Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SEA GIRT RESTAURANT v. BOROUGH OF SEA GIRT

January 14, 1986

SEA GIRT RESTAURANT AND TAVERN OWNERS ASSOCIATION, INC., A NONPROFIT ORGANIZATION OF THE STATE OF NEW JERSEY, 810 THE PLAZA, INC., A CORPORATION OF THE STATE OF NEW JERSEY, TRADING AS THE STADIUM, AND STADIUM REALTY CO. INC., A CORPORATION OF THE STATE OF NEW JERSEY, ROD'S OLDE IRISH ALE HOUSE, INC., A CORPORATION OF THE STATE OF NEW JERSEY, HARRIGAN'S INC., A CORPORATION OF THE STATE OF NEW JERSEY, T/A HARRIGAN'S PUB SEA GIRT OCEAN VIEW, INC., A NEW JERSEY CORPORATION, AVON HOTEL CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY PLAINTIFFS,
v.
BOROUGH OF SEA GIRT, NEW JERSEY MAYOR THOMAS BLACK, MAYOR OF THE BOROUGH OF SEA GIRT, COUNCILMAN WILLIAM MARRIOTT, COUNCILMAN FREDERICK McKNIGHT, COUNCILMAN MARK REGAN, COUNCILWOMAN MARGARET APPEL, COUNCILMAN RAYMOND HARTER, MEMBERS OF THE GOVERNING BODY OF SEA GIRT, HELEN B. BRASH, MUNICIPAL CLERK OF THE BOROUGH OF SEA GIRT, GENERAL IRWIN I. KIMMELMAN, ATTORNEY GENERAL OF THE STATE OF NEW JERSEY, DIRECTOR JOHN F. VASSALLO, JR., DIRECTOR OF ALCOHOLIC BEVERAGE CONTROL DEFENDANTS



The opinion of the court was delivered by: RODRIGUEZ

 O P I N I O N

 RODRIGUEZ, District Judge

 On November 5, 1985, in a referendum held in the Borough of Sea Girt, a majority of the voters in that community voted in favor of limiting the sale of alcoholic beverages in licensed retail facilities to the hours of 6:00 a.m. to midnight, seven days a week. *fn1" This vote reduced the hours alcoholic beverages could be served in Sea Girt by two hours a day. *fn2" Plaintiffs, the Sea Girt Restaurant and Tavern Owners Association, Inc. and six corporate holders of plenary retail consumption liquor licenses which operate restaurants and taverns in Sea Girt, immediately filed this civil rights suit pursuant to 42 U.S.C. § 1983 challenging the constitutionality of the referendum process and sought a temporary restraining order to prevent the new ordinance from going into effect pending the outcome of the lawsuit. In addition to injunctive relief, plaintiffs seek damages, attorneys fees and costs of suit. Defendants named in this action are the Borough of Sea Girt, its mayor, council people and municipal clerk (collectively the "borough defendants"), and the Attorney General of the State of New Jersey and the Director of the state's Alcoholic Beverage Control Board (collectively the "state defendants"). This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343. In an Order entered November 8, 1985, this Court denied plaintiffs' request for emergent relief and scheduled a hearing to resolve the constitutional questions. *fn3" Testimony was taken and legal arguments were heard on the question of liability on December 11 and 12, 1985.

 Plaintiffs contend that a liquor license is a property interest protected from arbitrary state or municipal action by the First and Fourteenth Amendments to the United States Constitution and that the New Jersey statute, N.J.S.A. 33:1-47.1 (Supp. 1985), which permits municipalities to regulate the hours of sale of alcoholic beverages by means of a public referendum, has diminished the value of their licenses and is unconstitutional in that it (1) deprives holders of liquor licenses of property interests without due process of law and (2) unduly burdens interstate commerce. In the alternative, plaintiffs assert that even if the referendum process is constitutional, the statute's five-year restriction on resubmission of referendum issues to public vote is an unconstitutional restriction on access to the ballot.

 For the reasons set forth below, this Court finds that N.J.S.A. 33:1-47.1, which provides for regulation of the hours of sale of intoxicating liquors by local referendum, does not violate plaintiffs' procedural or substantive due process rights protected by the Fourteenth Amendment to the Constitution, nor does the result of the referendum process place an undue burden on interstate commerce in violation of the Commerce Clause of the Constitution. In addition, the Court does not find it necessary to address plaintiffs' claim that the statute impermissibly interferes with freedom of association or access to the ballot as protected by the First Amendment because the Court construes the five-year prohibition on resubmission of referendum questions to apply only to resubmission of the "same" questions. Accordingly, N.J.S.A. 33:1-47.1 is constitutional and judgment is entered in favor of defendants.

