Reply Brief — PDX North, Inc., Petitioner v. Robert Asaro-Angelo, Commissioner, New Jersey Department of Labor and Workforce Development

No. 20-1327

In the

Supreme Court of the United States

__________________

PDX NORTH, INC.,

Petitioner,

v.

ROBERT ASARO-ANGELO, IN HIS OFFICIAL CAPACITY AS

THE COMMISSIONER OF THE DEPARTMENT OF LABOR

AND WORKFORCE DEVELOPMENT OF THE STATE OF

NEW JERSEY,

Respondent.

__________________

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Third Circuit

__________________

REPLY BRIEF

__________________

JACK L. KOLPEN, ESQ.

IAN D. MEKLINSKY, ESQ.

CORINNE MCCANN TRAINOR, ESQ.

Counsel of Record

ALLISON L. HOLLOWS, ESQ.

MICHAEL W. SABO, ESQ.

FOX ROTHSCHILD LLP

Princeton Pike Corporate Center

997 Lenox Drive

Lawrenceville, NJ 08648

Tel: (609) 896.3600

Fax: (609) 896.1469

ctrainor@foxrothschild.com

Counsel for Petitioner

July 27, 2021

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . ii

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I.

The Decision Below is Wrong.. . . . . . . . . . . . . 1

II.

The Circuits Are Split On the Question

Presented. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

III.

The Question Presented is Exceptionally

Important. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ii

TABLE OF AUTHORITIES

CASES

ACRA Turf Club, LLC v. Zanzuccki,

748 F.3d 127 (3d Cir. 2014) . . . . . . . . . . . . 5, 6, 11

Addiction Specialists, Inc. v. Township of

Hampton, 411 F.3d 399 (3d Cir. 2005). . . . . . . 6, 7

Bristol-Myers Squibb Co. v. Connors,

979 F.3d 732 (9th Cir. 2020). . . . . . . . . . . . . . 7, 11

Browning-Ferris Indus. v. Kelco Disposal,

Inc., 492 U.S. 257 (1989) . . . . . . . . . . . . . . . . . . . 7

Byrd v. United States,

138 S.Ct. 1518 (2018) . . . . . . . . . . . . . . . . . . . . . . 7

EEOC v. FLRA,

476 U.S. 19 (1986). . . . . . . . . . . . . . . . . . . . . . . . . 7

Hamilton v. Bromley,

862 F.3d 329 (3d Cir. 2017) . . . . . . . . . . . . . . . . . 6

Huffman v. Pursue, Ltd.,

420 U.S. 592 (1975). . . . . . . . . . . . . . . . . 3, 6, 8, 10

Matter of Corbo,

117 B.R. 109 (Bankr. D.N.J. 1990). . . . . . . . . . . . 5

Minnesota Living Assistance, Inc. v. Peterson,

899 F.3d 548 (8th Cir. 2018). . . . . . . . . . . . . 7, 8, 9

Mulholland v. Marion County Election Board,

746 F.3d 811 (7th Cir. 2014). . . . . . . . . . . . . . . 7, 9

New York v. Ferber,

458 U.S. 747 (1982). . . . . . . . . . . . . . . . . . . . . . . . 2

iii

Rynearson v. Ferguson,

903 F.3d 920 (9th Cir. 2018). . . . . . . . . . . . . . 7, 10

Sprint Commc’ns, Inc. v. Jacobs,

571 U.S. 69 (2013). . . . . . . . . . . . . . . . . . . . passim

State v. Drake,

79 N.J. Super. 458 (App. Div. 1963). . . . . . . . . 2, 3

State v. Paladino,

203 N.J. Super. 537 (App. Div. 1985). . . . . . . . . . 4

State v. Witrak,

194 N.J. Super. 526 (App. Div. 1984). . . . . . 2, 3, 5

Trainor v. Hernandez,

431 U.S. 434 (1977). . . . . . . . . . . . . . . . . . . . . . . . 5

Younger v. Harris,

401 U.S. 37 (1971). . . . . . . . . . . . . . . . . . . . passim

STATUTES

N.J.S.A. 43:21-14 . . . . . . . . . . . . . . . . . . . . . . . passim

N.J.S.A. 43:21-14(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 4

N.J.S.A. 43:21-14(h) . . . . . . . . . . . . . . . . . . . . . . . . . . 5

N.J.S.A. 43:21-16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

N.J.S.A. 43:21-16(e) . . . . . . . . . . . . . . . . . . . . . passim

N.J.S.A. 43:21-16(f) . . . . . . . . . . . . . . . . . . . . . . . . . . 4

iv

OTHER AUTHORITIES

N.J. Dep’t of Lab. and Workforce Dev., Emp.

