Appendix — Fort Wayne Books, Inc. v. Indiana
Supreme Court brief1989
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October Term, 1987
tY.
—
FORT WAYNE BOOKS, INC.,
Petitioner,
vs.
STATE OF INDIANA, et al.,
Respondents.
APPENDIX TO PETITION FOR A WRIT OF
CERTIORARI TO THE SUPREME COURT
OF THE STATE OF INDIANA
—_— =
<—
Jouw H. Westrox*®
Davi M. Brown
G. Ranpat. Garrov
Browy, Weston & Sarno
432 N. Camden Dr., Suite 900
Bever.y Hills, CA 90210
(213) 550-7460
Attorneys for Petitioner
*Counsel of Record
Lee J. Kew
8252 East Lansing Road
Suite 101
Durand, MI 48429
Of Counsel
COCKLE LAW BRIEF PRINTING CO.. (800) 225-6964
or call collect (402) 342-2831
APPENDIX TABLE OF CONTENTS
Appendix Description
A Opinion of Indiana Supreme Court en-
tered on March 2, 1987 App. 1
B Order of Indiana Supreme Court deny-
ing petition for stay of execution filed
by Burke Mendenhall (dated Septem-
ber 2, 1987) _ i App. 23
Cc Opinion of Indiana Court of Appeals
entered on June 12, 1985 | iin &
D site died atews ont
ing entered by the Allen Circuit Court
~on March 19, 1984 App. 99
E Indiana Supreme Court’s order deny-
ing rehearing and opinion coneurring in
part and dissenting in part, entered on
June 18, 1987 pp. 104
F All relevant Indiana statutes _..____App. 113
G Opinion of Arizona Court of Appeals in
State of Arizona v. Feld, Case No. 1
CA-CR 9471, filed on August 4, 1987 App. 126
te eR
App. 1
APPENDIX A
IN THE
SUPREME COURT OF INDIANA
4447 CORPORATION, et al.,
Appellants,
Vv.
STEPHEN GOLDSMITH,
No. 4-12883 A 415
Appellee. in the Court of
Appeals
FORT WAYNE BOOKS, INC.
et al., No. 29804-8703-
CV-270 in the
Appellants, Indiana Supreme
Court
Vv.
STATE OF INDIANA AND
STEPHEN M. SIMS,
me me ee ee re ee ee ee ee ee ee ee ee ee ee ee ee ee ee”
Apnellees.
INTERLOCUTORY APPEAL FROM HAMILTON
CIRCUIT COURT
The Honorable Judith S. Proffitt, Judge
Cause No. C83-346
and
INTERLOCUTORY APPEAL FROM ALLEN
CIRCUIT COURT
The Honorable Thomas L. Ryan, Judge
Cause No. CC-84-446
CIVIL PETITION TO TRANSFER
GIVAN, CJ.
These consolidated causes are before the Court on
appellees’ Petition to Transfer. Appellees filed similar
App. 2
actions in which they allege the various defendants, own-
ers and operators of adult bookstores, have engaged in
racketeering activity as defined in the Racketeer Influ-
enced and Corrupt Organizations Act (RICO), Ind. Code
§ 35-45-6-1 et seq. Appellees seek various remedies as pro-
vided in the Civil Remedies for Racketeering Activity
(CRRA) statute, Ind. Code $ 34-4-30.5-1 ef seq.
In both cases the trial court, pursuant to Ind. Code
§ 34-4-30.5-3(b), entered an ex parte order seizing appel.
lants’ assets. On interlocutory appeal of the denial of
appellants’ motions to vacate the seizure orders, a ma roan
ity of the Court of Appeals, Fourth District, held that the
RICO and CRRA statutes constitute facially unconstitu.
tional prior restraints in their application to the predicate
offense of obscenity. 4447 Corp. v. Goldsmith (1985), Ind
App., 479 N.B.2d 978, 592. We grant appellees’ petition
and thereby vacate the opinion of the Court of Appeals
In 1980, the legislature enacted the Indiana RICO
statute, which is essentially patterned after the federal
anti-racketeering laws. See Alvers v. State (1986), Ind
App., 489 N.E.2d 83. As set out in Ind. Code § 35-45-6-2
(a), a person: :
**(1) who has knowingly or intentional iv
any proceeds directly or indirectly erat io
pattern of racketeering activity, and who uses or in-
vests those proceeds or the proceeds derived from
them to acquire an interest in real property or to
tablish or to operate an enterprise ; ne
(2) who through a pattern of racketeering activity
nowingly or intentionally acquires or maintains,
either directly or indirectly, an interest in or control
of real property or an enterprise; or
App. 3
(3) who is employed by or associated with an enter-
prise, and who knowingly or intentionally conducts or
otherwise participates in the activities of that enter-
prise through a pattern of racketeering activity ;’’
commits the offense of Corrupt Business Influence, a Class
C felony. ‘‘ ‘Racketeering activity’ means to commit, to
attempt to commit, or to conspire to commit a violation,
or aiding and abetting in a violation’’ of any of a number
of enumerated predicate offenses, including violation of
the obscenity statute. Ind. Code § 35-45-6-1. A ‘pattern
of racketeering activity’’ is defined as ‘‘engaging in at
least two (2) incidents of racketeering activity that have
the same or similar intent, result, accomplice, victim, or
method of commission....’’ Id.
Under the CRRA provisions, the prosecuting attorney
in a county in which the violation occurs may bring an ac-
tion te enjoin a violation of the RICO statute. Ind. Code
§ 34-4-30.5-2. If the court finds by a preponderance of the
evidence that such a violation has occurred, it may:
‘*(1) order a defendant to divest himself of any in-
terest in any enterprise or real property;
(2)- impose reasonable restrictions upon the future
activities or investments of a defendant, including
prohibiting a defendant from engaging in the same
type of endeavor as the enterprise in which he was
engaged in violation of IC 35-45-6-2;
(3) order the dissolution or reorganization of any
enterprise ;
(4) order the suspension or revocatiun of a license,
permit, or prior approval granted to any enterprise
by any agency of the state;
(5) order the forfeiture of the charter of a corpora-
tion organized under the laws of Indiana, or the revo-
App. 4
cation of a certificate authorizing a foreign corpora-
tion to conduct business within the state, upon finding
that the board of directors or a managerial agent act-
ing on behalf of the corporation, in conducting the
affairs of the corporation, has authorized or engaged
in conduct in violation of IC 35-45-6-2 and that, for
the prevention of future criminal activity, the public
interest requires the charter of the corporation for-
feited and the corporation dissolved or the certificate
revoked ; and
(6) make any other order or judgment that the court
considers appropriate.’’ /4d.
Additionally, pursuant to- Ind. Code § 34-4-30.5-3(a),
the prosecuting attorney in a county in which any of the
property is located ‘‘may bring an action for the forfeiture
of any property used in the course of, intended for use in
the course of, derived from, or realized through, conduct
in violation of IC 35-45-6-2."" Upon a showing by a pre-
ponderance of the evidence that the property in question
was so used, the court shall order the property forfeited
to the state. Jd. When a forfeiture action has been filed,
the prosecutor may move for an order to have the prop-
erty subject to forfeiture seized by a law enforcement
agency and the court ‘‘shall issue such an order upon a
showing of probabl _.use to believe that a violation of
IC 35-45-6-2 invol- ug the property in question has oc-
eurred.’’ Ind. Code § 34-4-30.5-3(b).
The first of the instant cases was commenced on Au-
gust 1, 1983, when appellee Stephen Goldsmith, Prosecuting
Attorney for the Nineteenth Judicial Circuit, filed a CRRA
action in Marion Circuit Court. The complaint alleged that
the three bookstores owned and operated by the individual
and corporate defendants (appellants) comprised an illegal
App. 5
enterprise as defined in Ind. Code § 35-45-6-1 and that
appellants had engaged in a pattern of racketeering ac-
tivity. The predicate offenses alleged were the distribu-
tion of obscene matter in violation of Ind. Code § 35-30-
10.1-2 (repealed by Acts 1983, P.L. 311, reeodified as Ind.
Code § 35-49-3-i).
At the same time Goldsmith filed a Verified Petition
for Seizure of Property Subject to Forfeiture. In support
of the petition, he attached a probable cause affidavit
sworn by Detective Thomas R. Rogers of the Indianapolis
Police Department. Detective Rogers stated therein that
he and other officers had visited the two operating book-
stores alleged to be part of the illegal enterprise, where
they observed sexually-oriented books, magazines, films
and videotapes available for sale or exhibition. The of-
ficers purchased four sexually explicit movies which were
submitted to the court.
The officers were informed by one of the bookstore
employees that a new bookstore, to be known as the Plaza
Entertainment Center, was due to open at 4266 West Ssth
Street in Indianapolis on August 1, 1983. One of the of-
ficers visited that location and spoke to a construction
worker, who informed the offiver that sexually-oriented
materials would be available for sale. In conclusion, De-
tective Rogers alleged that numerous investigations had
led him to the reasonable belief that the two existing adult
bookstores were part of a single enterprise and that the-
enterprise was preparing t» open a new bookstore which
would sell and exhibit obscene materials.
Based on those representations, the trial court on
August 1 found probable cause to believe violations of the
RICO statute existed and entered an ex parte order com-
App. 6
pelling the Indianapolis Police Department to seal the un-
opened bookstore. The court also ordered appellants to
preserve certain business equipment located at the two
operating bookstores and to list their other property.
Trial was set for 72 hours later.
Ou August 4 appellants filed motions to dismiss the
complaint and to vacate the seizure order, based in part on
their contention tiat the order and the RICO statute
abridged the exercise of the freedoms of speech and press
im violation of the First and Fourteenth Amendments to
the United States Constitution. The cause was continued
on appellants’ motions and later transferred to Hamilton
Cireuit Court, where on September 8 Goldsmith Siled an
amended complaint seeking a number of CRRA remedies.
On December 21, 1983, the trial court denied appel-
lants’ motions to dismiss the complaint and to vacate the
August 1 seizure order. The court, pursuant to Ind.R.
App.P. 4(B) (6), then certified for interlocutory appeal the
question of whether a seizure order may issue when based
on obscenity violations not yet litigated.
On March 19, 1984, appellee Stephen Sims, Prosecut'ng
Attorney for the Thirty-Eighth Judicial District, filed a
CRRA action in the Allen Cireuit Court. The complaint
allegea that the three adult bookstores owned and operated
by the various defendants (appellants) comprised an il-
legal enterprise and that appellants had engaged in a pat-
tern of racketeering activity, the predicate offenses being
the distribution of obscene materials. Cited in the com-
plaint were appellants’ thirty-nine obscenity convictions
entered between June of 1981 and March of 1984.
Sims simultaneously filed a Verified Petition for Seiz-
ure of Property Subject to Forfeiture. Attached to the
App. 7
petition was a probable cause affidavit sworn by Officer
Charles Dennis of the Ft. Wayne Police Department. The
affidavit alleged the thirty-nine prior obscenity conviec-
tions and related that police officers had observed ma-
terials believed to be obscene during recent surveillance of
the bookstores. Also submitted to the court were taped de-
seriptions by police officers of the contents of the
materials.
That same day the court entered an ez parte order al-
lowing the Ft. Wayne Police Department to seize the con-
tents of the three bookstores. On March 23 appellants
moved to vacate the order and in the alternative sought a
modification of the order which would allow them to con-
tinue the sale anc distribution of the materials in the book-
stores. Those motions were premised on appellants’ al-
legation that the order constituted a constitutionally im-
permissible prior restraint. The motions were denied on
Mareh 29.
After police officers on April 3 hauled away the con-
tents of the bookstores, appellants filed an Emergency
Motion for Inventory of Property Removed and/or Return
of Property. That motion was also denied. On April 18
the trial court certified two questions for interlocutory
appeal: 1) whether an application for seizure upon prob-
able cause shown ex parte as provided by Ind. Code
§ 34-4-30.5-3(b) violates due process guarantees provided
by the Indiana and United States Constitutions: and 2)
whether the seizure order, which is based upon prior erim-
inal convictions, is a violation of the First Amendment.
Thus these cases are similar, with several important
factual distinctions. In the Marion County case, the predi-
cate obscenity violations were shown by the allezations of
App. 8
the investigating officers, while in the Ft. Wayne case the
predicate violations underlying the RICO allegation were
shown by proof of prior convictions for violations ef the
Indiana obscenity statute. The two existing Marion County
bookstores were permitted to continue operating pending
trial and the unopened store was sealed. The Court of
Appeals issued a stay order allowing the store to open.
The three bookstores in Ft. Wayne were sealed and the
conten‘s were hauled away by the police. Those stores re-
iain closed.
Upon consolidating the two cases, the Court of Appeals
determined that its disposition of the interlocutory appeals
“require[d] resolution of but a single issue: whether the
RICO and CRRA provisions invoked against the defen-
dants abridge the freedoms of speech and press guaranteed
by the First and Fourteenth Amendments to the United
States Constitution.’ 4447 ¢ ‘orp., supra at 583. The
court concluded that:
““[T)he challenged RICO /CRRA provisions are un-
constitutional on three distinct vet intevvaiated
for the suppression of obscene materials. Finally
independent of our determination that these statutes
operate as an unconstitutional prior restraint, their
provisions as they relate to obscenity must fall under
the less restrictive means test announced in ['nited
States v. O'Brien (1965), 291 US. 367, 88 S.Ct. 1673,
20 L.Ed.2d 672, for the evaluation of allegedly conte nt-
neutral state regulation which has an incidental impact
upon free expression.”’ Jd. at 585 (original emphasis).
Before addressing the questions certified for inter-
locutory appeal, we must analyze the issue found by the
ee ieee
App. 9
Court of ., esc to be dispositive, namely whether the
RICO/CRRA tatutory scheme as it pertains to the predi-
cate offense of obscenity violates the First and Fourteenth
Amendments to the United States Constitution. That
analysis begins with the propositic: that an act of the
legislature must be afforded a presumption of constitu-
tionality. Ruge v. Kovach (1984), ind., 467 N.E.2d 673;
Johnson v. St. Vincent Hospital, Inc. (1980), 273 Ind. 374,
404 N.E.2d 585.
Appellees argue the purpose of the CRRA remedies is
not to suppress speech but rather to compel the forfeiture
of assets acquired through racketeering activity ; therefore,
their actions were not undertaken in an effort to enjoin or
restrain any future display or distribution of presump-
tively protected expressive material. Appellees assert that
since any personal property, regardless of its nature,
which is derived from racketeering activity could possibly
be seized, he seizure orders were not entered because ap-
pellants’ assets were obscene materials but because there
was probable cause to believe they were assets subject to
forfeiture.
Appellants contend that the statutory scheme must be
analyzed in terms of its effect upon the exercise of First
Amendment rights, and in so doing the only conclusion
that can be reached is that the s.atutes as applied to the
, .edicate offense of obscenity constitute an impermissible
prior restraint. Appellants would have us adopt the Court
of Appeals’ view ‘‘that for constitutional purposes, these
proceedings must be viewed as the functional equivalent
of « nuisance or obscenity action,’’ 4447 Corp., supra at
597, and cite a number of cases involving state actions
App. 10
found to constitute prior restraints. See, e.g., Entertain-
ment Concepts, Inc., Ill v. Macie, wski (7th Cir. 1980),
631 F.2d 497 (license revocation); Universal Amusement
Co., Inc. v. Vance (Sth Cir. 1978), 587 F.2d 159 (nuisance
abatement), aff'd. (1980), 445 U.S. 308, 100 S.Ct. 1156,
63 L.Ed.2¢ 413; State ex rel. Blee v. Mohney Enterprises
(1972), 154 Ind. App. 244, 289 N.E.2d 519 (injunction).
To appellants, the word ‘‘racketeering’’ as applied in
this context is merely a semantie device to allow the state
to ‘‘expand its arsenal of weapons designed to suppress
‘weenity’’ to include license revocation, padlocking, for-
feiture of property used to disseminate obscene matter
and similar methods which the courts have historically
condemned ; consequently, the CRRA remedies constitute
a restraint on future expression. We cannot agree.
The purpose of the federal RICO statute, after which
the Indiana statute was patterned, is ‘‘to provide new
weapons o° unprecedented seope for an assault upon or-
ganized crime and its economic roots.’"’ Russello v. United
States (1983), 464 U.S. 16, 26, 104 S.Ct. 296, 302, 78
L.Ed2d 17, 26. Its provisions are to be liberally con-
stroed to effectuate its remedial purposes. United States
v. Turbkette (1981), 452 U.S. 576, 101 S.Ct, 2524, 69 L.Ed.2d
246 > the most important of those remedies is the
forfe:tuf% of assets acquired through racketeering activity.
Russello, supra.
Both the federal and Indiana RICO statutes delineate
predicate offenses which underlie an allegation of a pat-
tern of racketeering activity. The Indiana RICO statute
as originally enacted included obscenity violations as a
predicate offense. While the federal RICO statute did
——
App. ll
not initially contain the predicate offense of obscenity
violations, in 1984 Congress amended the statute to in-
clude as a predicate offense ‘‘any act .. . involving...
dealing in obseene matter . . . which is chargeable under
State law and punishable by imprisonment for more than
one year.”” 18 U.S.C.A. § 1961(1)(A) (West Supp. 1986).
The statute was further amended to include ‘‘any act
which is indictable under . . . title 18, United States Code
_. . sections 1461-1465 (relating to obsvene matter).’’ 18
U.S.C.A. § 1961(1)(B) (West Supp. 1986).
Given the clear legislative purpose in enacting these
anti-racketeering statutes, that purpose, in the context
of alleged obscenity violations, cannot be specifically con-
strued to represent an attempt to restrain the sale or dis-
tribution of expressive materials. The legislative attack
on racketeering activity is not, as appellants contend,
merely a semantic device intended to circumvent well-
established First Amen iment doctrine.
