G. & J.K. Enterprises, Inc. v. Division of Alcoholic Beverage Control

• Decision Date: 25 October 1985
• Citation: 500 A.2d 43,205 N.J.Super. 77
• Parties: In the Matter of G. & J.K. ENTERPRISES, INC. t/a the Rendezvous Lounge, Respondent-Appellant, v. DIVISION OF ALCOHOLIC BEVERAGE CONTROL, Petitioner-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 77

205 N.J.Super. 77

500 A.2d 43

In the Matter of G. & J.K. ENTERPRISES, INC. t/a the Rendezvous Lounge, Respondent-Appellant, v. DIVISION OF ALCOHOLIC BEVERAGE CONTROL, Petitioner-Respondent.

Superior Court of New Jersey Appellate Division.

Argued Oct. 7, 1985.

Decided Oct. 25, 1985.

Edward S. Bloch, Woodbridge, for respondent-appellant.

Melissa Baggitt, Deputy Atty. Gen., for petitioner-respondent (Irwin I. Kimmelman, Atty. Gen. of N.J., attorney; James J. Ciancia, Asst. Atty. Gen., of counsel).

Before Judges FURMAN and PETRELLA.

The opinion of the court was delivered by

PETRELLA, J.A.D.

These three consolidated appeals arise from a final order of the Director of the Division of Alcoholic Beverage Control suspending the plenary alcoholic beverage license of G. & J.K. Enterprises t/a The Rendezvous Lounge (Licensee) for two periods of 60 days and an additional period of 120 days based on three separate charges of violations of the Division's regulations. The offenses involved all related to determinations that on four separate dates Licensee had suffered or permitted lewd or immoral activity in or upon the licensed premises in violation of the applicable regulations and that the Licensee failed to include certain "exotic dancers" on his list of employees.

Licensee, which conducts its business at 601 Washington Road, South Amboy, was charged in a January 18, 1983 notice with violating N.J.A.C. 13:2-23.6 on November 23, 1982 by permitting lewd and immoral activity upon the licensed premises in the performances by females commonly referred to as topless dancers, and violating N.J.A.C. 13:2-23.13(a)(3) by failing to list the names and addresses of those dancers as current employees on the licensed premises.

While those charges were pending an additional notice and charges dated May 19, 1983, were served on Licensee alleging that on February 14, 1983 similar violations occurred. These charges were consolidated and heard as a contested case by an Administrative Law Judge (ALJ).

We find it unnecessary to fully detail the somewhat graphic testimony elicited at the hearings of the activities engaged in by the female dancers who on each occasion danced and performed with their breasts, and sometimes parts of other private areas exposed. There was testimony in the record which supports the ALJ's findings that in the November 23, 1982 incident two Division undercover agents observed two females dancing with the top portions of their outfits removed and their breasts exposed to the patrons. There was testimony that the first dancer, while topless, left the stage several times during her performance to accept gratuities from patrons. There was testimony that the second dancer permitted a male patron to remove her silver jeans. ¹ That dancer then removed the top of her outfit and exposed her breasts to the patrons. The investigator also testified that while on the dance stage, this dancer pulled down the bottom portion of her bikini and exposed her "anal" area to the patrons. The activities of the evening occurred while Gregory Kaye, a principal of Licensee, was seated at the bar and did nothing to discourage or stop the performances.

The Division's inspector testified to having observed somewhat similar occurrences by two different female dancers on February 14, 1982. One of the dancers engaged in considerable self-manipulation of her breasts, as well as lying down on a blanket on the stage and spreading her legs and massaging her breasts. It was essentially undisputed that on both dates none of the dancers' names were on the employee list prescribed under the previously cited regulations.

In his initial decision the ALJ found that Licensee had violated the regulations as charged. The Director accepted the ALJ's initial decision and increased the proposed penalty from 30 to 60 days. Licensee appealed and obtained a stay pending disposition of the appeal.

During the pendency of that appeal Licensee was served with a March 28, 1984 notice and charges regarding incidents of permitting or suffering performances of lewd or immoral activity in or upon the licensed premises on January 7, 1984. There was testimony that on that date two different female performers danced with their breasts exposed, and that one of the dancers performed with what was described and found to be a virtually transparent bikini bottom. The ALJ found that Licensee had violated the regulations. He recommended a 60-day license suspension. The Director accepted the ALJ's findings and recommendations and imposed a 60-day suspension. Licensee appealed and obtained a stay of its license suspension and a consolidation of the then pending appeal.