 DISCUSSION

 Any analysis of a statute dealing with the regulation of the sale of alcoholic beverages must begin with a discussion of the Twenty-first Amendment to the United States Constitution. Section 2 of that Amendment provides:

 
The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

 This clause gives to the states broad powers to specify the times, places and circumstances under which liquor may be sold within their borders. Capital Cities Cable Inc. v. Crisp, 467 U.S. 691, , 81 L. Ed. 2d 580, 597, 104 S. Ct. 2694 (1984); California v. LaRue, 409 U.S. 109, 114, 34 L. Ed. 2d 342, 93 S. Ct. 390 (1972); Joseph E. Seagram & Sons v. Hostetter, 384 U.S. 35, 16 L. Ed. 2d 336, 86 S. Ct. 1254 (1966). The New Jersey courts have held consistently that this power to regulate the sale of alcoholic beverages is virtually limitless. Joseph H. Reinfeld, Inc. v. Schieffelin & Co., 94 N.J. 400, 412, 466 A.2d 563 (1983); Blanck v. Mayor and Borough Council of Magnolia, 38 N.J. 484, 490, 185 A.2d 862 (1962); Mazza v. Cavicchia, 15 N.J. 498, 505-506, 105 A.2d 545 (1954); G. & J.K. Enterprises, Inc. v. Div. of Alcoholic Beverage Control, 205 N.J. Super. 77, 82-85, 500 A.2d 43 (App. Div. 1985). In fact, the sale of such beverages may be prohibited altogether. Mazza, supra, 15 N.J. at 505; Eskridge v. Div. of Alcoholic Beverage Control, 30 N.J. Super. 472, 475, 105 A.2d 6 (App. Div. 1954).

 Plaintiffs concede that the state of New Jersey, and its municipalities by virtue of a delegation of this power, can regulate the hours during which alcoholic beverages may be sold. (Plaintiffs' brief, at 17-18). They complain, however, that the statutory scheme set forth in N.J.S.A. 33:1-47.1, which permits the hours to be set by majority vote on voter-initiated referendum, denies them due process of law. Although the gravamen of plaintiffs' complaint appears to be denial of procedural due process -- i.e., inadequate notice and no opportunity to be heard, plaintiffs also appear to be making a substantive due process argument -- i.e., the statute impermissibly infringes on a fundamental right. Although the parties blur the distinction between these two principles, the Court will analyze each separately, beginning with plaintiffs' primary claim, denial of procedural due process. The Court notes at the outset that courts, particularly trial courts, are reluctant to reach the conclusion that a statute is unconstitutional. State v. Cannarozzi, 77 N.J. Super. 236, 239, 186 A.2d 113 (App. Div. 1962); Cafe Gallery, Inc. v. State, 189 N.J. Super. 468, 474, 460 A.2d 227 (Law Div. 1983); Supermarkets General Corp. v. Sills, 93 N.J. Super 326, 336, 225 A.2d 728 (Ch. Div. 1966). A strong presumption favors the validity of legislation. Velmohos v. Maren Engineering Corp., 83 N.J. 282, 295, 416 A.2d 372 (1980).

 PROCEDURAL DUE PROCESS

 The Fourteenth Amendment's procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. Board of Regents v. Roth, 408 U.S. 564, 576, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972). Therefore, in order to establish an entitlement to certain procedural protections, plaintiffs first must establish that their interest in a liquor license constitutes a property interest. To have a property interest in a liquor license, plaintiffs "must have more than an abstract need or desire for it . . . . [They] must, instead, have a legitimate claim of entitlement to it." Id. at 577. Such interests in property can take many forms. See, e.g., Perry v. Sindermann, 408 U.S. 593, 33 L. Ed. 2d 570, 92 S. Ct. 2694 (1972) (teacher's tenure contract creates a property interest); Goldberg v. Kelly, 397 U.S. 254, 25 L. Ed. 2d 287, 90 S. Ct. 1011 (1970) (welfare benefits constitute property).

 In order to determine if a liquor license constitutes property for purposes of due process analysis, the Court must look to state law. Bishop v. Wood, 426 U.S. 341, 48 L. Ed. 2d 684, 96 S. Ct. 2074 (1976); Beckham v. Harris, 756 F.2d 1032, 1036 (4th Cir. 1985). As the Supreme Court stated in Board of Regents v. Roth, supra, 408 U.S. at 577:

 
Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law -- rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.

