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MERCO PROPERTIES, INC. v. GUGGENHEIMER

June 3, 1975

MERCO PROPERTIES, INC., and Joseph Merolla, Plaintiffs,
v.
Elinor GUGGENHEIMER, Commissioner of the Department of Consumer Affairs, City of New York, et al., Defendants


Stewart, District Judge.


The opinion of the court was delivered by: STEWART

MEMORANDUM

STEWART, District Judge:

 Plaintiffs bring this action pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 2201, seeking declaratory and injunctive relief, to restrain defendants from enforcing a New York City ordinance requiring the licensing of cabarets and catering establishments on the ground that such ordinance is unconstitutional on its face and as applied. *fn1"

 Plaintiff Merco Properties, Inc. ("Merco") is the lessee under a written 50-year lease dating from October, 1966 of the Hotel Granada, located at 268 Ashland Place in downtown Brooklyn. Plaintiff Joseph Merolla is the principal shareholder, president and director of Merco. Defendants are the City of New York, Betty Furness, former Commissioner of Consumer Affairs, Deputy Commissioner Bernard Sack, Consumer Affairs' hearing examiner Leo Pollack, and former Mayor John V. Lindsay. *fn2" Plaintiffs allege that Furness, Sack and Lindsay were responsible for the administration and enforcement of the challenged ordinances during 1973.

 Following successive denials by defendants of Merco's applications for catering and cabaret licenses between 1969 and 1973, plaintiffs brought the instant action challenging the 1973 license denial on constitutional grounds. *fn3" Specifically, plaintiffs allege that the denial of Merco's license application denied them their "constitutional right to engage in their lawful and legitimate business and vocation of providing a place . . . for the peaceable assembly of members of the public . . . and of providing . . . them food and beverages with music for listening, dancing and entertainment. . . ." Complaint, para. 43. Plaintiffs also contend that the denial of a license to Merco has deprived members of the public of the "place of their choice to peaceably assemble." Complaint, para. 44. Additionally, plaintiffs maintain that the challenged ordinance is unconstitutionally vague and overbroad on its face and as applied in that it grants the Commissioner of Consumer Affairs unfettered and unguided discretion to refuse to issue catering and cabaret licenses when she is not "satisfied" that the applicant is "a fit and proper person." Complaint, para. 46. Plaintiffs do not allege any violations of procedural due process; in fact, Merco was accorded an adversary hearing in the presence of counsel before its license was denied.

 This court issued a temporary restraining order in November, 1973, enjoining the enforcement of the applicable licensing ordinances against plaintiffs, thus allowing them to use the premises of the Hotel Granada as a cabaret and catering establishment. The temporary restraining order has remained in effect as a de facto preliminary injunction pending determination of plaintiffs' motion for injunctive relief and defendants' cross-motion for dismissal pursuant to Rule 12(b)(1) and (6) of the Federal Rules of Civil Procedure.

 Standing

 Defendants allege that both plaintiffs Merco and Merolla lack standing to bring this action. Since a corporation cannot be deprived of freedom of speech and of assembly, Hague v. C.I.O., 307 U.S. 496, 527, 59 S. Ct. 954, 83 L. Ed. 1423 (opinion of Stone, J.; see also opinion of Roberts, J., id., at 514, 59 S. Ct. 954) (1939), defendants argue that Merco does not have standing. We disagree. Merco does not maintain that it is being deprived of freedom of speech and assembly, but rather, that the public is being deprived of those rights by operation of the allegedly unconstitutional licensing ordinance. Merco does have standing, we believe, to assert the interest of the public in freedom of assembly. Such standing was granted to a corporate plaintiff in City News Center, Inc. v. Carson, 310 F. Supp. 1018, 1023 (M.D.Fla.1970), in which relief was also sought under 42 U.S.C. § 1983 and 28 U.S.C. § 2201 and jurisdiction founded upon 28 U.S.C. § 1343. But see 101 Studio Inc. v. Bardal, 384 F. Supp. 852 (S.D.N.Y.1974). In a related context, the Fifth Circuit has noted:

 
Numerous Supreme Court opinions attest to the fact that First Amendment rights are not private rights of the appellants so much as they are rights of the general public. "Those guarantees [of speech and press] are not for the benefit of the press so much as for the benefit of all of us."

 Machesky v. Bizzell, 414 F.2d 283, 289 (5th Cir. 1969) (citations omitted). This language should apply equally to guarantees of freedom of assembly.

 We also find that Merco has standing to assert due process claims to the extent that it alleges that its denial of a license was an unconstitutional deprivation of liberty or property. City News Center, Inc. v. Carson, supra, at 1022.

 Defendants argue that Merolla is without standing to bring this action, since he cannot sue for damages to the corporation or to himself derivatively. We agree. The gravamen of Merolla's complaint is that he was injured because Merco was denied a catering and cabaret license. He does not allege a separate injury to himself as an individual. *fn4" In a similar situation, the Ninth Circuit held that a stockholder owner, with his wife, of all the capital stock of a corporation of which he was president and general manager could not bring an action under 42 U.S.C. § 1983 for damages suffered by the corporation. Erlich v. Glasner, 418 F.2d 226 (9th Cir. 1969). See also Gentry v. Howard, 365 F. Supp. 567 (W.D.La.1973) (corporation given standing under 42 U.S.C. § 1983; action by corporate president dismissed). The Erlich decision was bottomed on the rule that "even though a stockholder owns all, or practically all, of the stock in a corporation, such a fact of itself does not authorize him to sue as an individual." Erlich v. Glasner, supra at 228 (citation omitted). In light of the Erlich case, we dismiss Merolla as a party plaintiff.

 Defendants' Immunity

 We next turn to defendants' claim that they are immune and privileged from actions brought under 42 U.S.C. § 1983. Defendant New York City was improperly named as a defendant, since a city is not a person within the meaning of 42 U.S.C. § 1983. City of Kenosha v. Bruno, 412 U.S. 507, 93 S. Ct. 2222, 37 L. Ed. 2d 109 (1973). See also Moor v. County of Alameda, 411 U.S. 693, 93 S. Ct. 1785, 36 L. Ed. 2d 596 (1973). Consequently, there is no jurisdiction under 28 U.S.C. § 1343(3). See Fisher v. City of New York, 312 F.2d 890 (2d Cir. 1963). Since the Declaratory Judgment Act does not afford an independent basis for relief, 6A Moore's Federal Practice ...


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