NJ Optometric Ass'n v. Hillman-Kohan Eyeglasses, Inc.NJ Optometric Ass'n v. Hillman-Kohan Eyeglasses, Inc.
- Reporters:
- ,
- Before:
- Kentz J.S.C.
Plaintiff New Jersey Optometric Association (Association) has brought suit against a multitude of defendants alleging, among other things, violations of
The list of defendants can be categorized into three main groups. The first is composed of three corporations, Hillman-Kohan Eyeglasses, Inc.; Vornado, d/b/a Noble Optics, Inc. and d/b/a Noble Eyeglasses; and Community Opticians, $7.00 Eyeglasses, Inc. (hereinafter collectively referred to as corporate defendants). The second group consists of 37
The immediate focus of this court is on the several motions of all the defendants to dismiss the complaint. The proffered grounds for dismissal of the complaint are several. For the sake of clarity and legal analysis I will address myself to the various motions separately as they relate to the three groups of defendants delineated above.
Initially, we must look to see of what the Association complains. The complaint is drafted in 13 counts. The basic thrust of the complaint as it relates to the individual defendants and corporate defendants is that they have entered into a commercial relationship which is in violation of
Count five of the complaint alleges that the Board has arbitrarily rejected numerous requests of the Association for the Board to take the necessary and proper steps provided by statute to halt the illegal and improper activities of the individual and corporate defendants.2 The Association wants
The sixth count is directed against the Attorney General. It basically iterates the relief requested in the fifth count because of the fact that the office of the Attorney General is the counsel to the Board and brings all necessary judicial proceedings on behalf of the Board.
I
The public defendants move to dismiss the complaint on the ground that this court lacks jurisdiction of the subject matter and that the action is not timely filed. This argument is premised on the public defendants’ view that the action of plaintiff is in reality an appeal from a final decision of a state administrative agency which, as such, must be filed in the Appellate Division and within 45 days of that final action. R. 2:2-3(a)2; R. 2:4-1(b). In order to clearly understand the basis on which the public defendants premise their argument some background is necessary. This background material is revealed in two affidavits submitted by the Attorney General in addition to the facts set forth in its brief sworn to be true. Although the instant motion is for a dismissal of the complaint and as such all facts pleaded are construed in favor of plaintiff, the court makes reference to the facts stated in these affidavits only for the limited purpose of constructing some sort of framework in which to analyze the public defendants’ motion.3
The public defendants take the position that the determination by the Board not to take any further action regarding the alleged violations of the Optometry Act presented to it by the Association is a final decision of a state administrative agency and hence reviewable only in the Appellate Division. R. 2:2-3(a)2. Johnson v. N.J. State Parole Bd., 131 N.J. Super. 513 (App. Div. 1974); Princeton First Aid Squad v. Division on Civil Rights, 124 N.J. Super. 150 (App. Div.), certif. den. 63 N.J. 555 (1973). The Association maintains that the decision of the Board not to issue complaints in the subject area is not a final decision or action from which an appeal may be had in the Appellate Division. The Association contends that its action is one of mandamus seeking this court to order the Board to undertake proceedings which will result in a decision or action which is final. Garrou v. Teaneck Tryon, 11 N.J. 294 (1953); Pfleger v. N.J. State Highway Dept., 104 N.J. Super. 289 (App. Div. 1968). The Association
Subsequent to the hearing in this matter the Appellate Division rendered its decision in the case of State v. Council of N.J. State College Locals, 141 N.J. Super. 470 (App. Div. 1976). The views expressed in that opinion appear to be dispositive of the present jurisdictional question. In that case a teachers’ union appealed from a decision of the Public Employment Relations Commission (PERC) which affirmed the decision of its executive director in deciding not to issue an unfair practice complaint against the State. The teachers’ union had filed an unfair practice charge with PERC in the hope that PERC would issue a complaint thereon. No hearing was held although there were “exploratory conferences” with the parties. In contrast to the argument at bar, PERC argued that its decision not to issue the unfair practice complaint was unreviewable by the court. The per curiam opinion states:
We hold that the refusal by PERC to issue a charge of unfair labor practice is reviewable pursuant to R. 2:2-3(a)2. [at 474-475]
The facts before me are strikingly similar to State v. Council of N.J. State College Locals, supra. The Association has lodged charges with the Board in the hope that it would issue complaints based on the charges. The Board has decided that complaints are not warranted. The Association then seeks judicial review of that decision not to issue complaints. The review sought should be in the Appellate Division pursuant to R. 2:2-3(a)2.4 Accordingly, the fifth
II
The corporate defendants’ motions to dismiss the complaint generally urge three reasons for the dismissal: (1) the Association is not a proper party nor does it have standing to bring an action for damages suffered not by it but by its members who are not parties herein; (2) neither the Association independently nor derivatively from its members can enforce alleged violations of the Optometry Act by injunction since they do not lie within the zone of interests sought to be protected by the enactment of the statute, and (3) plaintiff is barred from its asserted cause of action on the basis that had it felt aggrieved from the decision of the Board failing to find a prima facie basis for the asserted violations, plaintiff should have appealed to the Appellate Division pursuant to R. 2:2-3(a) within 45 days of the letter of denial.
It is not necessary for the court to analyze and rule on all the reasons given in support of the corporate defendants’ motions. It is my belief that the court‘s ruling on the second stated reason for dismissal will obviate the need for discussion on the other reasons. I am confining this immediate analysis to those counts of the complaint based on alleged violations of the Optometry Act or Optician Act by the corporate defendants.
The corporate defendants maintain that neither the Association nor its membership lie within the zone of interest
There is no doubt that the primary purpose of the Optometry Act is to protect the public from incompetence, ignorance, fraud, etc., in connection with the care of the human eye. Abelson‘s, Inc. v. N.J. State Bd. of Optometrists and N.J. State Bd. of Optometrists v. Koenigsberg, supra. Any benefits that accrue to individual optometrists practicing pursuant to the statute are incidental and do not rise to the status of a property right which can be protected by a civil
The practice indicated by these cases has sprung up because enforcement of regulatory statutes is sometimes neglected by public authorities and is apt to be more vigorous if those who have a direct financial stake are permitted to prosecute. But the practice cannot be supported in principle and is contrary to the decisions of our state cited earlier in this opinion. The motion for an injunction will be denied for the reason that the statute, on which complainants sue, was not enacted for their benefit. [122 N.J. Eq. at 387]
If individual licensed optometrists have no right to sue for enforcement or violations of the Optometry Act, a fortiori an unincorporated organization comprised of the same optometrists has no standing to assert otherwise unassertable
III
Plaintiff attempts to justify or ground its standing to sue for violations of the Optometry Act by drafting its complaint in terms of protecting the public from denigration of the professional standards of the practice of optometry in the State of New Jersey and restoring public confidence therein which allegedly has been eroded by the acts of defendants. Plaintiff cites N.J. State Bar Ass‘n v. Northern N.J. Mortgage Associates, supra, for the proposition that it does have standing to sue for violations of the Optometry Act in order to protect the public. In that case the N.J. State Bar Association and five individual attorneys brought suit to enjoin the defendants’ alleged unauthorized practice of law. The trial judge entered summary judgment dismissing plaintiff‘s action on the ground that the Supreme Court of New Jersey had exclusive jurisdiction over the unauthorized practice of law. The Supreme Court reversed the decision of the trial court holding that the plaintiff N.J. State Bar Association had standing to sue and the the Superior Court had jurisdiction of the matter. It remanded the case to the trial court for a plenary hearing. In the course of its opinion the court discussed the distinction between enjoining defendants’ acts where private property rights and irreparable harm are involved and where plaintiffs seek an injunction as protectors of the public‘s interest when no private rights are involved. “The considerations underlying the granting of injunctive relief differ in each case.” 22 N.J. at 193. The court further noted:
I do not believe that N.J. State Bar Ass‘n v. Northern N.J. Mortgage Associates, supra, supports plaintiff‘s right to maintain this action.8 In N.J. State Bar Ass‘n the emphasis of the complaint was upon the injury to the public. The relief sought was injunctive. In analyzing the complaint the court summarized its nature as follows:
Except for the short allegation to the effect that “the individual plaintiffs and all other attorneys at law of the State of New Jersey similarly situated will be deprived of their property right in their licenses to practice law,” the emphasis of the complaint is exclusively upon the injury to the public and to the administration of justice. [at 196]
In contrast, the complaint in the instant case is not seeking protection of the public. Its dominant, primary and unmistakable flavor is self-interest on the part of plaintiff. The real motivation for this action is selfish commercial interest. The complaint consists of 13 counts, some of which allege antitrust violations, unfair competition and tortious conduct on the part of the several defendants. The relief sought is money damages, including treble damages for the alleged
The general emphasis in this complaint is on injury done to plaintiff and its members. This stands in bold contrast to the complaint filed in the N.J. State Bar Ass‘n case where there was only a short allegation of deprivation of plaintiff‘s property rights and the emphasis of the complaint was exclusively “upon the injury to the public and to the administration of justice.” 22 N.J. at 196. I believe the complaint before the court now is that type envisioned by Chief Justice Vanderbilt when, speaking for a unanimous court, he said:
Nor will it be granted to those who proceed under the outward pretense of a public service, motivated in fact by selfish purposes, cf. Lipman v. Forman, 138 N.J. Eq. 556 (Ch. 1946); Mosig v. Jersey Chiropodists, Inc., 122 N.J. Eq. 382 (Ch. 1937). [at 195]
The court is mindful of the fact that the appeal in the N.J. State Bar Ass‘n case was from a grant of summary judgment and that the motion before the court now is for a dismissal of the complaint. The standards to be applied are different. It is elementary that on a motion to dismiss a complaint all inferences are to be drawn in favor of plaintiff. Bonnett v. State, 126 N.J. Super. 239, 242 (App. Div. 1974). However, since the only way that plaintiff could maintain this suit is if it were suing in the public interest, I believe that the complaint itself betrays this essential role. It is my opinion that the allegations of the complaint along with the prayers for relief exude a selfish motivation that cannot be countenanced. Even a cursory reading of the complaint
IV
In counts seven and eight of the complaint plaintiff alleges violations of the Antitrust Act on the part of the corporate defendants. The Association seeks statutory treble damages and injunctive relief. Again, defendants contend that this plaintiff is not the proper party to bring this suit for antitrust violations because of the fact that plaintiff is a nonprofit organization. It is not engaged in a business for pecuniary benefit.
Any person who shall be injured in his business or property by reason of a violation of the provisions of this act may sue therefor and shall recover threefold the damages sustained by him, together with reasonable attorneys’ fees, filing fees and reasonable costs of suit. Reasonable costs of suit may include, but shall not be limited to the expenses of discovery and document reproduction. [Emphasis supplied]
Although there is no reported decision of our courts dealing with this specific provision, guidance may be appropriately found in the decisions construing the corresponding sections of the Clayton Act,
