Neshaminy Constructors, Inc. v. Krause

• Citation: 437 A.2d 733,181 N.J.Super. 376
• Parties: , 29 Cont.Cas.Fed. (CCH) P 81,751 NESHAMINY CONSTRUCTORS, INC., David A. Robinson and Anthony Canuso, Plaintiffs, v. Donald KRAUSE, Wilfred Smith and Arthur Forbes, Defendants.
• Decision Date: 21 May 1981
• Court: Superior Court of New Jersey

Page 376

181 N.J.Super. 376

437 A.2d 733, 29 Cont.Cas.Fed. (CCH) P 81,751

NESHAMINY CONSTRUCTORS, INC., David A. Robinson and Anthony

Canuso, Plaintiffs, v. Donald KRAUSE, Wilfred Smith and Arthur Forbes, Defendants.

Superior Court of New Jersey, Chancery Division,

Mercer County.

Decided May 21, 1981.

George F. Kugler, Haddonfield, for plaintiffs (Archer, Greiner & Read, Haddonfield, attorneys).

Neal S. Solomon, Princeton, for defendants (Pellettieri, Rabstein & Altman, Princeton, attorneys).

Michael S. Bokar, Deputy Atty. Gen., Trenton, for intervenor, State of New Jersey (James R. Zazzali, Atty. Gen., Trenton, attorney).

Charles F. Harris, Lawrenceville, for intervenor-amicus curiae ELSA (Rhoads, Parkin & Harris, Lawrenceville, attorneys).

DREIER, J. S. C.

This case presents for review the constitutionality of N.J.S.A. 34:9-2, enacted in 1931, governing construction contracts awarded by the state or any other public body. The act requires that "preference in employment thereon shall be given to citizens of the state of New Jersey who have resided and maintained domiciles within the state for a period of not less than one year immediately prior to such employment," ¹ adding only that nonNew Jersey citizens may be employed when local citizens are unavailable. The statute goes on to require the inclusion in all such contracts of a provision that noncompliance shall render the contract voidable at the instance of the public body and it makes a violation of the act by a contractor punishable as a disorderly persons offense.

Ewing-Lawrence Sewerage Authority, (ELSA), intervenor-amicus curiae here, has begun a multi-million dollar systems improvement and expansion project largely funded by the Federal Government. On this project plaintiff Neshaminy Constructors, Inc., a Pennsylvania corporation, is a principal contractor. Defendants Donald Krause, Wilfred Smith and Arthur Forbes, all New Jersey citizens, sought employment with Neshaminy for the project but were not hired. They brought suit against plaintiff in Lawrence Township Municipal Court alleging that out-of-state residents had been hired in their stead, in violation of N.J.S.A. 34:9-2. ² Neshaminy has admitted hiring out-of-state residents and, in this court, challenges the statute. Neshaminy has moved today essentially for summary judgment, seeking a declaration of unconstitutionality. ELSA has made the identical motion. ³ The State of New Jersey, granted the right to intervene as a party under R. 4:28-4(d), has filed a cross-motion for summary judgment upholding the statute. Defendants Krause, Smith and Forbes contend the matter is not in an appropriate posture for summary judgment, there being what defendants assert is a factual issue as to the purposes of the legislation under attack, but contend also that should the court reach the merits, the statute should be upheld.

We will reach the merits. It is conceded by all parties that there is no recorded legislative history regarding this statute. The terms of the statute are unambiguous. There is no dispute that available New Jersey residents were passed over in favor of nonresidents. The question is therefore squarely presented whether, as a matter of law, plaintiff is bound by the provisions of N.J.S.A. 34:9-2.

The major thrust of the challenge to this statute is made under the privileges and immunities clause of the United States Constitution, Art. IV, § 2, which states: "The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states." The clause has been construed by the United States Supreme Court as establishing "a norm of comity," Austin v. New Hampshire, 420 U.S. 656, 660, 95 S.Ct. 1191 1194, 43 L.Ed.2d 530 (1975), that is to prevail among the states with respect to their treatment of each other residents.

