The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
In the summer of 2011, as part of an effort to to reduce its budge deficit, New York State's government and the two largest unions representing executive branch employees negotiated changes to their collective bargaining agreements ("CBAs"). The changes included a reduction in the percentage of health insurance premium costs that the State would pay ("contribution rates") and a corresponding increase in the percentage paid by employees. On August 17, 2011, the New York State legislature amended section 167(8) of the New York Civil Service Law for the purpose of implementing those new agreements.*fn1
Then, between September and November 2011, the State applied the new, lower contribution rates to judicial employees and their dependents.*fn2 The health insurance benefits owed to many of these judicial employees were and are governed by the 2007-2011 CBA negotiated through their union, plaintiff New York State Court Officers Association ("the Union").*fn3 The Union argues that because the new rates were implemented unilaterally through a change in statute and not through renegotiations, and because the new rates contravene the CBA, the amendment to the Civil Service Law constitutes a substantial impairment of contract that violates Article I, Section 10 of the United States Constitution.*fn4 The Union seeks a preliminary injunction prohibiting defendants from continuing to implement the law against its current and retired members and their dependents.
For the reasons explained below, I find that the Union is not likely to succeed on the merits of its Contracts Clause claim. As a result, the motion for a preliminary injunction is denied.
Article 8.1 of the CBA governs the provision of health insurance to represented judicial employees. It says that:
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.*fn5 The agreement thus provided Union members with two guarantees: First, they would continue to receive health and prescription drug benefits; Second, they would receive the same benefits on the same terms as the majority of represented Executive Branch employees. The prior four agreements between the Union and the State contained substantially similar language, although from 1991 through 2003, the agreements provided for a specific co-payment structure that would apply regardless of the co-payment structure that applied to the majority of represented Executive Branch employees.*fn6
Since 1983, section 167(1) of the New York Civil Service Law has established the rates at which the State shall contribute to the medical insurance premiums of its current and retired employees and their dependents. Between 1983 and 2011, section 167(8) permitted the state to treat the rates in section 167(1) as a floor and to pay a higher portion of the premiums if a CBA so required:
Notwithstanding any inconsistent provision of law, where and to the extent that an agreement between the state and an employee organization entered into . . . 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.*fn7
This was the state of the law when the Union and State signed the current CBA in 2008. On August 17, 2011, after the State and its largest executive branch employee unions agreed to reduce the State's contribution rates below those established by section 167(1), the legislature passed Chapter 491 of the New York Laws of 2011, replacing the word "increased" in section 167(8) with the word "modified." This change permitted the State to pay contribution rates lower than those described in section 167(1), in accordance with the new agreements.
On November 3, 2011, the State announced that it would pay a reduced contribution rate to members of the Union as well.*fn8 In accordance with the terms of Article 8.1 of the CBA, the rates would be those agreed to by the State and the major executive branch unions.*fn9