Brown et al v. State of New York et al
Filing
48
MEMORANDUM-DECISION AND ORDER granting in part and denying in part 16 Motion to Dismiss for Lack of Subject Matter Jurisdiction: The Court hereby ORDERS that Defendants motion to dismiss Plaintiffs Complaint (Dkt. No. 1) is GRANTED IN PART AND DEN IED IN PART; and the Court further ORDERS that Defendants motion to dismiss Plaintiffs complaint as against the State of New York, New York State Unified Court System, New York State Civil Service Department, New York State Civil Service Commission, and New York State and Local Retirement System is GRANTED in its entirety; and the Court further ORDERS that Defendants motion to dismiss Plaintiffs claims for monetary damages asserted against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl, Hanrahan , Megna, and DiNapoli in their official capacity is GRANTED; and the Court further ORDERS that Defendants motion to dismiss Plaintiffs claims for injunctive and declaratory relief asserted against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl, Hanra han, Megna, and DiNapoli in their official capacity is GRANTED only to the extent that such claims seek retrospective relief; and the Court further ORDERS that Defendants motion to dismiss Plaintiffs Article 78 claims is GRANTED; and the Court furthe r ORDERS that Defendants motion to dismiss Plaintiffs claims asserted against Defendants Cuomo, Lippman, Prudenti, Ahl, Hanrahan, and DiNapoli in their personal capacity is GRANTED, with leave to amend; and the Court further ORDERS that Defendants motion is denied in all other respects. Signed by U.S. District Judge Mae A. D'Agostino on 9/30/13. (ban)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
____________________________________________
BARBARA G. BROWN, as President and on behalf of the
CITYWIDE ASSOCIATION OF LAW ASSISTANTS,
ARTHUR CHELIOTES, as President and on behalf of
LOCAL 1180, COMMUNICATIONS WORKERS OF
AMERICA, AFL-CIO, JOHN CLANCY, as President
and on behalf of the COURT OFFICERS BENEVOLENT
ASSOCIATION OF NASSAU COUNTY, CLIFFORD
KOPPELMAN, as President and on behalf of LOCAL
1070, DISTRICT COUNCIL 37 AFSCME, AFL-CIO,
BRENDA LEVINSON, as President and on behalf of the
COURT ATTORNEYS ASSOCIATION OF THE CITY
OF NEW YORK, CHRISTOPHER MANNING, as
President and on behalf of the SUFFOLK COUNTY
COURT EMPLOYEES ASSOCIATION, INC., JOHN
STRANDBERG, as President and on behalf of the
SUPREME COURT OFFICERS ASSOCIATION, and
JOSEPH C. WALSH, as President and on behalf of the
NEW YORK STATE COURT CLERKS ASSOCIATION,
Plaintiffs,
vs.
THE STATE OF NEW YORK, ANDREW M. CUOMO,
individually, and in his official capacity as Governor of
the State of New York, NEW YORK STATE UNIFIED
COURT SYSTEM, JONATHAN LIPPMAN, individually
and in his capacity as the Chief Judge of the State of
New York, A. GAIL PRUDENTI, individually and in her
capacity as Chief Administrative Judge of the State of
New York, NEW YORK STATE CIVIL SERVICE
DEPARTMENT, PATRICIA A. HITE, individually, and
in her official capacity as Commissioner of the New York
State Civil Service Department, NEW YORK STATE
CIVIL SERVICE COMMISSION, CAROLINE W. AHL
and J. DENNIS HANRAHAN, individually, and in their
official capacities as Commissioners of the New York State
Civil Service Commission, ROBERT L. MEGNA,
individually, and in his official capacity as Director of the
New York State Division of the Budget, and THOMAS P.
DiNAPOLI, individually, and in his official capacity as
Comptroller of the State of New York, and NEW YORK
STATE AND LOCAL RETIREMENT SYSTEM,
1:13-CV-645
(MAD/CFH)
Defendants.
____________________________________________
APPEARANCES:
OF COUNSEL:
GREENBERG BURZICHELLI
GREENBERG P.C.
3000 Marcus Avenue, Suite 1W7
Lake Success, New York 11042
Attorneys for Plaintiffs
SETH H. GREENBERG, ESQ.
ERIC T. SCHNEIDERMAN
Attorney General of the State of New York
The Capitol
Albany, New York 12224
Attorney for Defendants
CHARLES J. QUACKENBUSH, ESQ.
RALPH PERNICK, ESQ.
Assistant Attorneys General
Mae A. D’Agostino, U.S. District Judge:
MEMORANDUM-DECISION AND ORDER
INTRODUCTION
On February 22, 2012, Plaintiffs commenced this action alleging that Defendants
unilaterally increased the percentage of contributions that Plaintiffs, unions representing active
and retired employees, are required to pay for health insurance benefits and thereby violated the
Contracts Clause and Due Process Clause of the United States Constitution, impaired Plaintiffs’
contractual rights under the terms of their respective Collective Bargaining Agreements (“CBA”),
and violated state law. Plaintiffs seek injunctive relief, declaratory judgments, and monetary
damages. See Dkt. No. 1 (“Complaint”).1 Presently before the Court is Defendants’ motion to
On December 29, 2011, Chief United States District Judge Gary L. Sharpe issued an
Order pursuant to General Order No. 12 of the United States District Court for the Northern
District of New York deeming ten separate actions filed in this district alleging similar facts and
causes of action as “related.” The instant action was originally filed in the United States District
Court for the Eastern District of New York, and was transferred to this Court on June 6, 2013,
pursuant to an order to transfer venue issued by Judge Arthur D. Spatt. Dkt. No. 35. Following
that transfer, on July 24, 2013, Magistrate Judge Randolph F. Treece ordered that this action be
deemed related to the ten other, similar actions, and was reassigned to this Court. Dkt. No. 46.
1
2
dismiss Plaintiffs’ complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Dkt. No. 16.
Plaintiffs have opposed the motion. Dkt. No. 23.
BACKGROUND2
Plaintiff Citywide Association of Law Assistants (“CALA”) is the collective bargaining
representative for certain non-judicial court attorney employees in the civil, criminal, and family
courts of New York City employed by Defendant New York State Unified Court System
(“UCS”). Plaintiff Barbara Brown is the Chairperson of CALA. See Dkt. No. 1 at ¶¶ 11-12.
Plaintiff Local 1180, Communication Workers of America, AFL-CIO (“Local 1180”) is
the collective bargaining representative for certain non-judicial employees employed by UCS
including, among others, Court Analysts, Administrative Services Clerks, and Supervising
Photostat Operators. Plaintiff Arthur Cheliotes is the President of Local 1180. See id. at ¶¶ 1314.
Plaintiff Court Officers Benevolent Association of Nassau County (“COBANC”) is the
collecting bargaining representative for certain non-judicial court employees in Nassau County
employed by UCS. Plaintiff John Clancy is the President of COBANC. See id. at ¶¶ 15-16.
Plaintiff Local 1070, District Council 37, AFSCME, AFL-CIO (“Local 1070”) is the
collective bargaining representative for certain non-judicial employees employed by UCS.
