February 14, 2020

Determining if benefits set out in a collective bargaining agreement survive the expiration of the agreement

Seven villages entered into "Joint Police Protection Contract" [SVC] establishing a joint police protective service. The SVC was valid for a five-year period and provided that, upon its expiration or upon a village's withdrawal therefrom, each village "remain[ed] obligated to pay its respective pro rata share ... after expiration or withdrawal." It was further provided that such "costs, liabilities and obligations shall include earned termination benefits as described in relevant sections of collective bargaining agreements [CBA] ...."  that provided for certain retiree health insurance benefits, hereinafter referred to as the "2006 agreement." 

Subsequently one village [Respondent] withdrew from the arrangement effective May 31, 2012 and formed its own police force while the remaining six villages [Plaintiffs] extended the SVC for one year, and then executed a new Six Village SVC.

Plaintiffs commenced this action against Respondent to recover damages for an alleged breach of contract, seeking, as its first cause of action, to recover the present value of Respondent's pro rata share of future retiree health care benefits incurred prior to the SVC expiration date, but paid or becoming due after the CBA's expiration date. Plaintiffs moved for summary judgment but Supreme Court granted Respondent's cross motion for summary judgment dismissing that portion of Plaintiff's first cause of action that involved future retiree health care benefits for any time period after May 31, 2012. 

The Appellate Division said the Respondent's met its prima facie burden for summary judgment, dismissing so much of Plaintiff's first cause of action as sought to recover future retiree health care benefits "to the extent such costs are attributable for any time period after its withdrawal from the SVC." The court explained that "As a general rule, contractual rights and obligations do not survive beyond the termination of a collective bargaining agreement." In contrast, opined the Appellate Division, "[r]ights which accrued or vested under the collective bargaining agreement will, as a general rule, survive termination of the agreement".

Further, said the court, although a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms, in determining whether a CBA creates a vested right to future benefits, "courts should not construe ambiguous writings to create lifetime promises" and when a contract is silent as to the duration of retiree benefits, "a court may not infer that the parties intended those benefits to vest for life."

Here, said the Appellate Division, the primary question was whether, by the terms of the controlling SVC, Respondent obligated itself to contribute to the cost of providing health benefits for retired police officers pursuant to the 2006 CBA. As the 2006 CBA is silent as to the duration of the health benefits promised therein, it must be assumed that those benefits were promised only until the expiration of the 2006 agreement. In the words of the Appellate Division, "[a]lthough the parties and the PBA were certainly free to negotiate for continued, enhanced, or reduced benefits in future CBAs," nothing contained in the text of the subsequent CBAs commits Respondent to the payment of any of the benefits in question upon the termination of the 2006 CBA."

Citing Kolbe v Tibbetts, 22 NY3d at page 353, the Appellate Division noted that CBA language in Kolbe provided for retiree benefits "that continued beyond the expiration of the CBA", explaining that the relevant language in the Kolbe CBA provided that "[t]he coverage provided [in retirement] shall be the coverage which is in effect for the unit at such time as the employee retires". 

As there is no comparable language guaranteeing the same level of benefits beyond the expiration of the 2006 CBA, the health care benefits at issue in the instant litigation did not survive beyond the expiration of the 2006 CBA. Further, the fact that Plaintiffs and the PBA may have bargained for equivalent benefits in future CBAs is irrelevant to the discrete issue of Respondent's liability to Plaintiffs under any subsequent SVC. 

Finding that Respondent established, prima facie, that it was not liable for health care benefits beyond the expiration of the 2006 CBA, the Appellate Division sustained Supreme Court's ruling dismissing so much of Petitioner's first cause of action as sought to recover future retiree health care benefits for any time period commencing after May 31, 2012.

The decision is posted on the Internet at: