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Hamilton Amusement Center v. Verniero

July 21, 1998


Chief Justice Poritz and Justices Handler, Pollock, O'hern, and Garibaldi join in Justice COLEMAN's opinion. Justice Stein has filed a separate opinion Concurring in part and Dissenting in part.

The opinion of the court was delivered by: Coleman, J.

Argued January 22, 1998

On certification to the Superior Court, Appellate Division, whose opinion is reported at 298 N.J. Super. 230 (1997).

This appeal challenges the constitutionality of N.J.S.A. 2C:34-7c that restricts the size, number, and content of signs that sexually oriented businesses may display. The case calls for the sensitive balancing of the interests of sexually oriented businesses in free speech with the State's interest in minimizing the adverse secondary effects caused by those businesses. The Appellate Division found that the statute does not violate federal or state constitutional guarantees to freedom of speech and that the statute is not void for vagueness. 298 N.J. Super. 230 (1997). We granted certification, 150 N.J. 24 (1997), and now affirm.


For some time prior to August 1995, plaintiffs Hamilton Amusement Center, Inc., t/a Video Express, L.O.J., Inc., t/a The Emporium, Pynco, Inc., t/a Camelot Book Store, and Crescendo Book, Inc., t/a Carnival Books (collectively referred to as "Hamilton" or "plaintiffs") owned or operated sexually oriented businesses selling a variety of magazines, books and videotapes, including adult materials. Plaintiffs used large signs to advertise the types of products sold, operating hours, and the locations of entrances. On August 16, 1995, Governor Whitman signed Assembly Bill No. 252 (1994), L. 1995, c. 230, codified at N.J.S.A. 2C:34-6 and N.J.S.A. 2C:34-7, that directly affects those signs. N.J.S.A. 2C:34-6 defines the key words and phrases used in the legislation, and N.J.S.A. 2C:34-7 contains the restrictions on signage and the establishment of perimeter buffer requirements that triggered this litigation.

On September 3, 1995, plaintiffs instituted the present litigation challenging the constitutionality of the signage restrictions in N.J.S.A. 2C:34-7c. Subsection c provides: "No sexually oriented business shall display more than two exterior signs, consisting of one identification sign and one sign giving notice that the premises are off limits to minors. The identification sign shall be no more than 40 square feet in size." N.J.S.A. 2C:34-7c.

Plaintiffs alleged in their complaint that those restrictions violate the First Amendment to the United States Constitution and Article I, Paragraph 6 of the New Jersey Constitution. Plaintiffs also contended that the provision is unconstitutionally vague because it fails to define "identification sign." Finally, they alleged that N.J.S.A. 2C:34-7c violates their Fourteenth Amendment rights to equal protection because the statute targets only sexually oriented businesses. Plaintiffs sought declaratory and injunctive relief to prevent the State from enforcing N.J.S.A. 2C:34-7c.

The trial court determined that N.J.S.A. 2C:34-7c was a content-based restriction on speech and applied strict scrutiny. The court found the provision unconstitutional under Article I, Paragraph 6 of the New Jersey Constitution because the State failed to articulate a factual basis to establish the legitimacy of its asserted compelling state interests -- traffic safety and the protection of minors. Alternatively, the trial court found that the statute failed to survive the less onerous time, place, and manner analysis because it was not narrowly tailored to protect against the secondary effects of sexually oriented businesses. The trial court entered a permanent injunction on December 19, 1995.

The Appellate Division reversed, concluding that N.J.S.A. 2C:34-7c targets only commercial speech and therefore is not subject to strict scrutiny. Hamilton, supra, 298 N.J. Super. at 238. The Appellate Division reasoned that the protection of minors and the regulation of traffic safety are both substantial governmental interests, id. at 239-40, and that N.J.S.A. 2C:34-7c is not substantially broader than necessary because it allows two signs, does not proscribe other modes of advertisement, does not limit the material that may be displayed within the store, and does not place any significant limitation on what may be advertised on the two signs. Id. at 241.

The Appellate Division construed the sign requirements to permit affixing the street numbers of the property as required by federal postal regulations and to permit the posting of temporary political signs. Id. at 241 n.6. The Appellate Division also interpreted "identification sign" to include: the name of the establishment; its street number; its telephone number; its operating hours; and the general nature of the establishment. Id. at 242.


