The City of White Plains [the City] adopted an ordinance in 2010 that terminated the City's paying 100 percent of the premiums for health insurance on behalf of its retired police officers, requiring the retired officer to pay the difference, if any, between 85 percent of the cost of the premium for participation in the New York State Empire Health Insurance Program and the full premium for the health insurance plan in which the retired officer was enrolled.
Retired police officers appointed prior to July 1, 1995 and who had retired prior to May 24, 2010 [Retirees], contending that the ordinance violated Contracts Clause of the United States Constitution, Article I, Section 10, and the Equal Protection Clause of the Fourteenth Amendment, brought an action in federal district court challenging the City's action.
The federal district court granting summary judgment in favor of the City and the other municipal defendants named in the action and the Retirees appealed. The United States Circuit Court of Appeals, Second Circuit, affirmed the district court's ruling.
Addressing the Retirees' "Contracts Clause" claim, the court said that the Retirees argue that the City’s 2010 Ordinance violates the Constitution's Contracts Clause because "their collective bargaining agreement [CBA] guaranteed that the City would pay the full cost of their health insurance premiums. However, said the Circuit Court, "this claim fails because [the Retirees] have forfeited any argument that the 2010 Ordinance constitutes an impairment, rather than a contractual breach." Further, said the court, the Retirees "also failed to contradict record evidence provided by the City that the 2010 Ordinance served a significant public purpose or that any contractual impairment of that guarantee was reasonable and necessary to effectuate that purpose."
Citing Buffalo Teachers, 464 F.3d at 369, the court noted that that it had held that “the legislative interest in addressing a fiscal emergency is a legitimate public interest” and, at most, the Retirees "dispute that the City was in a “real fiscal emergency.”
As the District Court explained, "the City provided substantial unrebutted evidence that the 2010 Ordinance was passed to address a serious budget shortfall and impending credit downgrade caused by the global financial crisis that started in 2008 and, for the City, worsened considerably as of 2010 and the Circuit Court said it agreed "with the District Court that any alleged impairment caused by the 2010 Ordinance to address the City’s fiscal emergency was reasonable and necessary—a conclusion that the appellants in any event do not challenge on appeal.*
Addressing the Retirees' Equal Protection Claim, the Circuit Court noted that the Retirees were all retired at the time the 2012–2018 collective bargaining agreement between the City and the representative of police officers then in service was executed and, agreeing with the district court, said that the Retirees were not similarly situated to active employees who could participate in collective bargaining, affirmed the dismissal of the Retirees’ equal protection claim.**
* The decision notes that City "presented ample evidence that it passed the 2010 Ordinance only after pursuing a range of measures to increase revenue and cut expenses" and although New York law permitted the City to require the appellants to contribute up to 50 percent of the premium amount, the 2010 Ordinance required the Retirees to contribute substantially less.
** In McDonald PBA v City of Geneva, Ct. of Appeals, 92 N.Y.2d 326, the Court of Appeals ruled that in the absence of a Taylor Law contract providing otherwise, a municipality’s past practice does not demonstrate any right to compel the municipality to continue providing the same level of health benefits to its retirees as it has in the past.
The decision is posted on the Internet at: