Love Shack successfully argued that its business was not "an adult establishment" since it complied with the 60/40 ratio rule issued in the Department of Buildings Operations Policy and Procedure Notices (OPPN 4/98 and OPPN 6/98). The Court refused to accept the City's recently codified OPPN 1/00, designed specifically to include additional factors that the City could consider in order to determine whether an establishment has a "substantial portion" of its business devoted to adult entertainment, in order to stop businesses from creating "sham" compliance with the zoning resolution's definition of an "adult business".

The Bronx Supreme Court relied on the New York Court of Appeals decision in City of New York v. Les Hommes, 94 N.Y.2d 267 (1999) where that Court rejected a similar "sham" argument made by the City. The Appeals Court when defining "stock" refused to let the City inquire into whether a video is offered "solely for sale or whether the inventory of such videos is stable, constantly supplemented or profitable." The Appeals Court held, "[T]he City's own guidelines interpret the zoning resolution literally. Nowhere in the operative OPPN 6/98 are factors other than amount of stock and floor space mentioned. Instead, the focus is solely on the appropriate percentages of stock and floor and cellar space, and the City drew these at 40 percent."

Justice McKeon refused to accept the City's argument that language in Les Hommes invited the City to rewrite its guidelines to correct its omission in its 60/40 percentage rule. The additional factors in OPPN 1/00 such as "amount of transactions involving adult versus non-adult inventory, variety of adult titled versus non-adult, and accessibility of non-adult contrasted to adult" were found by the Court to be "designed to potentially punish an establishment whose earnings are greater from the sale of adult material than non-adult by threat of closure."Accordingly, the Court held, such a purpose facially seemed "to violate the fundamental tenet that the '[r]egulation must not be aimed at suppressing the content of the material shown or sold.' Matter of the Town of Islip v. Caviglia, 73 N.Y.2d 544 (1989). Moreover, the definitional specificity of 'substantial portion,' established by the 60/40 rule, will be eviscerated by an amalgam of factors designed to replace objective criteria with subjective whim and caprice."