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All Nations Taxi v. City of New Brunswick


July 17, 2008


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-204-05.

Per curiam.


Argued: October 3, 2007

Before Judges Cuff, Lisa and Simonelli.

In response to requests from residents, the City of New Brunswick (the City) appointed a committee to review the quality of existing taxi service and the need for additional taxi service. In response to study recommendations, the City Council adopted an ordinance allowing the issuance of five additional taxi licenses subject to public bid, with a $50,000 minimum bid, and imposing additional requirements regarding taxi operations within the City. The City appeals from an order invalidating the public bidding procedure and the minimum bid as ultra vires. Plaintiffs*fn1 All Nations Taxi (All Nations) and Acapulco Taxi (Acapulco) appeal from the order dismissing their other claims that the regulatory provisions are void for vagueness, have been selectively enforced against out-of-town taxi operators, restrict plaintiffs' right to travel, and infringe on their search and seizure rights. We affirm.

All Nations operates a taxicab company in Milltown. Acapulco operates a taxicab company in Bound Brook. Both are licensed by the municipalities in which they are located. Neither company is licensed in the City, although the owners of each company bid for a license when the City authorized the issuance of five additional licenses.

The Taxi Service Review Committee (the Committee), commissioned by the New Brunswick City Council, recommended the creation of five additional taxicab licenses that would be subject to public bid, with a minimum bid of $50,000. The Committee suggested enhanced quality of service standards, improved inspection procedures, and adoption of an "implied consent" ordinance for random stops to verify licensure, insurance and equipment standards. The Committee also recommended additional operational requirements including stricter enforcement of the existing ban on "cruising" for fares, and sharp limitations on stopping and standing while in service. Finally, the Committee suggested that taxicabs not licensed in the City should be allowed to pick up passengers in another town and discharge them in the City, or pick up a passenger in the City and discharge the passenger in another town. An out-of-town licensed taxicab could not pick up and discharge a passenger in the City.

The City Council amended the existing taxi ordinance*fn2 in early 2004. The Amended Taxi Ordinance of 2004 (ATO) incorporated virtually all of the recommendations of the Committee. It established annual fees of $250 for the operation of a taxi and $60 for the renewal of a taxi driver license. The ATO provides for the thorough and careful inspection of all taxis by the police department prior to the issuance of a taxicab license. The police department must also inspect the taxis every three months to ensure safety, cleanliness and fitness. On September 21, 2005, the City Council amended the ATO to remove the language requiring that police "shall maintain a constant vigilance over all taxicabs" to ensure safe and clean equipment and authorizing police to stop and inspect any taxi at any time. The 2005 amendment to the ATO authorized the director of police to assign only one member of the department to conduct periodic physical inspections of the taxicabs.

Section 5.100.190 of the ATO provided originally that a taxicab cannot park on the streets of the City, except at designated taxi stands, or on private property unless the property is owned by the owner or operator of the taxicab. In September 2005, the City Council amended this provision to provide that the owner or operator can park a taxicab at his home or at another location in the City when the owner or operator is conducting personal business, other than taxi services. Section 5.100.250 of the ATO also provides that a taxicab in service cannot stop except to receive or discharge passengers or in response to a traffic signal or at the direction of a police officer.

Following the adoption of the ATO in 2004, the owners of All Nations and Acapulco complained that they received an excessive number of tickets and summonses for alleged violations of the amended ordinance. Eusebio Lopez, the owner of Acapulco, asserted that he received numerous tickets for picking up fares in the City. He alleged that one ticket was issued when he was with two friends and had neither sought nor accepted a fare in the City. Felix Perez, the son of Olegario Vasquez, the owner of All Nations, asserted that he received a ticket when he stopped at a store to buy milk. During 2004, All Nations was charged with 165 violations of Title 39 of the New Jersey Statutes, including citations for unsafe operation and careless driving, improper discharge of passengers, and failure to provide proper child restraints. All Nations also received over sixty summonses for violations of the taxi ordinance, including excessive use of a horn, improper parking, and operating an unlicensed taxi. Acapulco received numerous citations for violations of Title 39 and the ATO. At the time of the return date of the order to show cause filed by plaintiffs, over 150 summonses had been issued and the resolution of many of those summonses was stayed pending disposition of plaintiffs' complaint.