Obscenity does not come within the area of constitu-
tionally protected speech or press. Miller v. California
(1973), 413 U.S. 15, 98 S.Ct. 2607, 37 L.Ed.2d 419; Roth
v. United States (1957), 354 U.S. 476, 77 S.Ct. 1304, 1
L.Ed.2d 1498, Our legislature, as has Congress, has de-
termined that obscenity violations should be one of the
underlying offences which may constitute racketeering
activity as defined in the RICO statute. We must take
heed of that legislative intent.
We believe the overall purpose of the RICO statute
is as applicable to obscenity violations as it is to the other
enumerated predicate offenses which have no conceivable
First Amendmen’ ramifications. Thus we ernnot agree
App. 12
with either appellants or the Court of Appeals that the
purpose of the Indiana RICO/CRRA scheme, as it per-
tains to the predicate offeuse f obscenity, is to restrain
the sale or distribution of expressive materials. It is
irrelevant whether assets acquired through racketeering
ectivity are obscene or not. They are subject to forfeiture
if the elements of a pattern of racketeering activity are
shown. The other CRRA remedies, such as license revo-
cation, are also available regardless of the nature of the
racketeering enterprise.
There is a dearth of caselaw concerning RICO-based
forfeiture of expressive materials. Appellees rely pri-
marily on Western Business Systems, Inc. v. Slaton (N.D.
Ga. 1980), 492 F.Supp. 513, a case in which the plaintiffs
sought a preliminary injunction in an attempt to prohibit
prospectively RICO prosecutions based on the predicate
crime of obscenity. The plaintiffs asserted that “the
statute constitutes a prior restraint on First Amendment
freedoms by allowing certain presumptively protected ma-
terials to be forfeited to the state.” Jd, at 514.
The court denied the motion for a preliminary injune-
tion. After reserving ruling on the defendants’ conten-
tion that the plaintiffs were not proper parties to bring
the suit, /d., the court found that the plaintiffs had not
shown any significant infringement of First Amendment
rights, were not in substantial need of protection, had
shown no threat of irreparable harm from enforcement
of the statute and had ‘‘shown little likelihood of eventual
success on the merits of their constitutional attack on
the Georgia RICO Act.” Jd. at 515.
In its opinion the court focused primarily on the plain-
tiffs’ argument that the statute allows for the forfeiture
=
App. 13
of printed matter on the basis that it is probably obscene.
According to the court, their ‘“‘attempted reading does
great violence to the words of the statute."’ /¢. at 514.
‘As the court reads the statute, Ga.Code § 26-
3403 prohibits the acquisition even of legitimate busi-
nesses with the proceeds of racketeering (as defined).
Under § 26-3405 all , of whatever nature and
no matter how inoffensive, if it is acquired with rack-
eteering proceeds, is subject to forfeiture to the state.
These chattels might be anything from gardeuing
equi to cook books, and might also be sexually
as ental. Forfeiture could apply to any
chattel whatever, if it was acquired with the proceeds
of racketeering. hus, if the items seized are books
or movie films, the seizure is totally unrelated to their
contents. They would be forfeited under the statute
a complaint, would be seizing them upon
We agree with court's reasoning that the purpose of
the forfeiture provisions is totally unrelated to the nature
of the assets in question. The overall purpose of the anti-
racketeering la. . is unequivocal, even where the predicate
offense alleged is a violation of the obscenity statute. The
remedy of forfeiture is intended not to restrain the future
distribution of presumptively protected speech but rather
to disgorge assets acquired through racketeering activity.
App. 4
Stated simply, it is irrelevant whether assets derived from
an alleged violation of the RICO statute are or are not
obscene.
Underlying the Court of Appeals’ opinion was its fear
that “‘these civil remedies invite indiscriminate prosecu-
tion."" 4447 Corp. supra at 592. Believing the ‘‘dra-
conian’’ RICO/CRRA statutes to be “prone to abuse
given the relative ease with which the state may invoke
their sanctions," Id., the court posited that “(t]he po-
tency of the prosecutorial weapon and the threat it poses
to the legitimate exereise of First Amendment freedoms
obviously exceed the bounds of constitutionally permissible
regulation.”’ /¢. at 601-02.
»-e do not share the Court of Appeals’ fears that
prosecutors will abuse the CRRA remedies and that allow-
ing the seizure and/or forfeiture of assets such as those
at issue here will lead to the breakdown of the protections
the First Amendment undeniably affords to various forms
of expression. It cannot be presumed that prosecutorial
diseretion will be abused te the extent of threatening *‘the
continued existence of bookstores and theaters.” See Id.
at 601. The remedies provided in the CRRA are a legiti-
mate tool in the attack on racketeering activity. To find
otherwise would thwart the legislative intent apparent in
the inclusion of obscenity as a predicate offense for a
showing of a pattern of racketeering activity and would
allow those engaged in racketeering activity to effectively
saw 'd their proceeds so gained behind a pseudo-constite.
In sum, these actions seeking various CRRA remedie«
were instituted in an attempt to compel the forfeiture of
App. 15
the proceeds of alleged racketeering activity and not to
restrain the future distribution of expressive materials.
We hold that the RICO/CRKA statutes «s they pertain
to the predicate offense of obscenity do ot violate the
First and Fourteenth Amendments of the United States
Constitution.
We now address the issues certified by the respective
trial courts for interlocutory appeal. In the Marion County
ease, the issue is whether a seizure order could be based
on alleged obscenity violations not yet litigated.
There are no reported Indiana cases directly con-
fronting the question of whether "rior convictions for the
predicate offenses are necessary to sustain a conviction
for Corrupt Business Influence under Ind. Code § 35-45-
6-2. In Alvers, supra at 85, the Court of Appeals stated
in its recitation of the facts that the defendant ‘‘was
charged with seven specific acts of two basic types—
receiving stolen property and substituting cubie zirconias
for diamonds in jewelry that was submitted for repairs,
thereby evidencing a pattern of racketeering activity.’’
While it can be implied that there were no convictions
for the acts underlying the allegation of racketeering
activity, the issue of whether those acts could provide
in part the basis for the conviction was not raised on
appeal.
Under the federal RICO statute, convictions for the
predicate offenses are not required. Sedima, SPRL. v.
Imrer Co. (1985), 473 U.S. —, 105 S.Ct. 3275, 87 L.Bd.2d
346; United States v. Malatesta (5th Cir. 1978), 583 F.2d
748, cert. denied (1979), 444 U.S. 846, 100 S.Ct. G1, 62
L.Ed.2d 59. Nowhere in Ind. Code 6 35-45-6-1, which de-
App. 16
fines ‘‘racketeering activity’? and ‘‘pattern of racketeer-
ing activity,’’ is there reference to the word conviction.
See Sedima, supra. The statute speaks only of commit-
ting a ‘‘violation’’ of any of the enumerated predicate
offenses.
Had the legislature intended to require convictions
for the predicate offenses, it would have so worded the
statute. Consequently, we hold that prior convictions for
the underlying offenses are not required to prove a pat-
tern of racketeering activity under Ind. Code § 35-45-6-2.
Appellants make light of the construction of the Indi-
ana RICO statute advanced by the office of the Indiana
Attorney General in J.N.S., Inc. v. State of Indiana (7th
Cir. 1983), 712 F.2d 303, in which the court affirmed the
dismissal on standing grounds of the plaintiffs’ complaint
seeking a declaratory judgment regarding the constitu-
tionality of the Indiana RICO statute as applied to ob-
seenity. As stated by the court, ‘‘{w)bile our research
discloses no Indiana cases construing the requirement of
two ‘violations,’ at oral argument, a deputy attorney gen-
eral opined that J.N.S. would have to accumulate two ob-
seenity convictions before the state RICO statutes would
apply.’’ Id. at 306 (original emphasis). That opinion
is not binding on this Court, and in any event there is no
basis from which to conclude it is a proper construction
of the Indiana RICO statute.
The Marion Circuit Court entered its ex parte seizure
order upon a showing of probable cause to believe a vio-
lation of the RICO statute involving the property in ques-
tion had occurred. As we construe the RICO statute. a
showing of prior convictions for the alleged ubseenity vio
App. lf
lations was uot required. In order to prevail in the for-
feiture action, appellee Goldsmith will of course have to
show the existence of the obscenity violations in order
to prove a violation of Ind. Code § 35-45-6-2 has occurred.
It is at trial on the forfeiture and other requested CRRA
remedies that the question of whether the materials are
obscene will be litigated. A final determination of that
question was not necessiry at the hearing on the petition
for seizure.
The trial court in the Ft. Wayne case certified two
questions: 1) whether the application for seizure violates
due process; and 2) whether the order constitutes a vio-
lation of the First Amendment. As to the latter question,
we have above held that the RICO/CRRA statutory scheme
as applied to the predicate offense of obscenity does rot
violate the First and Fourteenth Amendments. We ac-
cordingly find the seizure order does not constitute a prior
restraint or in any other manner impinge upon appellants’
rights under those amendments.
Concerning the former question, which was not ad-
dressed by the Court of Appeals in the majority opinion,
we interpret the trial court’s inquiry to be whether, in
light of procedural due process guarantees, the appellants
ean be deprived of their property, without an adversary
hearing, pending trial on the forfeiture action. Ind. Code
§ 34-4-30.5-3(b) clearly allows, upon the filing of a for-
feiture action under Ind. Code § 34-4-30.5-3(a), for the
entry of an order seizing property allegedly subject to
forfeiture upon a showing of probable cause to believe
a violation of the RICO statute involving the property in
question has occurred.
App. 18
The Marion Cireuit Court, although not required to
do so by Ind. Code § 34-4-30.5-3, sa sponte set trial for
72 hours after the entry of its seizure order. The Allen
Cirenit Court did not set a trial date after entering the
ex parte seizure order; nevertheless, we find that the
setting of a trial date within such a brief period is not
required to guarantee the due process rights of appel-
lants.
At the point a seizure order is entered there has been
a judicial determination that there is probable cause to
believe a violation of Ind. Code § 35-45-6-2 involving the
property has occurred. The reason for an adversary hear-
ing on the seizure of the property would be to determin-
whether the property had been unlawfully seized. Gen-
erally, a defendant would initiate such action by the filing
of a motion to vacate the seizure order, as was done in
the instant cases, and we would expect the court to hold
a prompt adversarial hearing on such a motion. If no
motion to vacate is filed, or if the motion is denied, there
will be a full adversarial hearing on the merits of the for-
feiture action. Although Ind. Code § 34-4-30.5-3(a) does
not specifically provide a time frame for that hearing,
we would interpret the statute to require the hearing on
the question of forfeitu » be held within a reasonable
time.
Thus a defendant whose property has heen seized
pursuant to Ind. Code § 34-4-30.5-3(b) is afforded due
process by a prompt adversarial hearing on a motion to
vacate the seizure order and/or by a hearing on the ques-
of forfeiture held within a reasonable time after the CRRA
complaint and petition for seizure have heen filed. In
App. 19
the instant case, appellants were affurded a hearing on
their motions to dismiss the complaints and to vacate the
seizure orders. Because the proceedings were halted by
the filing of the interlocutory appeals, there has been no
opportunity for trials on the merits of the CRRA com-
plaints. At this stage we can discern no violation of ap-
pellants’ due process rights.
Transfer is granted and the opinion of the Court of
Appeals is vacated. The causes are remanded for further
proceedings not inconsistent with this opinion.
GIVAN, C.J.
Pivarnik and Dickson, JJ., coneur.
Shepard, J., concurs in result with respect to 4447 Corpo-
ration v. Goldsmith and dissents with respect to Fort
Wayne Books v. State. _
DeBruler, J., dissents with separate opinion.
App. 20
IN THE
SUPREME COURT OF INDIANA
447 CORPORATION, et al,
STATE OF INDIANA AND
STEPHEN M. SIMS,
)
)
; Appellants, ) NO. 41283 A 415
: )
; ataia ) COURT OF
STEVEN GOLDSMITH, ) APPEALS
)
Appellee. ) NO. 29804-8703.
v. ) CV.270
SUP
FORT WAYNE BOOKS, INC, ‘ patty
et al., )
Appellants, ) (Piled
v. ' March 2, 1987)
)
)
)
)
Appellees.
INTERLOCUTORY APPEAL FROM HAMILTON
CIRCUIT COURT
The Honorable Judith 8. Proffitt, Judge
Cause No, C83-346
and
INTERLOCUTORY APPEAL FROM ALLEN
CIRCUIT COURT
The Honorable Thomas L. Ryan, Judge
Cause No. CC-84-446
DeBRULER, J — Dissenting
T am in agreement with the thoughtful and thorough
opinion of Judge Young of the Fourth District. 4447 Cor-
poration v. Goldsmith (1980' Ind. App., 479 N.E.2d. 578,
—_———
App. 21
I will surface portions of that opinion in order to re-
emphasize the important points.
The majority summarizes with approval appellees’
contention that . . . ‘“‘the purpose of the CRRA remedies
is not to suppress speech but rather to compel the for-
feiture of assets acquired through racketeering activity’’
and that . . . “the seizure orders were not entered be-
eause appellants’ assets were obscene materials but be-
cause there was probable cause to believe they were assets
subject to forfeiture.”’
The majority intimates that the challenged legislative
scheme here is a legitimate and rational response to the
problem of racketeering activity and that the potential
impact of the forfeiture on presumptively constitutionally
protected expressive materials is irrelevant. Therefore,
the majority holds under this relaxed standard of review,
that the challenged legislative scheme passes constitutional
muster.
The aajority opinion misses the mark.
Supreme Court decisions clearly direet, however, that
in cases of this order, ‘‘the standard of review is de-
termined by the nature of the right assertedly threat-
ened or violated rather than by the power being exer-
cised or the specific limitation imposed."’ Sched er.
Borough of Mount Ephraim (1981), 452 U.S. 61, 6,
101 S.Ct. 2176, 2182, 68 L.Ed. 671. [Emphasis added).
i447 Corporation v. Goldsmeth, supra at 583.
Here, the nature of the right assertedly threatened is ap-
pellants’ First Amendment Right to sell books: books
which until adjudged obscene, an unprotected category of
speech, are constitutionally protected.
App. 22
‘Given the assertion of this right, we are nui tree to
accept uncritically the state’s characterization of the
padlocking of bookstores and the seizure of their con-
tents as neutral incidents of a campaign against
‘‘racketeering”’, but rather must subject the state
regulation to searching and realistic serutmy.”’ [Erm-
phasis added]
4447 Corporation v. Goldsmith, supra at 584.
Under the circumstances of these cases, a searching and
realistic scrutinization reveals that the challenged legisla-
tive scheme operates as an unconstitutional prior restraint
of speech. As employed by both prosecutors, once a per-
son is found to have engaged more than once in an open
retail sale of unprotected speech, he forfeits his rights in
protected speech. Such a perfunctory scheme resulting in
an entire shutdown is clearly an unconstitutional prior re-
straint on future protected conduct.
OF CD Pe AE Sl A Ne
i i i I he a. 1 Pets lly
App. 23
APPENDIX B
IN THE
SUPREME COURT OF INDIANA
4447 CORPORATION, et al.,
Appellants,
-y-
STEPHEN GOLDSMITH,
CAUSE NO.
4-1282 A 415 in the
Court of Appeals
Appellee.
FORT WAYNE BOOKS, INC., CAUSE NO.
et al., 29804-8703-CV-
Appellants, 270 in the Indiana
Supreme Court
-V-
STATE OF INDIANA and
STEPHEN M. SIMS,
me ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee ee”
Appellees.
ORDER
DENYING “‘PETITION FOR STAY OF EXECUTION
IN CONNECTION WITH PETITION FOR
CERTIORARI”’.
COMES NOW the Petitioner, Burke Mendenhall, by
counsel, Bernard L. Pylitt, and files his ‘‘ Petition for Stay
of Execution in Connection With Petition for Certiorari’’,
alleging as follows:
1. That this cause was initially brought in the
Marion County Circuit Court by the Marion County
Prosecuting Attorney, Stephen Goldsmith, alleging
that the Petitioner, Mendenhall, owned the real estate
App. 24
at 4266 West 38th Street, Indianapolis, Indiana where
an adult bookstore was engaged in racketeering activi-
ties as defined in the Indiana Racketeering Influence
and Corrupt Organizations Act (**RICO’’), Indiana
Code 35-45-6-1 et seq.
2. On August 1, 1983, the Marion County Cir-
euit Court, The Honorable Anthony J. Metz, Judge
Pro Tem presiding, in Cause No. C83-1788, issued
Findings of Fact and an Order declaring the property
owned by the Petitioner, Mendenhall, at 4266 West
38th Street, Indianapolis, Indiana was subject to for-
feiture under the remedies section provided in the Civil
Remedies for Racketeering Activities ( ‘““CRRA’’), In-
diana Code 34-4-30.5.1 et seq (hereinafter referred to
as the ‘‘Forfeiture Order’’).
3. After a change of venue from Marion County,
the Hamilton County Cireuit Court entered an Order
on November 21, 1983 overruling a Motion of a co-
defendant, Burton Gorelick, to vacate the Forfeiture
Order, which ruling was then appealed to the Indiana
Court of Appeals as an Interlocutory Appeal in Con-
solidated Cause No. 4-1284 A 415 in the Indiana Court
of Appeals, Fourth District.
4. On February 2, 1984, Chief Judge Paul H.
Buchanan, Jr., Court of Appeals of Indiana, entered
an Order upon Interlocutory Appeal modifying the
Forfeiture Order of the Marion County Circuit Court
dated August 1, 1983, pending the appeal of that mat-
ter to the Indiana Court of Appeals. A copy of that
Order is attached hereto as Exhibit ‘‘A’’,
5. The Indiana Court of Appeals for the Fourth
District in 4447 Corp. v. Goldsmith (1985), Ind. App.
