Court Stakes a Middle Ground On Free Speech in Shopping Malls

©2000 New Jersey Law Journal

The New Jersey Supreme Court has provided shopping mall owners and their management some guidance in determining what restrictions of the free speech activities are permissible on their premises. But this guidance does not take the form of a clear demarcation of permissible and impermissible actions.

Instead, in its June ruling in The Green Party of New Jersey v. Hartz Mountain Industries, Inc., 2000 WL 758410 (N.J.), the Court adopted a balancing test that weighs the private property rights of the mall owners against the rights to speak and assemble freely.

Because this balancing is to be performed on a case-by-case basis, further case law will be required to clarify how particular restrictions on leafleting and related free speech activities fare in this balancing process.

The Green Party decision, however, makes clear that all restrictions on free speech activities will need to be based on an objective analysis of actual risks created by those very same activities. Hypothetical risks do not provide a sufficient rationale on which to base restrictions on constitutionally protected free speech rights.

Given the Court's emphasis on the importance of shopping malls as a modern-day forum for political and societal discourse, it is safe to conclude that there is a thumb on the scale on the side of organizations seeking access to New Jersey's shopping malls.

Green Party is the first case analyzing the constitutional reasonableness of speech regulations imposed by private shopping centers since the state Supreme Court holding in New Jersey Coalition Against War in the Middle East v. J.M.B. Realty Corp., 138 N.J. 326 (1994), cert. denied 516 U.S. 812, 116 S. Ct. 62, 133 L. Ed.2d 25 (1995).

In New Jersey Coalition, the Court held that the owners of certain community and regional shopping centers must allow leafleting and other similar political and societal speech within their shopping malls.

The Court reasoned that the free speech rights guaranteed by the New Jersey Constitution protect against not only the intrusions of government entities, but also against unreasonable intrusions of private parties. The genesis of this holding was the Court's view that shopping malls -- given their roles as modern day town centers -- are defacto public forums.

The Court did not however, ignore completely the private property rights of the shopping mall owners. The obligation to allow leafleting and related free speech activities within private shopping malls was made subject to the "broad powers" of the shopping mall owners to impose reasonable time, place and manner restrictions. New Jersey Coalition, 138 N.J. at 377-78. In Green Party, the Court adopted a balancing test as the appropriate analytical framework in which to assess the reasonableness of such restrictions. A balancing of expressional rights and private property interests will determine whether such restrictions pass constitutional muster under New Jersey Coalition.

On one side of the scale is the mall owner's private property interest in controlling the uses of his or her property. On other side are the free speech rights in these malls, the modern gathering places of New Jersey's citizens. Under Green Party, any restrictions must further the legitimate private property rights of the mall owners while at the same time preserve the malls as forums for expressional rights.

The plaintiff in Green Party had sought access to the Mall at Mill Creek in Hudson County to collect petition signatures on behalf of the New Jersey Draft Nader for President Committee. The mall had permitted reasonable access to its facilities for community and non-profit groups for informational activities. Access was subject to written rules promulgated by mall management that were designed to protect the tenants and customers from disturbance.

Three requirements were specifically at issue in Green Party: the requirement that an organization handing out leaflets acquire a one million dollar general liability insurance policy; the requirement that an organization sign a license agreement containing a hold harmless clause; and the limitation on access to the mall to one day, or at most a few days, per year.

In adopting the balancing test as the test of reasonableness, the Court rejected more definitive approaches adopted by the lower courts. The Chancery Division concluded that the restrictions imposed by the Mall at Mill Creek were constitutionally impermissible. In so concluding it applied the same narrowly tailored standard as the U.S. Supreme Court has applied to governmental time, place and manner restrictions in its First Amendment jurisprudence.

Under this test, a mall owner's restrictions would have to be narrowly drawn to promote the substantial interests of the mall owner. The Chancery Division based its holding on the rationale expressed in Coalition that shopping malls are defacto public forums.

Applying the narrowly tailored test, the Chancery Division concluded that the insurance and hold harmless requirements were constitutionally impermissible as de facto prohibitions on leafleting activities. This test would impose a high burden on mall owners by emphasizing protection of freedom of expression. The Appellate Division reversed, concluding that the use of the narrowly tailored test did not square fully with the holding of New Jersey Coalition.

In the Appellate Division's view, the Chancery Division had applied the wrong analytical framework in assessing the question of reasonableness and had failed to account for the broad power of mall owners to regulate free speech activities. The Green Party v. Hartz Mountain Industries, Inc., 324 N.J. Super. 192, 217-18 (App. Div. 1999).

