Opinion
No. 931–16.
10-17-2016
Robert D. WILSON, William J. Allen, Maureen Alonzo, Stephen Fabbie, Gary Francis, Walter John Francisco, Jr., Melvin French, Margaret Parks, and All Similarly Situated Retirees of the New York State Thruway Authority, formerly in the CSEA Bargaining Unit, Plaintiffs, v. The NEW YORK STATE THRUWAY AUTHORITY, and Maria Lehman, as the Interim Executive Director and Chief Operating Officer of the New York State Thruway Authority, Defendants.
Paul S. Bamberger, of Counsel, Eric E. Wilke, of Counsel, Civil Service Employees Association, Inc., Albany, Attorneys for Plaintiffs. Eric T. Schneiderman, Attorney General of the State of New York, Helena Lynch, AAG, of Counsel, Albany, Attorney for the Defendants.
Paul S. Bamberger, of Counsel, Eric E. Wilke, of Counsel, Civil Service Employees Association, Inc., Albany, Attorneys for Plaintiffs.
Eric T. Schneiderman, Attorney General of the State of New York, Helena Lynch, AAG, of Counsel, Albany, Attorney for the Defendants.
DENISE A. HARTMAN, J.
Plaintiffs, retirees of the New York State Thruway Authority, challenge the requirement that, effective April 1, 2016, they must pay six percent of the premiums for their health insurance. Before that date, plaintiffs received individual retiree health insurance coverage at no cost to them. Plaintiffs claim that the requirement that they contribute six percent of their individual health insurance premiums violates their contracts between the Civil Service Employees Association, Local 1000, AFCME, AFL–CIO (CSEA) and the Thruway Authority in effect at the time they retired. Defendants the Thruway Authority and Maria Lehman, Interim Executive Director and Chief Operating Officer of the New York State Thruway Authority, have moved to dismiss the complaint pursuant to CPLR 3211(a)(7), contending that the collective bargaining agreements on their face contain no provision obligating the Thruway Authority to provide or pay for health insurance benefits for retirees.
While the collective bargaining agreements provide for "retirement benefits," they contain no express term requiring the Thruway Authority to provide health insurance benefits to retirees and their family members, nor do they address any cost-sharing responsibilities for providing such coverage. Finding no ambiguity in the collective bargaining agreements that would allow resort to extrinsic evidence, the Court must construe them on their face. The Court holds as a matter of law that plaintiffs fail to state a claim for breach of the agreements. Accordingly, the Court grants defendants' motion to dismiss pursuant to CPLR 3211(a)(7).
Background
Plaintiffs retired from the New York State Thruway Authority at various times between 2004 and 2015. Each was a member of the CSEA bargaining unit whose retirement benefits were subject to the collective bargaining agreement in effect at the time of their retirement. Plaintiffs commenced this action on behalf of themselves and others similarly situated seeking a declaration of their rights and repayment of health insurance costs that they have been required to pay since April 1, 2016.
Plaintiffs allege that each of the plaintiffs' collective bargaining agreements at the time of retirement contained language which is currently found in Article IX, section A, entitled "Retirement Benefits for Authority Employees," of the 2009–2012 contract :
The 2009–2012 collective bargaining agreement remains in effect until a successor contract is reached.
The Authority will provide to employees in this Negotiating Unit the retirement benefits made available to participating employers by the New York State Retirement and Social Security Laws, including Chapters 1046 and 1047 of the Laws of 1973.
Plaintiffs allege that, since 1973, the "mutually accepted practice" was to apply that language to mean that the Thruway Authority would pay 100 percent of the health insurance premiums for retirees' individual health insurance and 75 percent of the additional costs of their premiums for family coverage. They assert that under this practice, the Thruway Authority would pay the respective percentages of the costs of health insurance premiums for the life of each retiree and for the life of each surviving spouse.
