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Hyman Kuritz v. the State of New York

December 3, 2012

HYMAN KURITZ, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, ALVIN MAGID, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, SARA A. KNAPP, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, LAWRENCE S. WITTNER, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PHILIP H. SMITH, AS PRESIDENT OF THE UNITED UNIVERSITY PROFESSIONS, AND UNITED UNIVERSITY PROFESSIONS; PLAINTIFFS,
v.
THE STATE OF NEW YORK, ANDREW M. CUOMO, AS GOVERNOR OF THE STATE OF NEW YORK, NEW YORK STATE DEPARTMENT OF CIVIL SERVICE, PATRICIA A. HITE, AS ACTING PRESIDENT OF THE NEW YORK STATE DEPARTMENT OF CIVIL SERVICE AND AS ACTING COMMISSIONER OF THE NEW YORK STATE DEPARTMENT OF CIVIL SERVICE, NEW YORK STATE CIVIL SERVICE COMMISSION, CAROLINE W. AHL AND J. DENNIS HANRAHAN, AS COMMISSIONERS OF THE NEW YORK STATE CIVIL SERVICE COMMISSION, NEW YORK STATE HEALTH INSURANCE PLAN, NEW YORK STATE DIVISION OF THE BUDGET, ROBERT L. MEGNA, AS DIRECTOR OF THE NEW YORK STATE DIVISION OF THE BUDGET, NEW YORK STATE GOVERNOR'S OFFICE OF EMPLOYEE RELATIONS, GARY JOHNSON, AS DIRECTOR OF THE NEW YORK STATE GOVERNOR'S OFFICE OF EMPLOYEE RELATIONS, THOMAS P. DINAPOLI, AS COMPTROLLER OF THE STATE OF NEW YORK, AND NEW YORK STATE AND LOCAL RETIREMENT SYSTEM, DEFENDANTS.



The opinion of the court was delivered by: Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

INTRODUCTION

Plaintiffs commenced the within action alleging that defendants unilaterally increased the percentage of contributions that plaintiffs, retired employees, are required to pay for health insurance benefits in retirement and thereby violated the Contracts Clause and Due Process Clause of the United States Constitution, impaired plaintiffs' contractual rights under the terms of their Collective Bargaining Agreement, and violated state law. Plaintiffs seek injunctive relief, declaratory judgments and monetary damages. Presently before the Court is defendants' motion to dismiss plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). (Dkt. No. 9). Plaintiffs have opposed the motion.*fn1 (Dkt. No. 12).

BACKGROUND*fn2

Plaintiff United University Professions ("UUP") is the collective bargaining representative for members of the State University Professional Services Negotiating Unit ("PSNU"). UUP represents more than 35,000 academic and professional faculty on the twenty-nine campuses of the State University of New York ("SUNY"), including the Systems Administration facilities and those at Empire College facilities. Plaintiff Phillip H. Smith is the President of UUP. Plaintiffs Hyman Kuritz, Alvin Magid, and Lawrence S. Wittner are retired State employees (professors) and former members of UUP. Plaintiff Sarah A. Knapp is a retired State employee (librarian) and former member of UUP. The aforementioned plaintiffs retired after January 1, 1983. During the relevant time, defendant Patricia Hite ("Hite") was Acting Commissioner of the Civil Service Department and Acting President of the Civil Service Commission. Defendants Caroline W. Ahl ("Ahl") and J. Dennis Hanrahan ("Hanrahan") were members of the Civil Service Commission. Defendant Robert Megna ("Megna") was the Director of the New York State Division of the Budget. Defendant Thomas P. DiNapoli ("DiNapoli") was the Comptroller for the State of New York and Trustee of the New York State and Local Retirement System. The New York State and Local Retirement System, under defendant DiNapoli's direction, withholds the New York State Health Insurance Program ("NYSHIP") premium owed by retired State employees from the pension benefits that those retired state employees receive. Defendant Gary Johnson ("Johnson") was the Director of the Governor's Office of Employee Relations. The Governor's Office of Employee Relations negotiates collective bargaining agreements with agents of the collective bargaining units, including the PSNU.

