Update of COLA Litigation – NJ FMBA

Update of COLA litigation from NJFMBA Chief State Counsel


On March 27, 2012, the NJFMBA and other public sector labor organizations filed a declaratory judgment action alleging that Chapter 78 is unconstitutional because, effective June 28, 2011, it suspended COLAs for all pension funds including active and retired members of PERS, TPAF and PFRS.  On May 25, 2012, the lower court dismissed the action on the basis that COLA funding was subject to legislative appropriations and one legislature could not bind another.

The parties appealed the decision to the appellate court and oral argument was heard by the Appellate Court on January 28, 2014.

On June 26, 2014, the appellate court issued its decision in the COLA lawsuit.   The court found that the statute created a contractual, non-forfeitable right to pension benefits, inclusive of COLA.  Since the appeals court found that current and future retirees have a contractual right to COLA, and the lower court did not address whether the 2011 statute impaired that contractual right in violation of the Constitution, the case was sent back to the lower court to make that determination.

On July 16, 2014, the State filed a cross-petition for certification to the NJ Supreme Court appealing the decision of the Appellate Division disputing whether Chapter 78 created a contractual right to the receipt of COLA.

On July 14, 2014, one of the pro se plaintiffs, Charles Ouslander, filed a petition for certification to the NJ Supreme Court to review the federal Contracts Clause and equitable estoppel claims which were dismissed by the appellate court.

On July 31, 2015, the Supreme Court granted the Ouslander petition and State cross-petition for certification.  The NJFMBA continues to be actively participating in the case.  Oral argument will be scheduled shortly.  The Court hears oral argument 2-5 times per month beginning in September and ending in April.

If you have any questions, feel free to contact the State office.

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