NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3083-22
PATRICK DAWSON, and BRIAN DUNKLEY,
Plaintiffs-Appellants,
v.
PHILIP MURPHY, Governor, in his official capacity, ELIZABETH MAHER MUOIO, New Jersey State Treasurer, in her official capacity, and SHOAIB KHAN, Director of Investments, in his official capacity,
Defendants-Respondents. ______________________________
Submitted October 9, 2024 – Decided October 29, 2024
Before Judges Smith and Chase.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3623-22.
The Riback Law Firm LLC, attorneys for appellants (Willam A. Riback, on the briefs).
Matthew J. Platkin, Attorney General, attorney for respondents (Melissa H. Raksa, Assistant Attorney General, of counsel; Amy Chung, Deputy Attorney General, on the brief).
PER CURIAM
Plaintiffs Patrick Dawson and Brian Dunkley appeal from an April 28,
2023 order transferring this matter to us as having exclusive jurisdiction and
denying their cross-motion to amend their complaint. In the alternative,
plaintiffs seek: (1) declaratory relief that the New Jersey Constitution guarantees
a right to a stable environment and (2) remand for review of and possible
divestment from the New Jersey Pension Fund's ("Fund") investments in the 200
largest publicly traded oil and gas companies, which plaintiffs maintain violate
that constitutional right. For the reasons that follow, we affirm the trial court's
order and decline to order declaratory relief or a remand.
I.
Plaintiff Patrick Dawson is a beneficiary of the Fund, and Plaintiff Brian
Dunkley is a resident of Atlantic County. Defendants are Governor Philip D.
Murphy, who plaintiffs allege has the authority to issue executive orders; State
Treasurer Elizabeth Maher Muoio, who plaintiffs allege has "policy authority
over the State's cash savings, debt[,] and investments[,]" and State Director of
Investments Shoaib Khan, who plaintiffs allege has "authority to allocate the
Pension Fund portfolio . . . ."
A-3083-22 2 In October 2022, on behalf of the State, Attorney General Matthew
Platkin, along with the New Jersey Department of Environmental Protection
("NJDEP"), and the Division of Consumer Affairs brought civil suit against
Exxon Mobil, British Petroleum, Chevron, ConocoPhillips, Shell, the American
Petroleum Institute, and other related entities alleging that their actions have
caused destruction of the environment ("Platkin Suit"). The Platkin Suit
enumerated several causes of action: failure to warn, negligence, impairment of
the public trust, trespass, public and private nuisance, and two violations of New
Jersey's Consumer Fraud Act.
The Fund includes seven public pension systems and was valued at $95.7
billion as of June 2021. Plaintiffs allege the State uses these assets to invest in
"the 200 largest oil and gas producing companies" ("investments"), even though
some of those entities are defendants in the Platkin Suit. As a result, plaintiffs
initiated suit in the Law Division. They characterized many of the factual
allegations in the Platkin Suit as "admissions" by the State that: fossil fuel
emissions pose an environmental threat; the cause of the emissions are the
entities in which the State has an ownership interest via the pension fund ; and
that ownership interest harms the assets of the public trust and the lives of New
Jersey citizens, broadly. In their initial complaint, plaintiffs pursued two
A-3083-22 3 theories: the State violated the Public Trust Doctrine by investing in the very
companies it alleged were engaged in the destruction of public assets; and breach
of duty to pension beneficiaries.
Defendants moved for: dismissal with prejudice under Rules 4:6-2(a) and
2:2-3(a)(2) or, in the alternative, for transfer to us under Rule 1:13-4(a); and
dismissal of Governor Murphy and Treasurer Maher Muoio as defendants under
Rule 4:6-2(e). Plaintiffs opposed, and cross-moved for leave to amend their
complaint. The proposed amendment sought "to bring a claim exclusively under
the New Jersey Constitution through the New Jersey Civil Rights Act"
("NJCRA"). The amendment alleged New Jersey was a market participant or
alter ego for the 200 companies, whose affirmative aggregate acts violated the
plaintiffs' rights as guaranteed by the New Jersey Constitution.
