Donohue et al v. The State of New York et al

Filing 19

MEMORANDUM-DECISION AND ORDER granting in part and denying in part 11 Motion to Dismiss for Lack of Subject Matter Jurisdiction: ORDERED that defendants motion to dismiss plaintiffs amended complaint (Dkt. No. 11) is GRANTED IN PART AND DENIED IN P ART; it is further ORDERED that defendants motion to dismiss plaintiffs amended complaint as against the State of New York, New York State Civil Service Department, New York State Civil Service Commission, New York State and Local Retirement System a nd New York State Unified CourtSystem is GRANTED. All claims against these defendants are dismissed; it is further ORDERED that defendants motion to dismiss plaintiffs claims for monetary damages asserted against defendants Hite, Ahl, Hanrahan, Megna , DiNapoli and Lippman in their official capacity is GRANTED; it is further ORDERED that defendants motion to dismiss plaintiffs claims for injunctive anddeclaratory relief asserted against defendants Hite, Ahl, Hanrahan, Megna, DiNapoli and Lippman in their official capacity is GRANTED only to the extent that such claims seek retrospective relief; it is further ORDERED that defendants motion to dismiss plaintiffs Article 78 claims is GRANTED; it is further ORDERED that defendants motion is denied in all other respects. Signed by U.S. District Judge Mae A. D'Agostino on 12/3/12. (ban)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
DANNY DONOHUE, as President of the Civil Service
Employees Association, Inc., Local 1000, AFSCME,
AFL-CIO, and CIVIL SERVICE EMPLOYEES
ASSOCIATION, INC., LOCAL 1000, AFSCME,
AFL-CIO, and MILO BARLOW, THOMAS JEFFERSON,
CORNELIUS KENNEDY, JUDY RICHARDS, and HENRY
WAGONER, on behalf of themselves and certain other
RETIREES of the STATE OF NEW YORK formerly in the
CSEA BARGAINING UNITS,
Plaintiffs,
vs.

1:11-CV-1530
(MAD/CRH)

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, THOMAS P. DiNAPOLI as Comptroller of the
State of New York, NEW YORK STATE AND LOCAL
RETIREMENT SYSTEM; JONATHAN LIPPMAN as Chief
Judge of the New York State Unified Court System, and the
NEW YORK STATE UNIFIED COURT SYSTEM,
Defendants.
____________________________________________
APPEARANCES:

OF COUNSEL:

CIVIL SERVICE EMPLOYEES
ASSOCIATION, INC.
143 Washington Avenue
P.O. Box 7125, Capitol Station
Albany, New York 12224
Attorneys for Plaintiffs

Daren J. Rylewicz, Esq.
Paul S. Bamberger, Esq.
Steven A. Crain, Esq.

ERIC T. SCHNEIDERMAN
Attorney General of the State of New York

Charles J. Quackenbush, Esq.
Asst. Attorney General

The Capitol
Albany, New York 12224
Attorney for Defendants
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. 11).
Plaintiffs have opposed the motion.1 (Dkt. No. 15).
BACKGROUND2
Plaintiff, Civil Service Employees Association, Inc. (“CSEA” or “the Union”) is the
collective bargaining representative for New York State employees in the Administrative Services
Unit (“ASU”), Institutional Services Unit (“ISU”), Operational Services Unit (“OSU”), Division
of Military and Naval Affairs Unit (“DMNA”) and the New York State Unified Court System
(“UCS”). Plaintiff Danny Donohue (“Donohue”) is the President of CSEA. Plaintiffs Milo
1

On December 29, 2011, Chief United States District Judge Gary L. Sharpe issued an Order pursuant to
General Order #12 of the United States District Court for the Northern District of New York. The within action was
deemed “related” to nine other actions filed in this Court. (Dkt. No. 5). Defendants filed the same motion to dismiss
in each action. Each set of plaintiffs filed separate briefs in opposition to the motion. While the matters involve the
same defendants and overlapping claims, the Court finds that they are sufficiently distinguishable in terms of the class
of plaintiffs and facts to warrant separate Memorandum-Decisions and Orders.
2

The background information is taken from the complaint and is presumed true for the purposes of this
motion only. This does not constitute a factual finding by the Court.
2

Barlow (“Barlow”), Thomas Jefferson (“Jefferson”), Cornelius Kennedy (“Kennedy”), Judy
Richards (“Richards”) and Henry Wagoner (“Wagoner”) are former employees of the State of
New York and covered under collective bargaining agreements in effect at the time of their
retirement. Plaintiffs retired after January 1, 1983 but before October 1, 2011 and receive health
insurance coverage. 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 and responsible for the
administration of the New York State and Local Retirement System, which issues monthly
payment of pensions to eligible State retirees in the Employees Retirement System, less any
deductions for the payment of retiree health insurance premiums. Defendant Jonathan Lippman
(“Lippman”) was the Chief Judge of the Unified Court System; the employer of current and
former bargaining unit members represented by CSEA.
From April 1982 to October 2011, CSEA and the State of New York entered into eight
consecutive Collective Bargaining Agreements (“CBAs”) covering four executive branch
bargaining units: ISU, OSU, ASU and DMNA. From 1982 to 2011, there have been eight
consecutive contracts between CSEA and UCS with the same duration as the executive branch
contracts. Article 9 of the 1982-1985 executive branch contracts between CSEA and the State
contained the following language:3

3

The CBA is not part of the record herein.
3

Sub-section 1(b). The State agrees to continue to pay 100 percent of
the cost of individual coverage and 75 percent of dependent coverage,
provided under the Statewide Plan, subject, however to the limitations
of Section 9.10( c ) of this Article.
*****
Sub-section 8. The unremarried spouse of [a retiree who predeceases
the spouse] shall be permitted to continue coverage in the Health
Insurance Program with payment at the same contribution rate as
required of active employees.
Sub-section 9. Employees added to the payroll and covered by the
State Health Insurance Plan have the right to retain health insurance
coverage after retirement, upon completion of 10 years of State
service.
Sub-section 10(a). The State and(d) The unremarried spouse of an
active employee, who dies after April 1, 1979 and who, at the date of
death was vested in the Employee’s Retirement System and within ten
years of his/her first date of eligibility for retirement shall be permitted
to continue coverage in the health insurance program with payment at
the same contribution rates as required of active employees.
Article 8 of the 1982-1985 contract between CSEA and UCS contained the following
language:
The State shall continue to provide the same health and prescription
drug benefits administered by the Department of Civil Service for the
State Executive branch managerial and confidential employees . . . at
the same cost to the State as defined by the contracts in force on
March 31, 1982. . . . Effective April 1, 1980, employees under local
option health plans shall be required to pay for any cost increase due
to improvement of benefits.
In November 1982, the parties reached a Memorandum of Understanding (“MOU”)
wherein the parties agreed to implement a ten percent (10%) contribution rate for individual
retiree health insurance coverage for future retirees, effective January 1, 1983.4 The parties
further agreed that retirees who retired prior to January 1, 1983 would not be affected by the

4

The MOU is not part of the record herein.
4

MOU and would continue to receive fully-paid retiree health insurance for individual coverage
and would contribute twenty-five percent (25%) toward the cost of dependent coverage. 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 the New York State Health Insurance Program
(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.
The Governor’s Program Bill Memorandum regarding the 1983 amendment indicated that
the purpose of the statute 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.”5
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.
Article 9 of the 1985-1988 executive branch CBAs between the State and CSEA
contained the following language:

5

The Governor’s Program Memorandum is not part of the record herein. The record in the related cases,
however, includes a copy of the Memorandum.
5

Sub-section 1(f). The State agrees to pay 90 percent of the cost of
individual coverage and 75 percent of the cost of dependent coverage
provided under the Empire Plan.
*****
Sub-section 14. The unremarried spouse [of a retiree who predeceases
the spouse] shall be permitted to continue coverage in the Health
Insurance Program with payment at the same contribution rates as
required of active employees.
Sub-section 15. Employees added to the payroll and covered by the
State health insurance plan have the right to retain health insurance
coverage after retirement, upon completion of 10 years of State
service.
Each of the six CBAs, for the four executive branch units, between CSEA and the State
during the twenty-three (23) years from 1988 through 2011 contained substantially the same
language as the 1985-1988 contract.
Article 8.1 of the 2003-2007 and 2007-2011 contracts between CSEA and UCS contained
the following language:
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 insurance and prescription
drug benefits to the same extent, at the same contribution level, in the
same form and with the same co-payment structure that Executive
Branch employees represented by CSEA receive such benefits.
On August 17, 2011, the legislature passed Chapter 491 of the Laws of 2011 (“Chapter
41"). Chapter 491 amended § 167(8) and replaced the word “increased” with the word
“modified.” The amendment further provided “the 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 rates toward
6

premiums that are contributed by plaintiffs herein 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, defendant Megna approved the extension of
modified contribution rates.
On October 1, 2011, defendants implemented new reduced State contribution rates which
resulted in a two percent (2 %) reduction in the State contribution rates for individual and
dependent coverage.
On January 5, 2012, plaintiffs filed an Amended Complaint (Dkt. No. 6) asserting causes
of action for impairment of contract, violation of due process and breach of contract. Plaintiffs
also claim that Civil Service Law § 167(8) violates state law and assert that defendants Hite and
Megna lacked authority under § 167(8) to approve and implement the reduction in State
contribution rates. Plaintiffs seek judgment pursuant to Article 78 of the New York Civil Practice
Laws and Rules. Plaintiffs commenced the action against defendants in their official capacities
only.
DISCUSSION
Standard on a Motion to Dismiss under 12(b)(1)
In contemplating a motion to dismiss for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1), the Court must “accept as true all material factual allegations in the complaint[.]”
Atl. Mut. Ins. Co. v. Balfour MacLaine Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). The Court
may consider evidence outside the pleadings, e.g., affidavit(s), documents or otherwise competent
evidence. See Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986); Antares
Aircraft v. Fed. Rep. of Nigeria, 948 F.2d 90, 96 (2d Cir. 1991). “The standards for considering a

7

motion to dismiss under Rules 12(b)(1) and 12(b)(6) are substantively identical.” Lerner v. Fleet
Bank, N.A., 318 F.3d 113, 128 (2d Cir. 2003).
Defendants move for dismissal pursuant to Fed. R. Civ. P. 12(b)(1) arguing that the
Eleventh Amendment precludes the Court from obtaining subject matter jurisdiction over the
following claims: (1) all of plaintiffs’ claims against the State of New York and its agencies; (2)
plaintiffs’ claims against defendants in their official capacities; and (3) plaintiffs’ Article 78 cause
of action. Defendants also allege that the principals of the Younger doctrine require abstention in
this matter.
I.

Eleventh Amendment
The Eleventh Amendment provides that “[t]he Judicial power of the United States shall

not be construed to extend to any suit in law or equity, commenced or prosecuted against one of
the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”
State Emp. Bargaining Agent Coalition v. Rowland, 494 F.3d 71, 95 (2d Cir. 2007) (citing U.S.
Const. amend. XI). The Eleventh Amendment bars federal courts from exercising subject matter
jurisdiction over claims against states absent their consent to such a suit or an express statutory
waiver of immunity. See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 90–100
(1984); see also Huminski v. Corsones, 386 F.3d 116, 133 (2d Cir. 2004) (citation omitted).
Although the plaintiff generally bears the burden of proving subject matter jurisdiction, the entity
claiming Eleventh Amendment immunity bears the burden to prove such. See Woods v. Rondout
Valley Cent. Sch. Dist. Bd. of Educ., 466 F.3d 232, 237 (2d Cir. 2006).
Section 1983 imposes liability for “conduct which ‘subjects, or causes to be subjected’ the
complainant to a deprivation of a right secured by the Constitution and laws.” Rizzo v. Goode,
423 U.S. 362, 370–71 (1976) (quoting 42 U.S.C. § 1983). It is well-settled that states are not
8

“persons” under section 1983 and, therefore, Eleventh Amendment immunity is not abrogated by
that statute. See Will v. Mich. Dep’t. of State Police, 491 U.S. 58, 71 (1989).
A.

Federal Claims against State of New York, New York State Civil Service
Department, New York State Civil Service Commission, New York State and Local
Retirement System and New York State Unified Court System
Regardless of the type of relief sought, the Eleventh Amendment bars this Court from

assuming jurisdiction over plaintiffs’ claims asserted against the State of New York and its
agencies. When the state or one of its “arms” is the defendant, sovereign immunity bars federal
courts from entertaining lawsuits against them “regardless of the nature of the relief sought.”
Pennhurst, 465 U.S. at 100. In this case, the State has neither waived its immunity, nor has
Congress exercised its power to override Eleventh Amendment immunity. Accordingly,
plaintiffs’ claims against the State of New York, New York State Civil Service Department, New
York State Civil Service Commission, New York State and Local Retirement System and the
New York State Unified Court System are dismissed. See McGinty v. New York, 251 F.3d 84,
100 (2d Cir. 2001) (dismissing the claims against the Retirement System for lack of subject
matter jurisdiction based upon the Eleventh Amendment).
B.

Federal Claims Against State Officials in their Official Capacity
Plaintiffs also assert claims against defendants Cuomo, Hite, Ahl, Hanrahan, Megna,

DiNapoli and Lippman in their official capacities. Eleventh Amendment immunity extends to
state officials sued in their official capacities for retrospective relief. See Kentucky v. Graham,
473 U.S. 159, 166 (1985). Actions for damages against a state official in his or her official
capacity are essentially actions against the state, and will be barred by the Eleventh Amendment
unless: (1) Congress has abrogated immunity, (2) the state has consented to suit, or (3) the Ex

9

parte Young doctrine applies. See Will, 491 U.S. at 71. In this matter, the issues presented before
this Court involve the third exception.
In Ex Parte Young, 209 U.S. 123 (1908), the Supreme Court established an exception to
state sovereign immunity in federal actions where an individual brings an action seeking
injunctive relief against a state official for an ongoing violation of law or the Constitution. This
doctrine provides “a limited exception to the general principle of sovereign immunity [that]
allows a suit for injunctive relief challenging the constitutionality of a state official’s actions in
enforcing state law under the theory that such a suit is not one against the State, and therefore not
barred by the Eleventh Amendment.” Ford v. Reynolds, 316 F.3d 351, 354-55 (2d Cir. 2003).
Under the doctrine, a suit may proceed against a state official in his or her official capacity,
notwithstanding the Eleventh Amendment, when a plaintiff, “(a) alleges an ongoing violation of
federal law and (b) seeks relief properly characterized as prospective.” See In re Deposit Ins.
Agency, 482 F.3d 612, 618 (2d Cir. 2007) (quotations and citations omitted); see also Santiago v.
New York State Dep’t of Corr. Serv., 945 F.2d 25, 32 (2d Cir. 1991) (holding that such claims,
however, cannot be brought directly against the state, or a state agency, but only against state
officials in their official capacities).
In Edelman v. Jordan, 415 U.S. 651, 653 (1974), the Supreme Court expanded upon Ex
Parte Young and held that even when a plaintiff’s requested relief is styled as an injunction
against a state official, if “the action is in essence one for recovery of money from the state, the
state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from
suit even though individual officials are nominal defendants.” Retroactive relief is that relief
“measured in terms of a monetary loss resulting from a past breach of a legal duty on the part of
the defendant state officials” regardless of how the relief is fashioned. Id at 668. “Prospective
10

relief includes injunctive relief that bars a state actor from engaging in certain unconstitutional
acts or abates ongoing constitutional violations as well as the ‘payment of state funds as a
necessary consequence of compliance in the future with a substantive federal question
determination.”’ Id. The “general criterion for determining when a suit is in fact against the
sovereign is the effect of the relief sought, namely, would the relief abate an ongoing violation or
prevent a threatened future violation of federal law?” Id. In Edelman, the majority concluded:
It is one thing to tell [a state official] that he must comply with the
federal standards for the future if the state is to have the benefit of
federal funds in the program he administers. It is quite another thing
to order the [state official] to use state funds to make reparation for the
past. The latter would appear to us to fall afoul of the Eleventh
Amendment if that basic constitutional provision is to be conceived of
as having any force.
Id. at 695 (quotation omitted).
In order to determine whether the Ex parte Young exception allows plaintiffs’ suit against
the officials, this Court must first determine whether the complaint alleges an ongoing violation
of federal law and second, whether plaintiffs seek relief properly characterized as prospective.
See Verizon Md., Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645 (2002). “[T]o successfully
avoid the Eleventh Amendment bar, a plaintiff must prove that a defendant's violation of federal
law is of an ongoing nature as opposed to a case ‘in which federal law has been violated at one
time or another over a period of time in the past.’” Papasan v. Allain, 478 U.S. 265, 277–78
(1986). The inquiry for determining whether an “ongoing violation” exists is, “does the
enforcement of the law amount to a continuous violation of plaintiffs constitutional rights or a
single act that continues to have negative consequences for plaintiffs.” New Jersey Educ. Ass’n v.
New Jersey, No. 11-5024, 2012 WL 715284, at *4 (D.N.J. Mar. 5, 2012).

11

Defendants argue that Eleventh Amendment immunity extends to state officials but
inexplicably fail to address the Ex Parte Young exception. Here, plaintiffs argue that a
“straightforward inquiry” reveals that plaintiffs have alleged a violation of federal law. Plaintiffs
allege that defendant officials are engaged in enforcing Chapter 491 of the Laws of 2011, a law
that is contrary to federal law because it impairs their rights under Article I, Section 10 of the U.S.
Constitution. Plaintiffs also allege that officials are implementing a state statute that violates
federal due process. An allegation that state officials are enforcing a law in contravention of
controlling federal law is sufficient to allege an ongoing violation of federal law for the purposes
of Ex parte Young. See Chester Bross Const. Co. v. Schneider, No. 12-3159, 2012 WL 3292849,
at *6 (C.D. Ill. Aug. 10, 2012) (citing Verizon Md., Inc., 535 U.S. at 645). Thus, plaintiffs have
satisfied the first prong of Ex Parte Young.
With respect to the nature of the relief sought, plaintiffs’ “WHEREFORE” clause contains
the following requests:
(a)

(b)

Declaring that State defendants’ actions increasing
contribution rates paid by plaintiffs, and the class they
represent, violates the CSEA/State contracts;

(c)

6

Declaring that State defendants’ actions increasing
contribution rates paid by plaintiffs and the class they
represent, are unconstitutional in violation of the Contract
Clause of Article I, § 10 of the United States Constitution, and
permanently enjoining State defendants from implementing
same;

Declaring that State defendants’ actions increasing
contribution rates paid by plaintiffs, and the class they
represent are unconstitutional in violation of Article I, § 6 and
§ 3 of the New York State Constitution, and permanently
enjoining State defendants from implementing same;6

Ex Parte Young does not extend to state-law claims asserted against state officers. See Pennhurst State
Sch. & Hosp. v. Halderman, 465 U.S. 89 (1984). Whether this court maintains subject matter jurisdiction over
plaintiffs’ state-law claims will be discussed infra.
12

(d)

Declaring that State defendants’ actions increasing
contribution rates paid by plaintiffs, and the class they
represent are unconstitutional in violation of their Fourteenth
Amendment Due Process rights under the United States
Constitution, and permanently enjoining State defendants from
implementing same;

(e)

Declaring Chapter 491 of the Laws of 2011 unconstitutional,
as applied under Civil Service Law 167(8), to the extent that
State defendants’ actions increased contribution rates paid by
plaintiffs, and the class they represent, which impairs the
plaintiffs’ contract rights;

(f)

Declaring that State defendants’ actions increasing
contribution rates paid by plaintiffs, and the class they
represent are unlawful, unauthorized pursuant to New York
Civil Service Law §167(1)(a) and §167(8), in excess of
jurisdiction, ultra vires, and null and void;7

(g)

Enjoining, prohibiting and restraining defendants DiNapoli
and the Retirement System from making any deductions from
the monthly pension payments of retired State employees,
including plaintiffs, and the class they represent, or passing
along any additional costs or charges, as a result of the reduced
contribution rates implemented by State defendants challenged
herein;

(h)

Directing State defendants to reimburse and make whole
plaintiffs, and the class they represent, for any and all
additional payments or deductions to pension payments, made
as a result of the reduced State contribution rates implemented
by State defendants challenged herein;

(i)

Awarding plaintiffs reasonable attorneys’ fees costs and
disbursements of this action pursuant to 42 U.S.C. § 1988, and
as otherwise allowed by law.

See Am. Cplt. (Dkt. No. 6). The Court will address each request for relief in turn.
1.

