Donohue v. Hochul

• Decision Date: 27 April 2022
• Docket Number: Docket No. 18-3193-cv,August Term, 2021
• Parties: Danny DONOHUE, as President of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Milo Barlow, on behalf of himself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Thomas Jefferson, on behalf of himself, on behalf of Retirees of the State of New York Formerly in the CSEA Bargaining Units, Cornelius Kennedy, on behalf of himself, on behalf of Retirees of the State of New York Formerly in the CSEA Bargaining Units, Judy Richards, on behalf of herself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Henry Wagoner, on behalf of himself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Plaintiffs-appellants, v. Kathleen C. HOCHUL, in her Official capacity as Governor of the State of New York, Patricia A. Hite, individually, Rebecca A. Corso, in her official capacity as Acting Commissioner, New York State Civil Service Department, Caroline W. Ahl, in her official capacity as Commissioner of the New York State Civil Service Commission, Lani V. Jones, in her official capacity as Commissioner of the New York State Civil Service Commission, Robert L. Megna, individually, Robert F. Mujica, Jr., in his official capacity as Director of the New York State Division of the Budget, Thomas P. Dinapoli, in his official capacity as Comptroller of the State of New York, Janet M. DiFiore, in her official capacity as Chief Judge of the New York State Unified Court System, Defendants-Appellees, The State of New York, New York State Civil Service Department, New York State and Local Retirement System, New York State Unified Court System, Defendants.
• Court: U.S. Court of Appeals — Second Circuit

32 F.4th 200

Danny DONOHUE, as President of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Milo Barlow, on behalf of himself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Thomas Jefferson, on behalf of himself, on behalf of Retirees of the State of New York Formerly in the CSEA Bargaining Units, Cornelius Kennedy, on behalf of himself, on behalf of Retirees of the State of New York Formerly in the CSEA Bargaining Units, Judy Richards, on behalf of herself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Henry Wagoner, on behalf of himself, on behalf of Retirees of the State of New York formerly in the CSEA Bargaining Units, Plaintiffs-appellants,

v.Kathleen C. HOCHUL, in her Official capacity as Governor of the State of New York, Patricia A. Hite, individually, Rebecca A. Corso, in her official capacity as Acting Commissioner, New York State Civil Service Department, Caroline W. Ahl, in her official capacity as Commissioner of the New York State Civil Service Commission, Lani V. Jones, in her official capacity as Commissioner of the New York State Civil Service Commission, Robert L. Megna, individually, Robert F. Mujica, Jr., in his official capacity as Director of the New York State Division of the Budget, Thomas P. Dinapoli, in his official capacity as Comptroller of the State of New York, Janet M. DiFiore, in her official capacity as Chief Judge of the New York State Unified Court System, Defendants-Appellees,The State of New York, New York State Civil Service Department, New York State and Local Retirement System, New York State Unified Court System, Defendants.

Docket No. 18-3193-cv

August Term, 2021

United States Court of Appeals, Second Circuit.

Last Submission: March 30, 2022

Decided: April 27, 2022

Eric E. Wilke, Civil Service Employees Association, Inc., Albany, NY (Daren J. Rylewicz, Jennifer C. Zegarelli, on the brief), for Plaintiffs-Appellants.

Frederick A. Brodie, Assistant Solicitor General, Albany, NY (Letitia James, Attorney General, State of New York, Barbara D. Underwood, Solicitor General, Andrea Oser, Deputy Solicitor General, on the brief), for Defendants-Appellees.

Robert T. O'Reilly, New York State United Teachers, New York, NY, for Amicus Curiae United University Professions.

Before: Newman and Lynch, Circuit Judges.^*

Gerard E. Lynch, Circuit Judge:

Plaintiffs-Appellants the Civil Service Employees Association ("CSEA") and certain of its officers and retired former members (collectively, "the CSEA Plaintiffs") brought this action against various New York State officials (collectively, "the State"), asserting claims for breach of contract and unconstitutional impairment of contractual obligations, based on the State's 2011 decision to reduce its contributions to certain retired former employees’ health insurance premiums. Although the relevant collective bargaining agreements ("CBAs") did not expressly provide for a vested lifetime right to a particular contribution rate, the CSEA Plaintiffs argued that various provisions of the CBAs gave rise to such a right by inference. The United States District Court for the Northern District of New York (Mae A. D'Agostino, J. ) granted summary judgment to the State on the contract and constitutional claims. See Donohue v. New York ("Donohue I "), 347 F. Supp. 3d 110 (N.D.N.Y. 2018).

On appeal, we determined that both claims "depend on aspects of New York law on which the State's courts have not conclusively ruled and that meet our other criteria for certification." Donohue v. Cuomo ("Donohue II "), 980 F.3d 53, 59 (2d Cir. 2020). Accordingly, we certified two questions to the New York Court of Appeals: (1) whether, under New York law, the CBA provisions that the CSEA Plaintiffs cite grant retirees a vested lifetime right to fixed contribution rates, or at least are ambiguous on that issue; and (2) if such a vested right exists, whether New York law affords the CSEA Plaintiffs a remedy in contract. Id. at 87.

