In this declaratory judgment action plaintiff Raybestos-Manhattan, Inc. challenges the constitutional validity of the Private Nonvested Pension Benefits Protection Tax Act, L. 1973, c. 124 ("the act") under the Constitutions of New Jersey and the United States.
The act, which after a one-year extension expired July 1, 1975, imposed upon certain employers ceasing operations at a place of employment in New Jersey a tax "equal to the total amount of nonvested pension benefits" of employees who had "completed 15 years of covered service under the pension plan of the employer" prior to the cessation
of operations. Pursuant to the act the Director of the Division of Taxation determined that plaintiff was liable for taxes in the amount of $13,474,357.29. Plaintiff disputed its liability and instituted the present action seeking a judicial declaration of the the invalidity of the act.
All parties seek judgment upon the basis of the operative facts which have been stipulated by a pleading filed for that purpose incorporating by reference many voluminous documents. This stipulation was supplemented by other facts submitted upon offers of proof under an agreement admitting the truth of the facts contained in the offers but raising a dispute as to their evidential admissibility. The court has ruled upon the objections interposed, and those offers which survived the objections now also form a part of the factual record.
Plaintiff is a New Jersey corporation which for many years had owned and operated a manufacturing facility in Passaic, producing a wide range of industrial rubber products distributed in a number of states and foreign countries. The genesis of this litigation was a public announcement by plaintiff on October 27, 1972 of its intention to close its Passaic facility and cease the manufacture and sale of industrial rubber products in the United States by June 15, 1973, with the consequence that plaintiff would no longer maintain a place of employment in New Jersey. As of October 27, 1972 plaintiff employed approximately 1,270 persons at its Passaic plant, of which number approximately 1,070 were members of the noncontributory Raybestos-Manhattan Inc. Employee Retirement Plan ("pension plan") executed in 1968 by plaintiff and the two labor unions which represented plaintiff's employees, the Manhattan Rubber Workers Independent Union, Inc. and District 15 of the International Association of Machinists and Aerospace Workers, AFL-CIO ("unions").
The pension plan provided for employee pensioned retirement at age 60 after 30 years of service or at age 65 after 20 years of service. When plaintiff closed its Passaic
facility on June 15, 1973, approximately 880 of the 1.070 members of the pension plan did not qualify for pensioned retirement under the terms thereof.
On November 6, 1972 plaintiff negotiated and executed a termination agreement with the unions, wherein plaintiff agreed to provide termination payments and temporary insurance coverage to terminated employees not eligible for pensioned retirement under the pension plan. Plaintiff since has paid over $1,500,000 to its former employees pursuant to this agreement.
On November 20, 1972, 24 days after the announcement of the closing of the Passaic operation, there was introduced in the General Assembly Assembly Bill 1563, entitled "An Act Imposing a Tax Upon Certain Employers for the Benefit of Employees with Nonvested Pension Rights" and cited as "The Emergency Pension Act of 1972" ("Assembly bill"). The Assembly bill assessed a tax upon every employer of 50 or more persons within the State of New Jersey who ceases to operate a place of employment in the State, said tax being the lesser of (1) the highest weekly payroll at the place of employment during the calendar year next preceding the date of cessation of operations, and (2) the "amount of all nonvested pensions of all persons employed by such employer during the year prior to the date the employer ceases to operate such place of employment."
The Senate Committee on Labor, Industry and Professions, after considering the Assembly bill, on February 22, 1973 voted out a substitute entitled "An Act Imposing a Tax Upon Certain Employers, Providing for the Assessment and Collection thereof, and Providing for Disposition of the Revenues Therefrom" and cited as "The Private Nonvested Pension Benefits Protection Tax Act," which was passed by the Senate on March 19, 1973 and by the General Assembly on March 29, 1973. This statute, which is the subject of this litigation, provides in essence that a tax be assessed upon every employer of 500 or more persons within
the State who "ceases to operate a place of employment" in the State, said tax being equal to the
The act defines "ceases to operate a place of employment" as
The act further provides that each employee who has completed 15 years of covered service under the pension plan "shall be entitled to make a claim * * * for an immediate payment of the current value of his nonvested pension benefits or a deferred pension benefit * * *." The act provided that it was to take effect immediately upon signature by the Governor and expire and be inoperative after July 1, 1974, but was subsequently extended for one year by L. 1974, c. 66, and finally expired on July 1, 1975.
