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Studio 45 Discotheque, Inc. v. City of Union City


March 5, 2008


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-6133-03.

Per curiam.


Argued December 10, 2007

Before Judges S.L. Reisner, Gilroy and Baxter.

In this civil rights action filed pursuant to 42 U.S.C.A. § 1983, plaintiff Studio 45 Discotheque Inc. (Studio 45), contends that Union City, the City's construction official Martin Martinetti, its zoning official David Spatz, and several members of the City's police department, violated plaintiff's rights in connection with the enforcement of a City ordinance and the forced temporary closure of plaintiff's establishment. Plaintiff appeals from a series of trial court orders, dismissing its complaint against all defendants on summary judgment and awarding defendants counsel fees.*fn2 We affirm the dismissal of the complaint, but reverse the award of counsel fees.


We begin by addressing the issue of mootness. Plaintiff is challenging the constitutionality of a City ordinance regulating establishments with alcoholic beverage licenses (liquor licenses). In August 2002, plaintiff's liquor license was suspended, after plaintiff's owner was found to have illicitly installed a hidden video camera in the ladies' room of the Studio 45 bar and discotheque. Plaintiff's liquor license was eventually revoked on December 22, 2004. We affirmed the license revocation on appeal. Studio 45 Discotheque, Inc. v. Union City, Docket No. A-2673-04 (App. Div. Dec. 5, 2005).

Based on the license revocation, the trial judge hearing the parties' summary judgment motions*fn3 held that Studio 45 did not have standing to challenge the constitutionality of the ordinance, because plaintiff was no longer licensed and therefore no longer subject to the ordinance. We agree that for purposes of future enforcement of the ordinance, plaintiff lacks standing. However, plaintiff is also seeking damages based on past enforcement of the ordinance by the Union City police and other City officials. See Monell v. Dep't of Soc. Service, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed. 2d 611 (1978). For purposes of that claim, plaintiff has standing to pursue its challenge to the constitutionality of the ordinance. Hence, we will address that claim.*fn4


Plaintiff's complaint challenged the validity, on its face and as applied, of a City ordinance limiting the hours during which licensed establishments were permitted to serve alcoholic beverages, and governing their hours of operation. The ordinance, Union City, N.J. Alcoholic Beverage Control Ordinance § 10-4.1 (2002), "Hours of Sale," subsection (a), provides:

No alcoholic beverages shall be sold, delivered to any consumer or served to or consumed in any licensed premises on any day between the hours of 2:00 AM and 7:00 AM . . . except that any licensee having both an alcoholic beverage license and a restaurant license for the same premises, and any hotel or club licensee shall have the privilege of remaining open during the aforesaid prohibited hours for the purpose of carrying on their usual activities, except the sale of alcoholic beverages.

The ordinance was adopted under the authority of the Alcoholic Beverage Control Act (ABC Act), N.J.S.A. 33:1-40:

The governing board or body of each municipality may, as regards said municipality, by ordinance or resolution, limit the hours between which the sale of alcoholic beverages at retail may be made, . . . and, . . ., regulate the conduct of any business licensed to sell alcoholic beverages at retail and the nature and condition of the premises upon which any such business is to be conducted.

Pursuant to subsection 10-2 of the Union City Code, words and phrases used in Chapter 10 are defined as they are in the ABC Act and regulations. The ABC Act defines "restaurant" as [a]n establishment regularly and principally used for the purpose of providing meals to the public, having an adequate kitchen and dining room equipped for the preparing, cooking and serving of food for its customers and in which no other business, except such as is incidental to such establishment, is conducted. [N.J.S.A. 33:1-1(t)(emphasis added).]

Consequently, under the statutory definition, an establishment that primarily operates as a discotheque or a dance hall, but which happens to have a municipal restaurant license, would not qualify as a "restaurant." Likewise, the term "club" is not defined in the ABC regulations as a "dance club" or "nightclub," as the term might be informally understood, but as a private membership organization. Pursuant to N.J.A.C. 13:2-8.1, a "club" is an organization, corporation or association controlled by and consisting of 60 or more persons, of legal drinking age, operating solely for benevolent, charitable, fraternal, social, religious, recreational, athletic or similar purposes and not for private gain.

A club licensee may only sell alcoholic beverages to "a bona fide member of the club or a bona fide guest of such member." N.J.A.C. 13:2-8.8(a); N.J.S.A. 33:1-12. Plaintiff is not a club for purposes of the statute and regulations.

