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Green Party of New Jersey v. Hartz Mountain Industries Inc.

August 03, 1999


Judges Petrella, Cuff and Collester.

The opinion of the court was delivered by: Petrella, P.j.a.d.


On appeal from Superior Court of New Jersey, Chancery Division, Hudson County.

Defendant Hartz Mountain Industries, Inc., doing business as The Mall at Mill Creek (Hartz or the Mall), appeals the grant of judgment in favor of the Green Party of New Jersey (Green Party) and James Mohn (collectively, plaintiffs) in litigation challenging the constitutionality of Hartz's regulations regarding persons or groups who wish to distribute leaflets at the Mall. The regulations at issue limited the frequency of any one person's permission to leaflet at the Mall, and required each such person to provide evidence of $1,000,000 in insurance coverage and sign a license agreement containing a "hold harmless" provision.

This case stems from our Supreme Court's 4-3 decision in New Jersey Coalition Against War in the Middle East v. J.M.B. Realty Corp., 138 N.J. 326, 332, 372 (1994), cert. denied, 516 U.S. 812, 116 S. Ct. 62, 133 L. Ed. 2d 25 (1995) (Coalition), in which the late Chief Justice Wilentz, speaking for the majority, held that certain regional and community shopping centers, as defined therein (the Mall was a defendant in that case), must permit leafletting on societal issues on their premises, subject to reasonable conditions set by such community shopping centers.

Hartz contends on appeal that the Chancery Division Judge erred in holding the regulations unconstitutional because (a) the Mall is not a traditional or quasi-public forum; (b) the California cases relied upon by the Judge are inapposite because they treat shopping malls as public fora; (c) regulations such as Hartz's should be subject only to "a reasonable business judgment standard"; and (d) under either a reasonable business judgment standard or a narrowly drawn standard, Hartz's regulations should be upheld. Hartz further contends that the Judge erred in adjudicating the matter at all because the case was and is moot.

The following facts were developed in the proceedings in the Chancery Division. Mohn is a resident of Guttenburg who had been involved with the New Jersey Draft Nader for President Committee (Nader Committee) in 1996, and thereafter with the Green Party in New Jersey. He also was active in membership and voter registration drives and leafletting for other organizations including the New Jersey Peace Action, Witness for Peace, the Arab-American Anti-Discrimination Committee, and the Rainbow Coalition. Mohn characterized these entities as small, poorly financed groups that would distribute informational materials in public places, including shopping malls, when an issue of concern to the organization developed. Mohn anticipated seeking access to the Mall to distribute political literature with some regularity and claimed that the groups with which he was involved would be unable to afford the insurance premiums associated with the Mall's requirement that such groups obtain $1,000,000 in insurance coverage.

The Mall is in Secaucus adjacent to Route 3 on some twenty-seven acres near Interchange 16E of the New Jersey Turnpike. Mohn considered soliciting petition signatures at the Mall important because it was a gathering place for large numbers of people, an enclosed area which was preferable when the weather was bad, and near his home. He and his wife went there about three times a week as part of the Mall's "Merry Milers" to walk for exercise at 8:30 a.m.

The Mall has approximately 325,000 square feet of "gross leasable area," but only about 35,000 square feet of common area open to the public. According to Hartz's Assistant Vice President of Retail Leasing, Hartz licensed up to ten kiosks or pushcarts to various vendors for use in the common area and required such lessors to submit a certificate of insurance for $1,000,000 in coverage. Hartz placed the kiosks to provide for a reasonable thoroughfare for the Mall's customers, and to comply with applicable building codes that required, among other things, a ten-foot egress corridor and a twenty-foot clearance around certain structures. The Mall's single-floor layout is roughly a straight line passageway between anchor stores (a supermarket and a discount department store) on either end and lined by stores on either side, with enlarged common areas at each end and midpoint. After allowing for the clearance required by the building code, there is limited space for kiosks, carts or tables in a narrow band of common area at the center of the passageway, and in the three enlarged areas. Those spaces also hold movable planters, movable benches, directory structures, seasonal displays, an information desk and some permanent rides for children.

