Lawrence v. Town of Irondequoit

• Decision Date: 29 October 2002
• Docket Number: No. 01-CV-6306L.,01-CV-6306L.
• Citation: 246 F.Supp.2d 150
• Parties: Hubert C. LAWRENCE, et al., Plaintiffs, v. TOWN OF IRONDEQUOIT, et al., Defendants.
• Court: U.S. District Court — Western District of New York

246 F.Supp.2d 150

Hubert C. LAWRENCE, et al., Plaintiffs, v. TOWN OF IRONDEQUOIT, et al., Defendants.

No. 01-CV-6306L.

United States District Court, W.D. New York.

October 29, 2002.

COPYRIGHT MATERIAL OMITTED

J. Nelson Thomas, Dolin, Thomas & Solomon LLP, Rochester, NY, for Plaintiffs.

Lisa T. Sofferin, Brown & Kelly, Buffalo, NY, for Defendants.

DECISION AND ORDER

LARIMER, Chief Judge.

INTRODUCTION

Plaintiffs Hubert Lawrence, Amelia Fontana, Roger Fox, and John Magin ("plaintiffs"), four retired Town of Irondequoit employees, commenced this action on behalf of themselves and a proposed class of similarly situated retired Town employees against defendants, the Town of Irondequoit, Sharon Burke (the Town of Irondequoit Director of Human Resources), and David Schantz (Town Supervisor) (collectively referred to as "the Town"), asserting claims based on 42 U.S.C. § 1983, the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., New York Human Rights Law § 296 ("NYSHR"), Article 5, Section 7 of the New York State Constitution, and various state common law theories, including breach of contract, fraud, and misrepresentation.

In brief, plaintiffs claim that the Town wrongfully reduced their retirement health care benefits from Blue Cross/Blue Shield's "Blue Million Plan" to a less costly Blue Choice Plan, effective July 1, 2001. Plaintiffs contend the Town's 1978 Personnel Policies and Procedures Manual (the "1978 Manual") created a contract between plaintiffs and the Town that assured plaintiffs lifetime Blue Million coverage if, at the time of retirement, they had been employed on a regular basis by the Town for a minimum of ten years and were fifty-five years old or more upon retirement. There is no dispute that plaintiffs all met those pre-conditions.

According to plaintiffs, the provisions of the 1978 Manual precluded the Town from changing those benefits once plaintiffs retired and met both conditions. Plaintiffs also assert that they had a constitutionally protected property right in the lifetime Blue Million coverage promised by the Town which was abrogated without due process of law, and that the Town's new resolution regarding retiree health care benefits is discriminatory on its face in violation of the ADEA insofar as it conditions participation in one of three new plans solely on the age of the retiree.

The Town asserts it was not barred from changing plaintiffs' health care coverage as it did, that the 1978 Manual did not constitute a contract between the Town and plaintiffs, and to the extent the Town had any obligation to provide health care coverage to plaintiffs, it fulfilled that obligation in accordance with the terms of the 1978 Manual by continuing to provide "Blue Cross/Blue Shield" coverage to plaintiffs.

Plaintiffs now move for class certification, pursuant to FED. R. CIV. P. 23, and for partial summary judgment, pursuant to FED. R. CIV. P. 56. The Town opposes class certification and cross-moves for summary judgment seeking dismissal of all of plaintiffs' claims, or in the alternative, dismissal on the merits of plaintiffs' federal claims, and dismissal for lack of subject matter jurisdiction on the state law claims.

FACTUAL BACKGROUND

In 1967, the Town passed a resolution by which it agreed to pay the entire premium for Blue Cross/Blue Shield coverage for all future retired employees who retired at the age of 60. In about 1970, these practices were codified into a personnel manual which set forth all of the Town's personnel policies.

There were some changes during the 70's and finally in September 1978, the Town published an updated manual ("1978 Manual") which is at the heart of this litigation. Plaintiffs, who are all retirees from the Town, contend that the health insurance benefits set forth in the 1978 Manual provided them with lifetime coverage.

A. The 1978 Manual

The 1978 Manual was adopted by resolution of the Town Board on September 21, 1978. Dkt. # 18, Ex. B.

According to the preamble of the 1978 Manual,

[t]he updated policies and practices contained in this Manual comprise the "Code of Personnel Relations of the Town of Irondequoit". It is the purpose of this Manual to codify personnel policies and practices that will provide fair and consistent treatment of employees of the Town, and provide each Department Head a guide to uniform interpretation and application of the policies and practices involved. In addition, the Manual is intended to be the primary means by which employees of the Town are informed of their benefits, rights, and responsibilities, as well as the rules and procedures which govern the personnel relationships between the Town and its employees.

Dkt. # 29, Ex. E.