479 N.E.2d 578, 592 held that the Civil RICO and
CRRA statutes at issue constituted facially unconsti-
tional prior restraints in their application to the predi-
cate offense of obscenity.
6. On March 2, 1987, this Court granted a Peti-
tion for Transfer and vacated the Opinion of the In-
ee ee a a a a | ee
App. 25
diana Court of Appeals, and remanded the matter to
the Hamilton County Cireuit Court for further pro-
ceedings not inconsistent with that Opinion.
7. Subsequent to the decision of the Supreme
Court of Indiana, the Honorable James E. Noland,
Judge, United States District Court for the Southern
District of Indiana, in an unrelated criminal matter
on June 5, 1987, under Cause Number IP86-20-CR-01
entered an Amended Judgment and Order of Forfei-
ture in the case captioned United States of America
vs. Burton Gorelick directing Gorelick to vacate the
premises at 4266 West 38th Street, Indianapolis, In-
diana and cease business operations at the Plaza En-
tertainment Center on or before March 2, 1987.
8. From on or about March 2, 1987, to and in-
eluding August 3, 1987, the premises remained vacant
at 4266 West 38th Street, Indianapolis, Indiana.
9. On or about August 3, 1987, a new business
entity began business at the location of 4266 West
38th Street, Indianapolis, Indiana.
10. On or about August 6, 1987, members of the
Indianapolis Police Department, under the direction
of the Marion County Prosecuting Attorney’s Office,
padlocked the subsequent business operation located
at 4266 West 38th Street, Indianapolis, Indiana, alleg-
edly under the authority of the August 1, 1983 Order
of the Marion County Cireuit Court in this matter,
and the November 21, 1983 Entry of the Hamilton
County Circuit Court, overruling the defense Motion
Vacate the Order of August 1, 1983.
11. On August 13, 1987, Deborah Daniels, Marion
County Prosecuting Attorney’s Office, advised the
undersigned that the new business located at 4266
West 38th Street, Indianapolis, Indiana, was closed
under the authority of the August 1, 1983 Order and
the November 21, 1983 Entry of the Hamilton County
Cireuit Court.
App. 26 App. 27
12. That the jurisdiction of the Supreme Court repels” . tition for Certiorari’’, as this
of the United States to review this case and petition ounen Connection with Pe — : ,
for certiorari rests upon 28 U.S.C. Section 1257 (3), Court is without jurisdiction over this matter.
and that the jurisdiction of this Court to issue the The Clerk of this Court is directed to send a copy of
stay request is granted by 28 U.S.C. Section 2101(f).
13. That this Court denied Appellant’s Petition :
for Rehearing on June 18, 1987. DONE AT INDIANAPOLIS, INDIANA this 2nd day
of September, 1987.
this Order to all counsel of Record.
14. The Appellant-Petitioner has retained coun-
sel who is in the process of preparing his Petition for Randall T. Shepard
Writ of Certiorari to the United States Supreme Court ad R AND ALL T. SHEPARD
which will be on the merits and will be filed within Chief Justice of Indiana
the proper time requirements as provided for by the
Rules of the United States Supreme Court.
15. The reason for applying for a stay of the
Order entered by the Marion County Cireuit Court,
The Honorable Anthony J. Metz, Judge Pro Tem pre-
siding, in Cause No. (83-1788 and the Order of this
Court rendered on March 2, 1987 in this matter is that
this Court’s decision raises an important constitu-
tional question involving the taking of Petitioner’s
property without due process of law in violation of
the Fourteenth Amendment to the Constitution of the
United States and the denial of this federal right is
the result of a finding by the courts below and is shown
by the record to be without evidence to support it.
16. That unless a stay of the Order entered by
the Marion County Circuit Court, The Honorable An-
thony J. Metz, Judge Pro Tem presiding, in Cause
No. C83-1788 and the Order of this Court rendered
on March 2, 1987 in this matter is granted, Petitioner,
Mendenhall, will be irreparably injured in that he is
being denied the right to collect rents from a new busi-
ness tenant without the benefit of any judicial deter-
mination and/or order, and that he will be irreparably
injured during the pendency of the case in the Su-
preme Court of the United States.
THIS COURT, BEING DULY ADVISED IN THE
PREMISES, now DENIES the ‘‘ Petition for Stay of Exe-
App. 28
APPENDIX C
IN THE
COURT OF APPEALS OF INDIANA
FOURTH DISTRICT
4447 CORPORATION, WORLD
VIDEO SYSTEMS, ISSI
THEATRE CORPORATION,
PLAZA ENTERTAINMENT CEN.
TER and BURTON GORELICK,
Appellants-Defendants,
-V-
STEPHEN GOLDSMITH, Prose-
cuting Attorney for the Nineteenth
Judicial Circuit,
Appellee-Plaintiff.
FORT WAYNE BOOKS, INC.,
CINEMA BLUE OF FORT
WAYNE, INC., and EROTIC
HOUSE BOOKSTORE, INC.,
Appellants-Defendants,
-V-
STATE OF INDIANA and
STEPHEN M. SIMS, Prosecuting
Attorney for the Thirty-Eighth
Judicial Circuit,
Appellees- Plaintiffs.
)
)
)
—
—— ee eee
) Consolidated Cause
) No. 4-1283 A 415
| No. 3-484 A 106
) Before
Consolidation ]
App. 29
INTERLOCUTORY APPEAL FROM THE
HAMILTON CIRCUIT COURT
The Honorable Judith S. Proffitt, Judge
and
INTERLOCUTORY APPEAL FROM THE
ALLEN CIRCUIT COURT
The Honorable Thomas L. Ryan, Judge
YOUNG, J.
In each of these cases, the state has instituted pro-
ceedings against adult bookstores under the Racketeer
Influenced and Corrupt Organizations Act (RICO), IND.
CODE 35-45-6-1 et seq., seeking remedies available under
the Civil Remedies for Racketeering Activity (CRRA)
statute, IND. CODE 34-4-30.5-1 et seq. The defendants
bring interlocutory appeals from the trial courts’ denials
of their motions to vacate injunctive orders providing for,
inter alia, the padlocking of bookstores and seizure of the
contents thereof. We have consolidated these appeals in
order to consider defendants’ common challenge to the
constitutionality of the RICO and CRRA statutes under
the First Amendment in the United States Constitution.
Marion County Prosecutor Stephen Goldsmith initiated
the first of these actions on August 1, 1983, when he filed
a complaint in the Marion Circuit Court against the in-
dividual and corporate defendants, owners and operators
of three adult bookstores. The complaint alleged that the
bookstores constituted ‘‘an illegal enterprise’’' and that
1. IC 35-45-6-1 defines “enterprise” to include a ‘‘sole
proprietorship, corporation, partnership, business trust,” etc.
App. 30
the defendants had engaged in ‘‘a pattern of racketeering
activity’? in violation of IC 35-45-6-1 et seg. These RICO
provisions create an offense of ‘‘corrupt business influ-
ence,’’ a Class C felony, committed by a person:
(1) who has knowingly or intentionally received any
proceeds directly or indirectly derived from a pattern
of racketeering activity, and who uses or invests those
proceeds or the proceeds derived from them to acquire
an interest in real property or to establish or to
operate an enterprise;
(2) who through a pattern of racketeering activity,
knowingly or intentionally acquires or maintains, eith-
er directly or indirectly, an interest in or control of
real property or an enterprise; or
(3) who is employed by or associated with an enter-
prise, and who knowingly or intentionally conducts or
otherwise participates in the activities of that enter-
prise through a pattern of racketeering activity; ....
IC 35-45-6-2. The statute enumerates various predicate of-
fenses which constitute ‘‘racketeering activity,’’ including
obscenity violations under IND. CODE 35-30-10.1-2 (re-
pealed 1983 Acts, P.L. 311; see now IND. CODE 35-49-3-1).
Goldsmith in his complaint sought civil remedies
created by the Civil Remedies for Racketeering Activity
_2. The RICO statute defines a ‘pattern of racketeering
activity” as:
engaging in at least two (2) incidents of racketeering ac-
tivity that have the same or similar intent, result, accom-
plice, victim, or method of commission, or that are other-
wise interrelated by distinguishing characteristics that are
not isolated incidents; however, the incidents are a pattern
of racketeering activity only if at least one (1) of the inci-
dents occurred after August 31, 1980, and if the last of the
incidents occurred within five (5) years after a prior inci-
dent of racketeering activity. IC 35-45-6-1.
App. 31
Act. Under IC 34-4-30.5-2, which provides for injunctive
relief in response to RICO violations, the trial court, upon
a finding by a preponderance of the evidence that a RICO
violation has oceurred may :
(1) order a defendant to divest himself of any inter-
est in any enterprise or real property;
(2) impose reasonable restrictions upon the future
activities or investments of a defendant, including pro-
hibiting a defendant from engaging in the same type
of endeavor as the enterprise in which he was engaged
in violation of 1C 35-45-6-2;
(3) order the dissolution or reorganization of any
enterprise ;
(4) order the suspension or revocation of a license,
permit, or prior approval granted to any enterprise
by any agency of the state;
(5) order the forfeiture of the charter of a corpora-
tion organized under the laws of Indiana, or the revo-
cation of a certificate authorizing a foreign corporation
to conduct business within the state, upon finding that
the board of directors or a managerial agent acting on
behalf of the corporation, in conducting the affairs of
the corporation, has authorized or engaged in conduct
in violation of IC 35-45-6-2 and that, for the prevention
of future criminal activity, the public interest requires
the charter of the corporation forfeited and the cor-
poration dissolved or the certificate revoked ; and
(6) make any other order or judgment tiat the court
considers appropriate.
The CRRA statute further authorizes the prosecuting at-
torney to seek forfeiture of property incident to corrupt
business influence, and to obtain a court order seizing prop-
erty subject to forfeiture, under IC 34-4-30.5-3:
(a) The prosecuting attorney in a county in
which any of the property is located, may bring an
App. 32
action for the forfeiture of any property used in the
course of, intended for use in the course of, derived
from, or realized through, conduct in violation of IC
35-45-6-2. An action for forfeiture may be brought in
any circuit or superior court in a county in which any
of the property is located. Upon a showing by a pre-
ponderance of the evidence that the property in ques-
tion was used in the course of, intended for use in the
course of, derived from, or realized through, conduct
in violation of IC 35-45-6-2, the court shall order the
property forfeited to the state, and shall specify the
manner of disposition of the property including the
manner of disposition if the property is not transfer-
able for value. The court shall order forfeitures and
dispositions under this section with due provision for
the rights of innocent persons.
(b) When an action is filed under subsection (a)
the prosecutor may move for an order to have property
subject to forfeiture seized by a law enforcement
agency. The judge shall issue such an order upon a
showing of probable cause to believe that a violation
pelle ata involving the property in question has
. Pursuant to this authority, Goldsmith filed along with
his complaint a Petition for Seizure of Property Subject
to Forfeiture, incorporating by reference the allegations
of the complaint and of the probable cause affidavit. This
petition alleged that the defendants intended soon to open
an additional adult bookstore in furtherance of their
“racketeering activity’’, i.e. ‘dissemination of obscenc
material.’’ The petition also asserted that the new book-
store contained numerous obscene items, none of which
were specified, and cited possession of these allegedly ob-
scene materials as probable cause to establish RIC( ) vio-
lations.
The probable cause affidavit upon which this petition
for seizure relied stated that police had visited the two
oe rh ee ee
App. 33
operating adult bookstores, where they observed sexually-
oriented books, magazines, films and videotapes. They
purchased four sexually-explicit movies, which they sub-
mitted to the court. Visiting the construction site of the
soon-to-open bookstore, they were informed that sexually-
oriented materials would be available there as well. The
police further alleged that the three bookstores constituted
a single enterprise under common ownership and control.
On the basis of these allegations, the trial court at the
ex parte proceedings of August 1, 1983, issued an order
that police seize, i.e. padlock, the third bookstore in advance
of its opening, as authorized by IC 34-4-30.5-4.2 While this
3. This CRRA section specifies the procedures for seizure
of property pursuant to IC 34-4-30.5-3 and related RICO pro-
visions:
(a) Property subject to forfeiture under this chapter
shall be seized by a law enforcement officer upon court
order. ...
(b) When property is seized under subsection (a),
— forfeiture and final disposition, the law enforce-
ment officer making the seizure may:
(1) place the property under seal;
(2) remove the property to a place designated by
the court; or
(3) require another agency authorized by law to take
custody of the property and remove it to an appro-
priate location.
(c) Property seized under subsection (a) is not sub-
ject to repleven [sic], but is considered to be in the cus-
tody of the law enforcement officer making the seizure,
subject only to order of the court. However, if a seizure
of property is made in accordance with subsection (a), the
prosecuting attorney shall promptly bring an action for
forfeiture under section 3 of this chapter. If an action is
not filed within 180 days after the date of the seizure, the
law enforcement agency whose officer made the seizure
shall return the property to its owner.
App. 34
order permitted the continued distribution of literature and
films at the two existing bookstores, it required the de-
fendants to list and preserve all other property pending
trial. On August 4, 1983, the defendants appeared and
filed motions to dismiss the complaint and to vacate the
trial court’s order.
Goldsmith on September 8, 1983, filed an amended
complaint in the Hamilton Cireuit Court, to which venue
of the case had been transferred. Reciting allegations ma-
terially the same as those of the original complaint,* plain-
4. Neither the original nor the amended complaint al-
leges prior obscenity convictions of these defendants. This fact
raises a serious question whether appellees have stated a cause
of action in the case of 4447 Corporation, et al., as the Indiana
Attorney General has previously taken the position, in J.N.S.,
Inc. v. State of Indiana (7th Cir. 1983), 712 F.2d 303, that the
RICO statute may not be applied to obscenity offenses in the
absence of two prior obscenity convictions.
_ In J.N.S., the plaintiff sought a declaratory judgment regard-
ing the constitutionality of the Indiana RICO statute as applied
to obscenity, although it had not been charged with violation
of that statute. The Court of Appeals affirmed dismissal of the
complaint on grounds of non-justiciability. The Court con-
cluded that because J.N.S. had twice been charged but had
not yet been convicted of obscenity violations, it had not suf-
fered sufficient actual or threatened injury to present a “case
or controversy” as constitutionally required under Article Ill.
In reaching this conclusion, the Court relied in part upon the
construction of the RICO statute advanced by the Indiana At-
torney General’s office:
While our research discloses no Indiana cases construing
the requirement of two ‘violations’, at oral argument, a
deputy attorney general opined that J.N.S. would have to
accumulate two obscenity convictions before the state
RICO statutes would apply. 712 F.2d at 306.
Because this consolidated appeal requires our determina-
tion of the underlying constitutional question, we need not
address this issue. We note the merits of appellants’ conten-
tion, however, as the requirements of due process, in addition
to the chilling effect of a contrary reading of the statute as ap-
plied to obscenity, would almost certainly render it constitu-
tionally infirm even if the statute were otherwise constitutional.
OSs 00s wes one
App. 35
tiff prayed for a panoply of CRRA remedies, including
license suspension, corporate charter revocation, and for-
feiture of all property related to the operation of these
bookstores.
On December 21, 1983, the Hamilton Cireuit Court de-
nied defendants’ Motion to Dismiss the complaint and to
vacate the order of the Marion Cireuit Court. This court
has granted a stay of that order pending appeal of the
denial of defendants’ motion to vacate.
In Fort Wayne Books, et al., Allen County Prosecutor
Stephen Sims has initiated a similar civil action against
the owners and operators of three adult bookstores. As in
the 4447 case, the complaint alleges an illegal enterprise,
the purpose of which is to operate adult bookstores. In
this case, the complaint also cites a pattern of racketeering
activity consisting of thirty-nine prior obscenity convic-
tions of the three bookstores and their agents between June
1981 and March 19, 1984, the date of the complaint.
Sims in his complaint sought CRRA remedies includ-
ing license forfeiture and confiscation of defendant’s prop-
erty. The prosecutor accordingly filed a petition for seiz-
ure of property, seeking forfeiture of the three bookstores
with their entire contents and all corporate assets under
IC 34-4-30.5-3.
The forfeiture petition incorporated by reference the
allegations of the complaint and the probable cause affi-
davit. The latter stated that police had been monitoring
the activities of the three bookstores and that the defendant
corporations and their employees had incurred thirty-nine
obscenity convictions. The affiant related that he and
other police had recently visited the bookstores, where they
observed materials he believed to be obscene.
App. 36
At an ex parte hearing held the same day the com-
plaint was filed, the trial court merely reviewed these docu-
ments and heard taped descriptions by police of the con-
tents of seized materials. On this basis, the prosecutor
obtained an order directing the sheriff to padlock all three
bookstores and to seize their contents.
Noting that this order constituted a constitutionally
impermissible prior restraint, the corporate defendants on
March 23, 1984, filed a motion to vacate the trial court’s
order. In the alternative, they sought to modify its terms
to allow the continued sale and distribution of materials
including books and motion pictures, for which they invoked
the protection of the First Amendment.
One week after defendants filed this motion, however,
the police seized and hauled away the entire contents of the
three bookstores. The defendants responded with an Emer-
gency Motion for Inventory of Property Removed and/or
Return of Property. The trial court denied doth of these
motions, and from the denial of their motion to vacate or
modify the court’s order, the corporate defendants appeal.
Our disposition of these interlocutory appeals requires
resolution of but a single issue: whether the RICO and
CRRA provisions invoked against the defendants abridge
the freedoms of speech and press guaranteed by the First
and Fourteenth Amendments to the United States Consti-
tution.
