Plaintiffs in this action are teachers who retired from their positions with the Central School District [District] in June 2011 and who at the time they retired were covered by the provisions set out in "an expired collective bargaining agreement" [CBA] between the Teachers Association [Association] and the District.
That CBA had "expired" on June 30, 2010 [Former CBA]. A successor CBA [Successor CBA] between the DTA and the District was ratified in October 2013 and its provisions were made applicable retroactively effective July 1, 2010.
The Former CBA provided, among other things, that the District would pay 100% of the health insurance premiums for health insurance coverage for retired employees and their dependents. The Successor CBA between the DTA and the District was ratified in October 2013 and no longer provided that the District would pay 100% of the health insurance premiums for such coverage for retired employees and their dependents. Rather the Successor CBA required certain employee contributions for health insurance premiums for both individual and dependent coverages.
That CBA had "expired" on June 30, 2010 [Former CBA]. A successor CBA [Successor CBA] between the DTA and the District was ratified in October 2013 and its provisions were made applicable retroactively effective July 1, 2010.
The Former CBA provided, among other things, that the District would pay 100% of the health insurance premiums for health insurance coverage for retired employees and their dependents. The Successor CBA between the DTA and the District was ratified in October 2013 and no longer provided that the District would pay 100% of the health insurance premiums for such coverage for retired employees and their dependents. Rather the Successor CBA required certain employee contributions for health insurance premiums for both individual and dependent coverages.
In January 2014, Plaintiffs individually submitted verified claims to the District stating that their vested contract rights had been violated when they were required to pay five percent of the required health insurance premium for coverage and in October 2014 commenced this action, contending that the Former CBA, rather than the Successor CBA, controlled with respect to their health insurance premium costs in retirement for individual and dependent coverage.
Ultimately Supreme Court, among other things, granted Plaintiffs' motions for summary judgment, finding that the Former CBA was still effective at the time that Plaintiffs had retired and that there was no evidence that they waived their retiree health insurance benefits under the Former CBA. The District appealed the Supreme Court's ruling.
Observing that "the essential facts are not in dispute," the Appellate Division said "this case presents questions of law" — specifically:
1. What health insurance provisions apply to plaintiffs — the Former CBA or the Successor CBA; and
2. Whether Plaintiffs' health insurance rights vested under the Former CBA.
Noting that Civil Service Law §209-a (1) (e), the so-called Taylor Law, "requires an employer to continue all the terms of an expired CBA while a new agreement is being negotiated," the Appellate Division opined that "the assumption is that all terms of a CBA remain in effect during collective bargaining of a successor agreement," citing Matter of City of Yonkers v Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 20 NY3d 651.
Although the court said that typically "contractual rights and obligations do not survive beyond the termination of a [CBA], rights which accrued or vested under the [old CBA] will, as a general rule, survive termination of the [old CBA]."* Thus courts "must look to well-established principles of contract interpretation to determine whether the parties intended that the contract give rise to a vested right."
While a court when determining whether a CBA creates a vested right to future benefits should not construe ambiguous writings to create lifetime promises, when an agreement is ambiguous or subject to more than one interpretation is it appropriate for the court to consider extrinsic evidence to determine the parties' intent and "it is logical to assume [from the absence of any such durational language of how long retirees will receive benefits] that the bargaining unit intended to insulate retirees from losing important insurance rights during subsequent negotiations by using language in each and every contract which fixed their rights to coverage as of the time they retired."
The Appellate Division decided that Supreme Court properly found that, pursuant to Civil Service Law §209-a(1), because the Successor CBA had not yet been ratified at the time Plaintiffs retired, the terms of the Former CBA remained in effect pending the negotiation and ratification of the Successor CBA. Accordingly, the question turns to whether Plaintiffs' contractual rights vested under the Former CBA survived its termination.
Finding that the language in the Former CBA was ambiguous, the Appellate Division said that this "permits this Court to look outside the contract to extrinsic evidence to discover the intent behind this provision of the Former CBA and in this instance the evidence adduced "supports the conclusion that it was the District's intent to provide full coverage for retired employees such as Plaintiffs."**
The court also noted that retirees were not permitted to vote in the ratification of the Successor CBA process and that such an absence of voting rights "further indicates that [the District] intended to protect Plaintiffs from losing their health insurance benefits," and concluded that Plaintiffs' rights vested under the Former CBA and survived its termination.
Finally, the Appellate Division said it was "unpersuaded by [the District's] contention that Plaintiffs waived their health insurance rights under the Former CBA" as they ratified the Successor CBA by their receipt and retaining retroactive pay in 2014 for the 2010-2011 school year, and the Successor CBA contained a clause making it applicable retroactively. Indeed, said the court, the record indicates that Plaintiffs had been making their health insurance premium payments under protest and had told the District that acceptance of such retroactive salary payments would not constitute such a waiver.
Supreme Court, said the Appellate Division, properly inferred that it was not Petitioner's intention to waive the benefits provided them under the Former CBA*** and thus Supreme Court properly granted Plaintiffs' motions for summary judgment and denied the District's motion for summary judgment.
* See Kolbe v Tibbetts, 22 NY3d 344.
** The District's amended response to a Plaintiff's demand for interrogatories stated the it interpreted the language "district participation rate in effect of 1/1/84" "to refer to those employees who retire under the [Former CBA] receiving the same benefit as employees who were retired as of 1/1/84."
*** The Appellate Division said that one of the Petitioners had "made clear in her letter of resignation, she had an agreement with [the District] that she would receive the retroactive [salary] payment while retaining the [health insurance] benefits of the old CBA."
The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_02843.htm