Brynien et al v. State of New York et al
MEMORANDUM-DECISION AND ORDER re 11 MOTION to Dismiss for Lack of Subject Matter Jurisdiction on behalf of all defendants filed by State of New York: ORDERED that defendants motion to dismiss plaintiffs complaint (Dkt. No. 11) is GRANTED IN PART AND DENIED IN PART; it is further ORDERED that defendants motion to dismiss plaintiffs complaint as against the Stateof New York, New York State Civil Service Department, New York State Civil Service Commission, New York State and Local Retire ment System and New York State Governors Office of Employee Relations 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 defen dants Hite, Ahl, Hanrahan, Megna, DiNapoli, and Johnson in their official capacity is GRANTED; it is further ORDERED that defendants motion to dismiss plaintiffs claims for injunctive and declaratory relief asserted against defendants Hite, Ahl, Hanr ahan, Megna, DiNapoli and Johnson 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 12/4/12. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
SUSAN KENT as PRESIDENT of
THE NEW YORK STATE PUBLIC EMPLOYEES
FEDERATION, AFL-CIO, NEW YORK STATE
PUBLIC EMPLOYEES FEDERATION, AFL-CIO,
and KAREN DANISH, JAMES CARR, ROBERT H.
HARMS, JR., KENNETH R. HUNTER, MARY REID,
CALVIN THAYER, and RAYMOND FERRARO
on Behalf of Themselves and All Others Similarly
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, in her official capacity as Acting Commissioner,
New York State Civil Service Department, NEW YORK
STATE CIVIL SERVICE COMMISSION, CAROLINE W.
AHL and J. DENNIS HANRAHAN, in their official capacities
as Commissioners of the New York State Civil Service
Commission, ROBERT L. MEGNA, in his official capacity as
Director of the New York State Division of the Budget, and
THOMAS P. DiNAPOLI, in his official capacity as Comptroller
of the State of New York, and NEW YORK STATE AND LOCAL
RETIREMENT SYSTEM, NEW YORK STATE GOVERNOR’S
OFFICE OF EMPLOYEE RELATIONS, and GARY JOHNSON,
in his official capacity as Executive Director of the Governor’s
Office of Employee Relations,
New York State Public Employees
P.O. Box 12414
1168-70 Troy-Schenectady Road
Albany, New York 12212-3414
Attorneys for Plaintiffs
Rita J. Verga, Esq.
Public Employees Federation, AFL-CIO
Office of General Counsel
1168-70 Troy-Schenectady Road
Albany, New York 12110
John F. Kershko, Esq.
Lisa M. King, Esq.
ERIC T. SCHNEIDERMAN
Attorney General of the State of New York
Albany, New York 12224
Attorney for Defendants
Charles J. Quackenbush, Esq.
Asst. Attorney General
Mae A. D’Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
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 thereby violated the Contracts Clause and Due Process
Clause of the United States Constitution and state law and 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. 16).
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. 4). 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.
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.
The New York State Public Employees Federation, AFL-CIO (“PEF”) is the collective
bargaining representative on behalf of New York State employees serving in positions in the
Professional, Scientific and Technical Services Unit (“PS&T Unit”) of the State government,
many of whom are enrolled in and receive health benefits through the statewide New York State
Health Insurance Program (“NYSHIP”). Plaintiff Susan Kent is President of PEF and brings this
action on behalf of retired employees who were within the PS&T Unit at the time of their
retirement, many of who receive benefits through NYSHIP. Plaintiffs Karen Danish, James Carr,
Robert H. Harms, Jr., Kenneth R. Hunter, Mary Reid, Calvin Thayer and Raymond Ferraro are
former State employees and former members of PEF now retired and enrolled in and receiving
either individual or dependent coverage health benefits through NYSHIP. 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
responsible for the administration of the New York State and Local Retirement System. The New
York State and Local Retirement System is responsible for making monthly pension payments to
eligible retired State employees less any deductions for the payment of retiree health insurance.
Defendant Gary Johnson (“Johnson”) was the Executive Director of the Governor’s Office of
Article XI of the New York State Civil Service Law (“CSL”) provides for a statewide
health insurance plan for eligible State employees and retired State employees known as NYSHIP
or “Empire Plan.” New York Civil Service Law § 167(1) assigns the State contribution rate
towards the cost of health insurance premium or subscription charges for the coverage of State
employees and retired State employees enrolled in NYSHIP. Prior to 1983, the State was
required to pay the full cost of premium or subscription charges for the coverage of State
employees and retired State employees enrolled in NYSHIP. 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 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 provided that
"[t]he State and the employee organizations representing State workers have agreed to a reduction
of the State’s contribution for the premium or subscription charges for employees enrolled in the
statewide health insurance plan."