The third of the consolidated appeals arises from July 3, 1984 charges that on May 8, 1984 Licensee permitted or suffered lewd or immoral activity upon the licensed premises and conducted the licensed business without keeping on the premises a complete list of employees. A hearing was held on these charges. The ALJ found that on May 8, 1984, two female performers separately performed with their breasts exposed while wearing bikini bottoms or G-strings, and collected gratuities from patrons while so attired. The names of the dancers were not on the employee list. On May 6, 1985 the ALJ sustained all the charges and recommended a 120-day license suspension. The Director accepted the ALJ's findings and conclusions and ordered a 120-day license suspension. Licensee filed a third notice of appeal, and obtained a stay of the suspension as well as consolidation with the previously consolidated appeals.

In these consolidated appeals Licensee argues that: (1) N.J.A.C. 13:2-23.6 is constitutionally defective; (2) the Director applied no standard of decency in finding that regulation to have been violated, and therefore, he was arbitrary, capricious and unreasonable; (3) the entertainers were independent contractors, not employees, and hence Licensee did not violate N.J.A.C. 13:2-23.13(a)(3); and (4) the penalties imposed were an abuse of discretion.

Licensee conceded at oral argument that it was not arguing that First Amendment rights protected it under the Alcoholic Beverage Control regulations, acknowledging and citing New York State Liquor Authority v. Bellanca, 452 U.S. 714, 101 S.Ct. 2599, 69 L.Ed.2d 357 (1981). Rather, Licensee's constitutional arguments are based on an alleged lack of due process arising from an asserted indefiniteness of the terms "lewdness" and "immoral" activity in the regulations.

N.J.A.C. 13:2-23.6 provides in pertinent part:

(a) No licensee shall engage in or allow, permit or suffer in or upon the licensed premises: (1) any lewdness or immoral activity; ....

Licensee contends that by failing to adequately define "lewdness" and "immoral activity," N.J.A.C. 13:2-23.6 thus lacks a standard of decency. This indefiniteness, according to Licensee, makes the regulation violative of its due process rights, thereby subjecting Licensee to arbitrary and capricious application of the regulation and to punishment in "an ex post facto manner." Licensee concedes the Director's authority to promulgate the regulation under the broad authority given him in N.J.S.A. 33:1-39.

We noted in In re Club "D" Lane, Inc., 112 N.J.Super. 577, 579, 272 A.2d 302 (App.Div.1971):

A license to sell intoxicating liquor is not a contract nor is it a property right. Rather, it is a temporary permit or privilege to pursue an occupation which is otherwise illegal. Since it is a business attended with danger to the community, it may be entirely prohibited or be permitted under such conditions as will limit to the utmost its evils. Mazza v. Cavicchia, 15 N.J. 498, 505 (1954).

The regulation and sale of alcoholic beverages, requiring as it does intense regulation, is considered on a narrower basis than other commercial enterprises. See e.g., Davis v. New Town Tavern, 37 N.J.Super. 376, 378, 117 A.2d 415 (App.Div.1955); In re Club "D" Lane, Inc., supra, 112 N.J.Super. at 579, 272 A.2d 302. See also In re Boardwalk Regency Corp. Casino License, 90 N.J. 361, 447 A.2d 1335 (1982), appeal dismissed, 459 U.S. 1981, 103 S.Ct. 562, 74 L.Ed.2d 927 (1982) (regulation of casinos). Although we have essentially only outlined the graphic testimony of what occurred on the Licensee's premises as found by the ALJ and the Director, Licensee's claim that the regulation is indefinite rings hollow. The terms "lewdness" or "immoral activity" in N.J.A.C. 13:2-23.6(a)(1) were also used in the predecessor regulation. ²

It was observed by Judge Goldmann in In re Olympic, Inc., 49 N.J.Super. 299, 306, 139 A.2d 768 (App.Div.1958), certif. den. 27 N.J. 279, 142 A.2d 262 (1958):

Our courts have long recognized the sui generis character of the liquor trade, and the Legislature has from earliest times treated that subject in an exceptional manner. Mazza v. Cavicchia, above, 15 N.J. at page 505 . As was there pointed out, the right to regulate the sale of intoxicating liquors is within the police power and practically without limit, and that power has uniformly been accorded liberal judicial support.

This court has within the past few years had occasion to construe and apply Rule 5 of State Regulation No. 20. [citations omitted] The liquor business must be carefully supervised and tightly restrained in the public interest, in accordance with the manifest design of the Alcoholic Beverage Act.

We referred to the purpose of the former regulation in In re Schneider, 12 N.J.Super. 449, 458, 79 A.2d 865 (App.Div.1951) where we said:

The object manifestly inherent in the rule with which we are here concerned [Regulation No. 20, Rule 5] is primarily to discourage and prevent not only lewdness, fornication, prostitution, but all forms of licentious practices and immoral indecency on the licensed premises. The primary intent of the regulation is to suppress the inception of any immoral activity, not to withhold disciplinary action until...