State v. Strong Oil Co., Inc.

• Decision Date: 23 October 1980
• Citation: 433 N.Y.S.2d 345,105 Misc.2d 803
• Parties: In the Matter of the Application of The STATE of New York, Petitioner, v. STRONG OIL COMPANY, INC., Respondent, pursuant to General Business Law, Section 396R and Executive Law Section 63(12).
• Court: New York Supreme Court

Page 345

433 N.Y.S.2d 345

105 Misc.2d 803

In the Matter of the Application of The STATE of New York, Petitioner, v.STRONG OIL COMPANY, INC., Respondent, pursuant to General Business Law, Section 396R and Executive Law Section 63(12).

Supreme Court, Special Term, Suffolk County, Part I.

Oct. 23, 1980.

Robert Abrams, Atty. Gen., New York City, for petitioner; Ronald Glickman, Asst. Atty. Gen., and Reed Brody, Deputy Asst. Atty. Gen., New York City, of counsel.

Keith J. Roland, Albany, for respondent.

Blau & Damadeo, Hicksville, for amicus curiae.

MEMORANDUM

JOSEPH JASPAN, Justice.

The New York State Legislature in Extraordinary Session held in November, 1979 determined that a valid state interest would be served by enactment of legislation designed to discourage price gouging by merchants of home heating oil (Section 396-r General Business Law, c. 730, L.1979, effective 11/5/79).

In this action the Attorney General seeks pursuant to Section 63(12) of the Executive Law to enforce as against the respondentStrong Oil Company, Inc. the remedial provisions of that section which authorizes an injunction, a civil penalty not to exceed $5,000 and where appropriate, restitution to aggrieved consumers.

The respondent denies the material allegations of the amended petition herein and as affirmative defenses challenges the constitutionality of the statute.

The respondent urges that the statute is unconstitutionally vague and overbroad, is preempted by Federal Statutes and thus in violation of the Supremacy Clause of the United States Constitution(Article VI, Clause 2) and otherwise in violation of the due process clauses in the State and Federal Constitution.

The Oil Heating Institute of Long Island, Inc. has been denied leave to intervene, but has been granted leave to file an amicus brief.

Examination of 396-r indicates that the legislative intent underlying the statute was to impose civil penalties upon merchants who charged "grossly excessive prices for essential consumer goods and services " during periods of "abnormal disruption of the market."

That this statute might be directed against commodities such as milk and gasoline as well as home heating oil is clear from the definition of consumer goods and services contained within the statute, to wit, "those used, bought or rendered primarily for personal, family or household purposes"(See, Legislative and Governor's Memoranda, McKinney's Session Law News ofNew York, Dec.1979, No. 7, p. A-4, p. A-28).

Equally clear is the fact that implementation of the legislation is conditional upon the happening of some future event, to wit, a legislative finding that an "abnormal disruption of the market exists."

A statute may be enacted in such a form that it shall have no effect until the happening of some future event, certain or uncertain.(Barto v. Himrod, 8 N.Y. 483;Roosevelt Raceway, Inc. v. County of Nassau, 18 N.Y.2d 30, 271 N.Y.S.2d 662, 218 N.E.2d 539, appeal dismissed385 U.S. 453.)In this regard it has been said that while most laws are "complete when passed, they sleep until the contingency contemplated sets them in motion"(Olp v. Town of Brighton, 173 Misc. 1079, 19 N.Y.S.2d 546, aff'd262 A.D. 944, 29 N.Y.S.2d 956;People v. Kearse, 56 Misc.2d 586, 289 N.Y.S.2d 346;Book 1, McKinney's Statutes, Section 43, p. 84).

While the legislature has declared an "abnormal disruption" for the 1979-80 heating season, it is clear that Section 396-r did not automatically terminate at the end of that heating season but only remains inert until such future time as the legislature again declares an "abnormal disruption" with respect to heating oil, or milk, or gasoline or any other essential consumer goods and services.The constitutional challenge survives.

These proceedings and the legal arguments with respect thereto relate only to home heating oil.This opinion is not intended to encompass any other consumer product or service.

The essence of the statute is reflected in the following quoted paragraph from the statement of legislative findings.

"In order to prevent merchants from taking unfair advantage of consumers during abnormal disruptions of the market, the legislature declares that the public interest requires that such conduct be prohibited and made subject to civil penalties."

