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D. Russo, Inc., and Daniel Russo v. Theodore J. Romankow


December 2, 2011


On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3740-04.

Per curiam.


Argued February 4, 2010 - Decided September 17, 2010 Reargued November 2, 2011

Before Judges Fuentes, Graves and Harris.

This appeal involves the constitutionality, as applied, of N.J.S.A. 2C:34-7, which governs where sexually oriented businesses can be located. In our earlier opinion in this appeal we reversed the trial court's order upholding the constitutionality of the statute as applied to plaintiffs D. Russo, Inc. and Daniel Russo (collectively Russo), subject to a remand to the Law Division with instructions to render complete findings as required by Saddle Brook v. A.B. Family Center, Inc., 156 N.J. 587 (1999). D. Russo, Inc. v. Romankow, No. A-0633-08 (App. Div. Sept. 17, 2010) (slip op. at 19). Following the remand proceedings, the trial court upheld the statute, determining that "[Russo's] First Amendment rights are protected because there are, indeed, alternative communicative sites reasonably available to [Russo] within the relevant area." A final judgment was entered in favor of defendants Theodore Romankow (in his official capacity as the Union County Prosecutor) (Prosecutor), Township of Union (Township), and Kevin Kalendek dismissing the complaint with prejudice, and Russo renewed his appeal. After a review of the record and the findings of the trial court pursuant to our mandate, we affirm.


Familiarity with our earlier opinion is assumed, and we need not repeat in detail either the procedural background or facts, except as necessary to illuminate the remand proceedings.

The fundamental question in this matter asked whether Russo's sexually oriented business -- known as Hott 22 -- located on Route 22 in the Township, may operate in the face of N.J.S.A. 2C:34-7. To do so, the statute must be declared unconstitutional as applied.

The four-day bench trial (conducted more than two years prior to the remand) presented the trial court with disparate expert opinions, all claiming allegiance to the Saddle Brook paradigm of (1) preliminarily determining the relevant market for this type of sexually oriented business and (2) then ascertaining the availability of alternative sites, if any, that exist within this market area to accommodate such sexually oriented business. See Saddle Brook, supra, 156 N.J. at 597.

The Prosecutor and the Township presented two experts, both professional planners, who expressed views that the relevant market area could be configured either (1) by a twenty-minute drive from Hott 22 or (2) by drawing a circle on a map with a radius of fourteen miles and placing Hott 22 at the center. Russo's expert, also a professional planner, demarcated the proposed market area based upon customer data collected by Hott 22's staff and concluded that it included sixteen municipalities in which an aggregate seventy percent of Hott 22's customer base resided.

The Township's expert (using the twenty-minute drive time market area) concluded that available alternative sites existed in four municipalities. The Prosecutor's expert (drawing the circular trade area) opined that eleven municipalities contained suitable alternative sites. Russo's expert was of the view that no available alternative sites existed in his configured market area.

The trial court considered the evidence and while recognizing that the experts' views on the relevant market area were similar, it did not explicitly demarcate the parameters of Hott 22's relevant market area. One of the reasons for our remand was to obtain from the trial court a clear declaration of the contours of the market area as mandated by Saddle Brook. D. Russo, Inc., supra, slip op. at 12.

On remand, in its written opinion dated January 19, 2011, the trial court reassessed the expert evidence and notwithstanding its view that its earlier expression of the market area was "self-explanatory," held that the fourteen-mile-radius design best described Hott 22's relevant market area. The trial judge primarily compared the approaches of Russo's and the Prosecutor's experts and found them "substantially identical," particularly since they both utilized Hott 22's customer survey data. Based upon its view that a twenty-minute drive in this State was too fraught with vagaries to accurately delimit a trade area, the court determined the fourteen-mile-radius approach "to be reasonable."