1.
Because defendants-appellants raise this constitutional
challenge, we must employ standards developed by the
United States Supreme Court with particular sensitivity
to the fundamental role of the freedoms of speech and press
App. 37
under our constitutional system. The state in the grava-
men of its argument essentially urges that we adopt a
lesser standard of review, focussing entirely upon the legit-
imacy of the avowed state purpose of ‘‘combatting racket-
eering’’ by means of the RICO Act and associated civil
remedies. Supreme Court decisions clearly direct, however,
that in cases of this order, ‘‘the standard of review is deter-
mined by the nature of the right assertedly threatened or
violated rather than by the power being exercised or the
specific limitation imposed.’’ Schad v. Borough of Mount
Emphraim (1981), 452 U.S. 61, 68.
Appellants in this case assert their right to distribute
and to exhibit materials including books, magazines, and
films which have not been adjudged obscene and which
therefore presumptively enjoy the protection of the First
Amendment. The constitutional guarantee of freedom of
the press, appellants rightly contend, embraces the circula-
tion of books as well as their publication. Bantam Books,
Inc. v. Sullivan (1963), 372 U.S. 58. Specifically, appel-
lants invoke their well-recognized right to freedom from
prior restraint of such communicative activity. Given the
assertion of this right, we are not free to accept uncritically
the state’s characterization of the padlocking of bookstores
and the seizure of their contents as neutral incidents of a
campaign against ‘‘racketeering’’, but rather must subject
the state regulation to searching and realistic scrutiny.
The communicative freedoms guaranteed by the First
Amendment have long been deemed a ‘‘transcendent value”’
of our constitutional system. Speiser v. Randall (1958),
357 U.S. 513, 526. The rationale for treating certain consti-
tutional guarantees as ‘‘preferred freedoms’’ was initially
suggested by Justice Stone in his celebrated footnote 4 to
App. 38
his opinion in United States v. Carolene Products @o.
(1938), 304 U.S. 144, 152-53, intimating that legislation
directly contravening a constitutional prohibition, such as
those of the Bill of Rights, may ‘‘be subjected to more
exacting judicial serutiny ... thaa are most other types
of legislation. ...*’ A few years later in Murdock v.
Pennsylvania (1943), 319 U.S. 105, 115, the Court explicitly
declared: ‘‘Freedom of press, freedom of speech, freedom
of religion are in a preferred position.”’ Justice Frank-
furter, concurring in Kovacs v. Cooper (1949), 336 U.S. 77,
90, eloquently expressed the underlying rationale for this
principle:
. without freedom of expression, thought becomes
checked and atrophied. Therefore, in considering
what interests are so fundamental as to be enshrined
in the Due Process Clause, those liberties of the in-
dividual which history has attested as the indispen-
sable conditions of an open as against a closed society
come to this Court with a momentum for -espect lack-
ing when appeal is made to liberties which derive
merely from shifting economic arrangements.
The protection of the First Amendment has not been
grudgingly restricted to the realm of political speech but
has rather been extended to a wide range of expressive
activity. Entertainment in the form of motion pictures,
broadcast programs, live performances, ete. as well as
political and ideological speech, falls within the ambit of
the Amendment. Schad, supra. Thus, ‘‘the setting of the
bookstore or the commercial theater [is] each presump-
tively under the protection of the First Amendment.”’
Roaden v. Kentucky (1973), 413 U.S. 496, 504. Our point
of departure, therefore, is a presumption that the defen-
dant bookstores have engaged in legitimate First Amend-
App. 39
ment activity, and that the materials they purvey represent
protected speech. We emphasize in this regard that the
courts have been loath to draw sharp distinctions among
various types of speech; sexualiy explicit but not obscene
materials are entitled to no less protection than other
forms of expression. J-R Distributors, Inc. v. Evkenberry
(9th Cir. 1984) 725 F.2d 482; Avalon Cinema Corp. v.
Thompson (8th Cir. 1981), 667 F.2d 659.
The Supreme Court has declared a few narrowly-lim-
ited classes of expression, including obscenity, to be en-
tirely outside the protection of the First Amendment. In
Roth v. United States (1957), 357 U.S. 476, 485, the Court
first explicitly held that ‘‘obscenity is not within the area
of constitutionally protected speech or press.’? As cur-
rently defined by the standards set forth in Miller v. Calt-
fornia (1973), 413 U.S. 15,5 obscenity is therefore a legiti-
mate object of state regulation, subject to both civil and
criminal sanctions. Paris Adult Theatre I v. Slaton (1973),
413 U.S. 49.
Because of the overriding importance of First Amend-
ment freedoms, however, state authority to suppress ob-
scenity is not untrammeled. As the Court in Miller cau-
5. The Court in Miller expounded the following test for
determining obscenity:
he basic guidelines for the trier of fact must be: (a)
be # . ‘the average person, applying contemporary com-
munity standards,’ would find that the work, taken as a
whole, appeals to the prurient interest, (b) whether the
work depicts or describes, in a patently offensive way, sex-
ual conduct specifically defined by the applicable state
law, and (c) whether the work, taken as a whole, lacks seri-
ous literary, artistic, political or scientific value.
413 US. at 24.
App. 40
tioned, ‘‘State statutes designed to regulate obscene ma-
terials must be carefully limited.’’ 413 U.S. at 23-24. A
state may constitutionally impose a prior restraint such
as an injunction against the future distribution of ob-
scenity, but only as to particular items determined to be
obscene, and then only under the rigorous procedural
guidelines developed in the line of cases culminating in
Freedman v. Maryland (1965), 380 U.S. 51, and Vance v.
Universal Amusement Co., Inc. (1980), 445 U.S. 308. The
Court has consistently emphasized that the line between
protected and unprotected speech is ‘‘finely drawn’’ and
requires the use of ‘‘sensitive tools’? to discern and en-
foree that boundary. Speiser v. Randall, 357 U.S. at 525.
Even in the realm of obscenity, therefore, the courts have
evinced concern that criminal and civil sanctions imposed
for the commercial dissemination of obscene materials not
sweep so broadly as to create a ‘‘chilling effect’? which
would curtail the availability of nonobscene literature and
films due to apprehension and self-censorship on the part
of distributors and exhibitors. See, e¢.g., Smith v. Cali-
fornia (1959), 361 U.S. 147; Bantam Books, supra.
The great weight of constitutional authority decided
under these general precepts leads ineluctably to our con-
clusion that the challenged RICO/CRRA provisions are
unconstitutional on three distinct yet interrelated grounds.
First, they operate as a prior restraint which impermis-
sibly impinges upon the dissemination of protected ma-
terials. Second, these measures fail to comply with the
procedural safeguards required even for the suppression
of obscene materials. Finally, independent of our deter-
mination that these statutes operate as an unconstitu-
tional prior restraint, their provisions as they relate to
an
App. 41
obscenity must fall under the less restrictive means test
announced in United States v. O’Brien (1968), 391 U.S.
367, for the evaluation of allegedly content-neutral state
regulation which has an incidental impact upon free ex-
pression.
Each of these theories sounds common chords of First
Amendment law, and any one of these approaches war-
rants the conclusion that the RICO/CRRA statutes are
facially unconstitutional as they pertain to the predicate
offense of obseenity.6 Although we rely primarily upon
our determination that these statutes constitute a pat-
ently unconstitutional prior restraint, we elaborate the
alternative theories because they reveal additional con-
stitutional defects of the statutes and definitively dispose
of arguments raised by the state. We will therefore dis-
cuss each of these mutually-reinforcing theories in detail
below.
IL.
The prohibition against prior restraints of speech and
press has always been regarded as the essential core of
First Amendment protection. The Court in Near v. Min-
nesota (1931), 283 U.S. 697, 713-14, first employed the
prior restraint doctrine to dismiss an injunction against
the press, observing that such suppressive measures rep-
resent ‘*the essence of censorship.’’ In the recent case
of Nebraska Press Association v. Stuart (1976), 427 U.S.
539, 559, the Court reiterated, ‘Prior restraints on speech
6. For an excellent general formulation of this analysis
in a closely related area of First Amendment law, see Trachtman,
Pornography, Padlocks, and Prior Restraints: The Constitutional
Limits of the Nuisance Power, 58 N.Y.U.L. Rev. 1478 (1983).
App. 42
and publication are the most serious and the least tol-
erable infringement on First Amendment rights.’
Accordingly, the Court has applied the strictest stan-
dard of review to cases involving any prior restraint of
expression arguably within the protective ambit of the
First Amendment. As a general matter, ‘‘Only a com-
pelling state interest in the regulation of a subjeet within
the State’s constitutional power to regulate can justify
limiting First Amendment freedoms,” as the Court has
noted in NAACP v. Button (1963), 371 U.S. 415, 438; see
also Avalon, supra. Even a truly compelling state inter-
est justifies regulation only in the manner least restric-
tive of speech. See, e.g., Central Hudson Gas & Electric
Corp. v. Public Service Commission ( 1980), 447 U.S. 557:
Shelton v. Tucker (1960), 364 U.S. 479.
With regard to prior restraints in particular, the
Court has repeatedly asserted, ‘Any system of prior re-
straints of expression comes to this Court bearing a heavy
presumption against its constitutional validity.” Bantam
Books, 372 U.S. at 70; see also New York Times v. United
States (1971), 403 U.S. 713, 714; Near, supra. The govern-
ment ‘‘thus carries a heavy burden of showing justification
for the imposition of such a restraint.”’ Organization for a
Better Austin v. Keefe (1971), 402 U.S. 415, 419; see also
New York Times Co. v. United States. supra,
This presumption against prior restraints is not ab-
solute; it is subject, however, only to narrowly-delineated
exceptions. In Near, the Court enumerated ‘*exceptional
eases’? which might justify restraint in advance of pub-
lication, including obscenity. 283 U.S. at 716. Under the
subsequent decisions in Roth and Miller, material ad-
App. 43
judged to be obscene is by definition unprotected speech
and may be restrained prior to distribution. Paris Adult
Theatre I v. Slaton, supra. The prior restraint doctrine,
however, precludes the use of overreaching methods which
threaten to curtail protected as well as unprotected speech.
Bearing in mind this narrow exception allowing for a gov-
ernmental ban on obscenity, a constitutional term of art
which is not coextensive with sexually-explicit or crotic
materials generally, we come inescapably to the conclu-
sion that the obscenity application of the RICO/CRRA
statutes renders those provisions fatally overbroad as an
unconstitutional prior restraint of protected expression.
We observe initially that the applicability of the prior
restraint doctrine to this case is beyond question. ‘‘When
speech is suppressed in advance of publication or distribu-
tion—instead of being permitted to enter the marketplace
of ideas before being identified and regulated as unpro-
tected speech—it has been subjected to a prior restraint.’”
This definition perfectly describes the situation before
us, in which the state has successfully attempted to pad-
lock bookstores and to seize extensive collections of books,
magazines, and films along with the neutral instrumen-
talities used for their dissemination. Without so much as
an allegation of obscenity as to most of the bookstores’
inventories of films and publications, the state ultimately
seeks permanent revocation of their business licenses as
well as forfeiture of these communicative materials and
instrumentalities. The impact of such remedies upon the
availability of these materials is direct and undeniable—
the state has effectively suppressed them prior to dis-
7. Trachtman, supra note 6, at 1493.
App. 44
tribution. The suppression of entire bookstores inevi-
tably affects protected as well as any unprotected expres-
sion, as we must presume absent allegation and proof of
the obscenity of each item seized.
Our determination that a prior restraint has been
applied to protected speech is virtually dispositive of the
present case and extends to the entire range of injune-
tive and forfeiture remedies available under these stat-
utes. In such a prosecution based upon prior obscenity
convictions or the bare allegation of contemporaneous ob-
scenity violations, the application of any one of the enu-
merated CRRA remedies threatens closure of the defen-
dant bookstores, theaters or similar establishments and
therefore poses an impermissible prior restraint.
First, we note the unconstitutionality of the injunctive
remedies immediately presented by the trial courts’ im-
position of seizure orders pursuant to IC 34-4-30.5-3, -4.
These sections by their clear terms authorize such a sei-
zure; we thus have no quarrel with the trial courts’ im-
plicit interpretation of the RICO/CRRA provisions to al-
low for this remedy. However, the resulting orders pad-
locking these bookstores and seizing their contents ef-
fectively prevent the circulation of the seized materials
and of others which defendants might otherwise dissem-
inate from the premises. This constraint upon the free
circulation of presumptively protected materials repre-
sents the unconstitutional prior restraint in its most viru-
lent form.
In addition to the injunctive orders seizing defen-
dants’ property pending trial, the state seeks as an ultimate
remedy the permanent forfeiture of the corporate de-
App. 45
fendants’ real and personal property, including the book-
store premises, their inventories of films and publications,
and the instrumentalities involved in the distribution of
these materials. Our conclusion regarding the unconsti-
tutionality of the seizure orders applies with even greater
force here. A forfeiture remedy extending to presumptive-
ly legitimate expression and the facilities used for pur-
poses of such expression is likewise overbroad and there-
fore facially invalid as a prior restraint.
We are confirmed in this analysis by an earlier de-
cision of this court and by numerous decisions from other
jurisdictions, a large majority of which have struck down
as impermissible prior restraints similar measures effect-
ing closure of bookstores and theaters on obscenity grounds,
Contrary to the state’s argument attempting to distinguish
these cases, which arise primarily under nuisance and
‘‘red light’? abatement statutes, we find these decisions
precisely analogous to the case before us. Again, we re-
mind the appellees that the vantage point from which we
view this constitutional claim is ‘‘the nature of the right
assertedly threatened or violated rather than . . . the
power being exercised or the specific limitation imposed.’’
Schad, 452 U.S. at 68.
This court has confronted a similar threat to an adult
bookstore defendant’s right to freedom from prior restraint
in State ex rel. Blee v. Mohney Enterprises (1973), 154 Ind.
App. 244, 289 N.E.2d 519. In that case, our First District
affirmed the trial court’s denial of an injunction by which
the plaintiff sought on statutory nuisance grounds to re-
strain an adult bookstore operator from disseminating any
printed material whatsoever in the county. Relying pri-
App. 46
marily upon Near, the court noted simply that such an
injunction would constitute an impermissible prior restraint
of protected communication.
This theme has resounded in most of the numerous
state and federal decisions to address the issue in recent
years. The Georgia Supreme Court in the representative
case of Sanders v. State (1974), 231 Ga. 608, 203 S.E.2d
153, struck down a permanent injunction closing an adult
bookstore upon a showing of a single prior obscenity vio-
lation. The state had invoked its nuisance statute as
authorization for this padlock order, a remedy materially
identical to the injunctive and forfeiture remedies sought
by the state in the present case.
‘‘The problem encountered in applying these laws . . .
to justify closing the entire bookstore’’, the Georgia court
began, ‘‘is the ancient right of free men to say and print
what they wish without prior restraint.’’ 231 Ga. at 611,
203 S.E.2d at 156. After discussing procedural difficulties
with the imposition of this sanction, the court continued:
The injunction closing this store and padlocking it as
a public nuisance necessarily halted the future sale
and distribution of other printed material which may
not be obscene, thereby precluding the application of
the above procedural safeguards and creating an un-
constitutional restraint upon appellant.
231 Ga. at 613, 203 S.E.2d at 157. In thus concluding that
the statute was facially invalid for overbreadth as applied
to obscenity violations, the court appealed to underlying
First Amendment principles evident also in our foregoing
discussion :
the overly broad coverage contemplated by this
statute ... creates a chilling effect upon the exercise
App. 47
of free expression. We cannot throw out the por-
tected to rid ourselves of the unprotected as these
laws would require... . We must use the deft, the
precise and the remedial incision of the surgeon rath-
er than the bludgeoning blow of the butcher to cut
away cancerous obscenity. If we do not, the body
politic will suffer too mortal a blow from our zeal to
have a decent society free of obscene publications but
otherwise full of poetry and prose.
231 Ga. at 614, 203 S.E.2d at 157.
Similarly in General Corporation v. State ex rel. Sweet-
on (1975), 294 Ala. 657, 320 So.2d 668, cert. denied, 425
U.S. 904 (1976), the Alabama Supreme Court addressed
this question, reversing a judgment ordering an adult the-
ater closed for one year pursuant to the State’s ‘‘red light”’
abatement act. The court emphasized that ‘‘evidence of
ubscene conduct in the past does not justify enjoining fu-
ture conduct which is protected by the First Amendment.
... The padlocking of appellant’s operations for one year
constitutes prior restraint at its worst and is patently
unconstitutional.’’ 294 Ala. at 665-66, 320 So.2d at 675.
In People ex rel. Busch v. Projection Room Theater
(1976), 17 Cal.3d 42, 130 Cal.Rptr. 328, 550 P.2d 600,
cert. denied, 429 U.S. 922 (1976), the California Supreme
Court tersely disposes of the issue before us, holding that
the Near doctrine precludes the use of temporary or per-
manent padlock orders against theaters or bookstores found
to have violated obscenity laws:
We are aware of no reported cases authorizing the
closing of a bookstore or theater, even after it has
been repeatedly determined judicially in a full adver-
sary hearing that all or substantially all of the maga-
zines or films exhibited or sold therein are obscene
App. 48
+. .We emphasize that the closing of such bookstores
or theaters, either temporarily or permanently, or the
enjoining of the exhibition or sale on said premises of
magazines or films not specifically so determined to
be obscene, constitutes an impermissible prior restraint
in violation of the First and Fourteenth Amendments
to the United States Constitution.
17 C.3d at 59, 130 Cal.Rptr. at 338, 550 P.2d at 610.
Other state courts have almost uniformly adopted this
position with.regard to injunctive remedies allowing the
state to close bookstores or theaters. See, e.g., Mitchem v.
