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

169 N.J. 105, 777 A.2d 1 (2001)

Opinion Date: July 18, 2001
Business Law
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CHECK CASHING—Regulations barring the location of one check cashing firm within 2,500 feet of another are valid, reasonable, and rational.

An applicant applied for a license with the Department of Banking and Insurance to operate a check cashing business. The application met all of the requirements of the New Jersey Check Cashers Regulatory Act of 1993, N.J.S. 17:15A-30, except for the requirement that the proposed location not be within 2,500 feet of an existing check cashing facility. The applicant’s proposed location would place the two facilities only 1,004 feet apart. For this reason, the Department never rendered a decision on the application. The applicant then brought a mandamus action to compel the Department to take action on the application and to obtain a ruling that the distance requirement was unconstitutional. The Department denied the application and the applicant appealed to the Appellate Division. The Appellate Division held that the distance requirement constituted a violation of substantive due process and therefore was unconstitutional. The Appellate Division reasoned that it could find no rational basis for the regulation. Therefore, it was arbitrary, capricious, and unreasonable. It then issued the license approval to the applicant with the condition that “an appeal of the court ruling invalidating the distance requirement is pending, and that its outcome may affect the validity of your license.” The Department appealed. The Supreme Court began by stating that “a presumption of validity attaches to every legislative enactment. ... When the means chosen bear a rational relationship to a legitimate state objective and are not arbitrary, capricious, or unreasonable, courts will sustain a legislative enactment.” Further, “courts will not invalidate economic regulation because they believe it to be unwise or bad policy.” Finally, “the means chosen by the Legislature need not be precise, or even the best way to achieve state objective.” Therefore, the issue before the Supreme Court was whether the imposition of the 2,500 foot distance was a rational means to achieve the goal of ensuring the economic viability of check cashing businesses and to prevent money laundering. Based on the record before the Court, which included legislative history about the rationale of the 2,500 foot requirement (which was not elaborated in the opinion), the Court concluded that the rule was rationally related to the statutory fee cap, a legitimate state objective. Therefore, it reversed the Appellate Division’s holding, but because the applicant had been operating its check cashing business for two years at the time the Court rendered its decision, the Court sustained the applicant’s license.

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