On September 27, 1996, Mohn wrote on behalf of the Nader Committee, to Marilyn Mangan, Hartz's Marketing Director, requesting space to set up an information table at the Mall. In accordance with Hartz's standard practice, Mangan forwarded Mohn a copy of its license agreement and regulations. Mohn signed the license agreement and faxed it back to Hartz, listing October 26 or 27 as the dates requested. Maranda Ashkar, Hartz's Retail Marketing Coordinator, who was responsible for reviewing and approving license agreements for nonprofit organizations desiring to use space at the Mall, wrote Mohn on October 14, 1996, informing him that the Mall would hold the October 27 date open, pending receipt by October 21, of the insurance certificate, cleanup deposit, and the original license agreement.

Hartz's regulations as sent to Mohn were contained in a two-page document captioned "Regulations of the Mall at Mill Creek for Non-Profit Informational Activities," and provided, in pertinent part:

"The following comprise the regulations of the Mall at Mill Creek for informational activities of non- profit organizations, individuals, or entities (collectively "Permittee"). The Mall at Mill Creek has afforded reasonable access for community and non-profit groups desiring to use the Mall for informational activities. However, informational activities must be conducted in a manner so as not to disturb Mill Creek's customers or tenants. Mill Creek reserves the right to change these rules at any time.

1. Activities are generally limited to one day per year between January 1 and October 31, unless otherwise approved by Mall Management upon written request." *fn1

"9. Permittee must provide a valid Certificate of Insurance, including general liability insurance in the combined single limit of $1,000,000. The certificate must contain an endorsement in the form contained in the License Agreement.

10. Permittee must sign the enclosed License Agreement."

Other regulations not at issue in this appeal require that (a) the organization provide its own table, covered to the floor on all sides; (b) have professionally printed signs; and, (c) submit a $100 cleanup deposit which "will be refunded if no unusual cleanup is required upon completion of Permittee's activities." The regulations incorporated many of the rules applicable to commercial temporary vendors at the Mall.

The license agreement referenced in the regulations required the Permittee to agree to abide by the regulations, and further provided:

"Licensee shall protect, indemnify, save and keep harmless Licensor against any and all claims, loss, cost, damage or expense of any kind or nature, whatsoever, arising out of or from (i) any accident or occurrence in, on or at the Premises, and (ii) any act or omission of Licensee, its employees, servants, agents or invitees. In the event the Mall or Hartz shall, without fault on its part, be made a party to any litigation commenced by or against Licensee, Licensee shall protect and hold the Mall and Hartz harmless and shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by the Mall or Hartz in connection with such litigation."

The license agreement also required an insurance endorsement naming "Hartz Mountain Industries, Inc. and its respective subsidiaries, affiliates, associates, joint ventures and partnerships as additional insured. It is intended for this insurance to be primary and non- contributing."

On October 14, 1996, Mohn obtained for the Nader Committee a quotation of $665 ($500 in premium plus $165 in fees and taxes) from the Retcho Agency for $1,000,000 in liability insurance for the day's activities at the Mall. Kerry Jeffers of the Retcho Agency assertedly told Mohn this quotation would cover leafletting and petitioning only at the Mall, and there would be additional charges for coverage for such activities at other malls.

Mohn and the Nader Committee then filed suit on October 21, 1996 and sought and obtained temporary relief in the Chancery Division in an October 25, 1996 order to show cause, which allowed them to leaflet at the Mall on October 27 without providing an insurance certificate. Hartz stipulated that it had no information about any claims having been filed as a result of the leafletting activities at the Mall on October 27. Mohn further certified that when he leafletted at the Mall in 1996 for the Nader Committee, the activity was conducted without incident.

In March 1997, Mohn was in the process of establishing the Green Party which had been organized in New Jersey on January 25, 1997, at a meeting of about forty people at the Rutgers Labor Education Center in New Brunswick. At that meeting, the invitees, who had been members of the Nader Committee, declared themselves as the Green Party. *fn2 In order to minimize the potential for challenge to their petition, the Green Party sought to acquire about 2,000 signatures, rather than the 800 required by law, on the nominating petition for its gubernatorial candidate in 1997.

While seeking petition signatures in locations other than the Mall, Mohn had handed out a two-page document that described the Green Party, its candidate and positions. Mohn intended to use that document in his leafletting and petition signature collection at the Mall if granted access. The leaflet did not make any reference to Hartz relating to Green Party's positions about corporate concentrations of wealth, nor did Mohn intend to do so during leafletting at the Mall. Mohn explained that the Green Party was "not anti-corporate, we are anti-corporate control," meaning that the members do not contest a corporation's right to exist or operate, but to control politically and economically through the power of their contributions.

