Progress of Pension Lawsuit
Quite a few of you have asked about the progress of the “pension lawsuit”. Here’s some updated infor-mation….Editor
The federal lawsuit brought by state govern-ment worker unions in an attempt to overturn New Jersey’s landmark pension reform law continues to grind away, even as other state courts have decided in favor of pensioners re-cently. The state’s largest teachers union, the New Jersey Education Associa-tion, and other unions filed a brief Feb. 7 that argued why they believe the case belongs in the U.S. District Court, rather than the state Superior Court. The brief says that be-cause pensions are paid out of the state’s pension fund and not out of the state treasury, at least not directly, then the federal court can hear the matter as a violation of the Consti-tution and the pensioners’ contractual rights. That came in response to a motion to dismiss, brought by the state Office of the Attorney General, which said the workers do not have a contractual right to annual pension increas-es and other elements that were enacted as part of the reforms passed last June. The state also believes the matter should not be heard in federal court. There is no deadline for the judge to issue an opinion. Stephen Pincus, a Pitts-burgh attorney who repre-sents unions, said in an interview that he believes New Jersey will win the fed-eral case simply because it’s in the wrong venue. “Case law is fairly clear that federal courts can’t make states comply with their own state law,” Pincus said. But Pincus noted that state courts have, of late, been deciding in favor of pensioners in the aftermath of the state pension chang-es that have passed in the past two years. Pincus was the attorney in a New Hampshire case in which a Superior Court justice decided that state employees who had worked 10 years, and thus vested in the pension plan, did not have to pay more toward their pension benefits. Employees who are not vested may be required to pay more, Justice Richard B. McNamara wrote in a January opinion. In Arizona, a Superior Court judge ruled Feb. 1 that the state may not raise contribution levels for state employees because their employment terms are a contractual right under the U.S. and Arizona state con-stitutions. “These show that it’s not always a slam dunk (win) for the states; courts are balancing rights,” Pincus said. New Jersey’s pension systems for state employ-ees and teachers, in total, faced a $37.8 billion un-funded liability for long-term costs last year. The pen-sion systems for local em-ployees showed another $16.7 billion in unfunded costs. The state passed landmark reforms last June which forced workers to contribute more toward their pensions and work longer before re-tirement. But two-thirds of the savings from the reform came from freezing the an-nual cost-of-living raises given to retirees. The question in New Jersey’s case, whether it is ultimately decided in the federal or state courts, is whether those changes — and the annual COLA ad-justment in particular — are protected as contractual rights, experts say.
Written by Jason Method
UPDATE-MARCH 5, 2012 By now, most of you may have learned that a decision was rendered on the above referenced pending “pension reform” lawsuit. On March 5th the United States District Court of New Jersey issued a decision on the State of New Jersey's motion to dismiss the lawsuit initiated by the unions. The court ruled in favor of the State's motion and dismissed the case from Federal court. This decision by the federal court merely means that the court ruled, based on the 11th Amend-ment, that the federal court does not have jurisdiction on the case. It did not address the merits of the case. Involved unions representatives have met with attorneys to discuss our next and best course of action. There are reportedly a number of options. As soon as we hear more on this important issue we will report back to the membership with what lies ahead.