Opinion
A-8/9/10/11 September Term 2021 085465
05-31-2022
MACK-CALI REALTY CORP., Cal-Harbor V Urban Renewal Associates, LP, Cal-Harbor VII Urban Renewal Associates, LP, Roseland Residential Trust, Gary Wagner, Ivan Baron, H.P. Roosevelt Urban Renewal Company, LLC, Cambridge Corporate Services, Inc., Local 621, United Construction Trades Industrial Union, Local 365, United Employees of Service Workers, SP Plus Corporation, Los Cuernos Corp., Exchange Place Alliance District Management Corporation, Spartan Security Services, Inc., New Jersey Business & Industry Association, and Hudson County Chamber of Commerce & Industry, Plaintiffs-Appellants/Cross-Respondents, v. STATE of New Jersey, City of Jersey City, Mayor and Council of the City of Jersey City, Donna Mauer, in her Official Capacity as Director and Chief Financial Officer of the City of Jersey City, and Brian Platt, in his Official Capacity as Business Administrator of the City of Jersey City, Defendants-Respondents/Cross-Appellants. City of Newark, Intervenor-Respondent/Cross-Appellant.
Paul S. Grossman argued the cause for appellants/cross-respondents (Weiner Law Group, attorneys; Paul S. Grossman, Clark E. Alpert, Parsippany, and Stephen J. Edelstein, on the briefs). Jean P. Reilly, Assistant Attorney General, argued the cause for respondent/cross-appellant State of New Jersey (Matthew J. Platkin, Acting Attorney General, attorney; Jean P. Reilly, of counsel and on the briefs, and Eileen W. Siegeltuch, Michael J. Duffy, Jamie M. Zug, Miles Eckardt, and Heather Lynn Anderson, Deputy Attorneys General, on the briefs). Vito A. Gagliardi, Jr. argued the cause for respondents/cross-appellants City of Jersey City, Mayor and Council of the City of Jersey City, Donna Mauer, and Brian Platt (Porzio, Bromberg & Newman and City of Jersey City, attorneys; Vito A. Gagliardi, Jr., Morristown, and Peter J. Baker, Trenton, of counsel, and Jeffrey M. Pypcznski and Thomas J. Reilly, Morristown, on the briefs). Cheyne R. Scott argued the cause for intervenor-respondent/cross-appellant City of Newark (Chasan Lamparello Mallon & Cappuzzo, attorneys; Cheyne R. Scott, of counsel and on the briefs, and Cindy Nan Vogelman, Secaucus, on the briefs).
Paul S. Grossman argued the cause for appellants/cross-respondents (Weiner Law Group, attorneys; Paul S. Grossman, Clark E. Alpert, Parsippany, and Stephen J. Edelstein, on the briefs).
Jean P. Reilly, Assistant Attorney General, argued the cause for respondent/cross-appellant State of New Jersey (Matthew J. Platkin, Acting Attorney General, attorney; Jean P. Reilly, of counsel and on the briefs, and Eileen W. Siegeltuch, Michael J. Duffy, Jamie M. Zug, Miles Eckardt, and Heather Lynn Anderson, Deputy Attorneys General, on the briefs).
Vito A. Gagliardi, Jr. argued the cause for respondents/cross-appellants City of Jersey City, Mayor and Council of the City of Jersey City, Donna Mauer, and Brian Platt (Porzio, Bromberg & Newman and City of Jersey City, attorneys; Vito A. Gagliardi, Jr., Morristown, and Peter J. Baker, Trenton, of counsel, and Jeffrey M. Pypcznski and Thomas J. Reilly, Morristown, on the briefs).
Cheyne R. Scott argued the cause for intervenor-respondent/cross-appellant City of Newark (Chasan Lamparello Mallon & Cappuzzo, attorneys; Cheyne R. Scott, of counsel and on the briefs, and Cindy Nan Vogelman, Secaucus, on the briefs).
PER CURIAM The judgment of the Superior Court, Appellate Division is affirmed substantially for the reasons expressed in Judge Messano's opinion, reported at 466 N.J. Super. 402, 246 A.3d 847 (App. Div. 2021).
CHIEF JUSTICE RABNER ; JUSTICES PATTERSON, SOLOMON, and PIERRE-LOUIS ; and JUDGE FUENTES (temporarily assigned) join in this opinion. JUSTICE ALBIN filed a separate opinion, dissenting in part and concurring in part.
JUSTICE ALBIN, dissenting in part and concurring in part. The majority has improvidently affirmed the dismissal of plaintiffs’ discriminatory payroll tax claim on a Rule 4:6-2(e) motion, when the complaint on its face alleges a valid claim that Jersey City Ordinance 18-133 violates the federal Commerce Clause. At this procedural posture, this case should have been remanded to permit the parties to take discovery and to give plaintiffs the opportunity to produce evidence to support their claim. It may be that plaintiffs will fall short of their burden. The majority, however, prematurely rings the death knell on that claim, and therefore I respectfully dissent.
I.
