Case Title: Roman Check Cashing, Inc. v. New Jersey Department of Banking and Insurance

Citation: 

Docket Number: a-62-99

State: new-jersey

Court: New Jersey Supreme Court

Date: 2001-07-18T00:00:00Z

Document:
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). PORITZ, C.J., writing for a majority of the Court. This appeal involves a constitutional challenge to a licensing restriction on entry check cashing businesses set forth in the New Jersey Check Cashers Regulatory Act of 1993, N.J.S.A. 17:15A-30 to -52 (the Act), which precludes the licensing of any such business that is located within 2,500 feet of an existing check cashing business. Roman Check Cashing, Inc. (Roman) applied for a check cashing license from the Department of Banking and Insurance (the Department) on August 21, 1997, to conduct business on the premises of its supermarket in downtown Dover. The application, when complete in December 1997, met all of the Act's conditions and requirements except that its proposed location was only 1,004 feet from an existing check cashing business. By April 1998, the Department had not yet rendered a licensing decision. Thus, Roman filed this lawsuit as a mandamus proceeding to compel the Department to take action on the license and to obtain a ruling declaring the distance requirement unconstitutional as violative of the Due Process, Equal Protection, and Commerce Clauses of the United States and the New Jersey Constitutions. On May 19, 1998, the application was denied solely because of the proposed location. The matter then was removed to the Appellate Division as an appeal from a final agency decision under Rule 2:2-3(a)(2). The Appellate Division found no rational basis for the regulation, and concluded that it was arbitrary, capricious, and unreasonable. Thus, the Appellate Division held that the distance requirement constituted a violation of substantive due process and was unconstitutional. The Department appealed to the Supreme Court as of right pursuant to Rule 2:2-1(a)(1), and sought a stay of judgment, which was denied. The Department then approved Roman's application, pending the outcome of the appeal before the Supreme Court. In a letter to Roman dated October 13, 1999, the Department noted the pendency of an appeal of the invalidation of the distance requirement, and further that its outcome may affect the validity of [Roman's] license. The Supreme Court granted amicus curiae status to the New Jersey Check Cashing Association, an industry lobbying group. HELD: The distance requirement set forth in the New Jersey Check Cashers Regulatory Act of 1993, which prohibits the licensing of any entry check cashing business that is located within 2,500 feet of an existing check cashing business, is rationally related to the health and stability of the industry and to maintaining the statutory fee cap, a consumer protection measure, and thus does not violate the United States and the New Jersey Constitutions. 1. In cases raising substantive due process claims under New Jersey's state constitution, the same standards developed by the U.S. Supreme Court under the federal constitution are used. (p. 4) 2. Judicial reluctance to interfere with the regulation of economic affairs by the legislative branch of government is longstanding, with the result that both the federal courts and New Jersey courts have invariably upheld economic regulation challenged on substantive due process grounds. (pp. 4-5) 3. When the means chosen for regulation bear a rational relationship to a legitimate state objective and are not arbitrary, capricious, or unreasonable, courts will sustain a legislative enactment even if the economic regulation is considered unwise or bad policy. (pp. 5-7) 4. A justification offered in support of the distance requirement is that it prevents geographic market saturation, which causes profitability to decline, and which in turn creates a need for fee increases . Thus, the distance requirement helps preserve the economic health and stability of check cashing businesses by ensuring adequate volume for those businesses. (pp. 7-9) 5. Although courts will readily impute a proper governmental purpose or interest and, if need be, infer an adequate factual basis to support legislative regulations, when the governmental interest cannot readily be inferred, courts look to extrinsic aids, such as committee hearings, similar statutes from other states, and case law on