Handbook, Audit Process, available at

https://www.nj.gov/labor/handbook/chap1/chap

1sec7AuditProcess.html . . . . . . . . . . . . . . . . . . . . 4

1

Younger abstention is reserved for exceptional

circumstances where there is a parallel, pending state

proceeding that is criminal or “akin to a criminal

prosecution.” Sprint Commc’ns, Inc. v. Jacobs, 571 U.S.

69, 78-79 (2013). The Question Presented asks what

should courts consider in determining whether a civil

action is “akin to a criminal prosecution.” Certiorari

should be granted because the Panel extended Younger

abstention beyond the confines of Sprint to a state

administrative action initiated under a statute New

Jersey courts deem purely civil; that is not “akin to a

criminal prosecution”; and that does not have a

criminal analog. Respondent asks the Court to reject

the Petition because the Panel correctly recited Sprint’s

standard, thus implicitly urging the Court to ignore the

Panel’s misapplication of Sprint; and because the case

allegedly presents an imperfect vehicle to address the

issue. Respondent’s arguments diminish the impact of

the Panel’s precedential decision, its extension of

Sprint to a parallel state administrative proceeding

that is not akin to a criminal prosecution, and its

rejection of controlling New Jersey courts’ decisions

holding the relevant statute to be purely civil, not

quasi-criminal. Certiorari is appropriate because due to

its errors, the Panel declined jurisdiction, shutting the

courthouse doors to Petitioner’s claims, thus allowing

future courts to do the same. The Panel’s precedent

should not stand.

ARGUMENT

I.

The Decision Below is Wrong.

1. The Panel’s decision conflicts with Sprint

because it improperly extended Younger to a civil

2

proceeding, holding that the state proceeding under

N.J.S.A. 43:21-14 was akin to a criminal prosecution,

in conflict with New Jersey state courts’ interpretation

of the same provision. New Jersey courts explain that

N.J.S.A. 43:21-14 provides only civil remedies under

New Jersey’s Unemployment Compensation Laws

(“UCL’s”) for an employer’s failure to pay the

appropriate contributions. See State v. Witrak, 194 N.J.

Super. 526, 531 (App. Div. 1984); State v. Drake, 79

N.J. Super. 458, 461 (App. Div. 1963). Nothing

Respondent raises refutes this error. Indeed, the word

“penalty” in N.J.S.A. 43:21-14 does not authorize

“sanctions for wrongful conduct,” especially as here,

when the state courts have examined the issue and

concluded that N.J.S.A. 43:21-14 authorizes only civil

remedies. See Witrak, 194 N.J. Super. at 531

(explaining that N.J.S.A. 43:21-16 is “not for mere

nonpayment or failure to file but for ‘offenses’ of

various descriptions”).

Respondent urges denial of the Petition,

maintaining that it inappropriately seeks review of

state law and is mired with case-confining facts. (Resp.

Br. 26). However, no predictive state law analysis is

necessary. Nor are there any facts to which the

Question Presented is confined. This case is the perfect

vehicle to decide whether, under Younger, federal

courts should consider and defer to state courts’

interpretation of their own statutes when deciding

whether the actually pending, not hypothetical, state

proceeding is “quasi-criminal” or “akin to a criminal

prosecution.” See New York v. Ferber, 458 U.S. 747, 767

(1982) (“the construction that a state court gives a state

3

statute is not a matter subject to [federal court]

review”).

