Opinion ID: 739913
Heading Depth: 2
Heading Rank: 1

Heading: Tolchin's Commerce Clause Challenge

Text: 33 Tolchin argues that the district court erroneously dismissed his Commerce Clause challenge to the bona fide office and the mandatory attendance requirements. He states that the Appellants have implemented regulations that unconstitutionally impair interstate commerce without sufficient justification and have thus violated the 'dormant' facet of the Commerce Clause. Tolchin Br. at 16.
34 The United States Constitution provides that Congress shall have Power ... to regulate Commerce ... among the several States. U.S. Const. art. I, § 8. While the Commerce Clause explicitly speaks only to the power of Congress to regulate interstate commerce, it has been interpreted to contain an implied limitation on the power of the States to interfere with or impose burdens on interstate commerce. Western & Southern Life Ins. Co. v. State Bd. of Equalization of California, 451 U.S. 648, 652, 101 S.Ct. 2070, 2074-75, 68 L.Ed.2d 514 (1981). This implied limitation is sometimes referred to as the 'negative' or 'dormant' Commerce Clause, and it is this aspect of Commerce Clause jurisprudence that is at issue in this case. 35 The dormant aspect of the Commerce Clause prohibits economic protectionism--that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors. New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273, 108 S.Ct. 1803, 1807, 100 L.Ed.2d 302 (1988). State legislative enactments, executive regulations and judiciary approved rules can all be subject to Commerce Clause analysis. See, e.g., New Energy Co., 486 U.S. 269, 108 S.Ct. 1803, 100 L.Ed.2d 302 (statute); Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970) (executive order); Goldfarb v. Virginia State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 2015-16, 44 L.Ed.2d 572 (1975) (judiciary-approved rule). 36 When conducting a dormant Commerce Clause analysis, we seek to balance the national interest in vibrant interstate commerce with the local interests promoted by the state regulation. In Pike, the Supreme Court stated that 37 Where the statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.... If a legitimate local purpose is found, then the question becomes one of degree. 38 397 U.S. at 142, 90 S.Ct. at 847 (citation omitted) (emphasis added). 39 In Brown-Forman Distillers Corp. v. New York Liquor Auth., 476 U.S. 573, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986), the Supreme Court later refined its Commerce Clause analysis by holding that when a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, it may generally be struck down without further inquiry. 476 U.S. at 578-79, 106 S.Ct. at 2083-84; see also Instructional Sys., Inc. v. Computer Curriculum Corp., 35 F.3d 813, 824 (3d Cir.1994). On the other hand, when a statute only indirectly affects interstate commerce and regulates evenhandedly, a determination must be made as to whether the State's interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits. Brown-Forman, 476 U.S. at 579, 106 S.Ct. at 2084 (citing Pike, 397 U.S. at 142, 90 S.Ct. at 847). In both cases, however, the critical consideration is the overall effect of the statute on both local and interstate activity. Id. 40 In this case, the district court, adopting in full the Magistrate's Report and Recommendation, applied the second--the balancing rule--standard, which it formulated as follows: 41 if legislation is facially neutral, and only has an incidental effect on commerce, the legislation will be upheld unless the burden on commerce is clearly excessive in relation to the putative local benefits. 42 Report and Recommendation of Magistrate Judge at 21 (Magistrate Report) (emphasis added) (quoting Pike, 397 U.S. at 142, 90 S.Ct. at 847) (adopted by district court in Tolchin v. Supreme Court of the State of New Jersey, No. 94-4860 (D.N.J. Dec. 14, 1995)). 43 Although we agree with the district court's selection of the balancing rule test and its result, we disagree with its articulation of the test. For the balancing rule test to apply, a state's action must not be merely 'facially neutral,' but must also be neutral in effect. Brown-Forman makes clear that heightened scrutiny applies not only when legislation is facially discriminatory, but also when a state statute or regulation's effect is to favor in-state economic interests over out-of-state interests.... 476 U.S. at 579, 106 S.Ct. at 2084.
