FANELLI V. CITY OF TRENTON
Case Date: 06/07/1994
Docket No: SYLLABUS
(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).
Argued February 1, 1994 -- Decided June 7, 1994
STEIN, J., writing for a unanimous Court.
This appeal addresses the validity of a City of Trenton municipal ordinance that bans hawking,
peddling, or vending in a statutorily-authorized Special Improvement District (SID). The ordinance exempts
from that prohibition pushcart peddling conducted by and adjacent to restaurants that operate in the SID.
Louis Fanelli is a food vendor holding a license under a State statute that gives armed-services veterans the
right to peddle. He challenges the ordinance on the grounds that it: 1) exceeded the State's delegation of
legislative powers to the municipality; 2) conflicted with his statutory right to peddle; 3) violated federal and
state constitutional due-process and equal-protection guarantees; and 4) violated federal and state antitrust
laws.
The Chancery Division rejected Fanelli's challenges to the ordinance. The court determined that the
ordinance had been authorized under the State's police power and established pursuant to the authority
delegated to municipalities by the statute authorizing the establishment of SIDs, N.J.S.A. 40:56-65 to -89
(SID statute). In addition, the court found that the ordinance survived Fanelli's equal-protection and due-process challenges as an economic regulation that was rationally related to achieving a legitimate public
interest. Lastly, the court concluded that state-action immunity shielded the ordinance from attack under
both federal and state antitrust laws.
On appeal, the Appellate Division affirmed substantially for the reasons expressed in the Chancery
Division opinion. The Supreme Court granted certification.
HELD: The City of Trenton's municipal ordinance banning independent peddlers within the Special
Improvement District (SID) furthers the policies of the SID statute as authorized by N.J.S.A.
40:56-77(b)(2). Furthermore, the ordinance does not violate state or federal equal-protection and
due-process rights because the ordinance is rationally related to the legitimate statutory objective
of revitalizing downtown shopping districts. Finally, because the ordinance is authorized by the
SID statute and the anticompetitive effect of the ban is a foreseeable result of that authorization,
the result does not violate state antitrust laws and constitutes state action that is immune from
challenge under federal antitrust laws.
1. The authorization for Trenton's ordinance arises from the SID statute, rather than from the general
police power of the municipal authority to license and regulate. In 1984, the Legislature amended the
pedestrian-mall statute to authorize the creation of SIDs and district management corporations to manage
them. The purpose of the Legislature's authorization of the creation of SIDs was the promotion of economic
growth and employment in local business districts; it was not restricted to concerns related to pedestrians.
An examination of the objectives and implementing provisions of Trenton's ordinance demonstrates that it is
a valid exercise of the authority delegated to the city in the SID statute. The ordinance furthers the objective
of the economic revitalization of downtown shopping areas and is authorized under a broad construction of
the regulatory powers delegated to municipalities by the SID statute. In addition, the limitation on pushcart
vending to areas adjacent to established restaurants is consistent with another municipal ordinance and
furthers the statutory purpose of promoting the movement of pedestrian traffic within the SID. (pp. 6-10)
2. The ordinance does not conflict with the statute granting veterans the right to peddle; the last
paragraph of that statute states that hawking, peddling and vending may be regulated by municipal ordinance.
Moreover, the SID statute specifically authorizes municipal control and regulation of vendors within the SID.
Thus, that authorization is a specific limitation on the rights generally granted in the vendor-statute.
Moreover, to any extent that a conflict exists between the two statutes, there is no doubt that the legislative
intent is that the SID statute prevail. (pp. 10-11)
3. To withstand Fanelli's claim that the ordinance violates federal and state constitutional due-process
and equal-protection rights, the statutory authorization must be rationally related to the achievement of a
legitimate state objective. Revitalization of the downtown shopping districts in New Jersey's cities is a
legitimate state objective. An ordinance prohibiting independent vendors from operating in a downtown area
selected for revitalization is rationally related to that objective. The ordinance creates an economic climate
within the SID designed to promote, attract, and retain resident businesses. The ban also promotes the flow
of pedestrian traffic by limiting outdoor vending to operations that are adjacent to resident businesses.
