Court Opinion

ID: 4546224
Source: CourtListenerOpinion
Date Created: 2020-07-06 14:09:07.165973+00
Date Added: 2024-06-11T12:48:51.930359
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                                APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-5237-18T4

GEORGE E. NORCROSS, CONNER
STRONG & BUCKELEW, LLC, NFI,
LP, THE MICHAELS ORGANIZATION,
LLC, COOPER UNIVERSITY HEALTH
CARE, and PARKER MCCAY, PA,

          Plaintiffs-Appellants,

v.

PHILIP DUNTON MURPHY, in his
official capacity as Governor of the
State of New Jersey, THE TASK FORCE
ON THE EDA'S TAX INCENTIVES,
RONALD K. CHEN, in his capacity as
the Governor's Designee under N.J.S.A.
52:15-7, WALDEN MACHT & HARAN
LLP, JIM WALDEN, and QUIÑONES
LAW PLLC,

          Defendants-Respondents,

and

THE NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY,

     Nominal Defendant.
_________________________________
Submitted March 30, 2020 – Decided July 6, 2020

Before Judges Moynihan and Mitterhoff.

On appeal from the Superior Court of New Jersey, Law
Division, Mercer County, Docket No. L-1007-19.

Brown & Connery, LLP, and Critchley, Kinum &
Denoia, LLC, attorneys for appellants Strong &
Buckelew, LLC, NFI, LP, and The Michaels
Organization, LLC (William M. Tambussi and Michael
D. Critchley, on the joint briefs).

Stern Kilcullen & Rufolo, LLC, attorneys for appellant
Cooper University Health Care (Herbert J. Stern, on the
joint briefs).

Marino Tortorella & Boyle, PC, attorneys for appellant
Parker McCay, PA (Kevin H. Marino, on the joint
briefs).

Rahat N. Babar and Theodore V. Wells, Jr. (Paul,
Weiss, Rifkind, Wharton & Garrison LLP) of the New
York bar, admitted pro hac vice, attorneys for
respondents (Alison R. Benedon, Kannon K.
Shanmugam (Paul, Weiss, Rifkind, Wharton &
Garrison LLP) of the New York bar, admitted pro hac
vice, Yahonnes Cleary (Paul, Weiss, Rifkind, Wharton
& Garrison LLP) of the New York bar, admitted pro
hac vice, Benjamin Moskowitz, of the New York bar,
admitted pro hac vice, Jamie Witte (Paul, Weiss,
Rifkind, Wharton & Garrison LLP) of the New York
bar, admitted pro hac vice, and Daniel R. Friel (Paul,
Weiss, Rifkind, Wharton & Garrison LLP) of the New
York bar, admitted pro hac vice, of counsel; Rahat N.
Babar and Theodore V. Wells, Jr., of counsel and on the
brief).

                                                          A-5237-18T4
                          2
PER CURIAM

      Plaintiffs George E. Norcross, Conner Strong & Buckelew, LLC (Conner

Strong), NFI, L.P. (NFI), The Michaels Organization, LLC (Michaels), Cooper

University Health Care (Cooper Health), and Parker McCay, P.A. (Parker

McCay), appeal from the July 31, 2019 dismissal of count two of their

complaint, in which they alleged four companies—Conner Strong, NFI,

Michaels, and Cooper Health—that applied for tax incentives from the New

Jersey Economic Development Authority (EDA) were wrongfully investigated

by the Task Force on EDA's Tax Incentives (Task Force), created by Governor

Philip Dunton Murphy. On appeal, plaintiffs contend that the judge erred in

considering extrinsic evidence in dismissing count two but also that their

allegations sufficed to survive dismissal. Alternatively, plaintiffs contend that

dismissal should have been without prejudice. Having reviewed the record in

light of the governing law, we affirm the dismissal, with prejudice, of count two

of plaintiffs' complaint.

                                       I.

      On January 19, 2017, State Auditor Stephen M. Eells provided the

Governor's Office with a report (State Auditor's report), which summarized his

findings from an audit of three EDA incentive programs for the period of July

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                                       3
1, 2011 through September 30, 2016. Stephen M. Eells, N.J. State Legislature,

Office of Legislative Servs., Office of the State Auditor, New Jersey Economic

Development Authority Selected Incentive Programs (2017).              The audit's

purpose was "to determine whether adequate controls were in place at the [EDA]

to award and administer business[-]incentive program grants in compliance with

statutory requirements and whether the [EDA] was monitoring grant recipients

for compliance with statutory requirements." Id. at 1.