44 Tolchin argues that the bona fide office and mandatory attendance requirements favor in-state economic interests and amount to economic protectionism that must be subject to the Commerce Clause's heightened scrutiny standard of review. Just as a law forbidding sleeping under a bridge falls more heavily on the shoulders of the indigent than on those of the wealthy, Tolchin argues, these requirements fall more heavily on the shoulders of nonresidents than on those of residents. 45 This analogy sheds little light on the issue before us. Most laws and regulations affect different people differently, depending on their circumstances. The relevant question here is whether there is any differential treatment of nonresident attorneys that favors in-state interests over out-of-state interests and the critical consideration is the overall effect of the statute on both local and interstate activity. Id. 46 All parties agree that, on its face, New Jersey's bona fide office requirement does not discriminate against out-of-state attorneys. See N.J.Ct.R. 1:21-1(a) (1996). However, Tolchin maintains that the bona fide office requirement effectively favors resident attorneys. We disagree. All attorneys who wish to practice in New Jersey must have a bona fide office. As one commentator has observed, the requirement's intent was to prevent occasional practice in New Jersey by an attorney once admitted, but who now practices primarily in another state. Pressler, Current New Jersey Court Rules, Comment R. 1:21-1 (1996). Such an attorney could lose his or her familiarity with New Jersey law and its development. Id. Thus, it is reasonable to assume that the only attorneys actually burdened by this requirement are those who wish to maintain small or sporadic practices in New Jersey. Tolchin argues that although such attorneys are required to spend the money necessary to maintain a bona fide office, they will not receive the comparable benefits that most attorneys with larger New Jersey practices would enjoy. While Tolchin might be right, his argument fails to implicate the Commerce Clause because such attorneys may be New Jersey residents as well as nonresidents. 47 Tolchin has also argued that it is less expensive for New Jersey residents to have a bona fide office because they can maintain them in their homes. Yet, a bona fide office is more than a mere address--it is a functioning office. Tolchin has not shown that more than a few attorneys practice from their homes, so that any advantage which inures to resident attorneys in this regard is minimal. All attorneys must incur some expense in order to comply with this requirement. Any incidental discrimination caused by the bona fide office requirement is not based on residency status, but on the size and type of an attorney's practice. 48 We reach the same conclusion with respect to New Jersey's mandatory attendance requirement, which does not discriminate on its face nor in effect against out-of-state interests any more than the bona fide office requirement. It, too, applies equally on its face to residents and nonresidents and does not effectively favor resident attorneys. Rather, any burden it imposes is directly proportional to the distance an attorney must travel to a skills and methods course site. Tolchin implicitly acknowledges that he is no more personally burdened by this requirement than many New Jersey attorneys, as he repeatedly notes how close New York is to New Jersey. While it is true that the mandatory attendance requirement may present difficulties for those residing hundreds or thousands of miles from New Jersey, we believe it is safe to assume that few attorneys live that far from where they intend to practice. See Frazier v. Heebe, 482 U.S. 641, 648-49, 107 S.Ct. 2607, 2612-13, 96 L.Ed.2d 557 (1987) (As a practical matter, a high percentage of nonresident attorneys willing to take the state bar examination and pay the annual dues will reside in places 'reasonably convenient' to the court.); Supreme Court of New Hampshire v. Piper, 470 U.S. 274, 286-87, 105 S.Ct. 1272, 1279-80, 84 L.Ed.2d 205 (1985) (One may assume that a high percentage of nonresident lawyers willing to take the state bar examination and pay the annual dues will reside in places reasonably convenient to New Hampshire.). We do not believe that the mandatory attendance requirement was purposefully intended to discriminate against the putative class of attorneys who intend to practice a great distance from New Jersey. It is safe to assume that most of the attorneys affected by this regulation are residents of New Jersey, New York and Pennsylvania. 49 We conclude that neither the bona fide office nor the mandatory attendance requirement purposefully or arbitrarily discriminate against out-of-state interests.
