PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

FRATERNAL ORDER OF POLICE LODGE 

NO. 89; INTERNATIONAL FIRE

FIGHTERS ASSOCIATION, Prince

George’s County Local 1619, Inc.;

DEPUTY SHERIFF’S ASSOCIATION,

Prince George’s County; PRINCE

GEORGE’S COUNTY CORRECTIONAL

OFFICERS ASSOCIATION, INC.; POLICE

CIVILIAN EMPLOYEES ASSOCIATION;

ISMAEL V. CANALES; DOUGLAS

BARTHOLOMEW; ROBERT A. CEASE;

CURTIS KNOWLES; ARTHUR C.

EMERY; MARYLAND PUBLIC  No. 09-2187 EMPLOYEES COUNCIL 67, a/w

AMERICAN FEDERATION OF STATE,

COUNTY AND MUNICIPAL EMPLOYEES,

AFL-CIO; AMERICAN

FEDERATION OF STATE, COUNTY AND

MUNICIPAL EMPLOYEES, AFL-CIO,

Local 241; AMERICAN

FEDERATION OF STATE, COUNTY AND

MUNICIPAL EMPLOYEES, AFL-CIO,

Local 1170; AMERICAN

FEDERATION OF STATE, COUNTY AND

MUNICIPAL EMPLOYEES, AFL-CIO,

Local 2462; 
AMERICAN FEDERATION OF STATE, 

COUNTY AND MUNICIPAL

EMPLOYEES, AFL-CIO, Local 3389;

AMERICAN FEDERATION OF STATE,

AND MUNICIPAL EMPLOYEES, AFLCIO, Local 2735,

Plaintiffs-Appellees,

v.

PRINCE GEORGE’S COUNTY,

MARYLAND,



Defendant-Appellant.

INTERNATIONAL MUNICIPAL LAWYERS

ASSOCIATION,

Amicus Supporting Appellant,

AMERICAN FEDERATION OF

LABOR AND CONGRESS OF

INDUSTRIAL ORGANIZATIONS,

Amicus Supporting Appellees. 

Appeal from the United States District Court

for the District of Maryland, at Greenbelt.

Alexander Williams, Jr., District Judge.

(8:08-cv-02455-AW)

Argued: May 13, 2010

Decided: June 23, 2010

Before KING and DAVIS, Circuit Judges, and C. Arlen

BEAM, Senior Circuit Judge of the United States Court of

Appeals for the Eighth Circuit, sitting by designation.

2 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
Reversed by published opinion. Judge King wrote the opinion, in which Judge Davis and Senior Judge Beam joined. 

COUNSEL

ARGUED: William Walter Wilkins, NEXSEN PRUET,

Greenville, South Carolina, for Appellant. Bruce R. Lerner,

BREDHOFF & KAISER, PLLC, Washington, D.C., for

Appellees. ON BRIEF: Kirsten Small, NEXSEN PRUET,

Greenville, South Carolina, for Appellant. Joel A. Smith, Darragh L. Inman, KAHN, SMITH & COLLINS, P.A., Baltimore, Maryland, for AFSCME Appellees; Andrew D. Roth,

Jason Peckenpaugh, Laurence Gold, BREDHOFF & KAISER, PLLC, Washington, D.C., for Public-Safety Appellees.

Charles W. Thompson, Jr., Devala A. Janardan, INTERNATIONAL MUNICIPAL LAWYERS ASSOCIATION,

Bethesda, Maryland, for Amicus Supporting Appellant. Lynn

Rhinehart, James B. Coppess, AFL-CIO, Washington, D.C.,

for Amicus Supporting Appellees.

OPINION

KING, Circuit Judge:

The appellees — several labor unions as well as individuals

represented by those unions (collectively, the "Unions") —

initiated this declaratory and injunctive proceeding against

appellant Prince George’s County, Maryland (the "County").

