Plaintiff claims that the prohibition is unconstitutional for yet another reason: it violates the Due Process Clause because it allegedly imposes strict liability on the owner for any violations by employees or customers. The Act states that a license or permit will be revoked “when an operator, employee, entertainer, or escort knew, or should have known, of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation.” Plaintiff asserts that an
establishment's license will be revoked if an
employee “whose knowledge cannot be imputed to the business itself” fails to take a reasonable effort to prevent alcohol use on the premises. Appellant's Br. at 52 (quoting
Wal Juice Bar, Inc. v. City of Oak Grove, Kentucky, No. 5:02CV–252–R, , at *10 (W.D.Ky.2008)). While the district court did not address this argument, its interpretive premise is without merit. As Shelby County explains, “[a] violation by an employee imperils that
employee's permit,” but “does not imperil the
operator's license, unless [the operator] ‘knew, or should have known of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation.’ ” Appellees' Br. at 38–39 (citations omitted; emphasis in original). We agree, as this interpretation of the challenged provision is also compelled by the general standard for revocation of operator's licenses and employees' permits. The Act provides for a revocation or suspension of an operator's license on the basis of an employee's actions only if an operator “has a duty to supervise conduct on the premises,” and “knew, or should have known, of the violation and authorized, approved, or, in the exercise of due diligence, failed to take reasonable efforts to prevent the violation.”
Tenn.Code Ann. § 7–51–1109(a)(2). Because the Act does not punish operators of adult establishments on the basis of strict liability, we affirm the district court's determination that no substantial likelihood of success on the merits of this claim was demonstrated.