Plaintiff Clifford Koppelman is the President of Local 1070. See id. at ¶¶ 17-18.
Plaintiff Court Attorneys Association of the City of New York (“CAA”) is the collective
bargaining representative for certain non-judicial attorney employees in New York City employed
by UCS. Plaintiff Brenda Levinson is the President of CAA. See id. at ¶¶ 19-20.
The background information is taken from the Complaint and is presumed true for the
purposes of this motion only. This does not constitute a factual finding by the Court.
2
3
Plaintiff Suffolk County Court Employees Association, Inc. (“SCCEA”) is the collective
bargaining representative for certain non-judicial employees in Suffolk County employed by
UCS. Plaintiff Christopher Manning is the President of SCCEA. See id. at ¶¶ 21-22.
Plaintiff New York State Supreme Court Officers Association (“SCOA”) is the collective
bargaining representative for certain New York State Supreme Court officers employed by UCS.
Plaintiff John Strandberg is the President of SCOA. See id. at ¶¶ 23-24.
Plaintiff New York State Court Clerks Association (“CCA” and together with CALA,
Local 1180, COBANC, Local 1070, CAA, SCCEA, and SCOA, the “Unions” ) is the collective
bargaining representative for certain non-judicial court clerks employed by UCS. Plaintiff Joseph
C. Walsh is the President of CCA. See id. at ¶¶ 25-26.
Defendant State of New York, through Defendant UCS, is the employer of the members of
the Plaintiff Unions. Both are parties to each of the Plaintiff Union’s respective CBAs. See id. at
¶ 27. Plaintiff Andrew M. Cuomo is the Governor of the State of New York, Defendant Jonathan
Lippman is the Chief Judge of UCS, and Defendant A. Gail Prudenti is the Chief Administrative
Judge of UCS. See id. at ¶¶ 28, 31-32.
During the relevant time period, Defendant Patricia A. Hite was the Acting Commissioner
of Defendant New York State Civil Service Department. See id. at ¶¶ 33-36. Defendants
Caroline W. Ahl and J. Dennis Hanrahan were members of Defendant New York State Civil
Service Commission. See id. at ¶¶ 38, 41. Defendant Robert L. Megna was the Director of the
New York State Division of the Budget. See id. at ¶ 42. Defendant Thomas P. DiNapoli was the
Comptroller of the State of New York responsible for authorizing the payment of salaries and
pensions for current and retired UCS employees. See id. at ¶ 44.
4
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 the New
York State Health Insurance Plan (“NYSHIP” or “Empire Plan”). See id. at ¶ 45. New York
Civil Service Law § 167(1) establishes 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. See id. at ¶ 52. 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. See id. at ¶ 54. 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. See id. at ¶ 55.
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.
During that same time period, the Plaintiff Unions and Defendant State of New York
negotiated and entered into several successive CBAs, which provided that the State contribution
rate would be ninety percent and seventy-five percent for individual and dependent coverage,
respectively. See id. at ¶ 56-58. Each of the Plaintiff Union’s most recent CBAs covered the
5
period beginning April 1, 2007, and expired March 31, 2011. See id. at ¶ 61. The Plaintiff
Unions have not negotiated new CBAs with Defendants since the expiration of the most recent
CBAs. See id. at ¶ 170.
Article 8 of the CBAs govern Health Insurance. Section 8.1 of the CBA provides as
follows:
The State shall continue to provide health and prescription drug
benefits administered by the Department of Civil Service.
Employees enrolled in such plans shall receive health and
prescription drug benefits to the same extent, at the same
contribution level, in the same form and with the same co-payment
structure that applies to the majority of represented Executive
Branch employees.
Id. at ¶¶ 63, 65.
On August 17, 2011, the New York State legislature passed Chapter 491 of the Laws of
2011 (“Chapter 491”), which amended CSL § 167(8) effective as of April 2, 2011. See id. at ¶
81. Chapter 491 replaced the word “increased” with the word “modified.” See id. at ¶ 84. As
amended, CSL § 167(8) now reads:
Notwithstanding 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 modified
pursuant to the terms of such agreement. 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.
Id. at ¶ 86 (emphasis added).
In August 2011, the State reached an agreement with non-party the Civil Service
Employees Association (“CSEA”), one of the largest public employee unions in New York,
6
which increased employee health care contributions and changed the existing system of co-pays,
deductibles, and other programs. See id. at ¶¶ 88, 90.
On September 21, 2011, Defendant Hite requested Defendant Megna’s approval to extend
the modified state contribution rates negotiated with CSEA to, inter alia, all employees of the
UCS. See id. at ¶ 91. On September 22, 2011, Defendant Megna approved the extension of
modified contribution rates. See id. at ¶ 94.
The new reduced State contribution rates for current members of the Plaintiff Unions and
their dependents, effective October 1, 2011, were as follows: eighty-eight (88%) percent for
current union members who are Salary Grade Nine and below; eighty-four (84%) percent for
current union members who are Salary Grade Ten and above; seventy-three (73%) percent for
dependents of current union members who are Salary Grade Nine and below; and sixty-nine
(69%) percent for dependents of current union members who are Salary Grade Ten and above.
See id. at ¶ 92. The new reduced State contribution rates for retirees and their dependents were as
follows: eighty-eight (88%) percent for retirees who retired or will retire between January 1, 1983
and December 31, 2011; seventy-three (73%) percent for dependents of retirees who retired or
will retired between January 1, 1983 and December 31, 2011; eighty-eight (88%) percent for
retirees (and their dependents) who retire after January 1, 2012 from a title Salary Grade Nine or
below or a similar position; and eighty four (84%) for retirees (and their dependents) who retire
after January 1, 2012 from a title Salary Grade Ten or above or a similar position. See id. at ¶ 93.
Thereafter, on September 27, 2011, Defendant Hite approved and filed emergency
amendments to 4 N.Y.C.R.R. §§ 73.3(b) and 73.12 to conform those regulations to the amended
CSL § 167. See id. at ¶¶ 95-96. According to the notice of emergency rule-making, the purpose
7
of these amendments was to “implement[] the terms of a collective bargaining agreement
covering members . . . represented by [CSEA].” Id. at ¶ 97.
On February 22, 2012, Plaintiffs filed a complaint asserting causes of action for
impairment of contract, violation of due process, violation of civil rights pursuant to 42 U.S.C. §
1983, breach of contract, and violation of CSL § 209-a.1(d), (e). Plaintiffs also claim that Civil
Service Law § 167(8) is unconstitutional as applied. Plaintiffs also seek an order, pursuant to
Article 78 of the New York Civil Practice Law and Rules, declaring that Defendants’ actions in
administratively decreasing the State contribution rates was arbitrary and capricious and an abuse
of discretion. Plaintiffs commenced this action against the individual defendants in both their
individual and official capacities. See Dkt. No. 1.
DISCUSSION
As an initial matter, the Court is compelled to note that Plaintiffs’ Complaint alleges much
of the same conduct and many of the same causes of action as alleged by the plaintiffs in the ten
related cases pending before this Court. Those complaints also name many of the same
defendants as are named in the instant action. Defendants in the related cases filed motions to
dismiss similar to Defendants’ motion here, which the Court has already ruled upon both in the
context of the motions to dismiss as well as motions for reconsideration. Nearly all of the issues
raised in Defendants’ motion to dismiss here were previously briefed and decided in the related
cases.