Their three-count complaint alleges, on behalf of County

employees covered by collective bargaining agreements (the

"CBAs"), that an employee furlough plan implemented by the

County in September 2008 contravened County law and the

Contract Clause of the Constitution. The district court rejected

the two county-law claims, but agreed with the contention in

the complaint’s third count, namely, that the furlough plan

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 3
contravened the Contract Clause. See Fraternal Order of

Police v. Prince George’s County, Md., 645 F. Supp. 2d 492

(D. Md. 2009) [hereinafter "Opinion"]. The County has

appealed and, as explained below, we reverse.

I.

A.

Pursuant to its charter, the County must have a balanced

fiscal year budget, meaning that its expenditures must not outpace its revenues. The County’s ability to quickly increase

revenues is inherently limited, however, because the charter

specifies both that property tax rates cannot be increased

above the 1979 rate and that a tax increase or levy can only

be submitted for voter approval in a congressional election

year. By 2008, a severe downturn in the local housing market,

mimicking the national downturn, had adversely impacted the

County’s finances. Thus, during the budget process for fiscal

year 2009 ("FY 2009"), the County projected a serious revenue shortfall. In June 2008, for example, the County projected

a deficit of $48 million for FY 2009.

In response to its anticipated revenue shortfall, the County

considered and adopted several measures to cut its FY 2009

expenditures. Of importance here, the County sought to curtail the compensation costs of County employees, implicating

the Unions’ interests. In addition to specifying the hours and

wages of the union-represented employees, the CBAs grant

annual cost-of-living adjustments to them.1 On June 26, 2008,

County officials met with the Unions’ representatives and

requested that the unionized employees forfeit their cost-ofliving adjustments for FY 2009. The Unions rejected the

1The relevant CBAs were apparently never submitted to the district

court in this proceeding, and thus are not part of the record nor included

in the Joint Appendix. Nevertheless, the parties do not dispute the relevant

terms of the CBAs. 

4 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
County’s request, however, primarily because they believed

that less drastic alternatives were available. More specifically,

the County maintained at least two reserve funds containing

tens of millions of dollars, and the Unions argued that the

County could use these funds to balance the FY 2009 budget.

In September 2008, the County again revised its revenue

forecast to reflect data from the first two months of FY 2009.

Those revisions predicted that the annual deficit would actually be $57 million — $9 million more than had been forecast

in June. After making other budget cuts, the County sought to

identify more than $20 million in additional cuts so that it

could balance the FY 2009 budget without dipping into its

reserve funds. On September 15, 2008, the County’s representatives once again met with the Unions, explaining that the

County had decided to implement an employee furlough plan.

On September 16, 2008, the County Council adopted

County Resolution 81-2008, which formally implemented the

relevant employee furlough plan. The furlough plan required

approximately 5,900 employees to forego 80 scheduled work

hours in FY 2009 (two full work weeks), representing a

3.85% annual pay reduction for such employees and saving

the County approximately $20 million in compensation costs.

As authority for the furlough plan, the County relied on section 16-229 of the County’s Personnel Law, which authorizes

the County to furlough certain employees when the County

Executive "determines that an ascertained shortfall in revenue

based upon available projections, during any fiscal year[,]

requires the compensation level of a department, agency, or

office to be reduced." P.G. County Code § 16-229(a)(1). 

B.

Two days later, on September 18, 2008, the Unions filed

this lawsuit in the Circuit Court for Prince George’s County,

seeking declaratory and injunctive relief with respect to the

furlough plan. The complaint alleged three claims against the

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 5
County: (1) that the furlough plan contravened section 16-

233(e) of the County’s Personnel Law, which authorizes a ratified CBA to override any contrary provision of the Personnel

Law (Count One); (2) that the furlough plan did not abide by

the furlough authorization provision found in section 16-229

of the Personnel Law (Count Two); and (3) that the furlough

plan contravened the Contract Clause of the Constitution

(Count Three). On September 19, 2008, the County removed

the lawsuit to the District of Maryland. 