7

Monetary Relief

See Footnote 6.
13

Plaintiffs argue that the Court has jurisdiction over related ancillary damages necessary to
effectuate prospective relief. While not cited by plaintiffs herein, plaintiffs in the related actions
cite to Milliken v. Bradley, 433 U.S. 267 (1977) as support for their claims for monetary damages.
In the Milliken case, the district court ordered implementation of student assignment plans and
educational components in the areas of reading, in-service teacher training, testing and counseling
to effectuate desegregation. The Supreme Court discussed the “prospective-compliance”
exception which permits federal courts to enjoin state officials to conform their conduct to the
requirements of federal law notwithstanding a direct and substantial impact on the state treasury.
Id. at 289. In Milliken, there was no money award in favor of the respondent or any member of
his class. The Court explained that the case “simply does not involve individual citizens’
conducting a raid on the state treasury for an accrued monetary liability.” Id. Instead, the decree
required state officials to eliminate a segregated school system. Id. The Court reasoned that
[t]hese programs were not, and as a practical matter could not be,
intended to wipe the slate clean by one bold stroke, as could a
retroactive award of money in Edelman. Rather, by the nature of the
antecedent violation, which on this record caused significant
deficiencies in communications skills — reading and speaking — the
victims of Detroit’s de jure segregated system will continue to
experience the effects of segregation until such future time as the
remedial programs can help dissipate the continuing effects of past
misconduct. Reading and speech deficiencies cannot be eliminated by
judicial fiat; they will require time, patience, and the skills of specially
trained teachers. That the programs are also ‘compensatory’ in nature
does not change the fact that they are part of a plan that operates
prospectively to bring about the delayed benefits of a unitary school
system. We therefore hold that such prospective relief is not barred
by the Eleventh Amendment.
Id. at 290.
The facts and relief sought in Milliken are clearly distinguishable from those at hand and
thus, the Court is not persuaded that the holding supports plaintiffs’ claims herein. To the extent
14

plaintiffs seek monetary relief against defendants acting in their official capacity as agents of the
State, such claims are barred by the Eleventh Amendment. See Fulton v. Goord, 591 F.3d 37, 45
(2d Cir. 2009) holding that “in a suit against state officials in their official capacities, monetary
relief (unlike prospective injunctive relief) is generally barred by the Eleventh Amendment”
(citation omitted).
2.

Injunctive Relief

Plaintiffs also seek an order permanently enjoining defendants from implementing the
reduced State contribution rates and enjoining defendants from making further deductions from
plaintiffs’ monthly pension payments. As discussed supra, defendants did not address Ex Parte
Young or the inapplicability/applicability of the doctrine herein. Defendants do not claim that
plaintiffs seek improper injunctive relief that is retrospective or designed to compensate for a past
violation of federal law. Moreover, defendants did not present any argument regarding the impact
such an injunction would have on the state treasury. To the extent that plaintiffs seek prospective
injunctive relief against defendants, plaintiffs have sufficiently alleged such claims and thus,
based upon the purview of Ex Parte Young, dismissal is not warranted. Finch v. New York State
Office of Children and Family Serv., 499 F. Supp. 2d 521, 538 (S.D.N.Y. 2007).
3.

Declaratory Judgment

Declaratory judgments form part of the injunctive relief allowed for under Ex Parte
Young. See Tigrett v. Cooper, No. 10-2724, 2012 WL 691892, at *6 (W.D. Tenn. Mar. 2, 2012).
However, declaratory relief is not permitted under Ex Parte Young when it would serve to declare
only past actions in violation of federal law: retroactive declaratory relief cannot be properly
characterized as prospective. Id.; Green v. Mansour, 474 U.S. 64, 74 (1985) (holding that the
Eleventh Amendment bars retrospective declaratory relief against state officials); New Jersey
15

Educ. Ass’n, 2012 WL 715284, at *5 (holding that a request for a declaratory judgment holding
that portions of a statute are unconstitutional is “nothing more than an indirect way of forcing the
State to abide by its obligations as they existed before the enactment of the Act and therefore,
essentially a request for specific performance” and, thus, not permitted).
In this matter, to the extent plaintiffs seek declaratory relief regarding the State
defendants’ past conduct, such claims must be dismissed because the Eleventh Amendment “does
not permit judgments against state officers declaring that they violated federal law in the past.”
Finch, 499 F. Supp. 2d at 538 (citing Puerto Rico Aqueduct and Sewer Auth. v. Metcalf & Eddy,
Inc., 506 U.S. 139, 146 (1993)); see also Nat’l Audubon Soc’y, Inc. v. Davis, 307 F.3d 835, 84748 (9th Cir. 2002) (noting that retrospective declaratory relief would declare that the State
Defendants committed constitutional violations in the past; prospective relief would declare that
likely future actions are unconstitutional).
However, plaintiffs’ request for an Order declaring Chapter 491 of the Laws of 2011
unconstitutional is prospective. See Verizon Md., 535 U.S. at 645 (“The prayer for injunctive
relief--that state officials be restrained from enforcing an order in contravention of controlling
federal law--clearly satisfies our ‘straightforward inquiry’”). As to this request, to the extent that
plaintiffs seek prospective declaratory relief, that relief is not barred by the Eleventh Amendment.

To summarize, the Eleventh Amendment deprives this Court of jurisdiction over all of
plaintiffs’ claims against the State of New York, New York State Civil Service Department, New
York State Civil Service Commission, New York State and Local Retirement System, the New
York State Unified Court System, and plaintiffs’ claims for monetary damages against defendants
in their official capacities. Jurisdiction remains over plaintiffs’ claims for prospective injunctive
16

and declaratory relief and against defendants Cuomo, Hite, Ahl, Hanrahan, Megna, DiNapoli and
Lippman in their official capacities.
C.

New York State Law Contractual Impairment Claims Against Defendants in their
Official Capacities
Defendants also move for dismissal of plaintiffs’ state law contractual impairment claim

asserted against defendants in their official capacity. The jurisdiction of a federal court to
entertain supplemental state law claims under 28 U.S.C § 1367 does not override Eleventh
Amendment immunity. “Supplemental jurisdiction under 28 U.S.C. § 1367(a) does not constitute
a congressional abrogation of the Eleventh Amendment granting district courts the power to
adjudicate pendent state law claims.” Nunez v. Cuomo, No. 11-CV-3457, 2012 WL 3241260, at
*20 (E.D.N.Y. Aug. 7, 2012) (citations omitted). The Eleventh Amendment bars suits in federal
courts seeking relief, whether prospective or retroactive, against state officials for their alleged
violations of state law. See Pennhurst, 465 U.S. 89, 106. The Ex parte Young doctrine is
inapplicable where the officials are alleged to have violated state law. Local 851 of Int’l Bhd. of
Teamsters v. Thyssen Haniel Logistics, Inc., 90 F. Supp. 2d 237, 247 (E.D.N.Y. 2000) (citing
Pennhurst, 465 U.S. at 104-06). However, the Eleventh Amendment does not bar a suit when an
official has allegedly acted entirely outside her state-delegated authority in a manner that violates
federal law. See Florida Dep’t of State v. Treasure Salvors, Inc. 458 U.S. 670, 696-697 (1982);
Pennhurst, 465 U.S. at 101, n.11. In Treasure Salvors, Inc., the Supreme Court held as follows:
[A]ction of an officer of the sovereign (be it holding, taking or
otherwise legally affecting the plaintiff's property)” that is beyond the
officer's statutory authority is not action of the sovereign, a suit for
specific relief against the officer is not barred by the Eleventh
Amendment. This conclusion follows inevitably from Ex parte
Young. If conduct of a state officer taken pursuant to an
unconstitutional state statute is deemed to be unauthorized and may be
challenged in federal court, conduct undertaken without any authority
whatever is also not entitled to Eleventh Amendment immunity.
17

Id. at 696. A state officer acts ultra vires when he acts beyond the scope of his statutory
authority, or pursuant to authority deemed to be unconstitutional. Id.
Here, in order for the exception to apply, plaintiffs must establish that defendants acted
“without any authority whatsoever” under state law. Sherwin-Williams Co. v. Crotty, 334 F.
Supp. 2d 187, 196 (N.D.N.Y. 2004). Plaintiffs allege that the state claims arise out of ultra vires
acts by defendants Hite and Megna:
Upon information and belief, defendant Hite has not been nominated
by the Governor, has not been confirmed by the Senate and has not
filed an oath of office as Commissioner of the Civil Service
Department or President of the Civil Service Commission.
Upon information and belief, defendant Hite, in her capacity as
“Acting President” of the Civil Service Commission, has not attended
or voted at any official meeting of the Civil Service Commission.
Notwithstanding the failure of State defendants to properly appoint
defendant Hite to these offices, defendant Hite sent a letter to
defendant Budge Director Megna on September 21, 2011 purporting
to increase the rates toward premiums that are contributed by
plaintiffs-retirees and the class they represent, from ten percent to 12
percent for individual coverage and from 25 to 27 percent for
dependent coverage.
Am. Cplt. at ¶¶ 70-72.
Plaintiffs also allege that, “[d]efendant Hite lack authority pursuant to Civil Service Law
167(8) to increase contribution rates for retirees, including plaintiffs-retirees, and the class they
represent.” Id. at ¶ 133. Moreover, plaintiffs state that Hite lack authority to approve a resolution
adopting regulations increasing the retiree rates. Id. at ¶ 135. Therefore, the regulations result
from an abuse of discretion and are null and void. Id. at ¶¶ 135-136. At this stage of the
litigation, plaintiffs have sufficiently pled the ultra vires exception to the Eleventh Amendment
and thus, defendants’ motion to dismiss plaintiffs’ state-law claims, on this basis, is denied.
18

D.

Federal Claims Against Defendants in their Individual Capacities
Plaintiffs have not asserted any claims against defendants Cuomo, Hite, Ahl, Hanrahan,

Megna, DiNapoli or Lippman, individually. However, plaintiffs argue that “should the Court find
that it does not have jurisdiction to award compensatory relief because defendants were not
named in their capacity as individuals,” plaintiffs seek to amend the complaint. See Dkt. No. 15,
at p. 10. The Court construes this argument as a motion for leave to file an amended complaint.
Suits against state officials in their personal capacity are not barred by the Eleventh
Amendment, even for actions required by their official duties, Hafer v. Melo, 502 U.S. 21, 27–28
(1991) (holding that state officials may be personally liable for actions taken in their official
capacity); however, such actions may be subject to dismissal on other grounds. Here, defendants
argue that legislative immunity would divest this Court of jurisdiction over any claims against the
individual defendants in their individual capacities. However, legislative immunity is a personal
defense that may be asserted in the context of a challenge under Rule 12(b)(6) and is not proper
for review as a jurisdictional bar under Rule 12(b)(1). See State Emp., 494 F.3d at 82 n. 4.
Accordingly, that portion of defendants’ motion, and plaintiffs’ request to amend, will be
discussed infra.
II.

