Roberts v. New York

LILLIAN ROBERTS as Executive Director of District Council 37, AFSCME, AFL-CIO, DISTRICT COUNCIL 37,AFSCME, AFL-CIO, DENNIS IFILL, as President of the Rent Regulation Services Unit Employees, Local 1359,District Council 37, AFSCME, AFL-CIO, THE RENT REGULATION SERVICES UNIT EMPLOYEES,LOCAL 1359, CLIFFORD KOPPELMAN, as President of the Court, County and Department of Probation Employees Unit,Local 1070, THE COURT, COUNTY, AND DEPARTMENT OF PROBATION EMPLOYEES UNIT, LOCAL 1070 and MILDRED BROWN,SHANOMAE WILTSHIRE, NORMA GALLOWAY, CHARMAINE HARDAWAY, MAURICE BOUYEA,STEVEN SCHWARTZ, on behalf of themselves and all others similarly situated, Plaintiffs,

v. THE STATE OF NEW YORK, ANDREW M. CUOMO, as Governor of the State of New York,NEW YORK STATE CIVIL SERVICE DEPARTMENT, PATRICIA A. HITE,as Acting Commissioner, New York State Civil Service Department,NEW YORK STATE CIVIL SERVICE COMMISSION, CAROLINE W. AHL and J. DENNIS HANRAHAN,as Commissioners of the New York State Civil Service Commission,ROBERT L. MEGNA, as Director of the New York State Division of the Budget,and THOMAS P. DiNAPOLI, as Comptroller of the State of New York,and NEW YORK STATE AND LOCAL RETIREMENT SYSTEM, Defendants.

1:12-CV-0046 (MAD/CRH)

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK

DATED: December 3, 2012

APPEARANCES:

DISTRICT COUNCIL 37

Attorneys for Plaintiffs

ERIC T. SCHNEIDERMAN

OF COUNSEL:

Erica C. Gray-Nelson, Esq.

Charles J. Quackenbush, Esq.

Attorney for Defendants

Asst. Attorney General

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Plaintiffs commenced the within action alleging that defendants unilaterally increased the percentage of contributions that plaintiffs, retired employees, are required to pay for health insurance benefits in retirement and violated the Contracts Clause and Due Process Clause of the United States Constitution, impaired plaintiffs' contractual rights under the terms of their Collective Bargaining Agreement, and violated state law. Plaintiffs seek injunctive relief, declaratory judgments and monetary damages. Presently before the Court is defendants' motion to dismiss plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). (Dkt. No. 10). Plaintiffs have opposed the motion.¹ (Dkt. No. 14).

BACKGROUND²

Council 37, American Federation of State, County and Municipal Employees ("AFSCME"), AFL-CIO ("council") is the collective bargaining representative for employees of the State of New York in the Rent Regulation Services Unit ("RRSU") and members of the Court, County and Department of Probation Employees Unit ("Court Unit"). Council 37 is acombination of 55 local unions. Plaintiff Lillian Roberts is the Executive Director and Chief Executive Officer of Council 37. Plaintiff Dennis Ifill is the President of Local 1359, an active employee of the State of New York and a member of RRSU. Local 1359 represents 302 members employed with the New York State Division of Housing and Community Renewal who receive benefits through the New York State Health Insurance Program ("NYSHIP"). Plaintiff Ifill receives dependent health coverage benefits through NYSHIP and is a vested member of the New York State Employees' Retirement System. Plaintiff Clifford Koppelman is the President of Local 1070, the Court Unit, which represents members of the New York State Unified Court System.

Plaintiffs Mildred Brown, Shanomae Wiltshire, Norma Galloway, Charmaine Hardaway and Maurice Bouyea are former State employees covered by the RRSU collective bargaining unit who retired and receive coverage through NYSHIP. Plaintiff Steven Schwartz was a State employee covered by the Court Unit who retired and receives coverage through NYSHIP.³

During the relevant time, defendant Patricia Hite ("Hite") was Acting Commissioner of the Civil Service Department and Acting President of the Civil Service Commission. Defendants Caroline W. Ahl ("Ahl") and J. Dennis Hanrahan ("Hanrahan") were members of the Civil Service Commission. Defendant Robert Megna ("Megna") was the Director of the New York State Division of the Budget. Defendant Thomas P. DiNapoli ("DiNapoli") was the Comptroller of the State of New York responsible for the administration of the New York State and Local Retirement System. The New York State and Local Retirement System is responsible for making monthly pension payments to eligible retired State employees less any deductions for the payment of retiree health insurance.

