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State v. New Jersey Trade Waste Association

Decided: July 25, 1983.

THE STATE OF NEW JERSEY
v.
NEW JERSEY TRADE WASTE ASSOCIATION, ET AL., DEFENDANTS



Meredith, J.s.c.

Meredith

[191 NJSuper Page 147] The New Jersey Antitrust Act, N.J.S.A. 56:9-1 et seq., provides that "Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, in

this State, shall be unlawful." N.J.S.A. 56:9-3. Under an indictment dated October 17, 1980 fifty-seven individuals, partnerships and corporations were charged with a violation of this statute in that they "knowingly engaged in a combination and conspiracy in unreasonable restraint of the business of providing garbage collection service to customers in the relevant area." The indictment was dismissed as to several defendants, and several others were severed for trial. With the exception of eight defendants tried before a jury earlier this year, all the rest entered into plea agreements with the State, under which they pled guilty to a provision of the Solid Waste Utility Control Act of 1970, N.J.S.A. 48:13A-10 a. Of the eight defendants who went to trial, four were convicted and mistrials were declared as to the other four, the jury having been unable to reach a verdict as to their guilt or innocence. Those who were found to be guilty are Anthony Scioscia, Home & Industrial Disposal Service, Louis Spiegel, and Inter County Refuse Service, Inc. These defendants move for an order declaring the interdict provision of the New Jersey Antitrust Act to be unconstitutional. Joining in the motion are two defendants as to whom mistrials were declared, and who face retrial on the charge, Browning-Ferris Industries of Elizabeth, Inc., and John M. Gentempo.

The criminal penalty provision of the New Jersey Antitrust Act reads as follows:

a. Any person or corporation, or any officer or agent thereof, who shall knowingly violate any of the provisions of this act or aid or advise in such violation, or who, as principal, manager, director, stockholder owning 10% or more of the aggregate outstanding capital stock of all classes of the corporation, agent, servant or employee, knowingly does any act comprising a part of such violation, is guilty of a misdemeanor and shall be punished by imprisonment for not more than 3 years or by a fine of not more than $50,000.00 or both; and if a corporation by a fine of not more than $100,000.00.

b. Any person convicted pursuant to the provisions of subsection a of this section is hereby denied the right and is hereby prohibited from managing or owning any business organization within this State, and from serving as an officer, director, trustee, member of any executive board or similar governing body, principal, manager, stockholder owning 10% or more of the aggregate

outstanding capital stock of all classes of any corporation doing business in this State, and all persons within this State, are hereby denied the right to handle the goods of or in any manner deal with, directly or indirectly, those persons, companies or corporations under the interdict specified herein. All persons knowingly violating any of the provisions of this section, either directly or indirectly, or aiding or abetting directly or indirectly in any violation of any provisions of this section, shall be deemed guilty of a misdemeanor and shall be fined not less than $100.00 nor more than $1,000.00 and shall be punished by imprisonment for not less than 30 days nor more than 6 months, and shall forfeit not less than $1,000.00 for each and every day such violation may continue, to be collected by a summary proceeding in a court of competent jurisdiction.

N.J.S.A. 56:9-11. Section (b) of this statute is called the interdict provision. Although the Attorney General asserts and the defendants would no doubt gladly concur that the interdict does not apply to corporations but only to individuals,*fn* this interpretation is not supported by the language of the statute. In N.J.S.A. 56:9-2, the term "person" is specifically defined to include corporations, partnerships and companies. Furthermore, the interdict states that all persons are prohibited from dealing with "persons, companies, or corporations under the interdict specified herein." The explicit intention was that corporations and other companies be subject to the interdict. Therefore, all the defendants convicted at trial as well as those joining the motion are concerned here. In this regard the opinion of the Attorney General is of no consequence. The imposition of the interdict is mandatory once a criminal conviction under the statute is obtained. The State cannot influence its imposition except by deciding to proceed under a different statute or under the civil provisions of the Antitrust Act. Obviously, the court as well is denied any exercise of discretion in the matter of the

interdict. Its prohibitions are automatically imposed regardless of the circumstances of any particular offense and irrespective of the defendant's prior criminal record or lack thereof.