In deciding the instant motion, the Court is guided by the doctrine of the law-of-the-case.
The law-of-the-case doctrine “posits that if a court decides a rule of law, that decision should
continue to govern in subsequent stages of the same case.” Aramony v. United Way, 254 F.3d
403, 410 (2d Cir. 2001) (quotation and citation omitted). The doctrine is broad enough to
8
“encompass[ ] a lower court's adherence to . . . the rulings of another judge or court in . . . a
closely related case.” Ovadia v. Top Ten Jewelry Corp., No. 04-2690, 2005 WL 1949970, *1
(S.D.N.Y. Aug. 12, 2005) (citing Heller Int’l Corp. v. Sharp, No. 85-3381, 1994 WL 386421, *3
(N.D. Ill. Jul. 19, 1994) (citation and quotation marks omitted); see Moss v. Crawford & Co., 201
F.R.D. 398, 401 n.1 (W.D. Pa. 2000) (stating that the law-of-the-case doctrine applies to issues
previously determined in closely related cases).
Standard on a Motion to Dismiss under 12(b)(1)
In contemplating a motion to dismiss for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1), the Court must “accept as true all material factual allegations in the complaint.”
Atl. Mut. Ins. Co. v. Balfour MacLaine Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). The court
may consider evidence outside the pleadings, e.g., affidavits, 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 and principles of sovereign immunity precludes the Court from obtaining
subject matter jurisdiction over the following claims: (1) Plaintiffs’ claims against the State of
New York and its agencies; (2) Plaintiffs’ claims against Defendants in their official capacities;
and (3) Plaintiffs’ state law causes of action.
I.
Eleventh Amendment/Sovereign Immunity
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
9
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, 92-100
(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 and their
officials acting in their official capacities 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).
A.
Federal and State Law Claims against Defendants State of New York, New York
State Unified Court System, New York State Civil Service Department, New York
State Civil Service Commission, and New York State and Local Retirement System
Regardless of the type of relief sought, the Eleventh Amendment bars this Court from
assuming jurisdiction over Plaintiffs’ claims asserted against the State of New York and its
agencies. When the state or one of its “arms” is the defendant, sovereign immunity bars federal
courts from entertaining lawsuits against them “regardless of the nature of the relief sought.”
Pennhurst, 465 U.S. at 100. In this case, the State has neither waived its immunity, nor has
Congress exercised its power to override Eleventh Amendment immunity. Accordingly, all of
10
Plaintiffs’ claims against the State of New York, New York State Unified Court System, New
York State Civil Service Department, New York State Civil Service Commission, and New York
State and Local Retirement System are dismissed. See McGinty v. New York, 251 F.3d 84, 100
(2d Cir. 2001) (dismissing the claims against the Retirement System for lack of subject matter
jurisdiction based upon the Eleventh Amendment).
B.
Federal Claims Against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl,
Hanrahan, Megna, and DiNapoli in their Official Capacity
Plaintiffs also assert claims against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl,
Hanrahan, Megna, and DiNapoli 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. Since Congress has not
abrogated immunity and the State has not consented to suit, as discussed supra, Defendants’
motion to dismiss presents issues involving 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,
11
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.” Id. at 663 (citing Ford Motor Co.
v. Dep’t of Treasury, 323 U.S. 459 (1945)). Retroactive relief is “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?” New Jersey Educ. Ass’n v. New Jersey, No. 11-5024, 2012 WL
715284, *4 (D.N.J. Mar. 5, 2012) (quoting Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S.
at 107). 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
12
federal funds in the programs 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.
Edelman, 415 U.S. at 695 (quoting Rothstein v. Wymann, 467 F.2d 226, 236-37 (2d Cir. 1972)).
In order to determine whether the Ex parte Young exception allows Plaintiffs’ suit against
the individual defendants in their official capacities, 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). To 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. See
Papasan v. Allain, 478 U.S. 265, 277-78 (1986) (internal quotation marks 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, 2012 WL 715284, at *4.
Plaintiffs allege that Defendant officials are engaged in enforcing Chapter 491 of the Laws
of 2011, a law that is unconstitutional. 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, *6 (C.D. Ill. Aug. 10, 2012) (citing Verizon Md., Inc., 535 U.S. at 645).
Thus, Plaintiffs have satisfied the first prong of Ex parte Young.
With respect to the nature of relief sought, Plaintiffs’ “WHEREFORE” clause contains the
following demands:
13
A. An order that Defendants’ actions in unilaterally
decreasing the State Contribution Rate and diminishing or
otherwise altering the union members’ health insurance and
prescription drug benefits and coverages, violates the
Contracts Clause of the U.S. Constitution, and thus is null
and void;
B. An order that Defendants’ actions in unilaterally
decreasing the State Contribution Rate and diminishing or
otherwise altering the union members’ health insurance and
prescription drug benefits and coverages, violates the U.S.
Constitution and the Constitution and laws of New York
State and thus is null and void;
C. A determination that Defendants’ actions in unilaterally
decreasing the State Contribution Rate and diminishing or
otherwise altering the union members’ health insurance and
prescription drug benefits and coverages constitutes a
breach of the parties’ CBAs;
D. A declaration that Defendants acted in a manner which
was arbitrary and capricious and an abuse of discretion;
E. A declaration that CSL § 167 (as amended by 2011 N.Y.
Laws ch. 491) and the implementing regulations are
unconstitutional- as applied to the eight Plaintiff Court
Unions and their current and retired members and their
dependents - to the extent that Defendants are relying upon
this authority to continue extending and implementing
reductions to the State Contribution Rate and diminishing or
otherwise altering the union members’ health insurance and
prescription drug benefits and coverages in violation of the
Contract Clause and Due Process Clause of the U.S.
Constitution.
F. An order permanently enjoining Defendants from
continuing to apply CSL§ 167 (as amended by 2011 N.Y.
Laws ch. 491) and the implementing regulations, against the
eight Plaintiff Court Unions and their current and retired
members and their dependents, as a basis for continuing to
extend and implement unilateral reductions and
modifications to the State Contribution Rate and health
insurance and prescription drug benefits and coverages of
current and retired union members and their dependents, in
violation of the Contracts Clause and Due Process Clause of
the U.S. Constitution.
14
G. An order permanently enjoining Defendants from
continuing to make deductions from the pension or
paychecks of retired or current union members and their
dependents- or passing along any additional costs or
changes- based on Defendants’ ongoing unilateral
reductions and modifications to the State Contribution Rate
and health insurance and prescription drug benefits and
coverages of current and retired union members and their
dependents, in violation of the Contracts Clause and Due
Process Clause of the U.S. Constitution.
H. Damages for union members who are impacted by the
unilateral changes for any additional costs incurred by them
to ensure the continuation of health insurance benefits for
themselves and their dependents at the contractual level;
I. Attorneys’ fees, costs and disbursements of this action
pursuant to 42 U.S.C. § 1988, and as otherwise allowed by
law; and
J. Such other relief as this Court deems appropriate.
Dkt. No. 1 The Court will address each request for relief in turn.
1.
Monetary Relief
Although not cited by Plaintiffs here, Milliken v. Bradley, 433 U.S. 267 (1977), allows in
limited circumstances for ancillary damages necessary to effectuate prospective equitable or
injunctive relief. In Milliken, 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 “prospectivecompliance” 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. at 290 n.22.
15
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”)
(citation omitted).
2.
Injunctive Relief
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 in the form of reduced wages and pension payments. Defendants
concede that a properly pled claim for prospective relief is permissible under Ex parte Young, but
16
claim that Plaintiffs’ allegations here are insufficient to fall within this exception. Defendants
have not presented any argument, beyond conclusory citations to the case law under Ex parte
Young, regarding the impact 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 of such claims is not
warranted at this time. See Finch v. New York State Office of Children & Family Serv., 499 F.
Supp. 2d 521, 538 (S.D.N.Y. 2007).
3.
Declaratory Judgment
Declaratory judgments form part of the injunctive relief allowed for under Ex parte
Young. See Tigrett v. Cooper, 855 F. Supp. 2d 733, 744 (W.D. Tenn. 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 finding 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 prior to the enactment of” the challenged statute and therefore, “in
both substance and practical effect, a request for specific performance” and, thus, not permitted).
In this matter, to the extent Plaintiffs seek declaratory relief regarding the individual
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 n.138 (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,
17
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 and principles of sovereign immunity deprive
this Court of subject matter jurisdiction over all of Plaintiffs’ claims against the State of New
York, New York State Unified Court System, New York State Civil Service Department, New
York State Civil Service Commission, and New York State and Local Retirement System, and
Plaintiffs’ claims for monetary damages against the Defendants Cuomo, Lippman, Prudenti, Hite,
Ahl, Hanrahan, Megna, and DiNapoli in their official capacities. Jurisdiction remains over
Plaintiffs’ claims for prospective injunctive and declaratory relief and against Defendants Cuomo,
Lippman, Prudenti, Hite, Ahl, Hanrahan, Megna, and DiNapoli in their official capacities.
C.
New York State Law Claims Against Defendants Cuomo, Lippman, Prudenti, Hite,
Ahl, Hanrahan, Megna, and DiNapoli in their Official Capacities
Defendants also move for dismissal of Plaintiffs’ state law claims 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
18
state law claims.” Nunez v. Cuomo, No. 11-3457, 2012 WL 3241260, *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. See 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, 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 696-97. A state officer acts ultra vires when he acts beyond the scope of his statutory
authority, or pursuant to authority deemed to be unconstitutional. Id.
Here, Plaintiffs must establish that Defendants acted “without any authority whatsoever”
under state law. Sherwin-Williams Co. v. Crotty, 334 F. Supp. 2d 187, 196 (N.D.N.Y. 2004).
Plaintiffs allege that the state claims arise out of ultra vires acts by Defendants:
Plaintiffs, eight unions representing various court employees and
the Presidents/Chairpersons of these unions (collectively
“Plaintiffs” or “Court Unions”), seek a declaration that the
unilateral changes to employee health insurance benefits,
coverage, and premium contribution rates for court employees by,
19
at the urging of, and with direction from the Defendants,
substantially impair existing collective bargaining agreements
(“CBAs”) and are unconstitutional, and exceed the Defendants’
statutory authority.
...
Upon information and belief, Defendant Hite has not attended or
voted in an official capacity as Commission President or Acting
President at any public meeting for the Commission.
...
CSL § 167, as amended by 2011 N.Y. Laws ch. 491, the
implementing regulations and Defendants’ application of these
authorities against the Plaintiff Court Unions in order to
unilaterally reduce the State Contribution Rate and health
insurance and prescription drug benefits for current and retired
union members, have no legitimate public purpose and/or
constitute an abuse of power.
...
CSL § 167 (as amended by 2011 N.Y. Laws ch. 491) and the
implementing regulations are unconstitutional- as applied to the
eight Plaintiff Court Unions and their current and retired members
and their dependents - to the extent that Defendants are relying
upon this authority to continue extending and implementing
reductions to the State Contribution Rate and diminishing or
otherwise altering the union members’ health insurance and
prescription drug benefits and coverages in violation of the
Contract Clause and Due Process Clause of the U.S. Constitution.
Dkt. No. 1 at ¶¶ 1, 40, 124, E.
Plaintiffs also allege that “Defendants’ administrative actions in approving, extending and
implementing changes to employee health benefits ... are ultra vires, without any lawful authority,
unauthorized pursuant to New York Civil Service Law §167(8), arbitrary and capricious, and
constitut[e] an abuse of discretion.” Id. at ¶ 6. 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 as to the individual basis, on this basis, is denied.
D.
Federal Claims Against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl,
Hanrahan, Megna, and DiNapoli in their Individual Capacities
20
Plaintiffs assert § 1983 claims for monetary damages, injunctive relief, and declaratory
judgment against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl, Hanrahan, Megna, and
DiNapoli, individually. 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 divests this Court of jurisdiction over Plaintiffs’
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 will be discussed infra.
II.
Fourth Cause of Action for 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
they should be dismissed with the rest of Plaintiffs’ state law claims pursuant to Eleventh
Amendment and sovereign immunity principles, see supra, and because “the CPLR merely
addresses procedural matters in State court, and cannot create procedural rules for the federal
courts[.]” Dkt. No. 16-1 at 9.
Although the parties did not focus on this issue in their respective memoranda of law, the
Court has addressed this same cause of action in ruling on similar motions to dismiss in a series of
related cases. See, e.g., New York State Corr. Officers & Police Benevolent Ass’n v. State of New
York, 911 F. Supp. 2d 111, 131-133 (N.D.N.Y. 2012). For the same reasons set forth in the
Court’s prior orders, the Court follows the “essentially unanimous position of the New York
21
district courts,” see Morningside Supermarket Corp. v. New York State Dep’t of Health, 432 F.
Supp. 2d 334, 347, and declines to exercise jurisdiction over Plaintiffs’ Fourth Cause of Action.
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. See Global Network Commc’ns v. City of
New York, 458 F.3d 150, 155 (2d Cir. 2006); Patane v. Clark, 508 F.3d 106, 111–12 (2d Cir.
2007). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in
the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc’ns, Inc.
v. Shaar 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) (internal quotation marks
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, and present claims that are “plausible
22
on [their] face.” Id. at 570. “The plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556
U.S. at 678 (citation omitted). “Where a complaint pleads facts that are ‘merely consistent with’
a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement
to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Ultimately, “when the allegations in a
complaint, however true, could not raise a claim of entitlement to relief,” Twombly, 550 U.S. at
558, or where a plaintiff has “not nudged [its] claims across the line from conceivable to
plausible, the . . . complaint must be dismissed[.]” Id. at 570.
I.
Claims Against Officials in their Individual Capacity
A.