Here, New Jersey courts hold that N.J.S.A. 43:21-14

is purely civil and is not quasi-criminal. See Witrak,

194 N.J. Super. at 530-31; Drake, 79 N.J. Super. at

461. The statute’s plain language similarly states that

it provides civil remedies and describes a filed

assessment as a civil judgment. See N.J.S.A. 43:21-14.

In concluding that the parties’ N.J.S.A. 43:21-14

administrative proceeding is a civil enforcement

proceeding quasi-criminal in nature, the Panel rejected

the plain language of the statute and its construction

by New Jersey courts, conflated the civil remedies

afforded under N.J.S.A. 43:21-14 with those afforded

under N.J.S.A. 43:21-16(e) involving fraud or

intentional misconduct, and improperly expanded

Sprint’s reach.

2. The Panel’s decision also contradicts this Court’s

command in Sprint that Younger only applies to a civil

enforcement proceeding “‘akin to a criminal

prosecution’ in ‘important respects.’” 571 U.S. at 79

(quoting Huffman v. Pursue, Ltd., 420 U.S. 592, 604

(1975)). Respondent’s argument focuses on buzzwords

from Sprint – investigation, complaint, violation – but

closer analysis of the proceedings belies the conclusion

that a civil enforcement proceeding, quasi-criminal in

nature, exists. The Panel did not closely consider these

“important” aspects of a criminal prosecution. (App.

17). Had it, the Panel would have found that the

“investigation” is not a targeted investigation, but a

4

field audit, one of thousands performed every year.1

See N.J. Dep’t of Lab. and Workforce Dev., Emp.

H a n d b o o k , A u dit P ro c e s s , a v a i l a b l e a t

https://www.nj.gov/labor/handbook/chap1/chap1sec

7AuditProcess.html. See also N.J.S.A. 43:21-14(d). The

“complaint” is a bill called a “contribution report” in

which Respondent declares that the amount of

unemployment compensation contributions paid by the

company is incorrect, that more are owed, and that

penalties and interest for the now late payment are

due, and if unchallenged by the employer, Respondent

may docket and institute collection efforts like any

other civil judgment. See N.J.S.A. 43:21-14(e). But see

(App. 17-18) (noting that Sprint does not require the

state to commence an action by formal complaint). Nor

was a minimum of due process protection afforded to

Petitioner in the state court proceeding, which would

have been required if the proceeding was

quasi-criminal. See State v. Paladino, 203 N.J. Super.

537, 547 (App. Div. 1985); N.J.S.A. 43:21-16(e) and (f).

Respondent repeatedly asserts that Petitioner

“chose to violate the law,” lending to its conclusion that

the administrative proceeding is a quasi-criminal

action instituted to sanction wrongful conduct.

Respondent’s argument, like the conclusion it invites,

is unsupported. There is no mens rea element in

N.J.S.A. 43:21-14, the statutory section under which

the state action has proceeded. Respondent only

commenced field audits of the Petitioner and calculated

contributions, interest, and penalties pursuant to

1

Respondent incorrectly states that PDX never argued that an

investigation did not occur. (Resp. Br. 29); (Pet. 15-16).

5

N.J.S.A. 43:21-14 that the auditor thinks PDX owes,

based on its review of a minimum of records. PDX

appealed as permitted to challenge the NJDOL’s

determination and accounting and assert that the

amounts calculated by the NJDOL are not due. See

N.J.S.A. 43:21-14(h). This procedural history of the

proceeding reflects a simple civil dispute, not one

commenced by the state to punish the Petitioner for

intentional misconduct.

3. The Panel also erroneously expanded Sprint

when it applied a “criminal analog” analysis,

addressing whether “the State could have alternatively

sought to enforce a parallel criminal statute.” (App. 16).

The Panel concluded that N.J.S.A. 43:21-16(e) is a

criminal statute that Respondent could have enforced,

but this conclusion is wrong because N.J.S.A.

43:21-16(e) is not a criminal statute, and Respondent

could not have brought an action under it. Indeed,

N.J.S.A. 43:21-16(e) is a civil statute, albeit one that

authorizes Respondent to commence actions in

Superior or municipal court in cases involving fraud.

Id. See also Matter of Corbo, 117 B.R. 109, 111 (Bankr.