UUP and the State of New York entered into a Collective Bargaining Agreement ("CBA") effective July 2, 2007 through July 1, 2011. The State and UUP were parties to ten or more predecessor agreements from 1979 through 2007. All agreements provide for health insurance coverage for persons who retired from service with the State of New York while a member of the PSNU collective bargaining unit represented by UUP.

The CBA between the State and UUP for the term of July 2, 2007 to July 1, 2011 specified that "[t]he State shall continue to provide all the forms and extent of coverage as defined by health insurance contracts in force on July 1, 2007 with the State's health insurance carriers unless modified by this agreement."*fn3 The insurance contracts in force on July 1, 2007 refer to the prior health insurance contracts in force from June 30, 1982 until July 1, 2007 with the State's health insurance carriers, which included health insurance coverage for retired bargaining unit members and their dependents. Bargaining unit members who retired during the term of the respective collective bargaining agreement received health insurance coverage through NYSHIP for themselves and their dependents.

At the time that the State of New York and UUP entered into the 1985 to 1988 agreement, the 1988 to 1991 agreement, the 1991 to 1995 agreement, the 1995 to 1999 agreement, the 1999 to 2003 agreement, the 2003 to 2007 agreement and the 2007 to 2011 agreement, CSL §167(1)(a) specified that the State shall pay ninety percent (90%) of the NYSHIP premium for individual coverage and seventy-five percent (75%) of the premium for dependent coverage for retired State employees. Those percentages were reflected in the PSNU CBA for that time period.*fn4 When the CBAs were negotiated, the existing statutes, and specifically section 167(a)(1), were incorporated into them and continued as part of the CBAs.

On August 17, 2011, the legislature passed Chapter 491 of the Laws of 2011 ("Chapter 491"). Chapter 491 amended § 167(8) and replaced the word "increased" with the word "modified." The amendment further provided that

[t]he president [of the Civil Service Commission], with the approval of the director of the budget, may extend the modified state cost of premium or subscription charges for employees or retirees not subject to an agreement referenced above and shall promulgate the necessary rules or regulations to implement this provision.

On October 1, 2011, defendants changed the percentage that the State of New York and retired State employees pay for the NYSHIP premiums. Effective October 1, 2011, the State pays eighty-eight percent (88 %) of the NYSHIP premium for individual coverage and seventy-three percent (73%) of the NYSHIP premium for dependent coverage. Thus, retired State employees pay twelve percent (12%) of the NYSHIP premium for individual coverage and twenty-seven percent (27%) of the NYSHIP premium for dependent coverage. These changes were applied to employees who retired after January 1, 1983.

On December 28, 2011, plaintiffs filed a complaint (Dkt. No. 1) asserting causes of action for impairment of contract, violation of due process, violation of civil rights pursuant to 42 U.S.C. § 1983, and breach of contract. Plaintiffs also assert that defendants Hite and Megna lacked authority to approve and implement the reduction in State contribution rates. Plaintiffs also seek an Order and Judgment under Article 78 of the New York Civil Practice Laws and Rules. Plaintiffs commenced this action against the individual defendants in their official capacities only.

DISCUSSION

Standard on a Motion to Dismiss under 12(b)(1)

In contemplating a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the Court must "accept as true all material factual allegations in the complaint[.]" Atl. Mut. Ins. Co. v. Balfour MacLaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). The Court may consider evidence outside the pleadings, e.g., affidavit(s), documents or otherwise competent evidence. See Kamen v. Am. Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986); Antares Aircraft v. Fed. Rep. of Nigeria, 948 F.2d 90, 96 (2d Cir.1991). "The standards for considering a motion to dismiss under Rules 12(b)(1) and 12(b)(6) are substantively identical." Lerner v. Fleet Bank, N.A., 318 F.3d 113, 128 (2d Cir. 2003).