Personal Involvement
Defendants argue that Plaintiffs’ conclusory, non-specific allegations regarding the
personal involvement of each of the individual Defendants are insufficient to survive a motion to
dismiss. In particular, Defendants contend that Plaintiffs have made several allegations related to
certain Defendants’ personal involvement “upon information and belief,” that Plaintiffs have
impermissibly relied on the doctrine of respondeat superior in their allegations with respect to
certain Defendants’ personal involvement, and that there are no allegations whatsoever linking
certain Defendants to the conduct at issue. It appears that Plaintiffs have failed to address this
argument in their oppositions to Defendants’ motion to dismiss.
“It is well settled that, in order to establish a defendant's individual liability in a suit
brought under § 1983, a plaintiff must show, inter alia, the defendant's personal involvement in
the alleged constitutional deprivation.” Grullon v. City of New Haven, 720 F.3d 133, 138 (2d Cir.
2013) (citations omitted).
“[W]hen monetary damages are sought under § 1983, the general
doctrine of respondeat superior does not suffice and a showing of some personal responsibility of
23
the defendant is required.” Wright v. Smith, 21 F.3d 496, 501 (2d Cir. 1994) (quotation and other
citations omitted). Nevertheless,
[t]he personal involvement of a supervisory defendant may be
shown by evidence that: (1) the defendant participated directly in
the alleged constitutional violation, (2) the defendant, after being
informed of the violation through a report or appeal, failed to
remedy the wrong, (3) the defendant created a policy or custom
under which unconstitutional practices occurred, or allowed the
continuance of such a policy or custom, (4) the defendant was
grossly negligent in supervising subordinates who committed the
wrongful acts, or (5) the defendant exhibited deliberate indifference
to the rights of [plaintiffs] by failing to act on information
indicating that unconstitutional acts were occurring.
Colon v. Coughlin, 58 F.3d 865, 873 (2d Cir. 1995). “[W]hile facts and evidence solely within a
defendant's possession and knowledge may be pled ‘on information and belief,’ this does not
mean that those matters may be pled lacking any detail at all.” Miller v. City of New York, No.
05-6024, 2007 WL 1062505, *4 (E.D.N.Y. Mar. 30, 2007) (citing, inter alia, First Capital Asset
Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 180 (2d Cir. 2004)); see DiVittorio v. Equidyne
Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) (“[T]he allegations must be
accompanied by a statement of the facts upon which the belief is based.”). The Court will review
Plaintiffs allegations with respect to each of the individual Defendants in turn.
1. Andrew M. Cuomo
Plaintiffs have alleged that Defendant Cuomo is the Governor of New York and, upon
information and belief, that he “approved and directed the implementation of reduced health
insurance benefits for members of the Plaintiff Court Unions which were enacted December 1,
2011 retroactive to October 1, 2011.” See Dkt. No. 1 at ¶¶ 28-29. Plaintiffs have also alleged
that Chapter 491 was “a Governor’s program bill,” id. at 81, and that the Governor’s office issued
a press release regarding the details of the 2011 CSEA CBA, id. at 88-89.
24
2. Jonathan Lippman
Plaintiffs have alleged that Defendant Lippman is the Chief Judge of UCS who
“establishes Statewide standards and administrative policies after consulting with the
Administrative Board of the Courts and approval by the Court of Appeals,” and that Defendant
Prudenti supervises the courts, including the implementation of CBAs, on Defendant Lippman’s
behalf. Id. at 31-32.
3. A. Gail Prudenti
Plaintiffs have alleged that Defendant Prudenti is the Chief Administrative Judge of UCS
and, on behalf of Defendant Lippman, “supervises the administration and operation
of the courts which includes the implementation and administration of collective
bargaining agreements between UCS and employee organizations representing nonjudicial
court employees throughout the State of New York.” Id. at 32.
4. Patricia A. Hite
Plaintiffs have alleged that Defendant Hite is the Acting Commissioner of the Civil
Service Department and, upon information and belief, that she approved the administrative
extension and implementation of increased costs and reduced health insurance benefits
and coverage for employees represented by the Plaintiff Court Unions and their
dependents effective December 1, 2011 and retroactive to October 1, 2011. Id. at ¶¶ 35-36.
Plaintiffs have further alleged upon information and belief that Defendant Hite has not attended or
voted in an official capacity as Commission President or Acting President at any public meeting
for the Commission. Id. at ¶ 40. Plaintiffs also allege that Defendant Hite, with Defendant
Megna’s approval, extended the modified State contribution rates negotiated with CSEA to
current and retired employees of UCS. Id. at ¶¶ 91-101.
25
5. Caroline W. Ahl & J. Dennis Hanrahan
Plaintiffs have alleged that Defendants Ahl and Hanrahan “together constitute the Civil
Service Commission.” Id. at ¶ 41.
6. Robert L. Megna
Plaintiffs have alleged that Defendant Megna is the Director for the New York State
Division of the Budget and, upon information and belief, that he “approved the administrative
extension and implementation of increased costs and reduced health insurance benefits and
coverage for employees represented by the eight Plaintiff Court Unions and their dependents
effective December 1, 2011 and retroactive to October 1, 2011.” Id. at ¶¶ 42-43. Plaintiffs also
allege that Defendant Megna approved Defendant Hite’s extension of the modified State
contribution rates negotiated with CSEA to current and retired employees of UCS. Id. at ¶¶ 91101.
7. Thomas P. DiNapoli
Plaintiffs have alleged that Defendant DiNapoli is the Comptroller of the State of New
York and, in that capacity, he “oversees and authorizes the payment of salaries and
pensions for all current and retired UCS employees.” Id. at ¶ 44.
Based upon a review of the allegations in the Complaint, the Court finds that Plaintiffs
have failed to make any direct or indirect allegations sufficient to permit an inference that
Defendants Cuomo, Lippman, Prudenti, Ahl, Hanrahan, and DiNapoli acted or failed to act in any
of the ways that would subject them to personal liability for the violations alleged by Plaintiffs.
Accordingly, Defendants’ motion to dismiss Plaintiffs’ claims as to these Defendants in their
individual capacity is granted.
26
Rule 15(a) of the Federal Rules of Civil Procedure provides that “[t]he court should freely
give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15. “Generally, a district court
has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue
prejudice to the opposing party.” Holmes v. Grubman, 568 F.3d 329, 334 (2d Cir. 2009) (internal
quotation marks omitted). “An amendment to a pleading is futile if the proposed claim could not
withstand a motion to dismiss” pursuant to Federal Rule of Civil Procedure 12(b)(6). Lucente v.
Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002).
Here, there has been no showing of bad faith or undue delay by Plaintiffs, nor would
Defendants suffer any prejudice if Plaintiffs are permitted to amend their complaint since there
are presently ten related actions pending before this Court in which the parties have not begun
conducting discovery. Moreover, the Court finds that such amendment would not be futile since
the Complaint could withstand a motion to dismiss on these grounds if properly amended.
Accordingly, the Court grants Defendants’ motion to dismiss for failure to sufficiently plead these
Defendants’ personal involvement, with leave to amend.
B.
Legislative Immunity
“[L]egislators are absolutely immune from liability for . . . all actions taken in the sphere
of legitimate legislative activity.” Bogan v. Scott-Harris, 523 U.S. 44, 48, 54 (1998) (quotation
and citations omitted). 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,
27
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 all the hallmarks of traditional legislation.” Bogan, 523
U.S. at 54-56. Such traditional legislation includes “policymaking decision[s] implicating
budgetary priories . . . and the services the [government] provides to its 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) (citation
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. See 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
28
claim that defendants acts were ultra vires, without authority, and null and void. Taking the
allegations in the complaint as true, as the Court must do on a motion to dismiss, Plaintiffs have
sufficiently alleged that Defendants were acting beyond the scope of their authority as public
officials. Drawing all reasonable inferences in Plaintiffs’ favor, the Court finds that the
allegations are sufficiently pled to defeat Defendants’ motion at this stage of the litigation. See
Collin Cnty. Tex. v. Homeowners Ass’n for Values Essential to Neighborhoods (HAVEN), 654 F.
Supp. 943, 949 (N.D.Tex. 1987) (holding that the plaintiff’s allegations that the defendants’
actions were “ultra vires” in character and that they acted outside of their capacities as public
officials arguably “deprives the [defendants] of Rule 12(b)(6) dismissal based upon an absolute
immunity defense”). At this stage of the litigation, based upon the sparse record, the Court
cannot state as a matter of law that Defendants are entitled to legislative immunity. See Phillips
v. Town of Brookhaven, 216 A.D.2d 374, 375 (2d Dep’t 1995) (stating that “[i]t cannot be
determined on the instant record that the individual defendants were acting exclusively in a
legislative capacity, which is required for immunity to attach”); see also Moxley v. Town of
Walkersville, 601 F. Supp. 2d 648, 662 (D. Md. 2009) (holding that “the doctrine of legislative
immunity is not uniquely asserted on motions to dismiss”). This ruling does not prevent
Defendants from renewing their motion with respect to the applicability of the doctrine of
legislative immunity after sufficient discovery and development of the record.
II.
Contracts Clause
Defendants move to dismiss Plaintiffs’ federal claims for impairment of contract. 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
29
‘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 Contracts 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 Contracts 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, 2012 WL 3241260, at *6 (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.
A.
Existence of a Contractual Relationship
Defendants argue that Plaintiffs have “no valid and enforceable contract that provides that
the State cannot reduce its contribution rate for health insurance coverage.” Dkt. No. 16-1 at 14;
see also id. at 15 (stating that “[t]here is . . . no express or implied contract by which New York
State has bound itself to provide optional health insurance with perpetually fixed contribution
rates”). Rather, Defendants contend that the Plaintiffs’ CBAs provided members with guarantees
only for the duration of those (now expired) CBAs and, in any event, all that the CBAs
guaranteed while in effect was continued coverage under the same co-payment structure that
applies to the majority of represented Executive Branch employees (i.e., employees represented
30
by CSEA). Plaintiffs claim that the State has a contractual obligation to maintain a State
contribution rate at or above what was provided for in CSL § 167(1) at the time the last CBAs
were executed. Plaintiffs allege three bases for the finding of this contractual obligation: their
respective CBAs for the time period April 1, 2007, to March 31, 2011, as extended under the socalled Triborough Amendment; the parties’ past practice; and the terms of CSL § 167 as it existed
on April 1, 2007.
Plaintiffs allege that pursuant to the Taylor Law (Civil Service Law Article 14) the
agreement to provide health coverage at the rates set forth in the CBA remains in full force and
effect until a successor agreement or award. See Dkt. No. 1 at ¶ 59. Plaintiffs further allege that,
upon the expiration of a CBA, it is against the law for a public
employer or its agents deliberately to refuse to continue all the
terms of an expired agreement until a new agreement is negotiated.
See CLS § 209-a.1(e) (the “Triborough Amendment”). In other
words, the terms of an expired contract remain in effect until a
successor agreement is negotiated (in a status quo period).
...
Plaintiffs’ CBAs provide a Article 8.1, that the “State shall continue
to provide health and prescription drug benefits administered by the
Department of Civil Service.” (Emphasis added).
Article 8.1 is consistent with and reflects the parties' agreement and
mutual understandings that the State Defendants are contractually
obligated to continue: (1) providing, to current union members and
their dependents, the same State Contribution Rate and the same
health insurance and prescription drug benefits that the State
Defendants provided under the preceding CSA, for the duration of
the CSA and until a successor CSA is negotiated; and (2) providing,
to retired union members and their dependents, the same State
Contribution Rate and the same health insurance and prescription
drug benefits that the State Defendants provided under the CSA in
effect at the time of their retirement.
...
Article 8.1 of the parties' CBA guarantees a static level of health
insurance and prescription drug benefits and coverages for the
entire term of the CBA, and any status quo period that may follow,
unless the parties agree otherwise.
31
Id. at ¶¶ 60, 63-64, 66.
Plaintiffs cite to the plain language of the CBA, which provides that
[e]mployees enrolled in such plans shall receive health and
prescription drug benefits to the same extent, at the same
contribution level, [and] in the same form and with the same copayment structure that applies to the majority of represented
Executive Branch employees [covered by such plans].
Id. at 65 (alterations in original).
Plaintiffs further allege that based upon the CBA negotiations, Chapter 14 of the Laws of
1983, and the past practices and representations by the State, the State was contractually obligated
to provide health insurance benefits at the rates set forth in CSL § 167(1) as of April 1, 2007. See
id. at 67-78.
Based upon the record, as it presently exists, Plaintiffs’ allegations identify written
language capable of reasonably being interpreted as creating a promise to provide Plaintiffs with
the State contribution rate set forth in CSL § 167(1) as of April 1, 2007, until a successor CBA
was negotiated. This finding is consistent with the Court’s prior orders on defendants’ motion to
dismiss similar allegations contained in complaints filed by other plaintiff unions. See, e.g., New
York State Corr. Officers & Police Benevolent Ass’n, 911 F. Supp. 2d at 137-142.
Defendants argue that this Court’s prior orders should not be followed here because: (1)
“unlike the CBAs in this action, the CBAs in the [related] actions provide for the continuation of
coverage ‘unless specifically modified or replaced pursuant to this agreement,’” Dkt. No. 26 at 4;
(2) “unlike the CBAs in the present action, the CBAs in the [related] actions expressly set forth
the specific percentages of the cost of coverage to be paid by the State and the employees,” id. at
5; and (3) the relevant provisions in the CBAs in this action are identical to that in New York State
32
Court Officers Ass’n v. Hite, 851 F. Supp. 2d 575 (S.D.N.Y. 2012), aff’d, 475 Fed. Appx. 803
(“NYSCOA”), see id.
As an initial matter, the Court notes that Plaintiffs did not append their respective CBAs to
the Complaint and, therefore, they are not part of the record on a motion to dismiss under Rule
12(b)(6). See Hejmanowski v. Bykowicz, No. 09-915A, 2010 WL 161446, *2 (W.D.N.Y. Jan. 13,
2010) (observing that “Federal courts have complete discretion to determine whether or not to
accept the submission of any material beyond the pleadings offered in conjunction with a Rule
12(b)(6) motion”). Accordingly, Defendants’ first argument cannot be supported on the existing
record and must be rejected at this stage of the litigation.