50 Because the bona fide office and the mandatory attendance requirements do not directly regulate or discriminate against interstate commerce, the heightened scrutiny test is not applicable. See Instructional Sys., Inc. v. Computer Curriculum Corp., 35 F.3d 813, 824 (3d Cir.1994). Thus, this case is distinguishable from the Commerce Clause cases that have applied heightened scrutiny to waste flow control ordinances. The Supreme Court has found that flow control ordinances have the effect of depriving competitors, including out-of-state firms, of access to a local market.... C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 386, 114 S.Ct. 1677, 1679, 128 L.Ed.2d 399 (1994); see also Atlantic Coast Demolition & Recycling, Inc. v. Bd. of Chosen Freeholders of Atlantic County, 48 F.3d 701 (3d Cir.1995). Because we have found no such deprivation, those cases do not mandate that we apply heightened scrutiny here. Accordingly, the district court was correct in applying the balancing rule test. Under this test, we must compare the local benefits of a regulation with the incidental burdens that it imposes on interstate commerce in order to determine whether the burdens are clearly excessive. Instructional Sys., 35 F.3d at 824. 51 Appellee New Jersey Supreme Court argues that the bona fide office requirement has the benefits of assuring the competence, accountability and accessibility of attorneys for the benefit of clients, courts, counsel and parties. Tolchin responds that there is no rational relationship between these benefits and the bona fide office requirement. While we agree with Tolchin's analysis in part, we nonetheless find that a rational relationship exists between the benefit of attorney accessibility and the bona fide office requirement. 52 In a case where in-state offices were required only of nonresidents, the United States Supreme Court held that there is no rational relationship between such a requirement and attorney competence. Frazier v. Heebe, 482 U.S. 641, 649, 107 S.Ct. 2607, 2613, 96 L.Ed.2d 557 (1987) (the mere fact that an attorney has an office in [a jurisdiction] surely does not warrant the assumption that he or she is more competent than an out-of-state member of the state bar.); see also Barnard v. Thorstenn, 489 U.S. 546, 555, 109 S.Ct. 1294, 1300-01, 103 L.Ed.2d 559 (1989) (We can assume that a lawyer who anticipates sufficient practice in [a jurisdiction] to justify taking the bar examination and paying the annual dues ... will inform himself of the laws of the [jurisdiction].); Supreme Court of New Hampshire v. Piper, 470 U.S. 274, 285, 105 S.Ct. 1272, 1279, 84 L.Ed.2d 205 (1985) (Court will not assume that a nonresident lawyer--any more than a resident--would disserve his clients by failing to familiarize himself with the [local law].). We believe that this holds true here as well. The Appellees have put forth no credible arguments as to why the bona fide office requirement would make an attorney more competent. 53 Nor do we find that New Jersey's bona fide office requirement increases attorney accountability. New Jersey requires that all nonresident attorneys designate the Clerk of the New Jersey Supreme Court as agent for receipt of service of process. N.J.Ct.R. 1:21-1(a) (1996). The New Jersey Supreme Court can therefore discipline all members of the New Jersey bar, regardless of residency. The Appellees make no compelling argument as to how New Jersey's bona fide office requirement is rationally related to attorney accountability. 54 However, we do believe that the bona fide office requirement has a rational relationship to the benefit of attorney accessibility for clients, courts, counsel and parties, and our belief is borne out by a New Jersey case which highlights the problems caused by attorneys who fail to maintain bona fide offices in New Jersey. In In The Matter of Kasson, 141 N.J. 83, 660 A.2d 1187 (1995), the New Jersey Supreme Court upheld the disciplining of an attorney pursuant to Rule 1:21-1(a) because the trial court had serious difficulty locating him during the course of litigation. Kasson's New Jersey office was never used, his name was misspelled on a sign and the office number on his letterhead was not the same as the number on the sign, which was not the same as the number of the actual office. Id. at 1188; see also Opinion 19, 138 N.J.L.J. 320 (disciplining a bar member for renting, but not using, office in New Jersey). In our view, this case demonstrates that there is a satisfactory basis to find a rational relationship between the bona fide office requirement and the intended benefit of attorney accessibility. 3 55 Thus, while the bona fide office requirement does impose the burden of maintaining an office on some attorneys who would prefer not to maintain one, we believe that those most burdened do not constitute a very large class. This class may include those who practice solely, but sporadically, in New Jersey; those who occasionally practice in New Jersey as part of a larger practice based in another state; and those who prefer to practice without maintaining any office at all. The requirement's burden affects interstate commerce in that it limits the mobility of some lawyers and reduces the options for consumers of the services they provide. 