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181 South Inc. v. Fischer

July 18, 2006

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

The opinion of the court was delivered by: Fuentes, Circuit Judge.

PRECEDENTIAL

Argued January 12, 2006

Before: FUENTES, ROSENN*fn1, and ROTH*fn2, Circuit Judges.

OPINION OF THE COURT

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 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 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).*fn3

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.

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.*fn4 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 ...


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