D.N.J. 1990); Witrak, 194 N.J. Super. at 529-32.

Although the Panel cites ACRA Turf Club, LLC v.

Zanzuccki, 748 F.3d 127, 138 (3d Cir. 2014), and

Sprint, 571 U.S. at 79-80, to invoke the criminal analog

test as determinative, in part, of its Younger analysis

(App. 16), the criminal analog test has not been

explicitly embraced by this Court either in Sprint or

post-Sprint, a distinction that Respondent fails to

address. Decades before Sprint, the “criminal analog”

test was advanced in Trainor v. Hernandez, 431 U.S.

6

434, 444 (1977) and Huffman, 420 U.S. at 604.

Pre-Sprint, courts considered whether there is a

criminal statute parallel to the civil statute at issue in

the state proceeding under which the state could have

vindicated its interests, and if so, then Younger

applied. The Panel employed this analysis without

addressing whether the test satisfies Sprint.

Assuming that Trainor and Huffman allow courts to

employ the criminal analog test to invoke Younger

abstention and deny jurisdiction, the decisions of both

the Panel and the District Court are flawed because

there is no criminal statute analogous to N.J.S.A.

43:21-14, accord ACRA Turf, 748 F.3d at 138-39, and

therefore, both the Panel and the District Court erred

in so holding. See (App. 19-20); (App. 41). Because

N.J.S.A. 43:21-14 is a civil statute that does not require

allegations of fraud or willful misconduct; because

fraud or willful misconduct was never alleged in the

state proceeding; and because N.J.S.A. 43:21-16(e) is

not a criminal statute, N.J.S.A. 43:21-16(e) cannot be

N.J.S.A. 43:21-14’s criminal analog.

4. Respondent’s argument that this case is an

imperfect vehicle to address the issue at hand is not

dispositive. As advanced by the parties and invoked by

the Panel, a plenary standard of review applies to the

Question Presented, namely, whether a parallel state

proceeding is “akin to a criminal prosecution in

important respects.” Compare Addiction Specialists,

Inc. v. Twp. of Hampton, 411 F.3d 399, 408 (3d Cir.

2005) (“We exercise plenary review over the legal

determination of whether the requirements for

abstention have been met.”), with Hamilton v. Bromley,

7

862 F.3d 329, 333 (3d Cir. 2017) (“We exercise plenary

review over a trial court’s . . . determination of whether

Younger abstention is proper.”). See also (App. 14 n.11).

Before the Panel, neither party disputed what standard

of review applied, both only citing Addiction

Specialists, 411 F.3d at 408. Thus, this Court need not

depart from its normal practice to address the issue.

See Byrd v. United States, 138 S.Ct. 1518, 1530 (2018);

EEOC v. FLRA, 476 U.S. 19, 24 (1986). Respondent’s

statement that the Panel “sided with Petitioner” (Resp.

Br. 5) on this point is baseless. To the extent the Court

departs from its normal practice, it may easily resolve

this issue of federal law. See Browning-Ferris Indus. v.

Kelco Disposal, Inc., 492 U.S. 257, 278-79 (1989).

II.

The Circuits Are Split On the Question

Presented.

In other Circuit cases cited by Petitioner, Minnesota

Living Assistance, Inc. v. Peterson, 899 F.3d 548, 553

(8th Cir. 2018), Mulholland v. Marion County Election

Board, 746 F.3d 811, 816 (7th Cir. 2014), Rynearson v.

Ferguson, 903 F.3d 920, 926 (9th Cir. 2018), and

Bristol-Myers Squibb Co. v. Connors, 979 F.3d 732, 738

(9th Cir. 2020), Sprint is followed closely, limiting

Younger abstention to circumstances involving parallel

civil proceedings akin to criminal prosecutions. In stark

contrast, the Panel expanded Sprint to a civil

proceeding commenced pursuant to N.J.S.A. 43:21-14.

It did so without deferring to New Jersey courts’

construction of the statute, without examining the

plain language or purpose of the statute or the specific

administrative proceeding, and without properly

identifying an analogous criminal statute as permitted

8

pre-Sprint, in Trainor and Huffman. This disparate

application of Sprint created a split between the Third

Circuit and all other circuits because no other court

applies Younger abstention to a purely civil proceeding

that is not like a criminal prosecution.