      One of the programs audited was the Grow New Jersey Assistance

Program (GROW).1 Id. at 3-4. Eells observed that when a business (other than

proposing a project in the City of Camden) applies for GROW incentives, it

must show "that existing full-time jobs are at risk of leaving the state or of being

eliminated, and that the award of tax credits under the program will be a material

factor in the business'[] decision to retain the jobs or create new jobs in New

Jersey." Id. at 3. Thus, the EDA required applicants to submit a cost-benefit

analysis, detailing "the costs to continue operations in New Jersey and the lower

1
   GROW was created "to encourage economic development and job creation
and to preserve jobs that currently exist in New Jersey but which are in danger
of being relocated outside of the State." N.J.S.A. 34:1B-244(a). As of
September 30, 2016, the EDA had "awarded 207 GROW grants valued at $3.9
billion of which $10.8 million in tax credits ha[d] been certified." New Jersey
Economic Development Authority Selected Incentive Programs at 1.
                                                                            A-5237-18T4
                                         4
costs to relocate to proposed out-of-state sites." Ibid. Eells examined the EDA's

review of the cost-benefit analyses submitted for four projects. Ibid.

      Based on the audit, Eells concluded that the EDA lacked adequate controls

in its process for awarding tax incentives under GROW. Id. at 2.    He

recommended that "the [EDA] maintain a more complete file of [its] review of

the cost[-]benefit analysis submitted by an applicant," and an "award of tax

credits should not be forwarded to the [EDA] board for approval until the proper

supporting documentation has been obtained . . . and the out-of-state option has

been proven to be more economical." Id. at 3-4. He also observed that the

formulas the EDA was using for projects in the City of Camden "might not yield

the intended benefits." Id. at 7.

      On January 19, 2018, Governor Murphy issued Executive Order No. 3

(EO 3), wherein he explained that "New Jersey's current economic incentive

programs have proven less effective than those in other states," and "despite the

dramatic increase in tax incentives, New Jersey's economic recovery from the

recession caused by the financial crisis has lagged behind competitor states."

Exec. Order No. 3 (Jan. 19, 2018), 50 N.J.R. 883(a) (Feb. 20, 2018). Referring

to the State Auditor's report, the Governor noted that "the EDA needed to

                                                                         A-5237-18T4
                                       5
improve its efforts to verify several aspects of applications submitted by

businesses" and "strengthen procedures designed to ensure compliance with the

terms of the EDA grants." Ibid. Consequently, he directed the Office of the

State Comptroller to "conduct a complete performance audit of [GROW] and

the Economic Redevelopment and Growth Grant Program [(ERG)], and

predecessor programs, from 2010 onward." The audit was intended to "inform

the public about the EDA's operations and assist lawmakers in their deliberations

as to whether these programs should be reauthorized when they expire on July

1, 2019." Ibid.

      On January 9, 2019, State Comptroller Philip James Degnan issued a

report (State Comptroller's report), which summarized his findings and

conclusions from the performance audit. Philip James Degnan, State of N.J.

Office of the State Comptroller, New Jersey Economic Development Authority:

A Performance Audit of Selected State Tax Incentive Programs (2019). He

concluded that the EDA lacked key internal controls to administer its incentive

programs, monitor recipients' compliance after approving an award, and

evaluate the effectiveness of the programs. Id. at 9. Because of the deficiencies

in the application and performance review processes, "incentive awards have

been improperly awarded, overstated, and overpaid." Id. at 20.

                                                                         A-5237-18T4
                                       6
      In response to the State Comptroller's Report, Governor Murphy issued

Executive Order No. 52 (EO 52). Exec. Order No. 52 (Jan. 24, 2019), 51 N.J.R.

190(b) (Feb. 19, 2019). EO 52 established the Task Force, a "purely advisory"

body, "to conduct an in-depth examination of the deficiencies in the design,

implementation, and oversight of [GROW] and ERG, including those identified

in the State Comptroller's performance audit." Ibid. It also authorized the Task

Force to hold public hearings and seek information from "any department,

office, division or agency of this State" and "voluntary cooperation from any

individuals or entities who have access to information pertinent to the Task

Force's mission." Ibid.