The complaint alleges that the successive collective bargaining agreements also contained provisions governing health insurance for active employees. Between 1973 and 1981, the Thruway Authority paid 100 percent of premiums for individual coverage and the employee paid 25 percent of the additional cost for family coverage. In 1981, the collective bargaining agreement provided for the Thruway Authority to pay 100 percent of the premiums for both individual employees and family coverage. Subsequent collective bargaining agreements provided that the Thruway Authority would continue to pay 100 percent of health insurance costs for employees hired before 1983. Employees hired between 1983 and 1995 were required to pay 20 percent of the premiums for individual or family coverage the first year and 10 percent the second year, with the Thruway Authority to begin paying the full cost of individual or family coverage starting in the third year of employment. Employees hired between 1995 and 2005 were required to pay for 10 percent of the cost of individual insurance premiums and 25 percent of the cost of family premiums for four years, with the Thruway Authority paying the full cost of individual or family coverage beginning in the fifth year of employment. Employees hired after 2005 have been required to pay 10 percent of the cost of individual coverage and 25 percent of the additional cost of family coverage for the duration of their employment.
Plaintiffs allege that, notwithstanding the ramping up of the percentages current employees have been required to pay for their health insurance premiums, the Thruway Authority has continued to pay 100 percent of the cost of individual insurance premiums and 75 percent of the cost of family coverage for retirees, and has done so "since at least 1973." But on November 9, 2015, the Thruway Authority passed a budget that included a provision, effective April 1, 2016, requiring retirees who retired after April 1, 1991 to pay 6 percent of their individual health insurance premiums. On December 15, 2015, the Thruway Authority sent written notice of the change to the retirees.
Plaintiffs commenced this action on or about March 7, 2015, alleging breach of the collective bargaining agreements. Defendants moved by pre-answer motion to dismiss for failure to state a claim, contending that the collective bargaining agreements at issue made no provision for paying the cost of health insurance premiums for retirees. In opposition, plaintiffs produced excerpts from the 2009–2012 collective bargaining agreement, contending that its provisions are ambiguous concerning payment of health insurance premiums for retirees, and arguing that since the merits cannot be determined on the face of the agreement, the case must be allowed to proceed for consideration of parol evidence. In reply, defendants submitted a complete copy of the 2009–2012 collective bargaining agreement to support their argument that the contract is clear on its face. The Court heard oral argument on the motion on August 17, 2016.
Analysis
On a motion to dismiss pursuant to CPLR 3211(a)(7), the Court must accept the complaint's allegations as true, accord plaintiffs "the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Faison v. Lewis, 25 NY3d 220, 224 [2015] [internal quotation marks omitted]; Maki v. Bassett Healthcare, 141 AD3d 979, 980 [3d Dept 2016] ). "A CPLR 3211 dismissal may be granted where documentary evidence," such as a written contract, "conclusively establishes a defense to the asserted claims as a matter of law" (Goldman v. Metro. Life Ins. Co., 5 NY3d 561, 571 [2005] [internal quotation marks omitted]; see Sleazak v. Stewart's Shops Corp., 133 AD3d 1179, 1180 [3d Dept 2015] ).
"In determining the obligations of parties to a contract, courts will first look to the express contract language used to give effect to the intention of the parties, and where the language of a contract is clear and unambiguous, the court will construe and discern that intent from the document itself as a matter of law" (Williams v. Vil. of Endicott, 91 AD3d 1160, 1161 [3d Dept 2012]. "Whether a contract is ambiguous is a question of law to be resolved by the court" (id. at 1162 ; see W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 [1990] ). "A contract is ambiguous if the language used lacks a definite and precise meaning, and there is a reasonable basis for a difference of opinion" (Agor v. Bd. of Educ., Northeastern Clinton Cent. Sch. Dist., 115 AD3d 1047, 1048 [3d Dept 2014] [internal quotation marks omitted] ). "If the court concludes that the contract is ambiguous, it cannot be construed as a matter of law, and dismissal under CPLR 3211(a)(7) is not appropriate" (id. [internal quotation marks omitted] ).
