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D. Russo, Inc v. Township of Union

December 29, 2010

D. RUSSO, INC., D/B/A HOTT 22, PLAINTIFF-APPELLANT,
v.
TOWNSHIP OF UNION, DEFENDANT-RESPONDENT
EXPO VIDEO UNLIMITED, LLC, AND BOKRAM, INC., D/B/A VIDEO EXTRA, PLAINTIFFS-APPELLANTS,
v.
TOWNSHIP OF UNION, DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Union County, Docket Nos. L-3558-06 and L-2313-06.

The opinion of the court was delivered by: Skillman, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted October 19, 2010 - Decided Before Judges Skillman, Parrillo and Yannotti.

The opinion of the court was delivered by SKILLMAN, P.J.A.D.

The New Jersey Civil Rights Act, N.J.S.A. 10:6-1 to -2, includes a provision that authorizes a court to award "the prevailing party" reasonable attorney's fees and costs, N.J.S.A. 10:6-2(f). The issue presented by this appeal is whether a party who brings an action under the Civil Rights Act that results in a change in defendant's conduct may qualify as a "prevailing party" even though the action is dismissed as moot rather than being concluded by a judgment in plaintiff's favor. We conclude that a party who brings an action that is shown to have been a "catalyst" for the cessation of conduct alleged to violate the Civil Rights Act may qualify as a prevailing party entitled to an award of attorney's fees.

In 2006, the governing body of the defendant Township of Union adopted an ordinance regulating sexually-oriented businesses. This ordinance imposed certain restrictions upon the operation of such businesses, including limitations upon their conduct and hours of operation and the imposition of substantial licensing fees, which had not existed before.

Plaintiff D. Russo, Inc., which operates a live nude-dancing establishment in Union called Hott 22, and plaintiffs Expo Video Unlimited, LLC and Bokram, Inc., which operate stores in Union that sell sexually-oriented books, movies and products, brought separate actions under the Civil Rights Act, which were subsequently consolidated, challenging the validity of the ordinance regulating sexually-oriented businesses under the free speech guarantee of the New Jersey Constitution. N.J. Const. art. I, ¶ 6. Plaintiffs obtained temporary restraints and then a preliminary injunction against enforcement of the ordinance, which remained in effect throughout the course of the litigation.

Union twice amended its ordinance regulating sexually-oriented businesses. Plaintiffs claim that those amendments were designed to address the constitutional deficiencies in the original ordinance they had identified in their complaints and that the "successor ordinances were arguably less offensive to the Constitution." Nevertheless, plaintiffs subsequently filed amended complaints, which alleged that the amended ordinances regulating sexually-oriented businesses still violated their rights under the New Jersey Constitution.

On March 11, 2009, Union advised the trial court that it had repealed the amended ordinance regulating sexually-oriented businesses. Plaintiffs claim that their challenges to the validity of the ordinance were the catalyst for its repeal and that, but for their actions, the ordinance would have remained in effect.

Following the repeal of the ordinance, plaintiffs filed a motion under N.J.S.A. 10:6-2(f) for an award of attorney's fees. In opposing plaintiffs' motion, Union contended not only that the "catalyst theory" should not apply in determining whether a litigant is a "prevailing party" entitled to attorney's fees under N.J.S.A. 10:6-2(f), but also that it had repealed its ordinance regulating sexually-oriented businesses for reasons unrelated to the pendency of this litigation,*fn1 and therefore, plaintiffs could not qualify as prevailing parties even under the catalyst theory.

By a written opinion dated July 31, 2009, the trial court denied plaintiffs' motion for attorney's fees. Relying upon the Supreme Court of the United States' decision in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001), which rejected application of the catalyst theory in determining whether a plaintiff qualified as a "prevailing party" under the sections of the Fair Housing Amendments Act of 1988 and Americans with Disabilities Act authorizing awards of attorney's fees, 42 U.S.C.A. §§ 3613(c)(2), 12205, the court concluded that the catalyst theory cannot be relied upon by a party seeking attorney's fees under N.J.S.A. 10:6-2(f). Having reached this conclusion, the court did not make any findings regarding the role this litigation played in Union's decision to repeal its ordinance regulating sexually-oriented businesses.

On September 3, 2009, the trial court entered an order of dismissal of plaintiffs' complaints "with prejudice by consent," which was followed by this appeal from the denial of plaintiffs' motion for attorney's fees.

Before considering the applicability of the catalyst theory to a determination of prevailing party status under N.J.S.A. 10:6-2(f), we note that plaintiffs could be entitled to an award of at least a portion of their attorney's fees even if the catalyst theory were held to be inapplicable. Subsequent to Buckhannon, a number of federal courts of appeals have held that a party who obtains a preliminary injunction against enforcement of a statute that is later repealed, thus mooting that party's challenge to the statute, may be a prevailing party entitled to an award of attorney's fees under a federal fee-shifting statute for the legal work performed in obtaining the injunction. See, e.g., Common Cause/Georgia v. Billups, 554 F.3d 1340, 1356 (11th Cir.), cert. denied, ___ U.S. ___, 129 S. Ct. 2770, 174 L. Ed. 2d 271 (2009); Dearmore v. City of Garland, 519 F.3d 517, 520-26 (5th Cir.), cert. denied, ___ U.S. ___, 129 S. Ct. 131, 172 L. Ed. 2d 240 (2008). Our courts also have recognized that success in obtaining preliminary injunctive relief may provide a sufficient foundation for an award of the attorney's fees under a fee-shifting statute ...


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