The New York Court of Appeals accepted certification, 36 N.Y.3d 935, 135 N.Y.S.3d 671, 160 N.E.3d 330 (2020), and answered the first part of our first certified question, holding that "New York's contract law does not recognize ... inferences" of vested lifetime rights to retiree benefits from silence and that "[a]bsent such inferences, none of the CBA provisions identified [in our first certified question] establish a vested right to lifetime fixed premium contributions, either singly or in combination," Donohue v. Cuomo ("Donohue III "), 38 N.Y.3d 1, 19, 164 N.Y.S.3d 39, 184 N.E.3d 860 (2022). The Court of Appeals declined, however, "to determine whether the CBA's text is ambiguous." Id.

With the benefit of the New York Court of Appeals's guidance, we now conclude that the district court did not err in granting summary judgment to the State on both claims. The New York Court of Appeals held as a matter of state law that the CBA provisions at issue cannot unambiguously establish a vested lifetime right to fixed premium contributions, so the breach of contract claim cannot succeed without the consideration of extrinsic evidence. Looking to the certification opinion and applying established principles of New York law, we hold that those provisions are not ambiguous regarding the establishment of such a vested right, and therefore consideration of extrinsic evidence is not permissible. To the extent that our Contract Clause analysis requires us to make an independent determination of whether constitutionally protected contractual obligations were impaired, we hold that no such obligations are at stake. We therefore AFFIRM the judgment of the district court.¹

BACKGROUND

This appeal grows out of a dispute over the State's decision in 2011 to reduce its premium contributions under the New York State Health Insurance Plan ("NYSHIP"), an optional health-benefit plan for active and retired State employees. From the program's inception in 1956 until 1983, the State, pursuant to a state statute, paid 100% of active and retired participants’ NYSHIP premiums and 75% of their dependents’ premiums. In 1982, the State negotiated with CSEA and other public-sector unions a reduction of the State's individual-coverage contribution rate from 100% to 90%, effective January 1, 1983. The 90% and 75% rates remained in effect from 1983 to 2011, during which period CSEA and the State negotiated seven more CBAs.

In 2011, in an effort to address budget shortfalls due to the Great Recession, the State negotiated with CSEA and other public-sector unions to reduce the State's contribution rates to 88% for individual coverage and 73% for dependent coverage for certain grades of employees, and 84% for individual coverage and 69% for dependent coverage for others. Thereafter, the State legislature amended N.Y. Civ. Serv. Law § 167 to provide that, "[n]otwithstanding any inconsistent provision of law, where and to the extent that a [CBA] so provides, the state cost of premium or subscription for eligible employees covered by such agreement may be modified pursuant to the terms of such agreement," and to authorize the President of the Civil Service Commission, "with the approval of the director of the budget, [to] extend the modified state cost of premium or subscription charges for employees or retirees not subject to [a CBA] and [to] promulgate the necessary rules or regulations to implement this provision." Id. § 167(8). Pursuant to that authorization, the Acting Commissioner of the State Civil Service Department – who is also the President of the Civil Service Commission – received the necessary approval and promulgated a regulation extending the 88% and 73% contribution rates negotiated for current employees to retirees. See N.Y. Comp. Code R. & Regs. tit. 4, § 73.3(b).

Various groups of retired former State employees, unions representing them, and those unions’ officers then filed eleven separate actions challenging the contribution reductions in United States District Court. The CSEA Plaintiffs filed this action on December 28, 2011, and the district court designated it as the lead case. The State moved for summary judgment in all eleven cases, and the CSEA Plaintiffs cross-moved for summary judgment in this case. The district court granted the State's summary judgment motions in all eleven cases and denied the CSEA Plaintiffs’ cross-motion, concluding, inter alia , that the CBA provisions at issue unambiguously did not provide any vested right to a continuing contribution rate for retirees. See Donohue I , 347 F. Supp. 3d at 129-31. All eleven sets of plaintiffs timely appealed. Like the district court, we designated the present case as the lead case, and we ordered that the various sets of plaintiffs coordinate their argument.

In Donohue II , we determined that this case turned on unresolved questions of New York law. We were unable to confidently predict whether the New York Court of Appeals would adopt the Supreme Court's holding in M & G Polymers USA, LLC v. Tackett , 574 U.S. 427, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015), that courts interpreting CBAs governed by federal law may not infer lifetime vesting of retiree benefits from silence as to the duration of such benefits, and the Supreme Court's holding in CNH Indus. N.V. v. Reese , ––– U.S. ––––, 138 S. Ct. 761, 200 L.Ed.2d 1 (2018), that such silence does not create ambiguity concerning that issue.² Donohue II , 980 F.3d at 68-72.

Prior to Tackett and Reese , some federal courts had drawn such inferences in interpreting CBAs governed by federal law, following the Sixth Circuit's lead in the now-abrogated case of International Union, United Auto., Aerospace, & Agric. Implement Workers of America (UAW) v. Yard-Man, Inc. , 716 F.2d 1476 (6th Cir. 1983). In Kolbe v. Tibbetts , 22 N.Y.3d 344, 980 N.Y.S.2d 903, 3 N.E.3d 1151 (2013), the New York...