State ex rel. Schaub (1971), Fla., 250 So.2d 8&3; Gulf
States Theaters of Louisiana v. Richardson (1973), La.,
287 So.2d 480; State v. A Motion Picture Entitled ““The
Bet’’ (1976), 219 Kan. 64, 547 P.2d 760; City of Minot
v. Central Ave. News, Inc. (1981), N.D., 308 N.W.2d 851:
State ex rel. Field v. Hess (1975), Okla., 540 P.2d 1165:
Davis v. Van Emberg (1975), 464 Pa. 618, 347 A.2d 712;
New Riviera Arts Theatre v. Davis (1967), 219 Tenn. 652,
412 S.W.2d 890.
Noteworthy federal decisions on this point include
Spokane Arcades, Inc. v. Brockett (9th Cir. 1980), 631
F.2d 135, aff'd. mem. 454 U.S. 1022 (1981), Universal
Amusement Co., Inc. v. Vance (5th Cir. 1978), 587 F.2d
159, aff’d. on procedural grounds, 445 U.S. 308 (1980),
and Nihiser v. Sendak (N.D. Ind. 1974), 405 F.Supp. 482,
aff’d., 431 U.S. 961 (1977). In Spokane Arcades, the court
declared Washington’s moral nuisance abatement statute
unconstitutional because of provisions permitting a court
to issue temporary and permanent injunctions and tem-
porary closure orders against businesses which may have
distributed obscene materials. Similarly, the en bene panel
App. 49
in Vance indicated that the application of Texas nuisance
statutes to permit the state to obtain blanket injunctions
against the future exhibition of "unnamed obscene films
would operate as an unconstitutional prior restraint. The
court also indicated that a padlock order against the prem-
isés where such films had been shown would be likewise
unconstitutional :
The statutes allow the state to close, for one year, a
theatre that has exhibited obscene films. Unless a
bond ... is posted, the showing of any motion picture
is punishable by contempt of court. Thus, future con-
duct that may fall within the purview of the First
Amendment is absolutely prohibited after a finding
of unprotected present conduct. It was precisely this
practice that was condemned by the Supreme Court in
the landmark case of Near v. Minnesota....
587 F.2d at 165. am
In Nihiser, the court held unconstitutional the former
Indiana pornographic nuisance statute, IND. CODE 35-30-
10.5 (repealed 1983 Acts, P.L. 311), on grounds that it
authorized the state to close a bookstore or theater for
one year as a consequence of the past sale or exhibition of
obscenity. Condemning this padlock sanction as a prior
restraint, the court in Nihiser also struck down the act’s
provision authorizing the removal of personal property
from the prémises declared to constitute a nuisance, ob-
serving that ‘‘the state has no right to seize and destroy
protected materials’’ such as projection equipment, films,
and publications. 405 F.‘supp. at 495-96.
As this latter holding of Nihiser indicates, the pro-
tection of the First Amendment under the Near doctrine
not only extends to the bookstore premises and to their
App. 50
inventories of films and publications, but also forbids the
confiseation or forfeiture of the neutral instrumentalities
used for communicative purposes as well. Personal prop-
erty such as printing presses, projectors, video equipment
and bookshelves obviously may be used for ines dis.
somination of protected materials as well as of mnpeatonte’
obscenity. Seizure and forfeiture of such property, a
the state seeks in the present case, operates to inhibit free
expression and thus constitutes an unwarranted prior re-
straint. As the court concluded in State v. A Motion Pic-
ture Entitled ‘The Bet’’, 547 P.2d at 771 |
The Kansas nuisance abatement statute
ne obscenity is overbroad in authorizing
e destruction of equipment, seats or other neutral
a a for use in showing films. Suneh
‘isions o e statute are unconstitutiona
ional as ;
ory restraint of freedom of expression. . ” fen
phy em ay anc which may be used in the future
ate forms of expression, such as |
sion, s movie pro-
Jectors and theatre seats, may not be dite ko.
cause of past transgressions of obscenity laws
as applied to
See also Maquin v.
United States rv.
B.
Miller (D.Kan. 1977), 433 F.Supp. 223;
| / Polak (E.D.Pa. 1970), 312 F.Supp. 112;
grovanni v. Hogan (S8.D.N.Y. 1970), 309 F.Supp 1364.
Contrary to this extensive body of authority, a very
few courts have upheld blanket injunctions and padlock
ia Biased
rders aimed at obscenity. Among the decisions squarely
8. In addition to Kidwell. j
| ) well, intra, the Ohio S$
4 = . tty ool ae a Stitch” (1974) 2 One
5, / ™£.20 911, appeal dismissed sub ;
Guild, Inc. v. Ewing, 421 U.S. 922 (1975), piitené ¢ ete
‘Continued on next page)
App. 51
addressing padlock orders in the obscenity context, only
one has adopted the position advanced by the state in this
ease. In State ex rel. Kidwell v. U.S. Marketing, Inc.
(1981), 102 Idaho 451, 631 P.2d 622, appeal dismissed, 455
U.S. 1009 (1982), the Idaho Supreme Court upheld that
state’s nuisance statute authorizing closure of the offend-
ing establishment for one year. The court construed the
padlock sanction as an in rem penalty against property
involved in the commission of obscenity violations, rattler
than as a prior restraint, and distinguished Near on
grounds that the Idaho padlock provision did not restrict
future speech on the basis of content.
Appellees do not rely on Kidwell, as they deny the
relevance of authority arising under nuisance and ob-
(Continued from previous page)
for closure of a theater for one year upon a showing of a single
obscene film exhibition. The Ohio Court emphasized, however,
that the property owner could gain release from the padlock
order by filing a bond and demonstrating that the specific nui-
cance would not recur, and narrowly construed the statute by
holding that the nuisance to be prevented by the order was
limited to the showing of the particular film adjudged to be
obscene. The court thus suggested that the state could not
require the theater owner to demonstrate that no obscene films
would be exhibited, implying that such a blanket injunction
would create an impermissible prior restraint. 37 Ohio St.2d
at 105. 307 N.E.2d at 918. In Fehlhaber v. North Carolina (4th
Cir. 1982), 675 F.2d 1365, however, the court upheld such a
blanket injunction prohibiting future distribution of unspeci-
fied obscene materials.
The Indiana RICO/CRRA statutes impose much more se-
vere sanctions than the courts considered in either of these
cases, permitting seizure orders of indefinite duration and cre-
ating a remedy of permanent forfeiture which would extend to
protected materials and neutral instrumentalities. These deci-
sions are therefore readily distinguishable from the case before
us, as well as contradictory to the weight of constitutional au-
thority. See, e.g., Spokane Arcades, supra; Vance, supra.
App. 52
scenity statutes to these RICO/CRRA proceedings. In-
stead, the state relies exclusively upon Western Business
Systeme, Inc. v. Slaton (N.D. Ga. 1980), 492 F.Supp. 513
in which the court employs similar reasoning to whe
the Georgia RICO statute’s forfeiture provisions as ap-
plied to the predicate offense of obscenity.
In Western Business Systems, the district court denied
a preliminary injunction by which plaintiffs sought to
restrain future application of the state’s RICO act. Be-
cause the plaintiffs, sellers of sexually-oriented materials
had not yet suffered prosecution under the statute the
court held that they lacked standing, but gratuitously wont
on to pronounce the statute constitutional as applied to
obscenity. In so holding, the court dismissed plaintiffs’
First Amendment overbreadth claim on grounds similar
to those adduced in Kidwell:
. all property, of whatever nature and no m
how inoffensive, if it is aequired with be ce
proceeds, is subject to forfeiture to the state... . Thus
if the items seized are books or movie films, the seizure
is totally unrelated to their contents.
492 F.Supp. at 514.
Along with other courts and commentators, we find
the logic of these two cases strained and artificial,? and
9. The only two other courts to embrace the Ki
idw -
yaw have been reversed by reviewing courts. See i
wom eye yy coy 1982), 544 F.Supp. 1034
1., 2d ir. ); State ex rel. i.
ae Theatrical Corp. (1975), 59 pom odin Bog Ar
389, rev'd., 396 Mich. 244, 240 N.W.2d 460 (1976). The Idaho
—- has also been critically analyzed in Note, State ex re/
+ . ell v. U.S. Marketing, Inc.: Prior Restraint and Obscenity
nder the Idaho Moral Nuisance Abatement Act, 19 Idaho L
Rev. 135 (1983), and in Trachtman, supra note 6, at 1502-6.
App. 53
agree with appellants that Western Business Systems is
wrongly decided, as it contravenes the higher authority of
Vance. The reasoning evinced in these cases is, moreover,
inimical to the principles of Near v. Minnesota and of other
leading Supreme Court decisions in this area.
The courts in Kidwell and Western Business Systems
dismiss prior restraint claims by characterizing the chal-
lenged regulations as content neutral, in rem penalties for
past illegal conduct. We first address the contention that
these padlock and forfeiture orders do not constitute prior
restraints but merely represent punishment for criminal
offenses. Although the state here proffers this rationale,
the constitutional standards embodied in Near do not per-
mit us to accept such a justification uncritically: ‘‘in pass-
ing upon constitutional questions the court has regard to
substance and not to mere matters of form, and... the
statute must be tested by its operation and effect.’’ 283
U.S. at 708.
The prospective effect of these sanctions upon pro-
tected expression is undeniable and stems directly from
the nature of the statutory scheme as an ‘‘anti-racketeer-
ing’? measure. As applied to obscenity, the direct effect
of these RICO/CRRA remedies is the closure of book-
stores and theaters. ‘‘Since it is clear that purveyors of
obscenity are also in part distributors of protected speech,
seeking to eliminate obscenity entrepreneurs includes the
goal of restricting protected speech in the future, beyond
the desire to punish the distribution of unprotected speech
in the past.’ To construe these padlock and forfeiture
10. Trachtman, supra note 6, at 1503.
App. 54
penalties simply as punishment for past misdeeds would
be to ignore their actual operation and effect as prior
restraints,
In addition, the Kidwell and Western Business Sys-
tems courts’ reliance upon the alleged content neutrality
of seizure and forfeiture sanctions is misplaced. We find
highly dubious the proposition that these measures, applied
in the obscenity context to close adult bookstores, are con-
tent neutral in any meaningful sense. More fundamen-
tally, content neutrality regarding the suppressed speech
or publication in no way inures a regulatory scheme from
a challenge to its constitutionality on prior restraint
grounds. The Court in its insightful Near opinion does
not suggest that content neutrality removes a regulation
from the definition of prior restraint; rather, Chief Jus-
tice Hughes quotes Blackstone in broadly defining the un-
constitutional regulation to include any “previous re-
straints upon publications’’, 283 U.S. at 713. Fatal to the
state’s position is the modern authority of Organization
jor a Better Austin v. Keefe, 402 U.S. at 417, in which the
Court strikes down as a prior restraint a content neutral
order enjoining the distribution of ‘‘ ‘pamphlets, leaflets
or literature of any kind.’ ’’
Our foregoing analysis of the property seizure and
forfeiture remedies under the prior restraint doctrine up-
plies equally to other RICO/CRRA remedies. The state
in 4447 Corp., et al. also seeks forfeiture of defendants’
business licenses and revocation of their corporate char-
ters. Because these licenses and charters are obviously
prerequisites for the corporate defendants’ continued oper-
ation, their denial or revocation works as effective a prior
restraint as do the seizure and other forfeiture sanctions.
ee ee ee ee ee ae
App. 55
Such denial or forfeiture of licenses and charters based
upon the past behavior of a business in distributing ob-
scenity has been roundly condemned as a prior restraint
by other courts. As the Court of Appeals has succinctly
observed in Genusa v. City of Peoria (7th Cir. 1980), 619
F.2d 1203, 1219:
We know of no doctrine that permits the state to deny
to a person First Amendment liberties . . . solely be-
cause that person was once convicted of a crime or
other offense.
As in Genusa, the district court in Cornflower Entertain-
ment, Inc. v. Salt Lake City Corporation (D.Utah 1980),
485 F.Supp. 777, also strikes down city ordinances author-
izing revocation of theater and bookstore licenses based
on past obscenity violations. Citing Vance, the court ex-
pressly rejects the state’s argument, central to appellees’
position in this case, that this civil closure remedy serves
as a penalty for past abuses and therefore does not con-
stitute a prior restraint. On the contrary, the court re-
sponds, 485 F.Supp. at 786:
To reason that an involuntary closure of a motion
picture theatre for past obscenity violations does not
constitute a prior restraint is clearly contrary to the
Supreme Court's definition of prior restraint.
In the recent case of Gayety Theatres, Inc. v. City of
Miami (11th Cir. 1983), 719 F.2d 1550, the Court of Appeals
similarly heid that the city ordinance providing for revo-
eation of a theater’s or bookstore’s license for one year,
based solely upon one obscenity conviction, imposed an
unconstitutional prior restraint on presumptively pro-
tected expression. Relying on the Near doctrine and upon
App. 56
Vance and its numerous progeny, the court observed em-
phatically that
the City can no more impose such a prior restraint
on the plaintiff than it could by ordinance restrain
a citizen from speaking in public for one year because
the citizen once uttered an obscenity in a public place.
719 F.2d at 1552.
Other state and federal courts presented with the
issue of license revocation in response to obscenity vio-
lations have unanimously adopted the same view: En-
tertaimment Concepts, Inc. III v. Maciejewski (7th Cir.
‘1980), 631 F.2d 497; Fuclan Enterprises, Inc. v. Arre
(D.Hawaii 1980), 488 F.Supp. 820; Evansville Book
Mart, Inc. v. City of Indianapolis (S.DInd. 1979), 477
F.Supp. 128; Bayside Enterprises, Inc. v. Carson (M.D.
Fla. 1979), 470 F.Supp. 1140; Natco Theatres, Inc. v. Rat-
ner (S.D.N.Y. 1979), 463 F.Supp. 1124; Oregon Bookmark
Corp. v. Schrunk (D.Or. 1970), 321 F.Supp. 639; Perrine
v. Municipal Court (1971), 5 C.3d 656, 97 Cal.Rptr. 320,
488 P.2d 648, cert. denied, 404 U.S. 1038 (1972): City of
Delevan v. Thomas (1975), 31 TLApp.3d 630, 334 N.F.2a
190; Alexander v. City of St. Paul (1975), 303 Minn. 201,
227 N.W.2d 370; Hamar Theatres, Inc. v. City of Newark
(1977), 150 N.J.Super. 14, 374 A.2d 502; City of Seattle
v. Bittner (1973), 81 Wash.2d 747, 505 P.2d 126.
These decisions are informed by the central teaching
of Near that even the most flagrant abuses of the freedoms
of speech and press do not justify the imposition of sane-
tions which prospectively curtail communicative activity.
The corporate defendants’ right to continue operation of
these bookstores may not be abridged on the basis of past
App. 57
obscenity convictions, whether by padlock order, prop-
erty forfeiture, or license revocation. The same principle
further precludes the state from obtaining an order pur-
suant to IC 34-4-30.5-2(1)-(3), requiring that defendants
divest themselves of any interest in these enterprises, re-
stricting their investment in similar businesses, or dis-
solving or reorganizing these enterprises. See Gayety
Theatres, supra.
The present case vividly illustrates the rationale for
longstanding hostility to any system of prior restraints
under our Constitution. The injunctive and forfeiture rem-
edies to which the state has resorted here threaten to im-
pact dramatically upon public access to controversial ma-
terials and divergent opinions. Such provisions allowing
the state to close bookstores and theaters are incomparably
more repressive than subsequent penalties for distribution
of particular obscene materials. Not only are the RICO/
CRRA statutes draconian in their effect, but they are also
prone to abuse given the relative ease with which the
state may invoke their sanctions. Devoid of procedural
strictures including the standard of proof of a criminal
prosecution, these civil remedies invite indiscriminate
prosecution. The operation of these statutes, which is both
swift and severe, may indeed curb the availability of ob-
scenity but cuts a broad swath into the realm of protected
expression as well. The consequent overbreadth of these
measures with their attendant chilling effect on the ex-
ercise of First Amendment rights renders the entire stat-
utory scheme constitutionally invalid. We therefore hold
that the injunctive remedies of IC 34-4-30.5-2, and the
seizure and forfeiture sanctions of IC 34-4-30.5-3, -4, con-
App. 58
stitute facially unconstitutional prior restraints in their
application to the predicate offense of obscenity.
ITI.
We have thus initially determined that the RICO/
CRRA statutes impose unconstitutional restraints upon
protected expression. Because the plaintiffs in this case
do not even allege that the entire inventories of these
padlocked bookstores are obscene, the seizure orders nec-
essarily restrict some protected materials and must fall
under the near-absolute constitutional ban on prior re-
straints of protected speech.
Additionally, these measures entail procedural de-
fects which would render the proceedings thereunder in-
valid even as applied to suppress actual obscenity. The
mere allegation by local officials that speech or publica-
tion is obscene does not end our prior restraint inquiry.
As the protected or unprotected nature of the speech re-
mains to be determined, the state must adhere to consti-
tutionally required procedures for its suppression. Other-
wise, the resulting seizure or forfeiture order poses an
unconstitutional prior restraint notwithstanding the fact
the state could legitimately suppress the seized materials
as obscenity.
Given the paramount importance of First Amendment
guarantees and the threat to those rights posed by over-
zealous prosecution of unprotected expression, the Su-
preme Court has outlined exacting procedural safeguards
which must attend state efforts to suppress alleged ob-
scenity. To ensure ‘‘the necessary sensitivity to freedom
of expression’’, Freedman v. Maryland (1965), 380 U.S.
