Donohue v. New York
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Opinion
Mae A. D'Agostino, U.S. District Judge:
I. INTRODUCTION
In their second amended complaint dated July 29, 2014, Plaintiffs seek declaratory and injunctive relief pursuant to
Currently before the Court are the parties' cross motions for summary judgment.
*118See Dkt. Nos. 93 & 98.1
II. BACKGROUND
A. The Parties
Plaintiff Danny Donohue is the statewide president of the Civil Service Employees Association, Inc. ("CSEA"). See Dkt. No. 98 at ¶ 1. Plaintiff CSEA is the collective negotiating representative for New York State employees in the Administrative Service Unit ("ASU"), Institutional Services Unit ("ISU"), Operational Services Unit ("OSU"), and Division of Military and Naval Affairs Unit ("DMNA"), as well as one unit of employees of the New York State Unified Court System. See
Defendant Andrew Cuomo is Governor of the State of New York. See
B. Collective Bargaining Agreement Negotiated Between the State and CSEA in 2011
On June 22, 2011, the Governor issued a press release announcing that the State had reached a five-year labor agreement (the "2011-16 CBA") with the CSEA. See Dkt. No. 98 at ¶ 14. The press release announced a two percent increase in the premium contribution rate for Grade 9 employees *119and below, and a six percent increase for Grade 10 and above.
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Mae A. D'Agostino, U.S. District Judge:
I. INTRODUCTION
In their second amended complaint dated July 29, 2014, Plaintiffs seek declaratory and injunctive relief pursuant to
Currently before the Court are the parties' cross motions for summary judgment.
*118See Dkt. Nos. 93 & 98.1
II. BACKGROUND
A. The Parties
Plaintiff Danny Donohue is the statewide president of the Civil Service Employees Association, Inc. ("CSEA"). See Dkt. No. 98 at ¶ 1. Plaintiff CSEA is the collective negotiating representative for New York State employees in the Administrative Service Unit ("ASU"), Institutional Services Unit ("ISU"), Operational Services Unit ("OSU"), and Division of Military and Naval Affairs Unit ("DMNA"), as well as one unit of employees of the New York State Unified Court System. See
Defendant Andrew Cuomo is Governor of the State of New York. See
B. Collective Bargaining Agreement Negotiated Between the State and CSEA in 2011
On June 22, 2011, the Governor issued a press release announcing that the State had reached a five-year labor agreement (the "2011-16 CBA") with the CSEA. See Dkt. No. 98 at ¶ 14. The press release announced a two percent increase in the premium contribution rate for Grade 9 employees *119and below, and a six percent increase for Grade 10 and above. See
The 2011-16 CBA between CSEA and the State was signed on August 15, 2011, and covered the periods between April 2, 2011 and April 1, 2016. See
The State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage toward the hospital/medical/mental health and substance abuse components provided under the Empire Plan. Effective October 1, 2011 for employees in a title Salary Grade 9 or below, the State agrees to pay 88 percent of the cost of individual coverage and 73 percent of the cost of dependent coverage toward the hospital/medical/mental health and substance abuse components provided under the Empire Plan. Effective October 1, 2011 for employees in a title Salary Grade 10 and above or an employee equated to a position title Salary Grade 10 and above the State agrees to pay 84 percent of the cost of individual coverage and 69 percent of the cost of dependent coverage toward the hospital/medical/mental health and substance abuse components provided under the Empire Plan.
Section 9.26 of the 2011-16 CBA provides that "[t]he unremarried spouse and otherwise eligible dependent children of an employee, who retires after April 1, 1979, with ten or more years of active State service and subsequently dies, shall be permitted to continue coverage in the health insurance program with payment at the same contribution rates as required of active employees for the same coverage." Dkt. No. 98 at ¶ 20. Article 50 of the 2011-16 CBA, entitled "Conclusion of Collective Negotiations," provides that
[t]his Agreement is the entire agreement between the State and CSEA, terminates all prior agreements and understandings and concludes all collective negotiations during its term. During the term of this Agreement, neither party will unilaterally seek to modify its terms through legislation or other means. The parties agree to support jointly any legislation or administrative action necessary to implement the provisions of this Agreement. The parties acknowledge that, except as otherwise expressly provided herein, they have fully negotiated *120with respect to the terms and conditions of employment and have settled them for the term of this Agreement in accordance with the provisions thereof.
C. 2011 Legislation to Implement Contribution Rate Changes for Health Insurance Premiums
Prior to 2011, section 167(8) of the Civil Service Law provided, in relevant part, that the "state cost of premium or subscription charges for eligible employees" covered by a CBA "may be increased to the terms of such agreement." Dkt. No. 98 at ¶ 22 (citing Senate Bill 5846, Assembly Bill 8513). On August 17, 2011, section 167(8) was amended to read as follows:
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, 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.
D. Collective Bargaining Agreements Between the State and CSEA from 1982 to 2011
Section 9.1(a) of the CBA in effect from 2007 to 2011 (the "2007-11 CBA") stated that "[t]he State shall continue to provide all the forms and extent of coverage as defined by the contracts in force on March 31, 2007, with the State's health insurance carriers unless specifically modified by this Agreement." Dkt. No. 98 at ¶ 25. As with the 2007-11 CBA, the 2003-07 CBA, 1999-03 CBA, 1995-99 CBA, 1991-95 CBA, 1988-91 CBA, 1985-88 CBA, and 1982-85 CBA all contained this language regarding the forms and extent of coverage. See
The 2007-11 CBA, 2003-07 CBA, 1999-03 CBA, 1995-99 CBA, 1991-95 CBA, 1988-91 CBA, and 1985-88 CBA all provided that the State paid 90 percent of the cost of the premium for individual coverage and 75 percent of the cost of the premium for dependent coverage for the Empire Plan and HMOs. See Dkt. No. 98 at ¶ 42. The 1982-85 CBA provided that the State paid 100% of employee premiums and 75 % of the cost of dependent coverage. See
E. Administrative Measures in 2011 Regarding Contribution Rates for Employee Health Insurance Premiums
By letter dated September 21, 2011, Defendant Hite notified Defendant Megna that she was extending, as authorized by Civil Service Law § 167(8), and subject to his approval, the modified State premium contribution rates set forth in Article 9 of the 2011-16 CSEA CBA, to unrepresented employees and retirees. See Dkt. No. 98 at ¶ 45.5 The letter was signed by Defendant Megna on September 22, 2011. See
On September 27, 2011, Defendant Hite adopted a Resolution, citing to the authority vested in her in Civil Service Law sections 160(1), 161-a, and 167(8), which amended section 73.3(b) of Title 4 of the New York Code of Rules and Regulations. See Dkt. No. 93-2 at ¶ 47 (citing Dkt. No. 93-21); see also Dkt. No. 98 at ¶ 47. The Resolution contained the following provisions applicable to retirees:
(i) for retirees who retired on or after January 1, 1983, and employees retiring prior to January 1, 2012, New York State shall contribute 88 percent of the charge on account of individual coverage and 73 percent of the charge on account of dependent coverage, provided, however, that for hospital/medical/mental health and substance abuse coverage provided under a Health Maintenance Organization, the State's rate of contribution shall not exceed 100 percent of its dollar contribution for such coverage under the Empire Plan;
(ii) for employees retiring on or after January 1, 2012, from a title allocated or equated to salary grade 9 or below, New York State shall contribute 88 percent of the charge on account of individual coverage and 73 percent of the charge on account of dependent coverage, provided, however, that for hospital/medical/mental health and substance abuse coverage provided under a Health Maintenance Organization, the State's rate of contribution shall not exceed 100 percent of its dollar contribution for such coverage under the Empire Plan;
(iii) for employees retiring on or after January 1, 2012, from a title allocated or equated to salary grade 10 or above, New York State shall contribute 84 percent of the charge on account of individual coverage and 69 percent of the charge on account of dependent coverage, provided, however, that for hospital/medical/mental health and substance abuse coverage provided under a Health Maintenance Organization, the State's rate of contribution shall not exceed 100 percent of its dollar contribution for such coverage under the Empire Plan.
Dkt. No. 98 at ¶ 48; see also Dkt. No. 93-21 at 2-3 (emphasis omitted). The foregoing provisions were made effective October 1, 2011. See
*122F. Chapter 14 of the Laws of 1983
In 1983, Civil Service Law § 167(8) was modified to provide that the full cost of health insurance premiums would be paid by the State for those who retired prior to January 1, 1983. See Dkt. No. 98 at ¶ 51; see also Dkt. No. 93-23. The 1983 law further provided that nine-tenths of the premium charge for health insurance would be paid by the State for current employees and those who retire on or after January 1, 1983. See
G. Fiscal Crisis Facing the State in 2010-2011
As a result of the Great Recession that began in December 2007 according to the National Bureau of Economic Research, the State faced General Fund budget gaps for Fiscal Year 2009-2010, 2010-2011, and 2011-2012 in the amounts of $17.9 billion (2 percent of estimated spending), $9.2 billion (15 percent of estimated spending), and $10 billion (15 percent of estimated spending), respectively. See Dkt. No. 98 at ¶ 54. A General Fund budget gap means the difference between planning spending commitments and the receipts available to pay them. See
In Fiscal Years 2009-10, 2010-11, and 2011-12, the State was required to adopt a range of measures to close the large budget gaps and achieve a balanced budget. See
The development of the annual budget follows a methodical process. See
The gap-closing plan that was proposed in the 2011-12 Executive Budget was approved by the Legislature with relatively few modifications. See
In balancing the budget for a given year, the State weighs the impact of gap-closing actions on its long-term operating position. See Dkt. No. 98 at ¶ 71. DOB typically develops the Financial Plan with a goal of achieving a reasonably close relationship between receipts and disbursements over multi-year period. See
The State's credit rating depends in part on its ability to maintain budget balance in the current year and to keep budget gaps projected for future years within a manageable range. See
As part of the response to the Great Recession, all State agencies were asked by the Governor's Office to advance proposals designed to achieve workforce savings. See
H. Defendant Hite Acting as Head of the Department of Civil Service
By the document entitled "Designation of Deputy," dated December 22, 2010, Nancy Groenwegen, then the Commissioner and head of the New York State Department of Civil Service, designated certain persons as deputies, who would act in her absence as the head of the New York State Department of Civil Service. See Dkt. No. 98 at ¶ 81. Defendant Hite was the first deputy so designated by Nancy Groenwegen. See
According to Defendants, upon Ms. Groenwegen's resignation, Defendant Hite became the Acting Commissioner of the Department of Civil Service. See Dkt. No. 93-2 at ¶ 85. Plaintiffs, however, contend that "Defendant Hite was designated as a Deputy so long as she held the position of Director Division of Classification and Compensation.... Further, Defendant Hite was never appointed as Acting Commissioner by Governor Cuomo and never filed a Public Officer Oath/Affirmation in the position of Acting Commissioner." Dkt. No. 98 at ¶ 85 (citing Hite Depo. pp. 21-22; Lynch Decl., Exh. 16).7 As Acting Commissioner of the Department, Defendant Hite was not a member of the Civil Service Commission. See
Defendants claim that, as Acting Commissioner, Defendant Hite ran the Department, making all executive decisions on behalf of the agency, including those related to the NYSHIP, and overseeing all Department Divisions, including the Division of Employee Benefits, which is responsible for the administration of the NYSHIP. See
By letter dated September 21, 2011, Defendant Hite notified Defendant Megna *125that she would extend, as authorized by Civil Service Law § 167(8), and subject to his approval, the modified State premium contribution rates set forth in Article 9 of the 2011-16 CBA to unrepresented employees and retirees. See
I. The Complaint and Pending Motions for Summary Judgment
In their first cause of action, Plaintiffs allege that the increase in the percentage of the health insurance premium contribution paid by retirees violated the Contracts Clause of Article I, § 10 of the United States Constitution. See Dkt. No. 55 at ¶¶ 79-95. Defendants contend that the Court should dismiss this cause of action because the collective bargaining agreements do not establish a contractual right to a perpetually fixed health insurance premium contribution rates. See Dkt. No. 93-1 at 11-16. Further, Defendants argue that, even if Plaintiffs do have a vested right to a perpetually fixed premium contribution rate, they failed to demonstrate a substantial impairment of that right. See
In their second cause of action, Plaintiffs allege that the increase in the percentage of the health insurance premium contribution paid by retirees breached Plaintiffs' contractual rights under the 2007-11 CBA. See Dkt. No. 55 at ¶¶ 96-105. Defendants contend that the Court should decline to exercise supplemental jurisdiction over this claim since there is no viable federal claim and that this claim should otherwise be dismissed because it lacks merit. See Dkt. No. 93-1 at 23-25.
