In the Matter of City of Yonkers, Respondent,v.Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, Appellant.BriefN.Y.February 13, 2013To be Argued by: RICHARD S. CORENTHAL (Time Requested: 30 Minutes) Westchester County Clerk’s Index No. 28797/10 Court of Appeals of the State of New York In the Matter of the Application of CITY OF YONKERS, Petitioner-Respondent, For a Decision and Order Pursuant to Article 75 of the Civil Practice Law and Rules - against - YONKERS FIRE FIGHTERS, LOCAL 628, IAFF, AFL-CIO, Respondent-Appellant. BRIEF FOR RESPONDENT-APPELLANT MEYER, SUOZZI, ENGLISH & KLEIN, P.C. Attorneys for Respondent-Appellant 1350 Broadway, Suite 501 New York, New York 10018 Tel.: (212) 239-4999 Fax: (212) 239-1311 Date Completed: July 2, 2012 TABLE OF CONTENTS Page(s) INTRODUCTION ..................................................................................................... 1 QUESTIONS PRESENTED FOR REVIEW ............................................................ 3 JURISDICTIONAL STATEMENT .......................................................................... 3 PROCEDURAL HISTORY ...................................................................................... 3 ARGUMENT ............................................................................................................ 9 I. NEW YORK STATE COURTS FAVOR ARBITRATION AND DISCOURAGE JUDICIAL INTERFERENCE ............................................. 9 II. THE CBA IS STILL IN EFFECT PURSUANT TO CIVIL SERVICE LAW § 209-a( 1 )(e), THE TRIBOROUGH LAW AND TIER 5 LEGIS LA TlON ..................................................................... 15 a. According to New York State Court of Appeals' Case Law, the Parties' CBA Is Still In Effect ......................................... 15 b. The Triborough Law, According to its Legislative History, Was Enacted To Strengthen Public Sector Unions And Provide Them With a Level Playing Field ......................................................................................................... 20 c. Rules of Statutory Construction Support Appellant's Interpretation of the Tier 5 Legislation ................................ 24 III. AFFIRMING THE APPELLATE DIVISION, SECOND DEPARTMENT'S DECISION WILL RESULT IN AN UNCONSTITUTIONAL IMPAIRMENT OF CONTRACT ....................... 26 IV.THE APPELLATE DIVISION, SECOND DEPARTMENT INCORRECTLY HELD THAT ARITRA TION OF THIS GRIEVANCE IS BARRED BY STATUTE ................................................ 34 a. New York Civil Service Law § 201 ( 4) Is Not Applicable to this Matter and Does Not Require That A Stay of Arbitration Be Issued ............................................................................... 35 b. RSSL § 470 Is Not Applicable to this Matter and Does Not Require That A Stay of Arbitration Be Issued ........................................ 40 CONCLUSION ....................................................................................................... 45 11 TABLE OF AUTHORITIES CASES AFSCME, Loca/2957 v. City of Benton, 513 F.3d 874 (8th Cir. 2008) ......................................................................... 30-32 Association of Surrogates and Supreme Court Reporters Within the City of New York v. State of New York. v / 79 N.Y.2d 39 (1992) ................................................................................... Passim Association of Surrogates and Supreme Court Reporters Within the City of New York v. State of New York, 940 F.2d 766 (2d Cir. 1991) .......................................................................... 28-30 Baltimore Tchrs. Un. v. Mayor of Baltimore, 6 F.3d 1012 (4th Cir. 1993) ................................................................................ 32 Board of Cooperative Educational Servs. of Rockland County v. New York State PERB, 71 N.Y.2d 753 (1977) ........................................................................................ 19 Board of Education of Dover UFSD v. Dover-Wingdale Teachers' Ass 'n, 61 N.Y.2d 913 (1984) ........................................................................................ 11 Board of Education v. Associated Teachers of Huntington, Inc., 30 N.Y.2d 122 (1972) ........................................................................................ 10 Board of Education v. Yonkers Federation ofTeachers, 40 N.Y.2d 268 (1976) ........................................................................................ 