In Matter of Aeneas McDonald Police Benevolent Association v. City of Geneva, the Court of Appeals applied these principles to a claim brought by retired municipal employees who sought to continue the City's long-standing practice of providing health care benefits to retirees (92 N.Y.2d 326 [1998] ). From 1972 to 1996, pursuant to a resolution of the City council, the City had furnished health benefits to all retired city employees through a series of health care plans that maintained a consistent level of benefits. In 1996, the City advised its retirees that it was changing its health care plan to one that afforded lesser coverage (id. at 329–330 ). Challenging the determination in a CPLR article 78 proceeding, the retirees conceded that none of the collective bargaining agreements between the police department and the City addressed the issue of health care benefits for retirees, but argued that longstanding practice established a right to continuation of the same level of benefits (id. at 330 ). The Court observed that health benefits for retirees is a permissive, not mandatory, subject of collective bargaining, and that unless there is some ambiguity on the face of the collective bargaining agreement, it could not look to the City's past practice of providing health care coverage or other parol evidence to find a continuing obligation to provide the same level of coverage (id. at 333 ). The Court concluded that absent any entitlement expressly conferred upon retirees in a collective bargaining agreement, "there is no legal impediment to the municipality's unilateral alteration of the past practice" (id. at 330–331 ).
On the other hand, where the public employees' collective bargaining agreements have contained terms expressly requiring former employers to provide health insurance benefits for retirees, the courts have looked to those terms to see if there was ambiguity as to the scope of the former employer's obligation, and if so, have allowed consideration of past practice and other parol evidence. In other words, in each case where a court has held that an ambiguity existed regarding the scope or duration of public retirees' right to health care benefits, the collective bargaining agreement contained a provision expressly obligating employers to provide health care benefits for retirees.
For example, in Kolbe v. Tibbetts (22 NY3d 344 [2013] ), the collective bargaining agreements contained express provisions for "Health Insurance for Retired Employees." When the school district unilaterally increased prescription drug co-pays, retirees argued that the increase violated a requirement in the collective bargaining agreements that the school district provide the same health care coverage that was in effect when they retired. The Court found that the plain meaning of the agreements conferred a vested right to insurance coverage that was in effect at the time of retirement, and that ambiguity in the scope of that contractual right permitted consideration of extrinsic evidence to resolve the issue of whether changing co-pay levels violated the retirees' contractual right (id. at 354–357 ).
Likewise, in Williams v. Village of Endicott, a retiree from the village police department claimed that changes in the health care coverage the village provided him violated the terms of his contract (91 AD3d 1160, 1160–1161 [3d Dept 2012] ). When he retired, the collective bargaining agreement then in effect contained an express provision that the village would "keep in full force and effect medical coverage and hospital coverage for each member of the bargaining unit, with benefits to be of a value at least equivalent to those presently in force," and that, in exchange for the village's agreement to continue their health insurance coverage, retirees would pay specified amounts toward their individual and family annual health care premiums (id. at 1161 ). Finding an ambiguity about the scope of the coverage the village was obliged to provide, the court allowed consideration of parol evidence (id. at 1162–1163 ; accord Agor, 115 AD3d at 1048–1049 ).
In contrast, here, nothing in the collective bargaining agreements expressly obligates the Thruway Authority to provide health insurance coverage to plaintiff retirees, let alone addresses cost-sharing for such coverage. Plaintiffs contend that Article IX, Section A, which requires the Thruway Authority to provide "retirement benefits made available to participating employers by the New York State Retirement and Social Security Laws, including Chapters 1046 and 1047 of the Laws of 1973" is ambiguous in that it "could refer to retiree health insurance benefits." The Retirement and Social Security Laws to which the agreement refers contain no provision that would require defendants to provide health care to retirees. And the courts have long differentiated between "retirement benefits," which are governed by the Retirement and Social Security Law, from retirees' health care benefits, which are governed by the Civil Service Law (see Matter of Lippman v. Bd. of Educ. of the Sewanhaka Central High School Dist., 66 N.Y.2d 313, 315–319 [1995] ; Matter of Lynbrook v. N.Y. State Pub. Empl. Relations Bd., 48 N.Y.2d 398, 406 [1979] ).