Nothing Respondent raises diminishes the split or

its consequences. Instead, Respondent raises irrelevant

facts or broad argument about each court’s similar

recitation of Sprint rather than addressing Petitioner’s

argument: that the Panel erroneously expanded

Younger abstention by holding that N.J.S.A. 43:21-14

is quasi-criminal, contradicting New Jersey state court

rulings that N.J.S.A. 43:21-14 is a civil provision

without any quasi-criminal purpose.

Peterson. The Panel’s analysis conflicts with the

Eighth Circuit’s Peterson decision in which that court

looked carefully at a state statute to determine if it

imposed quasi-criminal penalties. In Peterson, the

Eighth Circuit addressed Younger abstention in the

context of an administrative proceeding for failure to

pay overtime compensation. 899 F.3d at 550. The

statute at issue in Peterson explicitly provides for the

imposition of criminal penalties. Id. at 553. Here, in

the proceeding commenced under N.J.S.A. 43:21-14,

there is no criminal sanction or imprisonment option.

Rather, to sanction Petitioner, the Commissioner would

have to establish that PDX intended to evade or

defraud the NJDOL under a different civil statute,

N.J.S.A. 43:21-16(e), and initiate a complaint in

municipal or Superior Court. Unlike Petitioner’s actual

state administrative proceeding, the administrative

proceeding in Peterson permitted the state to seek

9

“criminal penalties,” which Respondent concedes

“certainly bolster[ed] a decision to abstain” in Peterson.

(Resp. Br. 14). Even if the state in Peterson chose not to

seek criminal penalties, they were available to the

state on the same facts and in the same proceeding at

issue. Not so in Petitioner’s case.

Mulholland. The Panel’s analysis conflicts with

Mulholland because the Seventh Circuit grounded its

analysis of whether the civil proceeding was akin to a

criminal prosecution in the remedies available under

the precise statute at issue. There, the local Election

Board initiated proceedings to sanction a candidate

accused of violating election campaigning laws. 746

F.3d at 816-17. Like in Peterson, and unlike the Panel,

the Seventh Circuit closely examined the state

statutory section underlying the state civil proceeding

and explained that “the Board’s authority to sanction

offenders is extremely limited–far less than the state

proceedings that have warranted Younger abstention

in other cases. The Board’s hearing could lead only to

a recommendation of prosecution to a county

prosecuting attorney or the state attorney general.” Id.

at 817 (citation omitted). The court also noted that

“[t]he possibility that a state proceeding may lead to a

future prosecution of the federal plaintiff is not enough

to trigger Younger abstention; a federal court need not

decline to hear a constitutional case within its

jurisdiction merely because a state investigation has

begun.” Id. Unlike the Panel that did not examine

either the state court decisions or the plain language or

impact of N.J.S.A. 43:21-14, the Seventh Circuit looked

at whether the proceeding “presented [any] possibility

of [a] criminal penalty.” Id. at 816-17.

10

Rynearson. In Rynearson, the Ninth Circuit

faithfully applied Younger to the actual state

proceeding brought under the Washington stalking

statute. There, a permanent protective order was

sought to enjoin Rynearson from posting harassing

social media comments. 903 F.3d at 923. Although

Rynearson involved private parties and a state

proceeding, that does not undermine the circuit split.

