Before Judges Stern, Wefing and Steinberg.
The opinion of the court was delivered by: Wefing, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
On appeal from a Final Administrative Action of the Commissioner of Labor.
AC&C Dogs, LLC and AC&C Dogs, Inc. (AC&C) *fn1 appeal from a final administrative action of the Commissioner of Labor finding them liable for the payment of certain unemployment taxes. After a careful review of the entire record in this matter, we reverse.
The record that was created in this matter is somewhat spare. The contested issue was responsibility for payment of these taxes. There was no dispute as to amount. The Department of Labor presented one witness, Richard Simmons, an auditor; large portions of his testimony consisted of reading his audit report. The Administrative Law Judge (ALJ), who heard this matter, struck portions of that report on the ground it was unsupported hearsay. AC&C presented two witnesses, Richard Serale, its principal, and Dennis Gallagher, a vendor.
AC&C is located in Atlantic City, New Jersey. It rents hot dog carts to individuals who then cook and sell hot dogs to the passing public. Atlantic City has, by ordinance, regulated who may engage in such sales. It requires they be licensed by the City; in order to obtain a vending license, an individual must be licensed under N.J.S.A. 45:24-9 to -13. The City has further restricted who may obtain such vending licenses by requiring that vending units be operated and attended by honorably discharged veterans. Atlantic City N.J. Code § 145-23F (1994). The City has also, by ordinance, restricted the locations at which such licensed individuals may sell their wares. The Code provides for what it terms at-large locations and designated locations. §§ 145-20; 145-23D, E, and V. The City has, further, limited the number of active vending licenses to one hundred twenty- five. § 145-18. (Richard Simmons testified that there were more than four hundred licensees; we are unable, from this record, to account for that disparity.)
Under the City's ordinance, there are forty designated locations in the City at which vending is permitted. To treat all licensees fairly, the City assigns such designated vending locations on a rotational basis. § 145-24. It posts a schedule on a monthly basis.
Beyond restricting sales on the Boardwalk, the City ordinance does not specify what items an individual may sell at a given location; nor does it require an individual to vend a certain minimum number of days or hours to maintain a vending license. It does, however, specify that a vendor can leave the vending unit for no more than twenty minutes at a time and cannot take such a break more than once every two hours. § 145-23F. It also directs that carts such as those provided by AC&C shall not be on the streets and sidewalks of the City between 6:00 a.m. and 9:30 a.m. § 145-23(A).
AC&C's business is limited to supplying hot dog carts to licensed vendors who wish to sell hot dogs on a given day. A vendor calls AC&C and asks to have a cart delivered to a named location at a specified time. Generally, the cart comes equipped with hot dogs, buns and condiments. At the end of the day, AC&C picks up the cart and the vendor pays a rental charge, based upon the number of hot dogs sold during the day.
AC&C does not require, however, that a vendor obtain his food stock from AC&C; he is free to purchase his own food supplies if he believes it is to his economic benefit. In such an instance, AC&C charges a flat fee for cart rental. AC&C supplies a suggested price list; a vendor, however, is free to set his own prices and to expand the menu by buying his own chili or cheese and offering such items as chili dogs or cheese dogs at whatever prices he deems appropriate.
AC&C is not the only company that supplies hot dog carts to licensed vendors in Atlantic City; there are at least two other such businesses. The vendors are free to select the company with which they wish to deal. Vendors may determine to obtain their carts from different suppliers on different days. They are also free to decide, on any given day, whether to sell foodstuffs other than hot dogs, for instance, ice cream. In such an eventuality, they would not deal with AC&C, but with a different entity that would supply an ice cream vending cart. And, of course, they are free to decide not to vend at all. The hot dogs are in no way identified to the consumer as coming from AC&C and the vendors display no AC&C identification. The vendors thus achieve no competitive benefit with the public by vending from a cart supplied by AC&C, as opposed to another supplier.
AC&C has no power to control either the manner in which the vendors conduct their businesses or the locations they select. All of those details are controlled by the City. A large number of the vendors with whom AC&C deals vend on a part-time basis, either because they have other, full-time positions, or because of their own individual preferences.
The ALJ issued a decision, adopted by the Commissioner of Labor, in which he concluded that AC&C was required to make unemployment tax payments on behalf of the vendors with whom it dealt because AC&C had failed to establish it was exempt under the "ABC" ...