A D.C. Superior Court judge has ruled that members of a Northwest Washington citizens group were within their constitutional rights when they called a group of bar owners "shady" in a leaflet campaign to block the bar's liquor license.

Judge Frederick H. Weisberg, in dismissing a $40 million libel suit brought by the bar owners against members of Plan Takoma Inc., ruled that statements made by the group are "absolutely privileged under the First Amendment."

"I'm thrilled, and not just for my neighborhood, but for neighborhoods all over the city," said Loretta Neumann, a Plan Takoma member who was named in the suit. "The suit had a chilling effect on our right to free speech."

An attorney for the bar owners, Benjamin B. Brown, could not be reached for comment.

The suit, filed last March, was part of a long battle between the bar owners--Philip C. Poling, Paul F. Myers and H. Russell Miller--and area residents who objected to the opening of the Whistle Stop at 6916 Fourth St. NW. Poling bought the property, the former Lucky Lady Lounge, at a tax sale in 1981.

The leaflet was written after neighborhood groups said they feared Poling, former president of a Wisconsin Avenue topless go-go bar called the Godfather, would open a similar bar at the Takoma Park site.

The groups asked the city's Alcoholic Beverage Control Board to deny a liquor license for the bar. Though Poling denied he intended to open a bar similar to the Godfather, the ABC board turned down the license application for the Takoma location.

The D.C. Court of Appeals upheld the denial of the license last April.

In their suit, the owners said the leaflet caused them to be "held up to ridicule" and damaged their reputation.

In his ruling, handed down Tuesday, Weisberg wrote that statements in the leaflet were "expressions of opinion" and therefore not libelous. The court, he wrote, "must vigilantly stand guard against even slight encroachments on the fundamental constitutional right of all citizens to speak out on public issues without fear of reprisal."