Opinion ID: 1715099
Heading Depth: 1
Heading Rank: 5

Heading: contract clause analysis

Text: In my view, the majority applies the wrong test in addressing plaintiffs' Contract Clause claim. The United States Supreme Court has affirmed there exists a dual standard of review for impairment of contract cases. United States Trust Company of New York v. New Jersey, 431 U.S. 1, 26 n. 25, 97 S.Ct. 1505, 1519 n. 25, 52 L.Ed.2d 92 (1977) (citing Perry v. United States, 294 U.S. 330, 350-51, 55 S.Ct. 432, 435, 79 L.Ed. 912 (1935)); Caritas Services, Inc. v. Department of Social and Health Services, 123 Wash.2d 391, 869 P.2d 28, 35 n. 6 (1994). Impairments of a state's own contracts face more stringent examination under the Contract Clause than would laws regulating contractual relationships between private parties. Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244 n. 15, 98 S.Ct. 2716, 2716 n. 15, 57 L.Ed.2d 727 (1978) (citing United States Trust Company v. State of New Jersey, 431 U.S. at 22-23, 97 S.Ct. at 1517 (1977)). See Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 413 n. 14, 103 S.Ct. 697, 705 n. 14, 74 L.Ed.2d 569 (1983) (In the present case, of course, the stricter standard of United States Trust Co. does not apply because Kansas has not altered its own contractual obligations). For both private and public contracts, the initial inquiry is whether the state law has in fact operated as a substantial impairment of a contractual relationship. [4] In contrast to the test for private contracts which next focuses on whether a significant and legitimate public purpose justifies the impairment, see Segura v. Frank, 93-1271 (La.1/14/94), 630 So.2d 714, the stricter Contract Clause standard for public contracts requires a determination as to whether the impairment is both reasonable and necessary to serve an important public purpose. United States Trust Company, 431 U.S. at 25, 97 S.Ct. at 1519; Carlstrom v. State, 103 Wash.2d 391, 694 P.2d 1 (1985); MacLean v. State Board of Retirement, 432 Mass. 339, 733 N.E.2d 1053, 1058 (2000); Opinion of Justices, 135 N.H. 625, 609 A.2d 1204, 1210 (1992); Davies v. Minneapolis, 316 N.W.2d 498, 502 (Minn.1982); Buckman v. Montana Deaconess Hospital, 224 Mont. 318, 730 P.2d 380, 385 (1986); Halpin, 320 N.W.2d at 915; Parker v. Wakelin, 123 F.3d 1, 5 (1st Cir.1997); Maryland Teachers Ass'n v. Hughes, 594 F.Supp. 1353, 1361-62 (D.Md. 1984).