A second reason for our remand was to have the trial court -- after explicitly demarcating the market area -- apply the appropriate factors touching on a site's availability to establish the quantum of available sites for Hott 22's relocation. We concluded that the trial court had properly found that defendants met their burden of proof on the question of available alternative channels for Hott 22's communication. However, we were concerned that without first delineating the perimeter of the market area, such approach would contravene the Court's clear analytical mandate in Saddle Brook. We reiterate that pursuant to Saddle Brook, the concepts of market area and available suitable sites are legally and analytically separate.

D. Russo, Inc., supra, slip op. at 17.

On remand, the trial court applied the same methodology for determining alternative sites that we upheld in our earlier opinion. It found "that the nineteen sites identified by [the Prosecutor's expert] in Newark are reasonably available," and outlined seven specific reasons for its conclusion. The trial court further held:

Looking at the Newark sites and the magnitude of potentially available other sites within the relevant market area, their existence alone is persuasive as to whether the defendants meet their burden.

The fact that the Newark area has at least [nineteen] potential sites within the relevant market area is impressive. If however, we add the other sites noted above, there is in excess of twenty-five other sites available for an area that is geographically near to plaintiff's current site.

Our final reason for the remand was based upon the trial court's failure to explore the relationship between the number of proposed alternative sites and the size of the relevant market area for Hott 22's business. D. Russo, Inc., supra, slip op. at 18. By not establishing the exact size of the market area or the specific number of available sites within that market, "an exquisite exercise of judicial authority, guided by the fundamental principles embodied in the First Amendment," could not be accomplished. Twp. of Cinnaminson v. Bertino, 405 N.J. Super. 521, 537 (App. Div.), certif. denied, 199 N.J. 516 (2009). Specifically, we sought a determination whether a constitutionally sufficient number of alternative sites existed for Russo to operate its sexually oriented business.

Pursuant to the remand, the trial court explored this thorny issue in detail. It rejected Russo's argument that a site-by-site analysis was required by Saddle Brook in order to assess the "real adequacy of the proposed available sites." Similarly, the court found unpersuasive Russo's contention that defendants were dutibound to support constitutional adequacy through "an analysis of the impact of the population in the relevant market area." Finally, it acknowledged that "there is no fixed or bright line test as to what number of available sites is sufficient within the relevant market area to protect [Russo's] constitutional right to expression."

The trial court's ultimate conclusion was to find the application of N.J.S.A. 2C:34-7 to Russo as constitutionally valid. Relying upon the nineteen sites in Newark, coupled with "sites in ten other towns within the [fourteen-]mile radius relevant market," plus finding that "[seventy percent] of [Russo's] customers lie within that area," the court determined:

[D]efendants have carried their burden of proof, and that [Russo's] First Amendment rights are protected because there are, indeed, alternative communicative sites reasonably available to [Russo] within the relevant area.

On February 7, 2011, the trial court entered a final judgment dismissing Russo's complaint. This appeal followed.



An appellate court's review of a trial court's fact-finding in a bench trial is limited. "Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (citation omitted). Such findings will not be overturned "unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963)). This is especially true when the trial court's determinations were based upon assessments of the believability of witnesses. See State v. Locurto, 157 N.J. 463, 472-75 (1999).

Notwithstanding our respect for the yeoman's work of trial judges in parsing facts, our jurisprudence still requires those judges to "disclose an analysis of the facts as they apply to the many applicable factors," Kas Oriental Rugs, Inc. v. Ellman, 407 N.J. Super. 538, 561 (App. Div.), certif. denied, 200 N.J. 476 (2009), rather than simply provide "[n]aked conclusions" of law, Curtis v. Finneran, 83 N.J. 563, 570 (1980). Our limited factual superintendence of trial judges, however, is enlarged when it comes to the "interpretation of the law and the legal consequences that flow from undisputed facts." Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995). As to these latter considerations, we do not give any special deference to trial courts' legal conclusions. See Frumer v. Nat'l Home Ins. Co., 420 N.J. Super. 7, 13 (App. Div. 2011).


Saddle Brook established a three-part test for determining the constitutionality of N.J.S.A. 2C:34-7 as applied to sexually oriented businesses.