The trial court decided the motions on April 28, 2023. To the extent the
court had jurisdiction to decide plaintiffs' motion for leave to amend, it denied
such leave. The court found a substantive due process claim under the NJCRA
required plaintiffs to establish both state action and an identified "right [,]
privilege[,] or immunity secured" by the constitution which was violated in some
way that shocked the conscience or offended notions of fairness and human
dignity. The court found plaintiffs proposed amended complaint did not set
A-3083-22 4 forth such a claim because no right to a stable climate is affirmatively granted
in the New Jersey Constitution and our jurisprudence has not recognized such a
right. Finally, the court determined that "passive investments in oil and gas
companies do not rise to the level of a substantive due process violation under
the standard of shocking the conscience." 1 Pursuant to our exclusive jurisdiction
under Rule 2:2-3(a)(2), the court then transferred the matter to us.
This appeal followed. Plaintiffs argue they should have been granted
leave to amend their complaint to bring a claim under the NJCRA, which would
be heard in the Law Division. In the alternative, if we exercise jurisdiction over
the matter as a challenge to a final agency decision, plaintiffs argue they should
be granted the declaratory and injunctive relief they sought in the original
complaint.
II.
1 The court also denied defendants' motion to dismiss Governor Murphy and Treasurer Maher Muoio as individual defendants, to the extent it had jurisdiction to do so. The court was satisfied the original complaint adequately set forth a claim against those defendants because "it could be found that the Governor and Treasurer both had at least supervisory roles over the Director, and therefore, the investments." Defendants do not appeal from this portion of the trial court's order.
A-3083-22 5 "We review a trial court's decision to grant or deny a motion to amend the
complaint for abuse of discretion." Port Liberte II Condo. Ass'n, Inc. v. New
Liberty Residential Urb. Renewal Co., 435 N.J. Super. 51, 62 (App. Div. 2014)
(citing Kernan v. One Wash. Park Urb. Renewal Assocs., 154 N.J. 437, 457
(1998)). However, the standard of review in "construing the meaning of a
constitutional provision . . . is de novo. . . ." Gormley v. Wood-El, 218 N.J. 72,
87 (2014). No deference is afforded to "interpretative conclusions of the trial
court . . . ." Ibid.
Our role in reviewing all administrative action is generally limited to three
inquiries:
(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law;
(2) whether the record contains substantial evidence to support the findings on which the agency based its action; and
(3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 157 (2018) (quoting In re Stallworth, 208 N.J. 182, 194 (2011)).]
A-3083-22 6 "When an agency's decision meets those criteria, then a court owes substantial
deference to the agency's expertise and superior knowledge of a particular field."
In re Herrmann, 192 N.J. 19, 28 (2007). Decisions "made by an administrative
agency entrusted to apply and enforce a statutory scheme" are reviewed "under
an enhanced deferential standard." East Bay Drywall, LLC v. Dep't of Lab. &
Workforce Dev., 251 N.J. 477, 493 (2022).
A.
Plaintiffs first argue they should have been granted leave to amend their
complaint under the NJCRA to include a substantive due process violation of a
fundamental right under Article 1, Paragraph 1 of the New Jersey Constitution.
They cite the federal case Juliana v. United States, 217 F. Supp. 3d 1224 (D. Or.
2016), as "rel[ying] on New Jersey law in finding a fundamental right to a stable
environment . . . ." Plaintiffs urge this Court to find an implied right to a stable
environment "under a penumbra of rights theory" as the Juliana court found such
an implied right in the Fifth Amendment to the United States Constitution.
Whether to grant a party leave to amend pleadings is left to the discretion
of the trial court "in light of the factual situation existing at the time each motion
is made." Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006) (citing
Interchange State Bank v. Rinaldi, 303 N.J. Super. 239, 256 (App. Div. 1997)).
A-3083-22 7 While leave to amend a pleading is generally liberally granted under Rule 4:9-
1, denial is appropriate "if the amended pleading itself is without legal merit,
that is, if the amendment as proposed would be futile." Notte, 185 N.J. at 495.
The NJCRA permits civil action "for damages and for injunctive or other
appropriate relief" to be brought by those alleging deprivation of "substantive
rights, privileges[,] or immunities secured by the Constitution or laws of this
State . . . ." N.J.S.A. 10:6-2(c). Substantive rights may arise from the plain
language of the federal and state constitutions, from constitutional
jurisprudence, or may be conferred by statute. Harz v. Borough of Spring Lake,
234 N.J. 317, 332 (2018).
Plaintiffs argue they have a viable substantive due process claim because
their proposed amended complaint seeks to "vindicate their rights under the
Public Trust Doctrine . . . ." We consider their argument.
