Teamsters Local 97 v. State of New Jersey

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3274-10T3
A-3868-10T3
A-3916-10T3
A-4086-10T3

TEAMSTERS LOCAL 97, affiliated
with the INTERNATIONAL BROTHERHOOD
OF TEAMSTERS, and PROFESSIONAL
FIREFIGHTERS ASSOCIATION OF NEW
JERSEY, I.A.F.F., AFL-CIO, APPROVED FOR PUBLICATION

Plaintiffs-Appellants, January 31, 2014

APPELLATE DIVISION
v.

STATE OF NEW JERSEY, CHRISTOPHER J.
CHRISTIE, as Governor of the State
of New Jersey, THE NEW JERSEY SENATE
AND ITS MEMBERS, STEPHEN M. SWEENEY,
as its President and as a Representative
of the Individual Members of the New
Jersey Senate, THE NEW JERSEY GENERAL
ASSEMBLY AND ITS MEMBERS, SHEILA Y.
OLIVER, as its Speaker and as a
Representative of the Individual
Members of the New Jersey General
Assembly, and ANDREW P. SIDAMON-ERISTOFF,
Treasurer of the State of New Jersey,

Defendants-Respondents.
_________________________________________________

NEW JERSEY STATE FIREFIGHTERS'
MUTUAL BENEVOLENT ASSOCIATION,
NEW JERSEY STATE POLICEMAN'S
BENEVOLENT ASSOCIATION, GLOUCESTER
CITY FMBA LOCAL NO. 51, NORTH
WILDWOOD FMBA LOCAL NO. 56, TRENTON
FMBA LOCAL NO. 6, KEARNY FMBA LOCAL
NO. 18, NEW BRUNSWICK FMBA LOCAL
NO. 17, BELLEVILLE FMBA LOCAL NOS.
29 AND 229, SPRINGFIELD FMBA LOCAL
57, SPRINGFIELD FMBA LOCAL 57A,
SOUTH ORANGE PBA LOCAL NO. 12, NEPTUNE
PBA LOCAL NO. 74, ESSEX COUNTY SHERIFF'S
OFFICERS PBA LOCAL NO. 183, KEYPORT PBA
LOCAL NO. 223, PASSAIC COUNTY SHERIFF'S
OFFICERS PBA LOCAL NO. 286, RUTHERFORD PBA
LOCAL NO. 300, PATERSON PBA LOCAL NO. 1 and
SUPERIOR OFFICERS ASS'N WILLIAM LAVIN, ROBERT
BROWER, and ANTHONY F. WEINERS,

Plaintiffs-Appellants,

v.

STATE OF NEW JERSEY, NEW JERSEY
DEPARTMENT OF THE TREASURY, NEW JERSEY
STATE HEALTH BENEFITS COMMISSION,
ANDREW P. SIDAMON-ERISTOFF, TREASURER,
STATE OF NEW JERSEY, individually and
officially, NEW JERSEY STATE SENATE,
as a body politic of the State of New
Jersey, and NEW JERSEY STATE GENERAL
ASSEMBLY, as a body politic of the
State of New Jersey,

Defendants-Respondents.
_________________________________________________

NEW JERSEY EDUCATION ASSOCIATION,

Plaintiff-Appellant,

v.

STATE OF NEW JERSEY, CHRISTOPHER J. CHRISTIE,
as Governor of the State of New Jersey, NEW
JERSEY DEPARTMENT OF THE TREASURY, ANDREW P.
SIDAMON-ERISTOFF, TREASURER, STATE OF NEW
JERSEY, individually and officially,
NEW JERSEY STATE HEALTH BENEFITS COMMISSION,
NEW JERSEY SCHOOL EMPLOYEES HEALTH BENEFITS
COMMISSION, NEW JERSEY STATE SENATE, as a
body politic of the State of New Jersey,
STEPHEN M. SWEENEY, as President and as a
Representative of the Members of the New
Jersey State Senate, NEW JERSEY STATE GENERAL

2 A-3274-10T3
ASSEMBLY, as a body politic of the State of
New Jersey, SHEILA Y. OLIVER, as its Speaker
and Representative of the Members of the
New Jersey General Assembly,

Defendants-Respondents.
_________________________________________________

NEW JERSEY FRATERNAL ORDER OF POLICE,

Plaintiff,

v.

STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT
OF THE TREASURY, NEW JERSEY STATE HEALTH
BENEFITS COMMISSION, ANDREW P. SIDAMON-ERISTOFF,
TREASURER, STATE OF NEW JERSEY, individually and
officially, NEW JERSEY STATE SENATE, as a body
politic of the State of New Jersey, NEW JERSEY
STATE GENERAL ASSEMBLY, as a body politic of
the State of New Jersey,

Defendants.
_________________________________________________

KEARNY FIREMEN'S MUTUAL BENEVOLENT
ASSOCIATION, LOCAL NO. 18,

Plaintiff,

v.

TOWN OF KEARNY,

Defendant.
_________________________________________________

BELLEVILLE FIREMEN'S MUTUAL BENEVOLENT
ASSOCIATION, LOCAL NOS. 29 & 229,

Plaintiffs,

v.

3 A-3274-10T3
TOWNSHIP OF BELLEVILLE,

Defendant.
_________________________________________________

Argued February 27, 2013 - Decided January 31, 2014

Before Judges Sapp-Peterson, Nugent and Haas.

On appeal from the Superior Court of New
Jersey, Law Division, Mercer County, Docket
Nos. L-1004-10, C-31-10, C-32-10, L-1291-10,
L-2287-10, and L-2312-10.

James M. Mets argued the cause for
appellants Teamsters Local 97 and
Professional Firefighters Association of New
Jersey (Mets Schiro & McGovern, LLP,
attorneys; Mr. Mets, of counsel and on the
brief; Brian J. Manetta, on the brief).

David I. Fox argued the cause for appellants
New Jersey State Firefighters' Mutual
Benevolent Association, its locals and
members (Fox and Fox, LLP, attorneys; Mr.
Fox, Craig S. Gumpel, and Jessica S.
Swenson, of counsel and on the brief).

Paul L. Kleinbaum argued the cause for
appellants New Jersey State Policemen's
Benevolent Association (Zazzali Fagella
Nowak Kleinbaum & Friedman, attorneys; Mr.
Kleinbaum, of counsel and on the brief;
Edward M. Suarez, Jr., on the brief).

Richard A. Friedman argued the cause for
appellant New Jersey Education Association
(Zazzali Fagella Nowak Kleinbaum & Friedman,
attorneys; Mr. Friedman, of counsel and on
the brief; Edward M. Suarez, Jr., on the
brief).

Jean P. Reilly, Deputy Attorney General,
argued the cause for respondents State of
New Jersey, Governor Christopher J.
Christie, and Treasurer Andrew P. Sidamon-
Eristoff (Jeffrey S. Chiesa, Attorney

4 A-3274-10T3
 General, attorney; Robert T. Lougy,
Assistant Attorney General, of counsel;
Natalia T. Chan, Deputy Attorney General, on
the brief).

Leon J. Sokol argued the cause for
respondents New Jersey Senate, General
Assembly, Stephen M. Sweeney, and Sheila Y.
Oliver (Sokol, Behot & Fiorenzo, attorneys;
Mr. Sokol, of counsel; Steven Siegel, on the
brief).

This opinion of the court was delivered by

NUGENT, J.A.D.