Distilled to its most basic elements, the Saddle Brook case requires trial courts to determine: (1) the relevant market area of the sexually oriented business; (2) the availability of alternative sites within the relevant market; and (3) whether the available sites, in relation to the size of the market area, provide enough suitable alternative sites for expression to comply with constitutional standards. [Borough of Sayreville v. 35 Club, L.L.C., 416 N.J. Super. 315, 324 (App. Div. 2010) (internal citations omitted).]

"[C]onsistent with First Amendment decisional law," the governmental entity seeking to enforce the statute bears the burden of proof as to each of these elements. Saddle Brook, supra, 156 N.J. at 598.

In Saddle Brook, the Court held that a relevant market area should encompass other municipalities that are "'within reasonable proximity to the [sexually oriented business's] location.'" Id. at 597 (internal citations omitted). To assist trial courts in determining what areas were reasonably proximate, the Court stated that the finder of fact may take into account "evidence of regional marketing patterns, availability of public transportation and access by automobiles, geographical distribution of customers at comparable sexually oriented businesses, and other factors deemed relevant by the parties and the court." Ibid.

We are satisfied that on remand, the trial court adequately considered and responded to the factors laid out in Saddle Brook, and that it was not required to directly address the geographical distribution of customers at comparable sexually oriented businesses. The court was presented with evidence as to transportation routes and marketing patterns affecting Russo. Addressing every market area factor listed by Saddle Brook is not necessary, as the language is permissive. See ibid. Accordingly, a failure to speak directly to the geographical distribution of Hott 22's competitors does not erode the validity of the market area determined by the trial court.

This is especially true, given that surveys mapping the geographic distribution of Hott 22's own customers were presented. Here, data based on Russo's clientele was used by both Russo's and the Prosecutor's experts, with the result that, according to the trial court, "'[a]ll of the experts who testified for each of the parties used approximately the same market area . . . .'" Thus, the accuracy of the market area established by expert testimony, and adopted by the trial court, is substantially supported by the record.

In choosing to rely on the Prosecutor's expert's opinion of the market area, rather than on the other parties' experts' opinions, the trial court stated that a "[fourteen] mile radius standard is fixed and, therefore, more understandable and reasonable." Russo claims that the court's failure to address his expert's actual testimony when making this determination resulted in a violation of the remand and the independent duties imposed by Rule 1:7-4. We disagree.

Although it appears that the trial court may have mistakenly attributed the Township's twenty-minute drive test to Russo's expert, we uphold the trial court's findings because there is "adequate, substantial, and credible evidence" in the record to support the finding that a fourteen-mile-radius design is a proper market area, regardless of the alternatives presented. Rova Farms, supra, 65 N.J. at 483-84. The clarity of the Prosecutor's model and the credibility of his expert's testimony provide ample support for the trial court's decision to adopt the fourteen-mile circle. This is so even when properly considered against Russo's competing model that was likewise derived from customer data, but contained additional modifications based on transportation routes and tweaks relating to the customer geographical data.

On remand, the trial court employed the same methodology for identifying available sites that had been approved by us in our initial opinion. The nineteen sites in Newark originally accepted by the trial court were found, on remand, to be within the relevant market area. The court concluded that those nineteen sites were still available under Saddle Brook. The court specifically articulated its reasons for finding that these sites were available, applying factors such as access to transportation, patron demography, and proximity to Hott 22. The trial court also incorporated by reference the Prosecutor's expert's opinion of over twenty-five additional available sites in other municipalities within the fourteen-mile circle.

Russo complains that the trial court did not make findings as to the number of available sites with sufficient specificity. This claim is based on the court's failure to analyze the "reasonability of the economic costs" that would be required to develop these sites, rather than its failure to clearly identify the sites that it considered to be available. Russo further argues that a more "specific investigation . . . into the individual locations is necessary to determine whether they could be developed for a reasonable cost that a generic business owner would be willing to incur."

"In addressing whether alternative sites for a protected activity should be considered in determining the availability of other adequate channels of communication, courts have focused on whether such sites are feasible alternatives and, consistent with Renton,[*fn1 ] have de-emphasized the significance of higher costs in determining feasibility." Saddle Brook, supra, 156 N.J. at 594-95.