The third and fifth causes of action allege that the retirees' premium contribution increase violated Plaintiffs' right to due process under the Federal and State Constitutions. See Dkt. No. 55 at ¶¶ 106-15, 132-40. Defendants argue that these claims fail because Plaintiffs do not have a property interest in a perpetually fixed premium contribution rate and the New York State Constitution does not provide for the cause of action Plaintiffs assert. See Dkt. No. 93-1 at 26-29, 32-34. Additionally, Defendants contend that, even if Plaintiffs had a property interest, the claim still fails because they had an adequate state-court remedy of which they failed to avail themselves. See
The fourth cause of action alleges that Defendant Hite lacked the authority to administratively extend the premium shift. See Dkt. No. 55 at ¶¶ 116-31. Defendants claim that this cause of action "appears to have been brought pursuant to Article 78 of the New York Civil Practice Law and Rules and has been dismissed." Dkt. No. 93-1 at 9 (citing Dkt. No. 19 at 19-22).
In their sixth cause of action, Plaintiffs allege that Defendants Hite and Megna violated Article III, § 1 of the New York State Constitution. See Dkt. No. 55 at ¶¶ 141-45. Defendants argue that the Court should decline to exercise supplemental jurisdiction over this state law claim which, in any event, has no merit because Defendants Hite and Megna acted in accordance with the express terms of Civil Service Law § 167(8). See Dkt. No. 93-1 at 34-35.
*126The seventh cause of action purports to be a separate cause of action under
Finally, the eighth cause of action alleges that the retirees' premium contribution increase violated Plaintiffs' contract rights established by statute and longstanding practice. See Dkt. No. 55 at ¶¶ 150-55. Defendants argue that they are entitled to summary judgment as to this claim because (1) it is well established that Civil Service Law § 167(1) did not bestow any contractual rights on Plaintiffs; (2) the claimed past practice did not exist; and (3) a past practice is merely a form of parol evidence and does not independently establish a contractual right. See Dkt. No. 93-1 at 37-39.
III. DISCUSSION
A. Standard of review
A court may grant a motion for summary judgment only if it determines that there is no genuine issue of material fact to be tried and that the facts as to which there is no such issue warrant judgment for the movant as a matter of law. See Chambers v. TRM Copy Ctrs. Corp. ,
In assessing the record to determine whether any such issues of material fact exist, the court is required to resolve all ambiguities and draw all reasonable inferences in favor of the nonmoving party. See Chambers ,
B. First Cause of Action: Contracts Clause of the United States Constitution
1. Legal Framework
"The Contracts Clause restricts the power of States to disrupt contractual arrangements. It provides that '[n]o state shall ... pass any ... Law impairing the Obligation of Contracts.' " Sveen v. Melin , --- U.S. ----,
"At the same time, not all laws affecting pre-existing contracts violate the *127Clause." Sveen ,
2. Contractual Relationship
In their motion, Defendants contend that no contractual relationship exists as to the allegedly impaired term because there is no contractual term promising the perpetual continuation of premium contribution rates at a specific level. See Dkt. No. 93-1 at 12-16. Plaintiffs, however, argue that they are entitled to summary judgment as to this claim because there is no dispute that the collective bargaining agreements at issue entitled retirees to health insurance "with the State paying 90% of the cost of individual coverage and 75% of the cost of dependent coverage upon the completion of 10 years of State service." See Dkt. No. 97-33 at 16. Plaintiffs rely primarily on two provisions of the CBAs at issue. See id. at 16-18. The first provision provides that "[e]mployees covered by the State Health Insurance Plan have the right to retain health insurance after retirement upon completion of ten years of service." Id. The second provision provides that "[t]he State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage toward the hospital/medical/mental health and substance abuse components provided under the Empire Plan." Id. at 16. Plaintiffs assert that this language has been contained in both clause within Section 9 of the CBAs from the 1982-85 CBA through the 2007-11 CBA. See id.
