Private Truck Council of America, Inc. v. State

• Court: United States State Supreme Court (New Jersey)
• Citation: 111 N.J. 214,544 A.2d 33
• Decision Date: 30 June 1988
• Parties: PRIVATE TRUCK COUNCIL OF AMERICA, INC., PPG Industries, Inc., W.H. Christie & Sons, Inc., and Dennis Trucking, on behalf of themselves and all others similarly situated, Plaintiffs-Respondents, and Cross-Appellants, v. STATE of New Jersey, Clifford W. Snedeker, Individually and as Director, Division of Motor Vehicles, and Michael Horn, Individually and as State Treasurer of New Jersey, Defendants-Appellants and Cross-Respondents. WEST MOTOR FREIGHT, INC., and West Truck Leasing, Inc., for themselves and on behalf of all others similarly situated, Plaintiffs-Respondents and Cross- Appellants, v. Clifford W. SNEDEKER, Director of the Division of Motor Vehicles of the State of New Jersey, and Michael M. Horn, Treasurer of the State of New Jersey, and the State of New Jersey, Defendants-Appellants and Cross-Respondents.

Page 214

111 N.J. 214 544 A.2d 33 PRIVATE TRUCK COUNCIL OF AMERICA, INC., PPG Industries,
Inc., W.H. Christie & Sons, Inc., and Dennis Trucking, on
behalf of themselves and all others similarly situated,
Plaintiffs-Respondents, and Cross-Appellants,
v.
STATE of New Jersey, Clifford W. Snedeker, Individually and
as Director, Division of Motor Vehicles, and Michael Horn,
Individually and as State Treasurer of New Jersey,
Defendants-Appellants and Cross-Respondents.
WEST MOTOR FREIGHT, INC., and West Truck Leasing, Inc., for
themselves and on behalf of all others similarly
situated, Plaintiffs-Respondents and
Cross- Appellants,
v.
Clifford W. SNEDEKER, Director of the Division of Motor
Vehicles of the State of New Jersey, and Michael M. Horn,
Treasurer of the State of New Jersey, and the State of New
Jersey, Defendants-Appellants and Cross-Respondents. Supreme Court of New Jersey. Argued Feb. 17, 1988.
Decided June 30, 1988.

On appeal from the Superior Court, Appellate Division, whose opinion is reported at 221 N.J.Super. 89, 534 A.2d 13 (1987).

Mary R. Hamill, Deputy Atty. Gen., argued the cause for appellants and cross-respondents (W. Cary Edwards, Atty. Gen. of New Jersey, attorney; Michael R. Clancy, Deputy Atty. Gen., of counsel).

Richard A. Allen, Washington, D.C., a member of the District of Columbia bar, argued the cause for respondents and cross-appellants Private Truck Council of America, Inc., et al. (Solomon & Simon, Livingston, attorneys; Richard A. Allen, Washington, D.C. and Arnold L. Simon, Livingston, on the briefs).

David H. Weinstein, Philadelphia, Pa., a member of the Pennsylvania bar, argued the cause for respondents and cross-appellants West Motor Freight, Inc., et al. (Brown & Connery, Westmont, attorneys; David H. Weinstein, Philadelphia, Pa., and Steven G. Wolschina, Westmont, on the briefs).

Page 215

PER CURIAM.

The judgment is affirmed substantially for the reasons expressed in the opinion of the Appellate Division, reported at 221 N.J.Super. 89, 534 A.2d 13 (1987).

O'HERN, J., has filed a separate dissenting opinion.

O'HERN, Justice, dissenting.

Once again the Court invalidates a tax that it thinks offends the Commerce Clause. In this case it invalidates New Jersey's counterpart third-tier tax on trucks that use our highways. In essence, the tax grants an exemption from taxation to truckers whose vehicles are registered in states that afford comity to New Jersey truckers. Otherwise it levels a tax equivalent in amount to that which the non-cooperating state would impose. The details of the cases are set forth in the two reported opinions below at 210 N.J.Super. 611, 510 A.2d 300 (Law Div.1985), reversed, 221 N.J.Super. 89, 534 A.2d 13 (App.Div.1987). I use the word "tax" because, although we deal with a counterpart fee imposed under the motor vehicle laws, N.J.S.A. 39:3-6, the case has been treated as though it involved a tax.

The tax is both a revenue measure and a policy measure. To the extent that it seeks to influence the policy of sister states it offends no principle of federalism.

The mere fact that California seeks to promote its insurance industry by influencing the policies of other States does not render the purpose illegitimate. As we said in United States Steel Corp. v. Multi-state Tax Comm'n, 434 U.S. 452, 478, 54 L.Ed.2d 682, 98 S.Ct. 799 (1978):

"Any time a State adopts a fiscal or administrative policy that affects the programs of a sister State, pressure to modify those programs may result. [544 A.2d 34] Unless that pressure transgresses the bounds of the Commerce Clause or the Privileges and Immunities Clause of Art IV, § 2, see, e.g., Austin v. New Hampshire, 420 U.S. 656 [43 L.Ed.2d 530, 95 S.Ct. 1191] (1975), it is not clear how our federal structure is implicated."

Western and Southern Life Ins. Co. v. State Bd. of Equalization of California, 451 U.S. 648, 671, [101 S.Ct. 2070, 2084] 68 L.Ed.2d 514, 532-33 (1981).

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Though invalidating Alabama's unequal tax burden on domestic versus foreign insurance companies, Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869, 105 S.Ct. 1676, 84 L.Ed.2d 751 (1985), reaffirmed the legitimacy of a state's counterpart tax that deterred other states from enacting discriminatory excessive taxation. Alabama had asked for more: it had wanted the Court to approve a tax that would promote domestic business by penalizing foreign businesses that desired to do business in Alabama. "Alabama has made no attempt, as California did, to influence the policies of other States in order to enhance its domestic companies' ability to operate interstate; rather, it has erected barriers to foreign companies who wish to do interstate business in order to improve its domestic insurers' ability to compete at home." 470 U.S. at 877-78, 105 S.Ct. at 1681, 84 L.Ed.2d at 759.

Of course, these cases involve insurance, a field that Congress has preempted from Commerce Clause coverage; however, the basic policy question remains the same. A tax will fail if its aim is to promote domestic industry at the expense of foreign commerce. There is no hint whatsoever of that aim in this case. That the tax is defensive does not make it offensive to the Constitution.

The challenge to the tax must be that it " 'transgresses the bounds of the Commerce Clause or the Privileges and Immunities Clause * * *.' " Western and S. Life Ins. Co. v. State Bd. of Equalization of California, supra, 451 U.S. at 671, 101 S.Ct. at 2084, 68 L.Ed.2d at 532 (citation omitted). In Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), the United States Supreme Court abandoned altogether with respect to Commerce Clause analysis " 'the use of magic words or labels' [that] could 'disable an otherwise constitutional levy,' " id. at 284, 97 S.Ct. at 1082, 51 L.Ed.2d at 334 (citation omitted), and recognized that these no longer served an analytic function. The Court shifted its focus away from labels and toward "the question whether the tax

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produces a forbidden effect." Id. at 288, 97 S.Ct. at 1084, 51 L.Ed.2d at 337.

Having replaced labels with economic reality, the Court developed a simpler, more straightforward approach, based on an analysis of the effects of the tax: the tax will be sustained against a Commerce Clause challenge when the tax (a) applies to an activity with a substantial nexus with the taxing state, (b) is fairly apportioned, (c) does not discriminate against interstate commerce,...