First, we address plaintiffs' contention that N.J.S.A. 2C:34-7c violates state and federal constitutional guarantees of free speech. The First Amendment to the United States Constitution provides that "Congress shall make no law . . . abridging the freedom of speech. . . ." U.S. Const. amend. I. The First Amendment restriction on governmental interference with free speech was made applicable to the states by the Fourteenth Amendment to the United States Constitution. U.S. Const. amend. XIV, § 1; 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 516, 116 S. Ct. 1495, 1515, 134 L. Ed. 2d 711, 736 (1996); Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S. Ct. 900, 903, 84 L. Ed. 1213, 1218 (1939).

Article I, Paragraph 6 of the New Jersey Constitution provides:

"Every person may freely speak, write and publish his sentiments on all subjects, being responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press." N.J. Const. art. I, ¶ 6. Because we ordinarily interpret our State Constitution's free speech clause to be no more restrictive than the federal free speech clause, Shelton College v. State Bd. of Educ., 48 N.J. 501, 518 (1967), "[w]e rely on federal constitutional principles in interpreting the free speech clause of the New Jersey Constitution." Karins v. City of Atlantic City, 152 N.J. 532, 547 (1998); see Bell v. Township of Stafford, 110 N.J. 384, 393 (1988) (stating that constitutional approach taken by United States Supreme Court when examining commercial speech conforms to our own). Two exceptions to the general rule, which are not involved here, are political expressions at privately-owned-and-operated shopping malls, New Jersey Coalition v. J.M.B., 138 N.J. 326 (1994), and defamation, Sisler v. Gannett Co., 104 N.J. 256, 271 (1986).


Our decision whether N.J.S.A. 2C:34-7c regulates only commercial speech will in turn determine the appropriate level of scrutiny to be applied. Plaintiffs argue that both commercial and political speech are impacted by the statute. They contend that even under the Appellate Division's construction of the statute to allow the posting of temporary political signs, they are prohibited from conveying political messages on the identification sign, from posting non-temporary political signs, and from posting signs related to religion or "everyday problems." Plaintiffs also contend that because the statute distinguishes between sexually oriented businesses and other businesses, strict scrutiny is appropriate. We find those arguments to be unpersuasive.

We begin our analysis by defining commercial speech. Commercial speech is "expression related solely to the economic interests of the speaker and its audience." Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 561, 100 S. Ct. 2343, 2349, 65 L. Ed. 2d 341, 348 (1980). It is "'speech proposing a commercial transaction.'" Id. at 562, 100 S. Ct. at 2349, 65 L. Ed 2d at 348 (quoting Ohralik v. Ohio State Bar Ass'n, 436 U.S. 477, 455-56, 98 S. Ct. 1912, 56 L. Ed 2d 444 (1978)); see also Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66-67, 103 S. Ct. 2875, 2880-81, 77 L. Ed 2d 469, 477-78 (1983) (holding that combination of following characteristics of communication "provides strong support" for Conclusion that communication is "properly characterized as commercial speech": advertisement, mention of specific product, and economic motivation).

N.J.S.A. 2C:34-7c restricts, rather than prohibits altogether, the signs that sexually oriented businesses may display. We find nothing to suggest that the statute restricts more than commercial speech, or that the Legislature contemplated that its application would extend beyond the commercial context. Although outdoor signs are often used to convey political, social, and commercial ideas, plaintiffs have made no showing of actual noncommercial use. Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 501, 101 S. Ct. 2882, 2889, 69 L. Ed 2d 800, 811 (1981). On the contrary, the record reveals the messages conveyed on plaintiffs' signs that predated the litigation are limited to business identification, the types of products sold, business hours, location of the video rental sections of the businesses, location of entrances, and parking information. Although plaintiffs could conceivably use their signs to convey noncommercial messages, they have not done so. We therefore decline to discuss political speech in a hypothetical case that is not before us. Furthermore, nothing in the legislative history suggests that the Legislature intended that the statute restrict political speech. We hold, therefore, that the statute applies only to commercial speech.


