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Bransten v. State

New York Court of Appeals

November 21, 2017

Eileen Bransten, & c., et al., Respondents,
v.
State of New York, Appellant.

          Judith N. Vale, for appellant.

          Alan M. Klinger, for respondents.

          PER CURIAM.

         The issue presented on this appeal is whether Civil Service Law § 167 (8), as amended, authorizing a reduction of the State's contribution to health insurance benefits for State employees, including members of the State judiciary, violates the Judicial Compensation Clause of the State Constitution (NY Const, art VI, § 25 [a]). We conclude the State's contribution is not judicial compensation protected from direct diminution by the Compensation Clause, and the reductions in contributions do not have the effect of singling out the judiciary for disadvantageous treatment. Therefore, plaintiffs' constitutional challenge fails.

         I. Statutory and Regulatory Background

         State employees, including members of the judiciary, are eligible to participate in health insurance plans that are paid, in part, by the State's contributions towards insurance premiums (Civil Service Law §§ 161, 167; see Governor's Mem, Bill Jacket, L 1956, ch 461 at 3). Participation is optional and the choice of which insurance to purchase is within the sole discretion of employees.

         In 2011, facing a budget crisis, the Legislature negotiated with State-employee unions to avoid layoffs in exchange for a percentage reduction to the State's premium contributions, as well as salary freezes and unpaid furloughs. Thereafter, the Legislature amended Civil Service Law § 167 (8) to authorize the Civil Service Commission to make these reductions for nearly all State employees and retirees. These changes also applied to unrepresented State employees and retirees not involved in negotiations, including approximately 1, 200 judges, [1] and over 12, 000 "managerial" or "confidential" employees. At the time, the changes did not apply to members of unions who had not agreed to modify their collective bargaining agreement, but those employees were subject to layoffs (4 NYCRR 73.12) [2]. The implementing regulations, effective October 1, 2011, provided for a two to six percentage point reduction in the State's health care contributions, depending on the employee's salary grade (4 NYCRR 73.3 [b]). Judges are not assigned salary grades, but all Supreme Court Justices receive a salary above "salary grade 10, " and therefore the State reduced its premium contribution from 90 percent to 84 percent for judges who elect to enroll in the State's health insurance plan, and for judges who retired after January 1, 2012. The regulations also reduced the State's contribution for employees who elected to participate in the State plan and retired between January 1, 1983 and January 1, 2012 from 90 to 88 percent of the cost of coverage (4 NYCRR 73.3 [b]).

         II. Plaintiffs' Action

         Plaintiffs are 13 named current and retired Justices of Supreme Court, the Association of Justices of the Supreme Court of the State of New York, and the Supreme Court Justices Association of the City of New York. Plaintiffs filed suit against the State seeking a declaratory judgment that the statute that authorizes the reduction in contributions towards health insurance premiums, Civil Service Law § 167 (8), violates the Compensation Clause of the New York State Constitution, and appropriate injunctive relief.

         Supreme Court denied the State's motion to dismiss for failure to state a claim pursuant to CPLR 3211 (a) (7). On the State's appeal from this interlocutory order, the Appellate Division affirmed, holding that compensation includes health insurance benefits, and that the decrease in the State's contribution level discriminates against judges because, unlike public-sector unionized employees, judges cannot collectively bargain to obtain compensation for the reduction in the State's contributions (Bransten v State, 117 A.D.3d 455');">117 A.D.3d 455 [1st Dept 2014]).

         The parties subsequently cross-moved for summary judgment. Supreme Court denied the State's motion and granted the plaintiffs' to the extent of declaring Civil Service Law § 167 (8) and its implementing regulations unconstitutional as applied to members of the judiciary (Bransten v State of New York, 2015 WL 1331265 [Sup Ct, New York County 2015]). The State appealed to this Court as of right directly from Supreme Court's judgment pursuant to CPLR 5601 (b) (2) . [3]

         III. Judicial Compensation Clause Salutary Purpose

         Article VI, section 25 of the New York State Constitution provides that the compensation of State sitting and retired judges: "shall be established by law and shall not be diminished during the term of office for which [a judge] was elected or appointed." The term "compensation" is not defined in the Constitution, but its meaning is inextricably tied to the purpose of the Compensation Clause, which is "to promote judicial independence" and, relatedly, to "ensure that the pay of prospective judges, who choose to leave their practices or other legal positions for the bench will not diminish" (Matter of Maron v Silver, 14 N.Y.3d 230, 250 [2010], citing United States v Will, 449 U.S. 200, 221 [1980]).

