Maryland Furloughs Unconstitutional
Apropos my previous post about the Chicago public employee furlough, Aaron Brazell tweets about a Maryland judge ruling that state furloughs violate the U.S. Constitution. He links to a WaPo recap:
A federal judge ruled Tuesday that Prince George’s County violated the U.S. Constitution when it furloughed 5,900 workers in the last fiscal year, a decision that could force the county to repay millions in wages in the midst of a crippling economic downturn.
The ruling, which the county plans to appeal, has the potential to upend a key Prince George’s strategy for combating deficits. A county spokesman said in a statement that the decision would result in “massive layoffs” if it stands.
“As a result of this [economic] crisis, the county made a difficult decision to furlough its employees for 10 days, saving $17 million,” James P. Keary, spokesman for County Executive Jack B. Johnson (D), said in the statement. “The court has substituted its judgment without acknowledging the economic challenges facing the country. . . . In order to protect their jobs and the lives of employees and their families we will be filing an appeal to remedy this irresponsible decision.”
But U.S. District Judge Alexander Williams Jr. wrote that although he is mindful that local governments are facing financial challenges “in the midst of a global recession,” officials could have turned to other “more moderate alternatives” to trim the budget.
“Although the County suggests to the Court that it faced dire circumstances and had no other reasonable alternatives, the record suggests otherwise and the County’s actions resemble trappings of doing that which was politically expedient,” Williams wrote in his 43-page opinion.
After reading the piece, I had a Whiskey Tango Foxtrot moment. The Constitution is pretty short and I’ve not only read it and studied it, I’ve taught courses about it. I couldn’t recall anything in the document that seemed remotely related to furloughs.
One has to read far down into the piece to get this:
In his opinion, Williams sided with the unions on one of three counts, finding that the county violated the contract clause of the U.S. Constitution, which bars states from passing laws “impairing the obligation of contracts.”
The furloughs reduced employees’ “salaries/wages and hours,” which were guaranteed under contracts “not subject to unilateral adjustment by the County,” Williams wrote. “To find otherwise would render the contracts virtually meaningless.”
Ah. That actually makes some sense. The Contracts Clause (Article I, Section 10, Clause 1) says:
No State shall … pass any … Law impairing the Obligation of Contracts.
That’s the entirety of the section. As always, FindLaw’s Annotated Constitution is the go-to resource for a quick synopsis of the judicial findings related to the provision. The murkiness of the law here shows it to be perhaps the most poorly crafted bit of the Constitution. Very quickly, the Supreme Court ruled that “No law” does not in fact mean no law. (My undergraduate ConLaw prof, Dr. Hope Davis, suggested that the Framers should have written “No law, damn it” to be more clear.)
I don’t have any specific knowledge of the contract between Maryland/PG County and its workers and presume that Judge Williams’ ruling is correct. (Note: In the eyes of the law, cities and counties are mere instruments of the states and their actions are considered that of their state government for the purposes of Constitutional interpretation.) To show how hard his job was, consider just this snippet of summary from FindLaw:
Also, an express contract between the State and an individual for the performance of specific services falls within the protection of the Constitution. Thus, a contract made by the governor pursuant to a statute authorizing the appointment of a commissioner to conduct, over a period of years, a geological, mineralogical, and agricultural survey of the State, for which a definite sum had been authorized, was held to have been impaired by repeal of the statute. But a resolution of a local board of education reducing teachers’ salaries for the school year 1933-1934, pursuant to an act of the legislature authorizing such action, was held not to impair the contract of a teacher who, having served three years, was by earlier legislation exempt from having his salary reduced except for inefficiency or misconduct. Similarly, it was held that an Illinois statute that reduced the annuity payable to retired teachers under an earlier act did not violate the contracts clause, since it had not been the intention of the earlier act to propose a contract but only to put into effect a general policy. On the other hand, the right of one, who had become a ‘permanent teacher” under the Indiana Teachers Tenure Act of 1927, to continued employment was held to be contractual and to have been impaired by the repeal in 1933 of the earlier act.
Sheesh.
UPDATE: I should note that, for the purposes of political science courses (vice law schools) the focus on the Contracts Clause is on government’s power. Mostly, then, we looked at a handful of cases that looked at the ability of a state to take action that had the effect of abrogating a private contract. That states can’t “impair” contracts, apparently even implied contracts, they make with individuals is an interesting side story.
Pesky thing, our Constitution.
Yes, one deals with the government at one’s own peril. Another way the government saves money during tough times: stiff the contractors and force them out of business.
I also recall some sort of similar ruling in Illinois back in 2002 from an administrative law judge. IIRC the state had to pay workers for the day(s) they stayed home because it was determined that the furloughs were attempts to unilaterally renegotiate the union contract.
Glancing at the court’s decision, it seems that the judge believed that the furloughs were initiated in September of 2008 while the county had $230 million in reserves primarily for the purpose of preserving the county’s AAA bond rating and partly as a bargaining tactic to get the union to give up its COLAs.
Opinion
I’m not at all comfortable with courts reviewing the reasonableness and motivations of elected officials, but it does strike me that the county, like some businesses and like the federal government, knows how to use a crisis.
Since when did the Constitution again become a criteria for a valid law?
When I first started reading, I thought maybe the judge was going to hang the case on it being a “taking”. What bothers me most is the judge second guessing whether this was or was not the best course of action. If the county executives were legally voting themselves millions in bonuses while cutting cost on the back of the workers, the review of that decision is in the hands of the voters, not a judge. If this was a las ditch attempt to keep the local government from falling into total anarchy and was absolutely the best thing to be doing, and it was unconstitutional, then it should be ruled that way.
The judge is not supposed to decide or review policy, but only interpret the law.
The decision in its entirety can be found here.
As context, note that an extreme reading of the Contracts Clause would run smack into the constitutional principle that states retain power to regulate to serve public purposes: for example, it would be odd to say that the state can’t stop a liquor store from selling to a 15 year old because that would be interfering with a sales contract. Accordingly, the Supreme Court has held that state laws that are reasonable and necessary to achieve public purposes are valid even if they have the effect of impairing contracts.
In this case, the county argued that the furlough program was necessary to preserve its fiscal stability, including its obligation to balance its budget. The court disagreed that this was “necessary,” pointing that the county could have balanced its budget some other way without impairing the contracts it had previously made with county workers.
I haven’t read the case, but if the County was a party to the contract then I’m a bit mystified as to why the court would rule on the Constitutional issue (to which there are few, if any, affirmative defenses) instead of finding that there was a breach of contract. Typically, when governments participate in the economic realm, they are treated just like any other contracting party. Seems as if in this case the government was held to a much stricter standard (without the appropriate “scrutiny” — what happened to “rational review”?) that denied the state any normal contract defenses.
Again, I haven’t read the opinion yet, and I’m loathe to grant governments the benefit of the doubt, but at first blush this case seems very odd.
Judge Williams has a history with Prince Georges County – Williams served as the state attorney for Prince George’s County from 1987 to 1994 and was appointed to the United States District Court for the District of Maryland in 1994.
I think that’s a good question. There was no breach of contract discussion, so this is my speculation. At some point, the county argues that the bargaining agreement does not specify the employee’s salary, to which the court responds that there are guaranteed minimums in the agreement.
Is it possible that the contract is too vague on salary issues to recover for breach of contract, but the government’s actions are clear enough to be an impairment? Seems theoretically possible.