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- Title
REEVALUATING THE SEVENTH CIRCUIT'S APPROACH TO CONTRACT CLAUSE CLAIMS IN AN AGE OF PENSION REFORM.
- Authors
MCDONELL, THOMAS
- Abstract
In the current era of fiscal crises, states consistently breach their own contracts with public employees to save money. Lawmakers argue that they have no choice but to enforce large pension cuts and modify collective bargaining agreements, while employees feel that the state has unfairly targeted them (especially when the state has other options, like raising taxes). Courts, faced with the difficult task of balancing these competing and compelling interests, must now consider the legality of such action by the state. Constitutional challenges to state impairment of contract may provide the only substantive remedy for affected employees. Therefore, plaintiffs around the country have sensibly argued that particular state action (like severe pension cuts) violates their rights under the Contract Clause of the U.S. Constitution. In evaluating Contract Clause claims, the Supreme Court requires courts to consider (1) whether state action impaired a contractual obligation; (2) whether the impairment is substantial in nature; and (3) whether the impairment nonetheless is reasonable and necessary to serve an important public purpose. While most circuits look at all these factors and engage in a true balancing test, the Seventh Circuit effectively bars all Contract Clause claims at their outset because of its narrow definition of the term "impairment." This Comment specifically challenges the Seventh Circuit's narrow interpretation of state "impairment" of contract and argues that 42 U.S.C. § 1983 is the most appropriate vehicle for making Contract Clause claims. The Seventh Circuit should adopt a three-pronged balancing test that would evaluate the reasonableness and necessity of a state's chosen course of action. Courts should examine whether a state's unilateral breach of a contract was reasonable and necessary to serve an important public purpose.
- Subjects
UNITED States; CONTRACTS; PENSION laws; COLLECTIVE bargaining; INTEREST (Finance); UNITED States. Constitution -- Contract clause; CIRCUIT courts
- Publication
Wisconsin Law Review, 2014, Vol 2014, Issue 3, p659
- ISSN
0043-650X
- Publication type
Article