Our Conclusion that N.J.S.A. 2C:34-7c has as its purpose the regulation of commercial speech does not mean that no constitutional protection is afforded to plaintiffs. On the contrary, the First Amendment protects commercial speech when the threshold requirements are met: that the speech is not misleading and relates to lawful activity. Central Hudson, supra, 447 U.S. at 563-64, 100 S. Ct. at 2350, 65 L. Ed. 2d at 349; see Schad v. Borough of Mt. Ephraim, 452 U.S. 61, 65-66, 101 S. Ct. 2176, 2180-81, 68 L. Ed. 2d 671, 678-79 (1981) (recognizing First Amendment protection for sexually explicit speech that is not "obscene"); In re Anis, 126 N.J. 448, 456 (1992). It is a limited measure of protection, however, because the First Amendment "accords less protection to commercial speech than to other constitutionally-guaranteed expression." Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 72 (1985); Town Tobacconist v. Kimmelman, 94 N.J. 85, 125 (1983). The limited measure of protection afforded commercial speech is "'commensurate with its subordinate position in the scale of First Amendment values.'" Metromedia, supra, 453 U.S. at 506, 101 S. Ct. at 2892, 69 L. Ed. 2d at 814 (quoting Ohralik, supra, 436 U.S. at 456, 98 S. Ct. at 1912, 49 L. Ed. 2d at 444); Central Hudson, supra, 447 U.S. at 562-63, 100 S. Ct. at 2349-50, 65 L. Ed. 2d at 348-49.

Central Hudson articulated a four-part test for determining when regulating commercial speech does not violate the First Amendment:

[1 I]t at least must concern lawful activity and not be misleading. [2] Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine [3] whether the regulation directly advances the governmental interest asserted, and [4] whether it is no more extensive than is necessary to serve that interest.

[Central Hudson, supra, 447 U.S. at 566, 100 S. Ct. at 2350, 65 L. Ed. 2d at 351.]

Subsequently, in 44 Liquormart, the Supreme Court held that Rhode Island's complete ban on liquor price advertising violated the First Amendment. 44 Liquormart, supra, 517 U.S. at 516, 116 S. Ct. at 1515, 134 L. Ed. 2d at 736. Similarly, Central Hudson involved a total ban of forms of commercial advertising found to violate the First Amendment because the government failed to demonstrate that a more limited speech regulation would not have adequately served the governmental interest.

Although the present case does not involve a total ban on commercial expression, the governmental regulation must be examined under both the Central Hudson standard and the time, place, and manner test articulated in Clark v. Community for Creative Non-Violence, 468 U.S. 288, 293, 104 S. Ct. 3065, 3069, 82 L. Ed. 2d 221, 227 (1984). The time, place, and manner restrictions on protected speech are valid provided they "are justified without reference to the content of the regulated speech, that they are narrowly tailored to serve a significant governmental interest, and that they leave open ample alternative channels for communication of the information." Ibid. Because the Central Hudson and Clark standards are closely intertwined in this case, we will conduct the two analyses simultaneously. City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 46, 54-55, 106 S. Ct. 925, 928, 932, 89 L. Ed. 2d 29, 37, 42 (1986).

In addition to concluding that N.J.S.A. 2C:34-7c targets only commercial speech, we are also persuaded that the statute is content-neutral. A statute or ordinance is considered to be content-neutral when the legislature's predominant concern is with adverse secondary effects, such as those caused by sexually oriented businesses, and not with the content of the speech being restricted. Ward v. Rock Against Racism, 491 U.S. 781, 791, 109 S. Ct. 2746, 2754, 105 L. Ed. 2d 661, 675 (1989). An incidental effect on some speech does not change the content-neutral characterization. Ibid.

Having concluded that N.J.S.A. 2C:34-7c targets only commercial speech and that such speech is provided a limited measure of protection under the First Amendment, we are required to engage in an intermediate scrutiny of the restrictions imposed by N.J.S.A. 2C:34-7c. Florida Bar v. Went For It, Inc., 515 U.S. 618, 623, 115 S. Ct. 2371, 2375-76, 132 L. Ed. 2d 541, 549 (1995). Moreover, courts have generally analyzed statutes and ordinances restricting sexually oriented businesses under an intermediate level of scrutiny because of the unique secondary effects associated with those businesses. Young v. American Mini Theatres, Inc., 427 U.S. 50, 70, 96 S. Ct. 2440, 2452, 49 L. Ed. 2d 310, 326 (1976).

