Kickboxing studio sues governor for failure to compensate business

The owner of a Franklin kickboxing studio is suing the administration of Gov. Phil Murphy for taking control of her property for the public benefit but not implementing the compensation program mandated by the Disaster Control Act.

The lawsuit was filed Sept. 23 on behalf of Darlene Pallay, owner of CKO Kickboxing Franklin. It challenges Murphy’s Executive Orders 103, 104 and 107.

The Disaster Control Act establishes emergency compensation boards for each county. These boards are tasked with holding hearings and fixing the amount of awards to be paid to aggrieved parties who file petitions. Payments are to be made within one year of each decision.

Attorneys Robert W. Ferguson of Stern, Kilcullen and Rufolo of Florham Park, N.J., and Catherine M. Brown of Denville, N.J., filed the lawsuit. They said the state cannot use the property “for the greater good without paying the business owner reasonable compensation.”

The attorneys also said Murphy’s executive orders violated both the state and federal constitutions.

“Beginning on March 16 with Executive Order 104, Governor Murphy decided to use the power given to him by the Act, to order businesses that he deemed ‘non-essential’ to close and to later reopen with severe restrictions,” Ferguson said. “But he did not follow the law, because he did not order that the affected property owners be compensated, forcing private owners to pay for a public benefit. In essence, the Governor’s edicts, as he has ruled for the last six months, have been paid for by New Jersey’s small businesses.”

Restrictions hamper revenue

CKO was permitted to reopen indoors with restrictions. However, according to the lawsuit, Pallay was unable to reopen because the restrictions prevented her business from generating sufficient revenue. CKO opened outdoors in June but operated at a reduced capacity and generated little revenue, the lawsuit says.

“I have put everything into this business, my blood, sweat and tears,” Pallay said.

CKO is seeking declaratory judgment against the governor.

Pallay founded the CKO franchise in 2009 and built it into a profitable business through community outreach at local events and through Facebook marketing. With members entitled to unlimited kickboxing classes each month, and many coming from as far away as Newton for classes, Pallay and her husband also maintained a second location in Augusta for several years.

CKO Kickboxing Franklin was selected as Franklin’s Economic Development Committee’s Business of the Month for May 2019, for Pallay’s dedication to the community through her business. In June 2020, U.S. Rep. Josh Gottheimer, (D-5), recognized Pallay as one of his “Fifth District Coronavirus Hometown Heroes” award winners, for providing no-cost online fitness classes to the public and local area schools after her business was shut down during the pandemic.

On Sept. 25, Murphy renewed New Jersey’s public health emergency declaration for another 30 days.