Judgment Pursuant to Article 78 of the New York Civil Practice Laws and Rules
Defendants move to dismiss plaintiffs’ claims under N.Y.C.P.L.R. Article 78, arguing

that, to the extent that plaintiffs are challenging officials’ interpretations of CSL § 167(8),
defendants’ promulgations or regulations, and the propriety of the Civil Service President’s
appointment, New York State has not empowered the federal courts to entertain these actions.
Plaintiffs contend that the Article 78 claims are predicated on the federal constitutional claims

19

and derive from a common nucleus of operative fact. Therefore, plaintiffs argue that this Court
has the discretion to exercise pendent jurisdiction over these claims pursuant to 28 U.S.C. § 1367.
Section 1367 provides that a court “may decline to exercise supplemental jurisdiction” if
there are “compelling reasons for declining jurisdiction.” 28 U.S.C. § 1367(c), (c)(4). “There
does not appear to be a consensus in this Circuit as to whether courts may, in their discretion, hear
Article 78 claims under the rubric of supplemental jurisdiction.” Minima v. New York City Emp.
Retirement Sys.,No. 11-CV-2191, 2012 WL 4049822, at *8 (E.D.N.Y. Aug. 7, 2012) (citing
Clear Wireless L.L.C. v. Bldg. Dep’t of Lynbrook, No. 10-CV-5055, 2012 WL 826749, at *9
(E.D.N.Y. Mar. 8, 2012) (noting that “it is doubtful . . . that claims under Article 78 are even
amenable to a district court's supplemental jurisdiction”); see also Morningside Supermarket
Corp. v. New York State Dep’t of Health, 432 F. Supp. 2d 334, 346 (S.D.N.Y. 2006) (refusing to
exercise jurisdiction over the plaintiffs Article 78 cause of action for an order annulling a
Department of Health for an error of law, and as arbitrary and capricious). The “overwhelming
majority of district courts confronted with the question . . . have found that they are without
power to do so or have declined to do so.” Clear Wireless, 2012 WL 826749, at *9 (quoting
Coastal Commc’ns Serv., Inc. v. City of New York, 658 F. Supp. 2d 425, 459 (E.D.N.Y. 2009));
see also DeJesus v. City of New York, No. 10-CV-9400, 2012 WL 569176, at *4 (S.D.N.Y. Feb.
21, 2012) (holding that Article 78 is a procedure, not a cause of action).
However, “[e]ven assuming that a federal district court could properly exercise
supplemental jurisdiction over an Article 78 claim, the court has ‘discretion under 28 U.S.C. §
1367(c) to determine whether to hear th[ose] claims.’” Morningside Supermarket Corp., 432 F.
Supp. 2d at 346 (citing Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 309 (2d Cir.
2004)).
20

In Morningside, the court held that
[f]ederal courts in New York agree that “Article 78 proceedings were
designed for the state courts, and are best suited to adjudication there.”
Moreover, “state law does not permit [these] proceedings to be
brought in federal court.” These are compelling reasons to decline
supplemental jurisdiction over Morningside’s third cause of action,
and there is nothing exceptional about Morningside’s claim that would
justify deviation from the well-reasoned and essentially unanimous
position of New York district courts on this issue.
Id. (internal citations omitted).
Here, plaintiffs seek to have this Court “annul” defendants’ actions pursuant to Article 78.
The case law on this issue is decidedly in defendants’ favor. While it is true that the federal
claims and state-law issues arise out of the same operative set of facts, this Court declines to
exercise supplemental jurisdiction over plaintiffs’ Article 78 claim because to do so would require
this Court to interpret state law before the New York State courts have an opportunity to analyze
and resolve the issues. See Support Ministries For Persons with AIDS, Inc. v. Vill. of Waterford,
N.Y., 799 F. Supp. 272, 280 (N.D.N.Y. 1992) (holding that “there is no reason for th[e] court to
embroil itself in a dispute between the State and a local government and to make this novel and
potentially extremely significant interpretation of state law”). The Court has reviewed the
holding in Yonkers Racing Corp. v. City of Yonkers, 858 F.2d 855 (2d Cir. 1988), a case cited by
the plaintiffs in related cases and finds the holding unpersuasive based upon the facts herein. In
Yonkers, the Second Circuit noted that the case “presented exceptional circumstances” and opted
to exercise jurisdiction over the plaintiffs’ Article 78 claim.8 The Yonkers holding has been cited
as the exception, not the rule. See Coastal Commc’ns, 658 F. Supp. 2d at 459; see also Kelly v.
City of Mount Vernon, 344 F. Supp. 2d 395, 407 (S.D.N.Y. 2004).
8

In Cartegena v. City of New York, 257 F. Supp. 2d 708, 709 (S.D.N.Y. 2003), another case cited by the
plaintiffs in the related action, the district court exercised jurisdiction over the Article 78 claims only after the parties
withdrew their jurisdictional objections and consented.
21

Here, plaintiffs have not persuaded this Court that this case presents such extreme facts.
Based upon the circumstances presented herein, the Court finds that this specific, state-created
civil action should not be brought in federal court. Accordingly, the Court follows the
“essentially unanimous position of the New York district Courts” and declines to exercise
jurisdiction over plaintiffs’ state law claims brought under Article 78. See Morningside, 432 F.
Supp. 2d at 347.
III.

Younger Doctrine
A federal court’s obligation to adjudicate claims within its jurisdiction is “virtually

unflagging.” New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 359
(1989) (holding that “abstention remains the exception, not the rule”). The Younger doctrine
“espouse[s] the policy that a federal court should not interfere with a pending state judicial
proceeding in which important state interests are at stake.” Wisoff v. City of Schenectady, No. 07CV-34, 2009 WL 606139, at *6 (N.D.N.Y. Mar. 9, 2009) (citing, inter alia, Middlesex County
Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 431–432 (1982)). In the Second Circuit,
courts applying Younger abstention “must determine (1) whether there is an ongoing state
proceeding; (2) whether an important state interest is involved; and (3) whether the federal
plaintiff has an adequate opportunity for judicial review of his constitutional claims during or
after the proceeding.” Univ. Club v. City of New York, 842 F.2d 37, 40 (2d Cir. 1988) (internal
citations omitted).
Generally, Younger is not applied against those not party to the pending state proceedings.
Hindu Temple Soc’y of N. Am. v. Supreme Court of State of New York, 335 F. Supp. 2d 369, 375
(E.D.N.Y. 2004). However, the Second Circuit has held that, “[i]n certain circumstances, Younger
may apply to the claims of third-parties who are not directly involved in any pending state
22

proceeding.” Spargo v. N.Y. State Comm’ on Judicial Conduct, 351 F.3d 65, 82 (2d Cir. 2003).
“[A]lthough plaintiffs should not ‘automatically be thrown into the same hopper for Younger
purposes,’ there may be ‘some circumstances in which legally distinct parties are so closely
related that they should all be subject to the Younger considerations which govern any one of
them.’” Hindu Temple, 335 F. Supp. 2d at 375 (quoting, inter alia, Doran v. Salem Inn, Inc., 422
U.S. 922, 928 (1975)). “Courts have consistently recognized while ‘[c]ongruence of interests is
not enough,’ by itself, to warrant abstention, where the plaintiffs’ interests are so inextricably
intertwined that ‘direct interference with the state court proceeding is inevitable,’ Younger may
extend to bar the claims of plaintiffs who are not parties to the pending state proceeding.”
Spargo, 351 F.3d at 82 (holding that two plaintiffs [political supporters of a state judge, the third
plaintiff] presented First Amendment challenges with legal claims that were sufficiently
intertwined with the judge’s state claims in that the case presented one of the narrow
circumstances in which Younger applies to those not directly involved in the state court action)
(citation omitted). While plaintiffs may seek similar relief or present parallel challenges to the
constitutionality of a state statute or policy, absent other factors establishing interwoven legal
interests, Younger will not bar the federal action. Spargo, 351 F.3d at 83. “Where courts have
applied Younger abstention to non-parties, those courts have limited the doctrine’s application to
instances where the non-parties ‘seek to directly interfere with the pending [state] proceeding.’”
Citizens for a Strong Ohio v. Marsh, 123 Fed. Appx. 630, 635 (6th Cir. 2005) (quoting Spargo,
351 F.2d at 85).
In a recent decision from the Eastern District, Donohue v. Mangano, No. 12-CV-2568,
2012 WL 3561796 (E.D.N.Y. Aug. 20, 2012), the defendants argued that the Younger doctrine
mandated abstention based upon an action in Supreme Court, Nassau County for injunctive and
23

declaratory relief that was filed by one of the three sets of plaintiffs. The plaintiffs not involved
in the state action argued that Younger did not extend to their claims because they were not a
party to the ongoing state court proceedings. See id. at *12. The court held that while it was
unlikely that the plaintiffs’ interests were inextricably intertwined for the purposes of Younger, it
declined to definitively rule on that issue. See id. Rather, the court held that the relief sought by
the plaintiffs in the state court action was remedial rather than coercive. See id. at *13. The
court, relying upon holdings in other Circuits, reasoned that a “coercive” action is a state-initiated
enforcement action in which the plaintiff does not have a choice to participate and one in which
the federal plaintiff is the state court defendant. See id. In contrast, a “remedial” proceeding is
one in which the plaintiff initiated an option to seek a remedy for the state’s wrongful action and
to vindicate a wrong inflicted by the state. With that reasoning, the court held that the Nassau
County action was “clearly remedial” and not the type of parallel state court proceeding requiring
abstention under Younger. See id. at *13-*14.
Here, as in Donohue, defendants’ arguments in support of abstention are imprecise.
Defendants argue that the Court should abstain from hearing this matter based upon a civil matter
currently pending in Albany County but offer no further analysis or argument in favor of
Younger. In the Albany County action, the petitioner, Retired Public Employees Association
(“RPEA”), filed a petition pursuant to Article 78 against defendants herein. The petitioners,
retirees from State service prior to October 1, 2011, petitioned for an order declaring the
administrative implementation of an increase in the percentage of contributions by State retirees
and/or their dependents based upon CSL § 167(8) invalid, null and void. The petitioners are also
seeking an order declaring the emergency regulation filed on October 1, 2011 invalid, null and
void, and are further seeking injunctive relief and a refund. On February 24, 2012, the
24

respondents filed a motion to dismiss.9 Defendants argue that the RPEA case involves the same
claims/issues presented herein and a facial challenge to CSL § 167(8).
The Court has reviewed the RPEA pleadings annexed to defendants’ motion. Defendants
do not dispute that plaintiffs herein are not a party in the state proceeding. Therefore, for the
Younger doctrine to apply herein, defendants must establish that plaintiffs and the RPEA
petitioners’ interests are “inextricably intertwined.” Defendants have failed to demonstrate that
plaintiffs’ interests are so closely related that abstention is warranted. In the state action,
petitioners have not asserted a contractual impairment claim based upon a CBA. Defendants have
not established that plaintiffs’ interests will interfere with the state court proceeding, nor has it
been established that plaintiffs have an adequate opportunity for judicial review of their federal
claims in the pending state court action. Courts have made clear that the Younger doctrine should
be applied sparingly and cautiously to federal plaintiffs not parties to an ongoing state action.
Accordingly, this Court finds that the parties and their claims are not “so closely related” to
require Younger abstention.10
Standard on a Motion to Dismiss under 12(b)(6)
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure tests the legal sufficiency of the party’s claim for relief and pleadings
without considering the substantive merits of the case. Global Network Commc’ns v. City of New
York, 458 F.3d 150, 155 (2d Cir. 2006); Patane v. Clark, 508 F.3d 106, 111–12 (2d Cir. 2007). In
considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading
and draw all reasonable inferences in the pleader’s favor. See ATSI Commc’ns, Inc. v. Shaar

9

Based upon the record and this Court’s independent research, the motion to dismiss is still pending.

