Kent Stores of New Jersey v. Wilentz

• Decision Date: 11 March 1936
• Citation: 14 F. Supp. 1
• Parties: KENT STORES OF NEW JERSEY et al. v. WILENTZ, Atty. Gen. of New Jersey, et al. FEDERAL CLEANERS & DYERS, Inc., et al. v. SAME.
• Court: U.S. District Court — District of New Jersey

14 F. Supp. 1

KENT STORES OF NEW JERSEY et al. v. WILENTZ, Atty. Gen. of New Jersey, et al.

FEDERAL CLEANERS & DYERS, Inc., et al. v. SAME.

District Court, D. New Jersey.

March 11, 1936.

Minturn & Weinberger, Harry H. Weinberger, and Hyman Halpern, all of Newark, N. J., and S. Frederick Placer, of New York City, for complainants.

David T. Wilentz, Atty. Gen., of New Jersey and Hervey S. Moore, of Trenton, N. J. (Isadore H. Colton, of Newark, N. J., of counsel), for defendants.

Before DAVIS, Circuit Judge, and CLARK and FORMAN, District Judges.

CLARK, District Judge.

The Legislature of New Jersey by chapter 281 of the Laws of 1935 (N.J.St. Annual 1935, § *225—17 et seq.) undertook the extensive regulation of the cleaning and dyeing trade. This industry seems to have received considerable legislative and judicial attention. A code of fair competition under the late National Recovery Act, 15 U.S.C.A. § 701 et seq., was approved, and therefore promulgated by the President on November 8, 1933, Bulletin No. 101, Registry No. 1714-22, N. R. A. Article IV of this Code provided a specific schedule of minimum wages and Article VI set up a code authority with power inter alia "to establish and prescribe fair and reasonable wholesale and retail prices." It was sustained on March 31, 1934, by the District Court of the Southern District of New York in the case of United States v. Spotless Dollar Cleaners, Inc., 6 F.Supp. 725, 727. This case revealed the obverse of the current situation, inasmuch as a New York Corporation was delivering clothes to a processing plant of a New Jersey corporation in Edgewater, N. J. Judge Knox, the senior judge of that District, picturesquely portrayed the conditions in the industry as they appeared to him:

"So baneful, says the government, has been the sum total of conditions affecting the cleaning and dyeing business, that it has been brought to the brink of ruin, and has subjected the more hardy establishments within the industry to the terrorism of the racketeer and trade ruffian. The situation thus created in particular localities has been aggravated by existing facilities of commerce and communication between the states, especially where large cities are to be found near state boundary lines. When such is the case, the problems and difficulties prevailing in the industry in one large city spread as does a miasmic mist over the territory of the adjacent state and its nearby city. Hence a price war which breaks out in one locality soon rages fiercely elsewhere.

"The industry is further represented as being possessed of peculiar frailties. One reason assigned for this is that profits in the industry are dependent primarily upon a `volume' business, and that `volume' flows to the merchants who unfairly cut prices to the point of profit banishment. In this way, merchants who are either unwilling or unable to meet the nonprofit prices of competition are forced to retire from the field in which they once prospered. When fatalities of this nature have become sufficiently great, the man who has wrought disaster to his vanquished opponents views his accomplishment with satisfaction, and makes haste to raise his prices. Meanwhile, the price of labor in the industry has been forced from living standards to those of bare existence; bankruptcies have occurred; the quality of service rendered the public has been impaired; and, finally, unemployed workers of the industry walk the streets. In addition, other results have come about." 6 F.Supp. 725, at pages 727, 728.

The appeal of this case was abandoned, prior to the decision in the Schechter Case (A. L. A. Schechter Poultry Corporation v. United States), 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947, upon the filing of an executive order revoking price fixing.

Similar cleaning and dyeing cases are collected in a note in 82 Pennsylvania Law Review, 738. Similar statutes have been passed in Wisconsin (Code approved by the Governor, July 26, 1935, under the Wisconsin Recovery Act) chapter 182, P.L. Wisconsin, 1935; in Florida, P.L.Florida, 1935, c. 16979; and in Delaware, chapter 120, P.L.Delaware, 1935 (40 Del. Laws). The Wisconsin Code in article 4 (entitled Predatory Competition) forbids the "sale of the services of the industry at less than the reasonable cost thereof to be determined by the state cleaning and dyeing code authority" and in article 7 prescribed minimum rates of pay for employees. Neither the Florida nor Delaware Acts deal with the workers. The former, by section 9, vests the Cleaning, Dyeing and Pressing Board with authority to fix a minimum scale of charges for the various services and the latter by rule 1 gives the Trade Board power to establish reasonable costs below which service should not be rendered.