The act became law on May 9, 1973, and one week later plaintiff, in compliance with the act, notified the Commissioner of Labor and Industry that it intended to close its Passaic plant and cease all business operations in New Jersey on June 15, 1973. On May 29, 1973 the Director of the Division of Taxation entered judgment against plaintiff by filing with the Clerk of the Superior Court a $12,000,000 certificate of debt reflecting his preliminary estimate of plaintiff's tax liability under the act. The Director
notified plaintiff, on August 15, 1973, of its tax liability of $13,474,357.29 and that payment thereof was due within 15 days. Plaintiff having failed to pay the assessed amount, a second certificate of debt was filed on October 2, 1973 in the amount of $1,474,357.29, reflecting the tax liability due at that time.
The present action was commenced on June 27, 1973, seeking a declaratory judgment that the act is invalid under the Constitutions of New Jersey and the United States, or, if valid, that the act does not apply to plaintiff. By order of this court on November 2, 1973, the action was bifurcated so as to permit the counts of the complaint relating to the constitutionality of the act to proceed; the order further permitted 22 former employees of plaintiff to intervene as defendants. The parties have extensively briefed the constitutional issues presented and have submitted the matter to the court for decision on cross-motions for judgment upon the stipulated facts.
Plaintiff has mounted a broad-based constitutional attack upon the validity of the act, alleging the following infirmities:
I. The act contains a classification which is arbitrary and without rational basis, rendering it void as (A) special legislation, and (B) violative of the equal protection guarantees of the Constitutions of New Jersey and the United States.
II. The act is arbitrary and unreasonable, serves no legitimate public or governmental purpose sufficient to justify an exercise of the taxing or police powers, and constitutes a taking of private property without just compensation, in derogation of the Constitution of New Jersey and the United States.
III. The act impairs the rights and obligations of plaintiff under its agreements with the unions, in derogation of the Constitutions of New Jersey and the United States.
IV. The act constitutes an unlawful intrusion by the State into an area of labor relations which has been preempted by federal legislation, in violation of the Constitution of the United States.
V. The act unreasonably and unlawfully restricts the free flow of commerce, in violation of the Constitution of the United States.
VI. The act violates the requirement that all revenue-raising bills shall originate in the General Assembly under the Constitution of New Jersey.
Plaintiff presents a two-fold attack on the classification contained in the act, (A) that it is void as special legislation in contravention of N.J. Const. (1947), Art. IV, § VII, pars. 8, 9 and (B) that it denies plaintiff equal protection of the laws as guaranteed by N.J. Const. (1947), Art. I, par. 5 and U.S. Const. , Amend. XIV. Both the special legislation prohibition and the equal protection guarantees forbid arbitrary classification which discriminates against some and favors others in like circumstances. See Toms River Affiliates v. Dept. of Environmental Protection , 140 N.J. Super. 135, 148 (App. Div. 1976). Accordingly, at the outset it is necessary to ascertain the parameters of the classification contained within the act.
Section 3 of the act states that the act applies to
The term "employer" is limited by § 2(a) to
"Ceases to operate a place of employment" is defined by § 2(e) as follows:
[E]ither the complete termination of operations at a place of employment or a substantial reduction in the number of employees at a place of employment as part of a plan or in connection with an intent to move the business operations at such place of employment outside the State. Substantial fluctuations in the number of employees of an employer whose business is of a seasonal nature shall not be deemed to be a ceasing to operate a place of employment except to the extent that a substantial reduction in the number of employees of such employer is attributable to a plan or intention to move the business operations of such an employer outside of the State. When an employer ceases to operate a place of employment but offers to retain all of the employees at another location within the State, this act shall not apply.
The parties are in disagreement as to the proper interpretation of § 2(e). Plaintiff argues that the Legislature intended the act to apply to employers who completely terminate operations or substantially reduce the number of employees, in either alternative "as part of a plan or in connection with an intent" to remove operations from the State. Defendants urge, conversely, that the "plan or intent" language applies only to the latter alternative, with the result that every employer who completely terminates operations at a place of employment within the State is subject to the provisions of the act.
The function of the judiciary in construing any statute is to give effect to the legislative intention and purpose. State v. Carter , 64 N.J. 382, 390 (1974); N.J. Builders, Owners & Managers Ass'n v. Blair , 60 N.J. 330, 338 (1972); Roman v. Sharper , 53 N.J. 338, 342 (1969). Section 2(e) is ambiguous. Where two competing interpretations suggest themselves the judicial inquiry is directed to ascertaining the intention of the Legislature, U.S. v. Brandenburg , 144 F.2d 656, 660-661 (3 Cir. 1944), and "it is a cardinal rule * * * that full effect should be given, if possible, to every word of a statute. We cannot assume the Legislature used meaningless language." Gabin v. Skyline Cabana Club , 54 N.J. 550, 555 (1969). See also, 2A Sutherland, Statutory Construction (4 ed. Sands , 1973), § 46.06 at 63. In this context consideration must be given to which of the two antecedents in § 2(e) is to be modified by the "plan or intent" clause following them. Under defendants' interpretation the classification contained within the act will be more general than if plaintiff's interpretation prevails, and hence less likely to be declared void as impermissibly restrictive. When a statute may be open to a construction which would render it unconstitutional or permit an unconstitutional application, the judicial branch should accept that construction which renders the statute constitutional, if it is reasonably susceptible of such a construction. State v. Profaci , 56 N.J. 346, 349-350 (1970).