10

Because the Court finds that defendants have failed to establish the first Younger factor, the Court need not
discuss the issue of whether the relief sought by the RPEA petitioners is “remedial” or “coercive.”
25

Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (citation omitted). This presumption of truth,
however, does not extend to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citation omitted). “Generally, consideration of a motion to dismiss under Rule 12(b)(6) is
limited to consideration of the complaint itself” unless all parties are given a reasonable
opportunity to submit extrinsic evidence. Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006). In
ruling on a motion to dismiss pursuant to Rule 12(b)(6), a district court generally must confine
itself to the four corners of the complaint and look only to the allegations contained therein.
Robinson v. Town of Kent, N.Y., No. 11 Civ. 2875, 2012 WL 3024766, at *3-4 (S.D.N.Y. July 24,
2012) (citing Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007)).
To survive a motion to dismiss, a party need only plead “a short and plain statement of the
claim,” see Fed. R. Civ. P. 8(a) (2), with sufficient facts “to ‘sho[w] that the pleader is entitled to
relief[.]’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (quotation omitted). Under this
standard, the pleading’s “[f]actual allegations must be enough to raise a right of relief above the
speculative level,” see id. at 555 (citation omitted), and present claims that are “plausible on
[their] face.” Id. at 570. “The plausibility standard is not akin to a ‘probability requirement,’ but
it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at
678. (citation omitted). “Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement
to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Ultimately, “when the allegations in a
complaint, however true, could not raise a claim of entitlement to relief,” Twombly, 550 U.S. at
558, or where a plaintiff has “not nudged [its] claims across the line from conceivable to
plausible, the [ ] complaint must be dismissed[.]” Id. at 570.
I.

Claims Against Officials in their Individual Capacity and Legislative Immunity
26

“[L]egislators are absolutely immune from suit in their individual capacities for “all
actions taken ‘in the sphere of legitimate legislative activity.’” Bogan v. Scott–Harris, 523 U.S.
44, 54 (1998). Legislative immunity only protects municipal officers from civil liability when
they are sued in their personal capacities, and not when sued in their official capacities. Baines v.
Masiello, 288 F. Supp. 2d 376, 383 (W.D.N.Y. 2003) (citations omitted). Legislative immunity
may bar claims for money damages, injunctions and declaratory relief brought against state and
local officials in their personal capacities. State Emp., 494 F.3d at 82 (citation omitted); Bogan,
523 U.S. 44, 54 (1998). “Whether an act is legislative turns on the nature of the act, rather than
on the motive or intent of the official performing it.” Christian v. Town of Riga, 649 F. Supp. 2d
84, 103 -104 (W.D.N.Y. 2009) (holding that legislative immunity shields an official from liability
if the act in question was undertaken “in the sphere of legitimate legislative activity”) (quotation
omitted).
Two factors are relevant to determining whether a defendant’s acts are within that sphere:
(1) whether the actions were an integral part of the legislative process; and (2) whether the actions
were legislative “in substance” and “bore the hallmarks of traditional legislation.” Bogan, 523
U.S. at 54-56. Such traditional legislation includes “policymaking decisions implicating
budgetary priories and services the government provides to it’s constituents.” Id. Legislative
immunity applies to acts within the “legislative sphere” even where the conduct, “if performed in
other than legislative contexts, would in itself be unconstitutional or otherwise contrary to
criminal or civil statutes.” Doe v. McMillan, 412 U.S. 306, 312–13 (1973)(quotation omitted).
Before defendants in the instant case can invoke legislative immunity, they have the
burden of establishing both of the following: (1) that the acts giving rise to the harm alleged in the
complaint were undertaken when defendants were acting in their legislative capacities under the
27

functional test set forth in Bogan; and (2) that the particular relief sought would enjoin defendants
in their legislative capacities, and not in some other capacity in which they would not be entitled
to legislative immunity. State Emp., 494 F.3d at 89; see also Canary v. Osborn, 211 F.3d 324,
328 (6th Cir. 2000) (holding that the burden is on the defendants to establish the existence of
absolute legislative immunity).
Here, defendants argue that by issuing the regulations, they were fulfilling discretionary,
policymaking functions implicating State budgetary priorities. As discussed supra, plaintiffs
have not asserted claims against defendants in their individual capacities.
Motions for leave to amend a complaint should be freely given “when justice so requires.”
Fed. R. Civ. P. 15(a)(2). A court may deny a motion for leave to amend where there is an
apparent or declared reason not to grant leave to amend, such as the futility of amendment. See
Fahs Const. Group, Inc. v. Gray, No. 10-CV-0129, 2012 WL 2873532, at *5 (N.D.N.Y. July 12,
2012).
Here, plaintiffs’ opposition to defendants’ motion is not a formal cross-motion and fails
to (1) attach a copy of the proposed Amended Complaint, and (2) set forth specifically the
proposed amendments, and identify the amendments in the proposed pleading, either through the
submission of a red-lined version of the Amended Complaint or other equivalent means, in
violation of Local Rule 7.1(a)(4). See id. (holding that, for this reason alone, the court can deny
the plaintiffs’ request). The absence of a proposed amended complaint precludes this Court from
determining whether the proposed amendment would be futile. Plaintiffs’ “motion” for
permission to file an amended complaint is denied without prejudice to refile. See Johnson v.
Monsanto Chem. Co., 129 F. Supp. 2d 189, 197 (N.D.N.Y. 2001).

28

Based upon the aforementioned, the Court cannot determine whether legislative immunity
would apply to any potential claims against defendants in their individual capacities. This ruling
does not prevent defendants from renewing their motion with respect to the applicability of the
doctrine of legislative immunity after plaintiffs move to amend and upon the completion of
sufficient discovery and development of the record.
II.

Contract Clause
Article I, Section 10 of the Constitution prohibits states from passing any law “impairing

the Obligation of Contracts.” While the language of the Contract Clause is absolute on its face,
“[i]t does not trump the police power of a state to protect the general welfare of its citizens, a
power which is ‘paramount to any rights under contracts between individuals.’” Buffalo Teachers
Fed’n v. Tobe, 464 F.3d 362, 367 (2d Cir. 2006) (holding that courts must accommodate the
Contract Clause with the inherent police power of the state to safeguard the vital interests of its
people) (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 241 (1978). To state a
cause of action for violation of the Contract Clause, a complaint must allege sufficient facts
demonstrating that a state law has “operated as a substantial impairment of a contractual
relationship.” Nunez v. Cuomo, No. 11-CV-3457, 2012 WL 3241260, at *6 (E.D.N.Y. Aug. 7,
2012) (citing Harmon v. Markus, 412 Fed. Appx. 420, 423 (2d Cir. 2011)). In this regard, there
are three factors that the Court will consider: (1) whether a contractual relationship exists; (2)
whether a change in law impairs that contractual relationship; and (3) whether the impairment is
substantial. Harmon, 412 Fed. Appx. at 423. A state law that impairs a contractual obligation
will not be deemed unconstitutional so long as: (1) it serves a demonstrated legitimate public
purpose, such as remedying a general social or economic problem; and (2) the means chosen to

29

accomplish the public purpose is reasonable and necessary. See Buffalo Teachers Fed’n, 464
F.3d at 368.
A.

Existence of a Contractual Relationship In Vested Rights

Defendants argue that no express or implied contract obligates them to provide “optional
health insurance with a perpetually fixed contribution rate.” Rather, defendants contend that the
CBA provided members with guarantees for the duration of the collective bargaining agreement
only. Plaintiffs claim that the language in the CBAs clearly evidences the parties’ intent to lockin the contribution rates that retirees pay for health insurance as vested, lifetime rights.
“All courts agree that if a document unambiguously indicates whether retiree medical
benefits are vested, the unambiguous language should be enforced.” Am. Fed’n of Grain Millers,
AFL-CIO v. Int’l Multifoods Corp., 116 F.3d 976, 980 (2d Cir. 1997) (citing, inter alia, UAW v.
Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir. 1983)). “It is a court’s task to enforce a clear and
complete written agreement according to the plain meaning of its terms, without looking to
extrinsic evidence to create ambiguities not present on the face of the document” and a “mere
assertion by a party that contract language means something other than what is clear when read in
conjunction with the whole contract is not enough to create an ambiguity.” New York State Court
Officers Ass’n v. Hite, 851 F. Supp. 2d 575, 579-80 (S.D.N.Y. 2012) (citations omitted). There is
a lack of consensus among the Circuits regarding the interpretation of documents that are
ambiguous. Am. Fed’n, 116 F.3d at 980. Some Circuits have held that “when the parties contract
for benefits which accrue upon achievement of retiree status, there is an inference that the parties
likely intended those benefits to continue as long as the beneficiary remains a retiree.” See Yardman, Inc., 716 F.2d at 1479. While the Yard-man “inference” was discussed by the Second

30

Circuit in Am. Fed’n, the Court did not specifically adopt the holding. Specifically, the Court
noted that
[w]hen documents are ambiguous, other circuits have disagreed as to
whether at trial, there should be a presumption that retiree benefits are
vested or that retiree benefits are not vested. Compare Yard-Man, 716
F.2d at 1482 (6th Cir.) (apparently presuming that retiree benefits are
vested), with Bidlack, 993 F.2d at 608-09 (7th Cir.) (apparently
presuming that retiree benefits are not vested). Because we conclude
below that there is no need for a trial as the documents at issue in this
case could not reasonably be interpreted as promising vested retiree
benefits, we need not decide what presumption, if any, would be
appropriate at trial.
Am. Fed’n, 116 F.3d at 980, n. 3.
Moreover, while extrinsic evidence may be used to interpret ambiguous CBAs, it may not
be used to alter the meaning of unambiguous terms. Am. Fed’n, 116 F.3d at 981 (citations
omitted). In Am. Fed’n, the Second Circuit concluded that, “to reach a trier of fact, an employee
does not have to ‘point to unambiguous language to support [a] claim. It is enough [to] point to
written language capable of reasonably being interpreted as creating a promise on the part of [the
employer] to vest [the recipient’s] . . . benefits,’ ” Id. at 980 (citations omitted); Schonholz v.
Long Island Jewish Med. Ctr., 87 F.3d 72, 78 (2d Cir. 1996). A district court may not base its
finding of ambiguity on the absence of language, and the court may only consider oral statements
or other extrinsic evidence after it first finds language in the documents that may reasonably be
interpreted as creating a promise to vest benefits. Id.; see also Parillo v. FKI Indus., Inc., 608 F.
Supp. 2d 264 (D. Conn. 2009). A single sentence in plan documents can suffice to raise a
question that requires resolution by a trier of fact. See Joyce, 171 F.3d at 134.
In this matter, the CBA creates a contractual relationship between plaintiff-retirees and
defendants. See Nunez, 2012 WL 3241260, at *6. Plaintiffs allege that, “[a]t the time of the
retirement of each plaintiff-retiree, he or she contributed ten percent toward the cost of individual
31