The issues in these consolidated appeals involve public

employees of the State, its political subdivisions, and their

agencies. As compensation for their services, many public

employees receive, among other benefits, health care insurance

and pensions. To the extent the employees are required to

contribute toward their benefits, their disposable income is

reduced. Yet, the money that funds employee benefits is not

unlimited. The State's officials are charged with the profound

responsibility not only of ensuring that the health care and

pension systems remain fiscally sound, but also that the State

remains fiscally strong and that the burden on the State's

taxpayers does not become intolerable. The interests of public

employees and their representatives sometimes clash with the

obligations of State government. Such is the case in this

appeal.

5 A-3274-10T3
 Plaintiffs, who represent state and local public employees

in collective negotiations with public employers, challenge the

constitutionality of three laws: L. 2010, c. 1 (Chapter 1),

which made changes to State-administered retirement systems; L.

2010, c. 2 (Chapter 2), which made changes to eligibility

requirements for and benefits provided through the State Health

Benefits Program (SHBP) and School Employees' Health Benefits

Program (SEHBP); and L. 2010, c. 3 (Chapter 3), which made

changes to other public employee benefits. The trial court

dismissed plaintiffs' consolidated complaints for failure to

state a claim.

In these consolidated appeals, plaintiffs argue that the

trial court misapplied the standard for evaluating a motion to

dismiss a complaint under Rule 4:6-2(e) for failure to state a

claim upon which relief can be granted. Plaintiffs also argue

that the trial court erred when it concluded that Chapters 1, 2,

and 3 did not violate either the State or Federal Constitution.

Having considered plaintiffs' arguments in light of the record

and controlling law, we conclude that the trial court properly

construed and applied Rule 4:6-2(e) when it dismissed

plaintiffs' complaints. We further conclude that plaintiffs

have not carried their heavy burden of demonstrating that the

laws are unconstitutional. Accordingly, we affirm.

6 A-3274-10T3
 I.

The plaintiffs in these consolidated appeals are Teamsters

Local 97 (Teamsters); the Professional Firefighters Association

of New Jersey (PFANJ); the New Jersey State Firefighters' Mutual

Benevolent Association (FMBA) and affiliated locals; the New Jersey

State Policeman's Benevolent Association (PBA) and affiliated

locals; and the New Jersey Education Association (NJEA). New

Jersey Fraternal Order of Police, Kearny Firemen's Mutual

Benevolent Association, and Belleville Firemen's Mutual Benevolent

Association Local Nos. 29 and 229, parties to the actions that

were consolidated in the trial court, have not filed separate

appeals. Defendants are the State of New Jersey, Governor

Christopher J. Christie, the New Jersey Department of the Treasury

and State Treasurer Andrew P. Sidamon-Eristoff, the State Health

Benefits Commission (SHBC), and the School Employees Health

Benefits Commission (SEHBC) (collectively, the Executive

Defendants); the State Senate and its President, Stephen M.

Sweeney, and the State General Assembly and its Speaker, Sheila

Y. Oliver (collectively, the Legislative Defendants).

Plaintiffs seek to have Chapters 1, 2, and 3 declared void

as unconstitutional. Because courts assessing constitutional

challenges to state legislation must consider, among other

factors, the governmental interests furthered by the

7 A-3274-10T3
legislation, we begin our analysis with the legislative history

of Chapters 1, 2, and 3. We also review the legislative history

of L. 2011, c. 78, which has superseded certain sections of

Chapter 2.

On February 8, 2010, the Legislature introduced Senate Bill

Numbers 2, 3, and 4. S. 2, 214th Leg. (N.J. 2010); S. 3, 214th

Leg. (N.J. 2010); S. 4, 214th Leg. (N.J. 2010). The legislation

was "designed to improve the fiscal strength of State and local

governments, reduce taxpayer burdens, and ensure the health and

pension systems remain viable for current and future employees."

Commc'ns Workers of Am. v. State of N.J., Dept. of Treasury,

421 N.J. Super. 75, 83 (Law Div. 2011).

The three Senate bills implemented some of the

recommendations of a Special Session Joint Legislative Committee

on Public Employee Benefits Reform (Special Joint Committee),

while leaving other recommendations to collective negotiations.

See Special Session Joint Legislative Comm. on Pub. Emp.

Benefits Reform, Final Report (2006), available at http://

www.njleg.state.nj.us/propertyTaxSession/JCPE_final_report.pdf.

The Special Joint Committee was created pursuant to a Concurrent

Resolution that declared "[t]his State's high property taxes are

a matter of great concern to the people of New Jersey." Assemb.

Con. Res. 3, 212th Leg. (N.J. 2006). The resolution created

four legislative committees, including one on public employee

8 A-3274-10T3
benefits, tasked with developing proposals to reduce property

taxes. N.J. Ass'n of Sch. Adm'rs v. Schundler, 211 N.J. 535,

540 (2012). The Special Joint Committee was specifically

"charged with identifying proposals that will terminate abuses

of the pension systems and control the cost of providing public

employee retirement health care and other benefits." Final

Report, supra, at 1.

In its final report, the Special Joint Committee found that

New Jersey's retirement systems had an $18 billion unfunded

liability. Ibid. SHBP expenditures, which then totaled $3.6

billion annually, had risen by over 150% in the previous five

years and were expected to double by 2010. Ibid. "State and

local governments will soon have to recognize the long-term

implications of these employee health care benefits on their

financial statements . . . ." Ibid. The Special Joint

Committee found that for the benefit of taxpayers, public

employees, retirees, and employers, measures to ensure the

fiscal stability of the retirement system, and measures to

control health care costs, needed to be implemented. Id. at 2.

The Special Joint Committee recommended forty-one reforms

to public employee pensions, health care benefits, and other

employee benefits. Id. at 2-5. The recommendations identified

"long term savings through wide-ranging reforms while

maintaining the essential components of a competitive system of

9 A-3274-10T3
pensions and benefits[.]" Id. at 2. With regard to health care

costs, the Special Joint Committee's investigation of

health benefits issues revealed a system
plagued by the skyrocketing costs of health
care that have dramatically increased the
cost of health benefits for both current and
retired public employees. The investigation
also found that New Jersey public employees
contribute less toward their health benefit
costs than public employees of other states.
The Joint Committee recommends that all
employees share in the cost of their health
benefits at some level and that local
governments be accorded increased
flexibility when negotiating cost sharing
with local employees.

[Id. at 57.]

The Special Joint Committee suggested, under

Recommendations 22 and 23, that the Legislature require all active

public employees and future retirees "to pay some portion of the

cost of health care insurance premiums," id. at 4, but deferred

to the various public employers and employee
representatives to determine the appropriate
level of premium sharing through collective
bargaining.

. . . The Benefits Review Task Force
suggested that employees carry a share of 5%
to 10%. In order to recognize differences
in ability to pay and to provide appropriate
flexibility in negotiations, this could be
achieved by mandating a certain overall
percentage employee share, with the
distribution of that share among income
groups to be subject to collective
bargaining.

[Id. at 115.]

10 A-3274-10T3
 Recommendation 25 suggested that the Legislature "[r]equire

that SHBP benefits changes negotiated by State be applied to

local governments."1 Id. at 4. The Special Joint Committee

recommend[ed] that legislation be enacted to
ensure that basic changes made in the
provisions of SHBP benefits to State
employees, such as the amount of copayments
for office visits and prescription drugs, be
applicable at the same time to all
individuals covered by SHBP.

The Joint Committee believes that it is
important that SHBP benefits changes
negotiated by the State with its employees
be applicable to employees of local
employers not only to reduce administrative
expenses for all through conformity but also
to extend to those local employers the same
cost savings enjoyed by the State. The
. . . Committee believes that it is
important to ensure consistency in health
benefit coverage and cost for all public
employees.

[Id. at 121-22.]