      The Governor appointed Rutgers law professor Ronald K. Chen to serve

as Chair of the Task Force, and he retained Jim Walden, of Walden Macht &

Haran LLP (Walden Macht), and Pablo Quiñones, of Quiñones Law PLLC

(Quiñones Law), to advise. On March 22, 2019, he further authorized Chen,

under N.J.S.A. 52:15-7, "to examine and investigate the management and affairs

of the EDA, and the management by any State officer of the affairs of the EDA,

relating to New Jersey's tax[-]incentive programs."

      Meanwhile, in February 2019, the Task Force began its investigation.

Walden sent document-preservation letters to companies that were certified to

                                                                        A-5237-18T4
                                       7
and did receive tax credits and to an additional group of companies that were

later identified during the investigation. The plaintiff companies were among

the companies that received these letters. Walden directed the companies to

"preserve all documents and communications that may be potentially relevant to

the Task Force's investigation" into deficiencies in administering GROW and

ERG, including documents from January 1, 2010 to the present that were related

to GROW or ERG incentives received or applied for, data or certifications

related to GROW or ERG, jobs created or retained and capital investments made

in accordance with program requirements, dates of retention and termination of

all New Jersey-based employees, potential relocation of or offers to relocate

offices outside of New Jersey, and all communications about the programs with

private third parties or employees or agents of the State.

      On March 28, 2019, the Task Force held a public hearing, at which it

presented an overview of the investigation. It offered testimony from the State

Comptroller; a whistleblower, who alleged that her former employer "knowingly

submitted false information to [the] EDA in order to get the tax incentives;" and

representatives of the Pew Charitable Trusts and the New Jersey Policy

Perspective, both of which advocated for caps on the EDA's incentive programs.

                                                                         A-5237-18T4
                                        8
      Thereafter, Chen issued subpoenas to Conner Strong, NFI, Cooper Health,

and Michaels. He sought information relevant to "(a) whether [the] EDA's

policies and procedures were sufficient to identify potential fraud or misuse of

[GROW and ERG] and (b) whether any company was able to defraud or misuse

[these] programs through any oversight failures." Specifically, he focused on

information about the consideration of an alternate location, including

documents about site visits, business plans about the proposed use of the

alternate location, analyses of the suitability of and relocation costs associated

with the alternate location, communications with the owner of the alternate

location, communications with the EDA about the alternate location, and

documents provided to any law enforcement agency, starting on January 1, 2015,

related to the alternate location.

      On May 1, 2019, Walden wrote to plaintiffs, informing them that the Task

Force planned to hold another public hearing the following day. He advised that

information adverse to their interests might be offered; therefore, under N.J.S.A.

52:13E-6, they were "afforded the opportunity to submit a sworn, written

statement to be incorporated into the record," addressing any such evidence.

      At the hearing, Walden explained that the Task Force was concerned that

it found "evidence of two schools of thought within the EDA" about whether

                                                                          A-5237-18T4
                                        9
applicants proposing projects in the City of Camden were required to show that

jobs were at risk of leaving the State. The impact of making such a showing

was significant, as a company that did would be able to show a greater net

benefit to the State from their project, resulting in a greater GROW incentive.

Based on the Task Force's investigation, with the exception of one company,

"every single applicant promising to move jobs from within New Jersey to

Camden actually certified that they were considering an out-of-state location."

Therefore, the Task Force examined applications from four companies that

"claimed to have an out-of-state location to demonstrate that jobs were at risk"

to determine "the level of diligence that was applied" in reviewing the

applications, not to "insinuat[e] that anyone broke the law."

      After Walden's opening remarks, there was testimony from Walden's

colleague and an EDA senior vice president about a whistleblower formerly

employed at the EDA; a different whistleblower; the principal of a corporate site

selection firm; the EDA's Managing Director of Underwriting, David Lawyer;

the EDA's former President and Chief Operating Officer, Timothy Lizura; and

the President of the New Jersey Policy Perspective.