Generally, "contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement." Litton Financial Printing Div. v. N.L.R.B. ,
*128Central to the Court's analysis here is the United States Supreme Court's decision in M & G Polymers USA, LLC v. Hobert Freel Tackett , --- U.S. ----,
The Supreme Court disagreed. Writing for the majority, Justice Thomas stated that contractual provisions in CBAs are to be enforced as written and interpreted in accordance with "ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy." Id. at 933. As with any contract, "the parties' intentions control." Id. (citing Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp. ,
When faced with ambiguous language, the Supreme Court advised that courts "should not construe ambiguous writings to create lifetime promises." Id. at 936 (citing 3 A. Corbin, Corbin on Contracts § 533, p. 216 (1960) ). Rather, courts should be guided by the "traditional principle that 'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.' " Id. at 937 (quoting Litton Fin. Printing Div., Litton Bus. Sys., Inc. v. NLRB ,
In her concurring opinion, Justice Ginsburg expounded upon Justice Thomas' adherence to fundamental principles of contract law, stating that when the parties' intent is unambiguously expressed in the contract, that intent controls, and the court's analysis should go no further. See id. at 938 (Ginsburg, J., concurring) (citing 11 R. Lord, Williston on Contracts § 30:2, p. 98-104) (4th ed. 2012) (Williston). When faced with ambiguity, however, courts may consider extrinsic evidence to determine the parties' intentions. See id. (citing 11 Williston § 30:7, at 116-24 ). Justice Ginsburg further observed that there is no rule requiring "clear and express" language in order to demonstrate that the parties intended *129healthcare benefits to vest. Id. Rather, " 'constraints upon the employer after the expiration date of a collective-bargaining agreement,' we have observed, may be derived from the agreement's "explicit terms," but they 'may arise as well from ... implied terms of the expired agreement.' " Id. (alterations in original) (quoting Litton ,
"Although a contract's general-durational clause does not say everything about the parties' intent to vest a benefit, Tackett v. M & G Polymers USA, LLC ,
With these principles in mind, in the present matter, the Court finds that the unambiguous terms of the CBAs at issue did not create a vested interest in the perpetual continuation of premium contribution rates at a specific level. Plaintiffs rely on Article 9 of CSEA's 2007-11 CBA, and substantially similar provisions of prior CBAs going back to 1983, to support their argument that they have a vested right to a perpetually fixed premium contribution rate for their health insurance coverage. See, e.g. , Dkt. No. 55 at ¶¶ 36, 43, 45, 70-71, 84, 109.
Section 9.1 of the 2007-11 CBA between CSEA and the State provides that "[t]he State shall continue to provide all the forms and extent of coverage as defined by the contracts and in force on March 31, 2007 with the State's health insurance carriers unless specifically modified by this Agreement." Dkt. No. 93-12 at 4. This language clearly indicates that the State is promising the continuation of coverage. The introductory language simply establishes that the coverage in the previous CBA, to the extent that it is defined in the contracts between the State and the insurance carriers, will continue unless altered through negotiations. Therefore, what is continued are the benefits defined in the contracts with the insurance carriers.
Additionally, to the extent that "continue" is read to mean continuation after the expiration of the CBA, the term "coverage" can only naturally be referring to the coverage that is defined in the "contracts" with "the State health and dental insurance carriers." The State promised to continue to provide "coverage," not as defined *130in the prior CBA, but in the State's contracts with the insurance carriers that provide coverage to State employees. As Defendants correctly note, premium contribution rates are not considered "forms and extent of coverage" under the State's Health Insurance Plan. Rather, the "forms and extent of coverage" are defined in the contracts with the health insurance carriers and those contracts do not define or set the premium contribution rates paid by the State and retirees. See Dkt. No. 93-2 at ¶¶ 18, 26, 28, 30, 32, 34, 36, 40-41. As such, the term "forms and extent of coverage" does not include within its scope premium contribution rates.
Also, to the extent that Plaintiffs claim that the word "contracts" in Section 9.1 refers to the CBA that was in effect on March 31, 2007, the argument must fail. First, as Defendants correctly note, Section 9.1 plainly refers to "contracts," not a single contract. Second, the 2007-11 CBA and its predecessors refer to themselves as the "Agreement," not the "contract." Dkt. No. 93-2 at ¶¶ 25, 27, 29, 31, 33, 35, 37, 39. There is no plausible reason why Section 9.1 of the 2007-11 CBA would diverge from the language that had been used for decades and refer to a prior CBA as the "the contracts" rather than the "Agreement."
Defendants also correctly note that the sections of the 2007-11 CBAs that set forth the specific premium contribution rates further support the interpretation that the CBAs do not guarantee a perpetual specific premium contribution rate. Specifically, Section 9.23(a) provides that "[t]he unremarried spouse and otherwise eligible dependent children of an employee, who retires after April 1, 1979, with ten or more years of active State service and subsequently dies, shall be permitted to continue coverage in the health insurance program with payment at the same contribution rates as required of active employees for the same coverage." Dkt. No. 93-12 at 21. This provision demonstrates that, when a specific contribution rate is meant to be guaranteed into retirement, it is set forth expressly in the contract.
Plaintiffs argue that two provisions read together support their position. Section 9.27(a) provides that "[e]mployees covered by the State Health Insurance Plan have the right to retain health insurance after retirement upon completion of ten years of service." Dkt. No. 97-33 at 16. Further, Section 9.14(a) provides that "[t]he State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage toward hospital/medical/mental health and substance abuse components provided under the Empire Plan."
Contrary to Plaintiffs assertions, these provisions do not provide for a vested right to a perpetually fixed premium contribution rate and Mr. Hanna's declaration does not alter this conclusion. Section 9.27(a) simply provides that employees have the right to retain health insurance in retirement upon completion of ten years of service, *131but is silent as to contribution rates. Section 9.14(a) does not contain any reference to benefits in retirement. As such, while the CBAs guarantee health insurance in retirement to those with ten years of service, they do not guarantee any specific contribution rate in retirement. See Cup v. Ampco Pittsburgh Corp. ,
Additionally, all of the CBAs at issue have durational limits. For example, Article 53 of the 2011-16 CBA provides that "[t]he term of this Agreement shall be from April 2, 2011 to April 1, 2016." Dkt. No. 93-10 at 18. Similarly, the 2007-11 CBA provides that "[t]he term of this Agreement shall be from April 2, 2007 to April 1, 2011." Dkt. No. 93-12 at 29. The sections of this CBAs, and all previous CBAs, providing for health insurance in retirement and setting forth the State's premium contribution rate do not contain any language pertaining to duration. As the Supreme Court has made clear that " 'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement,' " CNH Indus. N.V. v. Reese , --- U.S. ----,
The only reasonable interpretation of the unambiguous language of the CBAs is that the premium contribution rates are subject to the general durational clauses and that this obligation ceased upon the termination of each respective CBA. See Gallo ,
Based on the foregoing, the Court finds that there was no contractual agreement regarding premium contribution rates continuing past the expiration of the CBA. As such, the Court grants Defendants' motion for summary judgment as to Plaintiffs' Contract Clause claim. In an excess of caution, however, the Court will address whether Defendants' actions impaired any such agreement and, if so, whether it was a reasonable and necessary means to serve a legitimate public purpose.
