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State v. XYZ Corp.

Decided: June 20, 1990.

IN THE MATTER OF THE PETITION TO EXPUNGE STATE OF NEW JERSEY, RESPONDENT-APPELLANT,
v.
XYZ CORPORATION (A FICTITIOUS NAME), PETITIONER-RESPONDENT



On Certification to the Superior Court, Appellate Division, whose opinion is reported at 232 N.J. Super. 423 (1989).

For affirmance in part; for reversal in part; for remandment -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by Pollock, J.

Pollock

This case presents two issues. The first is whether a corporation is a "person" within the meaning of N.J.S.A. 2C:52-6a. That statute permits "persons" as to whom criminal proceedings have been dismissed to petition the Superior Court requesting that records of arrest "and all records and information pertaining thereto be expunged." The second issue concerns the standard of proof that the State must satisfy when objecting under N.J.S.A. 2C:52-14b to the expungement of criminal records relating to a prosecution not resulting in a conviction.

The Law Division concluded that a corporation is not a "person" within the meaning of the expungement statute. Alternatively, applying a preponderance-of-evidence standard, it found that the State had satisfied its burden as an objector to establish that the continuing availability of the records outweighed the desirability of expungement. The Appellate Division reversed, holding that a corporation was a "person" within the meaning of the statute, 232 N.J. Super. 423, 425-31, 557 A.2d 670 (1989), and that the State's burden as an objector is that of clear and convincing evidence, id. at 432, 557 A.2d 670. We granted the State's petition for certification on both issues, 117 N.J. 637, 569 A.2d 1337 (1989), and now affirm in part, reverse in part, and remand the matter to the Law Division.

-I-

XYZ Corporation (XYZ) is a fictitious name referring to a corporation indicted in two State Grand Jury Indictments. The relevant substantive and procedural facts are detailed in Judge Havey's careful opinion for the Appellate Division, 232 N.J. Super. at 425-26, 557 A.2d 670. For convenience, we summarize them briefly.

The first indictment charged that on several occasions XYZ had released acetone and other chemicals into sewer lines operated by the Middlesex County Utilities Authority (MCUA) and Old Bridge Township Sewerage Authority. Those discharges

had allegedly blocked a sewer line and created an explosive condition. The second indictment alleged that XYZ had falsified records and tampered with test results pertaining to the cleanup of groundwater pollution on its premises.

Through negotiations, the State agreed to dismiss the indictments against XYZ and its principals on condition that XYZ establish a $250,000 irrevocable trust for the benefit of MCUA to clean the sewer line. On creation of the trust, the State dismissed the indictments with prejudice.

After dismissal of the indictments, XYZ and the individual defendants petitioned, pursuant to N.J.S.A. 2C:52-6, to have the indictments expunged. The trial court granted the individual defendants' petitions, but denied XYZ's petition. In an unreported opinion, the trial court concluded that corporations are not "persons" within the meaning of the expungement statute. The court alternatively found that even if XYZ could file a petition, it should be denied under N.J.S.A. 2C:52-14b, because the State had satisfied the court by a preponderance of the evidence that the need for availability of the records outweighed XYZ's interest in expungement.

On appeal, the Appellate Division held that corporations are "persons" within the meaning of the expungement statute, and thus are entitled to petition for relief. 232 N.J. Super. 423, 425, 557 A.2d 670. Adopting the reasoning in State v. R.E.C., 181 N.J. Super. 79, 83, 436 A.2d 573 (Law Div.1981), the Appellate Division additionally held that the expungement of records involving prosecutions not resulting in convictions can be denied only when the State has " clearly convince [d] the court" that the need for availability of the records outweighs the desirability of expungement. 232 N.J. Super. at 432, 557 A.2d 670. The court rejected the trial court's application of the ...


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