coverage and 25 percent toward the cost of dependent coverage which became a vested right for
life on the date of each plaintiff-retiree’s retirement.” Am. Cplt. at ¶ 90. Plaintiffs allege that
“CSEA and UCS have not concluded a successor to the 2007-2011 collective bargaining
agreement, and are still in negotiations for a new contract; therefore, the 2007-2011 CSEA/UCS
contract stays in effect by operation of law, pursuant to Article 14 of the Civil Service Law (‘the
Taylor Law’).” Id. at ¶ 78.
In the Amended Complaint, plaintiffs allege that the relevant CBA contains the following
language:11
Sub-section 1(f). The State agrees to pay 90 percent of the cost of
individual coverage and 75 percent of the cost of dependent coverage
provided under the Empire Plan.
Sub-section 14. The unremarried spouse [of a retiree who predeceases
the spouse] shall be permitted to continue coverage in the Health
Insurance Program with payment at the same contribution rates as
required of active employees.
Sub-section 15. Employees added to the payroll and covered by the
State health insurance plan have the right to retain health insurance
coverage after retirement, upon completion of 10 years of State
service.
Id. at ¶ 49.
Plaintiffs also allege, “[e]ach of the six collective bargaining agreements between CSEA
and the State during the 23 years from 1988 through 2011, in each of the four executive branch
CSEA units contained substantially the same language as the 1985-1988 contract language quoted
above, and that language stayed in full force and effect until October 1, 2011.” Id. at ¶ 51.

11

The CBAs are not part of the record herein.
32

Plaintiffs cite to additional contractual language that provides, “[e]mployees added to the
payroll and covered by the State Health Insurance Plan have the right to retain health insurance
coverage after retirement, upon the completion of 10 years of State service.” Id. at ¶ 42.
Plaintiffs further allege that,
[o]ver at least the past 29 years, from at least April 1982 to October 1,
2011, CSEA and the State have established a practice based on
language in the parties’ collective bargaining agreements that each
employee who retired with ten or more years of State service and was
covered by a CSEA/State collective bargaining agreement on the
employee’s date of retirement, pays the same unchanged contribution
rate toward premiums for retiree health insurance for the life of the
retiree.
Id. at ¶38.
Plaintiffs’ allegations identify written language capable of reasonably being interpreted as
creating a promise to provide plaintiffs with a vested interest in perpetually fixed NYSHIP
contribution.
Defendants argue that the relevant sections apply “for the duration of the CBA.”
However, the record, as it presently exists, does not support that conclusion. Indeed, the record
does not contain a copy of any of the aforementioned CBAs. Defendants fail to submit any
further argument in support of dismissal on this issue and cite to one case in support of the
proposition that history cannot serve to bind the State to promises that it never made. See Aeneas
McDonald Pol. Benevolent Ass’n v. City of Geneva, 92 N.Y.2d 326, 333 (1998). However,
Aeneas is readily distinguishable from the facts at hand.
In Aeneas, the labor relationship between the City and the police department had been
governed by collective bargaining agreements. However, none of the agreements addressed the
issue of health benefits for retirees. This fact alone sets Aeneas apart from the instant case. Here,
there is a CBA between defendants and plaintiffs that contains specific language addressing
33

health benefits. See Della Rocco v. City of Schenectady, 252 A.D.2d 82, 84-85 (3d Dept. 1998)
(distinguishing Aeneas because the action before the court contained a “continuum of collective
bargaining contracts between defendant and plaintiffs, each containing identical clauses which
provided for hospitalization and major medical coverage for retired members and their families”).
Defendants also argue that plaintiffs do not have a statutorily implied right to a fixed
amount toward retiree health insurance citing to a recent Southern District decision in New York
State Court Officers Ass’n v. Hite, 851 F. Supp. 2d 575 (S.D.N.Y. 2012).12 Plaintiffs failed to
respond to this argument and did not address the NYSCOA case in their Memorandum of Law.
The NYSCOA case was before the court on a motion for a preliminary injunction. The relevant
language of their CBA provided, “[e]mployees . . . shall receive health and prescription drug
benefits . . . at the same contribution level . . . that applies to the majority of represented
Executive Branch employees.” Id. at 577. The court held, “[t]he contract does not guarantee that
Union members will receive health benefits at the rates set by Civil Service law § 167(1).” Id. at
579. Rather, “[i]t guarantees that they will receive benefits at the same rates as the majority of
executive branch employees.” Id. The court concluded that based upon the unambiguous terms
of the contract, the plaintiffs contracted for the same health benefits as the executive branch
employees. Id. Plaintiffs cited to Buffalo Teachers Fed’n in support of their claims but the court
found that the, “clear contractual obligations . . . differ materially from the action at issue here.”
Id. at 580. The court also addressed plaintiffs’ argument that section 167(1) itself created
contractual rights. The court rejected that argument and reasoned, “defendants correctly note that
courts are hesitant to read contractual rights into statutes because to do so would too easily

12

After the Southern District Court issued the decision on the motion for a preliminary injunction, the case
was transferred to the Northern District of New York. The matter is presently pending herein under Docket No. 12CV-532.
34

preclude New York State from changing its policies.” Id. at 582. The court held, “[r]eading
section 167 as a contract would improperly impair the ability of the Legislature to change its
policies regarding its employees’ health insurance plans.” Id. Thus, the court held that because
the plaintiffs failed to demonstrate a likelihood of success on the merits, the motion for a
preliminary injunction was denied. On August 12, 2012, the Second Circuit affirmed the lower
court decision. New York State Court Officers Ass’n v. Hite, 475 Fed. Appx. 803 (2d Cir. 2012).
The Second Circuit reviewed the district court’s decision to deny a preliminary injunction and
affirmed the order for “substantially the same reasons.” However, the Court noted that “[w]e
intimate no views on the ultimate merits as maybe developed upon a full trial.” Id. at 805 n. 3.
This Court has carefully reviewed the district court’s decision in NYSCOA and the
complaint in that case and finds that the NYSCOA case is distinguishable from this action.
Factually, the CBA at issue herein contains specific written language that is reasonably
interpreted as a promise to vest the benefits. Procedurally, the NYSCOA case is presently pending
in this Court and contains three causes of action: (1) violation of the Contracts Clause of U.S.
Constitution; (2) violation of the Due Process Clause of the Fourteenth Amendment; and (3) a
request for a declaratory judgment that Civil Service Law 167 and the implementing regulations
are unconstitutional as applied. See NYSCOA v. Hite, 12-CV-532, Dkt. No. 1. In the March 2012
decision, the district court did not dismiss any portion of the plaintiffs’ complaint. The court only
denied the application for a preliminary injunction. All three originally asserted causes of action
are still pending. While the March 2012 decision in NYSCOA v. Hite is clearly relevant to the
issues presented in this lawsuit, the district court’s holding on the motion for a preliminary
injunction is not controlling on this motion to dismiss. A motion for a preliminary injunction
requires a different standard of proof than a motion to dismiss. See Lawrence v. Town of
35

Brookhaven Dep’t of Hous., Cmty. Dev. & Intergov. Affairs, No. 07-CV-2243, 2007 WL
4591845, at *13 (E.D.N.Y. Dec. 26, 2007). “[U]nlike a preliminary injunction motion, dismissal
pursuant to Rule 12(b)(6) is not based on whether Plaintiff is likely to prevail, and all reasonable
inferences must be viewed in a light most favorable to Plaintiff.” Id. “In opposing a motion to
dismiss, Plaintiff is not required to prove her case; she must simply establish that the allegations
in the Complaint are sufficient to render her claims plausible.” Id. (citing Iqbal, 490 F.3d at 158)
(internal citation omitted). Accordingly, defendants’ reliance upon the NYSCOA holding is
misplaced at this stage of the litigation.
In the alternative, plaintiffs argue that should the Court deem the language of the statute
ambiguous, extrinsic evidence demonstrates the parties’ intent to contract for vested benefits.
Such evidence includes the Bill Jacket to Chapter 14 of the Laws of 1983 and past practices and
representations by the State. In addition, plaintiffs cite to various holdings from New York State
courts and district court decisions in both this Circuit and others where the courts concluded, as a
matter of law, that the subject CBA created vested, lifetime rights to unchanged health insurance
benefits. At this juncture, the Court will not consider such extrinsic evidence and further, the
Court is not compelled to follow the holdings of the cases cited by plaintiffs. Those actions
involved motions for summary judgment and thus, a comprehensive analysis of the record and a
vastly different standard of proof on both parties. See Myers, 244 A.D.2d at 847; Joyce, 171 F.3d
at 133-34.
As discussed supra, the Court has found that plaintiffs have satisfied their burden to
identify specific written language that is reasonably susceptible to interpretation as a promise to
provide a perpetually fixed contribution rate. On a motion to dismiss, that is all that plaintiffs
must establish. Consequently, at this stage of the litigation, plaintiffs have adequately pled the
36

existence of a contractual right in perpetually fixed contributions to survive a motion to dismiss.
However, the Court cannot make any conclusions as a matter of law with respect to this issue.
B.

Substantial Impairment

Even assuming plaintiffs possessed a valid contractual interest in a perpetual NYSHIP
contribution rate, defendants argue that they have not substantially impaired plaintiffs’ rights.
Defendants contend that the NYSHIP program is still in place and thus, defendants are fulfilling
their contractual obligations. Moreover, defendants contend that the adjustment to the subsidy
rate was a foreseeable variable and within the parties’ reasonable expectations.
An impairment of a contract must be “substantial” for it to violate the Contract Clause.
Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411 (1983).
Impairments that affect the terms upon which the parties have reasonably relied or that
significantly alter the duties of the party are substantial. Allied Structural Steel Co., 498 U.S. at
245. The primary consideration in determining whether the state law has, in fact, operated as a
substantial impairment is the extent to which reasonable expectations under the contract have
been disrupted. Sanitation and Recycling Indus., Inc. v. City of New York, 107 F.3d 985, 993 (2d
Cir. 1997) (“Impairment is greatest where the challenged government legislation was wholly
unexpected”). “[A] law that provides only one side of the bargaining table with the power to
modify any term of a contract after it has been negotiated and executed is perhaps the epitome of
a substantial impairment.” Donohue, 2012 WL 3561796, at *26 (“This far-reaching power [ ] can
arguably be itself a substantial impairment to a contractual relationship”) (citing Baltimore
Teachers Union, Am. Fed’n of Teachers Local 340, AFL-CIO v. Mayor and City Council of
Baltimore, 6 F.3d 1012, 1016 (4th Cir. 1993)).