3. Substantial Impairment
In their cross motion, Plaintiffs contend the individuals that retired between January 1, 1983 and October 1, 2011, had well-established expectations that this longstanding benefit would continue as it had for twenty-eight (28) years. See Dkt. No. 97-33 at 19-20. Plaintiffs claim that this long-standing practice and the language of the relevant CBAs rendered their expectations reasonable. See
" 'Total destruction' or repudiation of the contract is not necessary for an impairment to be substantial."
*132Donohue v. Paterson ,
As discussed above, any expectation of a perpetually fixed contribution rate in retirement was unreasonable based on the plain language of the CBAs. The CBAs clearly provide that Plaintiffs would receive the health insurance coverage that was in effect at the time of their retirement. Nothing in the CBAs prevented the State from raising retirees' contribution rates upon the termination of the CBA.
Moreover, even if the Court were to consider the past practices, Defendants are correct that there is no basis for Plaintiffs' assertion that, "since the enactment of Chapter 14 of the Laws of 1983, the State's longstanding practice and established course of conduct further establishes the parties' intent and the State's contractual obligation to provide for the contribution of health insurance benefits for retired State employees, including a continuation of the State contribution rates in effect at the time a State employee retires[.]" Dkt. No. 55 at ¶ 152. The provision in the law guaranteeing that those who retired before January 1, 1983 would pay no contribution was specifically negotiated on an occasion twenty-eight years before this action was commenced. While it is true that, between 1983 and 2011, there was no change in the contribution rate paid by retirees, the State also made no change to the contribution rate paid by employees as well. As such, all that this pattern establishes is that, during the period in question, the need did not arise to make changes to the premium contribution rates.
Based on the foregoing, the Court finds that Defendants are entitled to summary judgment on this claim because the undisputed facts demonstrate that there was no substantial impairment of any contractual right.
4. Legitimate Public Purpose That is Reasonable and Necessary
"When a state law constitutes substantial impairment, the state must show a significant and legitimate public purpose behind the law." Buffalo Teachers Fed'n v. Tobe ,
An impairment is reasonable only if it is "specifically tailored to meet the societal ill it is supposedly designed to ameliorate." Sanitation & Recycling Indus. ,
In the present matter, the Court finds that the undisputed facts demonstrate that Chapter 491 of the Laws of 2011 served a significant and legitimate purpose that was reasonable and necessary. The law was enacted in an effort to close a multi-billion dollar budget gap caused by the Great Recession. See Dkt. No. 98 at ¶¶ 54-57. Therefore, it is beyond dispute that the Legislature's public purpose in enacting the law was legitimate. See Buffalo Teachers Fed'n ,
Plaintiffs argue that Defendants' claim that increasing the health insurance premiums for individuals that retired between January 1, 1983 and October 1, 2011, was reasonable and necessary is belied by the record. See Dkt. No. 97-33 at 21. "First, according to the State's witness James Dewan, the annual savings to the State to increase the contribution levels for those individuals that retired was between $20 million and $30 million annually.... While that is a significant amount of money to a class of individuals on a fixed income, the State's overall budget for the 2011-2012 fiscal year was $131.7 billion.... Based on the State's estimated savings, it was at most .023% of the overall $131.7 billion State budget and at the least .015% of the budget, which cannot be truly be [sic] deemed as reasonable and necessary."Id. Second, Plaintiffs contend that the State's chief negotiator in 2011, Joseph Bress, testified that there were no written proposals or directives from the Governor's Office regarding how they were to achieve the $450 million in savings. See
First, as set forth in detail above, in the Fiscal Year 2011-12, the State was facing a $10 billion budget gap. Plaintiffs' attempts to downplay the State's dire fiscal situation *134for Fiscal Year 2011-12 is entirely without merit.
Second, the undisputed facts demonstrate that the action taken by Defendants were narrowly tailored. In Fiscal Years 2009-10, 2010-11, and 2011-12, the State was required to adopt a range of measures to close the large budget gaps and achieve a balanced budget. The measures adopted in these years touched on a range of State activities, including: reductions in State payments for public schools, healthcare providers, local governments, social services and other services; imposition of cost controls on the operations of State agencies; increases in tax revenues, including personal income taxes, sales taxes, and other taxes; the deferral of required payments to the State pension system; and the use of non-recurring resources. See Dkt. No. 98 at ¶ 57. The Fiscal Year 2011-12 gap-closing plan consisted of a range of measures to moderate spending growth and increase receipts. See id. at ¶ 59. This plan, which lowered spending by approximately $8.5 billion, included the following reductions: $2.8 billion in education aid; $2.7 billion for Medicaid; $1.5 billion for State agency operations; and $1.6 billion for various other programs and activities. See id. at ¶¶ 60-61. The gap-closing plan also included approximately $860 million in actions that the Division of Budget characterized as non-recurring, including the use of certain fund balances and resources made available from state public authorities, as well as $324 million in increased revenues. See id. at ¶ 62. These are but a few of the actions that were taken to close the budget gap. In light of the considerable cuts made across all aspects of the State's spending, Plaintiff's argument that the extremely modest percentage increase in contribution rate is not narrowly tailored must be rejected. See Ambrose ,
Additionally, the Court rejects Plaintiffs' argument that the increase in the retirees' health insurance contribution rate was not fiscally motivated. The State was required to identify $450 million in savings from workforce cost reductions. James Dewan indicated that the savings from the administrative extension of the increased contribution rates to retirees were projected to be $20 to $30 million. See Dkt. No. 101-1 at ¶ 6. To achieve the $450 million in workforce cost reductions, other proposals were implemented, including a temporary reduction in employee salary levels and certain changes to health insurance benefits, including increases to prescription drug copayments and deductibles for non-network physician visits. See id. at ¶ 7. Additionally, several other proposals were considered but ultimately rejected. Examples of such rejected cost savings proposals include: changing the methodology used to calculate overtime compensation, location pay, and hazardous duty pay; eliminating longevity payments and performance advance increases; reducing workers' compensation benefits; increasing State employees' parking fees; increasing copayments due for certain medical services; increasing the coinsurance paid by enrollees for non-network medical services; changing the methodology used to reimburse claims incurred at non-network hospitals; eliminating Medicare Part B premium reimbursements for newly eligible retirees; and increasing the health insurance premium *135contributions paid by employees and retirees by one, three, four, five, six, or ten percentage points. See id. at ¶ 8. According to Mr. Dewan, these proposals were rejected for various reasons, including that they would fail to yield significant enough savings; they were rejected, or likely would be rejected, by public employee unions; and the availability of other more moderate cost-reduction options. See id. at ¶ 9.
