PHILADELPHIA, PA – The Third U.S. Circuit Court of Appeals has ruled that a New Jersey Division of Alcoholic Beverage Control (ABC) regulation that prohibits “any lewdness or immoral activity” on the premises of a liquor-licensed business is not unconstitutional.The case, 181 South Inc. v. Fischer, stems from fines the ABC levied against the Moulin Rouge “go-go” bar in Atlantic City, NJ, following an uncover operation conducted by New Jersey State Police in 2003.

According to court documents, undercover officers who entered the Moulin Rouge “noted three female adult entertainers on 181 South’s premises engaging in what the police determined to be prohibited activity under the Regulation.”

Specifically, the police observed “an entertainer rubbing her breasts and vagina while onstage,” who then “proceeded to straddle a patron, pushing her breasts in his face and then rubbing her leg in the patron’s pelvic area before rubbing his inner thighs with her hands.” Officers also witnessed two other women “caressing” their breasts and “massaging” their vaginas to “simulate the act of masturbation.”

After being cited for the violations, 181 South, the company that owns the Moulin Rouge, negotiated a payment of $10,000 to the ABC in lieu of having the club’s liquor license suspended. Concerned that the regulations might hamper operation of the club in the future, 181 South filed a lawsuit arguing that the regulation is unconstitutional because it “proscribes protected forms of expression and fails to make clear what conduct is or is not permitted on the premises of a liquor licensee.”

After U.S. District Court Judge Robert B. Kugler ruled in favor of the ABC, 181 South appealed, asserting Kugler had erred in rejecting the companies First Amendment challenge to the regulation,and in rejecting the claims that the regulation was unconstitutionally overbroad and vague.

“The courts in New Jersey have described lewdness as ‘erotic excitation’ – whatever the hell that means,” said 181 South’s attorney Daniel A. Silver, according to the Philadelphia Inquirer.

Relying largely on the Supreme Court’s decision in the case of California v. LaRue, however, the Third Circuit found that Kugler had not erred in rejecting 181 South’s constitutional challenges to the regulation.

In California v. LaRue, the majority wrote that “as the mode of expression moves from the printed page to the commission of public acts that may themselves violate valid penal statutes, the scope of permissible state regulations significantly increases.”

Paraphrasing an earlier decision, the majority in LaRue also found that “the extent to which ‘conduct’ was protected by the First Amendment depended on the presence of a ‘communicative element.’” The Court also observed that the performance the State sought to prohibit “partake more in gross sexuality than of communication.”

In the Third Circuit’s decision issued Tuesday, Judge Julio M. Fuentes writes that “the Regulation, as interpreted by the New Jersey courts, does not violate the First Amendment.”

Fuentes reasons that the state’s “regulation of the sale of alcoholic beverages at ‘inappropriate locations’ falls within its general police power,” and asserts that it is “well-established” that the state’s interest in “curtailing the ‘unacceptable social behavior’ that can arise in conjunction with adult entertainment is important and substantial.”

Fuentes also opines that the state’s interest in enacting the ABC’s regulation “is unrelated to the suppression of free expression, because the Regulation does not prohibit individuals from participating in ‘lewd or immoral activity.’ Rather, it only prohibits such activity from taking place on the premises of liquor-licensed establishments.”

Silver said he was “very disappointed” with the decision, and that he intends to request the opportunity to argue the case again before the full Third Circuit. A three-judge panel drawn from the Third Circuit originally heard arguments in the case, but Judge Max Rosen died before the Court handed down its decision. Senior Circuit Judge Jane Roth concurred with Fuentes in the decision.

Silver observed that Fuentes appeared to be mistaken with regards to some key underlying facts of the case.

Fuentes opens his decision by stating “(O)ne of the club’s main attractions involves topless dance performances that include sexually explicit dance routines.” In fact, says Silver, the Moulin Rouge dancers do not remove their tops, and at a minimum remain covered by bikini tops and bottoms throughout their performances.

“I don’t consider this a strip club if they’re wearing a bathing suit,” said Silver.

Silver will also argue that the panel’s analysis of the claim that the regulation is overbroad was flawed. Although he conceded that the performers observed by the State Police may have crossed the line, Silver said that the vague nature of the regulation’s language restricts dancers well beyond the prohibition of contact with patrons or simulated masturbation.

“If a dancer in a bikini touches her breast and that’s considered lewd, then she can’t dance,” asserted Silver. “She has to just stand there.”