Brian Sullivan, et al. v. Nassau County Interim Finance Authority, et al.

In 2011, a New York State-created oversight authority, the Nassau County Interim Finance Authority (“NIFA”), along with Nassau County (the “County”), enacted a wage freeze resolution that suspended the contractual rights of some 2,400 police officers, 7,000 civil servants and 750 corrections officers in Nassau County. After nine years of litigation, the Second Circuit, applying the Contract Clause, agreed that the wage freeze operated as a substantial impairment of contractual rights and that the measure was entitled to “less deference” review because the government had impaired its own contracts. Yet, despite agreeing to apply a more stringent standard, the Circuit nonetheless summarily deferred to NIFA’s and the County’s judgment that they had “no other discernible options” short of freezing wages, without analyzing the budgetary situation in Nassau County and without scrutinizing whether the wage freeze was in fact imposed as an emergency and “last resort” measure as required by governing Supreme Court and Circuit Court precedent. The questions presented are:

1. Whether the Court should re-examine the “reasonable and necessary” test, applied under a “less deferential” standard, when a State impairs its own contractual obligations, implicating the Contract Clause of the U.S. Constitution?

2. When a State impairs its own contractual obligations, should it bear the burden of establishing that the impairment was “reasonable and necessary” under the circumstances?