The City offered five new taxicab licenses at public bid. Vasquez, on behalf of All Nations, successfully bid $74,000. Lopez on behalf of Acapulco, successfully bid $75,000. At the time of the return date of the order to show cause, each owner paid the required deposit but failed to pay the remainder of the balance.

On January 6, 2005, plaintiffs filed a verified complaint and an order to show cause with temporary restraints challenging various provisions of the ATO. In Count One, plaintiffs allege that the number of authorized licenses is arbitrary and the procedure and cost for acquisition of a license is an improper and unauthorized revenue raising measure. In Count Two, plaintiffs allege that the prohibition against unlicensed taxicabs from picking-up and discharging passengers within the City and the limitations on parking places an undue burden on their right to travel.

In Count Three, plaintiffs allege that the ATO allows the police unfettered authority to stop and search taxicabs without reasonable suspicion of any regulatory violation. In Count Four, plaintiffs allege that the ATO is unconstitutionally vague and overbroad because it bestows excessive discretion on the police and municipal court. Finally, in Count Five, plaintiffs allege that the City selectively enforced the terms of the ATO against out-of-town taxicabs, many of which are owned by Hispanics with Hispanic clientele.

On the return date of the order to show cause, Judge Longhi declined to impose temporary restraints regarding the enforcement of the ATO. A consent order stayed the adjudication of all summonses issued against plaintiffs until resolution of the litigation.

Following discovery, the parties filed cross-motions for summary judgment. In his April 7, 2006 oral opinion, Judge Longhi held that the procedure for issuance of the additional licenses, specifically by public auction and with a $50,000 minimum bid, is ultra vires and the minimum bid bears no reasonable relationship to the cost of administration of the taxicab regulatory program. He remanded the matter to establish a proper license fee. The judge also granted the City's motion for summary judgment and dismissed Counts Two through Five of plaintiffs' complaint.

In doing so, the judge found that the out-of-town taxicabs had the ability to travel into and out of the City. A taxi licensed in another town could carry passengers into the City and it could pick up a passenger in the City and transport the passenger out-of-town. Accordingly, he held that the public's right to travel is not burdened because persons in the City can use licensed and non-licensed taxis to get into and out of the City.

Judge Longhi also held that the ATO as revised in 2005 eliminated the power to conduct warrantless searches of taxicabs. As amended, the ordinance contains specific procedures for periodic inspections that eliminated the possibility of repeated warrantless searches. As such, the taxi ordinance does not contravene the state and federal constitutional prohibition of warrantless searches.

The judge found that the ordinance is not void for vagueness. First, he noted that the ordinance is applicable to all taxicab operators in the City regardless of ethnicity. Second, it does not make otherwise lawful conduct unlawful because the ATO's stopping and standing ban applies only to taxicabs in service. Therefore, an out-of-service taxicab may park on the street or in a driveway without violating the terms and restrictions of the ordinance. Furthermore, the ordinance prohibition on out-of-town taxicab drivers picking up and discharging passengers in the City is clear and unambiguous. He noted that the anecdotal evidence of out-of-town drivers coaching passengers to state that they were picked up in another town is evidence that the restriction was known and well-understood.

Judge Longhi also rejected plaintiffs' contention that the ordinance is vague because it fails to establish fines and penalties for specific violations. The ordinance establishes a range for fines between $100 to $1250 and imprisonment or community service for up to ninety days. He found, however, that the ordinance does assign specific penalties for specific violations and the broad penalty scheme is used only as a default when a specific penalty has not been assigned to a restriction.

As to Count Four of the complaint, Judge Longhi held that N.J.S.A. 39:4-8 does not preempt the parking, stopping and standing regulations contained in the ordinance. N.J.S.A. 39:4-8c expressly authorizes the City to adopt the regulations contained in its taxi ordinance. Finally, the judge held that plaintiffs failed to establish selective enforcement of the ordinance. He found no evidence that Hispanic drivers had been targeted for enforcement.

We commence our discussion with the appeal filed by the City that addresses the authority of the City Council to authorize five additional licenses, to distribute those licenses by public auction, and to establish a minimum bid.