App. 59
51, 58, the Court has effected a hybridizat‘on of First
Amendment concerns and traditional due process stan-
dards."
At the same time it declared obscenity to be unpro-
tected speech in Roth, the Supreme Court began to define
the constitutional limits which must condition injunctive
measures to control obscenity. In Kingsley Books, Inc.
v. Brown (1957), 354 U.S. 436, the Court upheld a narrow
and precise New York obscenity statute authorizing an
ex parte injunction against a particular book alleged to
be obscene, but requiring trial on the merits within one
day and a final decision within two days of trial. Subse-
quent caselaw indicates that the procedures approved in
Kingsley Books embody minimal standards for proceed-
ings against obscenity, as the Court has continually re-
fined and reaffirmed these requirements.
In Speiser v. Randall, supra, decided the year after
Roth and Kingsley Books, the Court began in earnest the
task of elaborating procedural limits to the suppression
of unprotected speech. The case presented a challenge to
California constitutional and statutory provisions condi-
tioning a tax exemption upon nonadvocacy of the over-
throw of government. The Court observed that when the
state seeks to restrain unlawful advocacy and thus im-
plicates the ‘‘transcendent value’’ of freedom of speech,
it must provide procedures which are adequate to safe-
guard against infringement of constitutionally pro-
tected rights—rights which we value most highly and
which are essential to the workings of a free society.
11. See Monaghan, First Amendment “Due Process’, 83
Harv.L.Rev. 518 (1970).
App. 60
Moreover, since only considerations of the greatest
urgency can justify restrictions on speech, and since
the validity of the restraint on speech in each case
depends on careful analysis of the particular circum-
stances, the procedures by which the facts of the case
are adjudicated are of special importance and the
validity of the restraint may turn on the safeguards
which they afford. (Citations omitted.)
357 U.S. at 521. The Court then proceeded to invalidate
the tax provisions on grounds that they impermissibly al-
located to the individual the burden of persuasion as to
the protected nature of expression,
Subsequent decisions have fleshed out the skeletal re-
quirements suggested by Kingsley Books and Speiser. In
Marcus v. Search Warrants of Property (1961), 367 U.S.
717, the court condemned as violative of the Fourteenth
Amendment the mass seizure of materials alleged by police
to be obscene but with no prior judicial determination of
obscenity. The challenged Missouri procedure allowed for
issuance of a general warrant merely on the basis of police
allegations regarding the existence of obscene materials.
Police were empowered under the ensuing warrant to
search the premises and to seize whatever in their disere-
tion they deemed obscene. Pursuant to the warrant issued
in Marcus police searched the warehouse of a wholesale
distributor of magazines, newspapers, and books along
with five retail newstands. They seized 11,000 copies of
280 publications, most of which were previously unspeci
fied, and most of which were later adjudged nonobscene.
Concluding that this procedure lacked the necessary
safeguards to afford due process protection to nonobscene
materials, the court emphasized both the ex parte nature
of the proceeding and the absence of any independent judi-
App. 61
cial determination of the obscenity issue. Justice Brennan
for the Court insisted upon procedures ‘‘designed to focus
searchingly upon the question of obscenity’’ prior to any
such mass seizure, 367 U.S. at 732, complaining that under
the Missouri statute,
the warrants issued on the strength of the conclusory
assertions of a single police officer, without any seru-
tiny by the judge of . . . materials considered by the
complainant to be obscene . .. . Procedures which
sweep so broadly and with so little discrimination are
obviously deficient in techniques required by the Due
Process Clause of the Fourteenth Amendment to pre-
vent erosion of the constitutional guarantees.
ld. at 732-33.
The Court in Marcus distinguished Kingsley Books
as sanctioning a limited injunctive remedy against par-
ticular named publications and under closely defined pro-
cedural safeguards, as opposed to the Missouri scheme
which
inhibited the circulation of publications indiseriimi-
nately because of the absence of any such safeguards
.... Kingsley Books does not support the proposition
that the State may impose the extensive restraints im-
posed here on the distribution of these publications
prior to an adversary proceeding on the issue of ob-
scenity, irrespective of whether or not the material is
legally obscene.
ld. at 734-36.
In Quantity of Copies of Books v. Kansas (1964), 378
U.S. at 205, the Court underscored this prerequisite of an
adversarial determination of obscenity prior to any large-
scale seizure of expressive materials. In an action under
the Kansas obscenity statute, the state attorney general
filed an information alleging the obscenity of 59 titles in a
App. 62
series of sexually-oriented paperback novels. Copies of
seven of the books accompanied the information and were
reviewed by the trial judge in a brief ex parte inquiry.
Finding these books obscene, the judge issued a warrant
authorizing the sheriff to seize the novels identified by title
in the information. Police then impounded all copies of
the titles they discovered in the bookseller’s possession,
some 1715 books in all.
Fatal to this prosecution, the Supreme Court con-
cluded, was the failure to afford appellants an adversary
hearing on the question of the books’ obscenity. Despite
the warrant’s specificity as to the materials to be seized,
the mass seizure of all copies of the specified titles ren-
dered the procedure constitutionally deficient in threaten-
ing to suppress nonobscene books. The fact that a full
hearing on the obscenity issue followed the seizure did not
impress the Court: ‘‘For if seizure of books precedes an
adversary determination of their obscenity, there is danger
of abridgement of the right of the public in a free society
to unobstructed circulation of nonobscene books.’’ 378
U.S. at 213.
The following vear in Freedman v. Maryland (1965),
380 U.S. 51, the Court unanimously invalidated the state’s
motion picture censorship statute as inadequately guaran-
teeing against inhibition of protected expression. The
statute required distributors to submit a): films to a cen-
sorship board prior to exhibition, and granted the board
virtually unfettered discretion to ban films on various
grounds including obscenity.
In striking down the Maryland provision as a prior
restraint, the Court synthesized themes developed in the
earlier cases to require three basic safeguards in any
App. 63
proceeding to enjoin or otherwise suppress unprotected
speech: (1) the censor must bear the burden of proof
that the material is unprotected under the First Amend-
ment; (2) a prompt adversarial hearing and final adjudica-
tion on the obscenity issue must be assured by statute or
by ‘‘authoritative judicial construction’’; and (3) any prior
restraint before judicial review must be strictly limited in
duration. 380 U.S. at 58-59.
The Supreme Court has recently reaffirmed these
principles in Vance v. Universal Amusement Co. (1980),
445 U.S. 308, aff’g. per curiam on other grounds, 587 F.2d
159 (5th Cir. 1978). The Court there invoked the Freed-
man guidelines to affirm the Court of Appeals, deeming
the Texas nuisance statutes violative of the First and
Fourteenth Amendments because they authorized injunc-
tions of indefinite duration prior to a final judicial deter-
mination of obscenity and without any guarantees of
prompt review of a preliminary finding of probable ob-
seenity.
The Court in Vance rejected the state’s argument
that such blanket injunctions against the exhibition of
named or unnamed films would constitute no more objec-
tionable a restraint than would a criminal obscenity pro-
ceeding.
Presumably an exhibitor would be required to obey
such an order pending review of its merits and would
be subject to contempt proceedings even if the film is
ultimately found to be nonobscene. Such prior re-
straints would be more onerous and more objectionable
than the threat of criminal sanctions after a film has
been exhibited, since nonobscenity would be a defense
to any criminal prosecution.
App. 64
445 U.S. at 916. The Court agreed with the conclusion of
the Court of Appeals that ‘‘the absence of any special safe-
guards governing the entry and review of orders restrain-
ing the exhibition of named or unnamed motion pictures . . .
precludes the enforcement of these nuisance statutes
against motion picture exhibitors.’* Jd. at 317. Vance thus
provides the most recent indication that the Supreme Court
will not tolerate injunctive remedies against obscenity in
the absence of strict procedural 3afeguards.
Appellants correctly assert that as a vehicle for the
suppression of obscenity, the RICO/CRRA statutes are
procedurally deficient under these due process standards
developed in the context of First Amendment concerns.
Because of these procedural defects, the state may not
constitutionally maintain a RICO/CRRA action on the
basis of obscenity, even if the statutes’ application were
limited to materials alleged to be obscene.
First, we address appellant's contention that the ex
parte nature of the seizure order renders it invalid under
the line of cases encompassing Marcus and Quantity of
Copies of Books. These decisions unequivocally require an
adversarial determination of obscenity prior to the imposi-
tion of such restraints upon the distribution of communi-
cative materials.
In the eases before us, the trial courts have issued
orders for the seizure and padlocking of appellants’ book-
stores, following ex parte determinations of probable
cause regarding two prior or contemporaneous obscenity
violations. The judge in the case of 4447 Cory., et al. has
apparently reviewed the four films submitted by the pro-
secution to establish such probable cause. In the Fort
Wayne action, the trial court has considered in an er parte
App. 65
proceeding the appellants’ past obscenity convictions, along
with police allegations regarding the obscene nature of the
bookstores’ contents and their taped descriptions of seized
materials.
These ex parte proceedings do not pass constitutional
muster. Even if the entire contents of these bookstores
were alleged and subsequently adjudged to be obscene, the
Marcus and Quantity decisions require an adversarial de-
termination of the obscenity of each item prior to the en
masse seizure ef such materials. In each of these cases,
the trial courts have made ex parte determinations only as
te the probability of obscenity violations, with no regard
to the obscenity of all seized materials. To the extent that
the courts have considered the obscenity of most of these
books, films, and magazines, they have relied exclusively
upon conclusory assertions and descriptions by police of
alleged obscenity. Such ex parte proceedings, character-
ized by the absence of an independent judicial determina-
tion of obscenity, are precisely of the order deemed un-
constitutional ab initio by the Supreme Court in Marcus
and Quantity.
The state’s reliance upon Heller v. New York (1973),
413 U.S. 483, in this regard is entirely misguided. The Su-
preme Court in Heller approved an ex parte determination
of probable obscenity only in narrowly-defined cireum-
stances involving seizure of a single copy of an allegedly
obscene film for bona fide purposes of preserving it as
evidence in a criminal proceeding. The Court explicitly
disapproved any mass seizures of communicative materials
on an ex parte basis as in the present case.
The judge issuing the warrant in Heller viewed the
entire film at a commercial movie house before signing the
App. 66
warrant for its seizure. The Court upheld this procedure
on grounds that an adversary hearing was not required
where the state sought merely to seeure one allegedly ob-
seene item as evidence. The Court stressed, however, that
its approval was conditiond upon the availability of a
prompt judicial determination of obscenity in an adversary
proceeding. Further, the seizure must not operate as a
prior restraint upon exhibition of the film; on a showing
that other copies were not available, the court should either
return the film or permit the exhibitor to copy it.
The Court in Heller specifically stated that it would not
retreat from the principles of Quantity of Copies of Books
and Marcus but rather would ‘‘serutinize any large-scale
seizures of books, films, or other materials presumptively
protected under the First Amendment’? to ascertain that
the requirements of those decisions were fully met. 415
U.S. at 491. Contrary to appellees’ interpretation, Heller
thus provides no support for the contention that an ex
parte probable cause determination of prior obscenity vio-
lations may constitutionally sustain the indefinite seizure
«* entire bookstores. Rather, the cautionary terms in
which the Heller Court couched its holding underscore the
unconstitutionality of such an injunctive regulation, the
purpose or effect of whieh is to inhibit free expression
prior to a final judicial determination of obscenity.
Heller thus implicates the broader question of the pro-
cedural validity of these statutes generally as they provide
for remedies of seizures and forfeiture of communicative
materials. Not only are the initial ex parte proceedings
constitutionally deficient; the resulting seizure orders and
the statutes’ provisions for permanent forfeiture impose
continuing restraints which inherently contravene each of
App. 67
the three requirements of Freedman v. Maryland. We con-
clude that the RICO/CRRA acts as applied to obscenity
are structurally incompatible with the Freedman guide-
lines, designed by the Court to mitigate the chilling effect
on protected speech of laws which afford courts the dis-
cretion to draw the uncertain line between legitimate and
unprotected expression.
lirst, the statutory scheme assigns the state no bur-
den of proof regarding obscenity, beyond the requirement
that plaintiffs adduce two predicate offenses. Far from
requiring that the state affirmatively demonstrate the ob-
scenity of all materials subject to seizure and forfeiture,
the RICO/CRRA statutes do not even permit the defen-
dants to litigate the issue and to establish the nonobscenity
of mos of the seized books, films, and magazines. The
state’s burden of showing that defendants have purveyed
obscenity in the past hardly satisfies the constitutional re-
quirement that the state prove the obscenity of all sup-
pressed materials.
The statutes’ allowance for such blanket suppression
of entire bookstores and theaters necessarily violates the
second and third Freedman standards as well. Unlike the
precise measure approved in Aingsley Books, these stat-
utes make no provision for prompt adversarial review and
more fundamentally, bypass any comprehensive obscenity
adjudication. Similarly, the final requirement of Freed.
man—that prior restraint before judicial review be strictly
limited in duration—clearly prohibits the indefinite seizure
and permanent forfeiture of materials never afforded judi-
cial review at all.
We reiterate that for purposes of these Freedman
guidelines, as distinguished from our analysis of the stat-
App. 68
utes’ operation as substantive prior restraints, it is irrele-
vant whether the suppressed materials in fact represent
protected or unprotected speech. Even if every item
seized from these bookstores might ultimately be adjudged
obseene, the seizure orders and any subsequent forfeiture
judgments would still be unconstitutional due to these pro-
cedural! irregularities.
The state claims that these actions are not governed
by the procedural strictures peculiar to First Amendment
litigation because the RICO/CRRA statutes are not in-
tended as a means of censorship. We have noted above
our conclusion that for constitutional purposes, these pro-
ceedings must be viewed as the functional equivalent of a
nuisance or obscenity action. Again, we must reject the
contention that the state may so broadly inhibit the cireu-
lation of books, films, and other expressive materials on
grounds that they represent incidents of ‘racketeering
activity’’ and are therefore subject to forfeiture as mere
contraband. The Supreme Court has summari.y dismissed
this proposition in Marcus, 367 U.S. at 730-31, noting
that the analogy of obscene literature to gambling para-
phernalia or other contraband for search and seizure pur-
poses ‘‘does not... answer the appellants’ constitutional
claim, but merely restates the issue whether obscenity may
be treated in the same way.’’ Concluding that it may 1 Jt,
the Court emphasized that because of the sensitive nature
of First Amendment determinations, ‘‘a State is not free
to adopt whatever procedures it pleases for dealing with
obscenity . . . without regard to the possible consequences
for constitutionally protected speech.”’ Id. at 751. See
also (Quantity of Copies of Books, 378 U.S. at 211-12.
Our discussion of the procedural irregularities of these
statutes and of the instant proceedings thereunder is not
a
a
App. 69
meant to imply that the RICO/CRRA provisions are sus-
ceptible of a saving construction by judicial interpretation.
Rather, we conclude that any such attempt to render the
statutes constitutional would create a complete incongruity
never intended by the legislature.
Our analysis of these statutes under the substantive
prior restraint doctrine has revealed that the sweeping
remedies they afford are for most purposes patently un.
constitutional. Some courts in considering the constitu-
tionality of nuisance abatement statutes and similar meas-
ures as applied to obscenity have avoided the constitutional!
problem by means of a limiting construction of the statute,
simply holding the statute inapplicable to obscenity as a
predicate offense. This avenue is not open here, as the
statutory scheme before us ¢. li itly creates a predicate
offense of obscenity. At best, v » could limit the operation
of these statutes to the seizure : ad forfeiture of particular
items alleged and subsequently adjudged to be obscene.
However, consideration of the procedural requirements of
the prior restraint doctrine indicates that grave constitu-
tional problems would even so continue to plague this ap-
plication of the statutes. The attempt to preserve the
statutes’ constitutionality by a narrowing construction,
therefore, would be an unnecessarily tortuous exercise, ere.
ating a provision anomalous in relation to the overall
operation of the RICO/CRRA statutes. Moreover, the
eviscerated version of the acts as applied to obscenity
would add nothing to the prosecutorial tools now afforded
by our criminal obscenity statute. We will not ascribe
to the legislative intent such an absurd result. Accordingly,
we conclude that the seizure orders against these defen-
dants and the statutes’ application to obscenity generally
App. 70
must be characterized as both substantively and procedur-
ally unconstitutional under the prior restraint doctrine:
as prior restraints of protected speech, or as impermissible
procedures for restraining speech which may or may not
he protected.
IV.
We note finally the constitutional infirmity of the
RICO/CRRA statutes under the O’Brien doctrine. Even
conceding to the state the validity of its central arguments
regarding the nature and purpose of this regulatory scheme,
we conclude that its sanctions are unconstitutional as ap-
plied to obscenity, given the availability of less restrictive
means in furtherance of the state’s legitimate purpose.
In United States v. O’Brien (1968), 391 U. %67, the
Supreme Court confronted a First Amendment challenge
to governmental regulation of an apparently content-neu-
tral nature, the federal prohibition against destruction of
selective service registration cards. The defendant, con-
victed under this statute for burning his draft ecard in
symbolic protest, challenged the punitive sanctions for his
politically expressive act on First Amendment grounds.
The Court in upholding the statute formulated a framework
for assessing the incidental impact of a general regulation
upon free expression, holding that:
a governmental regulation is sufficiently justi-
fied if it is within the constitutional power of the
Government ; if it furthers an important or substantial
governmental! interest; if the governmental interest is
unrelated to the suppression of free expression; and
if the incidental restriction on alleged First Amend-
ment freedoms is no greater than essential to the fur-
therance of that interest.
