Grendel's Den, a restaurant on Boylston St., has filed suit in Federal District Court against the Cambridge Licensing Commission and the Massachusetts Alcoholic Beverages Commission charging that the state law which allows churches to deny liquor licenses to nearby establishments is unconstitutional.

The complaint, prepared by M. David Rosenberg, lecturer on Law and attorney for Grendel's, states that the Holy Cross Armenian Catholic Parish's objections have prevented Grendel's from obtaining a license since 1971, and have placed the restaurant in "a severely disadvantageous competitive position." The Parish's brick building adjoins Grendel's.

Church and State

Rosenberg's brief, first filed on Nov. 11, 1977, and amended on March 16, 1978, argues that the Massachusetts law which gives the parish absolute veto power on licenses within 500 feet violates the Constitution's prohibition against state-established religions, its guarantee of equal protection under the law, and the Sherman Act, which prohibits actions in restraint of free trade.

Both Rosenberg and Grendel's owner Sue Kuelzer yesterday declined to comment on the case.

Theodore Finnegan, executive secretary of the Alcoholic Beverages Commission, said yesterday the Massachusetts Supreme Court has upheld the 500-ft. rule in two recent decisions.

"If a church objects, we just can't give a license," Phyllis McLaughlin, secretary of the Cambridge Licensing Commission, said yesterday.

By Dawn's Early Light

Spokesmen for the Holy Cross parish were unavailable for comment yesterday.

The suit states that the denial of a liquor license for Grendel's is "arbitrary, capricious, and discriminatory."

It adds that the parish has not objected to at least ten other liquor licenses for establishments within its 500-ft. zone.

The case is still in the "discovery stage," in which lawyers for each side present evidence and contest the other side's arguments before the Court rules.

The suit charges that "certain members" of the Holy Cross congregation or contributors to the parish have influence in the parish's governing board which they have exercised against Grendel's.