This is but a natural concomitant of the strong presumption that a statute is constitutional. Harvey v. Essex Cty. Bd. of Freeholders , 30 N.J. 381, 389 (1959). In construing ambiguous statutory language it is appropriate to act on "the fair assumption that the wishes of the legislative body would be furthered by upholding its prospective goals to the extent constitutionally permissible." Camarco v. Orange , 61 N.J. 463, 466 (1972). It is also an accepted principle of statutory construction that "referential and qualifying phrases refer solely to the last antecedent -- where no contrary intention appears." State v. Congdon , 76 N.J. Super. 493, 502 (App. Div. 1962); see also, Gudgeon v. Ocean Cty. , 132 N.J. Super. 13, 17 (App. Div. 1975). Accordingly, unless a contrary legislative intent appears, the qualifying "plan or intent" language should not be read as modifying instances where an employer completely terminates his operations.
Where, as in § 2(e) of the act, the intent of the Legislature as to the correct interpretation is not apparent on the face of the statute, the court must scan the legislative history of the enactment in order to determine the legislative purpose. Data Access Systems, Inc. v. State , 63 N.J. 158, 166 (1973); Hudson Cty. News Co. v. Sills , 41 N.J. 220, 226 (1963), app. dism., 378 U.S. 583, 84 S. Ct. 1914, 12 L. Ed. 2d 1036 (1964); N.J. Pharmaceutical Ass'n v. Furman , 33 N.J. 121, 130 (1960); see Todd Shipyards v. Weehawken Tp. , 45 N.J. 336, 341 (1965). As stated in State v. Madden , 61 N.J. 377 (1972), in this quest
Thus, while it has been argued that the court, in determining the legislative intent, should consider only the statement of purpose appended to the Senate Committee Substitute [144 NJSuper Page 169] to the Assembly Bill, it is settled law that consideration may be given to any legislative history which may be of aid in performing the judicial obligation and function. "[O]ur courts have adopted the policy of considering a broad spectrum of information (weighing its credibility and relevance) as a tool in determining the intent of the Legislature." State v. Jersey Central Power and Light Co. , 133 N.J. Super. 375, 387 (App. Div. 1975). Among the extrinsic materials presented for consideration and incorporated in the offers of proof are numerous newspaper articles which provide a contemporaneous commentary on the origins of the act and its passage through the Legislature, and a press release containing comments of then-Governor Cahill pertinent to the act. Defendants, while stipulating the fact of the publication and dissemination of these articles and the press release, argue that even if relevant, they are inadmissible hearsay since they are offered to show the truth of the matters stated therein. Evid. R. 63. The press release and newspaper articles undoubtedly constitute hearsay evidence not admissible under any of the traditional exceptions to the hearsay rule. However, our courts have come to consider an ever-widening variety of hearsay materials in ascertaining legislative intention and motivation, including letters written by the person suggesting the legislation, State v. Madden, supra; memoranda prepared by those who drafted the legislation, In re Estate of Lambert , 63 N.J. 448, 452-453 (1973); Data Access Systems, Inc. v. State, supra 63 N.J. at 166-167; newspaper articles, State v. Union Cty. Park Commission , 48 N.J. 246, 251-252 (1966); Lloyd v. Vermeulen , 22 N.J. 200, 209 (1956); the statement appended to a bill at the time of its passage, Deaney v. Linden Thread Co. , 19 N.J. 578, 584-585 (1955); Howard Savings Inst. v. Kielb , 38 N.J. 186, 195 (1962); Gudgeon v. Ocean Cty., supra 135 N.J. Super. at 16; the identity of persons or groups sponsoring the legislation in question, Group Health Ins. of N.J. v. Howell , 43 N.J. 104, 112 (1964); Independent Electricians, etc., [144 NJSuper Page 170] Ass'n of N.J. v. N.J. Bd. of Examiners , 54 N.J. 466, 470 (1969); see Grand Union Co. v. Sills , 43 N.J. 390, 396-397, 401 (1964); speeches by legislators while the legislation was pending before the Legislature, State v. Jersey Central Power & Light Co., supra 133 N.J. Super. at 383; conditional veto messages applicable to the legislation, Loveladies Prop. Owners Ass'n, Inc. v. Raab , 137 N.J. Super. 179, 184 (App. Div. 1975); Dept. of Health. v. Sol Schnoll Dressed Poultry Co. , 102 N.J. Super. 172, 176-177 (App. Div. 1968); Caldwell v. Rochelle Park Tp. , 135 N.J. Super. 