Sea Girt Restaurant v. Borough of Sea Girt, Civ. A. No. 85-5360.

Decision Date14 January 1986
Docket NumberCiv. A. No. 85-5360.
Citation625 F. Supp. 1482
PartiesSEA GIRT RESTAURANT AND TAVERN OWNERS ASSOCIATION, INC., a Nonprofit Organization of the State of New Jersey, 810 The Plaza, Inc., a Corporation of the State of New Jersey, Trading As the Stadium, and Stadium Realty Co. Inc., a Corporation of the State of New Jersey, Rod's Olde Irish Ale House, Inc., a Corporation of the State of New Jersey, Harrigan's Inc., a Corporation of the State of New Jersey, T/A Harrigan's Pub Sea Girt Ocean View, Inc., a New Jersey Corporation, Avon Hotel Corporation, a Corporation of the State of New Jersey, Plaintiffs, v. BOROUGH OF SEA GIRT, NEW JERSEY, Mayor Thomas Black, Mayor of the Borough of Sea Girt, Councilman William Marriott, Councilman Frederick McKnight, Councilman Mark Regan, Councilwoman Margaret Appel, Councilman Raymond Harter, Members of the Governing Body of Sea Girt, Helen B. Brash, Municipal Clerk of the Borough of Sea Girt, General Irwin I. Kimmelman, Attorney General of the State of New Jersey, Director John F. Vassallo, Jr., Director of Alcoholic Beverage Control, Defendants.
CourtU.S. District Court — District of New Jersey

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Thomas C. Brown, West Orange, N.J., for plaintiffs.

Lee Barry, Deputy Atty. Gen., Trenton, N.J., for defendants, State of N.J. and New Jersey Alcoholic Beverage Control Div.

William H. Burns, Jr., Pearce, Maguire, Burns, O'Brien & Van Note, Spring Lake, N.J., for defendants Borough of Sea Girt and Borough of Sea Girt Officials.

RODRIGUEZ, District Judge.

On November 5, 1985, in a referendum held in the Borough of Sea Girt, a majority of the voters in that community voted in favor of limiting the sale of alcoholic beverages in licensed retail facilities to the hours of 6:00 a.m. to midnight, seven days a week.1 This vote reduced the hours alcoholic beverages could be served in Sea Girt by two hours a day.2 Plaintiffs, the Sea Girt Restaurant and Tavern Owners Association, Inc. and six corporate holders of plenary retail consumption liquor licenses which operate restaurants and taverns in Sea Girt, immediately filed this civil rights suit pursuant to 42 U.S.C. § 1983 challenging the constitutionality of the referendum process and sought a temporary restraining order to prevent the new ordinance from going into effect pending the outcome of the lawsuit. In addition to injunctive relief, plaintiffs seek damages, attorneys fees and costs of suit. Defendants named in this action are the Borough of Sea Girt, its mayor, council people and municipal clerk (collectively the "borough defendants"), and the Attorney General of the State of New Jersey and the Director of the state's Alcoholic Beverage Control Board (collectively the "state defendants"). This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343. In an Order entered November 8, 1985, this Court denied plaintiffs' request for emergent relief and scheduled a hearing to resolve the constitutional questions.3 Testimony was taken and legal arguments were heard on the question of liability on December 11 and 12, 1985.

Plaintiffs contend that a liquor license is a property interest protected from arbitrary state or municipal action by the First and Fourteenth Amendments to the United States Constitution and that the New Jersey statute, N.J.S.A. 33:1-47.1 (Supp.1985), which permits municipalities to regulate the hours of sale of alcoholic beverages by means of a public referendum, has diminished the value of their licenses and is unconstitutional in that it (1) deprives holders of liquor licenses of property interests without due process of law and (2) unduly burdens interstate commerce. In the alternative, plaintiffs assert that even if the referendum process is constitutional, the statute's five-year restriction on resubmission of referendum issues to public vote is an unconstitutional restriction on access to the ballot.

Defendants assert in response that a liquor license, far from being property for purposes of due process analysis, is merely a temporary permit to engage in an otherwise illegal activity and as such is subject to reasonable regulation. According to defendants, even those states which consider a liquor license to be property recognize the right of the state to regulate the sale of alcoholic beverages. Accordingly, defendants assert that due process is not violated as long as such regulation bears a rational relationship to the public interest. In addition, defendants contend that a five-year restriction on resubmission to a vote of issues decided by popular referendum is constitutionally permissible. Finally, defendants distinguish regulation of intoxicating liquors from other types of regulation which are subject to traditional commerce clause requirements to conclude that this particular restriction on hours of sale of alcoholic beverages does not place a burden on interstate commerce.

