Supreme Court gives New Jersey, shipping industry and unions a win in New York ports case

The Supreme Court ruled Tuesday that New Jersey can unilaterally withdraw from the long-standing Waterfront Commission Compact it has with New York to police corruption in the shipping industry in the major port the two states share.

All nine of the Supreme Court's justices voted in favor of the ruling, which dismissed arguments by New York in favor of forcing New Jersey to stay in the compact.

Justice Brett Kavanaugh wrote the 9-page majority opinion in the case, which is a victory for container shipping companies and a union that represents dock workers.

The ruling hinged on the fact that the Waterfront Commission Compact does not explicitly bar either state from exiting the agreement.

The two-member Waterfront Commission was created in 1953 by New York and New Jersey to address labor corruption in the Port of New York and New Jersey. The entity oversees mandatory employment licensing for waterfront workers and conducts law-enforcement probes in the port.

A year after the commission was created, the Marlon Brando movie "On the Waterfront" depicted the labor-related crime that the commission was set up to deal with. The film won eight Academy Awards, including ones for best picture, best actor and best director.

New Jersey sought to withdraw from the Waterfront Commission in 2018, arguing that the compact had outlived its usefulness.

By that time, more than 80% of the work hours of waterfront work occurred on the New Jersey side, with roughly the same percentage of cargo passing through that state's side.

When the compact began, about 70% of waterfront employees worked on the New York side.

New York opposed New Jersey's bid to exit the compact, claiming that the compact "does not allow either State to unilaterally withdraw," Kavanaugh noted in his opinion.

However, Kavanaugh added, while the compact explicitly says that both states must agree on making any amendments or supplements to the compact, it "does not address each State's power to unilaterally withdraw."

"It neither expressly allows nor expressly proscribes unilateral withdrawal," he wrote.

That is in contrast to some other interstate companies, which do expressly allow, prohibit or limit unilateral withdrawal," Kavanaugh wrote.

He also noted that under the so-called default contract-law rule, either party to a contract may terminate that agreement if the contract calls for ongoing and indefinite performance.

Kavanaugh also wrote that "principles of state sovereignty likewise support New Jersey's position."

"Here, the Compact involves the delegation of a fundamental aspect of a State's sovereign power — its ability to protect the people, property, and economic activity within its borders — to a bistate agency," he wrote.

"We draw further guidance from the fact that, as is undisputed, New York and New Jersey never intended for the Compact and Commission to operate forever."

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