         Historically, the focus of the Compensation Clause has been to protect against the danger of external control over judicial pay as a means by which to exert influence over the judiciary. "[T]he Legislature was precluded from diminishing salaries in recognition of the risk that salary manipulation might be used as a tool to retaliate for unpopular judicial decisions" (Matter of Maron, 14 N.Y.3d at 252). As with the similar prohibition contained in the federal Compensation Clause, the anti-diminution language was intended to protect judges from the corruptive force of financial uncertainty, in order to maintain an able and independent judiciary, free of coercion from the other branches (see U.S. Const, art III, § 1 [judges' compensation "shall not be diminished during their Continuance in Office"]; Matter of Maron, 14 N.Y.3d at 250 [purpose of State clause is same as federal clause: to promote judicial independence]; Will, 449 U.S. at 218-220 [framers of federal constitution made certain the compensation of judges was protected from one of the evils that brought about the Revolution]; United States v Hatter, 532 U.S. 557, 568-569 [2001] [founders recognized importance of protecting judiciary from financial dependence on legislature]).

         To that end, and as this Court explained in Matter of Maron, the legislature may not enact laws that directly diminish judicial compensation or accomplish the same result by singling out judges for disadvantageous treatment that indirectly diminishes their pay (14 N.Y.3d at 252-54; see also Hatter, 532 U.S. at 571). Thus, plaintiffs may establish a Compensation Clause violation here by demonstrating that the State's reduced contribution to their health insurance premiums: 1) is a direct diminishment of their compensation; or 2) is an indirect diminishment that targets judges for disadvantageous treatment.

         IV. Prohibition on Direct Diminution in Judicial Compensation

         Under our case law, protected judicial "compensation, " as that term is used in the Compensation Clause, refers to a judge's salary and any additional monies that serve as a permanent remuneration for costs necessarily incurred in fulfillment of a judge's judicial obligations. So, for example, in People ex rel. Bockes v Wemple (115 NY 302, 310 [1889]), the Court held that the legislature had increased judicial compensation by providing a fixed amount "'in lieu of' expenses ... to compensate [the judge] further for what the office entailed... in the way of duties and work." The Court further explained that "the intention of the legislature was to make a permanent addition to the stated salary, which should be beyond the power of subsequent legislatures to affect" (id.). Similarly, in Gilbert v Board of Supervisors of County of Kings (136 NY 180, 185 [1892]), the Court recognized that "the word compensation... was understood to mean salary of the judge as such, and the allowance for expenses." Notably, the Court distinguished between compensation within the meaning of the Constitution - what the Court described as the salary set for judges in their role as sitting judges - and a discretionary allowance set by a municipality or board for a judge's local service as a Commissioner of Jurors (see id. at 185-186; see also Bockes at 309-310). From these cases the two essential characteristics of constitutionally-protected judicial compensation can be gleaned: the remunerative purpose and the permanence of the legislative allotment. [4]

         The health care contribution at issue here exhibits neither of these characteristics. It is not part of a judicial salary or a permanent remuneration for expenses necessarily incurred in fulfillment of judicial obligations. Nevertheless, plaintiffs argue that compensation means anything of value provided by an employer and includes health care benefits, as they "are an integrated part of the compensation package provided to State employees and Judges." While plaintiffs are correct that the State pays a percentage of premiums for those employees who choose to participate in a State subsidized health care plan, that fact does not transform the State's contribution into judicial compensation within the meaning of our State Constitution. This Court has previously recognized that compensation for constitutional purposes has a unique and historical purpose (see Bockes, 115 NY at 306-307; Gilbert, 136 NY at 184-185).

         Indeed, plaintiffs are unable to point to anywhere in the legislative schema where the State's contribution is referred to as "compensation." In fact, Chapter 567 of the Laws of 2010, which created the Special Commission on Judicial Compensation, states that the Commission's purpose was to "examine, evaluate and make recommendations with respect to adequate levels of compensation and non-salary benefits for judges and justices of the state-paid courts of the unified court system" (emphasis added). This suggests that, contrary to plaintiffs' argument, judges' health care benefits are distinct from judicial compensation.