The New Jersey Act (and cf. Code under the state or "little N. R. A." approved by the Governor, November 17, 1933), chapter 372, P.L.1933, as amended (N.J. St.Annual 1934, § *225 — 3 et seq.), is more comprehensive than those above cited. It grants complete powers for the regulation of the industry, including the prevention of seventeen unfair trade practices, the establishment of standards of sanitation and of course the authority to "prescribe fair and reasonable minimum wholesale and retail prices" (section 3, subdivision D, N.J.St.Annual 1935, § *225 — 19, subd. D), and "to establish minimum rates of pay, maximum hours of employment, and to prohibit the employment of child labor in the cleaning and dyeing trade of this State" (section 3, subdivision J, N.J.St. Annual 1935, § *225 — 19, subd. J).

Several cleaning and dyeing companies are unwilling to comply with the regulations of the state board appointed under the act. These regulations were promulgated after hearings extending from September 9 until October 3, 1935. The findings of fact and the conclusions of the board were published December 9, 1935, and are the major part of the record herein. They are distinctly reminiscent of the passage from Judge Knox's opinion which we have just quoted. These companies, as is their right, attack the enabling statute on constitutional grounds, and as is their necessity, invoke the convening of a three-judge court (cf. "A Case for Three Judges," Hutcheson, 47 H.L.Rev. 795).

The constitutional ground is the familiar one "due process," and we are thereby faced with what Mr. Justice Holmes once called the apologetics of the police power. There is no present advantage in speculating on the posture of our country's political economy in the absence of the accepted interpretation of the famous clause. The history and logic of that interpretation is a never failing subject for treatment by the scholars of the law. A brilliant discussion is found in an article by the late Judge Hough in 32 Harvard Law Review, 218. He concludes it at page 233 by declaring that the action of judges thereunder is a "far higher exercise of judicial thought than," he says, "insurance or patent law; it is really a function of political criticism." At any rate we can agree that there is a great difference of function in passing on the definition of the police and the distribution of the other powers.

Before giving detailed consideration to the application of the due process clause to the minimum wage and price provisions of the statute, we take note of the legislative declaration of emergency (section 1, of the act N.J.St.Annual 1934, § *225 — 3 and statement of legislative purpose). We are not, however, going to do any more than take note of it. This "emollient of emergency" as Professor Powell has called it (Commerce, Pensions, and Codes, II, 49 H.L.Rev. 193) has become standard legislative practice, since it received the desired accolade in the rent (or housing shortage) cases, Block v. Hirsh (1921) 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865, 16 A.L.R. 165; Marcus Brown Holding Co. v. Feldman (1921) 256 U.S. 170, 41 S.Ct. 465, 65 L.Ed. 877; Edgar A. Levy Leasing Co. v. Siegel (1922) 258 U.S. 242, 42 S.Ct. 289, 66 L.Ed. 595; and see Chasleton Corporation v. Sinclair (1924) 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841 (declaring that particular emergency at an end). It has been extended to moratory laws, Home B. & L. Ass'n v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413, 88 A.L.R. 1481; Feller, Moratory Legislation: A Comparative Study (1933) 46 H.L.Rev. 1061, 1081-85; Mortgage Relief During the Depression, 47 H.L.Rev. 299; Constitutionality of Mortgage Relief Legislation, 47 H.L.Rev. 660; but rejected in A. L. A. Schechter Poultry Corporation v. United States, supra. The principal fact in support of an emergency theory found by the legislative board, is that "shortly after the stock market debacle of 1929 and with the advent of the depression the volume of business began to drop" (page 2 of the findings). This may be an argument for the Securities Exchange Act, 15 U.S.C.A. § 78a et seq. To attribute validity thereto would abrogate the due process clause altogether. Some think that the whole emergency doctrine is a recognition of the desirability of doing so.

Counsel for the complainant companies seemed so sure of the soundness of their objection to the price fixing features of the statute (a confidence, as we shall see, thoroughly justified) that they gave only cursory attention to the minimum wage provision. Perhaps it would be kinder to say that the policy of such law meets with their approval. The sad fact seems to be, however, that the law, at least as at present drafted, does not meet the constitutional standard established by the United States Supreme Court. It is not within the scope of this opinion to enlarge upon either the historical, social, or economic aspects of minimum wage legislation. There is a vast literature on the subject from which we have culled the following: Baker, Protective Labor Legislation (1925) 79-99; Burns, Wages and the State (1926); Development of Minimum Wage Laws in the United States, 1912 to 1927, U....