With regard to other benefits, Recommendation 36 suggested that

the Legislature "[l]imit sick leave compensation payable upon

retirement to $15,000," and Recommendation 37 suggested a

limitation on the accumulation of vacation leave. Id. at 5.

On March 22, 2010, Senate Bill Numbers 2, 3, and 4 were

signed into law (Chapters 1, 2, and 3). They became effective

on May 21, 2010. Chapter 1 made reforms to pension systems,

1
SHBP is a multiple-option program that offers health benefits
coverage through a variety of plans and managed care programs.
Final Report, supra, at 121.

11 A-3274-10T3
Chapter 2 made reforms to health benefits programs, and Chapter

3 made reforms to payments for employee benefits, including

accumulated sick leave and vacation time.

The following sections of Chapters 1, 2, and 3 are central

to this appeal. Chapter 1, Section 22 (codified at N.J.S.A.

43:16A-1) changed the definition of "final compensation" used in

calculating retirement benefits for persons who became members

of the Police and Fireman's Retirement System (PFRS) after the

law's effective date. Instead of defining "final compensation"

for such new members as compensation received in the last twelve

months of creditable service – the definition for members as of

the effective date – the law changed the meaning of "final

compensation" for such new members to "the average annual

compensation for service for which contributions are made during

any three fiscal years of membership providing the largest

possible benefit to the member or the member's beneficiary."

The Department of the Treasury estimated that Chapter 1 would

reduce the required contribution to the State-administered

retirement systems for State and local employers "by $13.2

million in State FY 2013, $25.3 million in FY 2014 and $40.9

million in FY 2015." Fiscal Note to S. 2 (June 3, 2010). FMBA

is the only plaintiff who has argued on appeal that those

provisions of Chapter 1 are unconstitutional, though other

plaintiffs have joined in FMBA's argument.

12 A-3274-10T3
 Chapter 2 made changes to the SHBP, as well as to the

SEHBP, concerning eligibility, cost sharing, choice of plan,

application of benefit changes, waiver of coverage, and multiple

coverage. Section 1 (codified in relevant part at N.J.S.A.

52:14-17.28b(c)(2)) required participating SHBP employees to

contribute toward the cost of health benefits coverage:

Commencing on the effective date of
P.L.2010, c. 2 and upon the expiration of
any applicable binding collective
negotiations agreement in force on that
effective date, the amount of the
contribution required pursuant to paragraph
(1) of this subsection by State employees
and employees of an independent State
authority, board, commission, corporation,
agency, or organization for whom there is a
majority representative for collective
negotiations purposes shall be 1.5% of base
salary, notwithstanding any other amount
that may be required additionally pursuant
to this paragraph by means of a binding
collective negotiations agreement.

Section 1 (codified in relevant part at N.J.S.A. 52:14-

17.28b(d)) also required retirees to contribute an amount equal

to "1.5% of the retiree's monthly retirement allowance," if the

retirees became "a member of a State or locally-administered

retirement system on or after the effective date of P.L.2010, c.

2[.]" Section 6 (codified in relevant part at N.J.S.A. 52:14-

17.46.9(b)) required the same contribution of SEHBP employees,

"[c]ommencing on the effective date of P.L.2010, c. 2 and upon

13 A-3274-10T3
the expiration of any applicable binding collective negotiations

agreement in force on that effective date[.]"

The State Department of the Treasury, Division of Pensions

and Benefits (DPB) estimated that contributions by active and

retired public employees (the 1.5% contribution) under Chapter 2

toward the cost of health care benefits would "result in a

savings to those entities and boards of $314 million in State

Fiscal Year 2011, $324 million in Fiscal Year 2012, and $333

million in Fiscal Year 2013." Fiscal Note to S. 3 (March 1,

2010).

Chapter 2, Section 8 (amending N.J.S.A. 52:14-17.36(b))

(the Section 8 Applicability Provision), made those changes in

health care benefits included in collective negotiations

agreements between the State and its employees applicable to

other public employers and employees:

All changes in the provision of health care
benefits through the program that are
included in collective negotiations
agreements between the State and its
employees entered into on or after the
effective date of P.L.2010, c. 2 shall be
made applicable by the commission to
participating employers and their employees
at the same time and in the same manner as
to State employees. This subsection shall
be applicable to the [SHBP] . . . and to the
[SEHBP] . . . to the extent not inconsistent
with the provisions of . . . P.L.2007, c.
103 (C.52:14-17.46.1 et seq.).

14 A-3274-10T3
 Chapter 2, Section 11 (amending N.J.S.A. 52:14-17.31a(c)),

provides that in consideration for a waiver of health insurance,

an employer may pay to the employee an amount not to exceed 25%

of the cost saved by the employer, or $5000, whichever is less.

To aid public employers in interpreting Chapter 2, the DPB

issued a document entitled "Frequently Asked Questions Regarding

Chapter 2, P.L.2010 and Changes to Public Employee Health

Benefits" (DPB's FAQs). The questions and answers included the

following:

2. Q. Is the 1.5% of base pay contribution
in addition to previously negotiated premium
contributions?

A. No. The 1.5% contribution is
intended to be a floor, or minimum,
contribution that an employee will make
toward medical and/or prescription drug plan
coverage. If another contribution
arrangement has been negotiated, the higher
of the two will prevail. All employees must
contribute an amount equivalent to at least
1.5% of the employee's base pay. . . .

. . . .

4. Q. On what salary is the calculation of
the 1.5% contribution based?

A. The calculation is based on the
employee's base contractual salary. In most
instances, that means the salary on which
pension contributions are based. However,
for employees hired after July of 2007 for
whom pensionable salary is limited to the
salary on which Social Security
contributions are based, the employee's
total base salary would be used. As an
employee receives salary increases during

15 A-3274-10T3
 the year, the amount of contribution would
need to be adjusted accordingly.

. . . .

6. Q. Our union contract expired last year
and has not been settled. Will these
employees be required to contribute the 1.5%
contribution after May 21st [2010]?

A. If the contract is not ratified by
May 21st, those employees will be required
to pay the 1.5% contribution for health
coverage. If the contract is ratified
before May 21st, those employees will not be
required to pay the 1.5% contribution until
the expiration of the contract.

. . . .

10. Q. Will non-SHBP/SEHBP participating
employers be required to follow the 1.5%
minimum contribution?

A. Yes. Chapter 2 stipulates that
employees of non-participating employers
must pay a minimum of 1.5% of annual base
salary as a health benefits contribution.

. . . .

17. Q. Will employees who waive coverage
still have to pay 1.5% towards health
benefit costs as all local employees and
then receive waiver incentive based on the
reduced employer cost?

A. No. An employee who waives coverage
is not required to pay the 1.5%
contribution.

On May 18, 2010, the Department of Community Affairs,

Division of Local Government Services (DLGS), issued Local

Finance Notice 2010-12 (LFN 2010-12), based on the materials

16 A-3274-10T3
issued by the DPB, which also provided guidance for complying

with Chapter 2 for both SHBP and non-SHBP local units, and

included answers to "Frequently Asked Questions."

Plaintiffs assert that the foregoing provisions of Chapter

2, particularly those that require the 1.5% contribution and

those that bind local employees to changes in health care

benefits negotiated by State employees, violate various rights

guaranteed by the State and Federal Constitutions.

Chapter 3 made

various changes concerning payments to
public employees for unused sick leave, sick
leave for injury while in State service, and
accidental and ordinary disability
retirement for members of the Public
Employees’ Retirement System (PERS) and the
Teachers Pension and Annuity Fund (TPAF).
The bill also limits to one year the amount
of vacation leave that certain local
government and school district officers and
employees would be permitted to carry
forward, under most circumstances.