The undisputed facts establish that Chapter 491 of the Laws of 2011 and the administrative extension of the premium shift to retirees was a matter of exigency that addressed a societal and economic interest and was appropriately tailored, and that other measures were considered and implemented before this measure was resorted to. Bearing in mind that whether legislation violates the Contracts Clause does not turn on "[w]hether [it] is wise or unwise as a matter of policy," Home Bldg. & Loan Ass'n v. Blaisdell ,
C. Second Cause of Action: Breach of Contract10
In their second cause of action, Plaintiffs allege that the increase in the percentage of the health insurance premium contribution paid by retirees breached Plaintiffs' contractual rights under the 2007-11 CBA. See Dkt. No. 55 at ¶¶ 96-105. Defendants contend that the Court should grant them summary judgment as to this claim because there is no contractual term guaranteeing a perpetual premium contribution rate. See Dkt. No. 93-1 at 25.
"The essential elements of a breach of contract cause of action are 'the *136existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach.' " Canzona v. Atanasio ,
In the present matter, in dismissing Plaintiffs' Contracts Clause cause of action, the Court held that there was no impairment of contract, i.e. , that the CBAs at issue did not promise Plaintiffs a perpetual premium contribution rate. It necessarily follows that Defendants did not breach this nonexistent contract term.
Based on the foregoing, the Court grants Defendants' motion for summary judgment as to Plaintiffs' second cause of action.
D. Third and Fifth Causes of Action: Due Process
The third and fifth causes of action allege that the retirees' premium contribution increase violated Plaintiffs' right to due process under the Federal and State Constitutions. See Dkt. No. 55 at ¶¶ 106-15, 132-40. Defendants argue that these claims fail because Plaintiffs do not have a property interest in a perpetually fixed premium contribution rate and the New York State Constitution does not provide for the cause of action Plaintiffs assert. See Dkt. No. 93-1 at 26-29, 32-34. Additionally, Defendants contend that, even if Plaintiffs had a property interest, the claim still fails because they had an adequate state-court remedy of which they failed to avail themselves. See
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. See Puckett v. City of Glen Cove ,
*137"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. ,
"The Due Process Clause does not protect against all deprivations of constitutionally protected interests in life, liberty, or property, 'only against deprivations without due process of law.' " Rivera-Powell v. New York City Bd. of Elections ,
In the present matter, the Court finds that Defendants are entitled to summary judgment as to Plaintiffs' due process claims because Plaintiffs had an adequate state court remedy available to them. Through the passage of the amendments to section 167(8) of the Civil Service Law and the Resolution passed by Defendant Hite amending section 73.3(b) of Title 4 of the New York Code of Rules and Regulations, Plaintiffs had notice of the changes to their health insurance contribution rates about to take effect. See Dkt. No. 93-2 at ¶ 47 (citing Dkt. No. 93-21). It is well settled that an Article 78 proceeding generally provides constitutionally adequate *138post-deprivation process. See Campo v. N.Y.C. Emps. Ret. Sys. ,
Even assuming that the availability of an Article 78 proceeding did not preclude Plaintiffs' due process claims, they are nevertheless still subject to dismissal. While it is true that collective bargaining agreements can be the source of a property right entitled to due process protection, "not every contractual benefit rises to the level of a constitutionally protected property interest." Ezekwo v. N.Y.C. Health & Hosps. Corp. ,
Here, as discussed above, Plaintiffs have failed to identify a term in any of the CBAs guaranteeing premium contributions at a fixed rate in perpetuity. In their response to Defendants' motion, Plaintiffs also appear to argue that, in addition to the rights created by the CBAs themselves, there was a "mutually explicit understanding" between the parties that created their protected interest in premium contribution rates that would remain fixed in retirement. See Dkt. No. 97-3 at 28-29. As Defendants correctly argue, the cases cited by Plaintiffs do not support their claim.
In Perry v. Sindermann ,
In Barnes v. Zaccari ,
In Basciano v. Herkimer ,
The Second Circuit distinguished Basciano in Costello v. Town of Fairfield ,
Here, as in Costello , Plaintiffs have not suffered a complete loss of benefits. And, unlike Basciano , Plaintiffs have failed to cite to any relevant statute, regulation, or otherwise official promulgation that would support their claim of a mutually explicit understanding. Additionally, courts have been reluctant to find a property interest premised on a benefit conferred by a public contract unless that benefit has been denied entirely. See Jackson v. Roslyn Bd. of Educ. ,
Based on the foregoing, the Court finds that Defendants are entitled to summary judgment as to Plaintiffs' due process causes of action.
E. Fourth Cause of Action: Violation of State Law
Plaintiffs' fourth cause of action alleges that Defendant Hite lacked the authority to administratively extend the premium shift. See Dkt. No. 55 at ¶¶ 116-31. Defendants claim that this cause of action "appears to have been brought pursuant to Article 78 of the New York Civil Practice Law and Rules and has been dismissed." Dkt. No. 93-1 at 9 (citing Dkt. No. 19 at 19-22). Plaintiffs have not responded to Defendants' motion insofar as it seeks dismissal of the fourth cause of action.