On November 19, 2003, plaintiff filed a complaint alleging that it "owns and operates a bar, and discoteque [sic] club, with cold food, not [sic] kitchen" and "sells for public consumption live entertainment, dancing and beverages both alcoholic and non alcoholic." The complaint also alleged that since "December 14, 1979 until the present, the premises . . . has been used by the plaintiff and/or previous tenants as a discotheque, dance club and bar." Consequently, plaintiff's complaint admitted that, as its name suggests, Studio 45 Discotheque was not being principally used as either a restaurant or a luncheonette, but as a discotheque, dance club and bar.

Plaintiff's complaint further alleged that as of November 8, 2002, its liquor license had been indefinitely suspended pending a hearing. The complaint also asserted that "on April 17, 2003, the Chief of Police of Union City Norman Bareis received a letter" from the Acting Attorney General advising that a licensee with a suspended license was nonetheless required, during the period of suspension, to comply with "municipal ordinances relating to closing hours."*fn5 However, the complaint also contended that the State's ABC Handbook indicated that a licensee with a suspended license could conduct "regular bona fide non-alcoholic business activities", other than selling alcohol, during a period of license suspension. The complaint alleged a general pattern of harassment by City officials in ordering the plaintiff to close on several occasions, suspending its liquor license without justification, misconstruing City ordinances to deny plaintiff a restaurant license, and improperly denying plaintiff the right to remain open after 2 a.m.

On November 21, 2003, the former Assignment Judge issued a temporary restraining order prohibiting the City from closing plaintiff's business between 2:00 a.m. and 7:00 a.m. On or about December 9, 2003,*fn6 the City filed a motion to dissolve the restraints. The City contended that the ordinance was rationally related to a legitimate public purpose, in that "liquor licensed establishments" other than restaurants, hotels and private clubs had "far more incidents which negatively affect the quality of life in the City such as noise and criminal disturbances, including but not limited to, fights, public urination, drug use and distribution, loud noise and public drinking."

In support of its motion, the City submitted two certifications from Police Captain Brian Barrett, who had been in charge of the City's alcoholic beverage code enforcement "from December 1991 through February 2001 and February through March 2002." Barrett compared police records "regarding calls for service" to liquor-licensed establishments from January through December 2003. According to Barrett, "liquor-licensed businesses which do not operate as a restaurant, social club or hotel . . . are responsible for a significantly greater number of calls for police service than other businesses within the City." There were "224 calls for police service to liquor-licensed establishments that operate without a restaurant" as opposed to 93 calls for service to "liquor-licensed establishments that operate a restaurant for this same time period." There were three calls for police service to private clubs. There were no hotels in the City licensed to serve alcoholic beverages.

Barrett also attested that the statistics were consistent with his observations during his eleven years enforcing the liquor laws in the City. He attested, based on his years of experience, that "patrons from bars/taverns which do not operate as a restaurant are more likely to engage in disruptive behavior such as fighting, public urination, drug use, loud noise and public drinking."

At the oral argument before the trial court, the City's attorney conceded that the City did not have statistics on police calls between 2 a.m. and 7 a.m., because there are "only two [liquor-licensed] establishments" that stay open past 2 a.m.

However, she argued that it was rational to extrapolate from the statistics about calls prior to 2 a.m. to conclude that allowing non-restaurant liquor licensees to stay open beyond 2 a.m. would also result in more police calls to those establishments.

The trial court concluded that the ordinance was irrational, reasoning that

I can discern no possible basis for limiting the list of lawful business activities that can be carried on by a licensee between two and 7 a.m. to restaurants, hotels and clubs. The defendant has not challenged the plaintiff's right to operate a disco, luncheonette ancillary to its liquor license. There's no rational basis to differentiate between the business activities of restaurants, hotels, and clubs, and other lawful businesses that might be carried on by liquor licensees, such as the plaintiff. There is no conceivable basis to permit restaurants to operate during the stated hours, but not luncheonettes, given that the only difference between them is where the food they serve is prepared.