      Lawyer explained the EDA's process for evaluating GROW applications,

and it was his understanding that all applicants, including those proposing

                                                                         A-5237-18T4
                                      10
projects in the City of Camden, were required to show that jobs were at risk of

leaving the State. Walden then asked him to discuss the files for the four

plaintiff companies. He explained that Conner Strong, NFI, and Michaels all

submitted expired letters of intent for their proposed out-of-state locations, and

when asked to extend the letters of intent, several months later they produced

new letters for similar space with smaller square footages and different

configurations, and two of the letters were only good for under two weeks. Upon

reviewing these files, Lawyer was concerned that the underwriter had not

questioned any of the notable differences or the length of time it took the

companies to obtain updated letters of intent. With respect to Cooper Health's

application, Lawyer expressed concern that the underwriter did not question its

original statement that there were no jobs at risk of leaving the State and the

competitor state was to be determined, while Cooper Health then began site

visits after it submitted its application.

       Lizura disagreed with Lawyer's view that applicants proposing projects

in the City of Camden were required to show that jobs were at risk. Aside from

this issue, he largely testified about the New Jersey Economic Opportunity Act

                                                                          A-5237-18T4
                                         11
of 2013, L. 2013, c. 161,2 which restructured the EDA's tax-incentive programs.

He noted that a Parker McCay lawyer was involved in editing a draft of the bill.

      Four days after the hearing, the plaintiff companies wrote to Walden,

objecting to the Task Force's investigation and "demand[ing] an opportunity to

submit a public presentation to the Task Force at its next scheduled hearing."

Walden responded, offering each company the opportunity to present fact

witnesses at the next hearing.

      On May 21, 2019, plaintiffs filed a complaint against defendants. In count

two, they sought "a declaratory judgment that N.J.S.A. 52:15-7 does not

authorize an investigation of entities and individuals who are not involved in the

management and affairs of state government." 3        Plaintiffs asserted that by

investigating them, the Task Force, Chen, Walden Macht, and Quiñones Law

were "not conducting a bona fide examination of any State officer or the

2
  This law is codified as amended in scattered sections of Titles 34 and 52 of
the New Jersey Statutes.
3
   Count two was asserted against the Task Force, Chen, Walden Macht, and
Quiñones Law. The other counts alleged (1) the creation of the Task Force for
its stated purpose was unlawful under N.J.S.A. 52:15-7; (2) the Task Force's
denial of trial-like rights at the public hearings was unlawful under the federal
and state constitutions and N.J.S.A 52:15-7; (3) compensatory payments to
Walden Macht and Quiñones Law were unlawful under N.J.S.A. 52:15-7; and
(4) Walden knowingly engaged in the unauthorized practice of law in New
Jersey.
                                                                          A-5237-18T4
                                       12
management and affairs of any department of State government," thereby

exceeding their authority under the statute.

      In June 2019, the Task Force planned to hold a third public hearing.

Plaintiffs filed an order to show cause with temporary restraints, seeking to

preclude the Task Force from holding further public hearings and publishing

reports based on its investigation. The Task Force agreed to cancel the hearing

to allow the court to address plaintiffs' application. After hearing oral argument,

Judge Mary C. Jacobson denied plaintiffs' request in an oral decision.

      Soon after, the Task Force released its first report. Ronald K. Chen,

Walden Macht & Haran LLP & Quiñones Law, PLLC, Governor's Task Force

on EDA Tax Incentives (2019). The Task Force explained that although the

focus of the investigation "has been and shall remain on the EDA, [the]

investigation necessarily involves a review of companies' tax-incentive

applications to determine how the EDA administered the [GROW] and ERG

programs." Id. at 6. In explaining the scope of the investigation, the Task Force

noted Parker McCay's representation of some applicants raised "red flags," as

the firm had been involved in editing the incentive legislation in a way that

"seemed to be adding special provisions . . . to benefit particular clients." Id. at

                                                                            A-5237-18T4
                                        13
12. The Task Force found that Parker McCay represented each of the plaintiff

companies around the time they applied for GROW incentives. Id. at 50, 55-57.

      The investigation revealed that the EDA lacked adequate procedures to

train its employees to review incentive applications and conduct research to

verify information included in the applications. Id. at 3-4. For example, a

"simple Internet search revealed that three companies—[Conner Strong,

Michaels, and NFI]—committed to move to Camden more than a year before

submitting their applications for tax incentives, in which they claimed they were

considering relocating to Pennsylvania as a potential alternative." Id. at 4. This

information may have led to the denial of incentives, had it been uncovered at

the time. Ibid. Further, Cooper Health stated in its application that no jobs were

at risk of leaving the State, but then "[t]he EDA subsequently accepted, without

any skepticism or further diligence, Cooper Health's later claim that it was

considering an out-of-state relocation, and approved Cooper Health for nearly

$40 million in tax incentives." Id. at 5. If the award had been based on the

statement that no jobs were at risk, the award would have only been around $7

million. Ibid. A more detailed background of each of these concerns was

provided later in the report. Id. at 49-63.