Following limited discovery, the parties filed cross-motions

for summary judgment. By its decision of August 18, 2009,

the district court awarded summary judgment to the County

on the county-law claims in Counts One and Two, but granted

summary judgment to the Unions on the Contract Clause

claim in Count Three.2

In its decision, the district court first rejected Count One,

the Unions’ claim under section 16-233(e) of the Personnel

Law.3 More particularly, the court agreed with the County that

nothing in the relevant CBAs prohibited the County from furloughing covered employees. See Opinion, 645 F. Supp. 2d at

504; see also Prince George’s County v. Fraternal Order of

Police, Prince George’s County, Lodge 89, 914 A.2d 199,

210 (Md. Ct. Spec. App. 2007) (observing that section 16-

233(e) authorizes specific CBA provisions to override general

Personnel Law provisions). In so ruling, the court relied on

the parties’ bargaining history, observing that between 1991

2Because the Unions did not cross-appeal from the district court’s judgment on the Personnel Law claims in Counts One and Two, those claims

are not specifically before us in this appeal. Nevertheless, the court’s

assessment of those claims is relevant to a proper evaluation of the claim

in Count Three. 

3Section 16-233(e) provides that "[u]pon adoption [of a CBA] by the

County Council, any provision in the applicable agreement contrary to the

provisions of this Subtitle shall have the effect of amending any such provision and enacting the provision into law applicable to that collective bargaining agreement." P.G. County Code § 16-233(e). 

6 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
and 1995, the CBAs specifically prohibited furloughs. See

Opinion, 645 F. Supp. 2d at 505. Thereafter, however, such

a "provision no longer appeared in any of the CBAs, rendering the CBAs silent on the issue of furloughs." Id. Accordingly, the Unions could not "argue that they bargained for an

exemption from furloughs." Id. In short, because the CBAs

lacked any provision that could be read as specifically overriding section 16-229’s general authorization of furloughs, the

court awarded summary judgment to the County on Count

One. 

Second, the district court rejected Count Two, the Unions’

claim that the County’s furlough plan contravened section 16-

229. See Opinion, 645 F. Supp. 2d at 505. The Unions alleged

that the furlough plan was impermissible because it was not

actually "required," particularly in light of the reserve funds

available to the County. In this respect, the County maintained that section 16-229 vests the County Executive with

the discretion to decide whether such a furlough plan is "required" by the circumstances. The court agreed with the position of the County, concluding that the Personnel Law

unambiguously provided the County Executive with a broad

grant of discretion to determine whether and when a furlough

was "required." See id. at 507-08 ("[A]bsent a showing of bad

faith or unreasonableness, the County executive has full

authority under Section 16-229 to determine what is

‘required.’"). Accordingly, the court awarded summary judgment to the County on Count Two.

Finally, however, the district court awarded summary judgment to the Unions on the Contract Clause claim of Count

Three. See Opinion, 645 F. Supp. 2d at 508-18. Applying the

three-part Contract Clause analysis established by the

Supreme Court, the court ruled that (1) the furlough plan

impaired the CBAs, (2) such impairment was "substantial,"

and (3) it was not "reasonable and necessary." See id. at 509-

11. In assessing whether the CBAs had been impaired (under

prong one), the court simply explained that

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 7
[u]nder the [CBAs], covered employees were guaranteed certain salaries/wages and hours. By furloughing employees, the County reduced these

salaries/wages and hours. The contracts were not

subject to unilateral adjustment by the County. To

find otherwise would render the contracts virtually

meaningless, because the union employees would

not be able to order their personal and business

affairs and rely upon the rights and obligations they

bargained for. Thus, the Court finds that the [furlough plan] impaired the Unions’ CBAs.

Id. at 510 (citation and internal quotation marks omitted). The

court then concluded that the balance of the test was also satisfied because such an impairment was substantial (under

prong two) and, given the County’s access to approximately

$97 million in reserve funds, the impairment was neither reasonable nor necessary (under prong three). See id. at 510-17.

Accordingly, the court awarded summary judgment to the

Unions on the Contract Clause claim. 

The County has timely appealed from the court’s summary

judgment award on Count Three, and we possess jurisdiction

pursuant to 28 U.S.C. § 1291. 

II.

We review de novo a district court’s award of summary

judgment, viewing the facts and inferences reasonably drawn

therefrom in the light most favorable to the nonmoving party.

See In re Peanut Crop Ins. Litig., 524 F.3d 458, 470 (4th Cir.