[S. State Gov't Wagering, Tourism &
Historical Preservation Comm., Statement to
S. 4 (Feb. 18, 2010).]

FMBA challenges as unconstitutional the provisions of

Chapter 3, Sections 1 and 2 (codified at N.J.S.A. 11A:6-19.2 and

N.J.S.A. 40A:9-10.4), that prohibit the State's political

subdivisions, agencies, and authorities from paying supplemental

compensation to officers or employees for accumulated unused

sick leave in an amount in excess of $15,000. FMBA also

17 A-3274-10T3
challenges the provisions of Section 4 (codified at N.J.S.A.

40A:9-10.5) that prohibit officers and employees "of a political

subdivision of the State, or an agency, authority, or

instrumentality thereof, that has not adopted the provisions of

Title 11A of the New Jersey statutes," from carrying over

accrued vacation leave beyond the next succeeding year.

On June 28, 2011, after the trial court dismissed

plaintiffs' complaints, the Legislature enacted the Pension and

Health Care Benefits Act, L. 2011, c. 78 (Chapter 78) (codified

in relevant part at N.J.S.A. 52:14-17.28c to -17.28d, N.J.S.A.

18:16-17.1, and N.J.S.A. 40A:10-21.1), which requires all public

employees to pay a sliding scale percentage of the cost of

health benefits for themselves and their dependents, but

maintains a "floor" for employee contributions of 1.5% of base

salary. S. Budget & Appropriations Comm., Statement to S. 2937

(June 16, 2011). See DePascale v. State, 211 N.J. 40, 45 (2012)

(addressing challenge to Chapter 78 as applicable to justices

and judges).

Section 45 (codified in relevant part at N.J.S.A. 52:14-

17.27(b)) established the SHBP Design Committee and vested it

with

the responsibility for and authority over
the various plans and components of those
plans, including for medical benefits,
prescription benefits, dental, vision, and
any other healthcare benefits, offered and

18 A-3274-10T3
 administered by the program. The committee
shall have the authority to create, modify,
or terminate any plan or component, at its
sole discretion. Any reference in law to
the State Health Benefits Commission in the
context of the creation, modification, or
termination of a plan or plan component
shall be deemed to apply to the committee.

Similarly, Section 46 (codified in relevant part at

N.J.S.A. 52:14-17.46.3(e)) established a SEHBP Design Committee

and vested it with

the responsibility for and authority over
the various plans and components of those
plans, including for medical benefits,
prescription benefits, dental, vision, and
any other healthcare benefits, offered and
administered by the program. The committee
shall have the authority to create, modify,
or terminate any plan or component, at its
sole discretion. Any reference in law to
the School Employees' Health Benefits
Commission in the context of the creation,
modification, or termination of a plan or
plan component shall be deemed to apply to
the committee.

Section 47 (codified in relevant part at N.J.S.A. 52:14-

17.29(J)) provides that "[n]otwithstanding any other provision

of law to the contrary the [SHBP Design Committee] shall have

the sole discretion to set the amounts for maximums, co-pays,

deductibles, and other such participant costs for all plans in

the program." Section 49 (codified in relevant part at N.J.S.A.

52:14-17.46.7) provides the SEHBP Design Committee with

identical discretion.

19 A-3274-10T3
 The State argues that Chapter 78 supersedes and renders

moot plaintiffs' constitutional challenges to the Section 8

Applicability Provision.

As noted previously, the Governor signed Chapters 1, 2, and

3 into law on March 22, 2010. The following month, plaintiffs

filed complaints seeking injunctive relief and judgments

declaring the laws unconstitutional and unenforceable. Several

plaintiffs later amended their complaints. Judge Linda R.

Feinberg denied plaintiffs' motions for injunctive relief and

also denied motions by the Senate and Assembly to dismiss the

complaints against them.

Thereafter, defendants moved to dismiss the consolidated

complaints for failure to state a claim upon which relief can be

granted. FMBA cross-moved for summary judgment. Following

argument, Judge Feinberg issued a comprehensive written opinion

granting defendants' motions and dismissing the complaints.

This appeal followed.

II.

We first address plaintiffs' contentions that the court

misapplied the standard of review for dismissing a complaint for

failure to state a claim upon which relief can be granted.

Plaintiffs argue that the court misapplied the applicable

standard by improperly considering material outside of the

pleadings. According to plaintiffs, because the court

20 A-3274-10T3
considered external materials, it should have treated the

motions as summary judgment motions and given the parties an

opportunity to take discovery. Plaintiffs also argue that

instead of evaluating the complaints to determine whether they

suggested a cause of action, the court made factual or

substantive determinations.

The standard a trial court must apply when considering a

Rule 4:6-2(e) motion to dismiss a complaint for failure to state

a claim upon which relief can be granted is "whether a cause of

action is 'suggested' by the facts." Printing Mart-Morristown

v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989). "In evaluating

motions to dismiss, courts consider 'allegations in the

complaint, exhibits attached to the complaint, matters of public

record, and documents that form the basis of a claim.'"

Banco Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005) (quoting

Lum v. Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir.), cert.

denied, 543 U.S. 918, 125 S. Ct. 271, 160 L. Ed. 2d 203 (2004)).

Our Supreme Court has explained that "[i]t is the existence of

the fundament of a cause of action in those documents that is

pivotal[.]" Ibid.

A motion to dismiss a complaint for failure to state a

claim "may not be denied based on the possibility that discovery

may establish the requisite claim; rather, the legal requisites

for plaintiffs' claim must be apparent from the complaint

21 A-3274-10T3
itself." Edwards v. Prudential Prop. & Cas. Co., 357 N.J.

Super. 196, 202 (App. Div.), certif. denied, 176 N.J. 278

(2003). For that reason, our courts have not hesitated to

dismiss complaints with prejudice when a constitutional

challenge fails to state a claim. See J.D. ex rel. Scipio-

Derrick v. Davy, 415 N.J. Super. 375, 397 (App. Div. 2010).

When we review a trial court's decision to dismiss a

complaint under Rule 4:6-2(e), we apply the same standard but

our review is de novo. Frederick v. Smith, 416 N.J. Super. 594,

597 (App. Div. 2010), certif. denied, 205 N.J. 317 (2011). We

conclude from our de novo review of the record on appeal that

the trial court correctly stated and applied the standard of

review for evaluating a Rule 4:6-2(e) motion. Contrary to

plaintiffs' arguments, the court did not engage in factfinding

and did not improperly consider materials outside of the

pleadings. Plaintiffs' arguments are, for the most part,

unsupported by the record. Their arguments also overlook our

Supreme Court's pronouncement about what materials a trial court

may consider when evaluating a motion to dismiss a complaint for

failure to state a claim.

In her opinion, Judge Feinberg stated explicitly that she

had considered "the pleadings, the relevant statutes,

regulations and cases cited by the parties." She noted that

FMBA had included in its "application for injunctive relief . . .

22 A-3274-10T3
a large notebook consisting of approximately four hundred

pages." The judge also noted that FMBA and PBA had submitted

certifications. Acknowledging that she had "reviewed the

certifications in reaching a decision whether to grant

injunctive relief," Judge Feinberg stated that "neither the

certifications nor material in the notebook has been considered

in deciding the motion to dismiss."

Plaintiffs identify only three sources of information they

claim the judge improperly considered: the Special Joint

Committee's final report, the DPB FAQs, and a DPB website. But

FMBA and PBA referred at length in their complaints to the

Special Joint Committee's final report and to DPB's FAQs, and no

plaintiff has alleged that the DPB website contained any

materials that were both relied upon by the trial court and

significantly different in content from the content of the

Special Joint Committee report and DPB FAQs. Because FMBA and

PBA referred to the Special Joint Committee report and DPB FAQs

in their complaint, the court properly considered them under

Rule 4:6-2(e). See In re Burlington Coat Factory Sec. Litig.,

114 F.3d 1410, 1426 (3d. Cir. 1997); E. Dickerson & Son, Inc. v.

Ernst & Young, LLP, 361 N.J. Super. 362, 365 n.1 (App. Div.