For the reasons set forth below, this Court finds that N.J.S.A. 33:1-47.1, which provides for regulation of the hours of sale of intoxicating liquors by local referendum, does not violate plaintiffs' procedural or substantive due process rights protected by the Fourteenth Amendment to the Constitution, nor does the result of the referendum process place an undue burden on interstate commerce in violation of the Commerce Clause of the Constitution. In addition, the Court does not find it necessary to address plaintiffs' claim that the statute impermissibly interferes with freedom of association or access to the ballot as protected by the First Amendment because the Court construes the five-year prohibition on resubmission of referendum questions to apply only to resubmission of the "same" questions. Accordingly, N.J. S.A. 33:1-47.1 is constitutional and judgment is entered in favor of defendants.

DISCUSSION

Any analysis of a statute dealing with the regulation of the sale of alcoholic beverages must begin with a discussion of the Twenty-first Amendment to the United States Constitution. Section 2 of that Amendment provides:

The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

This clause gives to the states broad powers to specify the times, places and circumstances under which liquor may be sold within their borders. Capital Cities Cable Inc. v. Crisp, 467 U.S. 691, ___, 104 S.Ct. 2694, 2707, 81 L.Ed.2d 580, 597 (1984); California v. LaRue, 409 U.S. 109, 114, 93 S.Ct. 390, 395, 34 L.Ed.2d 342 (1972); Joseph E. Seagram & Sons v. Hostetter, 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966). The New Jersey courts have held consistently that this power to regulate the sale of alcoholic beverages is virtually limitless. Joseph H. Reinfeld, Inc. v. Schieffelin & Co., 94 N.J. 400, 412, 466 A.2d 563 (1983); Blanck v. Mayor and Borough Council of Magnolia, 38 N.J. 484, 490, 185 A.2d 862 (1962); Mazza v. Cavicchia, 15 N.J. 498, 505-06, 105 A.2d 545 (1954), G. & J.K. Enterprises, Inc. v. Div. of Alcoholic Beverage Control, 205 N.J.Super. 77, 82-85, 500 A.2d 43 (App.Div. 1985). In fact, the sale of such beverages may be prohibited altogether. Mazza, supra, 15 N.J. at 505, 105 A.2d 545; Eskridge v. Div. of Alcoholic Beverage Control, 30 N.J.Super. 472, 475, 105 A.2d 6 (App.Div. 1954).

Plaintiffs concede that the state of New Jersey, and its municipalities by virtue of a delegation of this power, can regulate the hours during which alcoholic beverages may be sold. (Plaintiffs' brief, at 17-18). They complain, however, that the statutory scheme set forth in N.J.S.A. 33:1-47.1, which permits the hours to be set by majority vote on voter-initiated referendum, denies them due process of law. Although the gravamen of plaintiffs' complaint appears to be denial of procedural due process —i.e., inadequate notice and no opportunity to be heard, plaintiffs also appear to be making a substantive due process argument —i.e., the statute impermissibly infringes on a fundamental right. Although the parties blur the distinction between these two principles, the Court will analyze each separately, beginning with plaintiffs' primary claim, denial of procedural due process. The Court notes at the outset that courts, particularly trial courts, are reluctant to reach the conclusion that a statute is unconstitutional. State v. Cannarozzi, 77 N.J.Super. 236, 239, 186 A.2d 113 (App.Div.1962); Cafe Gallery, Inc. v. State, 189 N.J.Super. 468, 474, 460 A.2d 227 (Law Div.1983); Supermarkets General Corp. v. Sills, 93 N.J.Super. 326, 336, 225 A.2d 728 (Ch.Div.1966). A strong presumption favors the validity of legislation. Velmohos v. Maren Engineering Corp., 83 N.J. 282, 295, 416 A.2d 372 (1980).

PROCEDURAL DUE PROCESS

The Fourteenth Amendment's procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. Board of Regents v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 2708-09, 33 L.Ed.2d 548 (1972). Therefore, in order to establish an entitlement to certain procedural protections, plaintiffs first must establish that their interest in a liquor license constitutes a property interest. To have a property interest in a liquor license, plaintiffs "must have more than an abstract need or desire for it.... They must, instead, have a legitimate claim of entitlement to it." Id. at 577, 92 S.Ct. at 2709. Such interests in property can take many forms. See, e.g., Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972) (teacher's tenure contract creates a property interest); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) (welfare benefits constitute property).

In order to determine if a liquor license constitutes property for purposes of due process analysis, the Court must look to state law. Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976); Beckham v. Harris, 756...

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