56 However, under the balancing test, we find that the burden on interstate commerce does not clearly outweigh the benefit received from the bona fide office requirement. See Instructional Sys., 35 F.3d at 824. This is not to say that such a requirement is the most narrowly tailored solution to the problem of attorney accessibility. We merely hold that such a requirement is rationally related to the benefit it is supposed to ensure. 4 57 Likewise, we believe that the mandatory attendance requirement for the skills and methods course is rationally related to the benefits it is intended to promote. The skills and methods classes are intended to train attorneys new to the New Jersey bar and to protect the public from untrained attorneys. Mandatory attendance at the course serves a defensible educational purpose: it ensures that attorneys hear--if not listen to--those topics thought to be important by the Appellees. 58 In support of his argument to the contrary, Tolchin submitted an affidavit from Dean Frank Macchiarola of the Cardozo Law School which, Tolchin argues, indicated that mandatory attendance served no valid educational function. However, the Macchiarola affidavit does not make such sweeping claims. It is limited to disputing some of the reasons proffered by Hogya for the mandatory attendance requirement; to asserting that mandatory attendance has no advantage over other approaches; and to extolling the advantages of customized learning. As a result, this affidavit fails to raise a genuine issue of material fact as to whether the mandatory attendance requirement is rationally connected to its intended benefits. 59 Moreover, the burdens on interstate commerce imposed by the mandatory attendance requirement for the skills and methods course are relatively small when compared to the benefits it promotes. The first year component of the course requires an attorney to invest a total of 40 hours. For that investment, New Jersey can be confident that attorneys new to its bar are at least minimally familiar with its laws. This requirement is even a small burden for those attorneys who want to practice in more than one state. Finally, the commuting burden for Tolchin, who is a bridge or two away from New Jersey, is actually less than it is for many New Jersey residents. See id. 60 Because this requirement appears to be a substantial burden only for the relatively few nonresident attorneys who reside a great distance from New Jersey, we do not find that such a burden clearly outweighs the benefits promoted by this requirement. Nor has Tolchin demonstrated that this widely accepted educational policy is in some way so wrong that we must declare it irrational. 5 61 Even if the New Jersey rules were to have an element of economic protectionism, we do not find that the requirements at issue in this case are so protectionist as to fail in the context of a dormant Commerce Clause analysis. Thus, we conclude that the district court properly relied upon the Pike balancing test, and concur with its result. New Jersey's bona fide office and mandatory attendance requirements generally burden nonresident attorneys to the same degree that they burden resident attorneys. The fact that these requirements may burden commerce in some incidental way is not enough to support Tolchin's claim. 62 Moreover, states clearly have a substantial interest in assuring the availability of and overseeing attorneys practicing within their borders. See Leis v. Flynt, 439 U.S. 438, 444 n. 5, 99 S.Ct. 698, 701 n. 5, 58 L.Ed.2d 717 (1978) (recognizing the traditional authority of state courts to control who may be admitted to practice before them); Goldfarb v. Virginia State Bar, 421 U.S. 773, 792, 95 S.Ct. 2004, 2015-16, 44 L.Ed.2d 572 (1975) (recognizing state courts have broad power to establish standards for licensing practitioners and regulating the practice of professionals). And finally, where heightened scrutiny is not warranted, we must not second guess the empirical judgment of lawmakers concerning the utility of legislation. CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 92, 107 S.Ct. 1637, 1651, 95 L.Ed.2d 67 (1987) (quoting Kassel v. Consolidated Freightways Corp., 450 U.S. 662, 679, 101 S.Ct. 1309, 1320-21, 67 L.Ed.2d 580 (1981) (Brennan, J., concurring)). 63 Tolchin argues that, at the very least, summary judgment should be denied so as to allow further investigation of the burdens of these requirements. We find that further investigation is unnecessary because, as the Fourth Circuit noted in a similar context, to require hearings in such cases 64 would deal a serious blow to the capacities of the states and localities to further even the most basic regulatory purposes. As the Commerce Clause is implicated by almost every economic regulation ... and its shadow extends equally far ... such hearings would be an almost constant process. 65 Goldfarb v. Supreme Court of Virginia, 766 F.2d 859, 862 (4th Cir.1985). We agree.