However, a feasible alternative need not be one that is commercially viable. In Sayreville, we held that "the availability of alternate sites does not depend on whether the land is developed, occupied, or any other practical consideration that may present an inconvenience to its acquisition." Supra, 416 N.J. Super. at 325-26. The United States Supreme Court has stated that sexually oriented businesses such as Russo's should be required to "fend for themselves in the real estate market, on an equal footing with other prospective purchasers and lessees," Renton, supra, 475 U.S. at 54, 106 S. Ct. at 932, 89 L. Ed. 2d at 42, and that the First Amendment does not "compel[] the Government to ensure that adult theaters, or any other kinds of speech-related businesses for that matter, will be able to obtain sites at bargain prices." Young v. American Mini Theatres, Inc., 427 U.S. 50, 78, 96 S. Ct. 2440, 2456, 49 L. Ed. 2d 310, 330 (1976).

The trial court originally found that the nineteen sites in Newark met the requirements for availability under Saddle Brook and Renton. We affirmed those findings prior to remand. In finding that the Newark sites were available, we did not indicate that an investigation resembling a due diligence inquiry or a determination of actual availability was necessary. This is consistent with Saddle Brook, which requires that the government identify reasonable or feasible alternatives for sexually oriented businesses, but not guaranteed alternatives.

The record supports the findings that the nineteen Newark sites highlighted by the trial court are available under the proper test. The trial court's analysis looked at whether sexually oriented businesses were prohibited in the relevant municipalities, under either state or local laws, as well as whether there was public access to these sites and whether there were physical impediments to their development. Having concluded that the nineteen Newark sites survived this scrutiny, the trial court was within its discretion to find these sites to be available.

The trial court also accepted over "twenty-five other sites [as] available for an area that is geographically near to [Russo's] current site," that were listed in the Prosecutor's expert's report. However, the expert did not conduct the specific analysis in these areas that he did in Newark, but was nevertheless persuasive enough to convince the trial court that his consideration of the additional twenty-five sites was reasonable. We will not disturb the trial court's conclusion that "a minimum of [nineteen] sites" within the relevant market area is "impressive."

The trial court held that the nineteen Newark sites were sufficient to allow Russo to operate his business under Saddle Brook and the First Amendment. Although the trial court did not utilize a formula, or explain in detail how it arrived at its decision, it stated that "it certainly appears [that] the number of alternative opportunities to locate Hott 22 is abundant in the noted relevant market area."

Russo argues that the trial court did not engage in a specific enough analysis regarding the sufficiency of the available sites because it did not fully compare the number of sites to the size or population of the market area. Russo also claims that the trial court failed to consider the existence of other "comparable businesses" in the market area, in violation of Saddle Brook. Russo relies on Casanova Entertainment Group, Inc. v. City of New Rochelle, 375 F. Supp. 2d 321 (S.D.N.Y. 2005), aff'd, 165 Fed. Appx. 72 (2d Cir. 2006), and MJ Entertainment Enterprises v. The City of Mount Vernon, 328 F. Supp. 2d 480, 488 (S.D.N.Y. 2004), to show that the trial court did not weigh the required factors in finding that the available sites were sufficient for the relevant market area. We determine that these cases, while of interest, are neither authoritative nor persuasive. As an intermediate appellate court, we are bound to apply the law as it is embodied in our Supreme Court's precedents. See State v. Hill, 139 N.J. Super. 548, 551 (App. Div. 1976).