The Legislature has conferred on municipalities the authority to regulate the operation of taxicabs in a municipality. N.J.S.A. 40:52-1. The Legislature has also declared that a municipality may require any taxicab that operates on its streets to obtain the consent of the governing body to do so. N.J.S.A. 48:16-2. In other words, the right to operate a taxicab is a franchise limited by law to those who obtain the requisite consent which is usually in the form of a license. Paige v. Red Top, Inc., 106 N.J. Super. 254, 257 (App. Div.), certif. denied, 54 N.J. 115 (1969); Taxi's Inc. v. Borough of E. Rutherford, 149 N.J. Super. 294, 305 (Law Div. 1977), aff'd o.b., 164 N.J. Super. 160 (App. Div. 1978). The governing body has authority to consent to the designation of cab stands at hotels, N.J.S.A. 40:67-3, and to establish license fees for a taxi license, N.J.S.A. 40:52-2; N.J.S.A. 48:16-2.

In short, the authority conferred by the Legislature on a municipality is sweeping. Notably, the Legislature did not impose a minimum or maximum number of licenses that can be granted by any municipality. A taxicab, however, is often considered a service to those who live, work, and visit a city or town; therefore, the exercise of the authority to license taxicabs should be guided by consideration of public convenience and necessity. Indeed, that is the approach in other jurisdictions. E.g. Yellow Cab Co. v. City of Chicago, 71 N.E.2d 652, 654 (Ill. 1947); City of Wichita v. Home Cab Co., 42 P.2d 972, 973 (Kan.), appeal dismissed, 295 U.S. 716, 55 S.Ct. 658, 79 L.Ed. 1672 (1935); Boston Neighborhood Taxi Ass'n v. Dep't of Pub. Utils., 575 N.E.2d 52, 54 (Mass. 1991).

In a case involving a challenge to the refusal by a municipal governing body to increase taxicab fares, a court noted that any agency of government, when exercising quasi-legislative and quasi-judicial authority, should be expected to "exercise their responsibility upon reasoned judgment." Yellow Cab Corp. v. City Council of Passaic, 124 N.J. Super. 570, 581 (Law Div. 1973). The court proceeded to observe that rate-making "involves a consideration of large questions of public policy and business wisdom." Ibid.

The question of the number of taxicab licenses that are necessary to meet the needs of the public must address questions of public policy and business wisdom. The public has every right to expect that the municipal decision on the issue will reflect a process of reasoned judgment. Here, the decision-making process regarding the number of additional licenses issued by the City cannot be faulted.

The City Council formed a committee to study the issue of the number of licenses and other concerns about the operation of taxicabs in the City. The Committee candidly stated that it had not identified an overwhelming need for additional taxicab licenses to serve the needs of the City. Nevertheless, the Committee recognized that some segments of the City felt that they were not being adequately served by the existing licensees. To that end, the Committee recommended, and the City Council authorized, five additional licenses. This was a measured response to a perceived, albeit unverified, public need. It reflected a consideration of public policy and simple economics.

The taxi ordinance provides that the annual fee to operate a taxicab is $250 and the annual application fee for a taxi driver license is $60. Plaintiffs do not challenge these fees, nor could they. The City has the authority to impose license fees. N.J.S.A. 40:52-2; N.J.S.A. 48:16-2. The annual license fee may exceed $50 except in municipalities located in a county of the first class with a population less than 20,000. N.J.S.A. 48:16-2. This limitation does not apply to the City.*fn3

Nevertheless, the license fee must bear some relationship to the cost incurred to regulate the licensed activity. Taxi's, supra, 149 N.J. Super. at 310-11.

The ATO allowed the municipal clerk to advertise the sale of five additional taxi licenses and established a minimum bid price of $50,000. Plaintiffs asserted, and Judge Longhi held, that the governing body lacked the authority to sell at auction the newly authorized licenses and that the minimum bid price was facially excessive. We agree.

The ability of a municipal governing body to issue initial licenses at a cost beyond a license fee is not unfettered and is not coterminous with the authority to license. Stated differently, when the Legislature has allowed a municipal governing body to offer a license to the public at a cost beyond an annual license fee, it has done so in specific terms. For example, the Legislature has expressly empowered a municipal governing body that has been authorized to issue one or more alcoholic beverage retail consumption or distribution licenses to do so by public sale. N.J.S.A. 33:1-19.1 to -19.7, -24.3.

In fact, our research reveals this as the only instance in which a municipal governing body has been authorized to offer a license by public sale with a minimum bid.

