Opinion ID: 1982295
Heading Depth: 1
Heading Rank: 4

Heading: Constitutionality of a Greater Penalty

Text: The trial court feared that a civil penalty greater than $100,000 may be `so punitive either in purpose or effect to negate the civil label.' If the per diem penalty in this case were considered a criminal penalty, it could violate the due process rights of H & M because the company did not receive the constitutional protections accorded to criminal defendants. See United States v. Ward, 448 U.S. 242, 248, 100 S.Ct. 2636, 2641, 65 L.Ed. 2d 742, 749 (1980); Kennedy v. Mendoza-Martinez, 372 U.S. 144, 167, 83 S.Ct. 554, 567, 9 L.Ed. 2d 644, 660 (1963). The characterization of a penalty as criminal or civil is primarily a matter of statutory construction. United States v. Ward, supra, 448 U.S. at 248, 100 S.Ct. at 2641, 65 L.Ed. 2d at 749; In re Garay, supra, 89 N.J. at 112. Where the legislature has labelled the penalty civil, that expression of legislative purpose is accorded substantial weight. Id. Since the Antitrust Act provides a separate section governing criminal penalties, N.J.S.A. 56:9-11, immediately succeeding N.J.S.A. 56:9-10, the clear legislative purpose of N.J.S.A. 56:9-10c is to provide civil penalties. See Note, New Jersey Antitrust Law: An Overview, 2 Seton Hall Legis.J. 134, 171 (1977) (monetary penalties under N.J.S.A. 56:9-10c constitute civil remedy). This characterization of the penalty will govern unless there is `the clearest proof' that the sanction is punitive either in purpose or effect. In re Garay, supra, 89 N.J. at 112, (quoting United States v. Ward, supra, 448 U.S. at 249, 100 S.Ct. at 2641, 65 L.Ed. 2d at 749). In determining whether the Legislature made the penalties of N.J.S.A. 56:9-10c so punitive as to transform them into criminal sanctions, we consider the following factors: [1] Whether the sanction involves an affirmative disability or restraint, [2] whether it has historically been regarded as a punishment, [3] whether it comes into play only on a finding of scienter, [4] whether its operation will promote the traditional aims of punishment  retribution and deterrence, [5] whether the behavior to which it applies is already a crime, [6] whether an alternative purpose to which it may rationally be connected is assignable for it, and [7] whether it appears excessive in relation to the alternative purpose assigned. [ Kennedy v. Mendoza-Martinez, supra, 372 U.S. at 168-69, 83 S.Ct. at 567-68, 9 L.Ed. 2d at 661 (footnotes omitted).] These factors are applied to the statute on its face. Id. Applying these factors to this case, we find that there is no clear proof to overcome the Legislature's characterization of the per diem penalty as civil. On the contrary, the second, third, and fifth factors clearly indicate that the per diem penalty is civil. As to the second factor, monetary penalties have historically been regarded as civil, not criminal, penalties. United States v. Ward, supra, 448 U.S. at 256, 100 S.Ct. at 2645, 65 L.Ed. 2d at 754 (Blackmun, J., concurring); cf. In re Garay, supra, 89 N.J. at 112 (the United States Supreme Court has never rejected Congress' designation of a monetary penalty as civil). As to the third factor, the per diem penalty may be imposed without a finding of scienter. As to the fifth factor, the antitrust behavior to which the penalty applies is not already a crime because there has not been a finding that defendants knowingly violated the Act, a finding that is required for a criminal conviction under N.J.S.A. 56:9-11. Accordingly, we find that the per diem penalty provision is constitutional on its face. Even though a civil penalty is constitutional on its face, its imposition in a given case may be so disproportionate to the harm caused by a defendant that the penalty is unreasonable. In re Garay, supra, 89 N.J. at 114-15. In the present case, the trial court did not determine that a penalty greater than $100,000 would be unreasonable. To the contrary, the court noted that a higher penalty might well on the facts of this case be more appropriate in terms of the magnitude of the offense; more telling in terms of the deterrent purposes of the act and more nearly proper to recompense plaintiff for the costs of the investigation and prosecution of the case.