A state judge Wednesday tossed out a lawsuit filed by political insider George Norcross against Gov. Phil Murphy to shut down the administration’s scrutiny of New Jersey’s now-expired controversial corporate tax break program.
Murphy convened the task force in January to investigate how businesses applied for Grow New Jersey tax breaks, and how the program was crafted, following a state audit that found glaring holes in the Economic Development Authority’s oversight of the program. The task force has since scrutinized how businesses with close ties to Norcross may have unfairly won hundreds of millions of dollars in tax breaks.
The plaintiffs on Wednesday represented four of those businesses: Cooper University Health Care and insurance firm Conner Strong & Buckelew – both where Norcross is an executive, NFI, The Michaels Organization and Parker McCay – a law firm where George’s brother Philip is a partner, that did not win any tax breaks, but which allegedly wrote many of the incentive-creating bills.
Speaking from the bench, at a nearly nine-hour hearing, Mercer County Judge Mary Jacobson dismissed the case “with prejudice”— prohibiting the plaintiffs from bringing any of the same claims against the Murphy administration. She rejected an argument from the plaintiffs that the task force was not a “bona fide investigation” and that Murphy instead convened the commission to go after his political foes, namely Norcross.
Jacobson chastised the attorneys for pushing the judge to not consider the comptroller’s report as a reason that the task force would be a legitimate investigation, but meanwhile accept a media report by New Jersey Globe suggesting the task force was convened for political purposes.
“When a court sees plaintiffs saying ‘don’t look at a factual report of an independent state auditor connected with the state Legislature – a matter of public record – but look at the blog post to help you make your claim that it’s not a bona fide investigation, that says a lot to me,” Jacobson said.
She also threw out out a request by Norcross’ attorneys to modify several subpoenas for information from submitted tax break applications so they could cross-examine witnesses and present their own evidence.
One attorney, Herbert Stern who represents Cooper, argued that the task force was going after private individuals, something well beyond its legal authority. “I’m old enough to remember the days of McCarthy,” Stern said in his oral arguments. “This is serious business. They’re out to get us, and they did. And they’re going to keep doing it too.”
Stern argued that his client Cooper – and the other three plaintiffs – were singled out of over 900 tax break recipients just weeks after the task force’s formation.
Kevin Marino – an attorney for Parker McCay – said of the task force that they could prove “from day one that it was contrived to target us,” an argument which Ted Wells, legal counsel for the Murphy administration and the task force, argued was a “red herring.”
“The task force is investigating the EDA, its management and affairs and it has every right to submit subpoena information from the plaintiffs and it has every right to make public findings about what that information has disclosed,” Wells said.
He attributed “arrogance” to legal efforts by attorneys for Norcross to block the investigation. “The lawsuit was filed to stop the task force from doing its work,” Wells said to Jacobson in his opening remarks. “They thought by filing the lawsuit, Gov. Murphy would give up. It didn’t happen and it’s not going to happen.”
Jacobson concluded that “the people are entitled to know what this investigation is revealing about the EDA.”
It is not clear whether the attorneys for Norcross will appeal the decision. Daniel Fee, a spokesperson for Norcross, said in a statement after the hearing they would “review the judge’s written decision in order to make a determination about whether and how to move forward.”
“The judge’s decision sets a dangerous precedent that this administration – or any administration – can hold investigatory hearings without allowing their targets basic Due Process rights,” Fee said.
But Darryl Isherwood, a spokesperson for the governor’s office, praised the late Wednesday evening decision.
“We are grateful that this action against the Task Force on EDA’s tax incentives has been dismissed, allowing it to continue the important work of ensuring the EDA properly administered programs that distributed billions of taxpayer dollars,” he said in a statement.
In June, Jacobson denied a preliminary injunction request by Norcross’ attorneys to block the release of a report detailing his dealings with the crafting of the corporate tax break program.
The task force has alleged businesses with close ties to Norcross unfairly won hundreds of millions of dollars in tax breaks, either by crafting parts of the law to benefit themselves, or by providing false information about plans to move out of the state if the companies did not win the incentives.
The task force’s subpoenas are seeking documents from the four plaintiffs outlining their plans to move to the alternative site in Philadelphia.
Cooper won a $39 million tax break from the EDA in 2014, NFI a $79 million tax break in 2017, Conner Strong an $86 million dollar tax break in 2017 and The Michaels Organization a $79 million tax break in 2017. The latter three companies all moved into a new office building on the Camden waterfront.
As Jacobson’s remarks drew to a close, attorney Michael Critchley blasted them as an “ad hominem attack on us.”