         Nor does the State's expansion of the class of benefits available to its employees, including judges, provide clear indication that the Legislature intended for its contribution towards premiums to be treated as a permanent addition to a judicial salary, whether as part of a judge's pay or as a fixed amount in lieu of expenses. In fact, since the Legislature created a centralized State health insurance fund in 1956 (see Civil Service Law § 167 [6]), the State has, on occasion, adjusted the costs and benefits afforded to State employees who have opted into the program by, for example, increasing employees' annual deductibles or changing the amounts employees must pay for out-of-network services. Notably, the State's contribution to employee health insurance premiums have been changed before, dropping from 100 percent in 1967 to 90 percent in 1983 (Civil Service Law § 167 [1] [a]; see also L 1983, ch 14). Plaintiffs concede that the State is not required to keep pace with increasing health care costs, which undermines their argument that maintaining the level of State subsidy is necessary to avoid constitutionally impermissible diminution of judicial compensation. Tellingly, "the whole matter" of choosing a health plan - or whether to participate in one at all - is left to the employee (cf. Gilbert, 136 NY at 185 [additional payment for serving as County Commissioner of Jurors is not compensation for constitutional purposes where the whole matter was left to the discretion of the county's board of supervisors]).

         Plaintiffs' approach also lacks a standard by which to distinguish between constitutionally protected compensation and any amount of monies provided directly to judges or as a discount for other costs. For plaintiffs, compensation would include even those items that have an indisputably indirect impact on salary, as, for example, parking privileges, discounts in a cafeteria, or even free coffee and bagels in a communal kitchen. As these examples illustrate, adopting plaintiffs' position renders meaningless "compensation" as a constitutional term of art. It would also leave us without any standard by which to guide future decisions.

         Significantly, the challenged percentage reduction in the State's contribution does not jeopardize judicial independence - the essential evil that the Compensation Clause is intended to address (see Matter of Maron, 14 N.Y.3d at 252). Granted, health care benefits may be valuable to an employee, but the percentage reduction to the State's contribution is not equivalent to the base salary upon which a judge subsists, and which, if tampered with, "amounts to a power over a [person's] will" (Will, 449 U.S. at 218; Hatter, 532 U.S. at 568, quoting Alexander Hamilton, Federalist No. 79, at 472; see also Matter of Maron, 14 N.Y.3d at 252) [5]. Simply put, the Compensation Clause uses proscriptive language to ensure that a judge will not hesitate to make a decision for fear that the outcome puts the judge's livelihood in jeopardy.

         While the reduction in the State's contributions to the costs of health insurance premiums would increase a participating judge's share of the cost associated with the chosen health care plan, such an increase is not the equivalent of a direct reduction in judicial compensation. It is a cost that is voluntarily assumed by the participating judges, and affects salary only indirectly as the judge must make up the difference.

         V. Indirect Effect of Discrimination Against Judges

         Plaintiffs argue that even if the reduction in State contributions towards judges' health care premiums does not reflect a direct diminution of their compensation, the amendment to section 167 (8) nevertheless indirectly diminishes their compensation and unconstitutionally discriminates against judges, and is therefore still unconstitutional under the United States Supreme Court's Hatter framework. The plaintiffs maintain that the amendment to section 167 (8) treats judges worse than other State employees who were able to negotiate benefits in exchange for the premium contribution reductions, or even opt out from the reduction entirely. They argue the legislation is similar to a law struck down as violative of the federal Compensation Clause in Hatter.

         As we have done in the past, we apply the analysis of Hatter - that a cost increase that indirectly affects judicial compensation is not unconstitutional, so long as the increase does not target judges for disadvantageous treatment - and we conclude that the State law is not the type of legislatively targeted discrimination impermissible under our Judicial Compensation Clause (Matter of Maron, 14 N.Y.3d at 255-256 [applying Hatter to freeze on judicial salaries challenged in companion case Chief Judge of State v Governor of State ]). In Hatter, the Supreme Court interpreted the federal Compensation Clause, with its similar purpose and language to the State Clause, when evaluating Medicaid and Social Security taxes collected from federal judges. The Court concluded the Medicaid tax was constitutional because it was a general tax burden borne by all citizens, and no compelling reason existed why judges should not share in such a nondiscriminatory tax. As the Court explained, "the likelihood that a nondiscriminatory tax represents a disguised legislative effort to influence the judicial will is virtually ...


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