The Division of the Budget’s Report on Bills also acknowledged that “[t]his measure
provides the necessary authorization to implement negotiated agreements between the State and
the employee organizations representing State employees. This action is appropriate in view of
the ‘good faith’ efforts of the State and the employee organizations to reach agreement on this
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.
As a result of negotiations, PEF and the State of New York executed Collective
Bargaining Agreements (“CBAs”) effective April 1, 1982 through March 31, 2011. Article 9 of
the 2007-2011 CBA is entitled “Health Insurance.”3 Section 9.1 of the CBA provides that "[t]he
State shall continue to provide all the forms and extent of coverage as defined by the contracts in
force on April 1, 2007 with the State health insurance carriers unless specifically modified or
replaced pursuant to this agreement." Cplt. at ¶ 66.
Article Section 9.2(h) of the 2007-2011 PEF CBA provides that [t]he State agrees to pay
90 percent of the cost of individual coverage and 75 percent of the cost of development coverage
including drug coverage provided under the Empire Plan. Id. at ¶ 67.
Article 9.13(a) of the 2007-2011 PEF CBA provides that "[e]mployees on the payroll and
covered by the State Health Insurance Program have the right to retain health insurance coverage
after retirement, upon the completion of ten years of State service." Id. at ¶ 68.
The same, or substantially similar, contract rights are contained in and consistently
maintained throughout the prior (from 1982 through 2007) collectively negotiated agreements.4
On August 17, 2011, the legislature passed Chapter 491 of the Laws of 2011 (Chapter
491). Chapter 491 amended § 167(8) and replaced the word “increased” with the word
“modified.” The amendment further provided as follows:
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.
The CBA is not part of the record herein.
These agreements are not part of the record herein.
On September 21, 2011, defendant Hite requested defendant Megna’s approval to extend
the modified contribution rates to PEF retirees. 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 coverage, from ninety percent (90 %) to
eighty-eight percent (88%), and Dependent Coverage, from seventy-five percent (75 %) to
seventy-three percent (73%), for enrolled State retirees, including PEF retirees, who retired on or
after January 1, 1983.
Defendants approved and filed emergency regulations to implement the reduction in State
contribution rates effective October 1, 2011, and a further reduction in State contribution rates for
employees retiring from State service on or after January 1, 2012, including PEF employees.
These reductions will result in a six percent (6 %) reduction in the State contribution rates for
individual coverage from ninety percent (90 %) to eight-four percent (84 %) and dependent
coverage from seventy-five percent (75 %) to sixty-nine percent (69 %) for those retirees retiring
from a title Salary Grade 10 or above, from a position equated to Salary Grade 10 or above, or for
those who retire from a position which is not allocated or equated to a Salary Grade, based upon
the wages or salary paid as compared to the salary schedule set forth in the CSEA Agreement.
On December 28, 2011, plaintiffs filed a complaint (Dkt. No. 1) asserting causes of action
for impairment of contract, violation of due process, violation of civil rights pursuant to 42 U.S.C.
§ 1983 and breach of contract. Plaintiffs also claim that Civil Service Law § 167(8) is
unconstitutional as applied 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 this action against the individual defendants in their official capacities only.
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’ 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
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
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
“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).
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 Governor’s Office of Employee Relations
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 New
York State Governor’s Office of Employee Relations 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).
Federal Claims Against State Officials in their Official Capacity
Plaintiffs also assert claims against defendants Cuomo, Hite, Ahl, Hanrahan, Megna,
DiNapoli and Johnson 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
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
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) (quotation omitted). 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).