Like the Eighth and Seventh Circuits, the Rynearson

Court closely reviewed the state statute and the

specific proceeding at issue. The court reasoned that

the under the statute, “a court may issue a protection

order if it ‘finds by a preponderance of the evidence

that the petitioner has been a victim of stalking

conduct by the respondent.’” Id. at 925 (citation

omitted). Importantly, the Ninth Circuit explained that

“[m]ore broadly, the mere fact that the protection order

law refers to criminal statutes does not mean that the

protection order proceedings are quasi-criminal.” Id. at

926. Like the Washington stalking statute, N.J.S.A.

43:21-14 references exceptions to the general rule in

instances of fraud, but in stark contrast to the Ninth

Circuit, the Panel did not address the state statute’s

parameters or the specific state administrative

proceeding to determine whether the administrative

action is akin to a criminal prosecution. Nor did the

Panel consider New Jersey courts’ long-standing

published decisions that proceedings commenced under

N.J.S.A. 43:21-14 are civil in nature, notwithstanding

its use of the word “penalty.” The Panel instead

erroneously equated the use of the word “penalty” in

the statute with a conclusion that Petitioner was

“sanctioned for wrongful conduct” in reliance on

unrelated, irrelevant provisions. Unlike the Ninth

11

Circuit, the Panel also invoked the criminal analog

analysis set forth in Trainor and Huffman to

incorrectly conclude that a civil statute, N.J.S.A.

43:21-16(e), can be a criminal statute analogous to the

civil statute at issue, N.J.S.A. 43:21-14.

Connors. The Ninth Circuit’s analysis in Connors

further exacerbated the circuit split. In Connors, the

State of Hawaii sued several pharmaceutical

companies in state court alleging false and deceptive

drug marketing practices. 979 F.3d at 734. Examining

the actual state proceeding, the Ninth Circuit affirmed

abstention because the “[s]tate’s action has been

brought under a statute that punishes those who

engage in deceptive acts in commerce.” Id. at 738.

Here, the Panel did not focus on the actual statute

pursuant to which Respondent initiated the field

audits, served the contribution reports, and filed the

civil judgment, and under which the Petitioner

contested the determination by filing a notice for a

hearing. Had it, the Panel would have concluded that

there was no allegation of knowing or intentional mens

rea or any accusation of fraud or evasion. (App. 16)

(citing ACRA Turf Club, 748 F.3d at 138). Thus, the

state could not have alternatively sought to enforce

N.J.S.A. 43:21-16(e) to vindicate its interests.

In sum, the Panel’s decision improperly expands

Younger to a civil proceeding that lacks the hallmarks

of a criminal prosecution. The Panel also misapplied

the pre-Sprint criminal analog analysis to conclude

that the administrative proceeding was a civil

enforcement proceeding quasi-criminal in nature. Its

conclusion directly conflicts with New Jersey state

12

courts’ interpretation of N.J.S.A. 43:21-14, holding that

it is civil and not a civil enforcement proceeding that is

quasi-criminal in nature. The Panel’s failures thus

created a circuit split between the Third Circuit and

the Seventh, Eighth and Ninth Circuits warranting

this Court’s review.

III.

The Question Presented is Exceptionally

Important.

The stakes here are extraordinary, both for the

parties in this case and litigants nationwide. This

Court should grant certiorari to reaffirm its consistent

command that Younger abstention remains the

exception, not the rule, and that federal courts have a

“virtually unflagging” obligation to hear and decide

cases within their jurisdiction. Sprint, 571 U.S. at 77.

If left intact, the Panel’s opinion and analysis will

require future courts to improperly decline jurisdiction

as did the Panel below, without regard to a state

court’s construction of its own state statutes and by

allowing federal courts to use civil statutes as the

requisite analog when employing a criminal analog

analysis. In all, the Panel’s precedential opinion will

prevent litigants from vindicating their constitutional

rights in a federal forum. The abstention issues

presented will not benefit from further percolation in

the circuit courts, and this case presents an ideal

vehicle to decide the legal issues raised by Petitioner

without wading into disputed facts or interpretation of

state law. All this strongly supports review.

13

CONCLUSION

The petition for a writ of certiorari should be

granted.

Dated:

July 27, 2021

Respectfully submitted,

JACK L. KOLPEN, ESQ.

IAN D. MEKLINSKY, ESQ.

CORINNE MCCANN TRAINOR, ESQ.

Counsel of Record

ALLISON L. HOLLOWS, ESQ.

MICHAEL W. SABO, ESQ.

FOX ROTHSCHILD LLP

Princeton Pike Corporate Center

997 Lenox Drive

Lawrenceville, NJ 08648

Tel: (609) 896.3600

Fax: (609) 896.1469

ctrainor@foxrothschild.com

Counsel for Petitioner