Donohue v. Cuomo

• Decision Date: 10 February 2022
• Docket Number: 6
• Citation: 38 N.Y.3d 1,184 N.E.3d 860,164 N.Y.S.3d 39
• Parties: Danny DONOHUE, as President of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, et al., Appellants, v. Andrew M. CUOMO, as Governor of the State of New York, et al., Respondents, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

38 N.Y.3d 1

184 N.E.3d 860

164 N.Y.S.3d 39

Danny DONOHUE, as President of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, et al., Appellants,

v.Andrew M. CUOMO, as Governor of the State of New York, et al., Respondents, et al., Defendants.

No. 6

Court of Appeals of New York.

February 10, 2022

Civil Service Employees Association, Inc., Albany (Eric E. Wilke, Jennifer C. Zegarelli and Daren J. Rylewicz of counsel), for appellants.

Letitia James, Attorney General, Albany (Frederick A. Brodie, Barbara D. Underwood and Andrea Oser of counsel), for respondents.

Edward J. Greene Jr., Albany (Megan Drum and Kimberly A. Livingstone of counsel), for New York State Public Employees Federation, amicus curiae.

Robert T. Reilly, New York City (Ariana A. Donnellan and Elizabeth Klassner of counsel), for United University Professions, amicus curiae.

The DeNigris Law Firm PLLC, Albany (Stephen G. DeNigris of counsel), and Police Benevolent Association of the New York State Troopers, Inc., Albany (Richard E. Mulvaney of counsel), for Police Benevolent Association of the New York State Troopers, Inc., amicus curiae.

New York State Law Enforcement Officers Union, Council 82, AFSCME, AFL-CIO, Albany (Christine Caputo Granich and Ennio J. Corsi of counsel), and Lippes Mathias LLP, Albany (Lawrence H. Schaefer of counsel), for New York State Law Enforcement Officers Union, Council 82, AFSCME, AFL-CIO, and another, amici curiae.

Greenberg Burzichelli Greenberg P.C., Lake Success (Seth H. Greenberg of counsel), for Court Attorneys Association of the City of New York and others, amici curiae.

Gleason, Dunn, Walsh & O'Shea, Albany (Mark T. Walsh and Richard C. Reilly of counsel), for New York State Police Investigators Association, Local 4 IUPA, AFL-CIO and another, amici curiae.

OPINION OF THE COURT

SINGAS, J.

In Kolbe v. Tibbetts , we left open whether a New York court should infer vesting of retiree health insurance rights when construing a collective bargaining agreement ( CBA) (see 22 N.Y.3d 344, 354, 980 N.Y.S.2d 903, 3 N.E.3d 1151 [2013] ). The Supreme Court subsequently rejected such inferences as incompatible with ordinary contract principles under federal law in M & G Polymers USA, LLC v. Tackett, 574 U.S. 427, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015) ) and CNH Industrial N.V. v. Reese, 583 U.S. ––––, 138 S. Ct. 761, 200 L.Ed.2d 1 (2018) ), repudiating International Union, United Auto., Aerospace, & Agric. Implement Workers of Am. (UAW) v. Yard–Man, Inc., 716 F.2d 1476 (6th Cir.1983), cert denied 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984) ) and its progeny. In response to questions certified to us by the United States Court of Appeals for the Second Circuit, we conclude that Yard–Man –type inferences favoring such vesting are likewise inconsistent with New York's established contract interpretation principles.

I.

Plaintiff Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL–CIO (CSEA) is the collective negotiating representative of the largest bargaining unit of New York State workers. Among others, CSEA represents workers employed in New York's Administrative Services Unit, Institutional Services Unit, Operational Services Unit, and Division of Military and Naval Affairs Unit. It also represents certain workers employed by the Unified Court System. CSEA's members and former members may obtain health insurance through the New York State Health Insurance Plan (NYSHIP), an optional health-benefit plan covering current and retired state employees and other public employees.

From NYSHIP's creation in the 1950s until 1983, the State paid 100% of both employees' and retirees' costs under the plan for individual coverage and 75% of their costs for dependent coverage, as required by statute. The State's contribution rate changed in 1983 after CSEA and other unions representing state employees reached a memorandum of understating (MOU), reducing that rate for individual coverage from 100% to 90%. The MOU superseded contrary provisions in the 1982–1985 CBA between CSEA and the State. The legislature amended Civil Service Law § 167(1) to codify the negotiated contribution rates for qualifying employees who retired after January 1, 1983, but the amendment did not change the State's contribution rates for qualifying employees who had retired before that date (see L 1983, ch 14, § 1).