The trial court relied on Hart v. Teaneck, 135 N.J.L. 174 (E. & A. 1946), which invalidated an ordinance requiring lunch wagons but not restaurants to close during certain hours. The judge reasoned that the ordinance "does not draw a distinction between restaurant licensees, whose primary business is the service of food, and those for which serving liquor is the primary activity." He rejected Captain Barrett's effort to determine the "primary business activity" by looking at whether there was live entertainment, dancing and other activities that seemed to predominate over the restaurant business being conducted. However, the judge did not consider that the ABC statute requires exactly such a distinction concerning a restaurant's "principal" activity. See N.J.S.A. 33:1-1(t). He also rejected Captain Barrett's statistical analysis on the theory that the patrons in both restaurants and luncheonettes "will have stopped drinking at 2 a.m., thereby satisfying the purpose of the ordinance." Pursuant to his findings, the former Assignment Judge entered a preliminary injunction against enforcement of the ordinance.

On this appeal, plaintiff offers an analysis that mirrors that of the former Assignment Judge. However, plaintiff's constitutional analysis is insufficiently deferential to the ordinance, given its presumption of validity.*fn7

As our Supreme Court held in a case involving a municipal ordinance governing the closing hours imposed on local businesses:

[O]rdinances are presumed valid and reasonable. The burden of proof to establish that they are arbitrary and unreasonable rests on the party seeking to overturn them. "The presumption may be overcome only by a clear showing that the local ordinance is arbitrary or unreasonable." The underlying policy and wisdom of ordinances are the responsibility of the governing body, and if any state of facts may reasonably be conceived to justify the ordinance, it will not be set aside. [Quick Check Food Stores v. Twp. of Springfield, 83 N.J. 438, 447 (1980) (citations omitted)(emphasis added).]

In Quick Check, plaintiff challenged an ordinance requiring all retail establishments in a neighborhood-commercial zone, except pharmacies and restaurants, to close from 9:00 p.m. until 6:00 a.m. Id. at 443. The Court rejected the plaintiff's contention that the ordinance was unreasonably discriminatory:

Plaintiff also argues that it is being discriminated against because drug stores, restaurants, and non-retail establishments are not subject to the ordinance's closing hours. The short answer to this contention is that plaintiff has produced no proof to overcome the presumption of validity, to dispel any conceivable state of facts affording a just ground for the action stated or to establish that the classification does not rest on some ground or difference related to the object of the legislation. There was evidence that pharmacies were excluded because of the public need for pharmacies to remain open longer hours. As for restaurants the record indicates that their business which is of a neighborhood type is not patronized by new customers after 9 p.m. and they may properly complete service to those being served at that time. [Id. at 451.]

The Court reached a similar conclusion applying the same test in upholding an ordinance prohibiting hawking, peddling or vending in a Special Improvement District. Fanelli v. City of Trenton, 135 N.J. 582, 587 (1994). Moreover, absent a fundamental right or suspect classification, the Court has consistently applied the rational basis test in analyzing due process and equal protection challenges to economic legislation. As the Court indicated in Caviglia v. Royal Tours of Am., 178 N.J. 460, 472 (2004)(citations omitted):

A state statute generally does not run afoul of federal substantive due process protections if the statute "reasonably relates to a legitimate legislative purpose and is not arbitrary or discriminatory." If the statute is founded on some conceivable rational basis to promote a public purpose, it will survive constitutional scrutiny. A more exacting standard applies to a statute that infringes on a fundamental right.

Further, "[a] statute satisfies the rational basis test even if the classification it makes is imperfect." Barone v. Dep't of Human Services, 107 N.J. 355, 367 (1987).

In light of the presumption of validity to which it is entitled, the ordinance is constitutional. Mindful that "any conceivable state of facts affording a just ground" for the ordinance will suffice, Quick Check, supra, 83 N.J. at 451, we find the City more than met this standard. In our view, there is nothing irrational in distinguishing between restaurants, private clubs and hotels that have liquor licenses, as opposed to bars, discos and dance clubs that have liquor licenses.

The certifications of Captain Barrett only confirm what any reasonable City councilperson might know from general life experience - that the latter establishments are more likely to be the scenes of boisterous and rowdy behavior than the former. Moreover, while the ordinance requires all licensed establishments to cease serving alcohol at 2:00 a.m., their patrons can continue to drink up to that deadline. Patrons already under the influence will not instantly sober up as the clock strikes 2 a.m. It is likewise rational to conclude that patrons of bars and nightclubs are more likely to have been focusing on drinking rather than eating, and that more of their patrons are likely to be under the influence.