The intermediate scrutiny will be conducted pursuant to Central Hudson and Clark. "Unlike rational basis review [applied by the trial court in the present case], the Central Hudson [intermediate] standard does not permit [a court] to supplant the precise interests put forward by the State with other suppositions." Edenfield v. Fane, 507 U.S. 761, 768, 113 S. Ct. 1792, 1798, 123 L. Ed. 2d 543, 553 (1993). In this case, that means that the State cannot substitute another substantial interest for its assertion that N.J.S.A. 2C:34-7c is required to protect minors and to promote traffic safety. It may, however, advance other substantial interests in addition to those two.


Under a commercial speech analysis, first we must determine whether the speech at issue merits protection by examining whether the speech concerns lawful activity that is not misleading. Central Hudson, supra, 447 U.S. at 566, 100 S. Ct. at 2350, 65 L. Ed 2d at 351. There has been no suggestion that the commercial advertising challenged here is misleading or involves unlawful activity or obscene material. Therefore, under the threshold prong of the Central Hudson test the case before us involves protected commercial speech.

Next, we focus on Central Hudson's second prong, namely whether a substantial governmental interest is advanced by regulating the commercial speech involved here. We will combine that Discussion with our analysis under the first prong of the time, place, and manner test:

whether the regulation is justifiable without reference to content. In the trial court, the State argued that the statute served two substantial state interests: (1) traffic safety; and (2) the welfare of minors. Before the Appellate Division, the State expanded the list of secondary effects it sought to address with N.J.S.A. 2C:34-7c, arguing that sexually oriented businesses, as well as the signs that advertise their existence, generally detract from neighborhood stability and contribute to prostitution, crime, juvenile delinquency, deterioration in property values, and lethargy in neighborhood improvement efforts.

The burden is on the State to establish the existence of the substantial governmental interest it sought to advance through the signage regulation. To assist in meeting this burden, the State relies on an established rule of statutory interpretation:

Consistent with the judicial preDisposition in favor of the validity of legislation, courts will readily impute a proper governmental purpose or interest as the object to be served by the enactment, and, if need be, infer an adequate factual basis to support legislative regulations, even in the absence of particular purposes or specific findings being expressed by the lawmakers.

Nevertheless, if an enactment directly impinges on a constitutionally protected right, the presumption in favor of its validity disappears. Courts are far more demanding of clarity, specificity and restrictiveness with respect to legislative enactments that have a demonstrable impact on fundamental rights.

[Bell, supra, 110 N.J. at 394-95 (citations omitted).]

The government's failure to sufficiently substantiate its alleged substantial interests can be constitutionally fatal to a regulation. See, e.g., id. at 396 (striking down ordinance because of failure to reveal objectives or factual underpinnings); Basiardanes v. City of Galveston, 682 F.2d 1203, 1215-16 (5th Cir. 1982) (finding that city had failed to prove justifiable interest in regulation prohibiting advertising by adult theaters because there was no evidence that city conducted careful study of effects of adult theaters). The First Amendment, however, does not require a legislative body "to conduct new studies or produce evidence independent of that already generated by other cities" before enacting a regulation affecting sexually oriented businesses, "so long as whatever evidence the [legislative body] relies upon is reasonably believed to be relevant to the problem" addressed. City of Renton, supra, 475 U.S. at 51-52, 106 S. Ct. at 931, 89 L. Ed 2d at 40. In Renton, the United States Supreme Court found that although the city had not conducted its own hearings on its locational zoning ordinance, it was entitled to rely upon another city's studies that had been placed in the record. Ibid. Unlike the city in Renton, however, when enacting N.J.S.A. 2C:34-7c, the Legislature did not place into the record the studies of this or any other jurisdiction; nor is there evidence that lawmakers relied on such studies. Similarly, the record does not reflect that the Legislature relied on decisional law from this or any other jurisdiction that discusses the detrimental secondary effects of sexually oriented businesses. Nonetheless, we will consider the precedents. Viewed collectively, a national consensus emerges regarding the secondary effects of sexually oriented businesses.