Defendants correctly observe that Plaintiffs’ CBAs, as alleged in the Complaint, contain
the same provision as the plaintiff’s CBA in the NYSCOA case,3 and do not contain specific
percentages for the State contribution rate. The relevant provision of the CBA at issue in the
NYSCOA case provided that “[e]mployees . . . shall receive health and prescription drug benefits .
. . at the same contribution level . . . that applies to the majority of represented Executive Branch
employees.” NYSCOA, 851 F. Supp. 2d 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). It guarantees that they will receive benefits at the same rates as the majority of executive
brand employees.” Id. at 579. As this Court observed in its orders on defendants’ motions to
dismiss the complaints in the related cases, the NYSCOA case is procedurally distinguishable from
this action. Most importantly, the matter was before the Southern District Court on a motion for a
preliminary injunction, not a motion to dismiss and, thus, different standards of proof and analysis
After the Southern District Court issued a decision on Plaintiff’s 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. 12-CV-532.
3
33
were applied. See Lawrence v. Town of Brookhaven Dep’t of Hous., Cmty. Dev. & Intergov.
Affairs, No. 07-2243, 2007 WL 4591845,*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, a 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). Moreover, there is no proof before the
Court on a motion dismiss whether, as Defendants contend, CSEA employees constitute a
“majority of represented Executive Brand employees,” or what the terms of the CSEA CBA was
before or after Chapter 491 of the Laws of 2011 was passed and implemented. In addition, as
noted above, Plaintiffs’ CBAs are not part of the record on this motion to dismiss. Thus, the
Court cannot interpret the meaning of the CBAs as a matter of law without having those
documents, in their entirety, before it. For these reasons, this Court finds the holding in NYSCOA
inapplicable to the issues before the Court at this juncture.4
Defendants also rely on Matter of Lippman v. Board of Education, 66 N.Y.2d 313 (1985),
for the proposition that public employees have no contractual, statutory, or constitutional right to
undiminished health insurance benefits. The court in Matter of Lippman held that health
The Court notes that both NYSCOA and In re Retired Public Employees Ass’n v. Cuomo,
No. 7586-11, 2012 WL 6654067 (Sup. Ct. Albany Co. Dec. 17, 2012) (“RPEA”) held that CSL §
167(1) did not give rise to a contractual obligation. Defendants argue that these cases compel this
Court to depart from its prior rulings in the related cases. The Court declines to do so. First,
these cases are not binding precedent. See supra (discussing NYSCOA); New York State Corr.
Officers & Police Benevolent Ass’n v. State of New York, No. 11-1523, 2013 WL 3450383 (Jul.
19, 2013 N.D.N.Y.) (addressing RPEA in the context of defendants’ motion for reconsideration in
the related cases). Second, and most importantly, the Court has found that Plaintiffs have
plausibly pled the existence of a contractual obligation on the basis of their respective CBAs and
parties’ past practice. Accordingly, the existence of a contractual obligation under CSL § 167(1)
is not determinative to resolution of this issue and, therefore, the Court declines to depart from its
prior rulings.
4
34
insurance benefits are not withing the protection of article V, section 7 of the New York State
Constitution, which provides that “membership in any pension or retirement system of the state or
of a civil division thereof shall be a contractual relationship, the benefits of which shall not be
diminished or impaired.” Since Plaintiffs do not allege any causes of action arising from the
New York State Constitution, this aspect of the court’s holding has no bearing on Plaintiffs’
claims. The court in Matter of Lippman also found no support for the contention that petitioners
there had a contractual right to continuation of health insurance contribution rates. Unlike
Plaintiffs in the instant matter, however, petitioners in Matter of Lippman were unrepresented
employee-teachers who did not operate under a CBA. Rather, their health benefits were provided
pursuant to a series of resolutions adopted by their employer-school board. Moreover, the court
found “positive evidence . . . that [the school board] may unilaterally adjust rates of contribution.”
Id. at 320. Thus, this aspect of the court’s holding in Matter of Lippman is also inapplicable to
the instant motion.
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
maintain the State contribution rates in effect at the time the CBAs were executed. 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 at this time.
B.
Substantial Impairment
Even assuming Plaintiffs possessed a valid contractual interest, Defendants argue that they
have not substantially impaired plaintiffs’ rights. Defendants contend that the NYSHIP program
35
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 Contracts 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. See Allied Structural Steel Co., 438 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. See 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 v. Mangano, 886 F. Supp. 2d 126, 156, 158 (E.D.N.Y.
2012) (“This far-reaching power . . . can arguably be itself a substantial impairment to a
contractual relationship”).
In this matter, Plaintiffs allege that the new reduced contribution rates resulted in an
increase in the cost of health insurance and decreased wages and pension payments. See, e.g.,
Dkt. No. 1 at ¶¶ 103-104. Plaintiffs have made a number of allegations regarding their
expectations under the CBAs. For example, Plaintiffs allege that “[s]ince January 1, 1983, each
Plaintiff Court Union entered into at least five succeeding CBAs with State Defendants. All
CBAs constituted valid, binding, and enforceable contracts between the parties. From 1983, up to
December 1, 2011, health insurance and related benefits were implemented consistent with the
36
parties’ CBAs and their associated past practices.” Id. at ¶ 58; see also ¶ 77 (“From January 1,
1983 to December 1, 2011, UCS and the eight Plaintiff Court Unions acted consistent with the
understanding that the State Defendants were obligated to act in accordance with its contractual
obligations under the CBAs and established a practice that implemented this understanding.”).
Plaintiffs argue that they relied in good faith upon the expectation that the State would continue to
contribute towards their health insurance costs in compliance with the CBAs. Id. at ¶ 80. Based
upon the allegations in the complaint 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 CBAs after
they had been negotiated and executed. Id. at ¶ 110. Plaintiffs contend that “it is against the law
for a public employer or its agents deliberately to refuse to continue all the terms of an expired
agreement until a new agreement is negotiated.” Id. at ¶ 60 (citing CSL § 209-a.1(e)). Moreover,
Plaintiffs claim that “Defendants’ unilateral reductions and modification to the State Contribution
Rate and health insurance and prescription drug benefits for current and retired union members
and their dependents: (1) substantially impaired their contractual obligations under the parties'
CBAs, their past practice and State law; (2) disrupted the reasonable expectations of the eight
Plaintiff Court Unions and their current and retired members and their dependents under the
CBA, the parties' past practice and State law; and (3) modified essential terms and conditions
under the CBAs, their past practice and State law - upon which the eight Plaintiff Court Unions
and their current and retired members and dependents reasonably and materially relied.” Id. at
37
123. Based upon the record as it currently exists, Plaintiffs have pled sufficient facts supporting a
plausible claim that the impairment to their contractual rights was substantial.5
C.
Legitimate Public Purpose and Reasonable and Necessary
When a state law constitutes substantial impairment, the state must show a significant and
legitimate public purpose behind the law. See Energy Reserves Group, 459 U.S. at 411-12. A
law that substantially impairs contractual relations must be specifically tailored to meet the
societal ill it is supposedly designed to ameliorate. See Allied Structural Steel, 438 U.S. at 243.