According to a certification by plaintiff's then-attorney, he spoke with Jeffers on February 13, 1997, regarding the insurance quotation previously given to the Nader Committee and was told that she had never seen a lower premium for a commercial excess line insurance policy than the $500 premium quoted in October 1996; she also told him that the policy fees and taxes were standard. The attorney subsequently spoke to Jeffers and Joseph Retcho, who managed the agency, and they were preparing a quotation for the Green Party for the same $665 cost for the insurance coverage.

In March 1997, Mohn learned from his homeowner's insurance company that his personal homeowner's policy would not cover the group's leafletting activities at the Mall. His personal umbrella policy would cover his activities, but not that of the Green Party or the Mall. Mohn's personal ability to pay the $665 for insurance coverage was not considered because he claimed the Green Party's rules would not permit contributions over $250 and a personal payment of the insurance premium would violate those rules.

William Colucci, Green Party Chairman, stated that the party set up a political action committee and a bank account and he was a signatory for both. However, he said that the Green Party would not be a recognized political party under New Jersey law until it received 10% of the vote at an election. As of March 12, 1997, the Green Party had $180.39 in a bank account, no other assets or funds, and debts or obligations of about $400. He said the Green Party did not have any insurance policies of any kind and did not have the resources to purchase liability insurance coverage that would cost $665. Although the party was requesting that members pay five dollars in annual dues at the March 22, 1997 meeting, he realized that most of that money had already been spent, and he was uncertain how the party would raise additional money. He confirmed that the party had a policy of limiting contributions from individuals to $250 and of accepting no money from organizations. Even if the party was able to raise in excess of $665 in the upcoming months, Colucci did not believe that the party would or should spend that money on insurance for leafletting for one day in a mall because "we have a lot of activities we could do that would further our cause greater than access one day at a mall." When asked whether leafletting at the Mall was that important, Colucci stated that it was because the group needed signatures to get its candidate on the ballot. He added that the Green Party "would probably have other priorities in spending $600." *fn3

Richard Lofberg, a chartered property and casualty underwriter with Clarence Lofberg Insurance Service, testified as Hartz's expert in insurance underwriting and specifically insurance with respect to tenants, vendors and other users of shopping malls. Lofberg explained that malls invariably require insurance of their tenants and vendors for these reasons:

"A mall is open to the public, it is a private location, a private site, because it is a private site the owner of that property is literally fully exposed to anything that happens, the slip and falls in shopping malls are horrendous, the rights of protection are really somewhat limited, considering what can happen there, a person walking through a mall taking a shortcut across the street, slips and falls and we have the suit against the mall, the exposures are horrendous. The bodily injury claims that result from them, many of which can't even be proven because there may not be any witnesses, tend to create tremendous hazards to any mall owner. It is a high risk business, it sounds like an easy one, but it's a high risk business."

Lofberg explained that insurance was readily available for those risks "at a price" and that where a group is financially strong enough to carry part of that risk itself, it can use a "self-insured retention," also called a high deductible, to lower its insurance costs on a per claim or a per period basis. *fn4 Another way to achieve that goal would be to use retrospective contracts where, after a deductible amount is reached, the insurer pays the full extent of the claim incurred and charges the insured a fixed percentage above the actual cost of a claim.

Because under either the self-insured retention or retrospective contract the shopping mall retains a substantial amount of risk, the mall requires tenants and vendors to obtain insurance to cover injuries arising in their leased areas. This approach leaves the mall owner responsible for the common areas. However, a mall owner may require the service responsible for waxing the floors to provide a certificate of insurance so that claims relating to a floor made too slippery would be borne by that service provider, including the costs of the claims made against the mall owner. Lofberg agreed that the mall could try to increase its rents to cover this additional expense, but when that approach had been tried in the past, it did not work too well.

