The New York Court of Appeals Thursday addressed New York City’s controversial sex shop zoning ordinance for the second time in less than five months, and dealt the Giuliani Administration another loss.

In City of New York v. Dezer Properties Inc., 50, the Court issued a terse memorandum that rejects the City’s argument that the controversial 60/40 rule, which defines adult establishments as those where 40 percent or more of the floor space is devoted to adults-only activities, applies solely to book and video stores and not topless bars.

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