2003), aff'd, 179 N.J. 500 (2004); N.J. Sports Prods., Inc. v.

Bobby Bostick Promotions, LLC, 405 N.J. Super. 173, 178 (Ch.

Div. 2007).

23 A-3274-10T3
 Aside from FMBA's and PBA's discussions in their complaints

of materials they now suggest the court should not have

considered, no plaintiff disputes that the Special Joint

Committee report and DPB FAQs are matters of public record. See

Hall v. Virginia, 385 F.3d 421, 424 n.3 (4th Cir. 2004) (noting

that the court can consider publicly available statistics on

Virginia Division of Legislative Services' official website),

cert. denied, 544 U.S. 961, 125 S. Ct. 1725, 161 L. Ed. 2d 602

(2005). Plaintiffs' arguments overlook our Supreme Court's

explicit statement that courts evaluating motions to dismiss

under Rule 4:6-2(e) may consider, in addition to the complaint

and its attachments, matters of public record. Banco Popular N.

Am., supra, 184 N.J. at 183. Accordingly, we reject plaintiffs'

argument that the trial court misapplied the applicable standard

when it granted defendants' Rule 4:6-2(e) motions.

III.

Plaintiffs next argue that defendants' motions should have

been denied, and FMBA's cross-motion for summary judgment

granted, because Chapters 1, 2, and 3 are unconstitutional, and

their complaints so stated. While addressing those arguments,

we bear in mind the following fundamental principles. Statutes

are presumed to be constitutional. DePascale, supra, 211 N.J.

at 63. This is because

24 A-3274-10T3
 [i]n our tripartite form of government
[judicial review of legislation] has always
been exercised with extreme self-restraint,
and with a deep awareness that the
challenged enactment represents the
considered action of a body composed of
popularly elected representatives. As a
result, judicial decisions from the time of
Chief Justice Marshall reveal an unswerving
acceptance of the principle that every
possible presumption favors the validity of
an act of the Legislature. . . . [A]ll the
relevant New Jersey cases display faithful
judicial deference to the will of the
lawmakers whenever reasonable men might
differ as to whether the means devised by
the Legislature to serve a public purpose
conform to the Constitution.

[N.J. Sports & Exposition Auth. v. McCrane,
61 N.J. 1, 8 (citation omitted), appeal
dismissed sub nom., Borough of E. Rutherford
v. N.J. Sports & Exposition Auth., 409 U.S.
943, 93 S. Ct. 270, 34 L. Ed. 2d 215
(1972).]

For those reasons, a statute "will not be declared void

unless it is clearly repugnant to the Constitution." Trautmann

ex rel. Trautmann v. Christie, 211 N.J. 300, 307 (2012) (quoting

Newark Superior Officers Ass'n v. City of Newark, 98 N.J. 212,

222 (1985)). A party seeking to rebut "[t]he strong presumption

of constitutionality that attaches to a statute . . . [must]

show[] that the statute's 'repugnancy to the Constitution is

clear beyond a reasonable doubt.'" Hamilton Amusement Ctr. v.

Verniero, 156 N.J. 254, 285 (1998) (quoting Harvey v. Bd. of

Chosen Freeholders, 30 N.J. 381, 388 (1959)), cert. denied, 527

25 A-3274-10T3
U.S. 1021, 119 S. Ct. 2365, 155 L. Ed. 2d 770 (1999).

Plaintiffs have failed to carry that heavy burden.

A.

Plaintiffs first contend that the court erred in dismissing

the counts in their complaints alleging that Chapter 2 violates

Article I, Paragraph 19 of the New Jersey Constitution. That

provision states as to public employees: "Persons in public

employment shall have the right to organize, present to and make

known to the State, or any of its political subdivisions or

agencies, their grievances and proposals through representatives

of their own choosing."

Plaintiffs chiefly challenge the 1.5% contribution required

by Chapter 2, and the Section 8 Applicability Provision. In

addition, FMBA argues that Chapter 3, Sections 1, 2, and 4,

violate Article I, Paragraph 19. Plaintiffs contend that the

trial court erred by dismissing these claims under Rule 4:6-

2(e).

The State Executive Defendants assert that Chapter 2

respects the rights guaranteed to public employees by Article I,

Paragraph 19 of the State Constitution, and that the trial court

did not err by dismissing plaintiffs' challenges to Chapter 2

under Rule 4:6-2(e) because their challenges presented legal,

not factual, issues. The State Executive Defendants also

contend that plaintiffs' argument that Chapter 2 violates

26 A-3274-10T3
Article I, Paragraph 19 of the State Constitution is moot

because it has been superseded by Chapter 78. Further, the

State Executive Defendants contend that all of plaintiffs'

arguments that the Section 8 Applicability Provision violates

various federal and state constitutional protections are moot

because the Section 8 Applicability Provision has been

superseded by Chapter 78.

We agree with the State Executive Defendants that Chapter

78 renders plaintiffs' challenges to the Section 8 Applicability

Provision moot. With the enactment of Chapter 78, the

Legislature has vested the Design Committees with the "sole

discretion" to create, modify, or terminate any plan or

component, as well as to set amounts for maximums, co-pays,

deductibles, and other participant costs for all plans offered.

The "sole discretion" of the Design Committees to create,

modify, or terminate any plan includes plans for "medical

benefits, prescription benefits, dental, vision, and any other

healthcare benefits." L. 2011, c. 78, §§ 45 and 46.

In view of the Legislature's vesting in the Design

Committees the sole discretion to make changes in the respective

healthcare plans, such changes are no longer effectuated through

collective negotiations between the State and its employees.

The provisions of Chapter 78 have superseded the Section 8

Applicability Provision. "[C]ourts should not reach

27 A-3274-10T3
constitutional questions unless necessary to the disposition of

the litigation." O'Keefe v. Passaic Valley Water Comm'n, 132

N.J. 234, 240 (1993). Because they are moot, we decline to

address plaintiffs' challenges to the Section 8 Applicability

Provision.

We turn to plaintiffs' arguments that the provisions of

Chapter 2 requiring the 1.5% contribution, as well as the

provisions of Chapter 3 limiting both supplemental compensation

for accumulated sick time and the carrying-forward of vacation

time, violate the constitutional right of public employees to

organize and to present their grievances and proposals through

their chosen representatives. We are unpersuaded by plaintiffs'

arguments.

To implement the constitutional right of public employees

to organize and present grievances and proposals, the

Legislature enacted the New Jersey Employer-Employee Relations

Act (EERA), N.J.S.A. 34:13A-1 to -43. The EERA defines the

scope of public employees' rights of collective negotiation. In

re Local 195, IFPTE, AFL-CIO, 88 N.J. 393, 401 (1982). N.J.S.A.

34:13A-5.3 provides in part that

Representatives designated or selected by
public employees for the purposes of
collective negotiation by the majority of
the employees in a unit . . . shall be the
exclusive representatives for collective
negotiation concerning the terms and

28 A-3274-10T3
 conditions of employment of the employees in
such unit. . . .

The scope of collective negotiations by public sector

employees concerning "the terms and conditions of employment" is

not, however, unlimited. See Lullo v. Int'l Ass'n of Fire

Fighters, 55 N.J. 409, 440 (1970).

[A] subject is negotiable between public
employers and employees when (1) the item
intimately and directly affects the work and
welfare of public employees; (2) the subject
has not been fully or partially preempted by
statute or regulation; and (3) a negotiated
agreement would not significantly interfere
with the determination of governmental
policy. To decide whether a negotiated
agreement would significantly interfere with
the determination of governmental policy, it
is necessary to balance the interests of the
public employees and the public
employer. When the dominant concern is the
government's managerial prerogative to
determine policy, a subject may not be
included in collective negotiations even
though it may intimately affect employees'
working conditions.

[In re Local 195, supra, 88 N.J. at 404-05.]

We agree with Judge Feinberg that although health care

benefits are a negotiable term or condition of employment under

the EERA, the Legislature has preempted negotiation of the 1.5%

contribution. "As a general rule, an otherwise negotiable topic

cannot be the subject of a negotiated agreement if it is

preempted by legislation." Bethlehem Twp. Bd. of Educ. v.

Bethlehem Twp. Educ. Ass'n., 91 N.J. 38, 44 (1982). A topic is

29 A-3274-10T3
preempted if a "regulation fixes a term and condition of

employment 'expressly, specifically and comprehensively.'"

Ibid. (quoting Council of N.J. State College Locals v. State

Bd. of Higher Educ., 91 N.J. 18, 30 (1982)). The Legislature

has fixed the 1.5% contribution "expressly, specifically and

comprehensively."2

PBA does not dispute that the Legislature may preempt

negotiations on a term or condition of employment, but argues

that the implementation of Chapter 2 to certain matters being

arbitrated under the Police and Fire Public Interest Arbitration

Reform Act (Reform Act), N.J.S.A. 34:13A-14 to -21, violates the

constitutional right of public employees to present grievances

through their chosen representatives. Specifically, PBA argues

that in interest arbitrations where "the arbitral records were

closed prior to the new laws' effective date," representatives

were effectively "precluded from submitting evidence over the

impact of new law to the interest arbitrator." We disagree.

To begin with, Article 1, Paragraph 19 guarantees to public

employees the right to present their grievances and proposals to

"the State, or any of its political subdivisions or agencies."

The Supreme Court has interpreted this paragraph's language

2
The contribution amount was changed in Chapter 78. Chapter 78,
Section 39 requires health-care contributions based on
employees' earning levels. See N.J.S.A. 52:14-17.28c.

30 A-3274-10T3
concerning public employees "to impose on the employer in the

public sector only the duty to meet with its employees or their

chosen representatives and to consider in good faith any

grievance or proposals presented on their behalf." Lullo,

supra, 55 N.J. at 416. Interest arbitrators are not employers.

Rather, interest arbitrators conduct an "essentially

adversarial" process, "a statutory method of resolving

collective-negotiation disputes." Hillsdale PBA Local 207 v.

Borough of Hillsdale, 137 N.J. 71, 80, 82 (1994).3

Additionally, arbitrators rendering a decision in

compulsory interest arbitration cases must apply the relevant

law. Paterson Police PBA Local 1 v. City of Paterson, ___ N.J.

Super. ___, ___ (App. Div. 2013) (slip op. at 17). See also

Kearny PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 217

(1979). They must "decide the dispute based on a reasonable

determination of the issues, giving due weight to those factors

listed [in N.J.S.A. 34:13A-16(g)(1)-(9)]." N.J.S.A. 34:13A-

16(g). If an arbitrator requires additional evidence as to any

factor, the arbitrator "may request the parties to supplement

their presentations," PBA Local 207, supra, 137 N.J. at 83-84,

3
PBA Local 207 involved certain interest arbitration procedures
that were later eliminated from the Reform Act. In re City of
Camden, 429 N.J. Super. 309, 328 n.7 (App. Div.), certif.
denied, 215 N.J. 485 (2013). Nevertheless, "the principles set
forth in [PBA Local 207] remain controlling." Ibid.

31 A-3274-10T3
but "the arbitrator need not require the production of evidence

on each factor." Id. at 84.

Arbitrators are vested with significant discretion in the

manner in which they conduct hearings. For example, an

arbitrator may "conduct hearings, and require the attendance of

such witnesses and the production of such books, papers,

contracts, agreements, and documents as the arbitrator may deem

material to a just determination of the issues in dispute,"

N.J.A.C. 19:16-5.7(e); grant adjournments, N.J.A.C. 19:16-

5.7(j); permit the parties to submit post-hearing briefs and

grant the parties special permission to introduce new factual

material in the post-hearing briefs. N.J.A.C. 19:16-5.7(l).

PBA has cited no authority suggesting that in those limited

instances where a new law has been enacted after parties have

presented evidence in interest arbitration proceedings but

before the arbitrators have rendered decisions, and the new law

might affect pending issues, arbitrators cannot exercise their

discretion to have the parties submit supplemental briefs or new

evidence. We discern no reason for prohibiting arbitrators from

so exercising their discretion in such limited circumstances.

Nor do we discern any reason why the parties should be

prohibited from requesting permission from arbitrators to

supplement their presentations in such limited circumstances.

32 A-3274-10T3
Of course, arbitrators may reject such requests if the

arbitrators deem supplemental submissions unnecessary.

Neither the language of the State Constitution, nor our

Supreme Court's decisions concerning the obligations Article I,

Paragraph 19 imposes on public employers, supports PBA's

argument that Chapter 2 violates this constitutional provision.

In view of those considerations, PBA has not demonstrated either

that Chapter 2 violates Article I, Paragraph 19 of the State

Constitution, or that Judge Feinberg erred when she dismissed

plaintiffs' complaints for failure to state a claim.

B.

We turn to plaintiffs' contentions that the provisions of

Chapter 2 requiring public employees and retirees to make the

1.5% contribution violate the equal protection guarantees of the

Federal and State Constitutions. We are unpersuaded.

The Fourteenth Amendment to the United States Constitution

provides that "[n]o State shall make or enforce any law which

shall . . . deny to any person within its jurisdiction the equal

protection of the laws." "The Equal Protection Clause directs

that 'all persons similarly circumstanced shall be treated

alike.'" Plyler v. Doe, 457 U.S. 202, 216, 102 S. Ct. 2382,

2394, 72 L. Ed. 2d 786, 798 (1982) (quoting F. S. Royster Guano

Co. v. Virginia, 253 U.S. 412, 415, 40 S. Ct. 560, 562, 64 L.

Ed. 989, 991 (1920)). However, the "legislature must have

33 A-3274-10T3
substantial latitude to establish classifications that roughly

approximate the nature of the problem perceived, that

accommodate competing concerns both public and private, and that

account for limitations on the practical ability of the State to

remedy every ill." Id. at 216, 102 S. Ct. at 2394, 72 L. Ed. 2d

at 798-99. Thus, "[i]f a statutory distinction has some

reasonable basis, 'a State does not violate the Equal Protection

Clause merely because the classifications made by its laws are

imperfect.'" Whitaker v. Devilla, 147 N.J. 341, 358 (1997)

(quoting Dandridge v. Williams, 397 U.S. 471, 485, 90 S. Ct.

1153, 1161, 25 L. Ed. 2d 491, 501 (1970)). Accord Caviglia v.

Royal Tours of Am., 178 N.J. 460, 480 (2004). "Under the

federal equal protection clause, absent an impact on a

fundamental right or targeting of a suspect class, a statute

must be upheld 'so long as it bears a rational relation to some

legitimate end.'" Trautmann, supra, 211 N.J. at 304 (quoting

Romer v. Evans, 517 U.S. 620, 631, 116 S. Ct. 1620, 1627, 134 L.

Ed. 2d 855, 865 (1996)).