The Second Circuit has held that “[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. “[C]ourts 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. at 368-69 (citation
omitted). Moreover, although 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. at 369. “That a contract-impairing law has a legitimate public purpose
does not mean there is no Contracts Clause violation. The impairment must also be one where the
means chosen are reasonable and necessary to meet the stated legitimate public purpose.” Id. at
369. On a motion to dismiss, the court is not bound to accept the legislature’s justification for the
public purpose. See Nat’l Educ. Ass’n -Rhode Island by Scigulinsky v. Retirement Bd. of Rhode
Island Emp. Retirement Sys., 890 F. Supp. 1143, 1162 (D.R.I. 1995).
5
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.
38
The “reasonable and necessary” analysis involves a consideration of whether the
adjustment of the rights and responsibilities of contracting parties is based upon reasonable
conditions and is of a character appropriate to the public purpose justifying the legislation’s
adoption. Am. Fed’n of State, County & Mun. Emps. v. City of Benton, Arkansas, 513 F.3d 874,
879-880 (8th Cir. 2008) (citing Energy Reserves Group, Inc., 495 U.S. at 412 (1983)). Before
analyzing whether an act is reasonable and necessary, the court must determine the degree of
deference afforded to the legislature. Where the state impairs a public contract to which it is a
party, the state’s self-interest is at stake and, thus, the court will afford less deference to the
state’s decision to alter its own contractual obligations. United Auto., Aero., Agric. Implement
Workers of Am. Int’l Union v. Fortuno, 633 F.3d 37, 45 (1st Cir. 2011); 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, 886 F. Supp. 2d at 169 (citing U.S. Trust Co. of N.Y. v. New Jersey,
431 U.S. 1, 30–31 (1977)). In this matter, the State is a party to the CBA and, thus, the Court will
afford less deference to the State’s decisions.
“To be reasonable and necessary under less deference scrutiny, it must be shown that the
state did not (1) ‘consider impairing the . . . contracts on par with other policy alternatives’ or (2)
‘impose a drastic impairment when an evident and more moderate course would serve its purpose
equally well,’ nor (3) act unreasonably ‘in light of the surrounding circumstances.’” Buffalo
39
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,886 F.
Supp. 2d at 159 (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 serious doubt.
40
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 an evident and 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
41
unanimous statement opposing the challenged provisions, there is
no adequate basis before the Court on which it may be established
that the provisions are reasonable and necessary.
Id. at 323.
While a fiscal crisis is a legitimate public interest, defendants cannot prevail on a motion
to dismiss the complaint with an argument limited to “emphasizing the State’s fiscal difficulties.”
See id. Broad reference to an economic problem simply does not speak to the policy
consideration and tailoring that is required to pass scrutiny under plaintiffs’ Contracts Clause
challenge. Id.
At this stage of the litigation, all that is required is that plaintiffs plead a “cognizable legal
claim for a remedy which may be proved at trial.” See Henrietta D. v. Giuliani, No. 95-0641,
1996 WL 633382, *12 (E.D.N.Y. Oct. 25, 1996). Plaintiffs allege that there is no legitimate
public purpose to reduce the State contribution rate, a substantial impairment of their contractual
rights, or that the same was necessary and reasonable to accomplish said purpose. See Dkt. No. 1
at ¶¶ 95-99, 124-125. 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 to dismiss. 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
42
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 cannot to demonstrate that the means
chosen were necessary at this stage of the ligation. 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, *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
43
beyond the pleadings and come forth with specific facts indicating a genuine issues for trial.” See
Connection Training Servs. v. City of Philadelphia, 358 Fed. Appx. 315, 318 (3d Cir. 2009).
II.
Due Process
As an initial matter, the Court is compelled to point out that the parties have not
extensively briefed their arguments with respect to this cause of action. It appears that 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
44
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. See 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 113-15; Basciano v. Herkimer, 605 F.2d 605, 611 (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,
45
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’ Second Cause of Action contains allegations relating to due
process. Plaintiffs allege that the implementation of the reduced contribution rates violate
Plaintiffs’ rights to be afforded adequate notice and a reasonable opportunity to be heard before
being deprived of property to which they were lawfully entitled. See Dkt. No. 1 at ¶ 141.
Plaintiffs allege that their property rights are based upon the CBAs, past practice, and statutory
rights. See id. at ¶ 139. 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 claims for due process violations to survive a motion to dismiss.
III.
Regulatory Amendments
Defendants attempt to argue that Plaintiffs’ causes of action challenging the regulations
that were issued to implement the amendments to CSL § 167(8) should also be dismissed. While
Defendants’ motion does not make clear the basis for this aspect of the motion, it appears they
contend (1) Plaintiffs do not have standing to challenge the regulations, and (2) since Plaintiffs’
CBAs tied their State contribution rates to those provided for in the CSEA CBA, the regulations
were unnecessary as to Plaintiffs and, therefore, had no effect on Plaintiffs distinct from any
alleged effect of amended CSL § 167(8). The Court interprets Defendants’ second contention as
a restatement of the first and finds that Plaintiffs have standing to challenge the regulations.
Contrary to Defendants’ assertions, Plaintiffs have sufficiently alleged that amended CSL
§ 167 and the regulations promulgated thereunder unconstitutionally impaired their contractual
rights to the State contribution rates in effect when the CBAs were executed. Although none of
46
the Plaintiff Unions are specifically identified in the regulations, at this stage of the litigation the
Court cannot conclude as a matter of law that they do not apply to Plaintiffs. Accordingly, the
Court finds that Plaintiffs have standing to challenge the regulations.
CONCLUSION
Accordingly, the Court hereby
ORDERS that Defendants’ motion to dismiss Plaintiffs’ Complaint (Dkt. No. 1) is
GRANTED IN PART AND DENIED IN PART; and the Court further
ORDERS that Defendants’ motion to dismiss Plaintiffs’ complaint as against the State of
New York, New York State Unified Court System, New York State Civil Service Department,
New York State Civil Service Commission, and New York State and Local Retirement System is
GRANTED in its entirety; and the Court further
ORDERS that Defendants’ motion to dismiss Plaintiffs’ claims for monetary damages
asserted against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl, Hanrahan, Megna, and
DiNapoli in their official capacity is GRANTED; and the Court further
ORDERS that Defendants’ motion to dismiss Plaintiffs’ claims for injunctive and
declaratory relief asserted against Defendants Cuomo, Lippman, Prudenti, Hite, Ahl, Hanrahan,
Megna, and DiNapoli in their official capacity is GRANTED only to the extent that such claims
seek retrospective relief; and the Court further
ORDERS that Defendants’ motion to dismiss Plaintiffs’ Article 78 claims is GRANTED;
and the Court further
ORDERS that Defendants’ motion to dismiss Plaintiffs’ claims asserted against
Defendants Cuomo, Lippman, Prudenti, Ahl, Hanrahan, and DiNapoli in their personal capacity is
GRANTED, with leave to amend; and the Court further
47
ORDERS that Defendants’ motion is denied in all other respects.
IT IS SO ORDERED.
Dated: September 30, 2013
Albany, New York
48
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