Private Truck Council of America, Inc. v. State
| Decision Date | 30 June 1988 |
| Citation | 111 N.J. 214,544 A.2d 33 |
| Court | New Jersey Supreme Court |
| 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. |
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).
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):
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 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, and (d) is fairly related to the services provided the taxpayer by the state.
The problem is that the tax in this case, like the tax in Continental Trailways v. Director, Div. of Motor Vehicles, 102 N.J. 526, 509 A.2d 769 (1986), looks like, sounds like, and reads like one that is discriminatory. It is understandable, then, for the Court to conclude that this tax is discriminatory because it sounds bad. We do not like retaliation. However painstaking the process is, the Court should look deeper than the appearance or label of the tax and consider whether the tax is in fact discriminatory. The question this Court must resolve is whether the tax provides "a direct commercial advantage to local business." Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 458, 79 S.Ct. 357, 362, 3 L.Ed.2d 421, 427 (1959).
Going back, then, to the four-part test of Complete Auto, it is obviously conceded here that there is a substantial nexus with the taxing state. Whether the tax is fairly apportioned or fairly related to the services provided by the state requires a case-by-case analysis of the effect on the individual foreign trucker. Since this case has gone off on a broadsided attack of the statute presumably because of its label, we simply have no record whatsoever in the case to establish such effects.
The majority's point seems to be that the tax discriminates against interstate commerce. But I must respectfully ask them to demonstrate how the tax provides a "direct commercial advantage to local business." Northwestern States Portland Cement Co. v. Minnesota, supra, 358 U.S. at 458, 79 S.Ct. at 362, 3 L.Ed.2d at 427.
If it be argued that the tax is bad because it is applied only to interstate carriers, the answer is that there is nothing wrong with that so long as the tax does not "produce[ ] a forbidden effect." Complete Auto, supra, 430 U.S. at 288, 97 S.Ct. at 1084, 51 L.Ed.2d at 337. In a unanimous opinion by Chief Justice Rehnquist, the Supreme Court recently restated that "Complete Auto abandoned * * * abstract notion[s]" about taxing interstate commerce, and required focus only on the four-part test. D.H. Holmes Co. v. McNamara, 486 U.S. ----, ----, 108 S.Ct. 1619, 1623, 100 L.Ed.2d 21 (1988).
If it be said that it is cheaper for the domestic trucker than for an out-of-state trucker to do business in, let us say, the northern New Jersey market, then I suggest that we must compare the mile-by-mile costs of such truckers. Indeed, since to defray the expenses of road maintenance New Jersey has a graduated registration fee on commercial vehicles, see State v. OJO Trucking Corp., 217 N.J.Super. 307, 525 A.2d 1125 (App.Div.), certif. granted 109 N.J. 44, 532 A.2d 1110 (1987), a sister-state trucker with low registration fees would have the commercial advantage in New Jersey over a domestic trucker.
In fact, the majority's result could put New Jersey's truckers at a disadvantage with border states. For example, assume that two truckers are operating in the Rockland County, New York area, one out of Hackensack and one out of Yonkers. If New York were to enact a fairly apportioned third-tier tax without reciprocal privileges in favor of New Jersey, New Jersey...
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