Unions ready legal challenge to pension reform, focus on COLAs

TRENTON – Two-thirds of the state’s projected savings from the pension reforms recently passed are tied to a freeze on annual “cost of living adjustments,” or COLAs.

But several unions are banding together to challenge the freeze by filing a lawsuit, claiming workers had a right to the increases.

“We’re going to get sued, there’s a news flash,” the governor said recently in a press conference. “We’ve done our legal homework on this.”

With recent decisions in Colorado and Minnesota setting an unofficial standard for state’s rights in this regard, there still is no precedent for pension cases such as this in New Jersey.

Officials from three state worker unions confirmed that the lawsuit is being crafted at the moment, although one source said some unions taking part in the legal challenge were expecting more substantive points of contention.

“Our attorneys think we’re on solid legal ground here,” said Steve Baker, spokesman for the New Jersey Education Association. The NJEA will be joined by other unions representing the “vast majority” of state workers, Baker said, although he couldn’t say exactly how many labor units would be involved.

He said the lawsuit is expected to be filed in the next two weeks. Other sources said the lawsuit was intended for federal court, although Baker could not confirm that.

It’s the “equivalent of a class action lawsuit,” he said, although technically that may not be the case. Members of the judiciary already are mounting their own legal challenge.

The COLA freeze will be the primary issue, he said, although other legal arguments may also be included.

The Communications Workers of America (CWA) Local 1033 filed a federal lawsuit recently in objection to Gov. Chris Christie’s and his forerunners’ shortchanging of the state pension payments, claiming an “impairment of contracts” based on federal worker rights laws.

In 2007, the NJEA sued the state for skipping over $2 billion in pension contributions, but a Superior Court judge ruled that the workers had no “constitutionally-protected contract right” over the state’s method or level of payment, merely a right to “receipt of vested benefits” from the system. The decision was upheld by an appeals court, and the state Supreme Court refused to hear an appeal over a year ago.

In hearing the NJEA’s case, Mercer County Superior Court Judge Linda Feinberg said the pension fund was projected solvent years into the future, enough to make immediate payments, at least.

She also told lawmakers not to misconstrue her decision as a “green-light” to skip the state’s payment, rather she implored them to fix the system. She recommended reducing benefits for future employees, which the Legislature has addressed.

In September, Feinberg will hear Hudson County Superior Court Judge Paul DePascale’s challenge to the recent pension and health care reform, based on a constitutional protection for judicial salaries.

There has yet to be any New Jersey court ruling that defines increased benefit contributions as an equivalent to salary reductions, but the Delaware Supreme Court has ruled equating the two.

Christie recently said of the lawsuits, “As the lieutenant governor and I are fond of saying, take a ticket and get in line.”

 

Unions ready legal challenge to pension reform, focus on COLAs