2008). Summary judgment is appropriate only if the record

shows that "there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matter of

law." Fed. R. Civ. P. 56(c).

8 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
III.

Notwithstanding the seemingly absolute terms of the Contract Clause, the Supreme Court has long interpreted the

Clause as not uniformly prohibiting the impairment of either

government or private contracts. See U.S. Trust Co. of N.Y. v.

New Jersey, 431 U.S. 1, 21 (1977).4 Instead, the Court has

outlined a three-part test intended to balance the Contract

Clause’s protections against the states’ reserved police powers. See id. More specifically, a reviewing court must determine: (1) whether there has been an impairment of the

contract; (2) whether that impairment was substantial; and (3)

if so, whether the impairment was nonetheless a legitimate

exercise of the police power. See Balt. Teachers Union v.

Mayor & City Council of Balt., 6 F.3d 1012, 1015 (4th Cir.

1993). Under the third prong — stated alternatively as

whether the impairment was "reasonable and necessary to

serve an important public purpose" — a state’s impairment of

its own contracts is subject to greater scrutiny than its impairment of private contracts. See U.S. Trust, 431 U.S. at 25-26.

On appeal, the County maintains, first of all, that the furlough plan did not impair the County’s contractual obligations, and, in the alternative, that any impairment of the CBAs

was reasonable and necessary under the circumstances. The

Unions, on the other hand, maintain that the County has abandoned any contention that the CBAs were not impaired. The

Unions also maintain that the CBAs were in fact impaired,

and, alternatively, that if the County actually reserved the

right to implement furloughs, such a reservation would itself

contravene the Contract Clause. 

As explained below, we agree with the County that it has

preserved its contention that the CBAs were not impaired. We

4The Contract Clause provides that "[n]o State shall . . . pass any . . .

Law impairing the Obligation of Contracts . . . ." U.S. Const. art. I, § 10,

cl. 1. 

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 9
further agree with the County that the furlough plan did not

impair the CBAs because, as a matter of County law, the Personnel Law’s authorization for furloughs — specifically, section 16-229 — is part of the CBAs. Finally, we reject the

Unions’ assertion that the reservation of rights contained in

section 16-229 contravenes the Contract Clause.

A.

As a threshold matter, the Unions contend that the County

has abandoned any contention that the CBAs were not

impaired for purposes of the Contract Clause. The Unions

concede that the County advanced that contention in its summary judgment papers in the district court, but assert that the

County’s lawyer abandoned it in an exchange with the district

court during argument on the summary judgment motions.

The exchange relied upon is as follows: 

COUNSEL: I would submit to the court that

the furlough plan must be analyzed under the contract clause

analysis as to whether, if it is an

impairment, whether under the

facts it was reasonable and necessary for a public purpose.

THE COURT: Well, let’s get that out the way

right now. There was an impairment. Now, all the cases say that.

Now, let’s understand that.

COUNSEL: Yes.

THE COURT: So, we’re not going to debate

that. There’s a significant impairment here —

COUNSEL: Correct.

10 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
THE COURT: — of this contract. So, that’s not

a dispute with me. So, the issue,

again, is what’s required, what’s

necessary and so forth. That’s

what we’re talking about.

COUNSEL: Correct.

THE COURT: All right.

COUNSEL: Your Honor, to explain the county’s advancement of the argument it was an impairment, only

because we overlapped the argument with the code that we were

authorized to do it. 

J.A. 100-01.5 Shortly thereafter, however, the County’s lawyer returned to the County’s basic position — that the CBAs

were not impaired because they did not preclude furloughs.

Specifically, the County’s lawyer stated that

I understand the court’s rationale, how it applies.

The difference is 16-233(e), when they talk about a

contract provision that supersedes, it is correct. . . .

The reality is 16-233(e) is limited to the provisions

that are included in the CBA. Furlough provisions

were not. And as the court rightly acknowledged earlier, in the 1990’s the furlough protections were in

the CBAs. It stopped and then from 1995 to the present, it is not.

Id. at 104-05. 

5Citations herein to "J.A. __" refer to the Joint Appendix filed by the

parties in this appeal. 