If the parties had indeed bargained to obligate the Thruway Authority to continue to provide paid health care benefits for retirees, they could easily have included an express provision for such benefits in the collective bargaining agreement, as the parties did in the above-cited cases (see also, e.g. Matter of Warner v. Bd. of Educ., Cobleskill–Richmond Cent. Sch. Dist., 108 AD3d 835, 837 [3d Dept 2013], lv denied 22 NY3d 859 [2014] ; Rocco v. City of Schenectady, 252 A.D.2d 82, 84 [3d Dept 1998], lv dismissed 93 N.Y.2d 1000 [1999] ; Myers v. City of Schenectady, 244 A.D.2d 845, 845–846 [3d Dept 1997], lv denied 91 N.Y.2d 812 [1998] ). But they did not do so here. Under these circumstances, there is no plausible argument that the parties mutually agreed that the term of art "retirement benefits" encompassed retirees' health insurance benefits and thus "no reasonable basis for a difference of opinion" (see Agor, 115 AD3d at 1048 ).
Nor does the Court find sufficient ambiguity in the structure, context, or other language of the collective bargaining agreement. While Article X, entitled "Insurance," including "Health Insurance," expressly requires the Thruway Authority to provide health insurance for employees at an escalating cost-sharing schedule for paying premiums depending on the employee's appointment date, Article IX, entitled "Retirement," contains no similar requirement. Instead, Article IX, Section A (quoted above) addresses "Retirement Benefits for Authority Employees"; Section B addresses "Survivor's Benefit for Retired Employees"; Section C addresses "Written Waiver [of membership in the Retirement System]"; Section D addresses "Deduction from Retirement Allowances for CSEA and Life Insurance Premiums"; and Section E addresses "Health Insurance Deferral in Retirement."
Article IX, Section E, presents plaintiffs' best argument for finding ambiguity. Section E permits retiring employees to delay or suspend "retiree Health coverage and the use of the Employee's Sick Leave conversion credits." Clearly, it reflects a recognition that Thruway Authority retirees may continue to be provided health insurance benefits. But Section E does not expressly—or even impliedly—require the Thruway Authority to provide any specific level of health care benefits for retirees or to pay a specific proportion of the cost of their health insurance premiums. Thus Section E does not in and of itself give rise to ambiguity sufficient to warrant consideration of the parties' past practices.
Indeed, finding a vested right to retirees' health insurance based upon such a slender reed would be a disincentive to employers to voluntarily offer such benefits for fear that past practice would create binding obligations going forward.
In sum, this case is akin to Matter of Aeneas McDonald Police Benevolent Assn. v. City of Geneva, supra, where the collective bargaining agreement likewise contained no provision obligating the employer to provide health insurance benefits to retirees. The courts have not found ambiguity as to the scope of retiree benefits absent such a provision. The Court therefore finds no ambiguity on the face of the collective bargaining agreements that would allow it resort to extrinsic evidence of past practices to determine whether the Thruway Authority agreed to pay a particular proportion of the costs of retirees' health insurance. The Court concludes as a matter of law that the Thruway Authority has not violated the collective bargaining agreement by making a unilateral change to the proportion of costs it pays and requires retirees to pay for their health insurance. It is
Ordered that defendants' motion to dismiss the complaint pursuant to CPLR 3211(a)(7) is granted.
This constitutes the Decision and Judgment of the Court. The original Decision and Judgment is being transmitted to defendants' counsel. All other papers are being transmitted to the County Clerk for filing. The signing of this Decision and Judgment does not constitute entry or filing under CPLR 2220 or 5016 and counsel is not relieved from the applicable provisions of those rules respecting filing and service.
Papers Considered
Notice of Motion to Dismiss and Affirmation in Support, with Exhibit 1
Memorandum of Law in Support
Affirmation in Opposition, with Exhibits A–C
Brief in Opposition
Reply Affirmation, with Exhibits 1–2
Reply Memorandum of Law, with Exhibit 1