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State v. Comfort Cab Inc.

Decided: January 17, 1972.


Kole, J.c.c.


This case involves a novel question of the relationship between the Federal Fair Labor Standards Act and the New Jersey Wage and Hour Law.

Defendant Comfort Cab, Inc. moved to dismiss three indictments against it charging violations of the New Jersey statutes relating to employees' wages and hours, basically the New Jersey Wage and Hour Law enacted in 1966:

(1) Indictment S-1033-71, charging defendant in 616 counts with failure to pay minimum and overtime rates, in violation of N.J.S.A. 34:11-56a4 and 34:11-56a22.

(2) Indictment S-1031-71, charging defendant in 20 counts of failure to keep true and accurate records of hours worked by employees, in violation of N.J.S.A. 34:11-56a20 and 34:11-56a22.

(3) Indictment S-1032-71, charging defendant in 47 counts of withholding and diverting wages, in violation of N.J.S.A. 34:11-4.4 and 34:11-4.10.

Defendant, a taxicab company, contends that the Federal Government has preempted the field of wages and hours relating to its employees by enactment of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. , and that, therefore, the New Jersey statutes claimed to be violated do not apply to it. Defendant claims that since it is "engaged in commerce" within the meaning of the Federal Fair Labor Standards Act, and since that act is exclusively applicable to it, it is not subject to the New Jersey statute, the New Jersey court is without jurisdiction and, therefore, the indictments should be dismissed. It also argues that even if the New Jersey, rather than federal, law applies, it is exempt under the provisions of the New Jersey statutes, and for that reason the indictments should be dismissed.

Ordinarily an indictment should not be dismissed unless its insufficiency is palpably shown. State v. McDowney , 49 N.J. 471, 474 (1967); State v. Weleck , 10 N.J. 355, 364 (1952); State v. Ferrante , 111 N.J. Super. 299, 304 (App. Div. 1970). Jurisdiction is an essential element which, if lacking, may lead to a palpably shown insufficiency, State v. McDowney, supra.

The State contends, citing Buck v. California , 343 U.S. 99, 72 S. Ct. 502, 96 L. Ed. 777 (1951), reh. den. 343 U.S. 932, 72 S. Ct. 756, 96 L. Ed. 1341 (1952), that defendant was not involved in interstate commerce and, accordingly, the Federal Fair Labor Standards Act is inapplicable.

The defendants in Buck were charged with failing to obtain permits required by a county through which their cabs operated, though passengers were neither picked up nor discharged in that county. The Supreme Court upheld the county's permit requirement and found that the regulation was not an unreasonable burden on foreign commerce. The taxicab company operated on an axis between the United States and Mexico.

Buck concerned licensing regulations and thus may be distinguished from the present case where the question is of inclusion or exclusion under a specific federal statute.

Further, the court found that local licensing regulations on a local business such as taxicabs was not a burden on foreign commerce in the absence of federal regulation.

The question is not whether Comfort Cab is involved in interstate commerce, but rather whether it is "engaged in commerce" within the general meaning of the federal act. 29 U.S.C.A. § 206(a); 29 U.S.C.A. § 207(a). "Commerce" is defined in the act as "trade, commerce, transportation, transmission or communication among the several States or between any State and any place outside thereof." 29 U.S.C.A. § 203(b) (emphasis added). Caserta v. Home Lines Agency, Inc. , 172 F. Supp. 409, 413 (S.D.N.Y. 1959).

The reach of the federal act is less than the constitutional reach of the Commerce Clause. Mitchell v. H.B. Zachry Co. , 362 U.S. 310, 80 S. Ct. 739, 4 L. Ed. 2d 753, 758-759 (1960). Until 1961 coverage under the act depended upon the nature of the employees' duties, not whether the employer's business was local or interstate. Mitchell v. H.B. Zachry Co., supra. In 1961 Congress additionally awarded coverage to "fellow employees of any employee who would have been protected by the original Act." Pub. L. 87-30, § 2(c). This amendment, however, did not enlarge the class of employers subject to the act. Maryland v. Wirtz , 392 U.S. 183, 188, 88 S. Ct. 2017, 2020, 20 L. Ed. 2d 1020, 1026 (1968).