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 11
Put simply, we must reject the Unions’ assertion that this

exchange manifested the County’s abandonment of its contention that the CBAs were not impaired. Instead, the County’s

lawyer appears to have recognized the district court’s differing viewpoint and its suggestion that the argument focus on

another issue.6 Under the Unions’ position, the County’s attorney could have preserved its impairment contention only by

continuing to argue with the court after it had already forcefully rejected the County’s position. Although a lawyer’s

statements may constitute a binding admission of a party, any

such statement must be "deliberate, clear, and unambiguous"

before we will afford it preclusive effect. Meyer v. Berkshire

Life Ins. Co., 372 F.3d 261, 265 n.2 (4th Cir. 2004) (alteration

and internal quotation marks omitted). In this instance, the

County attorney’s representations at oral argument do not,

when assessed in context, demonstrate the deliberate, clear,

and unambiguous abandonment of the contention that the

CBAs were not impaired by the furlough plan.7 Accordingly,

we are satisfied that the County adequately preserved that

contention below.

6The Unions seek to bolster their abandonment contention by emphasizing that the County did not raise the issue of contract impairment in its

supplemental brief after the argument (and after limited discovery). The

County’s submission, however, was merely a supplement to its original

brief, which squarely raised the impairment contention. Supplemental

briefing was only authorized so that the parties could update their contentions following discovery and the legal contention of whether there was

a contract impairment was not affected by the discovery proceedings. 

7Notably, even if the County’s lawyer had admitted that the CBAs were

somehow impaired by the furlough plan, it is far from clear that such an

admission would have bound the district court in assessing the Contract

Clause claim. See New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 24

(4th Cir. 1963) ("When counsel speaks of legal principles, as he conceives

them and which he thinks applicable, he makes no judicial admission and

sets up no estoppel which would prevent the court from applying to the

facts disclosed by the proof, the proper legal principles as the Court understands them."). 

12 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
B.

Turning to the merits of the Contract Clause claim of Count

Three, the district court erred in ruling, under the first prong

of the constitutional test, that the CBAs were impaired. Pursuant to the terms of the County’s Personnel Law, each provision thereof — including the authorization for furloughs

contained in section 16-229 — must be read into the CBAs.

The Unions maintain that section 16-229 "does not clearly

manifest an intent on the County’s part to reserve to itself

such a unilateral contract modification power." Br. of Appellees 21. Such a construction of section 16-229, however, is

foreclosed by the Personnel Law’s plain terms, which the district court recognized when it awarded summary judgment to

the County on the two Personnel Law claims of Counts One

and Two.

1.

The County’s Personnel Law is found in Subtitle 16 of the

County Code. Section 16-103 provides that 

the provisions of this Subtitle shall apply to any

employee occupying a position in the classified service where said employee is governed by a collective

bargaining agreement . . . , except as specifically

provided otherwise under the provisions of Section

16-233.

P.G. County Code § 16-103(a)(3) (emphasis added). Section

16-233, in turn, refers specifically to this principle, stating

that "the provisions of this Subtitle shall apply to any

employee who is governed by a collective bargaining agreement . . . , except as specifically provided otherwise in such

collective bargaining agreements." Id. § 16-233(a) (emphasis

added); see also id. § 16-233(b) ("[T]he provisions of this

Subtitle shall be presumed to be Countywide in nature . . . .").

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 13
Indeed, section 16-233(e) creates the only exception to the

principle that the Personnel Law is read into every CBA: 

Upon adoption of [a CBA] by the County Council,

any provision in the applicable agreement contrary

to the provisions of this Subtitle shall have the effect

of amending any such provision and enacting the

provision into law applicable to that collective bargaining unit. 

Id. § 16-233(e). 

The furlough provision in section 16-229, which is part of

Subtitle 16, provides that "[e]mployees occupying full or parttime positions in either the classified or exempt service . . .

may be required to take leave without pay as a furlough." P.G.

