Q And this conversation would be in the context of the business interest of the particular individual with whom you were speaking. Is that right?
A You mean as viewing them as competition?
. . .
Q In fact, Mr. Campbell, isn't there an antipathy between an individual owner of a pharmacy and a chain store pharmacy?
A Now I'm giving my age away. When I first became active in the county and state association there was a strong feeling of resentment as the chains were growing, but -- and I remember years ago, chain store pharmacies were afraid to apply for membership in our association, this isn't true. Right now the president of our local county manager [sic] has been the manager of a Thrift store in Trenton and he's one of the most highly regarded men in the association. As I say, he's our president.
Q That doesn't dilute the fact that there's still this feeling between the individual -- on the part of the individual owner that the chain store is jeopardizing their business, that feeling exists, doesn't it, Mr. Campbell?
A Sure it exists, but it's subsiding.
. . .
Q This feeling of antipathy is something not only you but other members of the Board of Pharmacy are aware of?
A Yes, we're aware of it.
Q And how do you become aware of this feeling of antipathy?
A Well, we're -- we're members of the Board of Pharmacy but we -- that occupies only a small part of our time. We're all engaged in operating our own pharmacies and we see, and talk to other pharmacists, other pharmacy owners.
Q What do they tell you? Do they tell you that Rite Aid is a big competitor, we're concerned about that? Do they tell you things like that?
A Not in -- not in my personal observation because, as I say, there's only one -- as far as I know there's only one Rite Aid store within any distance, I'd say fifteen or sixteen miles, and none others around.
Q Let me rephrase the question.
Instead of just Rite Aid do these individual owners you talk to, do they tell you that the chain store is a threat to them, they're concerned about the chain store and it jeopardizes their business? Do they tell you things like that?
A Some do. It's not a big part of our life. Campbell dep. at 82, 85-86, 87-89.
In part, Sussman testified:
Q Did they say anything beyond the fact that Rite Aid's prices are less than prices of individually owned pharmacies?
Q Did anyone indicate that that might be a threat to their business?
Q Did anyone indicate that it might tend to divert their business?
A I don't recall that specifically. It --
Q Generally, Mr. Sussman, I'm not asking you to recall specifically what was said and who said it, just generally.
A It could possibly dilute their business.
Q Did anyone say that to you?
Q But you recognize nevertheless that the pricing policy of Rite Aid because it is lower than individually owned pharmacies could tend to dilute the business of individually owned pharmacies, correct?
A There is a possibility.
Q You recognize that possibility, do you not, Mr. Sussman?
Q You recognize that possibility, do you not?
Q Do you know whether other members of the Board of Pharmacy recognize that possibility?
A I don't know.
Q Have you ever shopped at Rite Aid Pharmacy to compare their prices with yours?
Q Has anyone on the Board of Pharmacy shopped at Rite Aid Pharmacies?
A Not to my knowledge.
Sussman dep. at 28-29.
Assessing the record as a whole with a recognition of Rite Aid's burden, we find that among the members of the pharmacy profession, there has developed no such pervasive bias against, or fear of, chain stores of Rite Aid as would taint or prejudice pharmacist members appointed from the overall pharmacy constituency to serve on the Board. Nor does this record establish any such pervasive economic effect exercised by the chains upon the independents, as is claimed by Rite Aid. As a consequence, we can find no more than the existence of normal competition with its normal and traditional fears and concerns among independents, large and small, and chains.
Thus, we are forced to conclude on the present record that a chain store poses no greater financial threat to an independent pharmacy than the financial threat posed by another competing independent.
Accordingly, we cannot say that participation on the Board of Pharmacy by an independent member in a case involving Rite Aid or any other pharmacy chain implicates the type of substantial pecuniary interest discussed in Gibson and Wall27 which would violate due process.
Rite Aid also challenges the constitutionality of the application to it of N.J.S.A. 45:14-3, 12 and 35.
These statutory provisions give the Board the power to investigate alleged violations of the pharmacy laws and to suspend or revoke licenses and permits as penalties for violations.
Rite Aid contends that these statutes were unconstitutionally applied to it insofar as they permitted the Board members to prejudge the allegations against Rite Aid. We reject Rite Aid's argument, as we are satisfied that the procedures employed by the Board were not constitutionally defective.
In Withrow v. Larkin, 421 U.S. 35, 95 S. Ct. 1456, 43 L. Ed. 2d 712 (1975) the Supreme Court held that a state medical examining board which conducted an investigation into alleged improprieties to determine whether there was probable cause to hold a hearing as to whether a physician's license should be revoked could, consistent with due process, conduct the adversary revocation hearing. The Court instructed:
No specific foundation has been presented for suspecting that the Board had been prejudiced by its investigation or would be disabled from hearing and deciding on the basis of the evidence to be presented at the contested hearing. The mere exposure to evidence presented in nonadversary investigative procedures is insufficient in itself to impugn the fairness of the board members at a later adversary hearing. Without a showing to the contrary, state administrators, 'are assumed to be men of conscience and intellectual discipline, capable of judging a particular controversy fairly on the basis of its own circumstances.'