Therefore, under the minimum-scrutiny analysis, the ordinance survives federal and state due-process claims
and the federal equal-protection claim. The ordinance also survives a State equal-protection challenge
because the regulation does not unduly restrict the right of peddlers to engage in their business. (pp. 11-13)
4. Trenton's ban on peddlers within the SID is immune from federal antitrust challenge under the
state-action doctrine. The SID statute specifically authorizes a city to regulate peddling to further its
economic-vitalization policies. That authorization clearly meets the requirement that the anticompetitive
action be a foreseeable result of state authorization. Furthermore, ordinances enacted pursuant to the SID
authorization are entitled to state-action immunity from federal antitrust liability. The New Jersey Antitrust
Act does not apply either; a necessary premise to Fanelli's State antitrust claim is that the ordinance is not
directed, authorized or permitted by State law. Because the ordinance is authorized by the SID statute,
Fanelli's argument fails. (pp. 13-19)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE WILENTZ and JUSTICES CLIFFORD, HANDLER, POLLOCK, O'HERN and
GARIBALDI join in JUSTICE STEIN's opinion.
SUPREME COURT OF NEW JERSEY
LOUIS FANELLI,
Plaintiff-Appellant,
and
LOUIS SHEPHERD, ROBERT
Plaintiffs,
v.
CITY OF TRENTON, a body
Defendant-Respondent,
and
TRENTON MERCHANTS ASSOCIATION
Defendants.
Argued February 1, 1994 -- Decided June 7, 1994
On certification to the Superior Court,
Appellate Division.
Charles J. Casale, Jr., argued the cause for
appellant.
Robert J. Paci, Assistant City Attorney,
argued the cause for respondent (Rocky L.
Peterson, City Attorney, attorney).
Richard S. Goldman argued the cause for
amicus curiae, Trenton Downtown Association
(Drinker, Biddle & Reath, attorneys).
The opinion of the Court was delivered by
STEIN, J.
This appeal requires the Court to determine the validity of
a municipal ordinance that bans hawking, peddling, or vending in
a statutorily-authorized Special Improvement District (SID). The
ordinance exempts from the prohibition pushcart peddling
conducted by and adjacent to restaurants that operate in the SID.
Plaintiff is a food vendor holding a license under a State
statute that gives armed-services veterans the right to peddle.
He challenged the municipal ordinance on the grounds that it (1)
exceeded the State's delegation of legislative powers to the
municipality; (2) conflicted with plaintiff's statutory right to
peddle; (3) violated federal and state constitutional due-process
and equal-protection guarantees; and (4) violated federal and
state antitrust laws. The Chancery Division upheld the validity
of the ordinance and the Appellate Division affirmed. We granted
plaintiff's petition for certification,
134 N.J. 481 (1993), and
now affirm.
Plaintiff Louis Fanelli owns and operates a vending cart from which he sells food and beverages such as frankfurters, meatball sandwiches, doughnuts, soft drinks, and coffee. Plaintiff is licensed by the State pursuant to N.J.S.A. 45:24-9, which grants honorably-discharged military personnel, among others, "the right to hawk, peddle and vend any goods, wares or
merchandise * * * within this State, by procuring a license * * *
." Plaintiff estimates that he has held such a license for
approximately twenty to thirty years. WHEREAS, N.J.S.A. 40:56-65 et seq. provides for the creation of a [SID] * * * to assist municipalities in promoting economic growth and employment within business
districts; to provide the municipality with
the broadest possible discretion to establish
by local ordinance, self help programs most
consistent with the local needs, goals and
objectives; and, to permit the governing body
to protect the public welfare and health and
the interest of the public in the safe and
effective movement of persons and to preserve
and enhance the function and appearance of
the business districts; and
WHEREAS, the governing body finds that
vending, hawking or peddling of any foods,
beverages, confections, goods, wares,
merchandise or commodities of any nature * *
* within the [SID] will undermine the
economic growth and employment within the
[SID] and will inhibit the safe, convenient
and effective movement of persons and detract
from the function and appearance of the
[SID]; and
WHEREAS, the governing body finds that
vending, hawking or peddling of any foods,
beverages, confections, goods, wares[,]
merchandise or commodities of any nature * *
* within the [SID] should be prohibited
unless specifically authorized by [the] City
Council pursuant to rules and regulations
formally adopted by [the] City Council in
accordance with the standards enunciated in
N.J.S.A. 40:56-65 et seq.