391 U.S. at 377.
App. 71
The Court thus refined the least restrictive means
doctrine applied in earlier First Amendment cases such
as Shelton v. Tucker (1960), 364 U.S. 479. Shelton involved
a challenge to an Arkansas statute requiring public school
teachers to file an annual affidavit disciosing all organiza-
tional affiliations and contributions. Dismissed for his
refusal to file such an affidavit, petitioner Shelton con-
tended that the statute exceeded the state’s legitimate pur-
poses. The Supreme Court agreed, observing that although
the state may have had a substantial interest in investigat-
ing the competence and fitness of teachers,
. . . that purpose cannot be pursued by means that
broadly stifle fundamental personal liberties when the
end can be more narrowly achieved. The breadth of
legislative abridgement must be viewed in the li¢ht
of less drastic means for achieving the same basic pur-
pose,
364 U.S. at 488.
O’Brien applies this principle to legislation which does
not on its face implicate First Amendment concerns such
as the associational rights asserted in Shelton, but which
incidentally affects free speech. The O’Brien decision fur-
ther addresses this problem in the context of symbolic ex-
pressive acts, or conduct which is ‘‘intertwined with ex-
pression,’’ Cox v. Louisiana (1966), 379 U.S. 559, 563, an
area in which the Court has employed a balancing approach
rather than the virtual presumption of unconstitutionality
applied to legislative abridgements of ‘‘pure speech.’’
The state relies on the O’Brien doctrine, asserting that
the RICO/CRRA provisions advance a compelling state
interest which should be balanced against the First Amend-
ment rights claimed by appellants. The state must there-
App. 72
fore characterize appellants’ operation of bookstores al-
leged to have purveyed obscenity as a course of conduct,
i.e., a ‘pattern of racketeering activity,’’ which is entitled
to a diminished level of constitutional scrutiny relative to
purely expressive activity.
Under well-established First Amendment principles,
we must reject this characterization. The commercial dis-
tribution of books, films and other expressive materials
prior to their adjudication as obscenity must be regarded
as communicative activity which the First Amendment pre-
sumptively protects. Any subsequent adjudication of ob-
scenity removes the subject materials from the sphere of
constitutional protection but does not alter the essential
communicative character of appellants’ activity in operat-
ing a bookstore or theater.
The state also asserts that the RICO/CRRA statutes
are motivated by a compelling state interest in curbing
‘racketeering activity’’ or ‘‘organized crime.’’ The stat-
utes as applied here, however, define ‘‘racketeering’’ solely
in terms of the predicate offense of obscenity. Their po-
tential operation to close bookstores and theaters upon a
showing of two such violations triggers a heightened degree
of scrutiny which requires that we realistically construe
the state purpose underlying the obscenity application of
these statutes to be the suppression of obscenity.
The regulation of obscenity does clearly fall within
the state’s constitutional authority under its police powers.
Paris Adult Theatre I v. Slaton, 413 U.S. at 68-69, and
thus complies with the initial requirement of O’Brien. We
further assume for the sake of this discussion that com-
batting obscenity represents a substantial governmental
App. 73
interest, as the Supreme Court has implied. Jd. Because
obscenity is unprotected by the First Amendment, we also
grant the state’s contention that the governmental interest
in eradicating obscenity is unrelated to the suppression of
free speech. The challenged statutes, however, run afoul
of the final prong of the O’Lrien test—they are unduly
suppressive in light of the state interest involved.
A number of courts in striking down measures similar
in their operation and effect to the RICO/CRRA statutes
have noted the availability of less draconian means of
achieving the state’s goal. See, e.g., Sanders v. State
(1974), 231 Ga. 608, 612, 203 S..2d 153, 156. Emphasizing
the mandate of the l’irst Amendment that the state employ
‘‘sensitive tools’’ for such regulation, the courts have noted
that criminal obscenity prosecutions and precise injunctive
remedies are appropriate because narrowly tailored to the
legitimate goal of removing from circulation particular
items adjudged to be obscene. Here, in contrast, the sweep-
ing injunetive and forfeiture remedies threaten to effect
the closure of any bookstore or theater which has twice
disseminated obscenity. Their impact upon protected ma-
terials is undeniably direct and severe.
In many respects, our analysis of the statutes’ over-
breadth under the O’Brien test intersects with our dis-
cussion of their overbreadth under the prior restraint doc-
trine. In the latter context, we have concluded that the
regulatory scheme with its seizure and forfeiture provi-
sions constitutes a prior restraint, void for overbreadth
because it inhibits the distribution of protected as well as
unprotected expression. The O’Brien approach similarly
focusses on the manner in which the statute impacts upon
App. 74
protected expression, but does not depend upon a deter-
mination. that these statutes impose a prior restraint.
Rather, O’Brien provides an alternative rationale for our
holding that these statutes are unconstitutional as applied
to obscenity: their dramatic impact upon protected ex-
pression is more severe than essential to the furtherance
of the state’s interest in curtailing the distribution of un-
protected materials.
The recent case of J-R Distributors, Inc. v. Eikenberry
(9th Cir. 1984), 725 F.2d 482 is illustrative of the constitu-
tional defects of this statutory scheme from the O’Brien
perspective. In J-R Distributors, the Court of Appeals in-
validated the Washington anti-obscenity statute, partly on
grounds that it impermissibly provided for unlimited civil
fines based on the total profits of an establishment deemed
a moral nuisance due to the distribution of obscenity. Such
fines would therefore, the court observed, ‘‘be based on
profits from the sale of protected materials in a place that
is a moral nuisance solely because obscene materials were
also sold or exhibited there.’’ 725 F.2d at 494. Because
of the regulation’s consequences for constitutionally pro-
tected speech, the court held,
. . « it is impermissible, in an anti-obscenity statute,
to provide that the amount of the fine shall be based,
even in part, on the proceeds from constitutionally
protected material... .
By focusing on the place where the obscene materials
are sold or exhibited rather than the unprotected ma-
terials themselves, the civil fine provision endangers
protected speech.
Id.
et ee ee
App. 75
The court in J-R Distributors draws a tellin» analogy
beiween this unlimited civil fine provision and anti-obseen-
ity padlocking remedies. While the latter have been con-
sistently declared unconstitutional principally on grounds
of the familiar presumption against prior restraints, both
remedies ‘‘have the effect of preventing the dissemination
of protected speech simply because obscene speech originat-
ed from the same location.’’ Jd. at 495, and it is this effect
which renders all such remedies constitutionally objection-
able. Addressing a construction which the state attempts
to bestow upon the regulatory scheme in the present case,
the court observes:
It may be argued that the protected speech is not
being punished but that it only serves as a measure
of the appropriate punishment. Such an argument is
not persuasive. The crucial point is that free speech
is far too sensitive a subject matter to serve as the
measurement for civil or criminal penalties.
Id.
Although the court in J-R Distributors does not ex-
plicitly cite O’Brien, it meticulously employs the O’Brien
framework in analyzing the First Amendment issue. The
court first notes the state’s constitutional power to regu-
late nuisances, an exercise of the police power which the
courts have consistently treated as a legitimate or substan-
tial state interest. Observing that the unlimited fine pro-
vision applies uniquely to businesses affected by the anti-
obscenity statute, whereas the state’s general nuisance
statute sets forth minimum and maximum civil penalties,
the court questions whether such differential treatment
‘* ‘suggests that the goal of the regulation is not unrelated
to the suppression of expression ;’ ’’ such a goal is of course
App. 76
presumptively unconstitutional. Jd. (quoting Minneapolis
Star & Tribune Co. v. Minnesota Commissioner of Revenue
(1983), 103 S.Ct. 1365, 1375). Finally, the court implicitly
applies the last prong of the O’Brien test, concluding that
the basing of fines on profits from the sale or exhibition of
constitutionally protected materials is unnecessary to the
achievement of the legitimate state goa] of suppressing ob-
scenity as a moral nuisance. Rather, the state ‘‘could have
achieved its legislative goals by more carefully tailored
means that would be less restrictive of free expression,’’
the court coneludes, citing Shelton v. Tucker. Id. at 496.
This application of the least restrictive means stan-
dard is equaily apposite to the eases before us. Even
if we were to accept the state’s characterization of the
confiseatory RICO/CRRA remedies as imposing an in
rem penalty for past criminal conduct rather than a prior
restraint, J-R Distributors teaches that the consequences
of this regulation for protected speech are constitutionally
unacceptable. Any such punishment for obscenity viola-
tions must be calibrated to the particular distribution of
obscenity and must not implicate the distribution of non-
obscene materials or profits from the sale thereof. The
RICO/CRRA provisions for seizure and forfeiture of
entire bookstores or theaters, including films, publications,
and the neutral instrumentalities for their dissemination,
or for the closure of such establishments by means of
license revocation, ete., represent an unduly suppressive
response to the problems occasioned by obscenity.
We therefore conclude that, however incidental such
restrictive effects may be to the general regulatory
scheme, the RICO/CRRA remedies as the statutes are
applied to obscenity directly and necessarily inhibit the
App. 77
dissemination of materials protected by the First Amend-
ment. These broad remedies are not essential to the ad-
vancement of the state’s interest in suppressing obscenity,
which may be accomplished by the less restrictive means
of criminal prosecutions and injunctive remedies against
specified obscene materials. Under the O’Brien doctrine,
therefore, the challenged provisions are inconsonant with
the requirements of the First Amendment.
V.
In passing upon the constitutionality of these statutes,
we are mindful of the current climate of opinion and of
political pressures to close adult bookstores and similar
establishments. It is the function of this and other courts,
however, to insulate basic constitutional guarantees from
the temporary vagaries of political expediency and from
the vicissitudes of public opinion. Although constitutional
doctrines may evolve in response to changing social con-
ditions, we may not sacrifice principles nurtured over cen-
turies to the fleeting passion of the hour.
Many find sexually-explicit films and publications un-
palatable; to others they represent a valuable source of
entertainment. Unless and until such materials are ad-
judged to be obscene, they are entitled to the full protec-
tion of the First Amendment and of Article I, §9 of the
Indiana Constitution. The availability of adult materials,
however controversial, is an accommodation we make to
the maintenance of a pluralistic, democratic society. The
enduring value and ultimate test of First Amendment prin-
ciples, as Justice Holmes observed, is ‘‘not free thought
for those who agree with us, but freedom for the thought
App. 78
that we hate." United States v. Schwimmer (1929), 279
U.S. 644, 654-55 (dissenting opinion).
The RICO CRRA statutes as applied to the predicate
offense of obscenity inherently lend themselves .o consti-
tutional abuses both flagrant and insidious. Although adult
bookstores and theaters may be dispersed through zoning
regulations, sexually-oriented entertainment may not be
regulated out of existence in a particular locality. Young
vr. American Mini Theaters (1976), 427 U.S. 50; see also
Schad v. Borough of Mount Ephraim (1981), 452 US. 61;
Avalon Cinema Corporation v. Thompson (1981), 667 F.2d
609. Yet local prosecutors may employ the RICO/CRRA
provisions to padlock and seize the contents of one book-
store after another until by direct application or by chill-
ing effect, the state has entirely eradicated such establish-
ments. Between the first such closure and the last we can
draw no meaningful distinction. ;
Moreover, the very ‘‘neutrality’’ which the state
claims for the impact of the injunctions and forfeitures
under these statutes enhances the potential for their abuse.
In the guise of a telling argument, the state concedes that
the ob: -enity of the seized inventories of books, magazines,
aid films is irrelevant and need not even be alleged. This
argument reflects an accurate reading of the statutes but
also reveals the deeply-flawed nature of the regulatory
scheme as a response to obscenity. May avant-garde book-
sellers and theaters be padlocked and forfeited to the state
upon a showing that alongside literary, political, and cine-
matic classics, they have twice disseminated controversial
works subsequently adjudged to be obscene? Our entire
foregoing discussion may be distilled into the conclusion
App. 79
that the guarantees of the First Amendment mean nothin z
if the state may arrogate such discretion over the contin.
ued existence of bookstores and theaters. The potency of
the prosecutorial weapon and the threat it poses to the
legitimate exercise of First Amendment freedoms obvi-
ously exceed the bounds of constitutionally permissible
regulation.
In striking down the prior restraint imposed upon a
newspaper in Near v. Minnesota, 283 U.S. at 718, the Court
quoted James Madison:
Some degree of abuse is inseparable from the proper
use of everything, and in no instance is this more true
than in that of the press.... [I|t is better to leave a
fow of its noxious branches to their luxuriant growth,
than, by pruning them away, to injure the vigour of
those vielding proper fruits.
his principle remains vital one today ; the rights of those
espousing unpopular causes and controversial views must
be upheld, or the rights themselves lose all security. Nor
may the state override this principle in the context of
obscenity prosecutions, as the Court has observed in Bon-
tam Books, 372 U.S. at 66:
_.. the Fourteenth Amendment requires that regula-
tion by the States of obscenity conform to proceedures
that will ensure against the curtailment of constitu-
tionally protected expression, which is often separated
from obscenity only by a dim and uncertain line. It
is characteristic of the freedoms of expression in gen-
eral that they are vulnerable to gravely damaging yet
barely visible encroachments. Our insistence that reg-
ulations of obscenity scrupulously embody the most
rigorous procedural safeguards is therefore but a spe-
cial instance of the larger principle that the freedoms
App. 80
of expression must be ringed about with adequate bul-
warks .... (Citations omitted.)
These considerations infom the emphatic decisions of
other courts in striking down similar legislation and man-
date our conclusion that the RICO/CRRA provisions as
they pertain to the predicate offense of obscenity may
not constitutionally stand. Accordingly, we remand these
causes to the trial courts for proceedings consistent with
this opinion.
Miller, P.J. concurs ;
Conover, J. dissents with opinion
CONOVER, J.
" ‘DISSENTING OPINION
I dissent. The Indiana RICO/CRRA statutory scheme
passes constitutional muster.
Our legislature intended the RICO/CRRA statutes
should receive a broad construction, as does the federal
RICO statute, Russello v. U.S. (1983), — U.S. —, 104 8.Ct.
300-301, so as to better curb racketeering generally in this
state. Specifically as to the cases before us, it is apparent
our legislature intended RICO/CRRA to be a vehicle for
the suppression of obscene materials offered for sale to
the public if such materials are part of the assets of a
racketeering activity which the state seek: to eradicate.
Thus, the central questions in these interlocutory appears
are:
1. whether a state may confiscate obscene materials
when they are part of the assets of a racketeering
activity, and
App. 51
2. if so, whether the Indiana RICO/CRRA sta‘u‘ory
scheme passes constitutional muster in light of
the First Amendment.
l. Obscenity Subject to State Action
Prior to 1973, no clear-cut majority spoke for the
United States Supreme Court in obscenity cases. In that
year, however, a five to four majority spoke in three cases.
They are Miller v. California (1973), 413 U.S. 15; Paris
Adult Theatre I v. Slaton (1973), 413 U.S. 49, both de-
cided the same day, and Heller v. New York (1973), 413
U.S. 483, decided the following day. Thus, these cases are
the only reliable precedent for our purposes.
In Miller, the Supreme Court said
This much has been categorically settled by the
Court, that obscene material is unprotected by the
First Amendment (citing cases). ‘The First and
Fourteenth Amendments have never been treated as
absolutes [footnotes omitted }.’
Miller, 413 U.S. at 23. The majority here, in essence,
adopts the ‘‘absolutist’’ approach long advocated by Mr.
Justice Douglas. This school argues because the term ‘‘ob-
scenity’’ cannot be precisely defined, First Amendment
protection is absolute as to all printed or photographic ma-
terials, they are not subject to state action under any cir-
cumstances. This approach was discussed and rejected by
the Miller Court, cf. 413 US. at 27-28.
Obscene material is subject to state actions because
_... there are legitimate state interests at stake in
stemming the tide of commercialized obscenity, even
assuming it is feasible to enforce effective safegnards
against exposure to juveniles and to passersby. Rights
App. 82
and interests ‘‘other than those of the advocates are
involved.”’ citing ease) These include the interest of
the public in the quality of life and the total community
environment, the tone of commerce in the great city
centers, and, possibly, the public safety itself. The
Hill-Link Minority Report of the Commission on Ob-
scenity and Pornography indicates that there is at least
an arguable correlation between obscene material and
crime. (uite apart from sex crimes, however, there
remains one problem of large proportions aptly de-
seribed by Professor Bickel:
‘*It concerns the tone of the society, the mode, or
to use terms that have perhaps greater currency,
the style and quality of life, now and in the future.
A man may be entitled to read an obscene book in
his room, or expose himself indecently there... .
We should protect his privacy. But if he demands
a right to obtain the books and pictures he wants
in the market, and to foregather in public places—
disereet, if you will, but accessible to all—with
others who share his tastes, then to grant him his
right ts to affect the world about the rest of us,
and to impinge on other privacies. (Emphasis in
original). Even supposing that each of us can, if
he wishes, effectively avert the eye and stop the
ear (which, in truth, we cannot), what is commonly
read and seen and heard and done intrudes upon
us all, want it or not.’’. .. (Emphasis added.) As
Mr. Chief Justice Warren stated, there is a “‘ right
of the Nation and of the States to maintain a
decent society . . .,"’ (citing case) (dissenting
opinion ).
The sum of experience, including that of the past two
decades, affords an ample basis for legislatures to con-
clude that a sensitive, key relationship of human exis-
tence, central to family life, community welfare, and the
App. 83
development of human personality, can be debased and
distorted by crass commercial exploitation of sex.
Nothing in the Constitution prohibits a State from
reaching such a conclusion and acting on it legislative'y
simply because there is no conclusive evidence or em-
pirical data. (Emphasis supplied).
Miller, 413 U.S. at 57-60, 63. The states have a legitimate
interest in suppressing salacious matter. RICO/CRRA as
enacted and here applied, is Indiana’s legislative response
to obscenity offered for sale to the public when it consti-
tutes part of the assets of a racketeering activity.