County Code § 16-229(a). That provision further specifies

that furloughs may be implemented, inter alia, "[w]here the

County Executive determines that an ascertained shortfall in

revenue, based upon available projections, during any fiscal

year[,] requires the compensation level of a department,

agency, or office to be reduced." Id. § 16-229(a)(1). When the

County Executive makes such a determination, he must transmit to the County Council a furlough plan in resolution form.

See id. § 16-229(b). 

It is a cardinal principle of contract interpretation that the

parties are presumed to contract against the backdrop of relevant law; thus, "all applicable or relevant laws must be read

into the agreement of the parties just as if expressly provided

by them, except where a contrary intention is evident." Lema

v. Bank of Am., N.A., 826 A.2d 504, 516 (Md. 2003) (internal

quotation marks omitted). Here, that paramount principle has

been accorded added force by section 16-103(a)(3), which

mandates that every provision of the Personnel Law —

including the furlough provision — apply to the County

employees governed by the CBAs. Thus, in light of the foregoing provisions of the County’s Personnel Law, the CBAs

14 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
necessarily included as a term thereof the possibility of

employee furloughs.

In seeking to avoid this conclusion as to Count Three, the

Unions offer an interpretation of the CBAs that is expressly

foreclosed by the district court’s unappealed rulings on

Counts One and Two. See Opinion, 645 F. Supp. 2d at 503-

08. In short, the Unions assert that section 16-229 says "nothing about the unilateral abrogation or modification of contracts that prohibit furloughs." Br. of Appellees 28 (emphasis

added). The Unions are unable, however, to identify any provision of the applicable CBAs that actually prohibits furloughs. If they had made such an identification, the Unions

would have been entitled to summary judgment on Count

One, as section 16-233(e) of the Personnel Law authorizes

such a CBA provision to override the general authority for

furloughs contained in section 16-229. Nevertheless, the court

awarded summary judgment to the County on Count One,

precisely because the applicable CBAs do not prohibit furloughs. Indeed, although previous CBAs expressly barred furloughs, they no longer do so. See Opinion, 645 F. Supp. 2d

at 505. Thus, even though the CBAs guarantee certain wages

and hours, those guarantees are subject to a significant caveat:

the County may yet implement furloughs pursuant to section

16-229. 

The Unions seek to countermand this plain reading of the

Personnel Law by relying on our Baltimore Teachers Union

decision. See 6 F.3d at 1015-16. That decision is inapposite

here, though, because the Personnel Law applies section 16-

229’s authorization for furloughs to those employees covered

by CBAs. In Baltimore Teachers Union, the City had adopted

a furlough plan and then sought to defend a Contract Clause

claim by asserting, much like the County here, that it had

reserved the right to unilaterally modify the contracts. See id.

The City’s position was undercut, however, by the general

nature of the provision on which it relied for authority to

modify the contracts — Article VI, section 2(g) of the City

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 15
Charter. That provision provided that, where deficiencies

arose from the City’s failure to realize sufficient income, the

Board of Estimates "shall effect reductions . . . in appropriations." Id. at 1016 n.3. Unsurprisingly, we recognized the

charter provision — which failed to reference contracts or

personnel practices — as far too general to "necessarily subsume the power to modify contracts." Id. at 1016. Thus, we

concluded that the charter provision did "not clearly evidence

an intention to authorize such modifications." Id. at 1016.8

In this situation, however, the County does not rely on such

a general grant of authority regarding its ability to implement

furloughs. Rather, it points to a specific provision of the Personnel Law, entitled "Furloughs," and an equally specific provision of that Subtitle providing that each of the provisions

therein applies to employees covered by CBAs. The Baltimore Teachers Union decision is thus readily distinguishable

from the circumstances presented in this appeal. Accordingly,

we reject the proposition that the furlough plan impaired the

CBAs. 

2.

In the alternative, the Unions contend that, even if section

16-229’s furlough provision authorizes the County to modify

the CBAs, such a reservation of rights to the County would

itself contravene the Contract Clause. In support of this contention, the Unions again rely on Baltimore Teachers Union,

this time resting on dicta found in a footnote of the majority

opinion. See 6 F.3d at 1016 n.5. In a concurring opinion,

Judge Widener had maintained that another provision of the

8Further distinguishing Baltimore Teachers Union from this case, it was

questionable there whether the City’s furlough plan was even consistent

with the budget reduction procedures required by section 2(g) of the City

Charter. See 6 F.3d at 1016 n.4. By contrast, there is no suggestion of

irregularity with respect to the process by which this furlough was implemented. 