NOW THEREFORE, the Council of the City
of Trenton ordain[s]:
* * * * * * * No person shall engage in hawking, peddling or vending of any foods, beverages, confections, goods, wares[,] merchandise or commodities of any nature or description on the streets and sidewalks within the City of Trenton's [SID] unless such use, and the location thereof, has been specifically authorized by [the] City Council pursuant to rules and regulations formally adopted by [the] City Council in accordance with the standards enunciated in N.J.S.A. 40:56-65 et seq. This ordinance shall not prohibit sales activities conducted by a person holding a license to operate a restaurant from
operating a pushcart on a sidewalk
immediately adjacent to a licensed premises *
* * .
Plaintiff operated his cart at the State-and-Montgomery
location until October 1988, when he learned of the ordinance and
ceased operating in Trenton. Plaintiff sought a temporary
restraint on enforcement of the ordinance through an order to
show cause, but was denied injunctive relief. Subsequently,
plaintiff obtained leave to amend an existing complaint
challenging another Trenton ordinanceSee footnote 1 to add challenges to the
validity of the SID ordinance. In a second amended complaint
filed in January 1989, plaintiff added a count for antitrust
violations.
the SID's boundaries so that it now encompasses the Front-and-Stockton location. Trenton, N.J., Ordinance No. 93-27 (Mar. 5,
1993).) In addition to plaintiff's testimony, the trial court
admitted into evidence transcripts of City Council meetings
prepared by plaintiff's counsel suggesting that the primary
purpose of the vending ban was to protect existing stores and
restaurants from competition.
In considering whether the City's ordinance is a valid exercise of authority granted by the State, we bear in mind that municipal ordinances enjoy a presumption of validity. Brown v. City of Newark, 113 N.J. 565, 571 (1989). Our cases have established that a municipal prohibition on peddling that serves
no purpose other than to protect local businesses from
competition is an invalid exercise of a municipality's police
power. See, e.g., id. at 583-84; Moyant v. Borough of Paramus,
30 N.J. 528, 544-45 (1959); N.J. Good Humor, Inc. v. Board of
Comm'rs,
124 N.J.L. 162, 168-71 (E. & A. 1940). However, we need
not apply that principle here because authorization for Trenton's
ordinance derives from the SID statutes, N.J.S.A. 40:56-65 to -89, rather than from the general police power or the authority to
license and regulate. Specifically, N.J.S.A. 40:56-77 states:
* * * *
(2) The uses to be permitted on the mall
or special improvement district property by *
* * concessionaires, vendors and others to
serve the convenience and enjoyment of
pedestrians and the location of such uses[.]
and restaurants as well as statements made during City Council
meetings.
the currently-held authority of municipalities to create
pedestrian malls as a local business improvement project. The
creation of special improvement districts would be an additional
method of revitalizing older downtown shopping districts.")
(emphasis added). Because the 1984 amendments made the
directives in N.J.S.A. 40:56-77 regarding permitted uses and the
regulation of peddling applicable to SID property, see L. 1984,
c. 151, § 13, we must read those directives in the context of the
distinct SID purposes set forth in N.J.S.A. 40:56-65b.
Furthermore, we interpret those delegated powers broadly. See
N.J. Const. art. 4, § 7, ¶ 11.
We also conclude that the ban does not conflict with the statute granting veterans the right to peddle, N.J.S.A. 45:24-9. The last paragraph of that provision states that "[h]awking, peddling and vending * * * may be regulated by municipal ordinance * * * ." We note that the City's ordinance does not prohibit peddlers from operating in Trenton. Rather, it reasonably limits the areas in which they may operate, and thus
is properly characterized as a regulation. See N.J. Good Humor,
supra, 124 N.J.L. at 167 (distinguishing municipal prohibition of
peddling from regulation).
