181 South Inc. v. Fischer

Opinions of the United

2006 Decisions States Court of Appeals

for the Third Circuit

7-18-2006

181 South Inc v. Fischer

Precedential or Non-Precedential: Precedential

Docket No. 05-1882

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 05-1882

181 SOUTH INC., a New Jersey Corporation

d/b/a MOULIN ROUGE,

Appellant,

v.

JERRY FISCHER, in his official capacity as Director, Division

of Alcoholic Beverage Control, Department of Law and Public

Safety, an Agency of the State of New Jersey; THE

MUNICIPAL BOARD OF ALCOHOLIC BEVERAGE

CONTROL OF THE CITY OF ATLANTIC CITY, NEW

JERSEY, an Agency of the City of Atlantic City, New Jersey, a

Municipal body,

Appellees.

On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 04-cv-05916)

District Judge: Honorable Robert B. Kugler

Argued January 12, 2006

Before: FUENTES, ROSENN * , and ROTH **, Circuit Judges.

*

This case was argued before a panel consisting of Judges

Roth, Fuentes, and Rosenn. Judge Rosenn passed away after

argument, but before the filing of this opinion. The decision is

(Filed July 18, 2006)

Stephen D. Holtzman

Holtzman & McClain

819 New Road

P.O. Box 869

Northfield, NJ 08225

Daniel A. Silver (Argued)

Silver & Silver

One Liberty Square

New Britain, CT 06051

ATTORNEYS FOR APPELLANT

Lorinda Lasus (Argued)

Office of the Attorney General of New Jersey

Division of Alcoholic Beverage Control

140 East Front Street

Trenton, NJ 08625

ATTORNEY FOR APPELLEE JERRY FISCHER

OPINION OF THE COURT

FUENTES, Circuit Judge.

The appellant, 181 South Inc. (“181 South”), operates an

adult cabaret called Moulin Rouge, located in Atlantic City, New

Jersey. The club holds a liquor license issued by the City of

Atlantic City pursuant to various New Jersey regulations. One of

the club’s main attractions involves topless dance performances

filed by a quorum of the panel. 28 U.S.C. § 46(d).

**Effective May 31, 2006 Judge Roth assumed senior status.

2

that include sexually explicit dance routines. Fearing that these

performances may result in substantial financial penalties or loss of

its liquor license, 181 South filed a complaint to challenge the

constitutionality of a state regulation prohibiting “any lewdness or

immoral activity” on liquor-licensed premises. On cross-motions

for summary judgment, the District Court denied 181 South’s

request for declaratory and injunctive relief and granted summary

judgment in favor of ABC Director Fischer. For the reasons that

follow, we will affirm the District Court and hold that the

Regulation, as construed by New Jersey courts, is not

unconstitutional.

I. Background

The New Jersey Legislature has delegated authority over the

manufacture, sale and distribution of alcoholic beverages in the

state to the New Jersey Division of Alcoholic Beverage Control

(the “ABC”) and has authorized the Director of the ABC, currently

appellee Jerry Fischer, to enforce the State’s rules and regulations

related to alcohol. See N.J. Stat. Ann. § 33:1-3 (2006); Id. § 33:1-

23. The ABC has broad authority in this realm and is statutorily

authorized to promulgate rules and regulations “as may be

necessary for the proper regulation and control of the manufacture,

sale and distribution of alcoholic beverages.” Id. § 33:1-39.

The ABC regulation at issue in this case reads, in relevant

part, as follows:

(a) No licensee shall engage in or allow, permit or suffer on

or about the licensed premises:

1. Any lewdness or immoral activity. . .

N.J. Admin. Code § 13:2-23.6(a)(1) (2005). The ABC enacted the

Regulation to reflect “the long-standing judicial recognition that

[“lewdness or immoral”] activity in conjunction with alcoholic

beverage consumption can give rise to unacceptable social

behavior.” 22 N.J. Reg. 1820 (June 18, 1990). ABC Director

Fischer has also stated in a Certification submitted to the District

Court that the purpose of the Regulation is to limit the harmful

secondary effects of the combination of alcohol and “lewd or

3

immoral activity,” including overconsumption of alcohol and

inappropriate physical contact between customers and dancers.

The New Jersey Superior Court, Appellate Division, has construed

the Regulation’s prohibition of “lewd or immoral activity” as

prohibiting entertainment where “‘the predominant object and

natural effect upon the observers-patrons of one portion of the

performance [is] erotic excitation.’” In re G & J.K. Enters., Inc.,

500 A.2d 43, 46 (N.J. Super. Ct. App. Div. 1985) (quoting Davis

v. New Town Tavern, 117 A.2d 415, 415 (N.J. Super. Ct. App.

Div. 1955)) (emphasis added).1

In May of 2003, the ABC cited 181 South for three separate

violations of the Regulation, which were deemed to have occurred

based on an undercover investigation by the state police. Though

there were alleged violations of other ABC rules and regulations,

what is important here is that the state police noted three female

adult entertainers on 181 South’s premises engaging in what the

police determined to be prohibited activity under the Regulation.

In one instance police observed an entertainer rubbing her breasts

and vagina while onstage. She then proceeded to straddle a patron,

pushing her breasts in his face and then rubbing her leg in the

patron’s pelvic area before rubbing his inner thighs with her hands.

Police also witnessed a second entertainer caressing her breasts and

massaging her vaginal area onstage. They then observed that

entertainer give a patron a one-on-one dance during which she

straddled him and pushed her pelvic area into his pelvic area to

simulate sexual intercourse. Finally, a third entertainer–from

whom one of the officers received a one-on-one dance–was seen

rubbing her breasts and massaging her vagina to simulate the act of

masturbation.

1

When interpreting a State regulation, we generally defer to

the interpretations of state trial or intermediate appellate courts.

See Nationwide Mut. Ins. Co. v. Buffetta, 230 F.3d 634, 637 (3d

Cir. 2000) (“The opinions of intermediate appellate state courts are

‘not to be disregarded by a federal court unless it is convinced by

other persuasive data that the highest court of the state would

decide otherwise.’” (quoting West v. Am. Tel &Tel., 311 U.S. 223,

237 (1940)).

4

Upon being cited for these violations, 181 South negotiated

a payment to the ABC in the sum of $10,000 in lieu of a suspension

of its liquor license.2 After it paid the negotiated fee, and prior to

reopening after a renovation, 181 South filed the instant lawsuit,

arguing that the Regulation is unconstitutional because it proscribes

protected forms of expression and fails to make clear what conduct

is or is not permitted on the premises of a liquor licensee. The

District Court granted summary judgment in favor of ABC Director

Fischer, holding the Regulation to be constitutional.3 This appeal

followed.4

II. Discussion

181 South contends that the District Court erred in finding

the Regulation constitutional and granting ABC Director Fischer’s

motion for summary judgment. On appeal it has raised four issues.

181 South claims that the District Court erred in rejecting 1) its

First Amendment, facial challenge to the Regulation; 2) its claim

that the Regulation is unconstitutionally overbroad; and 3) its claim

that the Regulation is unconstitutionally vague. In addition, 181

South asserts that the District Court erred in permitting the

2

Under the penalties set forth in a schedule at New Jersey

Admin. Code § 13:2-19.11(I), violations of the Regulation are

punishable by suspension of one’s liquor license for 30, 45, 60 or

90 days, or in some instances where there have been serial

violations, license revocation. Under New Jersey Admin. Code

§ 13:2-19.11(b), however, the “Director may suspend or revoke a

license, even for a first violation.”

3

Listed Appellee the Municipal Board had its Motion for

Summary Judgment denied without prejudice because it failed to

submit adequate briefing.

4

The District Court had federal question jurisdiction under

28 U.S.C. § 1331 and jurisdiction to address declaratory and

injunctive relief under 28 U.S.C. § 2201 and 28 U.S.C. § 2202. We

have jurisdiction pursuant to 28 U.S.C. § 1291. In reviewing

grants of summary judgment, our standard of review is plenary.

Hampe v. Butler, 364 F.3d 90, 93 (3d Cir. 2004).

5

Certification of Appellee Fischer to be used as a limiting statutory

construction of the Regulation. We address each issue in turn.

A. First Amendment Facial Challenge

We begin our analysis of the current state of First

Amendment protections as they relate to erotic dance in liquor-

licensed locations with California v. LaRue, 409 U.S. 109 (1972),

a Supreme Court opinion with facts similar to those present here.

In LaRue, the California Department of Alcoholic Beverage

Control had adopted regulations that prohibited the following

conduct, among others, on liquor-licensed premises:

• the actual or simulated “touching, caressing or fondling of

the breast, buttocks, anus or genitals”;

• the actual or simulated “displaying of the pubic hair, anus,

vulva or genitals”; and

• the permitting by a licensee of “any person to remain in or

upon the licensed premises who exposes to public view any

portion of his or her genitals or anus.”

Id. at 111-12. The Supreme Court rejected a First Amendment

challenge to the regulations. As the majority explained, “as the

mode of expression moves from the printed page to the

commission of public acts that may themselves violate valid penal

statutes, the scope of permissible state regulations significantly

increases.” Id. Paraphrasing United States v. O’Brien, 391 U.S.

367 (1968), the Court noted approvingly that in that case “the

extent to which ‘conduct’ was protected by the First Amendment

depended on the presence of a ‘communicative element.’” LaRue,

409 U.S at 117. The Court then observed that the California

regulations prohibited performances “that partake more in gross

sexuality than of communication.” Id. at 118. Importantly, the

Court observed that the regulations did not seek to ban all

performances they addressed, but only those performances that take

place in establishments licensed by the state of California to sell

liquor by the drink. Id.

In upholding the constitutionality of the regulations in

LaRue, the Court paused to observe that performances such as

6

those proscribed in California are not without First and Fourteenth

Amendment protection. However, the Court noted, “we would

poorly serve both the interests for which the State may validly seek

vindication and the interests protected by the First and Fourteenth

Amendments were we to insist that the sort of bacchanalian

revelries the [California] Department sought to prevent by these

liquor regulations were the constitutional equivalent of a

performance by a scantily clad ballet troupe in a theater.” Id.

In closing, the LaRue Court observed that, given the “added

presumption in favor of the validity of the state regulation in this

area that the Twenty-first Amendment [which repealed Prohibition

and granted states broad leeway over the regulation of intoxicating

liquors] requires, we cannot hold that the regulations on their face

violate the Federal Constitution.” Id.

Though LaRue’s holding remains good law, its reliance on

the Twenty-first Amendment was later undercut by 44 Liquormart

Inc. v. Rhode Island, 517 U.S. 484 (1996). There, the Court held

that “the Twenty-first Amendment does not qualify the

constitutional prohibition against laws abridging the freedom of

speech embodied in the First Amendment.” Id. at 516. The 44

Liquormart Court took care to note, however, that “the Court’s

analysis in LaRue would have led to precisely the same result if it

had placed no reliance on the Twenty-first Amendment.” Id. at

515. The Court observed that, without regard to states’ regulatory

authority over alcoholic beverages under the Twenty-first

Amendment, a given state may

prohibit the sale of alcohol in inappropriate locations.

Moreover. . . the States’ inherent police powers provide

ample authority to restrict the kind of “bacchanalian

revelries” described in the LaRue opinion regardless of

whether alcoholic beverages are involved.

Id. (citing Young v. Am. Mini Theatres Inc., 427 U.S. 50 (1976)

and Barnes v. Glen Theatre, Inc., 501 U.S. 560 (1991)).

Though the argument could be made that the Regulation is

constitutional because it falls under a state’s right “to prohibit the

sale of alcohol in inappropriate locations” and to “restrict the kind

7

of ‘bacchanalian revelries’ described in the LaRue opinion,” 5 we

decline to base our holding on this point. Rather, we agree with the

Seventh Circuit and conclude that “after 44 Liquormart[,] state

regulations prohibiting the sale or consumption of alcohol on the

premises of adult entertainment establishments must be analyzed

in light of American Mini Theatres and Barnes.” Ben’s Bar, Inc.