The Supreme Court has "recognized that the penetrating and elusive duty which this Act casts upon the courts to define in particular cases the less-than-constitutional reach of its scope, cannot be adequately discharged by talismanic or abstract tests, embodied in tags or formulas." Mitchell v. H.B. Zachry Co., supra , 362 U.S. at 313, 80 S. Ct. at 742, 4 L. Ed. at 758. However, general guidelines have been provided:

The question whether an employee is engaged 'in commerce' within the meaning of the present [Federal Fair Labor Standards] Act is determined by practical considerations, not by technical conceptions

* * *. The test is whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than local isolated activity. [ Mitchell v. C.W. Vollmer & Co. , 349 U.S. 427, 429, 75 S. Ct. 860, 99 L. Ed. 1196, 1200 (1955)]

It has also been said:

The practical test to be applied is whether, without the particular service, interstate commerce would be impeded or abated. Great remoteness, however, renders the act inapplicable. (Citations omitted). [ Republic Pictures Corporation v. Kappler , 151 F.2d 543, 545 (8 Cir. 1945)]

Since, as previously discussed, under a 1961 amendment the coverage of any employee by the pre-1961 act mandates coverage for all his fellow employees, Comfort Cab would appear to be covered by the federal act if a substantial part of any of its employees' activities relate to interstate commerce. Kirshbaum Co. v. Walling , 316 U.S. 517, 62 S. Ct. 1116, 86 L. Ed. 1638 (1941); Walling v. Jacksonville Paper Co. , 317 U.S. 564, 63 S. Ct. 332, 87 L. Ed. 460 (1942). "Substantial part" has been found as low as 3.57% of an employee's total worktime, in McComb v. W. E. Wright , 168 F.2d 40 (6 Cir. 1948), and 5% in Wirtz v. Dunmire , 239 F. Supp. 374 (W.D. La. 1965).

Defendant contends that it is "engaged in commerce" within the meaning of the federal act, and further claims that as such it is covered by the provisions of that act regarding minimum wage and overtime. Accordingly, it contends that the like New Jersey regulations have been preempted by the federal act with regard to parties so engaged in commerce.

The United States Constitution gives Congress the exclusive power "to regulate commerce * * * among the several States, * * *." Art. I, Sec. 8, Cl. 3. However, exercise of New Jersey's police power, a concurrent power derived from the Tenth Amendment's reservation to the States of powers not delegated to the Federal Government nor prohibited

to the States, "will be sustained even though it may affect interstate commerce incidentally so long as it does not unduly burden it." Moyant v. Paramus , 30 N.J. 528, 549 (1959); Burton v. Sills , 99 N.J. Super. 516, 526 (Law Div. 1967), aff'd 99 N.J. Super. 459 (1968), aff'd 53 N.J. 86 (1968), app. dism. 394 U.S. 812, 89 S. Ct. 1486, 22 L. Ed. 2d 748 (1969); Head v. New Mexico Board of Examiners , 374 U.S. 424, 83 S. Ct. 1759, 10 L. Ed. 2d 983, 987-988 (1963); Huron Portland Cement Co. v. Detroit , 362 U.S. 440, 80 S. Ct. 813, 4 L. Ed. 2d 852 (1960). An actual conflict between state and federal laws is governed by the "Supremacy Clause," which dictates that "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof * * * shall be the supreme Law of the Land * * *." Art. VI, Sec.. 2. Regulation by the State of the wages and hours of employees working in the State is obviously an exercise of its police power. See New Jersey State Hotel-Motel Ass'n v. Male , 105 N.J. Super. 174 (App. Div. 1969).

The indictments relevant herein charge offenses allegedly committed between December 31, 1966 and December 25, 1968. During a portion of this time-period both driver and nondriver employees of defendant Comfort Cab were exempt from sections of the federal act covering minimum wage and maximum hour/overtime rates, but were covered by the like sections of the New Jersey law. Defendant claims that an exemption in the federal act preempts any such state regulation.

Preemption is governed by the intent of Congress regarding the federal act. Huron Portland Cement Co. v. Detroit, supra , involving an alleged conflict between federal licensing of steam vessels and a local smoke abatement ordinance, held as follows:

In determining whether state regulation has been pre-empted by federal action, 'the intent to supersede the exercise by the State of its police power as to matters not covered by the Federal legislation is not to be ...

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