The Appellate Division instead applied a business judgment standard to review the question of whether the Mall at Mill Creek's time, place and manner restrictions were constitutionally reasonable.

The Appellate Division based its adoption of the business judgment test on the New Jersey Supreme Court's recognition in New Jersey Coalition that the free speech rights within privately owned malls were limited. In addition, mall owners retained broad powers to regulate the exercise of free speech rights. This test, had it survived scrutiny by the Supreme Court, would have created a more permissive climate with respect to a mall owner's time, place and manner restrictions, as the emphasis shifts from the free speech rights of the leafleteers to the mall owners' private property rights.

The Appellate Division's decision created a two-part test of the reasonableness of time, place and manner restrictions: First, is the regulation a reasonable means for assuring that constitutionally protected speech does not interfere with the shopping center's business? Second, is the effectiveness of the proposed exercise of free speech rights sufficiently protected? The Appellate Division concluded that "[a]ffected malls, i.e., those subject to the Coalition case, must have the ability to impose regulations based on a standard which we would describe as a good faith exercise of reasonable business judgment."

Under this rubric, the insurance requirement, the indemnification requirement and the one-day per year limitation were upheld as reasonable business judgments designed to deal with the perceived increase in liability exposure and scheduling difficulties caused by the expressive activities themselves.

The New Jersey Supreme Court reversed, concluding that neither the narrowly tailored nor the business judgment tests of reasonableness struck the appropriate balance between free speech rights and private property rights.

The Court found that the narrowly tailored standard adopted by the Chancery Division applies in cases where First Amendment privileges are subjected to governmental time, place and manner restrictions. In the instant case, there was no governmental entity regulating or otherwise impinging on the First Amendment rights of the Green Party.

The regulation at issue in this case was of private property rights. The application of the constitutional guarantees of free speech to the owners of certain shopping malls sought to enable the exercise of free speech rights. The Court held that the narrowly tailored test was therefore not applicable.

With regard to the Appellate Division's adoption of a business judgment standard of review, the Court concluded that "we are not so certain that what is good for mall owners is good for the country, or, in this case, good for the citizens of New Jersey who seek to exercise their free speech rights."

The Court held that the business judgment rule has limited relevance in the context of the relationship between expressional rights and private property rights. The situation presented in the instant case did not entail assessing the rights and obligations of distinct constituents within a business entity.

The Court concluded that the business judgment rule is not an effective framework in which to analyze the reasonableness of a mall owner's time, place and manner restrictions.

Writing for the Court, Justice Daniel J. O'Hern adopted the reasoning of the late Chief Justice Robert Wilentz as expressed in New Jersey Coalition. "It is the extent of the restriction and the circumstances of the restriction that are critical, not the identity of the party restricting free speech." Green Party, 2000 WL at 12 (quoting New Jersey Coalition, 138 N.J. at 369). The Court thereby rejected the deference to the decisions of the mall owners implicit in the Appellate Division's opinion.

In adopting a balancing test, O'Hern took cognizance of New Jersey's reluctance to adopt rigid classifications in constitutional analysis.

"Rather than to slot cases into tiers of strict scrutiny or narrow tailoring, we have attempted in constitutional analysis to balance the competing interests, giving proper weight to the constitutional values" he wrote. Under the balancing test adopted by the Court, the factors to be considered in weighing the free speech and private property interests are the nature of the affected right, the extent to which a mall owner's restrictions intrude upon the affected right, and the mall owner's need for the restriction.

The role played by a particular type of expression within the fabric of political and societal discourse is the pivotal starting point in the weighing of interests.

"The more important the constitutional right sought to be exercised, the greater the mall's need must be to justify interference with the exercise of that right," O'Hern wrote. Restrictions adopted by a mall owner must therefore be designed to achieve the legitimate purposes of protecting business interests while preserving free speech rights.

The "broad authority" of shopping mall owners may be employed to minimize interference with the business activities of the mall. This "broad authority" must at the same time, however, preserve a leafleteer's free speech rights. The plaintiff in Green Party sought access to the Mall at Mill Creek in an effort to gather petition signatures in support of its candidate for Governor of New Jersey.

Under the first prong of balancing test, the Court emphasized the importance of leafleting and gathering signatures in the context of political campaigns and a candidate's efforts at obtaining his or her party's nomination for public office. Personal contact with the voters is crucial. Leafleting is one of a limited number of cost and time effective means to meet a large number of citizens and therefore presents a unique opportunity to raise issues of political and societal importance. In addition, leaflets are inexpensive and can be produced by almost anyone, the Court said.

