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September 19, 2016

Applying the principles of statutory construction in the course of litigation

Applying the principles of statutory construction in the course of litigation
Carver v Nassau County Interim Fin. Auth., 2016 NY Slip Op 05995, Appellate Division, Second Department [Decided with Donohue v Nassau County Interim Fin. Auth., 2016 NY Slip Op 05996, Appellate Division, Second Department]

In 2000, the County of Nassau was in the grip of a fiscal crisis involving a $2.7 billion debt. In response, the State Legislature created the Nassau County Interim Finance Authority [NIFA].*NIFA was created as a public benefit corporation to oversee the County's finances and created three periods of oversight: [1] an initial "interim finance period," [2] an ensuing period of "monitoring and review," and, when triggered by fiscal decline as defined in the Act, [3] a "control period" to restore fiscal balance.

On January 26, 2011, NIFA ordered a control period upon projecting a substantial budget deficit during which it imposed successive wage freezes upon County employees. A number of employee organizations representing employees in several collective bargaining units challenged NIFA’s imposition of these wage freezes.**

Ultimately the merits of the contention that NIFA was not granted statutory authority to extend the wage freezes beyond the interim finance period, which expired in 2008, was considered by Supreme Court in a proceeding pursuant to CPLR Article 78. The employee organizations sought a court order annulling and vacating certain resolutions adopted by NIFA and an order compelling compliance with salary provision set out in the relevant collective bargaining agreements.

In so doing, the plaintiffs relied on relied on Public Authorities Law §3669(3)(a), which provides, in relevant part:

"3. Authorization for wage freeze.

"(a) During a control period, upon a finding by the authority that a wage freeze is essential to the adoption or maintenance of a county budget or a financial plan that is in compliance with this title, the authority, after enactment of a resolution so finding, may declare a fiscal crisis. Upon making such a declaration, the authority shall be empowered to order that all increases in salary or wages of employees of the county and employees of covered organizations which will take effect after the date of the order pursuant to collective bargaining agreements, other analogous contracts or interest arbitration awards, now in existence or hereafter entered into, requiring such salary increases as of any date thereafter are suspended. Such order may also provide that all increased payments for holiday and vacation differentials, shift differentials, salary adjustments according to plan and step-ups or increments for employees of the county and employees of covered organizations which will take effect after the date of the order pursuant to collective bargaining agreements, other analogous contracts or interest arbitration awards requiring such increased payments as of any date thereafter are, in the same manner, suspended. . . . The suspensions authorized hereunder shall continue until one year after the date of the order and, to the extent of any determination of the authority that a continuation of such suspensions, to a date specified by the authority, is necessary in order to achieve the objectives of the financial plan, such suspensions shall be continued to the date specified by the authority, which date shall in no event be later than the end of the interim finance period, provided that such suspensions shall terminate with respect to employees who have agreed to a deferral of salary or wage increase upon the certification of the agreement by the authority pursuant to paragraph (b) of this subdivision"(emphasis supplied by the court in its decision).

Supreme Court denied the petition and dismissed the proceeding. The Appellate Division sustained the lower court’s rulings.

Citing Sabot v Lavine, 42 NY2d 1068, the Appellate Division explained that to address the plaintiffs’ argument “the familiar principles of statutory construction” must be applied whereby "Any statute or regulation . . . must be interpreted and enforced in a reasonable ... manner in accordance with its manifest intent and purpose." The court then set out the following test to be considered by courts with respect to determining “legislative intent:”

1. “A statutory interpretation that is ‘contrary to the dictates of reason or leads to unreasonable results is presumed to be against the legislative intent’;

2. “When presented with a question of statutory interpretation, [the court's] primary consideration is to ascertain and give effect to the intention of the Legislature;

3. "The clearest indicator of legislative intent is the statutory text, ‘the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof’;

4. “A further fundamental rule of statutory construction when construing statutes under the same legislative act is that the court must ‘take the entire act into consideration, or look to the act as a whole, and all sections of a law must be read together to determine its fair meaning’; and

5. "A court should avoid a statutory interpretation rendering the provision meaningless or defeating its apparent purpose."

Applying these principles to the above-quoted section of the NIFA Act, as well as the NIFA Act's requirement that it "shall be liberally construed to assist the effectuation of the public purposes furthered hereby," the Appellate Division found that, contrary to the petitioners' contention, the Supreme Court correctly determined that NIFA was authorized under the NIFA Act to impose the challenged wage freezes.

Public Authorities Law §3669(3), said the court, expressly provides for NIFA's authority to declare a control period by adopting a resolution finding a fiscal crisis, and upon such finding, order that all increases in salary or wages of county employees be suspended. Further, noted the court, the Act provided that NIFA may be declared control periods "at any time."

Although the petitioners argued that other language in Public Authorities Law §3669(3) confines wage freeze authority to the interim finance period alone, the Appellate Division said that the petitioners had ignored the fact “that wage freeze authority was placed in a statutory section entitled "Control Period." The plain language preceding the use of the term "interim finance period" in that section by the Legislature clearly and unequivocally conferred wage freeze authority upon NIFA during control periods.

In the words of the court, … “petitioners' reliance upon certain language of Public Authorities Law §3669(3) that references the interim finance period is misplaced, as that language is followed by a ‘provided’ qualifier that does not apply here.” Further, petitioners’ construction of §3669(3) conflicts with the meaning of the statute as a whole, as well as with the Legislature's expressed intent that NIFA be vested with recognized tools for dealing with ongoing fiscal crises.

Accordingly, the Appellate Division concluded that NIFA and the County respondents established their objections in point of law and held that Supreme Court properly, in effect, denied the petition and dismissed the proceeding.

* Public Authorities Law §§3650-3672.

** The decision sets out in some detail the procedural actions taken by the parties in advancing their respective claims.

The decision in Carver v Nassau County Interim Fin. Auth is set out on the Internet at:

The decision in Donohue v Nassau County Interim Fin. Auth. is set out on the Internet at:

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