v. Vill. of Somerset, 316 F.3d 702, 712 (7th Cir. 2003); see also

Giovani Carandola, Ltd. v. Bason, 303 F.3d 507, 513 n.2 & 519

(4th Cir. 2002) (pointing out 44 Liquormart’s reliance on the

“leading cases addressing the proper secondary effects analysis of

ordinary public decency regulations,” American Mini Theatres and

Barnes, and noting that “the result in LaRue remains sound not

because a state enjoys any special authority when it burdens speech

by restricting the sale of alcohol, but rather because the regulation

in LaRue complied with the First Amendment”); Sammy’s of

Mobile Ltd. v. City of Mobile, 140 F.3d 993, 996 (11th Cir. 1998)

(noting that ordinances such as the one in LaRue are content-

neutral and, after 44 Liquormart, should be analyzed under the

immediate scrutiny test articulated in Barnes and O’Brien); Odle v.

Decatur County, 421 F.3d 386, 399 (6th Cir. 2005) (agreeing with

the “number of courts [that] have interpreted [44] Liquormart’s

reaffirmation of LaRue’s holding to mean that the LaRue

regulations would have survived intermediate scrutiny–and . . . that

they would have had to survive such scrutiny to comport with the

First Amendment”) (footnote omitted).

In American Mini Theatres, a case relating to adult

entertainment zoning ordinances, the Supreme Court declared that

“[r]easonable regulations of the time, place, and manner of

5

See BZAPS, Inc. v. City of Mankato, 268 F.3d 603, 608

(8th Cir. 2001) (determining that an adult entertainment liquor

regulation is constitutional based solely on LaRue); Sammy’s of

Mobile, Ltd. v. City of Mobile, 140 F.3d 993, 996 n.5 (11th Cir.

1998) (relying in part on LaRue in upholding an ordinance relating

to nude dancing in liquor-licensed locations); Giovani Carandola,

Ltd. v. Bason, 303 F.3d 507, 523 (4th Cir. 2002) (Niemeyer, J.,

dissenting) (noting that “LaRue remains binding precedent with

respect to similarly worded statutes”).

8

protected speech, where those regulations are necessary to further

significant governmental interests, are permitted by the First

Amendment.” 427 U.S. at 63 n.18. Barnes, a case involving a

public indecency statute as applied to nude dancing, adopted the

four-part O’Brien test for determining the constitutionality of a

government rule or regulation proscribing protected expressive

conduct. Such a rule or regulation is justified if 1) it is “within the

constitutional power of the Government”; 2) it “furthers an

important or substantial governmental interest”; 3) “the

governmental interest is unrelated to the suppression of free

expression”; and 4) “the incidental restriction on alleged First

Amendment freedoms is no greater than is essential to the

furtherance of that interest.” Barnes, 501 U.S. at 567 (quoting

O’Brien, 391 U.S. at 377).

Applying this test, the Regulation, as interpreted by the New

Jersey courts, does not violate the First Amendment. First, New

Jersey’s regulation of the sale of alcoholic beverages at

“inappropriate locations” falls within its general police power. 44

Liquormart, 517 U.S. at 515. Accordingly, the Regulation is an

exercise of power within New Jersey’s constitutional authority.

See Ben’s Bar, 316 F.3d at 722 (upholding a similar regulation on

this prong of the Barnes test). Second, it is well-established that

New Jersey’s interest in curtailing the “unacceptable social

behavior” that can arise in conjunction with adult entertainment is

important and substantial. See City of Erie v. Pap’s A.M., 529 U.S.

277, 296-97 (2000) (noting the importance of combating the

harmful secondary effects of nude dancing). Third, New Jersey’s

interest in enacting the Regulation is unrelated to the suppression

of free expression, because the Regulation does not prohibit

individuals from participating in “lewd or immoral activity.”