37

In this matter, plaintiffs allege that the new rates resulted in a two percent increase in the
contribution rates for individual coverage and dependent coverage. Moreover, plaintiffs claim
that the effect of this change in the retiree contribution rate was to require plaintiffs-retirees and
the class they represent to pay more for their health insurance than they would have paid under
the provisions of the contracts in effect on the dates of each plaintiff-retiree’s retirement. Am.
Cplt. at ¶¶ 79-80. Plaintiffs further allege “[t]he passage and implementation of Chapter 491 of
the laws of 2011 raising plaintiffs -retirees’ health insurance premium contribution rates from ten
percent to 12 percent toward the cost of individual coverage and from 25 percent to 27 percent
toward the cost of dependent coverage constitutes an impairment of the aforesaid contracts.” Id.
at ¶ 91.
Defendants argue that CSL § 167(8) reflected “the lawmakers’ understanding” that the
cost of NYSHIP coverage was subject to adjustment. In support of this assertion, defendants rely
upon extraneous documents not incorporated, mentioned or relied upon in the Amended
Complaint. Thus, the Court will not consider the documents in the context of the within motion.
Moreover, even assuming that the Legislature was aware of the possible changes in coverage and
costs, defendants have not established, or even alleged, a similar understanding on the part of
plaintiffs. To this end, plaintiffs allege that “[u]ntil October 1, 2011, State employees who were
members of all five CSEA units, . . . with ten or more years of service, continued to receive fullypaid retiree health insurance for individual coverage and continued to contribute 25 percent
toward the cost of dependent coverage for health insurance in retirement as described in the above
contracts” and “[s]tate employees who were members of all five CSEA units . . . , who retired
between January 1, 1983 until October 1, 2011 with ten or more years of service contributed ten
percent toward the cost of individual coverage and 25 percent toward the cost of dependent
38

coverage.” Am. Cplt. at ¶¶ 59-60. Further allegations of plaintiffs’ expectations are articulated.
Plaintiffs allege that over the past twenty-nine years, the State established a practice that each
employee who retired with ten or more years of State service was covered by a CSEA/State
collective bargaining agreement on the employee’s date of retirement. Id. at ¶ 37. Based upon
the allegations in the complaint, language in the CBA and CSL § 167(8), plaintiffs have
sufficiently alleged that the impairment was not reasonably expected.
Further, plaintiffs allege that defendants “unilaterally implemented higher contribution
rates for 1983-2011 retirees.” Plaintiffs also claim that prior to the enactment of Chapter 491,
§167(8) provided “that the State cost of premium or subscription charges for employees may
only be increased pursuant to the terms of a collective bargaining agreement; however, the statute
further stated that such increase ‘shall not be applied during retirement.’” Id. at ¶ 62. Plaintiffs
further assert that based upon the Taylor Law, the provisions of the 2007-2011 contract “stay in
effect by operation of law.” Id. at ¶ 78. Based upon the record as it currently exists, plaintiffs
have pled sufficient facts supporting a plausible claim that the impairment to their contractual
rights was substantial.13
C.

Legitimate Public Purpose and Reasonable and Necessary

When a state law constitutes substantial impairment, the state must show a significant and
legitimate public purpose behind the law. See Energy Reserves Group, 459 U.S. at 411-12. A
law that substantially impairs contractual relations must be specifically tailored to “meet the

13
Defendants cite to Local 342, Long Island Pub. Serv. Emp., UMD, ILA, AFL-CIO v. Town Bd. of the Town
of Huntington, 31 F.3d 1191, 1194 (2d Cir. 1994) in support of the argument that the law did not prevent the parties
from fulfilling their obligations and thus, there was no substantial impairment. The Court has reviewed the holding
and finds the facts vastly dissimilar from those at hand. Moreover, Local 342 was before the Southern District on a
motion for a preliminary injunction which, as discussed supra, requires a different standard of proof than a motion to
dismiss. Thus, at this stage of the litigation, given the factual and procedural differences, the Court is not compelled
to abide by the holding in Local 342.
39

societal ill it is supposedly designed to ameliorate.” Allied Structural Steel, 438 U.S. at 243. The
Second Circuit has held, “[a] legitimate public purpose is one ‘aimed at remedying an important
general social or economic problem rather than providing a benefit to special interests.”’ Buffalo
Teachers Fed’n, 464 F.3d at 368. “Courts have often held that the legislative interest in
addressing a fiscal emergency is a legitimate public interest” however, “the purpose may not be
simply the financial benefit of the sovereign.” Id. (citation omitted). Moreover, “[a]lthough
economic concerns can give rise to the [ ] use of the police power, such concerns must be related
to ‘unprecedented emergencies’ such as mass foreclosures caused by the Great Depression.” Id.
“That a contract-impairing law has a legitimate public purpose does not mean there is no
Contracts Clause violation. The impairment must also be one where the means chosen are
reasonable and necessary to meet the stated legitimate public purpose.” Id. at 369. On a motion
to dismiss, the court is not bound to accept the legislature's justification for the public purpose.
See Nat’l Educ. Ass’n -Rhode Island by Scigulinsky v. Retirement Bd. of Rhode Island Emp.
Retirement Sys., 890 F. Supp. 1143, 1162 (D.R.I. 1995).
The “reasonable and necessary” analysis involves a consideration of whether the
adjustment of the rights and responsibilities of contracting parties is based upon reasonable
conditions and is of a character appropriate to the public purpose justifying the legislation’s
adoption. Am. Fed’n of State, County & Mun. Emps. v. City of Benton, Arkansas, 513 F.3d 874,
879-880 (8th Cir. 2008) (citing Energy Reserves Group, Inc., 495 U.S. at 412 (1983)). Before
analyzing whether an act is reasonable and necessary, the court must determine the degree of
deference afforded to the legislature. Where the state impairs a public contract to which it is a
party, the state’s self-interest is at stake and, thus, the court will afford less deference to the
state’s decision to alter its own contractual obligations. United Auto, 633 F.3d at 45; see also
40

Buffalo Teachers Fed’n, 464 F.3d at 369 (holding that “[w]hen a state's legislation is self-serving
and impairs the obligations of its own contracts, courts are less deferential to the state’s
assessment of reasonableness and necessity”). “The relevant inquiry for the Court is to ensure
that states neither ‘consider impairing the obligations of [their] own contracts on a par with other
policy alternatives’ nor ‘impose a drastic impairment when an evident and more moderate course
would serve its purposes equally well,’ nor act unreasonably ‘in light of the surrounding
circumstances.’” Donohue, 2012 WL 3561796, at *30 (citing U.S. Trust, 431 U.S. at 30–31). In
this matter, the State is a party to the CBA and, thus, the Court will afford less deference to the
State’s decisions.
“To be reasonable and necessary under less deference scrutiny, it must be shown that the
state did not (1) ‘consider impairing the . . . contracts on par with other policy alternatives’ or (2)
‘impose a drastic impairment when an evident and more moderate course would serve its purpose
equally well,’ nor (3) act unreasonably ‘in light of the surrounding circumstances.”’ Buffalo
Teachers Fed’n, 464 F.3d at 371. Some factors to be considered under this inquiry include:
“whether the act (1) was an emergency measure; (2) was one to protect a basic societal interest,
rather than particular individuals; (3) was tailored appropriately to its purpose; (4) imposed
reasonable conditions; and (5) was limited to the duration of the emergency.” Donohue, 2012
WL 3561796, at *30 (citing, inter alia, Energy Reserves Grp., 459 U.S. at 410 n.11).
In a case in this district, Senior United States District Judge Lawrence E. Kahn addressed
the issue of reasonableness while affording “less deference” to the State’s decisions. Donohue v.
Patterson, 715 F. Supp. 2d 306, 322 (N.D.N.Y. 2010). The Donohue case involved an emergency
appropriations bill which enacted unpaid furloughs, a wage freeze, and a benefits freeze on
certain groups of state employees in contravention of a number of CBAs. Id. at 313. The
41

“extender bill” expressly imposed the altered terms “[n]ot withstanding any other provisions of
this section or of any other law, including article fourteen of this chapter, or collective bargaining
agreement or other analogous contract or binding arbitration award.” Id. at 314. The court
assumed there was a legitimate public purpose and directed it’s attention to the reasonableness
issue. Judge Kahn noted that the defendants failed to present any showing of a substantial record
of any legislative consideration of policy alternatives to the challenged bill:
Defendants do not, and evidently cannot, direct the Court to any
legislative consideration of policy alternatives to the challenged terms
in the bill; rather, the only support offered by Defendants for their
assertion that the contractual impairment was not considered on par
with other alternatives is a list of assorted expenditure decisions made
by the State over the past two years, such as hiring freezes and delays
of school aid. This will not do. That the State has made choices
about funding and that a fiscal crisis remains today surely cannot,
without much more, be sufficient justification for a drastic
impairment of contracts to which the State is a party. Without any
showing of a substantial record of considered alternatives the
reasonableness and necessity of the challenged provisions are cast in
serious doubt.
Id. at 322.
Rather, the court noted that the defendants relied upon “generalities” and failed to
demonstrate that they “did not impose a drastic impairment when a more moderate course was
available.” Id. The court addressed the affidavits submitted by the defendants in support of the
motion and held as follows:
While Defendants have identified a fiscal emergency and note that
state personnel comprise a significant source of state spending, their
argument equates the broad public purpose of addressing the fiscal
crisis with retrieving a specific level of savings attributed to the
provisions. The two are not the same. Where reasonable alternatives
exist for addressing the fiscal needs of the State which do not impair
contracts, action taken that does impair such contracts is not an
appropriate use of State power. In its submissions to the Court, the
State artificially limits the scope of alternatives for addressing the
fiscal crisis to retrieving a certain amount of savings from unionized
42

state employees. According to this view, the reasonableness and
necessity of the challenged provisions is demonstrated simply because
there is a fiscal crisis and Plaintiffs have not identified alternative
sources from their own contracts for the same level of funding as that
desired by the State. Plaintiffs are not charged with that responsibility.
The desired savings need not come from state personnel in the amount
identified by the State. Rather, the State must consider both
alternatives that do not impair contracts as well as those which might
do so, but effect lesser degrees of impairment.
Id. at 323.
Judge Kahn concluded that,
[m]ost importantly, the Court cannot ignore the conspicuous absence
of a record showing that options were actually considered and
compared, and that the conclusion was then reached that only the
enacted provisions would suffice to fulfill a specified public purpose.
While the Court would afford significant deference to a legislative
judgment on an issue of this type where the State is not a party to the
impaired contract, the Court cannot do so here — not only because the
state is a contractual party but, far more critically, because actual
legislative findings in support of the provision cannot be located; due
to the take-it-or-leave nature of the extender bill, in conjunction with
the Senate’s contemporaneous and unanimous statement opposing the
challenged provisions, there is no adequate basis before the Court on
which it may be established that the provisions are reasonable and
necessary.
Id. at 323.
While a fiscal crisis is a legitimate public interest, defendants cannot prevail on a motion
to dismiss the complaint with an argument limited to “emphasizing the State’s fiscal difficulties.”
See id. Broad reference to an economic problem simply does not speak to the policy
consideration and tailoring that is required to pass scrutiny under plaintiffs’ Contracts Clause
challenge. Id.
At this stage of the litigation, all that is required is that plaintiffs plead a “cognizable claim
for a remedy which may be proved at trial.” See Henrietta D. v. Giuliani, No. 95-CV-0641, 1996
WL 633382, at *12 (E.D.N.Y. Oct. 25, 1996). Plaintiffs assert that
43