Both the United States Supreme Court and this Court have held that the government does not have a heavy burden to satisfy the substantial governmental interest prong of the Central Hudson standard. That burden may be satisfied in a variety of different ways. As recently as 1995, the Supreme Court stated that we do not read our case law to require that empirical data come to us accompanied by a surfeit of background information. Indeed, in other First Amendment contexts, we have permitted litigants to justify speech restrictions by reference to studies and anecdotes pertaining to different locales altogether, see City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 50-51, 106 S. Ct. 925, 89 L. Ed. 2d 29 (1986); Barnes v. Glen Theatre, Inc. 501 U.S. 560, 584-585, 111 S. Ct. 2456, 115 L. Ed. 2d 504 (1991) (Souter, J., Concurring in the judgment), or even, in a case applying strict scrutiny, to justify restrictions based solely on history, consensus, and "simple common sense," Burson v. Freeman, 504 U.S. 191, 211, 112 S. Ct. 1846, 119 L. Ed. 2d 5 (1992). Nothing in Edenfield, supra, a case in which the State offered no evidence or anecdotes in support of its restriction, requires more.

[Florida Bar, supra, 515 U.S. at 628, 115 S. Ct. at 2378, 132 L. Ed. 2d at 552.]

The Supreme Court has recognized that sexually oriented businesses can cause concrete and non-speculative side effects that government can target. These effects include promoting juvenile delinquency, contributing to an overall increase in crime, creating an environment that leads to the general deterioration of neighborhoods, and lowering property values. City of Renton, supra, 475 U.S. at 51, 106 S. Ct. at 931, 89 L. Ed. 2d at 40.

Additionally, this Court has held that a zoning ordinance need not articulate its objectives but may be sustained against constitutional challenge on the presentation in court of evidence supporting the governmental interest advanced by the ordinance. Zilinsky v. Zoning Bd. of Adjustment, 105 N.J. 363, 371 (1987). Thus, the substantial governmental interest prong can be satisfied by reference to studies pertaining to other jurisdictions, legislative history, consensus, and even common sense. The State maintains that the legislative history reflecting the State's substantial interest in ameliorating the negative effects of sexually oriented businesses consists of a position report submitted by Concerned Women for America, a floor speech given by the bill's sponsor, Assemblywoman Crecco, and the legislative history of N.J.S.A. 2C:33-12.2.

The Assembly Judiciary, Law and Public Safety Committee considered the Concerned Women report. That report focuses on the connection between violent, sexually explicit material and violent crime, but does not mention signage. The report does not address traffic safety or harm to minors; nor does it address the additional effects that were presented to the Appellate Division.

Assemblywoman Crecco's speech supports the State's assertion that the Legislature was concerned with the protection of minors and the reduction of traffic hazards. She explained that "[s]ign restrictions would be advantageous because multiple signs distract motorists and cause accidents." Crecco also referred to the welfare of minors twice in her speech. First, she mentioned minors in reference to buffer planting, but not in reference to signage restrictions. Second, she stated that "[w]e need to put the brakes on these sorts of element [sic] in all municipalities . . . . Parents are concerned about their children being exposed to these types of perverted establishments and their sordid activities." Assemblywoman Crecco, however, did not offer evidentiary support for her Conclusions.

Further support for the proposition that N.J.S.A. 2C:34-7c was enacted to protect the welfare of minors can be found in the text of the statute itself: N.J.S.A. 2C:34-7c requires a sign indicating that the premises are off-limits to minors. Moreover, because N.J.S.A. 2C:34-7c and N.J.S.A. 2C:33-12.2 *fn1 were part of the same package, consideration of the legislative history of the latter statute is appropriate. In Chez Sez VIII, Inc. v. Poritz, the Appellate Division held that N.J.S.A. 2C:33-12.2 was constitutional, relying on the pre-enactment evidence regarding private viewing booths. 297 N.J. Super. 331, certif. denied, 149 N.J. 409, and cert. denied, __ U.S. __, 118 S. Ct. 337, 139 L. Ed 2d 262 (1997). The history of N.J.S.A. 2C:33-12.2 was not a part of the record in this case at the trial level, but the ...

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