Article XI of the New York State Civil Service Law ("CSL") provides for a statewide health insurance plan for eligible State employees and retired State employees known as the NYSHIP or (maybe) "Empire Plan." New York Civil Service Law § 167(1) assigns the State contribution rate towards the cost of health insurance premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP. Prior to 1983, the State was required to pay the full cost of premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP. Chapter 14 of the Laws of 1983 amended Civil Service Law § 167(1)(a) to limit the amount that the State was required to pay towards the cost of premium or subscription charges for the coverage of State employees and retired State employees enrolled in NYSHIP, by providing that the State was required to contribute only ninety percent (90 %) of the cost of such premium or subscription charges for the coverage of State employees and retired State employees retiring on or after January 1, 1983. The State would continue to contribute seventy-five percent (75 %) for dependent coverage for State employees and retired State employees. Chapter 14 was introduced to implement contract provisions negotiated through collective bargaining between the State and various public employee unions regarding health insurance benefits and costs, including an agreed upon reduction of the State's contribution rate for the premium or subscription charges for employees enrolled in NYSHIP, while continuing the State's full contribution for retired State employees who retired before January 1, 1983. The purpose of Chapter 14 of the Laws of 1983 was "to effectuate provisions of various memoranda of understanding executed pursuant to the collectively-negotiated agreements between the State and the employee organizations . . . dealing with health insurance."

Between 1983 and 2011, Civil Service Law § 167(8) provided, inter alia,

[n]otwithstanding any inconsistent provision of law, where and to the extent that an agreement between the state and an employee organization entered into pursuant to article fourteen of this chapter so provides, the state cost of premium or subscription charges for eligible employees covered by such agreement may be increased pursuant to the terms of such agreement.

From 1984 to 2011, there have been eight consecutive Collective Bargaining Agreements ("CBAs") between the State and Council 37. Since 1984, Article 9 of each CBA between the RRSU and the State has contained the following language:⁴

§9.1 Continuation

The State shall continue to provide all the forms and extent of coverage as defined by the contracts in force on April 1, 2007 with the State's health insurance carriers unless specifically modified or replaced pursuant to this agreement.

§9.2(l) Eligibility

Effective January 1, 1992, an employee who is eligible to continue health insurance coverage upon retirement and who is entitled to sick leave credit to be used to defray any employee contribution toward the cost of the premium, may elect an alternative method of applying the basic monthly value of the sick leave credit. Employees selecting the basic sick leave credit may elect to apply up to 100 percent of the calculated basic monthly value of the credit toward defraying the required contribution to the monthly premium during their own lifetime.

§9.4 Empire Plan Premium

The State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage toward hospital/medical/mental health and substance abuse/prescription drug components provided under the Empire Plan.

Article 8.1 of the Court Units Agreement provides as follows:⁵

The State shall continue to provide health and prescription drug benefits administered by the Department of Civil Service. Employees enrolled in such plans shall receive health and prescription drug benefits to the same extent, at the same contribution level and in the same form and with the same co-payment structure that applies to the majority of represented Executive Branch employees covered by such plans.

On August 17, 2011, the legislature passed Chapter 491 of the Laws of 2011 ("Chapter 491"). Chapter 491 amended § 167(8) and replaced the word "increased" with the word "modified." The amendment further provided that

[t]he president [of the Civil Service Commission], with the approval of the director of the budget, may extend the modified state cost of premium or subscription charges for employees or retirees not subject to an agreement referenced above and shall promulgate the necessary rules or regulations to implement this provision.

On September 21, 2011, defendant Hite requested defendant Megna's approval to increase the premium contribution rates plaintiffs-retirees pay from ten percent (10%) to twelve percent (12%) for individual coverage and from twenty-five percent (25%) to twenty-seven percent (27%) for dependent coverage. On September 22, 2011, Megna approved the extension of modified contribution rates. Defendants approved and filed emergency regulations to implement the aforesaid reduction in State contribution rates effective October 1, 2011.

On January 10, 2012, plaintiffs filed a complaint (Dkt. No. 1) and asserted causes of action for impairment of contract, violation of due process, violation of civil rights pursuant to 42 U.S.C. § 1983 and breach of contract. Plaintiffs also claim...