Our State Constitution does not contain an equal protection

clause. State v. Chun, 194 N.J. 54, 101, cert. denied, 555 U.S.

825, 129 S. Ct. 158, 172 L. Ed. 2d 41 (2008). Yet, the concept

of equal protection is implicit in Article I, Paragraph

1. McKenney v. Byrne, 82 N.J. 304, 316 (1980); Guaman v. Velez

(Guaman I), 421 N.J. Super. 239, 267 (App. Div. 2011). In

34 A-3274-10T3
analyzing equal protection challenges under the State

Constitution, courts apply "a more flexible balancing test that

considers three factors: '(1) the nature of the right asserted;

(2) the extent to which the statute intrudes upon that right;

and (3) the public need for the intrusion.'" Guaman I, supra,

421 N.J. Super. at 267 (quoting State v. O'Hagen, 189 N.J. 140,

164 (2007)). Although this analysis differs from the "federal

tiered approach, the tests weigh the same factors and often

produce the same result." Sojourner A. v. N.J. Dep't of Human

Servs., 177 N.J. 318, 333 (2003).

Plaintiffs contend the sections of Chapter 2 that require

the 1.5% contribution violate the federal and state equal

protection guarantees because they create arbitrary

classifications among employees. For example, NJEA asserts that

the 1.5% contribution "applies to all public employees

regardless of the type or level of coverage applicable to the

individual employee, or the actual cost of coverage to the

employer." According to NJEA, under that scheme, an employee

opting for single coverage would pay the same "mandatory minimum

contribution as an employee opting for family coverage." NJEA

also asserts that the 1.5% contribution will have a

disproportionate impact on public employees "at the lower end of

the income spectrum." Teamsters add that public employees who

receive benefits "from a private insurer or from a union benefit

35 A-3274-10T3
fund" are required to pay the 1.5% contribution to offset

employer health care costs even though they receive no benefits

from the employer plans.

Chapter 2 does not, however, affect a fundamental right or

target a suspect class.4 The law does, on the other hand, bear a

rational relation to legitimate State interests. Those

interests include controlling the cost of providing health care

benefits to public employees; reducing administrative expenses;

and ensuring consistency in health benefit coverage and costs

for public employees. Moreover, the changes in Chapter 2 are

part of legislation enacted to improve the fiscal strength of

State and local governments; reduce taxpayer burdens; and ensure

that the health and pension systems remain viable for current

and future employees.

Moreover, the provisions of Chapter 2 are rationally

related to those State interests, as is evident from the DPB

estimates that the required contributions will result in savings

of hundreds of millions of dollars. Though perhaps an imperfect

scheme because imposing the 1.5% contribution may have different

4
NJEA asserts that the Section 8 Applicability Provision
violates equal protection guarantees because it infringes upon
public employees' fundamental right, under Article I, Paragraph
19 of the State Constitution, to present grievances to their
employers through their chosen representatives. We have
previously explained that plaintiffs' challenges to the Section
8 Applicability Provision are moot. We will not address those
claims again.

36 A-3274-10T3
consequences for some classes of employees, perfection is not

required. Chapter 2 falls well within the legislative "latitude

to establish classifications that roughly approximate the nature

of the problem perceived, that accommodate competing concerns

both public and private, and that account for limitations on the

practical ability of the State to remedy every ill." Plyler,

supra, 457 U.S. at 216, 102 S. Ct. at 2394, 72 L. Ed. 2d at 798-

99.

Similarly, Chapter 2 satisfies Article 1, Paragraph 1 of

the New Jersey Constitution. "There is, in this case, an

'appropriate governmental interest suitably furthered by the

differential treatment involved.'" Trautmann, supra, 211 N.J.

at 305 (quoting Barone v. Dep't of Human Servs., 107 N.J. 355,

368 (1987)). As we have stated, the State has a legitimate

interest in controlling the cost of health care benefits,

ensuring consistency in health benefit coverage, and further

ensuring that the programs that make health care coverage

available to public employees remain viable for both current and

future employees. The State has a further interest in

minimizing taxpayer burdens.

For the reasons we have previously explained, the State's

interests are furthered considerably by the 1.5% contribution

requirement. And considering the need to ensure that health

care programs remain viable for future as well as current public

37 A-3274-10T3
employees and retirees, the intrusion on the interest of current

employees and retirees not to make a minimum 1.5% contribution -

- for any reason -- is itself minimal.5

For substantially the same reasons, we reject FMBA's

argument that Chapter 1, which changes the definition of "final

compensation" used to calculate retirement benefits, violates

the equal protection guarantees of the Federal and State

Constitutions because it results in arbitrary classifications

among employees.

Chapter 1, Section 22 (codified in relevant part at

N.J.S.A. 43:16A-1(28)(a)-(b)), provides that for employees who

become members of PFRS after May 21, 2010, "final compensation"

means the average annual compensation for any three fiscal

5
Plaintiffs have not clearly defined the specific interests they
claim are impacted by the 1.5% contribution. NJEA asserts that
Chapter 2 disproportionately impacts lower-income State
employees by requiring they contribute the same percentage of
their salaries as other employees. We note that the provisions
of Chapter 2 concerning the 1.5% contribution have been
partially superseded by the provisions of Chapter 78 requiring
health care contributions based on employees' earning levels,
with a minimum, or floor, of 1.5% base salary. See L. 2011, c.
78, § 39 (codified at N.J.S.A. 52:14-17.28c); L. 2011, c. 78, §
40 (codified at N.J.S.A. 52:14-17.28d) (employees participating
in SHBP and SEHBP); L. 2011, c. 78, § 41 (codified at N.J.S.A.
18:16-17.1) (employees of boards of education); L. 2011, c. 78,
§ 42 (codified at N.J.S.A. 40A:10-21.1) (employees of a local
unit or agency thereof). These provisions of Chapter 78 also
require different contributions for individual and family
coverage. L. 2011, c. 78, § 39 (codified at N.J.S.A. 52:14-
17.28c).

38 A-3274-10T3
years of membership. 6 For employees who became members before

that date, final compensation "means the compensation received

by the member in the last 12 months of creditable service

preceding his retirement or death." N.J.S.A. 43:16A-1(28)(a).

We agree with Judge Feinberg that the classification

between current and new enrollees is rationally related to

legitimate State goals including cost savings, ensuring the

fiscal stability of the plan, and administrative

efficiency. See Brown v. State, 356 N.J. Super. 71, 82 (App.

Div. 2002) (explaining that the Legislature may limit benefits

it confers in the interest of preserving State's economic

resources). The law fully comports with the federal and state

equal protection guarantees.

C.

FMBA and Teamsters next argue that the judge erred by

dismissing their claim that the 1.5% contribution requirement of

Chapter 2 violates the Contract Clauses of the Federal and State

Constitutions because the laws impaired existing and pending

CNAs.

6
Chapter 1, Section 20 (amending N.J.S.A. 18A:66-2) and Chapter
1, Section 21 (amending N.J.S.A. 43:15A-6), change the
definition of final compensation for new enrollees in TPAF and
PERS from the average compensation for the three years prior to
retirement, to the average of five years.

39 A-3274-10T3
 The federal and state constitutions prohibit the passage of

any "law impairing the obligation of contracts." U.S. Const.

art. I, § 10, cl. 1; N.J. Const. art. IV, § 7, ¶ 3. "The two

clauses are applied coextensively and provide the same

protection." N.J. Educ. Ass'n v. State, 412 N.J. Super. 192,

205 (App. Div.) (internal quotation marks omitted), certif.

denied, 202 N.J. 347 (2010). In addressing a claim for

violation of the Contract Clause, the threshold inquiry is

whether the law "operated as a substantial impairment of a

contractual relationship." Allied Structural Steel Co. v.

