The opinion of the court was delivered by: Acosta, J.
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law Â§ 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
David Friedman,J.P. John W. Sweeny, Jr. Rolando T. Acosta Sallie Manzanet-Daniels, JJ. Index
Defendants/respondents appeal from the order of the Supreme Court, New York County (Carol Robinson Edmead, J.), entered January 20, 2012, which, insofar as appealed from as limited by the briefs, granted plaintiffs/petitioners' motion for partial summary judgment declaring defendant-respondent City of New York to be in violation of Retirement and Social Security Law Â§ 480(b)(I) and (ii) by failing to contribute required amounts to the pensions of members of the New York City Police Pension Fund and the New York City Fire Department Pension Fund who are in Tier III of the City's pension system, and granted defendants' motion to dismiss plaintiffs' second, third, and fifth causes of action.
The primary issue before the Court is whether the City of New York's decision to not apply an increased-take-home-pay (ITHP) benefit to police officers and firefighters placed into Tier III of the retirement system after July 1, 2009, and to continue deducting 3% of their wages towards their retirement benefits, violates Retirement and Social Security Law (RSSL) Â§ 440(b). We hold that it does. We also hold that plaintiffs sufficiently stated a cause of action for common-law conversion of the deducted wages.
All City and State Employees, including New York City police officers, hired before July 1, 1973, were placed into a retirement system referred to as "Tier I." As a general matter, public employees hired between July 1, 1973 and July 1, 1976 were placed into Tier II (see generally RSSL art 11, Â§ 440-451). Most public employees hired between 1976 and 1983 were placed into Tier III (see RSSL art 14, Â§Â§ 500-520). Tier II retirement benefits have a pension component and an annuity component (see RSSL Â§Â§ 441[b][c]). Tier III has a pension benefit, but no annuity component (see RSSL Â§Â§ 504; 505).[*fn1]
While most public employees hired after 1976 were placed, successively, into Tiers III and IV, until July 1, 2009, the Legislature repeatedly extended Tier II for police officers. The City has placed police officers hired after July 1, 2009, into Tier III, rather than Tier II.
Tier II police officers make individual pension contributions ranging from 4.3% to 8.65% of their pay, depending on their age at the time they were hired. By contrast, police officers in Tier III make individual pension contributions at a fixed rate of 3% of their pay.
In 1963, as a result of contract negotiations with police unions, the City implemented "Pensions-for-increased-take-home-pay (ITHP) (see Administrative Code of City of NY Â§ 13-226). ITHP increased officers' take-home pay by having the City contribute a portion of each officer's required pension contributions. From 1963 to 1966, the City contributed 2.5% towards all police officers' pensions. In 1967, the Legislature increased the City's ITHP contribution rate to 5%, where it remained until 1975 (see Administrative Code Â§ 13-226[a]).
In 1974, the Legislature shifted the ITHP codification from the New York City Administrative Code to the Retirement and Social Security Law (see RSSL Â§ 480[a]). During the fiscal crisis of 1976, the Legislature reduced the City's ITHP contribution rate from 5% to 2.5% (see RSSL Â§ 480[b][i]). In June 2000, the City and the Municipal Labor Committee entered into an agreement entitled "Agreement on Jointly Supported Pension Enhancements" (MLC Agreement). The parties to the MLC Agreement agreed to support implementation of certain actuarial methods that would generate savings for the City. In exchange, the City agreed to support specifically identified pending legislation that ...