Jersey City adopted Ordinance 18-133, which imposed on every Jersey City "employer a tax equal to one percent of the employers’ payroll" for the purpose of funding public education. Jersey City, N.J., Code § 304-19, 19.1. Under the Ordinance, however, employers were exempted from paying the payroll tax for their Jersey City resident employees. Id. § 304-19(a). In other words, the payroll tax was imposed only on an employer's non-resident employees -- whether in-state or out-of-state. Plaintiffs filed an action alleging that the Jersey City Ordinance, and its enabling statute, violated the federal Commerce Clause. In their complaint, plaintiffs allege that "many New York citizens, not resident in Jersey City, work in Jersey City or seek employment in Jersey City." They further allege that the Ordinance's payroll tax makes the employment of non-residents by Jersey City businesses more costly and therefore deters those businesses from hiring out-of-state employees. Plaintiffs claim that the discriminatory targeting of non-resident employees, who come from New York, unconstitutionally interferes with interstate commerce.
II.
Jersey City filed a motion to dismiss pursuant to Rule 4:6-2(e), asserting that the complaint does not state a claim on which relief can be granted. On such a motion, our jurisprudence commands that we examine the complaint liberally to discern whether it contains a "fundament of a cause of action." See Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746, 563 A.2d 31 (1989). Our review is limited to "the facts alleged on the face of the complaint" in determining whether a plaintiff has pled a legally sufficient cause of action. Ibid. (citing Rieder v. Dep't of Transp., 221 N.J. Super. 547, 552, 535 A.2d 512 (App. Div. 1987) ); see also Dimitrakopoulos v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 107, 203 A.3d 133 (2019). At this early procedural stage, "the plaintiff is ‘entitled to every reasonable inference of fact,’ " and our courts are instructed to take " ‘a generous and hospitable approach’ " in reviewing the validity of the complaint. Dimitrakopoulos, 237 N.J. at 107, 203 A.3d 133 (quoting Printing Mart-Morristown, 116 N.J. at 746, 563 A.2d 31 ). Accordingly, motions for failure to state a claim under Rule 4:6-2(e) "should be granted in only the rarest of instances." Printing Mart-Morristown, 116 N.J. at 772, 563 A.2d 31.
III.
A statute that "discriminates against interstate commerce" or has the effect of "favor[ing] in-state economic interests over out-of-state interests" generally violates the Commerce Clause. Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986). " ‘[D]iscrimination’ simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter." Or. Waste Sys., Inc. v. Dep't of Envtl. Quality of Or., 511 U.S. 93, 99, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994). A discriminatory law will be invalidated unless "it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives." Id. at 101, 114 S.Ct. 1345 (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 278, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988) ).
However, a neutral law that imposes only an incidental effect on interstate commerce will be upheld unless "the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Id. at 99, 114 S.Ct. 1345 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970) ).
IV.
In dismissing plaintiffs’ discriminatory payroll tax claim, the trial court explained that "[a]side from mere assertions, plaintiffs have not provided any evidence that it will, in fact, be more expensive to hire someone who does not reside in Jersey City." The court also stressed that "[p]laintiffs failed to make a competent showing of their economic loss attributable to the law, as well as a discriminatory effect on interstate commerce as a whole." The Appellate Division likewise reasoned that "[p]laintiffs have failed to demonstrate, beyond mere conjecture, that the payroll tax as enacted burdens out-of-state-resident employees, i.e., that the Ordinance's effect burdens out-of-state economic interests." See Mack-Cali Realty Corp. v. State, 466 N.J. Super. 402, 442, 246 A.3d 847 (App. Div. 2021).
In coming to those conclusions, however, neither the trial court nor the Appellate Division limited their review to "the facts alleged on the face of the complaint," nor did they give plaintiffs the benefit of "every reasonable inference of fact." See Printing Mart-Morristown, 116 N.J. at 746, 563 A.2d 31. "At this preliminary stage of the litigation," plaintiffs were not required to prove their claim. See ibid. Had those courts taken the "hospitable approach" to the allegations in the complaint, as required by our jurisprudence, see ibid., the Rule 4:6-2(e) motion would have been denied and the case would have proceeded to discovery. Only after the taking of discovery should plaintiffs have been held to the evidentiary standards demanded by the trial court and the Appellate Division.
Had New York City passed a similar law imposing a payroll tax on businesses that employed the approximately 400,000 New Jersey residents commuting over the Hudson River, would a claim alleging on its face an interference with interstate commerce have been dismissed? In the present case and the hypothetical one posed, we need to know more before rushing to judgment.
On this bare record, we do not know the true extent of the payroll tax's effect: whether and to what extent the payroll tax impacts Jersey City employers’ hiring decisions, and whether out-of-state resident employees are adversely affected by the tax. Only if plaintiffs were given the opportunity to take discovery would we know whether the payroll tax has only an incidental effect on interstate commerce.
I therefore respectfully dissent from the dismissal of the discriminatory payroll tax claim. I concur with the majority's decision to remand for discovery on the challenged provision of the Ordinance that imposes a payroll tax on Jersey City businesses for each out-of-state employee supervised from Jersey City.