In the Court's view, access to shopping malls is critical, as such malls in New Jersey are the only location to meet large numbers of citizens face to face. Malls are therefore unique forums in which to seek signatures on political petitions or create interest in issues of general concern. This type of speech therefore has a high value in our system of political discourse. O'Hern reasoned that allowing mall owners to place substantial burdens on this avenue of exercising free speech rights may destroy it.

Under the second and third prongs of its balancing test, the Court reasoned that "[i]n weighing the harm that mall owners may suffer, we must consider the nature and extent of the risk proposed by leafleteers and pamphleteers." In completing this analysis, the Court ruled that the focus must be on objective factors.

In the case of the Green Party, the Court noted that there was no prior history of injury or incident with groups of the same type as the plaintiff when engaged in free speech activities. Furthermore, there was no evidence proffered as to the actual costs, if any, of the risks created.

"These requirements for information, it met, would allow us to consider whether any legitimate business interests of the mall have been infringed or threatened by the expressive political activity," The Court said.

The proofs offered by the Mall at Mill Creek fell short of demonstrating the necessity of the liability insurance, the Court continued. In the face of this deficiency of objective criteria, there was little to balance against the important expressive activities of the Green Party. The Court therefore invalidated the Mall at Mill Creek's restrictions.

The mall, the Court added, offered no specific evidence with regard to what, if any, additional risks would be created by the plaintiff or like groups given the already extensive risks created by the general invitation to the public at large. In the Court's view, the proffering of generalized risks is not sufficient.

The mall's showing of numerous claims against it, the majority of which were slip and fall cases, did not meet the burden of demonstrating objective risks. There was no showing that the activities of the Green Party and like groups would increase the already substantial liability exposure faced by the mall owners and accepted as a facet of doing business, according to the Court.

"It seems somewhat unfair to charge leafleteers for occasionally exercising expressive rights when skylarking teenagers, who accept the general invitation of the Mall and pursue expressive activities that would appear to pose a greater risk, are not asked to pay anything for that privilege," O'Hern wrote.

The Court, therefore, concluded that the imposition of the insurance requirement in this case was based on a subjective judgment and was therefore rejected. However, the Court did not reject the insurance requirement as invalid per se.

The Court held open the possibility that a better-developed record may provide a sufficient objective demonstration of real economic costs associated with occasional leafleting. In such a case, leafleteers could be required to pay a fairly allocated fee. This fee would have to be objectively related to the risk created, the Court found.

The Court sidestepped the issue of what time, place and manner restrictions a mall owner would be able to impose if faced with a request for access to its facilities by a group with a history of provoking angry or violent reactions.

Would a mall owner be justified in imposing differing restrictions or insurance requirements based on the content of a group's free speech if that speech created an objectively greater risk of disruption to the private property rights of the mall owner? This question also awaits further development of the case law.

The Court did not deal extensively with the hold harmless clause or the restriction on the number of days per year a particular group may have access to the Mall at Mill Creek. The Court concluded that the hold harmless clause also fails in this case for reasons similar those discussed in connection with the insurance requirement.

Once again, the provision is not objectively related to any actual risks created by the Green Party representative. The language contained in hold harmless provision at issue in Green Party was designed for the mall's tenants. An agreement tailored to the particular risks, if any, created by the leafleteers "would not be objectionable," the Court found.

The Court also did not review the restrictions on access to a limited number of days per year for a particular group as the parties had reached an agreement on this issue. The Court noted, however, that "[b]ecause of the primary and general election cycles, more than one day per year is reasonably required to exercise the expressive rights requested." The Court did not address the issue of whether this rationale applies to expressive activities not tied to the requirements of the political calendar.

The Court has staked a middle ground between the restrictive "narrowly tailored" holding of the Chancery Division and the Appellate Division's more permissive business judgment standard.

Although the balancing test adopted by the Court does not provide definitive answers as to what restrictions are permissible and what restrictions run afoul of free speech rights, mall owners should note carefully the Court's reaffirmation of the principles set forth in New Jersey Coalition.

The Court, with five new Justices appointed since the New Jersey Coalition decision, unanimously reaffirmed the conclusion that shopping malls play a unique role as the modern town centers.

With this role comes the constitutional obligation not to unreasonably impinge on free speech rights. Although mall owners retain the ability to regulate free speech activities, "[t]he Court did not intend that those regulations would prevent the exercise of expressive activities."