Owners of Georgia’s adult nightclubs are “guardedly optimistic” after a Fulton County Superior Court judge Monday declined to dismiss a lawsuit questioning the constitutionality of a new state tax on their businesses.
Judge Constance Russell told lawyers for the state and the club owners that they had a month to decide how they wanted to proceed after ruling that the lawsuit can move forward. Russell gave them the choice of going to trial or letting her decide the question.
The tax, approved by Georgia voters in 2016, requires that adult entertainment businesses pay $5,000 or 1 percent of their gross revenue, whichever is more, to finance the Safe Harbor for Sexually Exploited Children Fund and a commission that oversees the fund, which is designed to provide care and social programs for victims.
The law targets child sex traffickers and businesses that contribute to problems.
Lawyers for the Georgia Association of Club Executives, a consortium of Georgia strip clubs, argue that the tax on their businesses is unconstitutional because it targets free speech — in this case, the nudity exhibited by adult entertainers.
“There is a new national study that shows that adult nightclubs have no connection to sex trafficking at all, let alone minor sex trafficking,” nightclub attorney Gary Freed said. “I’m guardedly optimistic things are going to go our way.”
Russell approved a request from the state to remove Attorney General Chris Carr as a defendant in the case, but she said the suit could continue against state Department of Revenue Commissioner Lynn Riley, whose office collects the tax.
The state Attorney General's Office had asked the court to throw out the suit.
Attorneys for the clubs argue that no one under age 18 is allowed to work at an adult entertainment business and no one under age 21 is allowed to attend a club. Most child sex trafficking is done through the internet, they argue.
Senior Assistant Attorney General Alex F. Sponseller said the state is not alleging there is child sex trafficking occurring at Georgia strip clubs. But he said they attract child sex trafficking.
Some businesses submitted taxes under the new law earlier this year, but the Department of Revenue is delaying enforcement of the collection until the case is resolved.
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