The court also struck a cross-appeal challenge by Sayreville that urged a lower court to consider the Internet as an alternative forum or site for XXXV Club to conduct its sexually oriented business.
Sayreville filed suit against the club, claiming it violates a state law prohibiting sexually oriented businesses within 1,000 feet of a park or residential area and licensing requirements of the borough.
The borough sought to permanently enjoin XXXV Club from operating its non-alcoholic club, but on Friday the court said there were no "sufficient number of suitable alternative sites for the expression of this constitutionally protected form of expression."
Sayreville, in court papers, said the Internet is a better venue for live nude dancing.
"Specifically, the borough argues that live interactive sexually oriented content delivered through mass media channels, such as the Internet, should have been considered by the trial court as a reasonable alternative to the live nude dancing offered by XXXV Club," the court said.
"In the view of many people, the live nude dancing experience offered by XXXV Club cannot be completely replicated in cyberspace. Despite the great unexplored potential of the Internet as a medium, including its interactive capabilities, it cannot yet, in such people's view, substitute for a live performance."
The 2-1 decision sends the case back to state Superior Court.