CSEA and the State thereafter agreed to seven CBAs, spanning 1985 to 2011, each containing provisions continuing the contribution rates at 90% for individual coverage and 75% for dependent coverage. Given the questions certified to us by the Second Circuit, we turn to the 2007–2011 CBA's relevant provisions.¹

Section 9.13 (a) of the 2007–2011 CBA set forth the contribution rates discussed above, providing that "[t]he State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage toward the hospital/medical/mental health and substance abuse components provided under the Empire Plan." The section did not, however, expressly state the duration of the State's promise to contribute at those rates. Section 9.24(a) said that "[e]mployees covered by [NYSHIP] have the right to retain health insurance after retirement upon completion of [10] years of service."

Section 9.23 (a) concerned contribution rates for surviving dependents of deceased retirees, stating:

"The unremarried spouse and otherwise eligible dependent children of an employee, who retires after April 1, 1979, with [10] or more years of active State service and subsequently dies, shall be permitted to continue coverage in the health insurance program with payment at the same contribution rates as required of active employees for the same coverage."

Sections 9.24(b) and 9.25 pertained to procedures for using sick-leave credits to defray premium costs. Section 9.24(b) stated: "An employee who is eligible to continue health insurance coverage upon retirement is entitled to a sick leave credit to be used to defray any employee contribution toward the cost of the premium" and allowed employees to apply specified percentages "of the calculated basic monthly value of the credit towards defraying the required contribution to the monthly premium during their own lifetime." Section 9.25 said: "An employee retiring from State service may delay commencement or suspend his/her retiree health coverage and the use of the employee's sick leave conversion credits indefinitely."

The 2007–2011 CBA's article 50 contained a merger clause, stating that the CBA was "the entire agreement between the State and CSEA, terminate[d] all prior agreements and understandings and conclude[d] all collective negotiations during its term." Finally, article 53 contained a four-year durational clause, providing that the CBA's term "shall be from April 2, 2007 to April 1, 2011."

As the 2007–2011 CBA neared its termination date, the State faced continued fiscal distress stemming from the Great Recession, including a $10 billion budget shortfall for fiscal year 2011–2012. In the context of that dire financial situation, CSEA and the State agreed to a five-year CBA in June 2011 under which the State's NYSHIP premium contribution rates for employees represented by CSEA were reduced by various percentages, depending on the employee's salary grade. Section 9.14(a) of the 2011–2016 CBA stated that, effective October 1, 2011, the State agreed to pay 88% of individual coverage and 73% of dependent coverage for employees in a title salary grade 9 or below and 84% of individual coverage and 69% of dependent coverage for employees in a title salary grade 10 or above.

The legislature amended Civil Service Law § 167(8) to provide that "the state cost of premium or subscription charges for eligible employees covered by such agreement may be modified pursuant to the terms of such agreement" (L 2011, ch 491, § 2; see Civil Service Law § 167[8] ). The amended statute also stated that the Civil Service Commission President, with approval from the Budget Director, "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" (L 2011, ch 491, § 2; see Civil Service Law § 167[8] ). The Department of Civil Service thereafter amended its regulations to extend the modified contribution rates to certain retirees. Specifically, the amended regulation states: "for retirees who retired on or after January 1, 1983, and employees retiring prior to January 1, 2012, New York State shall contribute 88 percent of the charge on account of individual coverage and 73 percent of the charge on account of dependent coverage" ( 4 NYCRR 73.3 [b][1]).

II.

After the State implemented the reduced NYSHIP contribution rates for the affected retirees in October 2011, CSEA, along with its president and certain retirees who were formerly in CSEA bargaining units (collectively, CSEA), commenced this action in federal court against, among others, certain New York State officials (collectively, the State).² CSEA asserted, among other claims, that the State breached the CBAs in effect at the time of the retirees' retirements and violated the United States Constitution's Contract Clause (see US Const, art I, § 10, cl 1 ). Other unions and retirees filed 10 related actions.

The United States District Court for the Northern District of New York, as relevant here, granted the State's summary judgment motions in all 11 actions and denied CSEA's motion for summary judgment (see 347 F. Supp. 3d 110, 146 [ND N.Y.2018] ). The court concluded that "the unambiguous terms of the CBAs at issue did not create a vested interest in the perpetual continuation of premium contribution rates at a specific level" ( id. at 129 ). The court determined that "the premium contribution rates are subject to the general durational clauses and that [the] obligation ceased upon...