We next consider plaintiff's claim that the ordinance violates federal and state constitutional due-process and equal-protection rights. We analyze both federal constitutional claims and the state due-process claim under minimum scrutiny, because the ordinance is an economic regulation that does not affect a suspect class. Thus, the statutory authorization need be only
rationally related to the achievement of a legitimate state
objective. See Brown, supra, 113 N.J. at 572-73. We consider
plaintiff's state equal-protection challenge under the balancing
test adopted for analysis of such claims. See id. at 573.
businesses. The ban also promotes the flow of pedestrian traffic
by limiting outdoor vending to operations that are adjacent to
resident businesses. As demonstrated in Dukes, supra, the fact
that the City Council exempted certain vending from the ban does
not render the ordinance irrational. See id. at 305, 96 S. Ct.
at 2517-18, 49 L. Ed.
2d at 518. Thus, we conclude that under
minimum-scrutiny analysis the ordinance survives plaintiff's
federal and state due-process claims and his federal equal-protection claim.
Plaintiff's final argument is that Trenton's selective ban on vending violates sections one and two of the Sherman Act, 15 U.S.C.A. §§1, 2, and the comparable New Jersey antitrust
statutes. See N.J.S.A. 56:9-3, -4. We conclude that the "state
action" doctrine immunizes the City's ordinance from challenge
under the federal antitrust laws, see Parker v. Brown,
317 U.S. 341,
63 S. Ct. 307,
87 L. Ed. 315 (1943), and that the ordinance
does not violate the New Jersey Antitrust Act, N.J.S.A. 56:9-1 to
-19. See N.J.S.A. 56:9-5c (stating that New Jersey Antitrust Act
does not apply to activity "directed, authorized or permitted" by
state law).
dealerships in locations that would threaten stability of
existing same-line dealerships).
articulated and affirmatively expressed as state policy" and (2)
"actively supervised by the [State] as the policymaker." Id. at
410, 98 S. Ct. at 1135, 55 L. Ed.
2d at 381 (discussing Bates v.
State Bar,
433 U.S. 350,
97 S. Ct. 2691,
53 L. Ed.2d 810
(1977)).
result' of what the statute authorizes." City of Columbia v.
Omni Outdoor Advertising, Inc.,
499 U.S. 365, 373,
111 S. Ct. 1344, 1350,
113 L. Ed.2d 382, 393 (1991) (quoting Hallie, supra,
471 U.S. at 42, 105 S. Ct. at 1718, 85 L. Ed.
2d at 31).
the city to regulate uses was sufficient to establish that the
city ordinance had been authorized by the state. Determining
whether in fact the ordinance had been passed to further the
statutory purpose or in accordance with procedural requirements
was unnecessary for state-action analysis. Id. at 371-72, 111 S.
Ct. at 1349-50, 113 L. Ed.
2d at 392-93. The Court then
determined that the anticompetitive effects were the foreseeable
result of the zoning statutes' authorization to municipalities to
regulate uses. Id. at 373, 111 S. Ct. at 1350, 113 L. Ed.
2d at
393.
unilaterally by government does not violate section 1 of Sherman
Act because concerted-action element is lacking).
In sum, Trenton's ban on independent peddlers within the SID furthers the policies of the SID statutes and is authorized by N.J.S.A. 40:56-77b(2). Furthermore, as a rational means of achieving the legitimate statutory objective of revitalizing downtown shopping districts, the ordinance survives both state and federal due-process and equal-protection challenges. Finally, because the city ordinance is authorized by the SID statutes and the anticompetitive effect of the ban is a foreseeable result of that authorization, the ordinance does not violate the state antitrust laws and constitutes state action that is immune from challenge under the federal antitrust laws.
Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, and Garibaldi join in this opinion. Footnote: 1 In June 1988, prior to the adoption of the ordinance prohibiting vending in the SID, Trenton had adopted Ordinance No. 88-39, which prohibited hawking, peddling, and vending throughout the City, except for eight discreet locations to which individual operators were to be assigned. Plaintiff challenged that ordinance and was granted temporary injunctive relief. The parties consented to continue that relief and subsequently Trenton stipulated that it would not enforce that ordinance and intended to repeal it. We do not consider the validity of that ordinance in this appeal.
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