The purpose is more fully described in Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357 (1869):

... to place the citizens of each State upon the same footing with citizens of other States, so far as the advantages resulting from citizenship in those States are concerned. It relieves them from the disabilities of alienage in other States; it inhibits discriminating legislation against them by other States; it gives them the right of free ingress into other States, and egress from them; it insures to them in other States the same freedom possessed by the citizens of those States in the acquisition and enjoyment of property and in the pursuit of happiness; .... (8 Wall. at 180)

The leading modern exposition of the limitations the clause places on a state's power to weight employment opportunities in favor of its own residents is Toomer v. Witsell, 334 U.S. 385, 68 S.Ct. 1156, 92 L.Ed. 1460 (1948), where the court held the clause bars "discrimination against citizens of other States where there is no substantial reason for the discrimination beyond the mere fact that they are citizens of other States." 334 U.S. at 396, 68 S.Ct. at 1162. A "substantial reason for the discrimination" would not exist, the court explained, "unless there is something to indicate that non-citizens constitute a peculiar source of the evil at which the (discriminatory) statute is aimed." 334 U.S. at 398, 68 S.Ct. at 1163. Moreover, even where the presence or activity of nonresidents causes or exacerbates the problem the State seeks to remedy, there must be a "reasonable relationship between the danger represented by non-citizens, as a class, and the ... discrimination practiced upon them." 334 U.S. at 399, 68 S.Ct. at 1164.

Following the standards established in Toomer, the Supreme Court has recently handed down a decision, Hicklin v. Orbeck, 437 U.S. 518, 98 S.Ct. 2482, 57 L.Ed.2d 397 (1978), which this court finds dispositive of the issue of whether N.J.S.A. 34:9-2 can pass constitutional muster. ⁴ In that case the State of Alaska required a hiring preference for Alaska residents in all public or private employment arising out of development of the gas and oil rights which the state held. The high court said:

... Even assuming that a state may validly attempt to alleviate its unemployment problem by requiring private employers within the State to discriminate against nonresidents-an assumption made at least dubious by Ward v. Maryland, 12 Wall 418, 20 L.Ed. 449 (1871)) it is clear that under the Toomer analysis ... (this statute) cannot withstand scrutiny ....

(No) showing was made on this record that nonresidents were "a peculiar source of the evil" Alaska Hire was enacted to remedy, namely, Alaska's "uniquely high unemployment" ... What evidence the record does contain indicates that the major cause of Alaska's high unemployment was not the influx of nonresidents seeking employment, but rather the fact that a substantial number of Alaska's jobless residents-especially the unemployed Eskimo and Indian residents-were unable to secure employment either because of their lack of education and job training or because of their geographical remoteness from job opportunities ....

Moreover, even if the State's showing is accepted as sufficient to indicate that nonresidents were "a peculiar source of evil," Toomer ... compel(s) the conclusion that Alaska Hire nevertheless fails to pass constitutional muster. For the discrimination the Act works against nonresidents does not bear a substantial relationship to the particular "evil" they are said to present. Alaska Hire simply grants all Alaskans, regardless of their employment status, education, or training, a flat employment preference for all jobs covered by the Act. A highly skilled and educated resident who has never been unemployed is entitled to precisely the same preferential treatment as the unskilled, habitually unemployed Arctic Eskimo enrolled in a job training program.

Even if a statute granting an employment preference to unemployed residents or to residents enrolled in job-training programs might be permissible, Alaska Hire's across-the-board grant of a job preference to all Alaskan residents clearly is not. (437 U.S. at 526-528, 98 S.Ct. at 2487-88, 57 L.Ed.2d at 405-406.)

In the case before this court, the State argues that the New Jersey statute is less broad in its sweep than the Alaska Hire Act, and therefore does not have to carry the burden of meeting the standards followed in Hicklin. This is unpersuasive.

Since Hicklin the New Jersey Supreme Court has demanded a strict compliance with the two-fold analysis used there. Not only must the nonresident be the peculiar source of the evil, but the cure must bear a reasonable relation to that same evil, bearing always in mind that the aim of the clause is substantial equality between the resident and nonresident. In Salorio v. Glaser, 82 N.J. 482, 414 A.2d 943 (1980), cert. den. 449 U.S. 804, 101 S.Ct. 49, 66 L.Ed.2d 7 (1980), the court invalidated N.J.S.A. 54:8A-1 et seq., the Emergency Transportation Tax Act, which authorized a tax on the income derived by New Jersey residents from sources outside the State and on the income of out-of-state residents derived from sources within the State. N.J.S.A. 54:8A-1 et seq. was much more narrowly drawn than the statute before this court, and buttressed with legislative findings of a "transportation emergency" deemed to make its provisions necessary. Yet the court said: "Imposition of the (tax) cannot be justified if it appears the tax burden on New York residents is substantially disproportionate to their burden upon New Jersey's transportation facilities." 82 N.J. at 505, 414 A.2d 943; emphasis added.

This court also notes that since Hicklin a sister state has had opportunity to consider a situation virtually identical to that here. In Salla v. Monroe Cty., 48 N.Y.2d 514, 423 N.Y.S.2d 878, 399 N.E.2d 909 (1979), cert. den. sub nom. Abrams v. Salla, 446 U.S. 909, 100 S.Ct. 1836, 64 L.Ed.2d 262 (1980), the Court of Appeals of New York confronted a statute providing that in construction of public works, the...