The act prohibits the sale of the covered goods and services at an "unconscionably excessive price " and defines that phrase in terms of gross disparity between the price of goods or services and their value measured by prices at which they were available in the usual course of business prior to the disruption of the market or the difference between the price charged and the price at which the same goods or services were readily attainable by other consumers in the trade area provided the higher price is not attributable to higher cost.

The text of the statute and the Memoranda of the Governor and State Executive Department are set forth in full in the attached appendix.

The allegation that respondent is price gouging is based upon the following claims of petitioner.

A survey by the Attorney General indicated that the prices of home heating oil in Long Island in January 9 to 10, 1980 was between $.87.9 to $.96.9 per gallon with an average price of $.92.3.A second survey in February 20 to 21, 1980 showed the price range to be between $.95.9 to $.99.1 or an average of $.97.3 per gallon.Selective surveys by the State Energy Office of 16 dealers in Suffolk County and 26 dealers in Nassau County revealed an average price of about $.94 per gallon with a high in each county of $.96.9 per gallon.

The respondent is alleged to have charged $1.00.9 per gallon on and before January 23, 1980.

Respondent's reply creates factual disputes not readily resolved on motion, but are rendered academic by the resolution of the legal questions posed by the challenge to the law.

Federal Preemption

Respondent argues that this legislation is a price control statute in conflict with and preempted by the Emergency Petroleum Allocation Act of 1973 (EPAA of 1973)(15 U.S.C. § 751 et seq.as amended in 1975).That amendment(15 U.S.C. § 760a) authorized the President to exempt petroleum products from fuel controls and to convert such controls from "mandatory to standby status".

Article VI, Clause 2, the Supremacy Clause, of the United States Constitution provides:

"This constitution, and the Laws of the United States which shall be made in Pursuance thereof ... shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the Contrary notwithstanding."

In determining whether a state statute is preempted by federal law and thus invalid under the Supremacy Clause, the court begins with "the assumption that the historic police powers of the States were not to be superceded by the Federal Act unless that was the clear and manifest purpose of Congress"(Ray v. Atlantic Richfield Co., 435 U.S. 151, 98 S.Ct. 988, 55 L.Ed.2d 179).

In this regard, the United States Supreme Court has established a two-pronged test for finding preemption of state legislation by federal laws.

The first prong is whether Congress has prohibited state regulation of the particular field involved (Jones v. Rath Packing Co., 430 U.S. 519, 97 S.Ct. 1305, 51 L.Ed.2d 604), that is, whether Congress has chosen to completely "occupy the field to the exclusion of the States"(Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 55 L.Ed.2d 443) in which case the states may not regulate within the field even where the regulation is in harmony with the federal scheme (Mobile Oil Corp. v. Tully, --- F.Supp. ----, at p. ----, memo.op. 9/19/80(N.D.N.Y., McCurn, D.J., at p. 14)).

The second is where, although Congress has chosen not to completely occupy a particular field "a state statute is void to the extent that it actually conflicts with a valid federal statute"(Ray v. Atlantic Richfield Co., supra, 435 U.S. at 158, 98 S.Ct. at 994).In this regard, the criteria for such a determination is "firmly established"-the court must decide whether the state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress"(Jones v. Rath Packing Co., supra, 430 U.S. at 526, 97 S.Ct. at 1310;Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581;Mobile Oil Corp. v. Dubno, 492 F.Supp. 1004, at p. 1010(Conn, Blumenfeld, D.J.)).

The intent of Congress to completely occupy a particular field and thereby preclude any state regulation thereof may be found from either an "explicit statement" in the federal statute or implied from that Statute's "structure and purpose"(Jones v. Rath Packing Co., supra, 430 U.S. at 525, 97 S.Ct. at 1309).Such an implied intent may be found where the "scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for States to supplement it.Or the Act of Congress may touch a field in which the federal interest is so dominant that the federal systems will be assumed to preclude enforcement of state laws on the same subject.Likewise, the object sought to be obtained by the federal law and the character of obligations imposed by it may reveal the same purpose"(Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447).

"Deciding whether a state statute is in conflict with a federal statute and hence invalid under the Supremacy Clause is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the constitutional question whether they are in conflict."(Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233.)

Thus, the first task before this court is the construction of Section 396-r, a matter not previously considered by any court of record.

"Construction" as a process for determining the meaning of statutes is...