At the same time, DEG hired an expert to determine where in that market DEG could possibly open its business without running afoul of either local zoning ordinances, or N.J.S.A. 2C:34-7, which prohibits operation of sexually oriented businesses within 1,000 feet of schools, school bus stops, child care centers, public playgrounds, places of worship, hospitals, and residential zones.  The expert determined that DEG could not legally open a sexually oriented business in Fairfield or 33 surrounding municipalities.

DEG brought the issue to court, and a Superior Court judge held that Fairfield’s zoning ordinance was unconstitutional on its face because it was content-based and did not provide for an alternative means of communication.  The judge also stated on the record that there was a reasonable likelihood that N.J.S.A. 2C:34-7 was also unconstitutional as applied in Fairfield.  After invalidating the local ordinance, the judge ordered Fairfield to issue the permit to DEG.  However, the judge also ordered a plenary hearing on whether N.J.S.A. 2C:34-7 was being unconstitutionally applied in Fairfield.  Meanwhile, DEG’s expert determined that DEG’s business violated N.J.S.A. 2C:34-7 because it was located within 1000 feet of one residential neighborhood.

In order to avoid further litigation and the possibility of the state law being declared unconstitutional as applied in Fairfield, the Township decided to enter into a settlement with DEG.  As part of the settlement that was agreed upon by the parties, DEG would be permitted to operate its business at the location it had previously leased in Fairfield, and if the Township were ever to adopt an ordinance permitting a sexually oriented business to be located in some other zone other than the zone where DEG’s business was currently operating, DEG would apply for, and the Township would grant, a Certificate of Non-Conformity for the store. 

Shortly thereafter, Fairfield did, in fact, adopt an ordinance that permitted sexually oriented businesses to be located in one zone within the Township; however, it was not the zone where DEG’s shop was located.  In accordance with the settlement, DEG applied for a Certificate of Non-Conformity.  However, the Township denied the application.  Fairfield then hired its own expert, who concluded that DEG’s expert was wrong in his assessment that there was nowhere in Fairfield where a sexually oriented business could be located without violating N.J.S.A. 2C:34-7.  Fairfield argued that because of this mistake, it should not be bound by its settlement with DEG.

In analyzing this case, the Supreme Court of New Jersey acknowledged that sexually oriented speech is protected by the First Amendment of the United States Constitution.  However, the Supreme Court also recognized that certain restrictions can be placed on this type of speech in order to control the secondary effects that sexually oriented businesses might have on the surrounding community.  Nevertheless, any restrictions must be only on the time, place, and manner of the speech.  The restrictions also must not be based on the content of the speech.  Finally, the restrictions must serve a substantial governmental interest, and allow for reasonable alternative avenues of communication.

After providing the constitutional backdrop, the Supreme Court also noted that a local municipality is permitted to settle a claim that challenges the constitutionality of the way a state statute is being applied in that municipality, as long as the claim is a substantial one.  In light of the Superior Court judge’s assessment that there was a substantial likelihood that N.J.S.A. 2C:34-7 was being unconstitutionally applied in Fairfield, the Supreme Court reasoned that this case did present a substantial claim.

The Court then analyzed Fairfield’s request for relief pursuant to Rule 4:50-1, from the consent judgment entered by the lower court, which confirmed the settlement between the parties.  The Court noted that relief from a judgment, whether it be a consent judgment or a judgment issued by the Court, should only be granted sparingly and is not an opportunity for a party to a lawsuit to simply change their mind.  The Supreme Court then determined that the consent judgment was not the result of a mistake, as Fairfield claimed.  Fairfield had been given an opportunity to hire its own expert to challenge the findings of DEG’s expert.  Fairfield chose to forego that opportunity and enter into a settlement.  Therefore, Fairfield would have to live with the consequences of their choice not to retain their own expert.