Defendants argue that Eleventh Amendment immunity extends to state officials but 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 nature of the relief sought, plaintiffs’ “WHEREFORE” clause contains the
Declaring that State defendants’ actions imposing,
implementing and administratively extending reduced State
contribution rates for health insurance to plaintiffs, and all
others similarly situated are unconstitutional in violation of the
Contract Clause of Article I of Section 10 of the United States
Constitution, and permanently enjoining State defendants from
Declaring that State defendants’ actions in imposing,
administratively approving, extending and implementing
increases in the contribution rates that retired State employees
are required to pay for health insurance benefits in retirement
are unlawful and unauthorized pursuant to New York Civil
Service Law § 167(8), in excess of jurisdiction, and null and
vacating and annulling the State defendants’ actions in
administratively approving, extending and implementing
increases in the contribution rates that retired State employees
are required to pay for health insurance benefits in retirement
as unlawful, in excess of jurisdiction, arbitrary, capricious and
an abuse of discretion;
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 all similarly situated, or passing along
any additional costs or charges as a result of the reduced State
contribution rates implemented by State defendants challenged
directing State defendants to reimburse and make whole
plaintiffs, and all similarly situated, 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;
Declaring Chapter 491 of the Laws of 2011 unconstitutional,
as applied under Civil Service Law § 167(8), to the extent that
State defendants administratively extended and implemented
reduced State contribution rates to retired State employees
which impair the contract rights of plaintiffs and all others
similarly situated, to continue health benefits;
awarding plaintiffs’ reasonable attorneys’ fees costs and
disbursements of this action.
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.
See Cplt. (Dkt. No. 1). The Court will address each request for relief in turn.
Plaintiffs claim that the Eleventh Amendment does not bar ancillary monetary 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
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”)
Plaintiffs also seek an order permanently enjoining defendants from implementing the
reduced State contribution rates, arguing that the continued effectuation of Chapter 491 will have
an impact upon plaintiffs/retirees who are receiving only a portion of their former income. 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 & Family Serv.,
499 F. Supp. 2d 521, 538 (S.D.N.Y. 2007) (citation omitted).
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
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,
847-48 (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, New York
State Governor’s Office of Employee Relations, and plaintiffs’ claims for monetary damages
against defendants in their official capacities. Jurisdiction remains over plaintiffs’ claims for
prospective injunctive and declaratory relief and against defendants Cuomo, Hite, Ahl, Hanrahan,
Megna, DiNapoli and Johnson in their official capacities.
New York State Law Contractual Impairment Claims Against Defendants in their
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.
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.
In this matter, 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 have pled that the state claims arise out of ultra vires acts by
defendants Hite and Megna:
Upon information and belief, defendant Hite, in her capacity as
“Acting Commissioner” of the Civil Service Department and “Acting
President” of the Civil Service Commission, has not filed an oath of
office as Commissioner or President, respectively.
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.
As a result of Hite’s lack of authority, defendant Megna lacked
authority on September 22, 2011, to approve the extension of modified
State contribution rates to retired State employees and unrepresented
State employees pursuant to Civil Service Law § 167(8).
Defendant Hite lack authority pursuant to Civil Service Law § 167(8)
to approve a resolution on September 27, 2011, adopting regulations
at 4 NYCRR §§ 73.3(b) and 73.12, to extend modified State
contribution rates to retired State employees and unrepresented State
As a result of defendant Hite’s lack of authority pursuant to Civil
Service Law § 167(8), defendant Civil Service Department lacked
authority to file emergency regulations with the New York Secretary
of State’s office on September 27, 2011, and published in the State
Register on October 14, 2011, to extend modified State contribution
rates to retired State employees and unrepresented State employees.
Am. Cplt. at ¶¶ 144-150.
Plaintiffs also allege that “defendants’ unilateral and retroactive imposition of reduced
State contribution rates for retirees is not based upon an extension of the terms contained in the
CSEA Agreement, and is therefore not authorized pursuant to Civil Service Law § 167(8)” and
ultra vires. Id. at ¶¶ 190, 193. 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.
Federal Claims Against Defendants in their Individual Capacities
Plaintiffs have not asserted any claims against defendants Cuomo, Hite, Ahl, Hanrahan,
Megna, DiNapoli or Johnson, individually. However, plaintiffs argue that, “should the Court find
that the PEF plaintiffs’ monetary relief request is not ancillary to the requested injunctive relief,
the PEF plaintiffs request to amend their complaint to seek such damages against the defendants
in their individual capacities.” See Dkt. No. 16, at p. 8. 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
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 official 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
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, 8 (E.D.N.Y. Aug. 17, 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 ruling
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. ID Civ. 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
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 caselaw 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.6 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).
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.
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
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.
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
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 proceeding.” Spargo v. N.Y. State Comm'n 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)
(citations 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. Id. 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
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
respondents filed a motion to dismiss.7 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.8
Based upon the record and this Court’s independent research, the motion to dismiss is still pending.
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.”
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’s, Inc. v.