Where a putative right asserted is not enumerated in the plain language of
the state constitution, as plaintiffs here concede, finding that one nonetheless
exists involves two-steps. "First, the asserted fundamental liberty interest must
be clearly identified. Second, that liberty interest must be objectively and deeply
rooted in the traditions, history, and conscience of the people of [New Jersey]."
A-3083-22 8 Lewis v. Harris, 188 N.J. 415, 435 (2006) (citations omitted). Further, "[h]ow
the right is defined may dictate whether it is deemed fundamental." Ibid.
"The [P]ublic [T]rust [D]octrine acknowledges that the ownership,
dominion[,] and sovereignty" over certain natural resources "is vested in the
State in trust for the people." Matthews v. Bay Head Improvement. Ass'n, 95
N.J. 306, 312 (1984). "The genesis of this principle is found in Roman
jurisprudence, which held that 'by the law of nature' 'the air, running water, the
sea, and consequently the shores of the sea' were 'common to mankind.'" Id. at
316-17 (quoting Justinian, Institutes 2.1.1 (T. Sandars trans. 1st Am. ed. 1876)).
The Public Trust Doctrine has a long legal history in our state, since 1821, when
our Supreme Court was "the first in the United States to verify its application in
the New World in Arnold v. Mundy, 6 N.J.L. 1 (Sup. Ct. 1821) . . . ." Raleigh
Ave. Beach Ass'n v. Atlantis Beach Club, Inc., 185 N.J. 40, 63 (2005) (Wallace,
Jr., J., dissenting) (quoting Encyclopedia of New Jersey 665-66 (Maxine N.
Lurie & Marc Mappen eds., 2004)).
Since then, the Public Trust Doctrine has been expanded to resolve
disputes over public access to municipality-owned beaches. See, e.g., Borough
of Neptune City v. Borough of Avon-By-The-Sea, 61 N.J. 296, 309 (1972); Van
Ness v. Borough of Deal, 78 N.J. 174, 180 (1978); City of Long Branch v. Jui
A-3083-22 9 Yung Liu, 203 N.J. 464, 485 (2010); Susko v. Borough of Belmar, 458 N.J.
Super. 583, 588 (App. Div. 2019).
We have limited an overbroad application of the Public Trust Doctrine,
especially where state agency action is at issue. See Borough of Avalon v. N.J.
Dep't of Env't Prot., 403 N.J. Super. 590, 606 (App. Div. 2008) (holding that the
Public Trust Doctrine does not permit the NJDEP to impose parking and
restroom requirements on municipalities owning and operating beaches .); State
v. 1 Howe St. Bay Head, Ltd. Liab. Co., 463 N.J. Super. 312 (App. Div. 2020)
(rejecting the Public Trust Doctrine as a basis to prevent the NJDEP from
creating a perpetual easement to protect coastline properties damaged by
Superstorm Sandy).
Plaintiffs point out Supreme Court precedent permitting the Public Trust
Doctrine to be "molded and extended to meet changing conditions and needs of
the public it was created to benefit." Borough of Neptune City, 61 N.J. at 309.
However, relying on the Public Trust Doctrine to find a fundamental substantive
due process right to a stable environment takes us far afield from our historic
applications of the Public Trust Doctrine so far. To date, the Public Trust
Doctrine has been invoked in disputes over access to, ownership of, and
regulation of natural resources such as the shoreline. We have not used the
A-3083-22 10 Public Trust Doctrine in this novel way, to scrutinize, and perhaps regulate, the
State's pension fund investment decisions because those decisions are alleged to
harm the State's natural resources.
Further, even if our historic use of the Public Trust Doctrine did relate to
purported harm and danger to natural resources, and not ownership and access
of those resources, plaintiffs would still need to articulate, as per the first step
of our inquiry, a clearly defined liberty interest. Here, they ask us to find a
fundamental right "to a stable environment," a proposed right far broader than
the right to prevent public-trust assets from environmental harm. Such an ill-
defined formulation of a fundamental right cannot serve as a basis for an NJCRA
claim. See Susko, 458 N.J. Super. at 589-90 (finding defendants' conduct, while
wrongful, did not establish NJCRA violations or entitle plaintiffs to counsel fees
"because the [NJCRA] requires the violation of an unambiguous, specific
statutory or constitutional provision . . . .").
