On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6126-10.
The opinion of the court was delivered by: Carchman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Carchman, Fisher and Baxter.
The opinion of the court was delivered by CARCHMAN, P.J.A.D.
This appeal requires us to consider the validity of Ordinance 6PFS-I 050510 (the Ordinance), enacted by defendant City of Newark (the City),*fn1 levying a tax on all car rental transactions within the City's Second and Third Industrial Zones, the latter of which encompasses parts of Newark Liberty International Airport (the Airport). Plaintiffs Avis Budget Group (Avis) and Hertz Corporation (Hertz) challenge the Ordinance, asserting that it violates the Anti-Head Tax Act (AHTA), 49 U.S.C.A. § 40116, as well as 42 U.S.C.A. § 1983 and the Commerce Clause of the United States Constitution, Article I, Section 8, Clause 3.
We conclude that the Ordinance is not a discriminatory tax or otherwise in violation of the AHTA or the dormant Commerce Clause. We determine that the Ordinance is a valid exercise of municipal authority. Accordingly, we affirm.
On July 28, 2009, the New Jersey Legislature enacted the New Jersey Economic Stimulus Act of 2009, N.J.S.A. 40:48H-1 to-9, which, among other things, granted authority to certain municipalities to tax motor vehicle rental transactions taking place in designated industrial zones, specifically, zones within which commercial airports are located. N.J.S.A. 40:48H-2. The stated purpose of the legislation and the tax was to finance the redevelopment of certain municipalities. N.J.S.A. 40:48H-1.
N.J.S.A. 40:48H-2, the operative provision granting authority to tax, provides in relevant part:
a. A municipality having a population in excess of 100,000 and within which is located a commercial airport which provides for a minimum of 10 regularly scheduled commercial airplane flights per day, or a municipality in which any portion of such an airport is located, by ordinance, may impose a tax on the rental of motor vehicles on such rental transactions that occur within a designated industrial zone of the municipality. Such tax shall be imposed on the person, corporation, or other legal entity that is permitted the use of a motor vehicle that it does not own for a period of time that is less than one year, in exchange for the payment of a fee, and shall be collected on behalf of the municipality by the person collecting such rental fee, in accordance with such procedures as shall be established in the ordinance imposing the tax.
The local motor vehicle rental tax rate imposed under an ordinance adopted pursuant to this section shall not exceed five percent of the total amount of the fee charged for the rental of the motor vehicle, excluding any taxes and surcharges.
The City, which has a population in excess of 100,000 and "within which [the Airport] is located," qualified under this provision. On April 27, 2010, the City Council, pursuant to N.J.S.A. 40:48H-2, introduced an ordinance to tax car rental transactions. During a public meeting to consider the proposed ordinance, council members informed the public that the Ordinance was intended to tax "outsiders" at the Airport but not Newark residents. Following the meeting, the Council passed the Ordinance, and the Mayor signed it into law on May 7, 2010. It was published on May 14, 2010.
The Ordinance provides in relevant part:
10:22A-3. IMPOSITION OF MOTOR VEHICLE RENTAL TAX.
There is hereby imposed on the person, corporation or other legal entity that is permitted the use of a motor vehicle that it does not own for a period of time that is less than one year, in exchange for the payment of a fee, a tax of five (5%) percent on the fee charged for the rental of such motor vehicle, excluding any taxes and surcharges, in respect of rental transactions that occur within the industrial zone. This tax is in addition to any other taxes or surcharges. 10:22A-4. DESIGNATION OF INDUSTRIAL ZONE.
a. The City hereby designates the following portion of the City as an "industrial zone" for purposes of the motor vehicle rental tax authorized by the Act and this chapter, such portion not exceeding, in the aggregate, fifty percent (50%) of the territory of the City: All of the territory within the City which is, as of the effective date of this ordinance, located [within] the "Second Industrial District" and the "Third Industrial District[,]" as such areas are established by Title XL, Chapter 2 of the Newark Municipal Code. The area so designated as an industrial zone under this paragraph a. shall not be altered by any subsequent revision of the City's zoning districts, but rather shall be amended only by an ordinance expressly amending this ordinance in accordance with the [A]ct.
b. The City hereby determines that the industrial zone designated in paragraph
a. of this Section 10:22A-4 of the City constitutes an area having, or intended to have, predominantly industrial, port, airport, and related uses.
The Third Industrial Zone encompasses parts of the Airport and the Port Newark Marine Terminal. All of the ten rental car companies that are currently affected by the Ordinance are located within the Third Industrial Zone. Plaintiffs are two of the ten affected companies.
Plaintiffs challenged the validity of the Ordinance in the Law Division, asserting that it violated State due process rights, was arbitrary, capricious and unreasonable, and was contrary to the AHTA and the Commerce Clause. At the hearing on the cross-motions for summary judgment, the parties focused on whether the tax violated the AHTA. The City argued that the court could not consider the issue since there was no private right of action to enforce the AHTA. On the merits, it claimed that the Ordinance did not exclusively affect Airport businesses because three rental car companies located in the Third Industrial Zone were not located "at the Airport." Plaintiffs countered that two of the referenced "companies" were actually Avis parking lots where no rental transactions occurred, and were unaffected by the tax, and the third, Action Car Rental, was "at the Airport" because it serviced the Airport by shuttle bus from an Airport hotel.
In a written opinion, Judge Michael R. Casale rejected the City's claim that plaintiffs did not have a private right of action to enforce the AHTA, relying on Interface Group, Inc. v. Massachusetts Port Authority, 816 F.2d 9, 16 (1st Cir. 1987), and Northwest Airlines, Inc. v. County of Kent, 955 F.2d 1054, 1058 (6th Cir. 1992), aff'd, 510 U.S. 355, 114 S. Ct. 855, 127 L. Ed. 2d 183 (1994) (deciding the questions presented on other grounds and not reaching the issue of the implied right of action). He rejected contrary decisions by the Seventh and Tenth Circuits in Southwest Air Ambulance, Inc. v. City of Las Cruces, 268 F.3d 1162, 1169 (10th Cir. 2001), and Miller Aviation v. Milwaukee County Board of Supervisors, 273 F.3d 722, 729 (7th Cir. 2001). However, since plaintiffs averred violations of 42 ...