Rather, it only prohibits such activity from taking place on the

premises of liquor-licensed establishments. In other words, the

Regulation “is not a restriction of erotic expression, but a

prohibition of nonexpressive conduct (i.e., serving and consuming

alcohol)” on premises where such expression takes place. Ben’s

Bar, 316 F.3d at 726. Finally, the Regulation’s restriction on First

Amendment freedoms is no greater than is essential to the

furtherance of that interest. Indeed, it is tailored precisely to pursue

its stated purpose: the reduction of the “unacceptable social

9

behavior” that so often arises in conjunction with the combination

of erotic entertainment and alcohol. See Ben’s Bar, 316 F.3d at

727 (noting that “as a practical matter, a complete ban of alcohol

on the premises of adult entertainment establishments is the only

way the [municipality] can advance [its] interest” in “combating

the secondary effects resulting from the combination of nude and

semi-nude dancing and alcohol consumption”); Pap’s A.M., 529

U.S. at 301 (noting that the ordinance in question in that case,

relating to nude dancing, “regulates conduct, and any incidental

impact on the expressive element of nude dancing is de minimus”).

We are thus satisfied that the Regulation passes the Barnes test and

accordingly does not violate the First Amendment’s guarantee of

freedom of expression.

B. Overbreadth

181 South next contends that even if the Regulation is

constitutional under the Barnes test, it is unconstitutionally

overbroad on its face because it proscribes a substantial number of

legitimate expressions of First Amendment rights. In order to show

that a statute is unconstitutionally overbroad, 181 South must show

that the Regulation is “not readily subject to a narrowing

construction by the state courts” and that its “deterrent effect on

legitimate expression is both real and substantial.” Erznoznik v.

Jacksonville, 422 U.S. 205, 216 (1975). A limiting construction

may be found where a state court or enforcement agency has

opined as to how the statute should be interpreted. Ward v. Rock

Against Racism, 491 U.S. 781, 795-96 (1989).

As discussed above, the Regulation’s prohibition of “lewd

and immoral activities” on liquor-licensed premises has been

construed by the New Jersey Superior Court as prohibiting

entertainment where “the predominant object and natural effect

upon the observers-patrons of one portion of the performance [is]

erotic excitation.” G & J.K., 500 A.2d at 46. The G & J.K. court

also offered guidance to officials charged with enforcing the

Regulation by holding that exposing breasts and bare anal area to

patrons constitutes a violation of the Regulation. See id. at 48. 181

South’s overbreadth challenge therefore fails the Erznoznik test

because the Regulation has been narrowed by statements of

10

interpretation by state courts.

Moreover, under the second prong of the Erznoznik test, the

New Jersey courts’ narrowing construction of the Regulation limits

its reach mainly to entertainment similar to that shown at Moulin

Rouge. We are thus satisfied that the Regulation satisfies that

prong as well. See Broadrick v. Oklahoma, 413 U.S. 601, 615

(1973) (“particularly where conduct and not merely speech is

involved, we believe that the overbreadth of a statute must not only

be real, but substantial as well, judged in relation to the statute’s

plainly legitimate sweep”); see also Virginia v. Hicks, 539 U.S.

113, 122 (2003) (“The overbreadth claimant bears the burden of

demonstrating, ‘from the text of [the law] and from actual fact,’

that substantial overbreadth exists.”) (quoting N.Y. State Club

Ass’n v. City of New York, 487 U.S. 1, 14 (1988)).

C. Vagueness

181 South’s next contention is that the Regulation is

unconstitutionally vague. This claim fails as well. The Supreme

Court has held that “[a] plaintiff who engages in some conduct that

is clearly proscribed cannot complain of the vagueness of the law

as applied to the conduct of others. A court should therefore

examine the complainant’s conduct before analyzing other

hypothetical applications of the law.” Vill.of Hoffman Estates v.

Flipside, Hoffman Estates, 455 U.S. 489, 495 (1982) (footnote

omitted). As discussed above, the conduct observed on 181

South’s premises clearly falls within the ambit of the conduct the

Regulation proscribes at liquor-licensed businesses. Thus, the

Regulation was not vague as applied to 181 South, and we need not

hypothesize as to its potential vagueness in other cases.

D. The Fischer Certification

Finally, 181 South maintains that the District Court erred in

permitting the certification of ABC Director Fischer to be used as

a limiting statutory construction of the Regulation. Because we

believe that the Regulation is not unconstitutional based solely on

its construction by New Jersey courts, we need not reach this issue.

11

III. Conclusion

For the reasons stated above, we will affirm the District

Court’s grant of ABC Director Fischer’s motion for summary

judgment.

12