Fairfield also argued that the consent judgment should be invalidated as void because it permitted DEG to engage in an illegal act – operating a sexually oriented business in violation of N.J.S.A. 2C:34-7.  The Supreme Court similarly rejected this argument.  The Court noted that the statute contains a clause that permits a municipality to pass an ordinance to allow a sexually oriented business in an area where it would otherwise be prohibited by state law.  The purpose of that clause was to save the statute from constitutional attack in municipalities where the statute would have the effect of barring sexually oriented businesses from the entire municipality.  Therefore, the result of the consent judgment entered by Fairfield was not that it permitted an illegal location for a sex shop, but rather that it made the location “legal.”

Finally, the New Jersey Supreme Court also rejected Fairfield’s argument under Rule 4:50-1(e) that the passing of a new ordinance that permitted sexually oriented businesses in one zone in the Township discharged its obligations under the judgment because it would no longer be equitable for the courts to enforce the judgment.  The Supreme Court held that in order for a litigant to be discharged from a judgment under equitable principles, that litigant has to show that events have occurred after the judgment which, absent relief, would cause extreme and unexpected hardship on that litigant.  That element was not satisfied by Fairfield in this case, and therefore the Court denied Fairfield’s request for relief from the consent judgment.

After finding that the consent judgment and settlement did not violate any other equitable principles and did not violate the Municipal Land Use Law, the Supreme Court upheld the consent judgment and ordered that Fairfield must comply with the settlement.  When complicated zoning and land use issues arise, contact a New Jersey zoning and land use lawyer for assistance.

In this case, the Bertinos wanted to open a retail store in Cinnaminson, NJ that would sell “risqué” adult books and novelty items, such as lingerie, greeting cards, games, videos, and explicit “how to manuals.”  However, the store would not contain video booths or peep shows, and would not carry adult magazines such as Hustler or Playboy.  The Bertinos wanted to locate the store within a redevelopment zone in Cinnaminson.  After writing to the Township about their intent to open the store, the Township responded that the store would violate a local zoning ordinance that prohibited adult book stores in that redevelopment zone.

The Bertinos challenged the constitutionality of the ordinance in a lawsuit filed in the Superior Court.  The Bertinos argued that the ordinance violated the Free Speech Clause of the First Amendment of the United States Constitution.  Our courts have held that governmental regulations that are not based on the content of the speech are constitutional only if they are designed to serve a substantial governmental interest and do not unreasonably limit alternative avenues of communication.  By contrast, governmental regulations that are based on the content of the speech or constitutional only if they are narrowly tailored to promote a compelling governmental interest.  However, our courts have also held that government regulations that limit the location of businesses that sell sexually explicit materials should be analyzed under the same standard as content-neutral regulations of speech because these regulations are designed to combat the undesirable secondary effects of such businesses (e.g., promoting juvenile delinquency, contributing to an overall increase in crime, creating an environment that leads to the general deterioration of neighborhoods, and lowering property values).

 In defending the ordinance, the Township of Cinnaminson argued that the ordinance advanced a legitimate governmental interest by preserving the integrity and character of the redevelopment zone.  However, the Township did not present any evidence to substantiate its position.  The Superior Court judge who heard the case agreed with the Township.  The Judge decided that the Township did not need to substantiate its position that the town ordinance was directed towards the negative secondary effects of adult bookstores because the negative secondary effects in this case were “obvious.”   The judge also found that the ordinance served a substantial governmental interest, in spite of the fact that the Township presented no evidence on this issue, because it was “common sense” that the adult bookstore would have a negative impact on the morals of the community.

The Appellate Division reversed the lower court and held that some evidence is necessary to substantiate that the ordinance was designed to serve a governmental interest.  The Appellate Division noted that the Township could meet its burden of proof in several ways: it could present testimony from realtors that the adult bookstore would have a negative impact on property values, it could present information gathered from chambers of commerce or other civic organizations about the potential negative effects these businesses have on similar communities, or it could present accounts from law enforcement officers that, based on their experience and training, these types of establishments draw crime to the area. 

Ultimately, the Court concluded that because these types of businesses are unpopular, any court that reviews ordinances designed to prohibit such businesses must be vigilant and guard against the use of zoning power that serves only to pander to mere prejudice.  It may be helpful for business owners to contact a New Jersey zoning and land use lawyer to analyze any alleged violations of municipal ordinances.