The interdict provision imposes an extraordinary penalty, incapable of clear comparison to the usual sentences of fines, incarceration or to the ultimate penalty, a sentence of death. The State characterizes the interdict as a "collateral consequence" to a conviction, implying that its prohibition is a penalty less severe than incarceration. The interdict is in fact a most severe and extreme solution to the problem of deterring future antitrust violations. Unlike most prison sentences, this punishment is perpetual. It is effective upon a single violation of the statute. It implicitly rejects the concept of rehabilitation or reform, one of the purposes of the criminal code of the State and therefore among the goals recognized and adopted by the legislature. N.J.S.A. 2C:1-2.

The State likens the interdict to a delicensing measure, which regulations have frequently been upheld by the courts. This statute not only prevents an individual from participating in a licensed profession, since those convicted of a crime are generally excluded from such practice, but also extends to prohibiting involvement in any business at a management or ownership level, for the rest of the defendant's life. The alternatives left to those convicted under the statute are few. They may take jobs as laborers, at probably substantially reduced income; they may be eligible to work for a labor union; or they may, of course, leave the state and start over. A defendant who takes a job in the state is forever barred from promotion or advancement and is prevented from using his earnings to obtain a significant interest in a business enterprise. The statute deprives individuals of the right to apply their skills and abilities to better themselves and to provide for themselves and their families in the best way they are able.

"In New Jersey, the right to obtain gainful employment and to use the fruits of such labor to acquire property has

traditionally been considered basic." Peper v. Princeton University Board of Trustees, 77 N.J. 55, 77 (1978). The right to earn a livelihood is a property right which is guaranteed by the Fifth and Fourteenth Amendments to the Federal Constitution, and by the State Constitution. Greene v. McElroy, 360 U.S. 474, 492, 79 S. Ct. 1400, 1411, 3 L. Ed. 2d 1377 (1959); Lane Distributors, Inc. v. Tilton, 7 N.J. 349 (1951); Carroll v. Local No. 269, Int'l Brotherhood of Electrical Workers, 133 N.J. Eq. 144 (Ch. 1943). The right of a person to engage in a business of his choice should be protected against arbitrary or unreasonable interference by the State. Greene v. McElroy, supra, 360 U.S. at 492, 79 S. Ct. at 1411; Lane Distributors, Inc. v. Tilton, supra, 7 N.J. at 362. The use of property is subject to regulation in the common interest and, of course, there is no right to conduct a business so as to injure the public. Nebbia v. New York, 291 U.S. 502, 54 S. Ct. 505, 78 L. Ed. 940 (1934). Thus, legislation preventing injurious practices is valid so long as it does not violate a specific constitutional provision or contradict a federal law, Ferguson v. Skrupa, 372 U.S. 726, 730-31, 83 S. Ct. 1028, 1031, 10 L. Ed. 2d 93 (1963), and when it bears a reasonable relationship to the protection of the public health, morals, safety or welfare. This "police power" of the State extends to protection from economic harm. Lane Distributors, Inc. v. Tilton, supra, 7 N.J. at 362, 365-66. For these reasons, statutes prohibiting monopolizing or restraining trade are completely valid.

The courts of New Jersey have characterized the right freely to engage in a lawful business or occupation as unalienable, however, and subject only to such restrictions as may result from the exercise of equal or superior rights of others, such as the right of fair competition. Peper v. Princeton University Board of Trustees, supra, 77 N.J. at 77, quoting Brennan v. United Hatters of North America, Local No. 17, 73 N.J.L. 729, 742 (E. & A.1906). While this supports an enactment declaring anticompetitive practices to be unlawful, a giant leap must be made to the conclusion that the interdict is a valid regulation protecting the right of fair competition.

Indeed, the right to earn a livelihood is regarded to be so basic as to limit the enforcement by the courts of covenants not to compete. Such an agreement standing alone is viewed as illegal and contrary to public policy. 6A Corbin on Contracts (1962) ยงยง 1379-1384. If an agreement not to compete constitutes only one part of a legitimate transaction it will be enforced by the courts only to the extent that it is reasonable in terms of duration and geographical area, and imposes no undue hardship. Ibid.; Voices, Inc. v. Metal Tone Mfg. Co., Inc., 119 N.J. Eq. 324 (Ch. 1936), aff'd, 120 N.J. Eq. 618 (E. & A.1936), cert. den., 300 U.S. 656, 57 S. Ct. 433, 81 L. Ed. 866 (1937); Rubel & Jensen Corp. v. Rubel, 85 N.J. Super. 27, 35 ...


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