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Roman Check Cashing Inc. v. New Jersey Department of Banking and Insurance

August 06, 1999


Before Judges Havey, Skillman and Lesemann.

The opinion of the court was delivered by: Lesemann, J.S.C. (temporarily assigned).


Argued June 11, 1999

On appeal from the State of New Jersey Department of Banking and Insurance.

Plaintiff Roman Check Cashing, Inc., (Roman) challenges the constitutionality of N.J.S.A. 17:15A-41e, which provides that no licensed check cashing office may be located within 2,500 feet of another such office. N.J.S.A. 17:15A-41e is part of the New Jersey Check Cashers Regulatory Act of 1993, N.J.S.A. 17:15A-30 to 52 (the Act). Because we are unable to perceive any rational connection between that limitation and any legitimate purpose underlying the statute, we conclude that the restriction is unconstitutional.

Roman is a New Jersey corporation located in the town of Dover. It applied to the New Jersey Department of Banking and Insurance (the Department) for a license as a check casher which, upon correction of some deficiencies, was considered "complete" on December 1, 1997. The proposed location for its check cashing office was in a Dover supermarket it owned known as the Latino American Supermarket. Dover has approximately 15,000 residents.

The Act represents a detailed set of regulations governing the check cashing business. It repealed a prior statute known as "The Check Cashing Law" which had been adopted in 1951 as N.J.S.A. 17:15A-1 et seq. It requires that one who engages in the check cashing business be licensed by the Department, N.J.S.A. 17:15A-33; limits fees that may be charged for check cashing services, N.J.S.A. 17:15A-43; requires reports to be filed annually with the Department, N.J.S.A. 17:15A-45; contains minimum net worth requirements for a check cashing business, N.J.S.A. 17:15A-37; and contains penalty provisions for violations of the Act; N.J.S.A. 17:15A-49. The provision at issue here states that, no office or mobile office [for check cashing purposes] shall be located within 2,500 feet of an existing office or mobile office, . . . . [N.J.S.A. 17:15-A-41c.]

Roman's application met all the conditions of the Act, but for the requirement that it be located 2,500 feet from any existing check cashing office. Its proposed business was located 1,004 feet from an existing licensed facility, the only such facility in Dover. For that reason, the Department rejected this application. The applicable legal principles are clear. In determining whether the regulation violates Roman's substantive due process rights, the question is whether there is any rational relationship between the regulation and a legitimate State purpose. If so, and if the regulation is not arbitrary, capricious or unreasonable, the regulation should be sustained:

"Economic regulations . . . need be only rationally related to a legitimate state purpose to satisfy requirements of substantive due process. Williamson v. Lee Optical of Okla., 348 U.S. 483, 488, 75 S. Ct. 461, 464, 99 L. Ed. 563, 572, reh'g denied, 349 U.S. 925, 75 S. Ct. 657, 99 L. Ed. 1256 (1955). If an economic regulation is not arbitrary, capricious, or unreasonable, and the means selected bear a rational relationship to the legislative objective, the regulation should be sustained." [Brown v. City of Newark, 113 N.J. 565, 572, (1989).]

On that basis, e.g., in Piscataway Township Bd. of Educ. v. Caffiero, 86 N.J. 308, 318 (1981), the Court held that a statute imposing vicarious liability on parents for damage done to school property by their children did not violate due process standards and was constitutional:

"Due process requires 'only that a law shall not be unreasonable, arbitrary or capricious, and that the means selected shall bear a rational relation to the legislative object sought to be obtained . . . .' We do not sit as a body reviewing the wisdom of legislative decisions, whether new or old, but can determine only whether legislative action is within constitutional limitations. If the statute does not violate the Constitution but is merely unwise or based on bad policy, then, . . . , it is for the Legislature rather than this Court to deliver a finishing blow to it." [Citations omitted.]

The presumption of validity in favor of a statute is strong, and one challenging that validity has a heavy burden to bear:

"The presumption [of validity] is not an irrebuttable one, but it places a heavy burden on the party seeking to overturn the ordinance. Legislative bodies are presumed to act on the basis of adequate factual support and, absent a sufficient showing to the contrary, it will be assumed that their enactments rest upon some rational basis within their knowledge and experience. This presumption can be overcome only by proofs that preclude the possibility that there could have been any set of facts known to the legislative body or which could reasonably be assumed to have been known which would rationally support a Conclusion that the enactment is in the public interest. The judiciary will not evaluate the weight of the evidence for and against the enactment nor review the wisdom of any determination of policy which the legislative body might have made." [Hutton Park Gardens v. West Orange Town Council, 86 N.J. 543, 565 (1975)(citations omitted).]

The State argues that there is a rational relationship between the 2,500 foot requirement and a legitimate State objective. The policy of the Act, it claims, includes prevention of illegal money laundering through check cashing facilities and, to that end, the State has an interest in maintaining the economic soundness of check cashing facilities. Absent such soundness, it says, an "unscrupulous business-person may be tempted by profitable criminal activity, such as money laundering." To accomplish that end, the State has an interest in "preventing dangerous geographical saturation of the market," to avoid having those market forces "drive business-persons to desperate choices, including money laundering." It concludes that, it is clearly conceivable that the distance requirement fosters healthy competition among ...

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