Court Opinion

ID: 4429087
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:17:52.549479+00
Date Added: 2024-06-11T08:48:11.882634
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NOT FOR PUBLICATION WITHOUT THE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-5465-16T3

SECURUS TECHNOLOGIES, INC.,

          Plaintiff-Appellant,

v.

PHIL MURPHY,1 GOVERNOR OF
NEW JERSEY, in his official capacity,
GURBIR S. GREWAL, ATTORNEY
GENERAL OF NEW JERSEY, in his
official capacity, MARCUS O. HICKS,
ACTING COMMISSIONER OF THE
NEW JERSEY DEPARTMENT OF
CORRECTIONS, in his official capacity,
and CAROLE JOHNSON, COMMISSIONER
OF THE NEW JERSEY DEPARTMENT
OF HUMAN SERVICES, in her official
capacity,

     Defendants-Respondents.
________________________________

                    Argued February 4, 2019 – Decided March 18, 2019

                    Before Judges Messano, Fasciale and Gooden Brown.

1
     Names of public officers have been substituted pursuant to Rule 4:34-4.
            On appeal from Superior Court of New Jersey, Law
            Division, Mercer County, Docket No. L-0143-17.

            Russell M. Blau (Morgan, Lewis & Brockius) of the
            District of Columbia Bar, admitted pro hac vice, argued
            the cause for appellant (Morgan, Lewis & Bockius,
            LLP, attorneys; Russell M. Blau and Alex R. Daniel, on
            the briefs).

            Chanel Van Dyke, Deputy Attorney General, argued
            the cause for respondents (Gurbir S. Grewal, Attorney
            General, attorney; Jason W. Rockwell, Assistant
            Attorney General, of counsel; Chanel Van Dyke, on the
            brief).

            Eric Jesse argued the cause for amicus curiae American
            Civil Liberties Union of New Jersey (American Civil
            Liberties Union of New Jersey Foundation and
            Lowenstein Sandler, LLP, attorneys; Liza F. Weisberg,
            Alexander R. Shalom, Jeanne M. Locicero and Edward
            L. Barocas, on the brief.)

PER CURIAM

      In 2016, the Legislature enacted the Rate Control Law (RCL), N.J.S.A.

30:4-8.11 to -8.14, which provides that State, county and private correctional

facilities may only contract for inmate call services (ICS) with a "qualified

vendor" that limits the rate charged to inmates to eleven cents per minute.

N.J.S.A. 30:4-8.12(a).2 The RCL also forbids any correctional facility to "accept

2
  The RCL also provides "that if international calls are included in the telephone
services made available for inmates, those calls shall be made available at

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or receive a commission or impose a surcharge for telephone usage by inmates

in addition to the charges imposed by the telephone service provider." N.J.S.A.

30:4-8.12(b). These provisions of the RCL apply to "any new or renewal

contract . . . in effect on or after the date of enactment," August 31, 2016. L.

2016, c. 37, § 5.

      Plaintiff Securus Technologies, Inc. provided ICS to inmates at the

Passaic County Jail and the Cape May County Correctional Center pursuant to

contracts awarded in 2010 and 2013, respectively. Plaintiff filed a complaint in

January 2017 seeking injunctive and declaratory relief against the then-governor

and various state officials (collectively, the State), arguing that the RCL violated

the takings and due process clauses of the United States Constitution, United

States Constitution amendment V, and the takings clause of the New Jersey

Constitution. N.J. Const. art. I, ¶ 20.

      Plaintiff's complaint alleged that it had made substantial "infrastructure"

improvements at the facilities, the costs of which it could no longer recoup

because of the RCL's statutory limit on ICS phone charges. It alleged that the

reasonable rates subject to Federal Communications Commission rules and
regulations, but not to exceed [twenty-five] cents per minute." N.J.S.A. 30:4-
8.12(c). The statute also requires every correctional facility to establish "either
a prepaid or collect call system, or a combination thereof, for telephone services
for inmates." N.J.S.A. 30:4-8.13(a).
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rate limit prohibited plaintiff's ability to seek renewal of its current contracts or

bid on future contracts.

      The State did not answer, but instead moved to dismiss the complaint with

prejudice for failure to state a claim for relief. R. 4:6-2(e). In support of the

motion, the State provided the Passaic and Cape May County documents

regarding plaintiff's contracts. The State argued that plaintiff lacked standing

because the contract with Passaic County had expired and the county had

awarded a new contract to a different vendor, and the Cape May contract was

unaffected by the RCL. The State also argued that plaintiff had no defined

"property interest" in future contracts and could not invoke the Declaratory

Judgment Act (DJA), N.J.S.A. 2A:16-50 to -62, because there was no

"justiciable controversy."     The American Civil Liberties Union (ACLU)

intervened and supported the State's motion.