It is difficult to discern from the allegations of the complaint on what basis the Association grounds its antitrust claim. Admittedly, it is not engaged in a business; it is a nonprofit corporation. The complaint speaks of violations of the Optometry and Optician Acts which allegedly are also violations of the Antitrust Act. However, as we have seen, these statutes do not bestow any property rights on the Association or its members. Violations of these regulatory statutes do not give rise to a civil cause of action in favor of the Association. Therefore, since the Association is not engaged in a business and it appears from the complaint that no judicially enforceable property rights of plaintiff have been invaded by the acts of defendants, it is difficult to perceive how plaintiff could suffer injury within the framework of the Antitrust Act. In fact, I would think it impossible. If there be any injury by reason of defendants’ acts it would be sustained by the individual optometrists (or opticians) who are at least arguably conducting a business. However, plaintiff is a distinct corporate entity having its own identity separate from its members. See Bergen Cty. Pharmaceutical Ass‘n v. Barden, 9 N.J. Super. 480, 483 (Ch. Div. 1950); Kauffman v. Dreyfus Fund, Inc., 434 F.2d 727, 733 (3 Cir. 1970), cert. den. 401 U.S. 974, 91 S.Ct. 1190, 28 L.Ed.2d 323 (1971). The counts alleging antitrust violations will be dismissed since plaintiff does not come within the class that may institute suit under
I now direct my attention to the claims of unfair competition on the part of the corporate defendants. Again, what is basically alleged is that the acts of defendants which are alleged violations of the Optometry and Optician Acts also constitute acts of unfair competition vis-a-vis the Association. The allegations of unfair competition do not specify any particular statute on which the claim is based. I will assume for purposes of this discussion that the claim is predicated on the broad common-law principles of unfair competition. Cf. Columbia Broadcasting Syst. v. Melody Recordings, 134 N.J. Super. 368, 375 (App. Div. 1975); American Shops, Inc. v. American Fashion, etc., Inc., 13 N.J. Super. 416 (App. Div.), certif. den. 7 N.J. 576 (1951) Defendants again argue, as they did on the antitrust issue, that the Association can have no interest in prosecuting an unfair competition claim; it is not engaged in business, so how can it claim that it is the subject of unfair competition? Unfair competition presupposes business competition.
The law of unfair competition is an amorphous area of jurisprudence. It knows no clear boundaries. Indeed, the nomenclature itself may be a misnomer. See 1 Callman, Unfair Competition, Trademarks & Monopolies (3 ed. 1967), § 5.1. The concept is as flexible and elastic as the evolving standards of commercial morality demand. Sachs, etc., Radio Co. v. Sachs Quality Stores Corp., 39 N.J. Super. 70, 85 (App. Div. 1956). The judicial tendency is to promote and advocate higher ethical standards in the business world. Q-Tips v. Johnson & Johnson, 206 F.2d 144, 145 (3 Cir.), cert. den. 346 U.S. 867, 74 S.Ct. 106, 98 L.Ed. 377 (1953).
Although it is impossible to categorize all acts which constitute unfair competition, there are a few fundamental elements that are definite. In essence, unfair competition is a business tort. Generally it consists of the misappropriation of one‘s property by another — property which has some sort of commercial or pecuniary value. 87 C.J.S. Trade-Marks,
It serves no purpose for this court to embark upon a journey through the maze of cases dealing with the multifarious aspects of the law of unfair competition. Such an undertaking is unwarranted because in my view the issue to be decided is basic: Has plaintiff alleged an injury to a judicially cognizable right? I think not. The reason for this opinion is basically the same for previous holding on plaintiff‘s standing on the antitrust counts. The Association is a nonprofit organization. It is in competition with no one, including the defendants. The members of the Association might be in competition with defendants, but the Association cannot assert the rights of its members in this context. See, Bergen Cy. Pharmaceutical v. Barden, supra. The Association is not in the business of eye care or ophthalmic dispensing. It is my opinion that a cause of action founded upon claims of unfair competition is not assertable by the Association whether in its own right or on behalf of its members. See California Apparel Creators v. Wieder of California, 162 F. 2d 893 (2 Cir. 1974); Key West Cigar Mfrs. Ass‘n v. Rosenbloom, 171 F. 296 (S.D.N.Y. 1909). But see, Mutation Mink Breeders Ass‘n v. Lou Nierenberg Corp., 23 F.R.D. 155 (S.D.N.Y. 1959).
VI
The remaining counts of the complaint are largely reiterative of the claims already discussed. Likewise, they must fall for the reasons expressed in the various analyses previously presented. This includes the eleventh count specifically directed against Richard M. Kaplan and Vornado, d/b/a Noble Optics, Inc. and d/b/a Noble Eyeglasses.