In the case of City News and Novelty, Inc. v. City of Waukesha (2000), the US Supreme Court addressed a dispute over First Amendment rights related to adult-oriented businesses. The plaintiff, City News and Novelty, Inc., operated an adult bookstore in Waukesha, Wisconsin and challenged a city ordinance that required such establishments to renew their licenses annually. The company argued this process was unconstitutional as it allowed for arbitrary denial by local authorities without providing sufficient legal safeguards or opportunities for judicial review. The Supreme Court ruled in favor of the defendant - the City of Waukesha - stating that while freedom of speech is protected under the First Amendment, cities have legitimate interests in regulating certain types of businesses due to potential secondary effects like crime or decreased property values. However crucially, they also emphasized that any licensing scheme must provide prompt judicial review if a license is denied.

In the dissenting opinion for City News and Novelty, Inc. v. City of Waukesha, Justice Stevens argued that the majority's decision to uphold a city ordinance requiring adult-oriented businesses to renew their licenses annually was an infringement on First Amendment rights. He contended that this requirement gave local officials too much discretion in deciding whether or not these businesses could continue operating from year to year, which could lead to arbitrary decisions based on personal biases rather than objective criteria. Furthermore, he disagreed with the majority's assertion that there were sufficient procedural safeguards in place to prevent such abuses of power because he believed they did not adequately protect against potential delays in license renewal processes which could effectively shut down a business without due process.