Page V-5 of the 1978 Manual, entitled "Hospitalization—Retired Employees", provided:

[i]t is the policy of the Town of Irondequoit to pay the cost of Blue Cross/Blue Shield coverage for all Town employees who, at the time of retirement, had been employed on a regular basis as a Town employee for a minimum of ten (10) years and had reached fifty-five (55) years of age or older. Retirement is understood to mean retiree has qualified for New York State Retirement Benefits under the New York State Retirement System and has received at least one (1) retirement benefit check.

Dkt. # 29, Ex. E, at V-5, ¶ 1; see also ¶ 10. The stated purpose of the policy was "[t]o establish uniform practices with respect to Town payment of Blue Cross/Blue Shield coverage for retired Town employees." Id. at ¶ 5.

The 1978 Manual did not define "Blue Cross/Blue Shield coverage." However, the provision related to health care benefits for active Town employees provided that the Town was to pay full premium for all employees to participate in the "`Blue Million Preferred Plan' of Blue Cross and Blue Shield," which provided more comprehensive coverage than the standard Blue Cross/Blue Shield plan. Dkt. #29, Ex. E, V-3, ¶ 15.

It is not disputed that upon retirement¹, the Town continued to pay plaintiffs' health care coverage under the Blue Million Preferred Plan. When each of the plaintiffs reached Medicare-eligibility status at the age of 65, the Town, in accordance with Blue Cross/Blue Shield policy, paid for coverage in the Blue Million Complementary Plan, a supplemental Medicare Plan. Dkt. # 43, Watro Reply Aff., ¶¶ 13-14, 27, 29. According to Beth Watro, the Town's Payroll Clerk responsible for the administration of health insurance, the conversion of health care coverage upon reaching Medicare-eligible status is orchestrated by Blue Cross/Blue Shield, and the Town's policy to provide different coverage to Medicare-eligible retirees is based solely upon the plans provided by Blue Cross/Blue Shield. Dkt. # 43, Watro Reply Aff., ¶¶ 27; see also Dkt. #41, Sofferin Aff., Ex. A.

B. Changes to the health care benefits offered by the Town

In the 1990's, the Town began experiencing a decline in tax revenue due to population losses and decreased sales taxes. Since 1992, however, the Town incurred a 70 percent increase in its health insurance premiums. Dkt. # 29, Schantz Aff, ¶¶ 8-15, 18. Unwilling to make cuts to police or other services, the Town began making changes to the fully paid health insurance coverage for both its active and retired employees. Id. at ¶¶ 21-22.

For instance, as of January 1, 1996, the Town switched fully paid coverage for active employees from the Blue Million Plan to the Blue Choice Plan, a less costly H M O plan. Dkt. # 30, ¶ 25; Dkt. # 29, Ex. L. On March 1, 1998, the Town again switched plans for active employees from Blue Choice to Blue Choice Select, an even less costly HMO plan. Dkt. #30, ¶ 29; Dkt. # 29, Watro Aff., ¶ 18. In addition, employees who retired after January 1, 1996, who were Medicare-eligible, and had more than ten years of service, were entitled only to fully paid coverage in the Blue Choice Senior plan, with a prescription drug rider. Employees hired after January 1, 1999, were responsible for paying ten percent of their health care coverage costs. Dkt. # 29, Ex. 0. Further, employees hired after January 1, 1999, were eligible for retiree health care coverage only upon completion of 20 years of service. Dkt. # 29, Ex. 0 and Watro Aff., ¶ 20. All of these changes had been prospective in nature and affected only newly hired or newly retired employees.

C. Changes to plaintiffs' health care coverage

On March 20, 2001, the Town passed a resolution changing the fully paid coverage it provided to current retired employees. Dkt. # 23, Ex. A. Effective July 1, 2001, retirees previously provided fully paid Blue Million Preferred coverage (i.e. those who were retired, but had not yet attained Medicare-eligibility status at the age of 65) received fully paid coverage in Blue Choice Select, a plan less comprehensive than the Blue Million Plan. Id. Retirees previously provided fully paid Blue Million Complementary coverage (i.e. those who were over the age of 65) were offered fully paid coverage in Blue Choice Senior or Supplemental H, a non-HMO Medicare-supplemental plan. Id. However, if a retiree who had previously been provided Blue Million Complementary coverage was over the age of 80 as of July 1, 2001, his or her health care coverage did not change. The Town continued to provide fully paid coverage in the Blue Million Complementary Plan. Id. Retirees wanting to continue their Blue Million Preferred or Complementary coverage could do so but only if they paid the difference in premium costs between Blue Million and Blue Choice or Supplemental H coverage. Id.

On March 27, the Town sent letters to all affected retirees, including plaintiffs, setting forth the changes in coverage and the opportunity to continue Blue Million coverage. Id. at Ex. B. Plaintiffs Lawrence and Fox elected to retain Blue Million Complementary coverage. Plaintiffs Fontana and Magin elected to receive fully paid coverage in the Blue Choice Senior plan. Dkt. # 43, Watro Reply ...