Collections Suit Latest in Christie Pension Clash

(CN) - Trusts for three state public employee unions sued New Jersey Gov. Chris Christie on Friday in an ongoing battle over public pension funding, but the new lawsuit is a simple collections action rather than a constitutional challenge.

The lawsuit, filed by the boards of trustees for three pensions belonging to state teachers, firefighters, and police unions, is now simply seeking billions in funding allegedly owed under current pension agreements.

The amended complaint, filed in Mercer County, N.J. Superior Court, is a simplification of the public pension fight, which began as a legal battle over budgetary requirements and legislative intent and has boiled down to cold, hard cash.

"In the [previous lawsuit], they were looking for an injunction," Bennett Zurofsky, the lead attorney representing the three pension boards, said in an interview. "This time, except for the amounts involved, this is 100 percent a collections action."

Last month, the New Jersey Supreme Court rejected a previous legal attempt by unions to challenge Christie's pension cuts, ruling 5-2 that the governor had acted within his power to cut funding. The state's high court also held that the legal framework for the incremental pension funding - a 2011 law now known as Chapter 78 - was not binding because the state's debt limitation clause required voter approval for budgeted pension funding over a 1 percent threshold.

June's ruling seemed to slam the door shut on unions' attempts to get their pensions funded, with State Troopers Fraternal Association of New Jersey President Christopher Burgos complaining the ruling was giving New Jersey "an out if they don't want to fulfill a contract."

However, the ruling also stated explicitly that Chapter 78 was constitutional, regardless of the debt limitation clause, and held that "the state must get its financial house in order."

The pension fund boards now say the New Jersey Supreme Court's June 9 ruling strengthens their new lawsuit, arguing that the ruling stated that the funding requirements contained within Chapter 78 were constitutional and therefore had to be met.

"Paying is not the same thing as appropriation," Zurofsky said. The plan, at least for the three pension funds, is to get a judgment and be placed on a list of parties owed money by the state, he said.

"If we get the judgment, we get whatever is available, and then we wait. But other collectors will also have to wait in line until we are paid," Zurofsky said. "That will increase the pressure to force payment."

That is also the reason behind the lawsuit's tactic of breaking down payments owed both by the fiscal year in which they were budgeted and by which fund they were owed. Zurofsky said certain of the pensions are owed lesser amounts that would not be affected by the 1 percent threshold under Chapter 78, which should make it harder for Christie to fight.

The governor's office did not answer requests for comment from Courthouse News.

The distinction over appropriation and mere payment is a fine one, but important, according to the lawsuit.

"Nowhere in the majority opinion is reducing the state's pension liability to a judgment in the same manner as any other contract held to be unconstitutional," the complaint states.

The unions are essentially arguing that Chapter 78 is a legal contract that requires payment for the pensions, and appropriations are merely the tool to pay.

"The promise to make the annual required contribution is separate and apart from the promise that the legislature will make the necessary appropriations to satisfy those obligations and appears in a separate subsection of Chapter 78," the lawsuit states. "It was only the promise to make the appropriations that was held to be unenforceable by the [New Jersey] Supreme Court [ruling]."

Tension over the pension funding has been brewing for years as the Republican governor saw it as a means to fill the budget hole he inherited, a deficit that now approaches $3 billion, while keeping his promise not to raise taxes. Christie's 2016 fiscal year budget includes only a $1.3 billion contribution to the pension funds, according to the lawsuit, which is roughly one-third of the total request and less than the minimum required contribution.

Other labor unions in the state have mulled appealing the New Jersey Supreme Court's ruling to the U.S. Supreme Court. The new lawsuit has no effect on those plans, Zurofsky said.

"I would like to think that Christie will obey the law and do the right thing," Zurofsky said. "But he hasn't done that."

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