The Superior Court of New Jersey in Salem County approved its opinion in the case of Salem County Improvement Authority v. Salem County Board of Chosen Freeholders for publication on May 12, 2014, concerning the extent of a freeholder director’s veto power under N.J.S.A. 40:37A-50.
Facts of the case
Here, the Salem County Improvement Authority (“SCIA”) filed an action in lieu of prerogative writs seeking an order invalidating the Salem County Freeholder Board’s (the “Freeholder Board”) partial veto of certain SCIA meeting minutes. On November 25, 2013, the date of the meeting for which the minutes are at issue, the (SCIA) awarded professional services contracts for the year 2014. The minutes of the meeting were delivered to the clerk of the Freeholder Board on December 2, 2013, in the same manner and within the same time frame as previous meeting minutes had been submitted for consideration pursuant to N.J.S.A. 40:37A-50(e). The meeting minutes were then hand-delivered to the Freeholders on December 3, 2013. On December 4, 2013, Freeholder director Julie Acton vetoed all the resolutions for professional services extending past December 31, 2013. The veto was approved by majority vote of the Freeholder Board.
Although the Freeholder Board argued that the court should only consider the actions of the Freeholder director, the court addressed the action of the Freeholder Board in confirming the director’s veto. SCIA argued that the veto was arbitrary, capricious or unreasonable, the standard in an action in lieu of prerogative writ. The Freeholder Board’s December 4, 3013, transcript included three reasons for the veto: (1) the timing of the delivery of the minutes to the Freeholder Board did not allow for sufficient review; (2) the award of professional contracts where, as here, the responses to a Request for Proposals were due on a holiday were invalid and illegal; and (3) the awarding of the professional services contracts on November 25, 2013, was inappropriate as they were customarily awarded at the SCIA’s annual reorganization meeting in February 2014. The court considered the Freeholder Board’s proffered reasons,.
As there was no New Jersey precedent for the validity of a veto in this context, the court reviewed the legislative history of N.J.S.A. 40:37A-50. N.J.S.A. 40:37A-50 provides, in pertinent part that:
The minutes of every meeting of an authority . . . shall be delivered by the end of the fifth business day following the meeting, by and under the certification of the secretary of the authority to each member of the county board of freeholders. No action taken at a meeting by the members of an authority shall be effective if within 10 days after the copy of the minutes shall have been delivered to each member of the board of freeholders, such action is vetoed by the director of the board of freeholders, with the concurrence of a majority of the members of the board of freeholders. If, within the 10-day period, the board of freeholders returns to the authority the copy of the minutes with a veto of any action taken by the authority or any of the authority’s members thereof at a meeting, that action shall be of no effect. If the director takes no action with respect to the minutes within the 10-day period, the minutes shall be deemed to be approved
The court found that the legislature intended the Freeholder Board to have “far reaching oversight over authorities and stated no limitations on the freeholder veto except specifically referencing in the next paragraph that no veto would affect bonds, collective bargaining agreements, or binding arbitration decisions.” The court concluded that because the veto power is only limited by the restrictions specified in the statute, the freeholders’ authority is expansive.
The court also focused on the high burden that a plaintiff must overcome in an appeal of an action by a governing body via an action in lieu of prerogative writs. The burden in such a case is to overcome the public body’s presumptively valid action by demonstrating that the act was “arbitrary, capricious, or unreasonable” and the Freeholder Board’s action was a “clear abuse of discretion.” The court held that SCIA failed to meet this burden, concluding that the Freeholder Board’s explanation that it needed more time was a reasonable basis for the veto. Further the Freeholder Board was statutorily given the authority to veto “any action” and here, its actions did not exceed the Board’s authority and the director’s action, confirmed by the Board, stood.
The court upheld the freeholder director’s veto which was confirmed by the majority of the Freeholder Board.
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