Captain Barrett's certification established that the police received nearly three times more calls from non-restaurant licensees than from restaurant licensees, and they got a negligible number of calls from social clubs. If bars and other non-restaurant licensees are the source of more police calls before 2 a.m., it is reasonable to project that those establishments would continue to be the sources of a disproportionate number of disturbances after 2 a.m. if not required to close at that hour. It is also reasonable to project that the alcohol-consuming patrons might be more disruptive of the surrounding neighborhood when they leave the premises, and thus reasonable to limit that disruption to 2 a.m. by requiring bars, nightclubs and similar licensed establishments to close by that hour. All of these factors lead us to conclude that the ordinance is rationally-based and constitutional on its face.

We also find nothing unconstitutional in its application to Studio 45. The fact that plaintiff held a luncheonette license did not make its establishment a "luncheonette." As plaintiff's complaint asserts, Studio 45 operated as a bar, discotheque and nightclub. Studio 45 also happened to have a luncheonette license issued by the City Health Department, because it served cold food prepared elsewhere. Thus, on June 14, 2003, Studio 45 obtained a certificate of occupancy as a "bar and club, cold food, no kitchen." Since, apart from being a bar, its principal use was music and dancing, and it had no kitchen, Studio 45 could not qualify for a liquor license as a restaurant under the ABC Act. See N.J.S.A. 33:1-1(t). Therefore, if Studio 45 had an active liquor license, it would have been subject to the ordinance and required to close at 2 a.m. because it was not a restaurant, hotel or membership club.

According to advice provided to the City by the Attorney General's Office, during its period of license suspension Studio 45 was subject to the same regulations applied to licensees, including ordinances prescribing hours of operation. The City construed this as requiring the plaintiff to close at 2 a.m., the way any other licensee would be required to do, even though plaintiff was not serving alcohol while its license was suspended. At oral argument of this appeal, plaintiff's counsel agreed that the Attorney General's letter meant that Studio 45 was subject to the ordinance while its license was suspended, albeit not after it was revoked. Hence, plaintiff's claim hinged on its argument that the ordinance was unconstitutional.

Since we conclude that the ordinance had a rational basis and thus did not violate plaintiff's substantive due process or equal protection rights, we affirm the trial judge's order dismissing plaintiff's complaint on that issue.


We next address plaintiff's claims against Spatz and Martinetti (the zoning board defendants) and the police defendants. Plaintiff claims that the zoning board defendants improperly handled its application for a change of use for its premises from bar/club to dance hall/club, after its liquor license was suspended. The trial judge properly concluded that, absent conduct by public officials that "shocks the conscience," zoning disputes are not cognizable under 42 U.S.C.A. § 1983. See Eichenlaub v. Twp. of Indiana, 385 F.3d 274, 285 (3d Cir. 2004); UA Theater Circuit Inc. v. Twp of Warrington, 316 F.3d 392, 402 (3d Cir. 2003)("Land-use decisions are matters of local concern and such disputes should not be transformed into substantive due process claims based only on allegations that government officials acted with 'improper' motives."). Plaintiff cannot pursue a § 1983 lawsuit instead of filing a timely action in lieu of prerogative writs to challenge a local zoning decision. See Id. at 402 (§ 1983 lawsuit cannot be used to transform federal court into a "zoning board of appeals"); R. 4:69-5 and -6(b)(3).*fn8

We agree with the trial judge that plaintiff's disagreement with the zoning officials' interpretation of the City's zoning ordinance, concerning whether Studio 45 was in a zone that permitted dance halls, does not satisfy the "shock the conscience" standard. This claim was properly dismissed for the reasons stated in the judge's cogent written opinion of August 11, 2005.

We likewise conclude that since the police defendants were enforcing a valid ordinance, and they were relying on advice from the Attorney General concerning application of the ordinance to a licensee with a suspended license, their enforcement activities did not violate 42 U.S.C.A. § 1983. We also agree with the trial judge, for the reasons stated in her August 11, 2006 opinion, that the police defendants were entitled to qualified immunity.*fn9 See Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 2156, 150 L.Ed. 2d 272, 281 (2001). Plaintiff's appellate arguments on this issue are without sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).


Finally, we address the issue of counsel fees. On June 1, 2006, a third judge heard argument on defendants' counsel fee motions and granted them based on his conclusion that defendants were the prevailing parties under 42 U.S.C.A. § 1988. He entered an order requiring plaintiff and its attorney to pay to the New Jersey Intergovernmental Insurance Fund $36,479.72 for Captain Barrett's counsel fees and costs, $33,463.92 for Sergeant Figueroa's counsel fees and costs, $68,784.60 for Spatz's and Martinetti's counsel fees and $12,481.98 for their costs, and $36,592.52 for Police Chiefs Bareis's and Everett's counsel fees and costs. Another order of June 1, 2006, awarded the remaining officers and detectives $35,441.67 for their counsel fees and costs.