Shaar 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.
Claims Against Officials in their Individual Capacity and Legislative Immunity
“[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”) (quoting
Bogan, 523 U.S. at 54).
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
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,
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).
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.
Article I, Section 10 of the Constitution prohibits states from passing any law “impairing
the Obligation of Contracts.” While the language of the Contracts 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
accomplish the public purpose is reasonable and necessary. See Buffalo Teachers Fed’n, 464 F.
3d at 368.
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 pursuant to express language in each of the PEF CBAs, the State was
obligated to pay 90% (individual) and 75% (dependent) for each former PEF member who retired
after January 1, 1983 and continued, under express agreement, to pay 100% of the cost of
individual coverage for PEF members who retired before January 1, 1983.
“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 Yard-man, Inc., 716 F. 2d at 1479. While the Yard-man “inference” was discussed by the
Second 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 (quotation and other citation
omitted). 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, “[t]he 2007-2011 PEF
CBA (including, without limitation, Articles 9.1, 9.2(h) and 9.13(a)) combine to establish fixed
and vested contract rights in favor of the plaintiffs, vested at the time of retirement, to continue
and retain their health insurance coverage at the same fixed contribution rate in effect at the time
of their retirement.” Am. Cplt. at ¶ 69. Plaintiffs allege that the three aforementioned provisions,
discussed supra and outlined in the complaint at Paragraphs 66, 67 and 68, must be read together.
At all relevant times herein, prior to the enactment of Chapter 491 of
the Laws of 2011, and the actions of the State defendants challenged
by the plaintiffs herein, the State contribution rate towards the cost of
health insurance premium or subscription charges for the coverage of
State employees and retired (PEF/PS&T) State employees, and their
dependents, enrolled in NYSHIP or an optional benefit plan
thereunder, was: one-hundred percent (100%) for individual coverage
for retired State employees who retired before January 1, 1983; ninety
percent (90%) for individual coverage for State employees who
retired after January 1, 1983; and, seventy-five percent (75%) for
dependent coverage for retired State employees.
Id.. at ¶ 93.
Plaintiffs further allege that,
[b]y their terms, the PEF CBAs and 1982 MOU contractually
obligated the State to continue to provide health insurance under
NYSHIP to retired PEF members including the continuation of the
State contribution rates as agreed and set forth therein, at the same
contribution rates in effect at the time of retirement.
The terms of the PEF CBAs concerning the retention of retirement
health insurance benefits by PEF retirees, including the continuation
of the State contribution rates as agreed therein, had not been modified
or replaced by any successor collective bargaining agreement as of
October 1, 2011, the date of imposition of the increased premium rates
on PEF and other retirees.
Id. at ¶¶ 94-95.
Plaintiffs claim that the plain language of the CBA allegedly provides that “[t]he State
shall continue to provide all the forms and extent of coverage as defined by the contracts in force
on April 1, 2007 with the State health insurance carriers unless specifically modified or replaced
pursuant to this agreement.” Id. at ¶ 66.
Article Section 9.2(h) of the 2007-201 PEF CBA provides as follows “[t he State agrees to
pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent
coverage including drug coverage provided under the Empire Plan.” Id. at ¶ 67.
Article 9.13(a) of the 2007-2011 PEF CBA provides that “[e]mployees on the payroll and
covered by the State Health Insurance Program have the right to retain health insurance coverage
after retirement, upon the completion of ten years of State service.”
The retired employees allege that they are covered by the terms of the CBA that were in
effect at the time of their retirement insofar as it provides for the continuation of their health
benefits. Id. at ¶¶ 76, 107.
Plaintiffs further allege that, “the State’s longstanding practice and established course of
conduct further establishes the State’s contractual obligation to provide for the continuation of
health insurance benefits for PS&T Unit retirees, including a continuation of the State
contribution rates as provided for by the CBA in effect at the time a PS&T Unit member retires.”
Id. at ¶ 102.
Based upon the aforementioned, the Court finds that 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 aforementioned sections of the CBA apply “for the duration of
the CBA.” However, the record, as it presently exists, does not support that conclusion.
Defendant has not cited to any portion of the CBAs with any such limiting language. Indeed, the
record does not contain copies of the relevant 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
health benefits. See Della Rocco v. City of Schenectady, 252 A.D. 2d 82, 84-85 (3d Dep’t 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. Defendants cite 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).9 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
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.