A municipal governing body may exercise only the power conferred on it by the Legislature. Hart v. Twp. of Teaneck, 135 N.J.L. 174, 176 (E. & A. 1947); City of E. Orange v. Bd. of Water Comm'rs, 73 N.J. Super. 440, 455 (App. Div. 1962), aff'd, 40 N.J. 334 (1963). It may also exercise that power only in the manner directed by the Legislature. Hasbrouck Heights Hosp. Ass'n v. Borough of Hasbrouck Heights, 15 N.J. 447, 455 (1954). Here, although the municipal governing body has the express power to license and regulate the operation of taxis within its boundaries, we discern no authority to offer licenses to operate those taxis by public sale with a minimum bid. The fact that the Legislature has expressly allowed a municipality to offer a license by public sale with a minimum bid in only one instance suggests that the public sale manner of distribution of licenses has been reserved for special circumstances. Moreover, the well-established requirement that the cost of the license must bear a reasonable relationship to the costs incurred to regulate the licensed activity is undercut once a license can be sold at a price limited solely by what the market will bear at a particular time. Accordingly, we hold that the municipal governing body lacked the authority to offer the newly authorized licenses by public sale with minimum bids.

Even if the municipal governing body had the authority to offer the licenses by public sale, the minimum bid fixed in the ordinance is unreasonable. N.J.S.A. 40:52-2 expressly allows a governing body to fix license fees "which may be imposed for revenue." On the other hand, any fee must be reasonably commensurate with the cost of regulation. Salomon v. City of Jersey City, 12 N.J. 379, 390 (1953); Taxi's, supra, 149 N.J. Super. at 306.

This record demonstrates that the City incurs costs to regulate the operation of taxis. In fact, the City submitted an estimate that the costs to enforce the taxi ordinance is $112,776.96. Assuming the five licenses were sold at the minimum bid, the City would derive more than twice the amount it expends to enforce the ordinance. The record also demonstrates that the five additional licenses have had little, if any, impact of the existing regulatory costs. Finally, the record is barren of any justification for transferring the entirety of the cost of enforcement and regulation to the newly issued licensees. In short, the amount of the minimum bid cannot be considered reasonable under the circumstances.

Plaintiffs also argue that the ATO is vague and overbroad on its face. As noted, while this litigation was pending the taxi ordinance was amended to address two principle concerns voiced by plaintiffs. Namely, section 5.100.140 was amended to remove the blanket stop and inspection language, and section 5.100.190 was amended to provide that the stopping and standing prohibitions apply only to taxicabs in service and do not prohibit the owner or operator from parking a taxicab at the operator's home or on the street to attend to personal business.

A statute may either be vague facially or as applied. Hamilton Amusement Ctr. v. Verniero, 156 N.J. 254, 279 (1998), cert. denied, 527 U.S. 1021, 119 S.Ct. 2365, 144 L.Ed. 2d 770 (1999); State v. Maldonado, 137 N.J. 536, 563 (1994). "A statute is facially vague only if it is vague in all its applications, while a statute is vague as applied only if it is vague when applied to the circumstances of a specific case." Maldonado, supra, 137 N.J. at 563. "A law is void as a matter of due process if it is so vague that persons 'of common intelligence must necessarily guess at its meaning and differ as to its application.'" Town Tobacconist v. Kimmelman, 94 N.J. 85, 118 (1983) (quoting Connally v. Gen. Constr. Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322, 328 (1926)). Vague laws are prohibited because they fail to give adequate notice that certain conduct will put the actor at risk of liability. Maldonado, supra, 137 N.J. at 562. In addition, vague laws may create unacceptable dangers of arbitrary and discriminatory enforcement because they fail to provide those charged with enforcing them with sufficiently precise standards. Ibid.

We are satisfied that the ordinance is not impermissibly vague either facially or as applied. The text of the statute governs only those taxicabs that are in service. The issuance of many summonses does not evidence confusion about the nature or scope of the restrictions. The number of summonses may be attributable to a renewed focus on enforcement. Moreover, each operator who has received a summons has the opportunity to present evidence that the stopping and standing prohibition did not apply to him under the circumstances extant at the time the summons was issued.

Plaintiffs' contentions that the ATO unconstitutionally burdens their and the public's right to travel and that the ordinance is preempted by state law are without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E). As to these issues, we affirm substantially for the reasons expressed by Judge Longhi in his April 7, 2006 oral opinion.


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