May 30, 2007
RANDY SENNA, T/A FLIPPERS FASCINATION, PLAINTIFF-APPELLANT,
WALTER FLORIMONT, ROBERT MEHLBAUM, 2400 AMUSEMENTS, INC., T/A OLYMPIC ENTERPRISES, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Cape May County, Docket No. CPM-L-576-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 9, 2007
Before Judges Fuentes and Baxter.
Plaintiff Randy Senna, t/a Flippers Fascination (Fascination), appeals from the March 31, 2006 grant of summary judgment to defendants Walter Florimont, Robert Mehlbaum, and 2400 Amusements, Inc., t/a Olympic Enterprises. On appeal, plaintiff argues that the trial court erred by applying the actual-malice standard to his defamation claim against defendant. We disagree, and affirm the grant of summary judgment in favor of defendant.
Plaintiff operates an arcade game known as Flipper's Fascination on the boardwalk in Wildwood. Contestants who win games of Fascination receive tickets that can be redeemed for prizes on display in the Fascination booth. Defendant Florimont also operates a Fascination game nearby on the boardwalk and is a competitor of plaintiff. Beginning in the summer of 2002, and continuing through September 2003, employees of defendant Florimont repeatedly used their public address system to broadcast accusations that plaintiff was dishonest, accusing plaintiff of cheating customers in Seaside by not giving them prizes that they were entitled to, warning bystanders that plaintiff "ran away and screwed all of his customers in Seaside" and that plaintiff would do the same thing again if given the opportunity.
Plaintiff filed suit against defendant alleging that the defamatory statements were made with knowledge that they were false. The complaint further alleged that the statements were made for the purpose of harming plaintiff's reputation or negatively interfering with his business. Plaintiff was not able to establish any demonstrable loss of income. Previously, the court had granted defendant's motion for summary judgment on the tortious interference claims, leaving only the defamation claims.
The court granted defendant's motion for summary judgment, finding the allegation that members of the public were being cheated at a boardwalk arcade was a "matter involv[ing] a highly regulated industry," that implicated "a matter of legitimate public concern." Ruling that the alleged defamation is "one of public issue defamation," the trial court concluded that plaintiff must establish that defendants made the accusations with "actual malice," either knowing that the statements were false or recklessly disregarding their probable falsity. When plaintiff could produce no evidence to satisfy the actual-malice standard, the court granted summary judgment to defendants.
When we review a grant of summary judgment, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995). The trial court's conclusion that cheating boardwalk customers implicates "a matter of legitimate public concern" was based on the Supreme Court's decision in Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 410 (1995), cert. denied, 516 U.S. 1066, 116 S.Ct. 752, 133 L.Ed. 2d 700 (1996). There, the Court held that the negligence standard should be applied to defamation complaints brought by businesses involved with an everyday product or service, whose practices do not involve a legitimate public interest. Id. at 426. Where, however, the conduct "constitute[s] consumer fraud, impinge[s] on the health and safety of New Jersey's citizenry, or comprise[s] activity within a highly-regulated industry," the actual-malice standard will apply. Ibid.
Critical to the trial judge's conclusion that the actual-malice standard applied, was his determination that the manner of operation of a boardwalk arcade game was a matter of legitimate public concern. Turf involved a lengthy special report published by the Bergen Record describing fraudulent and dishonest practices used by a lawnmower repair shop against its customers. Id. at 396-99. The Court was careful to note that the actual-malice standard of liability is an inappropriate standard to impose on most small businesses. Id. at 401. The Court observed:
To subject the local shoemaker, corner newspaper stand owner, and other similarly situated business owners to such a heightened standard of proof places an impossible burden on them. Most local businesses and their owners do not voluntarily thrust themselves into public controversy merely by opening a business. [Ibid.]
The Court held that a small business can nonetheless be subjected to the actual-malice standard if it operates within a "highly-regulated industry." Id. at 426. Applying that holding, the trial court concluded that because games of chance on a boardwalk are regulated by the State, plaintiff's activities come within the ambit of the actual malice standard announced in Turf. Defendants argue that because plaintiff's Fascination game is a form of gambling that is regulated by the State Legalized Games of Chance Control Commission, N.J.S.A. 5:8-78 to -130 and N.J.A.C. 13:3-1.1 to -7.9, plaintiff's complaint of defamation should be subject to that enhanced burden. We agree.
The Department of Law and Public Safety has enacted a considerable body of regulations governing arcade games, which regulate everything from the type of prizes permitted and their value, N.J.A.C. 13:3-3.5, to the requirement that employees of a boardwalk arcade be fingerprinted, N.J.A.C. 13:3-3.10. Indeed, there are seventy separate regulations governing the conduct of arcade games and the licensure of their operators. N.J.A.C. 13:3-1.1 to -7.9.
Of particular importance here are two of those regulations. N.J.A.C. 13:3-3.5(b), which specifies that games of chance may offer prizes with a value not to exceed $10,000, and also provides in subsection (1) that "there shall be no limit on the time within which tokens or tickets must be redeemed in any . . . "Fascination" parlor licensed pursuant to N.J.A.C. 13:3-7(a)4 . . . ." N.J.A.C. 13:3-3.8(a) prohibits licensees such as plaintiff from "allow[ing] or engag[ing] in any deceptive, misleading or fraudulent . . . practice in connection with the . . . operating or conducting of any licensed game."
In the aggregate, these two regulations permit a licensee such as plaintiff to offer prizes to any single contestant with a combined value of $10,000, and the contestant is not obligated to redeem the winning Fascination tickets for a prize within any specified timeframe. The allegations made by defendant's employees over their public address system accused plaintiff of boarding up his Seaside arcade parlor so that contestants who went there the next summer could not redeem their prizes, in apparent violation of N.J.A.C. 13-3-3.5(b)(1) and N.J.A.C. 13:3-3.8(a).
We agree with defendant's argument that the provisions of N.J.A.C. 13:3-1.1 to -7.9 make the operation of arcade games of chance a "highly-regulated industry," and therefore we agree with the trial judge's conclusion that under the circumstances presented here, plaintiff's claim of defamation should be subjected to the actual malice standard.
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