66, 73-74 (Law Div. 1975), and comments of the Governor at the time of the enactment of the legislation, Irval Realty v. Bd. of Public Utility Comm'rs , 61 N.J. 366, 377 (1972); see Grand Union Co. v. Sills, supra 43 N.J. at 397. Similar materials which have been considered admissible under traditional rules of evidence include recommendations by study commissions which prompted the legislation, Data Access Systems, Inc. v. State, supra 63 N.J. at 165. In re In-Progress Trace Wire Communication , 138 N.J. Super. 404, 410 (App. Div. 1975); Reale v. Wayne Tp. , 132 N.J. Super. 100, 108 (Law Div. 1975); Tenafly v. Centex Homes Corp. , 139 N.J. Super. 490, 495 (Law Div. 1975); Anske v. Palisades Park , 139 N.J. Super. 342, 346 (App. Div. 1976), and text commentators' remarks regarding a statute, Data Access Systems, Inc. v. State, supra 63 N.J. at 164-165. A reviewing court may also include in its consideration of legislative history materials which may never have met the legislative eye. Data Access Systems, Inc. v. State, supra at 166-167. A review of these case authorities confirms that hearsay evidence of the nature of that offered by plaintiff is admissible as an aid to the court in its determination of legislative intention or motivation. On one occasion the use of the hearsay evidence so admitted was limited to confirmation of an intent already established by other evidence. Data Access Systems, Inc. v. State, supra. On other occasions the court has not so limited its use of such hearsay evidence, e.g., In re Estate
of Lambert, State v. Madden and Irval Realty v. Bd. of Public Utility Comm'rs , all supra. Accordingly, if necessary, it is appropriate in this case to consider the proffered newspaper articles and press release as relevant and material aids in ascertaining the meaning of the statutory language.
Plaintiff urges that dramatic evidence of legislative intent relevant to the proper interpretation of § 2(e) may be found in the Senate Committee Substitute Bill which preceded the act as finally enacted. Section 2(e) of the Committee Substitute contained a comma before the phrase "or a substantial reduction in the number of employees," so that it read as follows:
"Ceases to operate a place of employment" means the complete termination of operations at a place of employment, or a substantial reduction in the number of employees at a place of employment as part of a plan or in connection with an intent to move the business operations at such place of employment outside of the State * * *.
The argument presented is that the placement of the comma in this predecessor of § 2(e) of the act evidences an erstwhile intent by the Legislature to have the phrase "as part of a plan or in connection with an intent to move the business operations at such place of employment outside of the State" modify only "a substantial reduction in the number of employees." While the absence of such a comma in the act as finally passed may be evidential of an intent by the Legislature to have the "plan or intent" language modify both the complete termination and substantial reduction situations, the more persuasive argument is to the contrary.
A similar problem was confronted in N.J. Ins. Underwriting Ass'n v. Clifford , 112 N.J. Super. 195 (App. Div. 1970), where, in construing the definition of "essential property insurance" as contained in N.J.S.A. 17:37A-2(a), it was stated:
Although punctuation is to be considered when interpreting a legislative enactment, Moore v. Magor Car Corp. , 27 N.J. 82, 87 (1958), it must be weighed against other factors indicative thereof and cannot be relied upon to distort an otherwise apparent meaning. See Weinacht v. Bergen Cty. Bd. of Chosen Freeholders , 3 N.J. 330, 334 (1949); State v. Madewell , 117 N.J. Super. 392, 396 (App. Div. 1967), aff'd 63 N.J. 506 (1973). It is noteworthy that the final sentence of § 2(e) provides that
When an employer ceases to operate a place of employment but offers to retain all of the employees at another location within the State, this act shall not apply.
By exempting from the tax those employers offering to retain their employees at another location within the State, the final sentence of § 2(e) is indicative of a statutory purpose of providing protection to employees against the loss of their unvested pension benefits. This conclusion is buttressed by the statement attached to the Senate Committee Substitute to the Assembly Bill:
The purpose of this bill is to protect the nonvested pension rights of employees whose employer ceases to operate a place of employment within this State.
Similarly, then-Governor Cahill commented in a press release when signing the act into law that
This legislation affects an area of vital concern not only to me as Governor but also to business and each and every employee throughout the State. The plight of the working man without adequate protection for his retirement under ...