The applicable fee statute, 42 U.S.C.A. § 1988, provides that "[i]n any action or proceeding to enforce a provision of [§ 1983] . . . the court, in its discretion, may allow the prevailing party . . . a reasonable attorney's fee as part of the costs." However, in construing this provision, courts apply a different standard to defendants than to plaintiffs.

In Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422, 98 S.Ct. 694, 701, 54 L.Ed. 2d 648, 657 (1977) (footnote omitted), the Supreme Court, considering a similar fee-shifting provision in Title VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e-5(k), held that fee awards to prevailing defendants were limited:

[A] plaintiff should not be assessed his opponent's attorney's fees unless a court finds that his claim was frivolous, unreasonable, or groundless, or that the plaintiff continued to litigate after it clearly became so. And, needless to say, if a plaintiff is found to have brought or continued such a claim in bad faith, there will be an even stronger basis for charging him with the attorney's fees incurred by the defense.

The Court warned judges to "resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation." 434 U.S. at 421-22, 98 S.Ct. at 700, 54 L.Ed. 2d at 657. In Hughes v. Rowe, 449 U.S. 5, 14-15, 101 S.Ct. 173, 178-79, 66 L.Ed. 2d 163, 172-73 (1980), the Court adopted this standard for a claim for counsel fees under 42 U.S.C.A. § 1988. See also Ferraro v. City of Long Branch, 314 N.J. Super. 268, 291-92 (App. Div.), certif. denied, 157 N.J. 541 (1998).

In Barnes Found. v. Twp. of Lower Merion, 242 F.3d 151, 157-58 (3d Cir. 2001), the court applied the same standard, noting that it is "more stringent than that for awarding fees to prevailing plaintiffs," who recover their attorney's fee unless there are special circumstances. The court set forth factors to consider, as guidelines and not strict rules, in determining whether a claim was frivolous: whether the plaintiff established a prima facie case, the defendant offered to settle, the trial court dismissed the case prior to trial . . . . [W]hether the question in issue was one of first impression requiring judicial resolution, the controversy is based sufficiently upon a real threat of injury to the plaintiff, the trial court has made a finding that the suit was frivolous . . . and the record supports such a finding.

The court in Barnes, supra, 242 F.3d at 14, also set forth the standard of appellate review for a grant or denial of attorneys' fees under § 1988, i.e., whether the judge abused his or her discretion.

In this case, the motion judge did not find that the suit was frivolous. He awarded attorneys' fees to the individual defendants solely because they were prevailing parties, contrary to the Court's holding in Christiansburg, supra, 434 U.S. at 421-22, 98 S.Ct. at 700, 54 L.Ed. 2d at 657, Hughes, supra, 449 U.S. at 14-15, 101 S.Ct. at 178-79, 66 L.Ed. 2d at 172-73, and Barnes, supra, 242 F.3d at 157-158. Although the judge mentioned some of the factors set forth in Barnes in connection with his award to one of the police officers, Figueroa, he did not make any finding that any of plaintiff's claims were frivolous, unreasonable or groundless. Because the judge employed the wrong legal standard in granting the fee applications, we cannot defer to his decision under the abuse of discretion standard.

Employing the Christiansburg standard, we are unable to agree with the motion judge's decision to award fees. This case began with plaintiff's application for a preliminary injunction, which was granted. In granting the injunction, the first trial judge strongly indicated his conclusion that the ordinance was unconstitutional. That ruling allowed the case to continue and set the stage for the remainder of the litigation. We cannot fairly conclude that plaintiff's complaint was frivolous, or that plaintiff was not justified in pursuing the complaint through the summary judgment stage, when the first judge who heard the case concluded that it had merit and entered an injunction in plaintiff's favor. Moreover, our review of the record reveals that while the zoning defendants were entitled to prevail under the "shocks the conscience" standard, their construction of the zoning ordinance was probably unreasonable. We do not conclude that plaintiff's complaint was frivolous and accordingly, reverse the awards of counsel fees to all defendants.

Affirmed in part, reversed in part.

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