the same subject. (pp. 9-11) 6. The distance requirement is rationally related to a legitimate state objective - promoting the health and stability of the industry and to maintaining the statutory fee cap, a consumer protection measure. Although the means to achieve the state objective could have been better tailored to the ends sought, the choice is not for the courts to make and is not arbitrary. (pp. 11-14) 7. Roman does not meet the threshold for an equal protection challenge because check cashing businesses are not similarly situated to banks and savings and loans associations, which are exempt from the distance requirements of the Act. (pp. 15-16) 8. Because the Department's conditional approval of Roman's license was confusing, because Roman has been operating a check cashing business for almost two years, and because the Department's approval was issued during a period when the distance requirement could not be enforced, the validity of Roman's check cashing license is sustained. However, its challenge to the constitutionality of the Act is rejected. Judgment of the Appellate Division is REVERSED. JUSTICE STEIN filed a separate opinion concurring in part and dissenting in part. Specifically, because he could find no principled basis on which to sustain the statute and preserve Roman's license, Justice Stein would have upheld the statute and invalidated the license. JUSTICES LONG, COLEMAN, and VERNIERO join in CHIEF JUSTICE PORITZ's opinion. JUSTICE STEIN has filed a separate opinion concurring in part and dissenting in part. JUSTICES LaVECCHIA and ZAZZALI did not participate. ROMAN CHECK CASHING, INC., a New Jersey Corporation, Appellant-Respondent, v. NEW JERSEY DEPARTMENT OF BANKING and INSURANCE, Respondent-Appellant. Argued September 25, 2000 -- Decided July 18, 2001 On appeal from the Superior Court, Appellate Division, whose opinion is reported at 324 N.J. Super. 58 (1999). Jessica L. Furey, Assistant Attorney General, argued the cause for appellant (John J. Farmer, Jr., Attorney General of New Jersey, attorney; Nancy Kaplen, Assistant Attorney General, of counsel; Thomas M. Hunt, Deputy Attorney General, on the briefs). Joseph J. Bell, Jr. argued the cause for respondent (Joseph J. Bell & Associates, attorneys). Robert E. Rochford submitted a brief on behalf of amicus curiae, New Jersey Check Cashers Association (Winne, Banta, Rizzi, Hetherington & Basralian, attorneys; Gerald Goldman, of counsel; Mr. Rochford, Donald A. Klein and Brian J. Neff, on the brief). The opinion of the Court was delivered by PORITZ, C.J. In the New Jersey Check Cashers Regulatory Act of 1993, N.J.S.A. 17:15A- 30 to -52 (the Act), the Legislature revised and expanded the regulatory framework for the business of cashing checks in this State. Assembly Financial Institutions Committee, Statement to Assembly Bill No. 1323, at 1 (May 17, 1993). The Act provides for the licensing of check cashing businesses by the Department of Banking and Insurance (Department) and sets maximum fees for check cashing services offered by licensees, as had its predecessor statute. See N.J.S.A. 17:15A-33, -43; see also The Check Cashing Law of 1951, N.J.S.A. 17:15A-1 to -29 (repealed by L. 1993, c. 383, 24, effective April 11, 1994). Relevant to this appeal, a new limitation on such businesses appears in N.J.S.A. 17:15A-41(e), which states that an office for check cashing will not be licensed if it is located within 2,500 feet of an existing office. Plaintiff, Roman Check Cashing, Inc., a New Jersey corporation located in the town of Dover, challenges this limitation on substantive due process, equal protection and commerce clause grounds under the United States and New Jersey Constitutions.See footnote 11 SUPREME COURT OF NEW JERSEY A- 62 September Term 1999 ROMAN CHECK CASHING, INC., a New Jersey Corporation, Appellant-Respondent, v. NEW JERSEY DEPARTMENT OF BANKING and INSURANCE, Respondent-Appellant. STEIN, J., concurring in part and dissenting in part. With one exception, I join in the opinion of the Court. Although sympathetic to plaintiff's position, I find no principled basis on which to sustain the statute and preserve plaintiff's license. Accordingly, I would uphold the statute and invalidate the license. NO. A-62 ROMAN CHECK CASHING, INC., a New Jersey Corporation, Appellant-Respondent, v. NEW JERSEY DEPARTMENT OF BANKING and INSURANCE, Respondent-Appellant. DECIDED July 18, 2000 Chief Justice Poritz