We conclude that Juliana, the case on which plaintiffs rely, is inapposite.
First, plaintiffs are asserting a state, not federal, constitutional claim. Second,
the federal district court in Juliana analyzed plaintiffs' constitutional claims
separately from their public trust claims. 217 F. Supp. 3d at 1252-61. It did
not, as plaintiffs contend, find a constitutional basis for the claims. Instead, the
A-3083-22 11 Juliana plaintiffs' public trust claims were analyzed "according to basic trust
principles, which impose upon the trustee a fiduciary duty to 'protect the trust
property against damage or destruction.'" Id. at 1245 (quoting George G. Bogert
et al., Bogert's Trusts and Trustees, § 582 (2016)). Amending the complaint to
include a claim of violation of a fundamental right to a stable environment would
have been a fruitless endeavor, because a subsequent motion to dismiss would
have been granted. Therefore, the trial court's denial of leave to amend was
proper. See, Prime Acct. Dep't v. Twp. of Carney's Point, 212 N.J. 493, 511
(2013).
B.
Plaintiffs' proposed amended complaint also seeks vindication of "rights
as a Pension Fund Beneficiary." Plaintiff Dawson is alleged to be "an employee
who qualifies for Public Employees Retirement System [("PERS")]
pension. . . ." Plaintiff Dunkley's connection to PERS or the Fund is not
apparent from the record.
Where a fundamental right is purported to be conferred by statute, New
Jersey courts have adopted the test from Blessing v. Freestone, 520 U.S. 329,
340-41 (1997), which construed the NJCRA's federal analogue, 42 U.S.C.S. §
1983, to determine whether a substantive right exists. Tumpson v. Farina, 218
A-3083-22 12 N.J. 450, 476 (2014). See also Harz, 234 N.J. at 331 (refining the Blessing test
in light of Gonzaga Univ. v. Doe, 536 U.S. 273, 283 (2002), to require a
determination of "whether, by enacting the statute, the Legislature intended to
confer a right on an individual").
PERS is governed by N.J.S.A. 43:15A-1 to -161. The statute confers
certain rights to potential members, such as the right to appeal denial of
membership in PERS, N.J.S.A. 43:15A-7.3, and the right to an annual report of
the fund's valuation, N.J.S.A. 43:15A-21. Nowhere in the text of the pension
statute can proof be found of legislative intent to authorize any agency, state
official, or private citizen to use the public pension investment decisions to
advance or hinder any fundamental constitutional right, express or implied,
including the plaintiffs' proposed "right to a stable environment." That said, an
NJCRA claim cannot be sustained on those grounds. There is no language in
PERS that authorizes the agency to make investment decisions in any basis other
than what is set forth in the PERS statute or the corresponding administrative
code. Therefore, the pension statutes do not provide a basis for finding a
fundamental right to a stable environment and denial of leave to amend the
complaint was proper.
III.
A-3083-22 13 Finally, plaintiffs urge us to remand the matter "to determine the amount
of investment into the 200 largest oil and gas companies and if that is consistent
with a constitutional right to a stable environment or is arbitrary in relation to
New Jersey's state policies to divest from oil and gas." They cite N.J.S.A.
52:18A-89.14 and -89.16 as examples of New Jersey law "recogniz[ing] that
passive investment into entities which are inimical to the rights and interests of
New Jersey citizens can be prohibited." They argue the State has both a
constitutional obligation to protect assets in the public trust and a statutory
obligation under N.J.S.A. 13:1D-150 and N.J.A.C. 7:7-1.5 to do the same. They
maintain the fund's investments constitute arbitrary and capricious action in that
they conflict with "other governmental decisions to address Climate
Catastrophe[,]" namely the Platkin Suit. They submit this inconsistency "is the
definition of arbitrariness."
When an issue cannot be "decid[ed] without an initial policy
determination of a kind clearly for nonjudicial discretion," a political question
is presented. Gilbert v. Gladden, 87 N.J. 275, 282 (1981) (quoting Baker v.
