Supermarkets General Corp. v. Sills

• Decision Date: 08 December 1966
• Docket Number: No. C--252,C--252
• Citation: 225 A.2d 728,93 N.J.Super. 326
• Parties: SUPERMARKETS GENERAL CORPORATION, a corporation of the State of Delaware, Plaintiff, and Save Way Pharmacy, a corporation of New Jersey, and Cherry Hill Saveway Pharmacy, a corporation of New Jersey, Intervening Plaintiffs, v. Arthur J. SILLS, Attorney General of the State of New Jersey, and Board of Pharmacy of the State of New Jersey, Defendants, and New Jersey Pharmaceutical Association, a non-profit association of the State of New Jersey, Intervening Defendant.
• Court: New Jersey Superior Court

Page 326

93 N.J.Super. 326

225 A.2d 728

SUPERMARKETS GENERAL CORPORATION, a corporation of the State

of Delaware, Plaintiff,

and

Save Way Pharmacy, a corporation of New Jersey, and Cherry

Hill Saveway Pharmacy, a corporation of New

Jersey, Intervening Plaintiffs, v. Arthur J. SILLS, Attorney General of the State of New

Jersey, and Board of Pharmacy of the State of New

Jersey, Defendants,

and

New Jersey Pharmaceutical Association, a non-profit

association of the State of New Jersey,

Intervening Defendant.

No. C--252.

Superior Court of New Jersey, Chancery Division.

Dec. 8, 1966.

Charles Danzig, Newark, for plaintiff (Riker, Danzig, Scherer & Brown, Newark, attorneys).

Abraham Brenman, Paterson, for intervening plaintiffs (Brenman & Susser, Paterson, attorneys).

Richard Newman, Deputy Atty. Gen., for defendants (Arthur J. Sills, Atty. Gen).

Frederic K. Becker, Perth Amboy, for intervening defendant (Wilentz, Goldman & Spitzer, Perth Amboy, attorneys).

MINTZ, J.S.C.

Plaintiffs seek a declaratory judgment adjudicating unconstitutional L.1965, c. 120 (N.J.S.A. 45:14--12). Since the institution of this suit the original plaintiff, Supermarkets Operating Company, a corporation of New Jersey, merged with Supermarkets General Corporation, a corporation of the State of Delaware (hereinafter referred to as Supermarkets). The pleadings were amended to reflect this change. The intervening plaintiffs, Save Way Pharmacy and Cherry Hill Saveway Pharmacy (hereinafter collectively referred to as Save Way), ask for the same adjudication.

The statute in question (hereinafter referred to as chapter 120) permits the State Board of Pharmacy (hereinafter referred to as the Board) to refuse an application for examination or suspend or revoke the certificate of a registered pharmacist or a registered assistant pharmacist, upon proof satisfactory to the Board that such pharmacist is guilty of grossly unprofessional conduct. The following is declared by the statute to constitute grossly unprofessional conduct:

'a. Paying rebates or entering into an agreement for payment of rebates to any physician, dentist or other person for the recommending of the services of any person.

b. The providing or causing to be provided to a physician, dentist, veterinarian or other persons authorized to prescribe, prescription blanks or forms bearing the pharmacist's or pharmacy's name, address or other means of identification.

c. The promotion, direct or indirect, by any means, in any form and through any media of the prices for prescription drugs and narcotics or fees or for services relating thereto or any reference to the price of said drugs or prescriptions whether specifically or as a percentile of prevailing prices or by the use of the terms 'cut rate,' 'discount,' 'bargain,' or terms of similar connotation; * * *

d. The claiming of professional superiority in the compounding or filling of prescriptions or in any manner implying professional superiority with may reduce public confidence in the ability, character or integrity of other pharmacists.

e. Fostering the interest of one group of patients at the expense of another which comprises the quality or extent of professional services or facilities made available.

f. The distribution of premiums or rebates of any kind whatever in connection with the sale of drugs and medications provided, however, that trading stamps and similar devices shall not be considered to be rebates for the purposes of this chapter. * * *'

Similar provisions have been adopted either by way of legislation or regulation in many states.

Although plaintiffs challenge the constitutionality of chapter 120 in its entirety, their basic thrust is directed against paragraphs (c) and (f). It is urged that the subject legislation, viewed realistically, is discriminatory and designed to suppress competition by preventing the advertising of prescription drugs at discount prices. It is asserted that there has been no showing that plaintiffs or other merchants similarly situated have operated their pharmaceutical departments in any way deleterious to the public health or welfare. In brief, they allege that the legislation under attack was designed to insulate the neighborhood drug store from the competition of plaintiffs and others.