"Legislation restricting constitutionally protected speech must leave available alternative avenues of communication." Renton, supra, 475 U.S. at 47, 106 S. Ct. at 928, 89 L. Ed. 2d at 37. "[T]he First Amendment requires only that [Defendants] refrain from effectively denying [Plaintiff] a reasonable opportunity to open and operate an adult theater within the city. . . ." Id. at 54, 106 S. Ct. at 932, 89 L. Ed. 2d at 42. Determining whether Russo has a constitutionally reasonable opportunity to operate his business using an alternative avenue within the relevant market area is a "formidable" and fact-specific task. Saddle Brook, supra, 156 N.J. at 596. The process for deciding whether the number of alternative sites for a sexually oriented business satisfies the First Amendment is a regional inquiry and entails, among other things, expert assessments of the size of the relevant market; the absolute number of available locations; the relative number of such locations to land mass; the ratio of locations to population; and the qualitative availability of particular properties in light of their own unique characteristics. Merely identifying some properties on which sexually oriented uses are permitted is only the first step in a complicated and fact-sensitive analysis. [DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 258-59 (2009) (internal citations omitted).]

This determination requires an "exquisite exercise of judicial authority," and an understanding that while "five suitable sites within a ten-mile market area may be enough to satisfy constitutional concerns," that "same number of suitable sites within a fifty-mile market area may not be." Twp. of Cinnaminson, supra, 405 N.J. Super. at 536 (remanding for an evidentiary hearing where the trial court concluded that there were sufficient alternative avenues for a sexually oriented business's expression despite not clearly identifying those avenues and acknowledging that state and local ordinances "drastically reduced" the number of available sites).

Although the trial court in this case did not identify every site that it deemed available, it incorporated expert opinion and specifically identified at least the nineteen sites in Newark. Including the additional twenty-five sites referred to by the court would be tenuous, as there was no specific identification of any such locations, but merely the naming of municipalities where sites could be available.

Nevertheless, the court explained that the "nineteen Newark sites alone" would have been enough to protect Russo's constitutional rights when compared to the relevant market area. We conclude that this was specific enough for purposes of Saddle Brook's third prong.

The court's analysis of the relationship between the nineteen Newark sites and the size and population of the market area, however, was somewhat superficial. The trial judge explained, as follows: when we take into account the number of specific sites in the relevant market area, the population within that area,[] the fact that nineteen Newark sites alone are numerous and only a matter of a few miles from the current site . . . it certainly appears the number of alternative opportunities to locate Hott 22 are abundant in the noted relevant market area.

The court merely took judicial notice of the census figures for population within the market area without stating that figure directly. The court also did not include a formula or ratio in comparing the population or size of the market area to the nineteen Newark sites, but made that assessment in a conclusory fashion.

From our vantage point, utilizing what we believe to be the same judicial notice employed by the trial court, the population of the relevant market area exceeds two million persons.*fn2 Using the nineteen Newark sites, this results in a ratio of one alternative site per approximately 105,000 individuals. The market area comprises an arithmetical total area (pi times the radius squared) of approximately 615 square miles,*fn3 producing a ratio of one alternative site per thirty-two square miles.

While Saddle Brook did not lay out a specific ratio that would satisfy constitutional concerns, many courts in other jurisdictions have engaged in comparable analyses. See e.g., Dumas v. Dallas, 648 F. Supp. 1061, 1070-71 (N.D. Tex. 1986), aff'd, 837 F.2d 1298 (5th Cir. 1988), aff'd in part and rev'd in part by, vacated in part by, 493 U.S. 215, 110 S. Ct. 596, 107 L. Ed. 2d 603 (1990); Centerfold Club, Inc. v. City of St. Petersburg, 969 F. Supp. 1288 (M.D. Fl. 1997); Diamond v. City of Taft, 215 F.3d 1052 (9th Cir. 2000) (noting that most courts have employed one of two methods to determine whether there are a sufficient number of alternative sites). We decline to tease a rigid, formulaic constitutional principle from the welter of cases employing comparable analyses. Instead, we continue to adhere to the touchstone of constitutionality: reasonableness.

Viewed through that lens, we are satisfied that notwithstanding its arguable imprecision, the trial court's ultimate conclusion on remand comports with First Amendment principles. Our determination is buttressed by the minimalist approach of using only nineteen available sites, rather than the much larger pool of likely available sites in municipalities other than Newark. Russo's constitutional right to freely express himself through Hott 22's business activities has not been infringed by N.J.S.A. 2C:34-7.


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