Defendants move for dismissal pursuant to Fed. R. Civ. P. 12(b)(1) arguing that the Eleventh Amendment precludes the Court from obtaining subject matter jurisdiction over the following claims: (1) all of plaintiffs' claims against the State of New York and its agencies; (2) plaintiffs' claims against defendants in their official capacities; and (3) plaintiffs' Article 78 cause of action. Defendants also allege that the principals of the Younger doctrine require abstention in this matter.*fn5

I. Eleventh Amendment

The Eleventh Amendment provides that "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." State Emp. Bargaining Agent Coalition v. Rowland, 494 F.3d 71, 95 (2d Cir. 2007) (citing U.S. Const. amend. XI). The Eleventh Amendment bars federal courts from exercising subject matter jurisdiction over claims against states absent their consent to such a suit or an express statutory waiver of immunity. See Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 90--100 (1984); see also Huminski v. Corsones, 386 F.3d 116, 133 (2d Cir. 2004) (citation omitted). Although the plaintiff generally bears the burden of proving subject matter jurisdiction, the entity claiming Eleventh Amendment immunity bears the burden to prove such. Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ., 466 F.3d 232, 237 (2d Cir. 2006).

Section 1983 imposes liability for "conduct which 'subjects, or causes to be subjected' the complainant to a deprivation of a right secured by the Constitution and laws." Rizzo v. Goode, 423 U.S. 362, 370--71 (1976) (quoting 42 U.S.C. § 1983). It is well-settled that states are not "persons" under section 1983 and, therefore, Eleventh Amendment immunity is not abrogated by that statute. See Will v. Mich. Dep't. of State Police,491 U.S. 58, 71 (1989).

A. Federal Claims against State of New York, New York State Civil Service Department, New York State Civil Service Commission, New York State and Local Retirement System and Governor's Office of Employee Relations Regardless of the type of relief sought, the Eleventh Amendment bars this Court from

assuming jurisdiction over plaintiffs' claims asserted against the State of New York and its agencies. When the state or one of its "arms" is the defendant, sovereign immunity bars federal courts from entertaining lawsuits against them "regardless of the nature of the relief sought." Pennhurst, 465 U.S. at 100. In this case, the state has neither waived its immunity, nor has Congress exercised its power to override Eleventh Amendment immunity. Accordingly, plaintiffs' claims against the State of New York, New York State Civil Service Department, New York State Civil Service Commission, New York State Health Insurance Plan, New York State Division of the Budget, New York State Governor's Office of Employee Relations, New York State and Local Retirement System, and the Governor's Office of Employee Relations are dismissed. See McGinty v. New York,251 F.3d 84, 100 (2d Cir. 2001) (holding that the claims against the Retirement System were dismissed for lack of subject matter jurisdiction based upon the Eleventh Amendment).

B. Federal Claims Against State Officials in their Official Capacity

Plaintiffs also assert claims against defendants Cuomo, Hite, Ahl, Hanrahan, Megna, DiNapoli and Johnson in their official capacities. Eleventh Amendment immunity extends to state officials sued in their official capacities for retrospective relief. See Kentucky v. Graham, 473 U.S. 159, 166 (1985). Actions for damages against a state official in his or her official capacity are essentially actions against the state, and will be barred by the Eleventh Amendment unless: (1) Congress has abrogated immunity, (2) the state has consented to suit, or (3) the Ex parte Young doctrine applies. See Will, 491 U.S. at 71. In this matter, the issues presented before this Court involve the third exception.

In Ex Parte Young, 209 U.S. 123 (1908), the Supreme Court established an exception to state sovereign immunity in federal actions where an individual brings an action seeking injunctive relief against a state official for an ongoing violation of law or the Constitution. This doctrine provides "a limited exception to the general principle of sovereign immunity [that] allows a suit for injunctive relief challenging the constitutionality of a state official's actions in enforcing state law under the theory that such a suit is not one against the State, and therefore not barred by the Eleventh Amendment." Ford v. Reynolds, 316 F.3d 351, 354-55 (2d Cir. 2003). Under the doctrine, a suit may proceed against a state official in his or her official capacity, notwithstanding the Eleventh Amendment, when a plaintiff "(a) alleges an ongoing violation of federal law and (b) seeks relief properly characterized as prospective." See In re Deposit Ins. Agency, 482 F.3d 612, 618 (2d Cir. 2007) (quotations and citations omitted); see also Santiago v. New York State Dep't of Corr. Serv., 945 F.2d 25, 32 (2d Cir. 1991) (holding that such claims, however, cannot be brought directly against the state, or a state agency, but only against state officials in their official capacities).