421 U.S. at 55, 95 S. Ct. at 1468. Withrow v. Larkin thus stands for the principle that the mere fact that the administrative agency has investigated the matter in question does not render it or its members incompetent, consistent with due process, to adjudicate the case as presented at the evidentiary hearing. Burnley v. Thompson, 524 F.2d 1233, 1241-42 (5th Cir. 1975); Fuentes v. Roher, 519 F.2d 379, 388 (2d Cir. 1975); Stebbins v. Weaver, 396 F. Supp. 104, 113-14 (W.D.Wis.1975). See also Hortonville Joint School District No. 1 v. Hortonville Education Association, supra. We think that Withrow disposes of Rite Aid's argument.
We recognize from the start that the actual investigation of Rite Aid was not conducted by the Board.
The record reveals that the Board's Secretary, Paul Pumpian, at the request of the Board referred two complaints concerning Rite Aid of Bergenfield to the Enforcement Bureau of the Division of Consumer Affairs for investigation. The Enforcement Bureau is not a part of the Board but does independent investigative work for the nineteen New Jersey professional boards. The Enforcement Bureau thereafter submitted its report to the Board, which in turn forwarded the report to the Attorney General for the institution of disciplinary proceedings.
Rather than hearing the matter itself, the Board appointed a retired Superior Court Judge to act as a hearing officer and to make a report with proposed findings. The Board thereafter reviewed Judge Mintz's report and, with the exception of the penalty recommendations, affirmed it.
We conclude that Withrow v. Larkin controls this issue and that N.J.S.A. 45:14-3, 12 and 35 are not unconstitutional "as applied" to Rite Aid.
The First Count of Rite Aid's Second Amended Complaint, $8 and the Fifth Count may be read as alleging that the Board has manifested actual bias (as distinct from "inferential" bias. See § III-V, supra) against Rite Aid. In support of these allegations, Rite Aid introduced testimony which it claims tends to show the actual bias of the present pharmacist board members.
While such evidence of individual actual bias is irrelevant to a successful constitutional attack on N.J.S.A. 45:14-1, proof of such actual bias would nonetheless result in a deprivation of Rite Aid's due process rights. Such an attack against the Board's order, however, does not involve the facial or "as applied" constitutionality of any state statute. A three judge district court under 28 U.S.C. § 2281 may not be convened to adjudicate a request for an injunction against an order of a state administrative board if the constitutional challenge is to a wrong done by the board under the statute, rather than a wrong resulting from the requirement of the statute itself. Ex Parte Bransford, 310 U.S. 354, 359, 60 S. Ct. 947, 84 L. Ed. 1249 (1940).
Having upheld the validity of N.J.S.A. 45:14-1 on its face and "as applied", we decline to rule on those allegations of the First and Fifth Counts which challenge the constitutionality of the Board's order of December 6, 1974 by asserting that the members of the Board were actually biased against Rite Aid. That issue is not appropriate for us to consider. It is more properly presented to a single judge of the district court. Rosado v. Wyman, 397 U.S. 397, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970); United Artists Corporation v. Proskin, 363 F. Supp. 406, 409-10 (N.D.N.Y.1973) (3 judge dist. ct.); BBS Productions, Inc. v. Purcell, 360 F. Supp. 801, 806 (D.Ariz.1973) (3 judge dist. ct.). Accordingly, if pressed by Rite Aid, it will be the district court's function to resolve any actual bias issue. We express no opinion, however, as to any factual or legal aspect bearing upon this question.
The Fourth Count of Rite Aid's Second Amended Complaint alleges that N.J.S.A. 52:14B-10(c) governing the procedure where hearing officers are used, is unconstitutional in that "the statute fails to delineate guidelines or standards the Board must adhere to in making its designation" of a hearing officer. N.J.S.A. 52:14B-10(c) provides:
(c) When a person not empowered to render an administrative adjudication is designated by the head of the agency as the presiding officer, his recommended report and decision containing recommended findings of fact and conclusions of law shall be filed with the agency and delivered or mailed to the parties of record; and an opportunity shall be afforded each party of record to file exceptions, objections and replies thereto, and to present argument to the head of the agency or a majority thereof, either orally or in writing, as the agency may order. The head of the agency shall adopt, reject or modify the recommended report and decision. The recommended report and decision shall be a part of the record in the case.