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In re Allegations of Violations of Law and Rule

Decided: January 21, 1988.


On appeal from Board of Public Utilities

J. H. Coleman, O'Brien and Havey. The opinion of the court was delivered by Coleman, J.h., P.J.A.D.


[222 NJSuper Page 260] The novel issue raised by this appeal is whether a transfer of all the stock in a public utility engaged in the solid waste collection business, without prior approval of the Board of Public Utilities (BPU), is violative of the Solid Waste Control Act, N.J.S.A. 48:13A-1 et seq. and implementing regulations. The BPU concluded that the stock transfer was void. The BPU

revoked Inter County's certificate of public convenience and necessity to provide collection service in the solid waste industry and prohibited its president Louis Spiegel individually from future participation in the solid waste industry. We now affirm the order of the BPU.



The crucial facts are not in serious dispute. On October 21, 1980 Inter County, its president Louis Spiegel, two trade associations of solid waste collectors and numerous other defendants were indicted by a State Grand Jury. The indictment charged that the named defendants and unindicted co-conspirators "knowingly engaged in a combination and conspiracy in unreasonable restraint of the business of providing garbage collection service to customers" in violation of the New Jersey Antitrust Act, N.J.S.A. 56:9-3. At the conclusion of a lengthy jury trial, Inter County, Louis Spiegel, Anthony Scioscia and Home and Industrial Disposal Service were found guilty of fourth degree conspiracy to restrain trade and commerce. On July 29, 1983 Inter County was sentenced to pay a fine of $15,000. On the same day, Spiegel was sentenced to a suspended custodial term of 18 months*fn1 and three years of probation with the special condition that he serve 200 hours of community service. He was also fined $10,000. The convictions were based on appellant's and other co-conspirator's participation in an unlawful customer allocation agreement whereby members acquired "property rights" which permitted them to provide garbage collection services to specific locations without competition. The conspiracy was implemented through the New Jersey Trade Waste Association which assigned specific collection areas to specific collectors and these designations became "property rights." See State v. Scioscia, 200 N.J. Super. 28, 32-33

(App.Div.1985), certif. den. 101 N.J. 277 (1985). Appellants' judgments of conviction were affirmed by us on March 20, 1985 in an unpublished opinion.

While the criminal appeal was pending, the BPU issued an order on December 20, 1983 to Inter County to show cause why its certificate of public convenience and necessity should not be revoked based on its conviction for violating N.J.S.A. 56:9-3. The BPU contended that the criminal convictions also established a violation of the anti-monopoly provision of the Solid Waste Utility Control Act, N.J.S.A. 48:13A-10 and a regulation promulgated pursuant thereto, N.J.A.C. 14:3-10.12. The matter was transmitted to the Office of Administrative Law for a hearing. On November 20, 1984 the BPU made a motion before the ALJ to amend the show cause order to include Spiegel individually as a party. The amendment sought to prohibit Spiegel from managing, owning or participating in any solid waste business organization within the State. The requested amendment was granted. After the BPU had rested its case before the ALJ, Inter County and Spiegel made motions to dismiss the order to show cause. These motions were denied in a letter opinion of ALJ Naomi Dower-LaBastille dated January 23, 1985.

On October 1 and 2, 1985 Inter County and Spiegel presented evidence before the ALJ on their behalf. During that phase of the hearing before the ALJ, Arthur Stryker, a business partner of Spiegel in other corporate ventures, testified that he became president of Inter County on January 1, 1985. He also testified that he and his wife, Deborah Stryker, purchased from Louis Spiegel and his wife, Mary Spiegel, all of the stock in Inter County on February 1, 1985; each acquired 50% without prior approval of the BPU. Appellants proffered expert testimony of an antitrust expert respecting the market power of appellants, but that evidence was not considered by the ALJ. The expert's testimony, however, was taken as an offer of proof to preserve the record for appeal. At the conclusion of the hearing before the ALJ appellants sought summary judgment based on Stryker's

testimony respecting the divestiture of Spiegel and the new ownership of Inter County. Appellants also made an "offer of judgment" based on Spiegel's representation that he would refrain from engaging in any solid waste collection business in New Jersey. Both the request for summary judgment and the "offer of judgment" were rejected by the ALJ.

On December 20, 1985 the ALJ issued her initial decision in which she concluded that the transfer of Inter County's stock was void. She also concluded that Inter County and Spiegel "attempted to monopolize and conspired with other persons to monopolize the provision of solid waste collection services to the New Jersey service area over which they had been assigned exclusive property rights in violation of [the Solid Waste Utility Control Act] N.J.S.A. 48:13A-10a." The ALJ found that appellants had agreed with other collectors to limit bidding or withdraw from a specific location or territory to eliminate competition, which conduct also violated N.J.A.C. 14:3-10.12. The ALJ recommended that (1) Inter County's certificate of public convenience and necessity be revoked, (2) each appellant be fined $500 which should be deemed satisfied by the extra discovery cost associated with the BPU's staff redefinition of relevant market, (3) Spiegel be barred from participation in the solid waste industry, and (4) Inter County submit to the BPU a list of all customers serviced by it.

On April 25, 1986, the BPU issued its final decision and order adopting the initial decision of the ALJ except that appellants were not permitted to satisfy the fines by their increased discovery costs. This appeal was filed on May 12, 1986. The Supreme Court on July 3, 1986 stayed the revocation of Inter County's certificate of public convenience and necessity pending disposition of this appeal.



In this appeal appellants contend that the BPU "erred in ruling that the transfer of stock from the Spiegels to the

Strykers violated N.J.S.A. 48:3-10 and N.J.A.C. 14:3-10.13(a) because it [the stock transfer] was made without Board approval." Essentially, appellants argue that the stock transfer did not require BPU approval under N.J.S.A. 48:3-10, N.J.A.C. 14:3-10.13(a) or N.J.S.A. 48:3-7. They argue that when the BPU issued its final decision and order on April 25, 1986, Spiegel no longer held any interest in Inter County because his 99% stock ownership and his wife's 1% ownership had been transferred to Arthur Stryker and his wife, Deborah, such that ...

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