In Edelman v. Jordan, 415 U.S. 651, 653 (1974), the Supreme Court expanded upon Ex Parte Young and held that even when a plaintiff's requested relief is styled as an injunction against a state official, if "the action is in essence one for recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants." Retroactive relief is that relief "measured in terms of a monetary loss resulting from a past breach of a legal duty on the part of the defendant state officials" regardless of how the relief is fashioned. Id. at 668. "Prospective relief includes injunctive relief that bars a state actor from engaging in certain unconstitutional acts or abates ongoing constitutional violations as well as the 'payment of state funds as a necessary consequence of compliance in the future with a substantive federal question determination.'" Id. The "general criterion for determining when a suit is in fact against the sovereign is the effect of the relief sought, namely, would the relief abate an ongoing violation or prevent a threatened future violation of federal law?" Id. In Edelman, the majority concluded:

It is one thing to tell [a state official] that he must comply with the federal standards for the future if the state is to have the benefit of federal funds in the program he administers. It is quite another thing to order the [state official] to use state funds to make reparation for the past. The latter would appear to us to fall afoul of the Eleventh Amendment if that basic constitutional provision is to be conceived of as having any force.

Id. at 695 (quotation omitted).

In order to determine whether the Ex parte Young exception allows plaintiffs' suit against the officials, this Court must first determine whether the complaint alleges an ongoing violation of federal law and second, whether plaintiffs seek relief properly characterized as prospective. See Verizon Md., Inc. v. Pub. Serv. Comm' of Md., 535 U.S. 635, 645 (2002). "[T]o successfully avoid the Eleventh Amendment bar, a plaintiff must prove that a defendant's violation of federal law is of an ongoing nature as opposed to a case 'in which federal law has been violated at one time or another over a period of time in the past.'" Papasan v. Allain, 478 U.S. 265, 277--78 (1986) (quotation omitted). The inquiry for determining whether an "ongoing violation" exists is, "does the enforcement of the law amount to a continuous violation of plaintiffs constitutional rights or a single act that continues to have negative consequences for plaintiffs." New Jersey Educ. Ass'n v. New Jersey, No. 11-5024, 2012 WL 715284, at *4 (D.N.J. Mar. 5, 2012).

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

With respect to the nature of the relief sought, plaintiffs' "WHEREFORE" clause contains the following requests:

(2) Declaring that defendants violated the United States and New York Constitutions as well as the laws of New York State as described in this complaint;

(3) Permanently enjoining defendants from violating the the United States and New York Constitutions as well as the laws of New York State as described in this complaint;

(4) Declaring that defendants breached the collective bargaining agreements between the State of New York and UUP as described in the complaint;

(5) Permanently enjoining the defendants from breaching the collective bargaining agreements entered into between the State of New York and UUP as described in this complaint;

(6) Declaring that defendants acted in a manner that was ultra vires, null and void as described in this complaint;

(7) Granting equitable relief pursuant to Article 78 of the New York CPLR making plaintiffs whole for the losses they sustained as a result of defendants' unlawful actions as described in this complaint . . . ;*fn6

(8) For relief pursuant to 42 U.S.C. § 1983 including reimbursement of the amounts plaintiffs incurred as a result of paying the unlawful increase in the percentages of the premiums applied to plaintiffs by defendants;

(9) Awarding plaintiffs attorneys' fees, costs and disbursements of this action pursuant to 42 U.S.C. § 1988.

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

1. Monetary Relief

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

Id. at 290.

The facts and relief sought in Milliken are clearly distinguishable from those at hand and thus, the Court is not persuaded that the holding supports plaintiffs' claims herein. To the extent plaintiffs seek monetary relief against defendants acting in their official capacity as agents of the State, such claims are barred by the Eleventh Amendment. See Fulton v. Goord, 591 F.3d 37, 45 (2d Cir. 2009) (holding that "in a suit against state officials in their official capacities, ...


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