Opinion ID: 795813
Heading Depth: 2
Heading Rank: 1

Heading: Substantial Impairment and Legitimate Public Purpose

Text: 15 We discuss questions (1) and (2) together. First, we agree with the district court that the wage freeze substantially impairs the unions' labor contracts with Buffalo. To assess whether an impairment is substantial, we look at the extent to which reasonable expectations under the contract have been disrupted. Sanitation & Recycling Indus., 107 F.3d at 993. Contract provisions that set forth the levels at which union employees are to be compensated are the most important elements of a labor contract. The promise to pay a sum certain constitutes not only the primary inducement for employees to enter into a labor contract, but also the central provision upon which it can be said they reasonably rely. With that in mind, we may safely state the wage freeze so disrupts the reasonable expectations of Buffalo's municipal school district workers that the freeze substantially impairs the workers' contracts with the City. See Ass'n of Surrogates and Sup.Ct. Reporters v. New York (Surrogates), 940 F.2d 766, 772 (2d Cir.1991) (noting that a statute affecting timing of payment of salary substantially impaired public employees' contract). 16 Second, we next ask if the legislature had a legitimate public purpose in passing the Act and providing for a wage freeze. When a state law constitutes substantial impairment, the state must show a significant and legitimate public purpose behind the law. See Energy Reserves Group, 459 U.S. at 411-12, 103 S.Ct. 697; Sanitation & Recycling Indus., 107 F.3d at 993. A legitimate public purpose is one aimed at remedying an important general social or economic problem rather than providing a benefit to special interests. Sanitation & Recycling Indus., 107 F.3d at 993. And as discussed in a moment, the purpose may not be simply the financial benefit of the sovereign. 17 The New York legislature had a legitimate public purpose in passing the Act and its wage freeze power. It is not disputed that Buffalo was suffering at the time, and continues to suffer, a fiscal crisis. The state legislature passed the Act to address specifically the City's financial problems. See N.Y. Pub. Auth. Law § 3850-a (McKinney Supp.2006) (declaring that the city of Buffalo is facing a severe fiscal crisis, and that the crisis cannot be resolved absent assistance from the state). This is not a case in which the Act and wage freeze were passed for the mere advantage of particular individuals, Blaisdell, 290 U.S. at 445, 54 S.Ct. 231; rather, the legislature passed the law for the protection of a basic interest of society, id. Further, courts have often held that the legislative interest in addressing a fiscal emergency is a legitimate public interest. See, e.g., id. at 444-48, 54 S.Ct. 231 (statute impairing mortgages found to be constitutional in light of depression era exigencies); In re Subway-Surface Supervisors Ass'n v. New York City Transit Auth. (Subway-Surface), 44 N.Y.2d 101, 112-14, 404 N.Y.S.2d 323, 375 N.E.2d 384 (1978) (statute freezing municipal wages held to be constitutional given fiscal emergency afflicting New York City). We find no reason in the instant case to reach a conclusion contrary to that reached in the cited cases.