16 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
City law, the Neall Amendment, permitted the City to unilaterally modify the CBAs in question. See id. at 1024 (Widener,

J., concurring). The Neall Amendment was stated as broadly

as the City Charter, authorizing the City to "take any action

necessary, including any action to reduce a previously

approved appropriation." Id. The panel majority reasoned

that, even if the Neall Amendment could be read to authorize

furloughs (a proposition rejected by the majority), (1) there

would have been such a failure of mutual obligation that it

would be "doubtful" whether any contract existed and (2) "the

Amendment, so read, would almost certainly violate the Contract Clause itself." Id. at 1016 n.5 (emphasis added). 

The latter point — mere unsupported dicta — cannot be

read to invalidate the much narrower authorization for furloughs found in section 16-229 of the Personnel Law. As an

initial matter, the hypothetical countered by the Baltimore

Teacher Unions majority — the concurrence’s broad reading

of the Neall Amendment — is distinguishable from the more

circumscribed authorization for furloughs contained in section

16-229. And, assuming that such dicta is applicable here, the

constitutional analysis therein is not supported by any legal

authority. In fact, the Unions are unable to identify any

authority that has invalidated, under the Contract Clause, a

statutory provision reserving to a governmental entity a limited right to modify its own contracts. Indeed, such a rule

would contradict Supreme Court precedent concerning the

incorporation of preexisting law into contracts. See, e.g.,

Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 429-30

(1934) ("[T]he laws which subsist at the time and place of the

making of a contract . . . enter into and form a part of it, as

if they were expressly referred to or incorporated in its terms."

(internal quotation marks omitted)). Indeed, the Court has

emphasized that this "principle embraces alike those [laws]

which affect [a contract’s] validity, construction, discharge,

and enforcement." Id. at 430 (internal quotation marks omitted); see also Long Island Water Supply Co. v. Brooklyn, 166

U.S. 685, 692 (1897). 

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 17
Moreover, the Unions’ contention that such a reservation of

rights would itself contravene the Contract Clause is belied by

yet another provision of the County’s Personnel Law: section

16-233(e). In short, the Unions maintain that any reservation

of authority to the County, such as that contained in the authorization for furloughs in section 16-229, would unconstitutionally impair the Unions’ ability to enter into meaningful

and binding contracts. That notion is undercut, however, by

section 16-233(e), which provides that a specific CBA provision can override any generally applicable provision of the

Personnel Law. In other words, if the Unions were to enter

into CBAs with the County that specifically prohibit furloughs — as they once did — then section 16-233(e) would

preclude the County from furloughing the employees covered

by those CBAs, notwithstanding section 16-229. Simply put,

the Unions were free to protect any economic or financial

expectancy with regard to wages and hours by securing the

County’s concurrence in a CBA that prohibited such furloughs, just as they had previously done. In essence, therefore, the Unions are simply asking for the benefit of a contract

provision that was left on the bargaining table. 

Nevertheless, even under the current CBAs, the Unions

were not without a legal remedy. Due to the limitations

imposed on the County Executive and the County Council by

section 16-229, the Unions were entitled to pursue a claim

under the Personnel Law that the furlough plan contravened

section 16-229. Indeed, the Unions advanced such a contention in Count Two of their complaint. In rejecting that claim,

however, the district court simply ruled that the County’s furlough plan was consistent with the Personnel Law. That ruling

should also have informed the court’s assessment of whether

the CBAs were impaired for purposes of the Contract Clause.

In short, because the CBAs provided for the possibility of furloughs, the court erred in its application of the first prong of

the Contract Clause test. Accordingly, we must reverse the

summary judgment award to the Unions.

18 FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY
IV.

Pursuant to the foregoing, we reverse the judgment of the

district court on Count Three.

REVERSED

FRATERNAL ORDER v. PRINCE GEORGE’S COUNTY 19