Lofberg explained that the certificate of insurance is an affirmation by the insurance producer that a policy of a specific type has been issued to a named insured for specified policy limits on specified terms, such as on an occurrence basis. Lofberg noted that a certificate of insurance might also set forth whether the underlying policy included contractual assumption of liability as to bodily injury and property damage; in such cases, if a person signed Hartz's hold harmless agreement, Hartz could be protected under the person's homeowner's, tenant's or umbrella personal insurance policy. Lofberg was familiar with the policies issued by the insurer for Mohn's homeowner's policy and said it included coverage for all personal, non- business activities of the insured, which would include participation as a volunteer leafleteer. Furthermore, if Mohn signed the hold harmless agreement, that contractual obligation would automatically be covered under Mohn's policy. Lofberg disagreed with the advice Mohn had been given that he would not be covered and added that there is no cost to obtain a certificate of insurance. Lofberg recognized, however, that neither the standard personal liability coverage, such as provided under Mohn's homeowners' policy, nor the standard personal umbrella policy, would allow the insured to purchase additional insured coverage in the form required by paragraph five of Hartz's license agreement. He further recognized that Hartz's license agreement anticipated that the Green Party, not an individual, would be the licensee, and that neither Mohn's homeowners' policy nor his umbrella policy would cover the Green Party or its members who were not members of Mohn's household.

Lofberg reviewed the Nader Committee's quote from the Retcho Agency and observed that it was a commercial quote for coverage by Mount Vernon Fire Insurance Company, a non-admitted company. He explained that a non-admitted company generally does not do business in New Jersey, but is permitted to write specific forms of coverage that are not otherwise available in the state. Lofberg knew that standard insurers would insure the regular activities of small political organizations in the state, such as local political parties, for an annual premium of $250, although he was not quite sure what was covered. He indicated that leafletting at the mall would involve having "a large flow of people coming down a common area," so the exposure could be above the $250 premium that standard market insurers would cover. Non-admitted insurers, he claimed, were free to charge more. Lofberg added that mall tenants could usually obtain coverage in the standard market because they would be paying an annual premium of between $10,000 and $50,000, but that vendors at the mall were usually covered by the non-admitted insurers because they paid only a small premium for a lot of risk.

Lofberg observed that the insurance quotation received by the Nader Committee did not contain a policy provision limiting the leafletting activities to one day, so the $500 premium cost appeared to contemplate coverage for a full year at the Mall; he asserted that coverage for only one day would be rated differently. He also said the $150 inspection fee above the base premium cost seemed about $100 too high. Lofberg considered Hartz's requirement for $1,000,000 of coverage to be reasonable, if not low, considering that this was for the group's activities on private property owned by others. Lofberg believed that assuming ability to pay the premium, there was no problem with the availability of this type of coverage.

Lofberg was not aware of any legal requirement that political parties have liability insurance for leafletting or petition signing activities, but he would advise that the Green Party have such coverage wherever they conducted those activities. He explained that slip and fall claims were the greatest risks in shopping malls, and that these accidents occurred with the same frequency per square foot throughout a mall, regardless of the type of surface that was walked upon or the size of the space. *fn5 Asked about the frequency of claims against the Mall since July 1993 compared with his experience elsewhere, Lofberg explained that he had some clients who faced a similar number of claims in one quarter the amount of floor area.

After hearing this testimony the Chancery Judge entered a March 14, 1997 order granting plaintiffs' request for permission to leaflet and gather petition signatures at the Mall on March 16, without obtaining a certificate of insurance.

Plaintiffs moved for summary judgment in January 1998. Both parties supplied additional information about the Mall's experience with nonprofit activities.

Since 1995 the Mall had entered into license agreements with various organizations. Each of those organizations had provided a certificate of insurance naming Hartz as an additional insured as required by the license agreement. Hartz's retail sales marketing coordinator could not recall anyone seeking permission to use the Mall without providing the certificate of insurance. Whether a group could use space at the Mall on a requested date depended in large part on whether there was something else going on at the Mall, such as a show or another group in the same location. Specifically, the marketing coordinator was asked about a licensing agreement for the North Jersey 4-C's group for November 17. She believed that they were permitted to come in after the October cutoff date in the regulations because Santa Claus did not arrive until the following week and the space had not been rented out to anyone else.

Hartz's marketing director had granted permission to organizations to return for an additional day when the group felt that there had not been sufficient attendance at the Mall on the day they had requested. She had also granted permission for one organization to use space in the Mall for seven days because the Mall's general manager was familiar with the organization and asked Mangan to waive the "one day per year" regulation. Based upon that experience, Mangan said she would be more inclined to grant permission for groups to use the Mall for more than one day. According to Hartz's representative, even though fund-raising was prohibited under Hartz's regulations, Hartz would try to cooperate with these groups, such as the American Cancer Society, so as long as they did not walk around the mall and solicit donations from customers. The marketing director said as far as she knew the insurance requirement and the cleanup ...

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