Il The RICO/CRRA Statutory Scheme Constitu-
tional
The majority holds the RICO/CRRA statutes uncon-
sti‘utional under the facts of these cases ‘‘on three distinct
yet interrelated grounds’’, namely,
1. they operate as a prior restraint upon First
Amendment-protected materials,
2. they fail to comply with procedural safeguards re-
quired even for suppression of obscene materials,
and
3. they fail the less restrictive means test announced
in U.S. v. O' Brien (1968), 391 U.S. 367, for evalua-
tion of allegedly content-neutral state regulation
having an incidental impact upon free expression.
I believe the majority is simply wrong on each count.
The encapsulated facts before us are:
1. the complaints allege the appellants have engaged
in a pattern of racketeering activity as that term is
defined in the RICO statute, and the state seeks o
impose the remedies available to it under CRRA
upon the appellants so as to terminate their rack-
eteering activities;
App. 84
2. additionally, the State has moved for immediate
seizure of the defendants’ assets, as authorized
LC. 34-4-30.5-3(b) ; e 7
3. importantly, a judge of @ ~ourt of general juris-
diction has heard evidence and determined there
was probable cause for seizure in each case as
required by CRRA before the seizure of assets
took place; and
4. the assets seized consisted of furniture, fixtures,
bank accounts, display cases, file cabinets, office
machine aery and — items, and books, maga-
zines ion picture films, and video off
for sale to the public. a
The majority concludes because books, magazines, motion
picture films, and video tapes offered for sale to the public
at large were part of the assets seized, the RICO/CRRA
statutes are unconstitutional as to those materials. While
I agree with the majority we must never permit the slight-
est abridgement of free speech as guaranteed by the First
Amendment in any form ineluding statutory prior restraint,
it is readily apparent the materials here involved do not
enjoy First Amendment protection. They are nothing more
than pure, undiluted obseenity.
As the majority notes, the test for obscenity is sue-
cinetly stated in Miller. There the Supreme Court said
The basic guidelines for the trier of fact must be:
(a) whether ‘the average person, applying contempo-
rary community standards, would find that the work,
taken as a whole, appeals to the purient interest, (b)
whether the work depicts or deseribes, in a patently
offensive way, sexual conduct specifically defined by
the applicable state law, and (c) whether the work
taken as a whole, lacks serious literary, artistic, po-
litieal or scientifie value.
App. 85
Miller, 413 U.S. at 24. With this test in mind, I state the
facts presented to the trial judves in each of these cases
in some detail.
In 4447 Corp., the probable cause affidavit of an In-
dianapolis Police detective sergeant assigned to its Vice
branch was introduced as evidence. It recites he visited
one of the appellants’ establishments, the Adult Toy and
Gift Shop in Indianapolis. While there, he viewed sexually
explicit materials offered for sale, including magazines,
video tapes, sexual aid devices, and eight millimeter motion
picture films. He purchased two such films entitled ‘‘ Anal
Madness’’ and ‘‘Spin the Bottle’’. Each had sexually ex-
plicit cover displays. Review of these films revealed men
and women engaged in deviate sexual conduct and sexua!
intercourse. He then went to the ‘‘Live Peep”’ section of
the store and entered a ‘‘conversation booth’’ where he
talked by telephone to a female. After putting money in
a coin operated device as she directed, lights came on on
her side of the booth. After tipping the female at her sug-
gestion, she removed her clothing, laid on the floor, and
performed erotic gyrations calculated to titillate the view.
er sexually.
The detective then went to World Video in Indianapo-
lis, another of defendants’ establishments. There he saw
X-rated video tapes and eight millimeter films displayed
for sale. After negotiations, he purchased two films en-
titled ‘‘Sexual Negotiations’’ and ‘‘Afternoon Delight’’.
He asked the store manager to discount the video tape
‘‘Hot Summer Night’’, but she warned ‘‘it was pretty
rough.’’ He then left without the video tape, but called
another police officer to enter the establishment and identi-
fy the two persons with whom he had dealt. One of them
App. 86
told the identifying officer she was opening a new store
at 38th Street and Lafayette Road in Indianapolis. The
affiant’s review of the additional films he purchased at
World Video revealed men and women engaged in sexual
intercourse and deviate sexual conduct.
The next day affiant returned to the Adult Toy and
Gift Shop and purchased the films ‘‘ Big Load’’ and ‘‘Gyro
Sex’’. These two films also depicted men and women en-
gaged in sexual intercourse and deviate sexual conduct.
The same day another detective went to World Video and
purchased the video tape titled ‘‘Hot Summer Night’’. It
portrayed four men forcing a young female to perform
oral sex, sexual intercourse, and their beating of her with
a belt.
Three days later, another detective went to the Plaza
Entertainment Center near 38th Street and Lafayette Road
in Indianapolis. Although the business appeared to be
open, the detective discovered upon entering there were
several construction workers present. However, sexually
explicit magazines, films and other materials were dis-
played for sale. Upon inquiry, one worker told the de-
tective the store would not be open until Monday. He then
showed the detective the ‘‘live peep’’ and mini theater sec-
tions, indicating the theater portion would not be completed
until December.
Based upon those facts, his examination of other docu-
ments, and his numerous investigations into businesses of
this nature, the detective sergeant stated he reasonably
believed all three locations were under common ownership
and control, part of the same enterprise, and being operated
by the various corporations and individuals named as de-
App. 87
fendants in the ease in a manner violative of the Indiana
RICO statute.
In Ft, Wayne Books, the prosecutor sought seizure of
assets under facts paralleling those in 4447 Corp. However,
probable cause in /’'t. Wayne Books additionally was based
upon nineteen convictions of these corporations for dis-
tributing obscene matter for consideration and nineteen
convictions of individuals who acted as agents of those
corporations for the same offenses. Such evidence clearly
demonstrates two or more incidents of racketeering activity,
and the obscene nature otf the materials at issue in each
case.
Although the First Amendment does not protect ob-
scene materials as a limitation on the pelice power of the
states under the Fourteenth Amendment, Paris Adult
Theater I, 413 U.S. at 54; Miller, 413 U.S. at 23-25; Kois
v. Wisconsin (1972), 408 U.S. 229, 230, they are entitled
presumptively to First Amendment protection initially,
simply because they consist of books, magazines, movies,
and video tapes. The constitutional rub comes at this point.
To pass constitutional muster, a statutory scheme seeking
to suppress obscene matter must also leave undisturbed
those materials which qualify for First Amendment pro-
tection. It is on this point many prior statutory strategies
have been impaled upon the First Amendment.
Only a few of the scores of cases cited by the majority
bear directly upon the question of whether Indiana’s RICO/
CRRA statutory scheme falls within current constitutional
parameters.
In Freedman v. Maryland (1965), 380 U.S. 51, the
United States Supreme Court struck down a state scheme
App. 88
for the licensing of motion pictures because it did not re-
quire resolution of the obscenity question with reasonable
promptness by a judicial determination in an adversary
proceeding prior to imposition of a valid final restraint.
Id., 380 U.S. at 58. The Supreme Court later explained
its holding in Freedman in these words
The settled rule is that a system of prior restraint
‘“‘avoids constitutional infirmity only if it takes place
under procedural safeguards designed to obviate the
dangers of a censorship system.”’ .. .
We held in Freedman, and we reaffirm here, that
a system of prior restraint runs afoul of the First
Amendment if it lacks certain safeguards: First, the
burden of instituting judicial proceedings, and of
proving that the material is unprotected, must rest
on the censor. Second, any restraint prior to judicial
review can be imposed only for a specified brief period
and only for the purpose of preserving the status
quo. Third, a prompt final judicial determination must
be assured.
Southeastern Promotions, Ltd. v. Conrad (1975), 420 U.S.
546, 560, 95 S.Ct. 1239, 1247.' It further stated in that
decision the F'reedman rule applied not only to motion pie-
tures and live plays, it also applied to materials, cf. United
States v. Thirty-Seven Photographs (1971), 402 U.S. 363,
(customs agents seized imported materials) and Blount
. In this case a municipal board denied the promoters of
the musical “Hair” use of a municipal theatre. The board made
that determination because of outside reports it had received
“the production would not be in the best interest of the com-
munity.” In a district court action after the promoter’s appli-
cation for preliminary injunction had been denied, the district
court sitting with an advisory jury determined “Hair” was ob-
scene and denied a permanent injunction.
App. 89
v. Rizzi (1971), 400 U.S. 410, (postal laws authorized postal
officials to restrict use of the mails).
In Southeastern Promotions the Supreme Court said
Procedural safeguards were lacking in several
respects. The board’s system did nof provide a pro-
cedure for prompt judicial review. (Emphasis sup-
plied.)
Southeastern Promotions, 420 U.S. at 561.
Does the Indiana statute CRRA provide procedural
safeguards ‘‘designed to obviate the dangers of a censor-
ship system’’ by providing ‘‘a procedure for prompt judi-
cial review”’ in cases where materials presumptively en-
titled to First Amendment protection are involved? Clearly
it does. LC. 34-4-30.5-3(b) provides
(b) When an action is filed under subsection
(a), the prosecutor may move for an order to have
property subject to forfeiture seized by a law enforce.
ment agency. The judge shall issue such an order
upon a showing of probable cause to believe that a
violation of IC 35-45-6-2 involving the property im
question has occurred. (Emphasis supplied.)
Not only are presumptive First Amendment materials so
protected, all property subject to immediate seizure re-
ceives like treatment under CRRA’s provisions. Judicial
review is required prior to seizure of any property.
Does the fact this judicial review is ex parte render
this procedure objectional under the Freedman rule? Again,
the answer is no.
App. 90
Chief Justice Burger, speaking for the majority,
cogently answered this question in Teller? He said
This Court has never held, or even implied, that there
is an absolute First or Fourteenth Amendment right
to a prior adversary hearing applicable to all cases
where allegedly obscene material is seized. (Citations
omitted.) In particular, there is no such absolute right
where allegedly obscene material is seized, pursuant
to a warrant, to preserve the material as evidence in
a criminal prosecution. In Lee Art Theater v. Virgina,
supra, the Court went so far as to suggest that it was
an open question whether a judge need ‘‘have viewed
the motion picture before issuing the warrant.’’ Here
the judge viewed the entire film and, indeed, witnessed
the alleged criminal act. It is not contested that the
judge was a ‘‘neutral, detached magistrate,’’ that he
had a full opportunity for independent judicial de-
termination of probable cause prior to issuing the
warrant, and that he was able to ‘‘foeus searchingly
on the question of obseenity.’’ (Citations omitted.)
In United States v. Thirty-Seven Photo 8
402 US. 363, 91 S.Ct. 1400, 28 LEd2d 922 van
and Freedman v. Maryland, 380 U.S. 51, 85 S.Ct. 734,
13 L.Ed.2d 649 (1965), we held that ‘‘beeause only a
judicial determination in an adversary proceeding
ensures the necessary sensitivity to freedom of ex-
pression, only a procedure requiring a judicial de-
termination suffices to impose a valid final restraint.’’
402 U.S., at 367, 91 S.Ct., at 1403, quoting 380 U.S
at 58, 85 S.Ct. at 738 (emphasis added). ¥
. . . Even in those eases, we did not require that
the adversary proceeding must take place prior to
2 In Heller, a New York Criminal Court judge watched
entire alleged! obscene film at a theatse at the request of an
— pt
" tim i i
—- a, Oe & was seized, used as evidence in
App. 91
initial seizure. Rather, it was held that a judicial de-
termination must oceur ‘‘ promptly so that administra-
tive delay does not in itself become a form of censor-
ship.’ (Citations omitted.) ... If such a seizure is
pursuant to a warrant, issued after a determination of
probable cause by a neutral magistrate, and, following
the seizure, a prompt judicial determination of the
obseenity issue in an adversary proceeding is avail-
able at the request of any interested party, the seizure
is constitutionally permissible. .. .
With such safeguards, we do not perceive that an
adversary hearing prior to a seizure by lawful war-
rant wou'd materially increase First Amendment pro-
tection. (Citations omitted.) The necessity for a prior
judicial] determination of probable cause will protect
against gross abuses, while the availability of a
prompt judicial determination in an adversary pro-
ceeding following the seizure assures that difficult
marginal cases will be fully considered in light of
First Amendment guarantees, with only a minima!
intereference with publie circulation pending litiga-
tion.
Heller, 413 U.S. at 489, 492-493, 93 S.Ct. at 2793, 2795.
From my review of these eases, I perceive the rule to
be when a non-judicial determination of obscenity is made
in First Amendment cases, the statutory scheme involved
must place the onus on the determining authority to carry
the proceedings promptly forward to a final judicial de-
termination of the obscenity question after an adversarial
hearing. The defendant is not required to take the initia-
tive in such cases. The rule is otherwise, however, when
the proceedings at issue are initially begun, as here, in
a judicial setting. In such cases the procedural scheme
must provide for
(a) an initial determination the materials to be seized
are, in fact, obscene, and
App. 92
(b) assurance a prompt fine! judicial determination
as to obscenity is readily available to any in-
terested party.
However, there is no onus on the plaintiff, after the initial
ex parte determination, to push the matter to a fina! hear-
ing on the obseenity issue.
As to the availability of a prompt final hearing under
RICO/CRRA, the seizure provisions are but another form
of civil attachment. On that subject, Ind. Rules of Civil
Procedure, Trial Rule 64 reads, in part
(A) Ancillary remedies to assist in enforcement
of judgment. At the commencement of and during
the course of an action, all remedies providing for
seizure of .. property are available under the cir-
cumstances and in the manner provided by law and
existing at the time the remedy is sought.
The remedies thus available include, without limi-
tation, . . . attachment . . . or equivalent legal or
equitable remedies, however designated . . .
CRRA provides a civil remedy to the state for the pursuit
of racketeering assets. Thus, the provisions of Indiana’s
civil attachment statute, LC. 34-1-11-1, et seq., were and
are available to the appellants at anytime.’ LC. 34-1-11-33
reads in part
three days later, but dilatory motions instead of prompt-
ly seeking the final adversarial on the ol cenity question
to which they were, and are, , as noted in the main text.
App. 93
Any defendant against whom an order of attach-
ment has been issued may, after appearing to the
action, move to have the attachment discharged and
restitution awarded of any property taken under it;
Under this statutory scheme, a prompt final adversarial
hearing on the obscenity question was available to ap-
pellants. In both 4447 Corp. and Ft. Wayne Books the
appellants have filed dilatory motions rather then seek
the final adversarial hearing to which they are entitled.
Similar facts were present in Heller. The Court there
said
A judicial determination of obscenity, folloWing a
fully adversary trial, occurred within 48 days of the
temporary seizure. Petitioner made no pretrial mo-
tions seeking return of the film or challenging its
seizure, nor did he request expedited judicial con-
sideration of the obscenity issue, so it is entirely
possible that a prompt judicial determination of the
obscenity issue in an adversary proceeding could have
been obtained if petitioner had desired. Although we
have refrained from establishing rigid, specifie time
deadlines in proceedings involving seizure of allegedly
obscene material, we have definitely excluded from
any consideration of ‘‘promptness’’ those delays
caused by the choice of the defendant. (Citations
omitted.) In this case, the barrier to a prompt ju-
dicial determination of the obscenity issue in an ad-
versary proceeding was not the State, but petitioner's
decision to waive pretrial motions and reserve the
obscenity issue for trial. Cf. Kingsley Books, Inc.
v. Brown, 354 US., at 439, 77 S.Ct., at 1326. (Empha-
sis supplied and footnote omitted.)
Heller, 413 U.S. at 490-491. Thus, delay in a prompt final
adversary hearing on the obscenity question in both the
App. 94
eases before us is chargeable to the appellants not the
appellees.
The majority ignores the facts before us when it says
in section IIT of its opinion ‘‘the protected or unprotected
nature of the speech remains to be determined... .’’ The
character of these materials initially has been determined
by a disinterested magistrate in each case. They are ob-
seene. Because the khICO/CRRA statutory system man-
dates an initial judicial hearing prior to seizure, and any
interested party is assured of a prompt final hearing on
the obscenity question, it is constitutional.
The majority eschews Heller calling it inapplicable
here because it involved only one film which was held by
the state as evidence to be used in a later prosecution.
Rejection of Heller is unwarranted because it was intended
to be precedential authority for cases involving larger
quantities of obscene materials, per note 7 of that opinion.
Referring to Marcus and Quantity of Books, this note
7 reads
In particular, Marcus involved seizure by police
officers acting pursuant to a general warrant of 11,000
copies of 280 publications. 367 o.s., at 723. Unlike
this case, there was no independent judicial determina.
tion of vbscenity by a neutral, detached magistrate,
nor were the seizures made to preserve evidence for
a criminal prosecution. Jd., at 732. The sole purpose
was to seize the articles as contraband and to cause
them ‘‘to be publicly destroyed, by burning or other-
wise.’’ Jd., at 721 n. 6. In A Quantity of Books v.
Kansas, 378 U.S. 205 (1964), 1,715 copies of 31 publi-
cations were seized by a county sheriff, also without
any prior judicial determination of obscenity and,
again, for the sole purpose of destroying the publica-
App. 95
tions as contraband. /7¢., at 206-209. (Emphasis sup-
plied.)
Heller, 413 U.S. at 491. As things now stand in these
cases, the materials in question have been stripped of
their presumptive First Amendment protection. By ju-
dicial decree, they constitute obscene matter no more en-
titled to First Amendment protection than a sack of door-
knobs.
A. RICO/CRRA Has No ‘Chilling Effect’’
on First Amendment Rights
The majority asserts RICO/CRRA has a ‘‘chilling
effect’ upon First Amendment rights. Again, I disagree.
Such contention is inapplicable her
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