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 that “[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. The 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 the 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 preclude New York State from changing its policies.” Id. at 582. The court held that
“[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
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
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.
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)).
In this matter, plaintiffs allege that the new reduced contribution rates resulted in an
increase in the cost of health insurance in the amount of twenty percent (20%) for individual
coverage and eight percent (8%) for dependent coverage. Am Cplt. at ¶ 132. Plaintiffs further
allege that the implementation of the reduced rate results in increases to the cost of health
insurance for plaintiffs that is “not limited in duration.” Id. at ¶ 160. Plaintiffs claim that they
obtained fixed and vested benefits as compensation for lost job mobility and possible wage
increases and that the benefits accrued after the employee had already given up his or her
potential to seek a better job or better wages. Id. at ¶¶ 114-115.
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 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 the contrary, Section 9.1 allegedly provides that coverage shall be paid, “unless specifically
modified or replaced pursuant to this Agreement.” Id. at ¶ 66. To this end, plaintiffs allege that
the fixed and vested rights were duly bargained for in exchange for many years of State service.
Id. at ¶ 110. Further, plaintiffs state that they “reasonably relied upon the expectation that the
State would continue to contribute towards their health insurance costs in retirement at the same
contribution rates fixed and vested at the time of retirement and that they would be able to retain
and continue those retirement health insurance benefits after their retirement as set forth in the
CBAs.” Id. at ¶¶ 111, 161. Further allegations of plaintiffs’ expectations are articulated
throughout the complaint. Plaintiffs allege that “the State’s longstanding practice and established
course of conduct further establishes the State’s contractual obligation to provide for the
continuation of health insurance benefits for PS&T Unit retirees, including the continuation of . . .
rates in . . . as provided for by the CBA in effect at the time of [retirement].” Id. at ¶ 101.
Moreover, plaintiffs allege that they reasonably expected their retirement benefits to continue,
because they were powerless to negotiate for the continuation of their benefits after they retired.
Id. at ¶ 121. 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 altered the terms of the CBA after it
had been negotiated and executed. Id. at ¶ 104. Plaintiffs contend that, pursuant to the “Taylor
Law, terms and conditions of employment cannot be unilaterally changed by the State defendants
absent collective bargaining.” Id. Based upon the record as it currently exists, plaintiffs have
pled sufficient facts supporting a plausible claim that the impairment to their contractual rights
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
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.
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.
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 courts 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
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
“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
“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
Id. at 322.
Rather, the court noted that 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
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
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
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 allege that while CSL § 167(8) permitted
an increase of state contribution rates to employees not subject to a CBA, nothing in Chapter 491
identified a legitimate State purpose to retroactively reduce the State contribution rate for State
retirees, or that the same was necessary and reasonable to accomplish such purpose. Am. Cplt. at
¶¶ 125-126. Plaintiffs allege that the defendants’ actions were an abuse of police power and
unnecessary to achieve legitimate government purposes and that defendants failed to advance any
legitimate rationale for the impairments. Id. at ¶¶ 165-166. Plaintiffs assert that the only
“rationale” or “purpose” was that it was “necessary to implement the negotiated agreement
between the State and the CSEA.” Id. at ¶ 167. To the contrary, plaintiffs contend that the
impairment actually defeats the significant public purpose of ensuring adequate and affordable
healthcare for retirees. Id. at ¶ 169. 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). 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
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).
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
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 healthcare benefits was rooted in the statutory pension scheme established by the Town
Charter and Plan ordinance).
In the complaint, plaintiffs’ Fifth Cause of Action contains allegations relating to due
process. Plaintiffs claim that the health insurance benefits provided by the State constitute vested
property rights to which they have a proprietary interest. Am. Cplt. at ¶¶ 103, 106. Plaintiffs
claim that they were deprived of their property without adequate notice or an opportunity to be
heard. Id. at ¶¶ 213-214. 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.
IT IS HEREBY
ORDERED that defendants’ motion to dismiss plaintiffs’ complaint (Dkt. No. 11) is
GRANTED IN PART AND DENIED IN PART; it is further
ORDERED that defendants’ motion to dismiss plaintiffs’ 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 Governor’s
Office of Employee Relations 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 Johnson in their official
capacity is GRANTED; it is further
ORDERED that defendants’ motion to dismiss plaintiffs’ claims for injunctive and
declaratory relief asserted against defendants Hite, Ahl, Hanrahan, Megna, DiNapoli and Johnson
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 4, 2012
Albany, New York
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