Plaintiffs contend that chapter 120 is invalid since it bears no relation to the public health, safety and welfare. They urge that it violates the Constitution of the United States as a denial of freedom of speech, the taking of property without due process of law, and the denial of equal protection of law. The further urge that the act is invalid because the Commerce Clause reserves the right to enact such legislation to Congress and that Congress has pre-empted this field of legislation. The statute is also alleged to be void for vagueness. Similarly, invalidation is demanded because of the alleged violation of the Constitution of New Jersey as to freedom of speech, equal protection of the laws, excessive fines and penalties, and violation of the requirement that every law shall embrace but one subject which shall be expressed in its title. Defendants assert that chapter 120 constitutes a valid exercise of the police power of the State, and thus should be adjudicated valid in every respect.

Supermarkets and its affiliates operate a group of stores under the name of 'Shop-Rite,' and sell a wide variety of products. Several of them contain duly licensed and registered pharmacies which are operated in a separate section of the respective stores or, in one instance, under a separate roof. Plaintiff has advertised extensively in various mediums, particularly through newspapers and circulars. In conjunction with their trade mark 'Shop-Rite,' Supermarkets has utilized the slogan 'Why Pay More.' This slogan and the trade mark 'Shop-Rite' are displayed on signs prominently placed in the stores and on signs outside of the stores. Their distinctive mark and slogan are on their bags and wrapping materials. The bags used in the pharmacy departments also describe Supermarkets' pharmacies as 'prescription specialists.' Additionally, Supermarkets has utilized the advertising device of coupons, allowing a purchaser 50cents off on any purchase made in their prescription departments. However, prior to the enactment of the subject legislation Supermarkets, upon request of the Board, voluntarily discontinued the use of coupons.

Save Way has advertised prescription drugs at a discount and also that it will fill prescriptions at a price cheaper than any other pharmacy.

It is well established that regulations imposed upon legitimate business must not be arbitrary and unreasonable and must be related to the health and general welfare of the public. In New Jersey Used Car Trade Ass'n v. Magee, 1 N.J.Super. 371, 61 A.2d 751 (Ch.Div.1948), the court indicated the general standards for constitutionality of a statute as follows:

'* * * The general rule was succinctly stated by the United States Supreme Court in Lawton v. Steele, 152 U.S. 133, 14 S.Ct. 499, 38 L.Ed. 385, thus:

'To justify the state in thus interposing its authority in behalf of the public, it must appear--first, that the interests of the public generally, as distinguished from those of a particular class, require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals. The legislature may not, under the guise of protecting the public interests, arbitrarily interfere with private business, or impose unusual and unnecessary restrictions upon lawful occupations; in other words, its determination as to what is a proper exercise of its police powers is not final or conclusive, but is subject to the supervision of the courts.'

In N.J. Good Humor, Inc. v. Board of Com'rs of Borough of Bradley Beach, supra (124 N.J.L. 162, 11 A.2d 113, 117) Mr. Justice Heher speaking for the Court of Errors and Appeals said:

'The restraints and regulations imposed for the general good and welfare must needs have the virtue of reasonableness. There cannot be, in the name of police regulation, an unreasonable and oppressive curtailment of personal or property rights. * * * And it goes without saying that an exertion of the public power, affecting personal and property rights, is nugatory unless made in good faith for the attainment of a public within its cognizance. If the dominant purpose be the service of private interests under the cloak of the general public good, it must be adjudged a perversion of the power." (at p. 378, 61 A.2d at p. 754)

It is equally well established that the burden of a party attacking a statute as unconstitutional is a strong one. An enactment of the New Jersey Legislature is presumed to be valid and to be based upon factual support. As was said in Reingold v. Harper, 6 N.J. 182, 78 A.2d 54 (1951):

'Factual support for the legislative judgment is to be presumed. Barring a showing Contra, the assumption is that the measure rests upon some rational basis within the knowledge and experience of the Legislature. Metropolitan Casualty Insurance Co. (of New York) v. Brownell, 294 U.S. 580, 55 S.Ct. 538, 79 L.Ed. 1070 (1935). While the existence of a rational basis for the legislation may be assailed by proof of facts beyond the sphere of judicial notice, 'by their very nature such inquiries, where the legislative judgment is drawn in question, must be restricted to the issue whether any state of facts either known or which could reasonably be assumed affords support for it'; and where there was a fairly arguable question as to the extent of the need, the decision was for the legislative body and 'neither the finding of a court arrived at by weighing the evidence, nor the verdict of a jury can be substituted for it.' * * * ' (at p. 196, 78 A.2d at p. 61)

Accord, Grand Union Co. v. Sills, 43 N.J. 390, 204 A.2d 853 (1964); Fried v. Kervick, 34 N.J. 68, 74, 167...