      The judge accepted that plaintiff no longer had the contract with Passaic

County, and its contract with Cape May was not subject to the RCL, inasmuch

as the statute only applied prospectively. She also accepted the State's argument

that plaintiff lacked standing under the DJA and dismissed plaintiff's complaint

with prejudice, stating it had failed to "plead facts establishing an actual

controversy."

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      Before us, the parties and the ACLU have essentially repeated their

arguments. Plaintiff argues, alternatively, that it should be permitted to file an

amended complaint because the dismissal with prejudice was improper. Having

considered these arguments, we reverse and remand for further proceedi ngs

consistent with this opinion.

      "The standard a trial court must apply when considering a Rule 4:6-2(e)

motion to dismiss a complaint for failure to state a claim upon which relief can

be granted is 'whether a cause of action is "suggested" by the facts.'" Teamsters

Local 97 v. State, 434 N.J. Super. 393, 412 (App. Div. 2014) (quoting Printing

Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). "Rule 4:6-

2(e) motions to dismiss should be granted in 'only the rarest [of] instances.'"

Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (alteration in original)

(quoting Lieberman v. Port Auth. of N.Y. & N.J., 132 N.J. 76, 79 (1993)). The

plaintiff's version of the facts are treated "as uncontradicted . . . accord[ed] . . .

all legitimate inferences. . . . [W]e accept[ed] them as fact" for purposes of

review.   Id. at 166.    The critical concern is whether, upon review of the

complaint, exhibits attached thereto and matters of public record, there exists

"the fundament of a cause of action"; "the ability of the plaintiff to prove its

allegations is not at issue." Id. at 183 (citing Printing Mart, 116 N.J. at 746).

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We review the trial court's decision de novo. Flinn v. Amboy Nat'l Bank, 436

N.J. Super. 274, 287 (App. Div. 2014).

      Most importantly, "[i]n those 'rare instances,'" where a motion to dismiss

is granted, id. at 286 (quoting Smith v. SBC Commc'ns, Inc., 178 N.J. 265, 282

(2004)), "ordinarily [it] is granted without prejudice." Id. at 286-87 (quoting

Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105, 116 (App. Div. 2009)).

We will reverse a "with-prejudice" dismissal of a plaintiff's complaint when it

is "premature, overbroad" or based upon a "mistaken application of the law."

Id. at 287. And, we generally accord the plaintiff an opportunity to amend the

complaint to allege additional facts that support the legal theory pled in the

complaint. Hoffman, 405 N.J. Super. at 116.

      As the Court recently said:

                   By vesting New Jersey courts with the "power to
            declare rights, status and other legal relations, whether
            or not further relief is or could be claimed," the DJA
            provides all individuals and organizations, public or
            private, with a forum to present bona fide legal issues
            to the court for resolution. The Legislature intended the
            Act to provide "relief from uncertainty and insecurity
            with respect to rights, status and other legal relations."

            [In re N.J. Firemen's Ass'n Obligation to Provide Relief
            Applications Under Open Public Records Act, 230 N.J.
            258, 275 (2017) (citing N.J.S.A. 2A:16-51 to -53).]

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Although it is remedial in nature and should be liberally construed, N.J.S.A.

2A:16-51, the DJA prohibits courts "from 'declar[ing the] rights or status of

parties upon a state of facts which are future, contingent and uncertain.'" Ibid.

(alterations in original) (quoting Lucky Calendar Co. v. Cohen, 20 N.J. 451, 454

(1956)).   "It follows, then, that a declaratory judgment claim is ripe for

adjudication only when there is an actual controversy, meaning that the facts

present 'concrete contested issues conclusively affecting' the parties' adverse

interests." Ibid. (quoting N.J. Tpk. Auth. v. Parsons, 3 N.J. 235, 240 (1949)).

      "It is the threshold findings of both justiciability and standing which form

the basis for relief under the [DJA]." In re Ass'n of Trial Lawyers of Am., 228

N.J. Super. 180, 184 (App. Div. 1988) (citing N.J. Home Builders Ass'n v. Div.

on Civil Rights, 81 N.J. Super. 243, 252 (Ch. Div. 1963)). Those issues are

subject to our de novo review. In re Vicinage 13 of the N.J. Super. Ct., 454 N.J.

Super. 330, 337 (App. Div. 2018).

      We have no doubt that plaintiff had standing to maintain an action under

the DJA and presents a justiciable controversy that challenges the

constitutionality of the RCL. As to standing, our courts have traditionally taken

a broader view than our federal counterparts. Ibid. "In essence, a plaintiff must

have an interest in the subject matter in order to maintain a declaratory judgment

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action." Cty. of Bergen v. Port of N.Y. Auth., 32 N.J. 303, 307 (1960). "[T]he

Court has 'consistently held that in cases of great public interest, any "slight

additional private interest" will be sufficient to afford standing.'" Vicinage 13,

454 N.J. Super. at 337-38 (quoting N.J. Dep't of Envtl. Prot. v. Exxon Mobil

Corp., 453 N.J. Super. 272, 301 (App. Div.), certif. denied, 233 N.J. 378 (2018)).