[a]t no time did the State Legislature amend Civil Service Law
167(1)(a) to raise the contribution rates for retiree health insurance
above ten percent for individual and 25 percent for dependent
coverage.
At no time have the State defendants or the State legislature issued a
declaration or any other kind of finding stating that it is necessary to
raise the contribution rates that retirees contribute toward the cost of
their health insurance to serve an important State purpose.
Upon information and belief, raising the contribution rates for retirees
was not party of the 2011-2012 State budget.
Am. Cplt. at ¶¶ 67-69.
Plaintiffs allege that, “the only ‘rationale’ or ‘purpose’ asserted by the defendants for
substantially impairing the plaintiffs-retirees’ contract rights was that it was necessary to
implement the negotiated agreements between the State and CSEA. Id. at ¶ 95. Indeed, plaintiffs
allege that the impairment “actually defeats the significant public purpose of ensuring adequate
and affordable health care for retirees who are least able to suffer such a retroactive diminution of
their health care benefits. Id. at ¶ 97. On a motion to dismiss, the Court must accept these
allegations as true. Thus, the Court finds that plaintiffs have pled sufficient facts suggesting that
defendants’ actions were not reasonable and necessary.
While defendants rely upon the economic emergency, a resolution of the issues
surrounding defendants’ fiscal crisis and economic situation will involve questions not
appropriately resolved on a motion for dismissal. See Nat’l Educ. Ass’n, 890 F. Supp. at 1164
(holding that a determination of the reasonableness of the defendants’ actions based upon the
economic crisis involving the Retirement System was premature on a motion to dismiss). Courts
have held that, “[r]esolution of . . . whether the contract-impairing enactment was ‘reasonable and
necessary to serve an important public purpose’ is not appropriate in the context of a motion to
dismiss.” JSS Realty Co., LLC v. Town of Kittery, Maine, 177 F. Supp. 2d 64, 70 (D. Me. 2001).
44

Defendants argue that the amendment to CSL § 167 was for a legitimate public purpose based
upon the State’s economic emergency and fiscal crisis. Even assuming that the Court accepts that
explanation as a legitimate purpose, defendants fail to demonstrate that the means chosen were
necessary. Defendants do not explain why the language and provisions of Chapter 491 were
selected and rather, rely upon the measures that the State refrained from enacting as a means of
demonstrating reasonableness including the State’s decision not to eliminate the NYSHIP
program or rewrite CSL § 167 to prescribe more severe modifications. These assertions are
unsupported by the record. Moreover, as Judge Kahn noted, listing the various ways that the
State has attempted to “overhaul” the economy, i.e., prison consolidation, mergers of state
agencies, and reforms to the juvenile system, without more, is insufficient justification for
impairing State contracts. See Donohue, 715 F. Supp. 2d at 323.
To summarize, although defendants may prove otherwise upon completion of discovery
and a motion for summary judgment, at this stage of the litigation, plaintiffs have met their
burden and have alleged a plausible cause of action for a violation of the Contracts Clause.
However, the parties are cautioned to appreciate the “distinction” between the Rule 12(b)(6)
standard and the summary judgment standard. The burden on the non-movant is significantly
different on a motion for summary judgment. “Even if the same relevant documents were
considered at each stage, general facts [. . . ] receive consideration at summary judgment, but not
in the Rule 12(b)(6) analysis.” Werbowsky v. Am. Waste Serv., Inc., No. 97-4319, 1998 WL
939882, at *5 (6th Cir. Dec. 22, 1998) (holding that the Rule 12(b)(6) ruling was not a final
judgment, and did not bind the district court at summary judgment). If presented with a motion
for summary judgment, plaintiffs will face the burden of citing to facts in the record and “must go

45

beyond the pleadings and come forth with genuine issues of fact for trial.” See Connection
Training Servs. v. City of Philadelphia, 358 Fed. Appx. 315, 318 (3d Cir. 2009).
II.

Due Process
Initially, the Court is compelled to point out that both defendants and plaintiffs present

nebulous arguments with respect to this claim. Plaintiffs simply claim that defendants violated
their Fourteenth Amendment rights to be afforded adequate notice and a reasonable opportunity
to be heard before being deprived of property to which they were lawfully entitled. Plaintiffs
argue that they possessed sufficient collective bargaining and statutorily created contract rights
and that defendants abolished the benefit without proper notice to plaintiffs. Defendants argue
that plaintiffs do not have a legitimate claim of entitlement to a property interest in insurance cost
percentages and, therefore, cannot sustain a claim under Due Process.
The Fourteenth Amendment provides, in relevant part, that “[n]o state shall . . . deprive
any person of life, liberty, or property, without due process of law.” U.S. Const. amend. XIV, §
1. In order to demonstrate a violation of either substantive or procedural due process rights, the
plaintiff must first demonstrate the possession of a federally protected property right to the relief
sought. Puckett v. City of Glen Cove, 631 F. Supp. 2d 226, 236 (E.D.N.Y. 2009) (citing Lisa’s
Party City, Inc. v. Town of Henrietta, 185 F.3d 12, 16 (2d Cir.1999)). Property interests “are
created and their dimensions are defined by existing rules or understandings that stem from an
independent source such as state law-rules or understandings that secure certain benefits and that
support claims of entitlement to those benefits.” Bd. of Regents of State Coll. v. Roth, 408 U.S.
564, 577 (1972) (holding that the plaintiff must have more than a unilateral expectation; the
plaintiff must have a legitimate claim of entitlement to the benefit). The Second Circuit has held
that, “[i]n order for a person to have a property interest in a benefit such as the right to payment
46

under a contract, [h]e must have more than a unilateral expectation of it. He must, instead, have a
legitimate claim of entitlement to it.” Local 342, Long Island Pub. Serv. Emp., UMD, ILA, AFLCIO v. Town Bd. of the Town of Huntington, 31 F.3d 1191, 1194 (2d Cir. 1994) (citations
omitted). “When determining whether a plaintiff has a claim of entitlement, we focus on the
applicable statute, contract or regulation that purports to establish the benefit.” Martz v. Vill. of
Valley Stream, 22 F.3d 26, 30 (2d Cir.1994).
“Courts have determined that in appropriate circumstances, contractual rights arising
from collective bargaining agreement give rise to constitutional property right.” Jackson v.
Roslyn Bd. of Educ., 652 F. Supp. 2d 332, 341 (E.D.N.Y. 2009) (citing Ciambriello v. Cty. of
Nassau, 292 F.3d 307, 314 (2d Cir. 2002). A “property interest in employment can be created by
ordinance or state law.” Winston v. City of New York, 759 F.2d 242, 247 (2d Cir. 1985) (holding
that the plaintiffs’ benefits were found in the New York State Constitution and vested in the
plaintiffs by the terms of a statutory scheme). The Second Circuit has held that
[i]n determining whether a given benefits regime creates a property
interest protected by the Due Process Clause, we look to the statutes
and regulations governing the distribution of benefits. Where those
statutes or regulations meaningfully channel official discretion by
mandating a defined administrative outcome, a property interest will
be found to exist.
Kapps v. Wing, 404 F.3d 105, 113 (2d Cir. 2005) (internal citations and quotation marks omitted).
Courts in this circuit have held that statutory framework may create a property interest. See
Kapps, 404 F.3d at 104; Basciano v. Herkimer, 605 F.2d 605 (2d Cir. 1978) (holding that city
administrative code created a property right in receipt of accident disability retirement benefits,
where the code required officials to give benefits to applicants who met specified criteria); see
also Winston, 759 F.2d at 242; Sparveri v. Town of Rocky Hill, 396 F. Supp. 2d 214, 218 (D.
Conn. 2005) (noting that the plaintiff claimed that her entitlement to the level of pension and
47

healthcare benefits was rooted in the statutory pension scheme established by the Town Charter
and Plan ordinance).
In the Amended Complaint, plaintiffs’ Third Cause of Action contains allegations relating
to due process. Plaintiffs allege that they have a vested property right to maintain the same
contribution rates contained in the contract that was in effect on the date each retiree retired and
that the State’s increase in contribution rates, absent due process, resulted in an impermissible
forfeiture of their vested property rights. Am. Cplt. at ¶¶ 115-116. Plaintiffs assert that they were
deprived of this property right without adequate notice or a reasonable opportunity to be heard.
Id. at ¶ 117. While the Court cannot conclude as a matter of law that plaintiffs’ possessed a
property interest within the meaning of the Fourteenth Amendment, plaintiffs have sufficiently
articulated and pled due process violations to survive a motion to dismiss.

CONCLUSION
IT IS HEREBY
ORDERED that defendants’ motion to dismiss plaintiffs’ amended complaint (Dkt. No.
11) is GRANTED IN PART AND DENIED IN PART; it is further
ORDERED that defendants’ motion to dismiss plaintiffs’ amended complaint as against
the State of New York, New York State Civil Service Department, New York State Civil Service
Commission, New York State and Local Retirement System and New York State Unified Court
System is GRANTED. All claims against these defendants are dismissed; it is further
ORDERED that defendants’ motion to dismiss plaintiffs’ claims for monetary damages
asserted against defendants Hite, Ahl, Hanrahan, Megna, DiNapoli and Lippman in their official
capacity is GRANTED; it is further
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ORDERED that defendants’ motion to dismiss plaintiffs’ claims for injunctive and
declaratory relief asserted against defendants Hite, Ahl, Hanrahan, Megna, DiNapoli and
Lippman in their official capacity is GRANTED only to the extent that such claims seek
retrospective relief; it is further
ORDERED that defendants’ motion to dismiss plaintiffs’ Article 78 claims is
GRANTED; it is further
ORDERED that defendants’ motion is denied in all other respects.
IT IS SO ORDERED.
Dated: December 3, 3012
Albany, New York

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