NJ Supreme Court Rules Pension Forfeiture Not a Fine Subject to Excessive-Fine Analysis

In State v. Bennie Anderson (A-15/16-20) (084365) (Decided August 11, 2021), the Supreme Court of New Jersey held that the forfeiture of defendant’s pension under N.J.S.A. 43:1-3.1 does not constitute a fine for purposes of an excessive-fine analysis under the Federal or State Constitutions. Because the forfeiture is not a fine, the court did not reach the constitutional analysis for excessiveness.

Facts of State v. Anderson

Defendant Bernie Anderson was employed by Jersey City in the Tax Assessor’s office. His position gave him the opportunity to alter property tax descriptions without the property owner filing a formal application with the Zoning Board. In December 2012, defendant engaged in an illicit transaction where he accepted a $300 bribe in exchange for altering the tax description of a property from a two-unit dwelling to a three-unit dwelling. Defendant retired from his position in March 2017 and was granted an early service retirement pension. In November 2017, defendant pled guilty in federal court to violating 18 U.S.C. § 1951(a), interference with commerce by extortion under color of official right. Defendant was sentenced to two years of probation and ordered to pay a fine. Based on defendant’s conviction, the Employees’ Retirement System of Jersey City reduced his pension.

The State filed an action in state court to compel the total forfeiture of defendant’s pension pursuant to N.J.S.A. 43:1-3.1. The trial court entered summary judgment for the State, finding that the forfeiture of defendant’s pension did not implicate the constitutional prohibitions against excessive fines because the forfeiture of pension benefits did not constitute a fine. The Appellate Division affirmed the grant of summary judgment to the State, but on different grounds. It concluded that the forfeiture of defendant’s pension was a fine, but that requiring defendant to forfeit his pension was not excessive.

NJ Supreme Court’s Decision in State v. Anderson

The Supreme Court of New Jersey affirmed the judgment upholding the forfeiture of defendant’s pension. “We conclude, as did the trial court, that defendant was not subjected to a fine. Accordingly, our conclusion on that first inquiry eliminates the need to assess whether the forfeiture constitutes an excessive fine. As a result, we need not review or express an opinion on the test for excessiveness employed by the Appellate Division,” the court wrote.

The court first addressed asking whether, under New Jersey law, the defendant had a property right in his pension such that the forfeiture of that “right” is a “fine” within the meaning of the Eighth Amendment or the State Constitution. As explained by the court, for many years, the seminal case on pension forfeiture was Uricoli v. Board of Trustees, Police & Firemen’s Retirement System, 91 N.J. 62 (1982), in which the court determined that an inflexible forfeiture rule was not clearly expressed in the language of the pension statute. Instead, the court identified factors to consider and balance when determining whether to impose a pension forfeiture, in the absence of any perceived legislative intent for mandatory forfeiture.

In 2007, the Legislature added N.J.S.A. 43:1-3.1 — the statute pursuant to which the State seeks forfeiture of defendant’s pension. N.J.S.A. 43:1-3.1(a) provides that a public employee “who is convicted of any crime set forth in subsection (b) of this section, or of a substantially similar offense under the laws of another state or the United States . . . shall forfeit all of the pension or retirement benefit earned.” (emphasis added). Also in effect at that time was N.J.S.A. 43:1-3(a), which provides that “[t]he receipt of a public pension or retirement benefit is hereby expressly conditioned upon the rendering of honorable service by a public officer or employee.” Subsection (b) of N.J.S.A. 43:1-3 empowers boards of trustees to order full or partial pension forfeiture upon dishonorable service, and subsection (c) lists factors — similar to the Uricoli factors — for determining whether misconduct breached the honorable service requirement.

The New Jersey Supreme Court went on to emphasize that, in the wake N.J.S.A. 43:1-3.1, the court could no longer conclude that the Legislature did not, unequivocally and categorically, condition the receipt of a pension on the rendering of uniformly honorable service. “The flexible analysis that the Legislature has left in place within section 3 does not give rise to ambiguity about the legislative scheme. Section 3 makes honorable service a condition of a right to a pension, and section 3.1 makes forfeiture of any right to a pension the result when honorable service is not provided due to conviction of an enumerated offense,” the court wrote.

The New Jersey Supreme Court concluded that because forfeiture of a pension is automatic and mandatory upon the commission of certain offenses under section 3.1, it is clear that defendant did not possess a property right in his pension protected by the Federal or State Constitutions. The court wrote:

In short, this case turns on the legislative decision in 2007 to take discretion away from courts and administrative agencies when public employees commit any of the identified offenses. The trial court correctly noted that and faithfully applied the law as written. And, as the court’s analysis noted, New Jersey’s approach to treat public pensions as quasi-contractual rights rooted in statute, and not as property rights, is consistent with the majority of courts to have addressed this issue.

Based on the foregoing, the New Jersey Supreme Court concluded that the first prong to an excessive-fine analysis — whether the forfeiture here was a “fine” within the meaning of the Eighth Amendment — “proves to be an impediment that defendant cannot overcome.” It held that the forfeiture of defendant’s pension under section 3.1 does not constitute a fine for purposes of an excessive-fine analysis under the Federal or State Constitutions.

Because the New Jersey Supreme Court held that the forfeiture was not a fine, it further concluded that “there is no reason to embark on a constitutional analysis for

excessiveness.” Accordingly, it declined to review the Appellate Division’s analysis for excessiveness and we vacate that portion of its opinion.

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