 Interests in liquor licenses in New Jersey are created and governed by statute, the Alcoholic Beverage Law, N.J.S.A. 33:1-1, et seq. (1940 and Supp. 1985). This statute provides that all licenses shall be for a term of one year and are not transferable except as follows:

 
In the case of death, bankruptcy, receivership or incompetency of the licensee, or if for any other reason whatsoever the operation of the business covered by the license shall devolve by operation of law upon a person other than the licensee, the director or the issuing authority may, in his or its discretion, extend said license for a limited time, not exceeding its term, to the executor, administrator, trustee, receiver or other person upon whom the same has devolved by operation of law as aforesaid. Under no circumstances, however, shall a license, or rights thereunder, be deemed property, subject to inheritance, sale, pledge, lien, levy, attachment, execution, seizure for debts, or any other transfer or disposition whatsoever, except to the extent expressly provided by this chapter. N.J.S.A. 33:1-26 (Supp. 1985). (emphasis added).

 This clear legislative pronouncement that liquor licenses are not property has been consistently supported by case law, all of the cases holding that a license to sell intoxicating liquor is not a contract nor is it a property right. Rather, it is a temporary permit or privilege to pursue an occupation which otherwise is illegal. Butler Oak Tavern v. Alcoholic Beverage Control Div., 20 N.J. 373, 381, 120 A.2d 24 (1956); Mazza, supra, 15 N.J. at 505; G. & J.K. Ent. v. Div. of Alcoholic Beverage, supra, 205 N.J. Super. at 82; Gober v. Pemberton Tp., 185 N.J. Super. 323, 335, 448 A.2d 516 (Law Div. 1982).

  However, this precise question, whether a liquor license should be characterized as "property" for federal purposes despite a legislative pronouncement to the contrary, has been addressed only once before by the New Jersey Supreme Court, and in a slightly different context from the present case. In The Boss Co., Inc. v. Bd. of Commissioners of Atlantic City, 40 N.J. 379, 192 A.2d 584 (1963), the state Supreme Court was faced with the question whether a liquor license and any rights thereunder were property rights to which a federal lien could attach pursuant to section 6321 of the Internal Revenue Code. The Court held that a liquor license in New Jersey constitutes "property" within the meaning and for the purposes of section 6321. Id. at 387. See also Reed v. Village of Shorewood, 704 F.2d 943 (7th Cir. 1983) (licensee's interest in renewal of liquor license constitutes a property right for purposes of the Fourteenth Amendment); Anderson v. Utah, 589 P.2d 1214 (Utah 1979) (licensing of a liquor business represents a substantial property interest to the licensee); Midwest Beverage Co. v. Gates, 61 F. Supp. 688 (N.D. Ind. 1945) (use of the liquor license has elements of property irrespective of what the legislature might declare about the license itself and therefore is property within the meaning of the due process clause of the Constitution); but see Shamie v. City of Pontiac, 620 F.2d 118 (6th Cir. 1980) (first-time liquor license applicant does not enjoy procedural due process rights under Michigan state law).

 In so holding, the Court looked beyond the language of the Alcoholic Beverage Law to examine the attributes of the license itself. The Court determined that the license has value: (1) personal value to the licensee from the right to engage in business and (2) monetary value to the licensee from the power to substitute, with municipal consent, another person in his place as licensee. Boss Co., supra, 40 N.J. at 384. The Court concluded:

 
The liquor license is a legal interest in the nature of an economic asset, created and protected by statute, and because it has monetary value and is transferable, either by consent of the licensee or by operation of law (in the special statutorily-described sense), it possesses the qualities of property. Id. at 385 (emphasis added).

 In addition, the Court noted that once granted, the license is protected against arbitrary revocation, suspension or refusal to renew. Id. at 384; see Blanck, supra, 38 N.J. at 489; N.J.S.A. 33:1-22, 33:1-31 (Supp. 1985).

 This same type of analysis was conducted by the Seventh Circuit when faced with the question of whether an Illinois liquor license is "property" for purposes of federal due process. Reed, supra, 704 F.2d at 948. In holding that a liquor license is property, that Court looked behind legislative "labels" to evaluate whether the license is property in a "functional sense." The Court focused on the fact that the license is "securely and durably the licensee's." Although good for only one year, it could be revoked only for cause, after notice and hearing, and subject to judicial review, and as the criteria for renewal were undemanding, it could be expected to be renewed as a matter of course. Id. at 948-49.

 This Court agrees with the sound reasoning of the New Jersey Supreme Court *fn4" and the Seventh Circuit and concludes that a New Jersey liquor license is an interest in property for purposes of federal due process analysis. A liquor license in New Jersey has an economic value both as an income-producing asset *fn5" and as an asset capable of being transferred in certain statutorily-proscribed circumstances. In addition, although the license is granted only for a term of one year, its suspension or revocation is governed by specific statutory procedures, N.J.S.A. 33:1-31, similar to those governing Illinois liquor licenses, and the license is protected against arbitrary suspension, revocation or refusal to renew. Blanck, supra, 38 N.J. at 489.

 The Court turns now to the question of whether the referendum process outlined in N.J.S.A. 33:1-47.1, by which municipalities may set the hours during which alcoholic beverages may be sold, fails to afford ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.