Carr, 369 U.S. 186, 217 (1962)). "Deciding whether a matter presents a
nonjusticiable political question is a 'delicate exercise in constitutional
interpretation . . . .'" Ibid. Non-justiciability determinations on political-
A-3083-22 14 question grounds "is primarily a function of the separation of powers." Baker,
369 U.S. at 210. Dismissal for non-justiciability requires "one of the following
'criteria [to] be inextricable from the facts and circumstances of the case'":
a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an unusual need for unquestioning adherence to a political decision already made; or the potentiality of embarrassment from multifarious pronouncements by various departments on one question.
[N.J. Election Law Enf't Comm'n v. DiVincenzo, 451 N.J. Super. 554, 564 (App. Div. 2017) (emphasis added) (quoting Gilbert, 87 N.J. at 282).] Whenever a nonjusticiable political question is presented, we "should
dismiss the case immediately so as not to spawn[] any legal consequences by
any further discussion of a nonjusticiable issue." De Vesa v. Dorsey, 134 N.J.
420, 429 (1993) (Pollock, J., concurring) (alteration in original) (internal
quotation marks omitted).
The New Jersey Constitution requires the Governor to "grant commissions
to all officers elected or appointed pursuant to this Constitution" and to
A-3083-22 15 "nominate and appoint, with the advice and consent of the Senate, all officers
for whose election or appointment provision is not otherwise made by this
Constitution or by law." N.J. Const., art. V, § I, ¶ 12. However, we are explicitly
granted jurisdiction over appeals from "the law and chancery divisions of the
Superior Court and in such other causes as may be provided by law." N.J.
Const., art. VI, § V, ¶ 2. See also R. 2:2-3(a)(2) (granting the Appellate Division
review of "final decisions or actions of any state administrative agency or officer
. . . ."). At the same time, we lack authority to "'act independently' from, or
'substitute [their] judgment' for, an agency which is empowered to make the
decision, the court is certainly empowered 'to bring [an] agency's action into
conformity with its delegated authority.'" Rosenstein v. State, Dep't of Treasury,
Div. of Pensions & Benefits, 438 N.J. Super. 491, 499 n.3 (App. Div. 2014)
(alteration in original) (quoting In re Polk License Revocation, 90 N.J. 550,
578).
The Division of Investments is an agency within the Department of
Treasury, N.J.S.A. 52:18A-79, and manages state employee pension funds,
N.J.S.A. 52:18A-88.1, in accordance with policies and procedures established
by the State Investment Council ("SIC"), N.J.S.A. 52:18A-91. The Director is
statutorily given the "functions, powers[,] and duties . . . of, or relating to,
A-3083-22 16 investment or reinvestment of moneys of, and purchase, sale or exchange of any
investments or securities of or for any funds or accounts under the control and
management of [public pension systems] . . . ." N.J.S.A. 52:18A-85. "[S]uch
investments [] shall be authorized or approved for investment by regulation of
the State Investment Council . . . ." N.J.S.A. 52:18A-88.1. The Director has a
fiduciary duty to "exercise the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use . . . ." N.J.S.A. 52:18A-89. The Director
must "manage and invest the portfolio solely in the interests of the beneficiaries
of the portfolio and for the exclusive purpose of providing financial benefits to
the beneficiaries of the portfolio." Ibid. (emphasis added).
Statutory provisions carve out the only express exceptions to this mandate.
The Legislature has passed statutes that specifically prohibited certain types of
investments. See N.J.S.A. 52:18A-89.16 (prohibiting investment in companies
"engaging in prohibited activities in Russia or Belarus"); N.J.S.A. 52:18A-89.14
(prohibiting investments with companies boycotting Israel); N.J.S.A. 52:18A-
89.12 (prohibiting investments in foreign companies with equity ties to Iran);
N.J.S.A. 52:18A-89.9 (prohibiting investment in foreign companies with equity
ties to the government of Sudan).
A-3083-22 17 Because the Legislature has not expressly identified violation of the
Public Trust Doctrine as an exception under the current statutory scheme, it is
not a basis for plaintiffs' challenge to the Director's investment decision and it
cannot be said that passively investing in these companies is arbitrary. We
conclude the Governor's choice of Treasurer, the appointment of the Director,
and his discretionary investment decision are non-justiciable political questions
which are appropriately directed to the Legislature.2
Affirmed in part, denied in part.
2 The Legislature has introduced Senate Bill No. 198 which would require divestment from the 200 largest publicly traded fossil fuel companies. S.198 (2024).
A-3083-22 18