Spannaus, 438 U.S. 234, 244, 98 S. Ct. 2716, 2722, 57 L. Ed. 2d

727, 736 (1978). In making that determination courts inquire

whether: 1) "there is a contractual relationship"; 2) the

"change in law impairs that contractual relationship"; and 3)

"the impairment is substantial." Gen. Motors Corp. v. Romein,

503 U.S. 181, 186, 112 S. Ct. 1105, 1109, 117 L. Ed. 2d 328, 337

(1992). If the state law constitutes a substantial impairment,

it may nonetheless "be constitutional if it is reasonable and

necessary to serve an important public purpose." U.S. Trust Co.

v. New Jersey, 431 U.S. 1, 25, 97 S. Ct. 1505, 1519, 52 L. Ed.

2d 92, 112 (1977).

We affirm, substantially for the reasons explained by Judge

Feinberg. We add only the following comments. FMBA and

Teamsters base their arguments primarily on the premise that

40 A-3274-10T3
their CNAs do not expire on their expiration dates, but rather

continue, either under a theory of implied contract or by

statute. The statute FMBA relies on is N.J.S.A. 34:13A-21,

which states in part that "[d]uring the pendency of proceedings

before the [interest] arbitrator, existing wages, hours and

other conditions of employment shall not be changed by action of

either party without the consent of the other[.]" Teamsters

rely on N.J.S.A. 34:13A-5.3, which states in part that

"[p]roposed new rules or modifications of existing rules

governing working conditions shall be negotiated with the

majority representative before they are established." This

statutory rule, "known as the prescription against unilateral

change of the status quo, prohibit[s] an employer from

unilaterally altering the status quo concerning mandatory

bargaining topics, whether established by expired contract or by

past practice, without first bargaining to impasse." Bd. of

Educ. of Neptune v. Neptune Twp. Educ. Ass'n, 144 N.J. 16, 22

(1996) (alteration in original) (internal quotation marks

omitted).

Chapter 2 does not require public employees to make the

1.5% contribution until after existing CNAs expire. Contrary to

plaintiffs' arguments, N.J.S.A. 34:13A-21 and N.J.S.A. 34:13A-

5.3 create statutory, not contractual, prohibitions against a

party changing the terms and conditions of employment during the

41 A-3274-10T3
pendency of interest arbitration proceedings or during the

negotiation of a new CNA. As we have previously explained, the

statutes apply to the parties to the expired CNA, not to the

Legislature. And because the Legislature created the

prohibitions against such changes, the Legislature can modify

them by statute. Further, even if the terms of an expired CNA

are deemed to be implied in fact until new terms are negotiated,

public employees have neither a contractual right nor a

reasonable expectation that terms implied in fact under such

circumstances will survive superseding terms imposed by

preemptory legislation.

D.

We reject plaintiffs' remaining contentions substantially

for the reasons that Judge Feinberg rejected them in her well-

reasoned decision. Those contentions include the following

arguments: the 1.5% contribution is an invalid tax on income

that did not originate in the General Assembly; the sections of

Chapter 2 imposing the 1.5% contribution are void for vagueness;

Chapters 1, 2, and 3 violate plaintiffs' rights to procedural

and substantive due process, and constitute a taking; and

Chapter 2 is a special law that decreases the emoluments of

public employees and also regulates the internal affairs of

municipalities, all in violation of the State Constitution.

42 A-3274-10T3
These and plaintiffs' other remaining arguments do not warrant

further discussion in a written opinion. R. 2:11-3(e)(1)(E).

IV.

The Legislative Defendants argue, as an alternative reason

for affirming the trial court’s judgment, that they are immune

from suit because an action against the State Senate and

Assembly challenging the constitutionality of a law violates the

separation of powers and the Speech or Debate Clause of the New

Jersey Constitution; and that Judge Feinberg erred by ruling to

the contrary.

The doctrine of separation of powers is set forth in

Article III, Paragraph 1 of the New Jersey Constitution, which

provides that "[t]he powers of the government shall be divided

among three distinct branches, the legislative, executive, and

judicial. No person or persons belonging to or constituting one

branch shall exercise any of the powers properly belonging to

either of the others, except as expressly provided in this

Constitution." The Speech or Debate Clause, set forth in

Article IV, Section IV, Paragraph 9 of the New Jersey

Constitution, provides that:

Members of the Senate and General Assembly
shall, in all cases except treason and high
misdemeanor, be privileged from arrest
during their attendance at the sitting of
their respective houses, and in going to and
returning from the same; and for any
statement, speech or debate in either house

43 A-3274-10T3
 or at any meeting of a legislative
committee, they shall not be questioned in
any other place.

Preliminarily, we note that the record on appeal is not

clear as to whether Judge Feinberg dismissed the claims against

the President of the Senate and Speaker of the Assembly. She

thought she had dismissed those claims. The Legislative

Defendants believe that the judge was mistaken and did not

dismiss those claims. Regardless, it does not appear from the

record on appeal that any plaintiff seriously opposed the

Legislative Defendants' application in the trial court to

dismiss the claims against the President of the Senate and

Speaker of the Assembly. Those claims should never have been

filed. There was no basis, in law or in fact, for making them.

Legislative immunity guaranteed by the Speech or Debate

Clause assures that the speech and conduct of legislators acting

within the sphere of legitimate legislative activity will not be

made the basis for a civil judgment. Gilbert v. Gladden, 87

N.J. 275, 292-93 (1981). Moreover, in a case where the sole

relief sought is a judicial declaration that a statute is

unconstitutional, naming individual legislators is a meaningless

exercise. They are unnecessary parties because the relief

sought can be obtained without them, and nothing can be obtained

from them. Naming individual legislators in cases where such

44 A-3274-10T3
limited relief is sought accomplishes nothing other than

distraction, wasted time, and perhaps wasted money.

Those and other reasons could arguably lead to the same

conclusion as to the Senate and the Assembly. Interpreting the

Speech or Debate Clause to apply to those institutions would

certainly serve several salient purposes. And as a general

proposition, a plaintiff can obtain a judgment declaring that a

statute is unconstitutional by naming only the State as a

defendant. See DePascale, supra, 211 N.J. at 47. We conclude,

however, that the prudent course is not to decide the issue in

this case.

We have previously noted that "courts should not reach

constitutional questions unless necessary to the disposition of

the litigation." O'Keefe, supra, 132 N.J. at 240. Here,

deciding this constitutional issue is unnecessary. We have

already upheld Chapters 1, 2, and 3. Additionally, the

Legislative Defendants have not filed a cross-appeal, but have

advanced their constitutional argument only as an alternative

reason for affirming the trial court's judgment. This

alternative reason is unnecessary in view of our rejection of

plaintiffs' claims. This action may be, as the Legislative

Defendants say, one in which plaintiffs seek only a declaratory

judgment that Chapters 1, 2, and 3 are unconstitutional, but

plaintiffs initially sought injunctive relief and Judge Feinberg

45 A-3274-10T3
issued a comprehensive opinion as to that claim. The parties

have not briefed whether the Legislative Defendants were

indispensable parties to the claim for injunctive relief.

For all those reasons, we decline to address the

Legislative Defendants' alternative constitutional argument.

V.

We end where we began. We recognize that Chapters 1, 2,

and 3 affect the disposable income of the State's active and

retired public employees. But the Legislature enacted these

laws to ensure that the State's pension and health care systems

remain fiscally sound and that the State's taxpayers are not

unduly burdened. The legislation furthers legitimate State

interests and violates neither the New Jersey Constitution nor

the United States Constitution.

Affirmed.

46 A-3274-10T3