Having failed to address Defendants' motion as to this claim, the Court finds that Plaintiffs have abandoned this claim. See Jackson v. Fed. Exp. ,
F. Sixth Cause of Action: Violation of Article III, § 1 of New York State Constitution
In their sixth cause of action, Plaintiffs allege that Defendants Hite and Megna violated Article III, § 1 of the New York State Constitution when they extended the premium contribution changes to retirees pursuant to the authority granted in section 167(8) of the Civil Service Law. See Dkt. No. 55 at ¶¶ 141-45. Defendants argue that the Court should decline to exercise over this state law claim which, in any event, has no merit because Defendants Hite and Megna acted in accordance with the express terms of section 167(8). See Dkt. No. 93-1 at 34-35.
Article III, § 1 of the New York State Constitution states that "[t]he legislative power of this state shall be vested in the senate and assembly." " 'The concept of the separation of powers is the bedrock of the system of government adopted by this State in establishing three coordinate and coequal branches of government, each charged with performing particular functions.' " Garcia v. N.Y.C. Dep't of Health & Mental Hyg. ,
Section 167(8) of the Civil Service Law provides as follows:
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, 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.
Plaintiffs first contend that Defendants' motion for summary judgment must be denied because, at the time the State changed the cost of retiree contribution rates, effective October 1, 2011, Defendant Hite was serving as the Director of Division of Classification and Compensation and the Deputy Commissioner for the Department of Civil Service. See Dkt. No. 97-33 at 32. Plaintiffs argue that, "[i]n order to modify the civil service law to include modification to retiree health insurance, as set forth in Defendant Hite's correspondence to Defendant Megna, dated September 21, 2011, these individuals were required to have been serving in a legislative capacity, which they were not."
To the extent that Plaintiffs are attempting to argue that section 167(8) is an unconstitutional delegation of legislative authority, their argument is unpersuasive. In Retired Public Employees Assoc., Inc. v. Cuomo ,
the power given to the Civil Service Commission, with the approval of the Budget Director, to modify health insurance contribution rates for retirees and non-represented state employees is entirely dependent upon - and limited by the terms of - a negotiated agreement between the state and an employee organization modifying the contribution rates for current employees.... Contrary to petitioners' contention, the standard set forth by the Legislature - that any change in the retiree statutory contribution rate must be tied to a collectively bargained rate - provides adequate guidance for the exercise of that discretion, as "there need not be a specific and detailed legislative expression authorizing a particular executive act [where, as here,] the basic policy decisions underlying the [actions authorized] have been made and articulated by the Legislature."
Next, the Court finds unpersuasive Plaintiffs' argument that Defendant Hite was not authorized to increase the premium contribution rate for retirees pursuant to section 167(8) because she had not filed an oath of office as President of the Civil Service Commission or Commissioner of the Department of Civil Service. Section 9 of the New York State Public Officers Law provides in relevant part as follows:
If there is but one deputy, he shall, unless otherwise prescribed by law, possess *142the powers and perform the duties of his principal during the absence or inability to act of his principal, or during a vacancy in his principal's office. If there be two or more deputies of the same officer, such officer may designate, in writing, the order in which the deputies shall act, in case of his absence from the office or his inability to act, or in case of a vacancy in the office, and if he shall fail to make such designation, the deputy longest in office present shall so act.
Plaintiffs have provided only conclusory allegations in support of their opposition to Defendants' motion, which the Court finds unpersuasive. Accordingly, the Court grants Defendants' motion for summary judgment as to Plaintiffs' sixth cause of action.
G. Seventh Cause of Action: Civil Rights Violation Under 42 U.S.C. § 1983
The seventh cause of action purports to be a separate cause of action under
Having already found that Defendants are entitled to summary judgment on Plaintiffs' federal claim and because
H. Eighth Cause of Action: Contract Rights Established by Statute and Practice
In the eighth cause of action, Plaintiffs allege that the retirees' premium contribution increase violated Plaintiffs' contract rights established by statute and longstanding practice. See Dkt. No. 55 at ¶¶ 150-55. Defendants argue that they are entitled to summary judgment as to this claim because (1) it is well established that *143Civil Service Law § 167(1) did not bestow any contractual rights on Plaintiffs; (2) the claimed past practice did not exist; and (3) a past practice is merely a form of parol evidence and does not independently establish a contractual right. See Dkt. No. 93-1 at 37-39. In response, Plaintiffs contend that the 1983 amendment to the Civil Service Law concerning retiree health insurance was an extension of the parties' negotiations and collective bargaining agreements. See Dkt. No. 97-33 at 33. In its filings, Defendants assert that " '[t]he 1983 law was enacted to implement agreements reached through collectively bargaining, including an express agreement that the State would continue to pay 100% of the health insurance premium contributions for those who retired prior to January 1, 1983.' "
As Defendants correctly note, courts are hesitant to read contractual rights into statutes because to do so would too easily preclude the State from changing its policies:
[A]bsent some clear indication that the legislature intends to bind itself contractually, the presumption is that "a law is not intended to create private contractual or vested rights but merely declares a policy to be pursued until the legislature shall ordain otherwise" ... Policies, unlike contracts, are inherently subject to revision and repeal, and to construe laws as contracts when the obligation is not clearly and unequivocally expressed would be to limit drastically the essential powers of a legislative body.