                                                                          A-5237-18T4
                                       14
      After the report was published, Chen reissued subpoenas to the plaintiff

companies, again requesting information related to the alternate location the

companies stated they considered when applying for GROW incentives.

      Defendants moved to dismiss plaintiffs' complaint. Judge Jacobson heard

oral argument and, in another oral decision, dismissed plaintiffs' entire

complaint with prejudice.

      The judge first concluded that N.J.S.A. 52:15-7 authorized the Governor

to investigate the EDA. In addressing count two, the judge noted that defendants

conceded that N.J.S.A. 52:15-7 did not authorize the Task Force to investigate

private entities or individuals; therefore, she considered whether the Task Force

exceeded its authority by investigating the plaintiff companies as part of its

investigation into the EDA.

      The judge determined that it was appropriate to consider the findings in

both the State Auditor's report and the State Comptroller's report:

            [T]he [c]ourt can look at . . . the four corners of the
            complaint, documents referred to in the complaint, even
            if not attached, matters of public record, or . . . anything
            relied on in the complaint, without converting the
            motion to dismiss into one for summary judgment.
                   And . . . the complaint attached [EO] 52, which
            refers to the [State Comptroller's] report. The [State
            Comptroller's] report has in it the reference to the [State
            Auditor's] report. The [State Auditor's] report is a
            matter of public record.

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                                       15
She further explained,

             [T]he aim of the rule about . . . not going outside the
             complaint is a sense of fairness and not . . . considering
             things that are a surprise to the plaintiff . . . and, of
             course that . . . doesn't apply here because the whole
             history of the concerns raised about [the] EDA are well
             known to . . . everyone.

Both reports were relevant, as they provided critical context:

             [T]here was a basis in those reports, whether they were
             true or not, you certainly had . . . independent public
             entities, the [A]uditor and the [C]omptroller, saying
             there are issues with the EDA. There's not appropriate
             oversight. There's not appropriate due diligence. This
             needs to be addressed. The [C]omptroller had a whole
             host of recommendations, and then the Governor told
             the Task Force [to] look into what [we can] do with
             legislation to try to address these problems. What can
             we do with the internal management and control of the
             EDA?

      The judge also considered the subpoenas Chen issued, and plaintiffs' claim

that they were not issued as part of a bona fide investigation: "The subpoenas,

both the earlier ones and the later ones, sought . . . wide-ranging information

from . . . plaintiffs, . . . primarily regarding alternate locations[, which] are . . .

relevant under the EDA statute." Plaintiffs' reliance on these subpoenas was

inadequate to survive the motion to dismiss, as the subpoenas were a response

to the Governor's "legitimate concerns about the EDA."

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                                         16
      The judge then considered the second public hearing, including Lawyer's

testimony that the plaintiff companies' applications raised red flags. Having

reviewed the hearing transcript, the judge concluded that plaintiffs' claims were

unsupported, considering the Task Force's "requirement to do due diligence" and

the EDA's "lack of follow-up . . . for these four . . . applications."

      Ultimately, the judge concluded that plaintiffs' "claim[s] that the Task

Force exceeded its authority and targeted these individuals and [that] it was a

sham and not bona fide" were unsupported. The subpoenas and public hearings

addressed "legitimate issues for an investigatory task force to explore." To state

otherwise, without additional supporting facts, would give rise to bald assertions

insufficient to support a cause of action. This appeal ensued.

      On appeal, plaintiffs argue that the judge erred in considering the State

Comptroller's report and the State Auditor's report in dismissing count two, as

both documents constitute evidence outside the pleadings. Next, they argue that

the judge erred in dismissing count two because they alleged sufficient facts

showing that the investigation was conducted for the prohibited purpose of

targeting plaintiffs. Lastly, plaintiffs argue that dismissal should have been

without prejudice, as they claim they can plead additional facts revealing that

the Task Force improperly targeted them.

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                                        17
                                        II.

      First, we consider plaintiffs' contention that the judge erred in considering

extrinsic evidence when deciding the motion to dismiss. We review a motion to

dismiss for failure to state a claim de novo, applying the same standard under

Rule 4:6-2(e) that governed the trial judge. See Frederick v. Smith, 416 N.J.

Super. 594, 597 (App. Div. 2010).

      When considering whether a party has asserted a claim for which relief

may be granted, the "inquiry is limited to examining the legal sufficiency of the

facts alleged on the face of the complaint." Printing Mart-Morristown v. Sharp

Elecs. Corp., 116 N.J. 739, 746 (1989).          The inquiry may also include

consideration of "exhibits attached to the complaint, matters of public record,

and documents that form the basis of a claim." Banco Popular N. Am. v. Gandi,

184 N.J. 161, 183 (2005) (quoting Lum v. Bank of Am., 361 F.3d 217, 221 n.3

(3d Cir. 2004)).    Further, the "court may consider documents specifically

referenced in the complaint 'without converting the motion into one for summary

judgment.'" Myska v. N.J. Mfrs. Ins. Co., 440 N.J. Super. 458, 482 (App. Div.

2015) (quoting E. Dickerson & Son, Inc. v. Ernst & Young, LLP, 361 N.J. Super.
362, 365 n.1 (App. Div. 2003), aff'd, 179 N.J. 500 (2004)); see also In re

Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

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                                       18
      In considering these documents, the court must "search[] the complaint in

depth and with liberality to ascertain whether the fundament of a cause of action

may be gleaned even from an obscure statement of claim." Printing Mart, 116
N.J. at 746 (quoting Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super.
244, 252 (App. Div. 1957)).        Although "plaintiffs are entitled to every

reasonable inference of fact," ibid., they may not rely on conclusory allegations,

hoping that discovery will allow them to find that a cause of action exists, id. at

768. If the judge perceives no legal basis for relief, he or she must dismiss the

complaint. Sickles v. Cabot Corp., 379 N.J. Super. 100, 106 (App. Div. 2005).

      Having reviewed plaintiffs' complaint, we conclude that the judge did not

err in considering the State Auditor's report and the State Comptroller's report

in dismissing count two. Both reports could have been considered on the basis

that they are matters of public record. See Banco Popular, 184 N.J. at 183;

Teamsters Local 97 v. State, 434 N.J. Super. 393, 414 (App. Div. 2014) (citing

Hall v. Virginia, 385 F.3d 421, 424 n.3 (4th Cir. 2004)). The Offices of the State

Comptroller and the State Auditor are offices of the Executive Branch and

Legislative Branch, respectively, N.J.S.A. 52:15C-2(a); N.J.S.A. 52:24-3, and

the reports from both offices are publicly available on their respective websites.

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                                       19
      Additionally, both reports considered in this matter provide necessary

context. As the judge noted, plaintiffs' complaint referenced EO 52 and included

a copy as an exhibit. A substantial portion of EO 52 discusses and quotes

findings from the State Comptroller's report that signaled a need to investigate

deficiencies in the design, implementation, and oversight of the EDA's tax -

incentive programs, and the State Comptroller's report, as well as EO 3,

discusses the State Auditor's report. Plaintiffs' complaint also cites to a finding

in the State Comptroller's report that "the EDA had approved [1000] projects

under its various programs," as support for their allegation that "the Task Force

immediately singled out [the plaintiff companies]." Although the reference to

the State Comptroller's report is brief, and there is no reference to the State

Auditor's report, we do not find the link between these documents to be so

attenuated as to preclude their consideration.

      Moreover, while consideration of a motion to dismiss is generally "limited

to examining the legal sufficiency of the facts alleged on the face of the

complaint," Printing Mart, 116 N.J. at 746, allowing for review of the State

reports in this case serves the purpose for which the exception to this rule was

created. The Third Circuit explained,

            The rationale underlying this exception is that the
            primary problem raised by looking to documents

                                                                           A-5237-18T4
                                        20
             outside the complaint—lack of notice to the plaintiff—
             is dissipated "[w]here [the] plaintiff has actual notice
             . . . and has relied upon these documents in framing the
             complaint." What the rule seeks to prevent is the
             situation in which a plaintiff is able to maintain a claim
             of fraud by extracting an isolated statement from a
             document and placing it in the complaint, even though
             if the statement were examined in the full context of the
             document, it would be clear that the statement was not
             fraudulent.

             [Burlington Coat Factory, 114 F.3d at 1426 (first and
             third alterations in original) (citation omitted) (quoting
             Watterson v. Page, 987 F.2d 1, 4 (1st Cir. 1993)).]

      Although plaintiffs did not allege fraud, we are persuaded by the Third

Circuit's reasoning, as was the trial judge. Plaintiffs' factual allegations relevant

to count two are limited to commenting on the Governor's intent in creating the

Task Force, as set forth in EO 52, and contesting the lawfulness of the document-

preservation letters and subpoenas. However, to support their cause of action,

plaintiffs' allegations only included "isolated" statements from the documents

that formed the basis for the Task Force's investigation. Both the State Auditor's

report and the State Comptroller's report enhance the narrative and provide

necessary context to understand the Task Force's actions.          They reveal the

Governor's legitimate concerns about a State entity's administration of tax-

incentive programs, thereby supporting his creation of the Task Force and the

                                                                             A-5237-18T4
                                        21
Task Force's subsequent actions, which included issuing the letters and

subpoenas.

                                         III.

      Next, we consider plaintiffs' claim that they alleged specific facts showing

that defendants violated N.J.S.A. 52:15-7, as a showing of improper motive is

sufficient to withstand defendants' motion. Specifically, their complaint alleged

the issuance of document-preservation letters and subpoenas and the comments

made during the public hearing demonstrate that the Task Force improperly

targeted the four plaintiff companies, all of whom are private entities.

      N.J.S.A. 52:15-7 does not authorize the Governor to investigate private

individuals or entities; rather, it provides in part,

             The Governor is authorized at any time, either in person
             or by one or more persons appointed by him [or her] for
             the purpose, to examine and investigate the
             management by any State officer of the affairs of any
             department, board, bureau or commission of the State
             and to examine and investigate the management and
             affairs of any department, board, bureau or commission
             of the State. The Governor and the persons so
             appointed . . . are empowered to subpoena and enforce
             the attendance of witnesses, to administer oaths and
             examine witnesses under oath and to require the
             production of any books or papers deemed relevant or
             material.

             [Ibid.]

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Any investigation that exceeds the authorization defined in the statue is invalid.

See Commc'ns Workers of Am., AFL-CIO v. Christie, 413 N.J. Super. 229, 259

(App. Div. 2010) ("An executive order is invalid if it usurps legislative authority

by acting contrary to the express or implied will of the Legislature."). However,

"when the Governor is acting consistently with express or implied authority

from the Legislature, his or her action should be given 'the widest latitude of

judicial interpretation, and the burden of persuasion would rest heavily upon any

who might attack it.'" Id. at 259-60 (internal quotation marks omitted) (quoting

Bullet Hole, Inc. v. Dunbar, 335 N.J. Super. 562, 575 (App. Div. 2000)).

      The trial judge found, and the parties do not dispute on appeal, that

N.J.S.A. 52:15-7 authorized the Governor to create the Task Force to investigate

deficiencies in the design, implementation, and oversight of the EDA's tax-

incentive programs. The statute also allowed the Task Force to require the

production of any relevant or material documents. N.J.S.A. 52:15-7.

      In light of the focus of the Task Force's investigation, plaintiffs' claim that

the document-preservation letters and subpoenas were issued to improperly

target them is a conclusory allegation. As plaintiffs applied to the EDA for tax

incentives, the information they supplied in support of their applications is vital

to the Task Force's ability to succeed in uncovering deficiencies in the EDA's

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                                        23
evaluation of applications and post-award compliance monitoring. The purpose

and wording of the subpoenas indicate the target of the investigation was the

EDA's administration of its tax-incentive programs. The investigation of a State

agency charged with administering such programs involves the agency's

processing and grant of related applications.       A natural extension of the

investigation is the examination of the applicants' submissions to determine

whether the agency properly handled them. Parties—even private parties—have

no right to expect that their applications—made to a public agency for public

incentives—will remain private or that those applications are immune from

public scrutiny, especially those authorized by statute.

      As to plaintiffs' concerns about comments referring to them during the

second public hearing, we find that plaintiffs have taken any statements out of

context. The focus of the hearing was the EDA's processing and oversight

practices, not just a review of the plaintiff companies' applications .       Any

references to the companies were to demonstrate "the level of diligence [the

EDA] applied" in reviewing incentive applications, not to "insinuat[e] that

anyone broke the law."

      Upon consideration of the facts alleged in plaintiffs' complaint and the

publicly available information that sheds light on the purpose of the Task Force's

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                                       24
investigation, we conclude that the trial judge did not err in dismissing count

two of plaintiffs' complaint for failure to state a cause of action.

                                        IV.

      Finally, we address plaintiffs' argument that dismissal should have been

without prejudice. If granted the opportunity to amend their complaint, they

would have included additional allegations of improper targeting that occurred

after their complaint was filed. Specifically, they assert that "after . . . Norcross

published a March 11, 2019 op-ed on NJ.com defending the state's tax[-

]incentive programs, 'the Task Force decided to review the applications for those

companies' associated with him." Then, in its published report, the Task Force

concluded, without a factual basis, that the plaintiff companies were awarded

"over $70 million in improperly approved tax-incentive awards." Further, they

claim that the report "severely criticized Parker McCay for being 'involved in

the drafting process' of the legislative amendments to [GROW]."

      Generally, dismissal under Rule 4:6-2(e) should be without prejudice to

allow for the filing of an amended complaint. Printing Mart, 116 N.J. at 772.

However, judges "are free to refuse leave to amend when the newly asserted

claim is not sustainable as a matter of law." Notte v. Merchants Mut. Ins. Co.,

185 N.J. 490, 501 (2006) (quoting Interchange State Bank v. Rinaldi, 303 N.J.

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                                        25
Super. 239, 256-57 (App. Div. 1997)); see, e.g., Nostrame v. Santiago, 213 N.J.
109, 128 (2013) (affirming dismissal with prejudice where the "plaintiff

conceded that he had no further facts to plead [and] instead fil[ed] the complaint

in the hope that he could use the tools of discovery to uncover evidence of

wrongdoing").

      Having reviewed the Task Force's published report, we conclude that

plaintiffs' proposed additions would not save count two from dismissal. First,

plaintiffs misstate the reason for the Task Force's response to Norcross' op-ed.

Norcross stated that "[t]he [tax] credits were not intended to entice firms that

were leaving the state to remain." George E. Norcross, III, George Norcross:

We Need Tax Incentives to Continue to Rebuild Camden, NJ.com (Mar. 11,

2019),      https://www.nj.com/opinion/2019/03/george-norcross-we-need-tax-

incentives-to-continue-to-rebuild-camden.html.       The Task Force became

concerned because all but one of the "in-state compan[ies] that proposed a move

to Camden did . . . certify that jobs were 'at risk' of leaving the State[,] . . .

including applications from entities with affiliations to . . . Norcross, including

[Conner Strong] and Cooper Health." Governor's Task Force on EDA Tax

Incentives at 48. It also became concerned about Michaels and NFI, as they

"were affiliated with . . . Norcross in that their applications were related to

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[Conner Strong's] application." 4 Ibid. Upon a cursory review of the plaintiff

companies' applications, "additional concerns arose, and the Task Force

determined that an examination of the EDA's oversight of these applications was

appropriate."

      Additionally, any of the unfavorable comments made about plaintiffs do

not show improper motive.       The comments pertaining to misstatements in

incentive applications and the possibility that the EDA improperly awarded over

$70 million of incentives were findings from the Task Force's investigation of

deficiencies in the EDA's application process, not of plaintiffs' actions in making

those misrepresentations.

      The allegations that plaintiffs propose to include in an amended complaint

are insufficient to show that the Task Force improperly investigated private

entities. Plaintiffs' proposed allegations represent findings of the Task Force's

investigation, and the fact that they do not portray plaintiffs in a positive light

does not cast doubt on the lawfulness of its investigation. Because plaintiffs

have failed to offer any additional allegations to suggest that the Task Force

4
 According to the report, Conner Strong, Michaels, and NFI had "joint plans to
move into a new office tower on the Delaware River waterfront of Camden."
Governor's Task Force on EDA Tax Incentives at 55.
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                                       27
unlawfully investigated them in violation of N.J.S.A. 52:15-7, we conclude that

dismissal with prejudice was appropriate.

      To the extent that we have not addressed the parties' remaining arguments,

we conclude that they lack sufficient merit to warrant discussion in a written

opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

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