        Plaintiff has such an identifiable interest, even though it no longer has a

contract with Passaic County and the contract it had with Cape May County was

unaffected by the RCL. This is so because plaintiff's complaint alleged that it

had invested monies in infrastructure improvements in both counties, and that

these    kinds   of   improvements     were    necessary   predicate   costs   any

telecommunication provider would incur going forward in bidding on future

contracts.    Plaintiff's essential complaint was that by capping the per-call

charges to inmates, the RCL unconstitutionally restricted its ability to recoup its

costs already expended and to bid in the future.

        Furthermore, the RCL requires all correctional institutions to provide for

ICS. As the ACLU rightly stresses in its brief, the issue is of great public

importance to inmates and their families and friends. 3

3
  We need not detail the long history of the FCC's involvement in the setting of
rates for ICS. Global Tel*Link v. FCC, 866 F.3d 397, 404 (D.C. Cir. 2017). It

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      Nor do we find that the complaint presents a non-justiciable issue because

plaintiff alleges only potential impacts from the RCL. Although courts should

avoid "decid[ing] or declar[ing] the rights or status of parties upon a state of

facts which is future, contingent and uncertain[,]" Trial Lawyers, 228 N.J.

Super. at 184 (quoting Tanner v. Boynton Lumber Co., 98 N.J. Eq. 85, 89 (Ch.

1925)), there is nothing speculative about plaintiff's allegations. See, e.g., Trs.

of Rutgers Coll. in N.J. v. Richman, 41 N.J. Super. 259, 284 (Ch. Div. 1956)

("In a declaratory judgment action, no wrong need be proved, but the mere

existence of a claim or threat of a possible claim disturbing the peace or freedom

of the plaintiff by casting doubt or uncertainty upon the plaintiffs' right or status

establishes the requisite condition of justiciability.").

      We recognize judicial reluctance to entertain DJA actions, particularly

when the plaintiff's claim rests upon the unconstitutionality of a statute. Trial

Lawyers, 228 N.J. Super. at 183. However, the State's reliance on our decision

in that case is misplaced. There, we held that the plaintiff had no standing to

challenge the constitutionality of the Punitive Damages Act because the

legislation did not affect the associational rights of the plaintiff's members or

suffices to say that the issue is one of significant public and governmental
interest.
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the individual rights of lawyers to represent their clients. Id. at 186-87. Here,

based only on the allegations in the complaint, the RCL allegedly affects

plaintiff's ability to conduct business in New Jersey.

      We recognize that plaintiff's complaint only alleged the RCL was

unconstitutional because it amounted to a taking without just compensation, in

violation of the takings clauses of the Federal and New Jersey Constitutions.

We further acknowledge, at least from our review of the arguments in the Law

Division, that the State apparently presented a substantive argument in support

of the motion, i.e., that plaintiff had no constitutionally protected property

interest in future contracts. However, it does not appear from the judge's oral

opinion that she specifically addressed that issue.

      "The New Jersey Constitution provides protections against governmental

takings of private property without just compensation, coextensive with the

Takings Clause of the Fifth Amendment of the United States Constitution."

Klumpp v. Borough of Avalon, 202 N.J. 390, 405 (2010) (citing Mansoldo v.

State, 187 N.J. 50, 58 (2006)). A statute that "operates to affirmatively preclude

plaintiff[] . . . from realizing a fair and reasonable rate of return on [its]

investment . . . would raise serious constitutional issues . . . ." N.J. Ass'n of

Health Plans v. Farmer, 342 N.J. Super. 536, 553 (Ch. Div. 2000) (citing State

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Farm Mut. Auto. Ins. Co. v. State, 124 N.J. 32 (1991)). The burden upon any

plaintiff pursuing such a challenge is a heavy one. State Farm, 124 N.J. at 45-

49.

      The State correctly argues that plaintiff has no constitutionally protected

property right to future contracts. N.J. Ass'n of School Adm'rs v. Schundler,

211 N.J. 535, 561 (2012). However, broadly read, plaintiff's complaint alleges

an inability to obtain a profitable rate of return on investments already made

because it cannot recoup those costs under the rate limits of the RCL.

      We venture no opinion at all on the success of such a claim, and the State

certainly will be able to challenge the bona fides of plaintiff's assertion. Nor

should this opinion be read as denying the State's ability to li mit the scope of

any constitutional challenge. For now, all we say is that it was error to dismiss

the complaint under Rule 4:6-2(e) because it suggested a "fundament of a cause

of action . . . ." Banco Popular, 184 N.J. at 183 (citing Printing Mart, 116 N.J.

at 746).

      Moreover, dismissing the complaint with prejudice and without providing

plaintiff with an opportunity to amend was contrary to the cases we have cited.

      Reversed and remanded. We do not retain jurisdiction.

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