National R. Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co. ,
In Retired Public Employees Assoc., Inc. v. Cuomo ,
Contrary to Plaintiffs' arguments, the Court finds that Civil Service Law § 167(1) did nothing more that set forth policy and did not create vested contractual rights. Its terms do not "clearly and unequivocally" express an immutable contractual guarantee. Indeed, all courts to have considered this argument have rejected it. See Retired Public Emps. Assoc., Inc. ,
Moreover, the alleged "past practice" of providing higher contribution rates prior to 2011 does not change this conclusion. "Courts also may look to the past practice of the parties to give definition and meaning to language in an agreement, including a collective bargaining agreement, which is ambiguous." Aeneas McDonald Police Benev. Assoc. v. City of Geneva ,
First, as discussed above, while it is true that, between 1983 and 2011, there was no change in the contribution rate paid by retirees, the State also made no change to the contribution rate paid by employees as well. As such, all that this pattern establishes is that, during the period in question, the need did not arise to make changes to the premium contribution rates and that individuals who retired after January 1, 1983 paid the same contribution rate as current employees. Second, even if applying the same contribution rates to retirees as to active employees constitutes a past practice, it cannot, as Plaintiffs claim, independently establish a contractual right. See Aeneas McDonald Police Benev. Assoc. ,
Based on the foregoing, the Court grants Defendants' motion for summary judgment as to Plaintiffs' eighth cause of action.
I. Plaintiffs' Motion to Preclude the Declarations of Colafati and Decker
1. Standard
Federal Rule 26 requires parties to disclose the identity of individuals "likely to have discoverable information ... that the disclosing party may use to support its claims or defense." Fed. R. Civ. P. 26(a). Parties are also required to update and supplement their disclosures and other discovery responses in "a timely manner." Fed. R. Civ. P. 26(e). Additionally, Rule 26(a)(2)(A) requires a party to disclose "the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705." Fed. R. Civ. P. 26(a)(2)(A). Indeed, "the identity of any witness who may be used to provide expert testimony, whether specifically retained for that purpose or not, must be disclosed." DVL, Inc. v. General Electric Co. ,
If a party fails to disclose a witness under Federal Rule of Civil Procedure 26(a) or (e), a party may not use that witness unless the failure to disclose was substantially justified or harmless. See Fed. R. Civ. P. 37(c)(1). "In determining whether preclusion is appropriate, courts must consider: (1) the reasons for the delay in providing the evidence; (2) the importance of the evidence precluded; (3) the prejudice to the opposing party from having to address the new evidence; and (4) the possibility of a continuance." In re Bear Stearns Companies, Inc. Sec., Derivative, & ERISA Litig. ,
2. Declaration of Dominic Colafati
In their motion, Plaintiffs note that, "[c]ontained within Mr. Colafati's Declaration is data and analysis concerning New York State's finances during all times relevant in this action allegedly based on records maintained by the DOB in the regular course of its business which have not been identified or disclosed to Plaintiffs, including quoted reports from 'Standards and Poor's', 'Fitch Ratings' and 'Moody's Investors Service.' " Dkt. No. 97-33 at 37. Mr. Colafati states further that he was responsible for all aspects of the Division of Budget's Expenditure Debt Unit's operations, which included overseeing the State's Financial Plan. See
Having considered the parties' submissions and the applicable law, the Court denies Plaintiffs' motion to preclude the declaration of Mr. Colafati. Initially, the Court notes that, in their statement of material facts, Defendants relied on Mr. *146Colafati's declaration in discussing the fiscal crisis facing the State in 2010-2011. See Dkt. No. 98 at ¶¶ 54-77. In their response to Defendants' statement of material facts, Plaintiffs admit to every fact established through Mr. Colafati's declaration. See id.
Next, the Court finds that Mr. Colafati's declaration does not constitute expert testimony. Rather, Mr. Colafati simply set forth institutional facts (many of which were publically known), not facts that were personal to him. Mr. Colafati's testimony is rationally based on his experience working for the Division of Budget and is not based on specialized knowledge.
Finally, the Court finds that Plaintiffs did not suffer prejudice from Defendants failure to disclose Mr. Colafati. All of the information contained in Mr. Colafati's declaration is contained in the declaration of James DeWan, who was listed in Defendants' Rule 26 disclosure and whom Plaintiffs did depose. See Dkt. No. 97-18; Dkt. No. 97-12 at 3.
Accordingly, the Court denies Plaintiffs' motion to preclude the declaration of Dominic Colafati.12
3. Declaration of Darryl Decker
Darryl Decker has been employed by the New York State Governor's Office of Employee Relations ("GOER") since 1996. See Dkt. No. 91-4 at ¶ 1. According to Plaintiffs, "[b]ased on his positions and his role as the 'lead health benefits negotiator for several CBAs' since 1999, Mr. Decker testifies to the meaning of certain language contained in the Health Insurance Articles of the collective bargaining agreements made between the State and Council 82 going back to as far as the 1982 to 1985 collective bargaining agreement, long before his employment commenced." Dkt. No. 97-33 at 40. Plaintiffs contend that the Court should strike Mr. Decker's declaration due to the prejudice caused by Defendants' Rule 26 violation. See id.
Having considered Plaintiffs' arguments, the Court denies the motion to preclude the declaration of Darryl Decker. The information contained in Mr. Decker's declaration is also available through the declaration of Priscilla Feinberg, Mr. Decker's predecessor. See Dkt. No. 93-5. Since Plaintiffs were given the opportunity to depose Ms. Feinberg, Plaintiffs have failed to demonstrate that they suffered any prejudice from Defendants' Rule 26 violation.
Based on the foregoing, the Court denies Plaintiffs' motion to preclude the declaration of Darryl Decker.
IV. CONCLUSION
After carefully reviewing the entire record in this matter, the parties' submissions and the applicable law, and for the above-stated reasons, the Court hereby
ORDERS that Defendants' motion for summary judgment (Dkt. No. 93) is GRANTED ; and the Court further
ORDERS that Plaintiffs' cross motion for summary judgment (Dkt. No. 97) is DENIED ; and the Court further
ORDERS that Plaintiffs' motion to preclude the declarations of Dominic Colafati and Darryl Decker is DENIED ; and the Court further
ORDERS that the Clerk of the Court shall enter judgment in Defendants' favor and close this case; and the Court further *147ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision and Order on the parties in accordance in the Local Rules.
IT IS SO ORDERED.
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