10 Chiles v. United Faculty ofF/a., 615 So.2d 671 (Fla. 1993) .................................................................................. 28 Civil Service Employees Association, Inc., Niagara Chapter & Town of ... lVlagara, 14 PERB 3049 (1981) ................................................................................... 35-37 Cobleskill Cent. School Dist. v. Newman, 105 A.D.2d 564 (3d Dept. 1984), appeal denied, 64 N.Y.2d 1071 (1985) .. 18-20 111 Condell v. Bress, 983 F .2d 415 (2d Cir. 1995) ............................................................................... 28 County of Nassau v. New York State Public Employment Relations Bd., 151 A.D.2d 168 (2d Dept. 1989) ........................................................................ 17 Educational Employees Credit Union v. Mut. Guar. Corp., 50 F.3d 1432 (8th Cir. 1995) .............................................................................. 27 Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 u.s. 400 (1983) ........................................................................................... 27 Equipment Mfrs. Inst. v. Janklow, 300 F.3d 842 (8th Cir. 2002) .............................................................................. 27 General Motors Corp. v. Romein, 503 u.s. 181 (1992) ........................................................................................... 27 Hartnett v. Ballston Spa, 152 A.D.2d 83 (3d Dept. 1989), appeal denied, 75 N.Y.2d 711 (1990) ........... 24 In re Bd. ofEduc. of Watertown City Sch. Dist., 93 N.Y.2d 132 (1999) ........................................................................................ 12 In re City of Johnstown and Johnstown Police Benevolent Ass 'n, 99 N.Y.2d. 273 (2002) ................................................................................ passim In re Quirk v. Regan, 565 N.Y.S.2d 422 (N.Y. Sup. Ct. 1991) ............................................................ 28 In re Union Free Dist. # 15 v. Lawrence Teachers Ass 'n, 33 A.D.3d 808 (2d Dept. 2006) .......................................................................... 12 Lawrence Teachers Ass 'n. v. Lawrence Pub. Sch., 38 A.D.3d 779 (2d Dept. 2007) .......................................................................... 14 Matter of the Arbitration between City of Oswego and Oswego City Firefighters Ass 'n, Local 2 707, 93 A.D.3d 1243 (4th Dept. 2012) ............................................................... Passim Matter of the Arbitration between City of Plattsburgh and Plattsburgh Police Officers Union AFSCME Local 82, 250 A.D.2d 327 (3d Dept. 1998) ........................................................................ 4 I IV Matter of Board of Trustees v. Maplewood Teachers ' Ass 'n, 57 N.Y.2d 1025 (1982) ...................................................................................... 17 Matter of City of Long Beach v. Civil Serv. Emplys. Ass 'n, Inc. - Long Beach Unit, 8 N.Y.3d 465 (2007) ........................................................................... 42-43 Matter of County of Chautauqua v. Civil Serv. Employees, Ass 'n. Local 1000, 8 N.Y. 3d 513 (2007) .............................................................................. 42 Matter of County of Niagara v. Newman, 104 A.D.2d 1 (4th Dept 1981) ..................................................................... 20-21 Matter of Old Brookville Policemen's Benevolent Ass 'n, 16 PERB "3094 (1983) ..................................................................................... 41 Matter of Patrolmen's Benevolent Ass 'n of City ofN. Y., Inc. v. New York State Pub. Empl. Relations Bd., 6 N.Y.3d 563 (2006) ................................. 42-43 Matter of Peters v. Union-Endicott Central Sch. Dist., 77 A.D.3d 1236 (3d Dept. 2010) .................................................................. 37,40 Matter of Vill. ofF airport v. Newman, 90 A.D .2d 293 (4th Dept. 1982) ........................................................................ 3 8 Matter of Westfall v. City of Cohoes, 86 CV 817, 1988 U.S. Dist. LEXIS 6925 (N.D.N.Y. July 11, 1988) ........... 38-40 New York City Transit Authority v. Transp. Workers Union of Am., 99 N.Y.2d I (2002) ......................................................................................... 9-10 Professional Staff Congress v. New York State PERB, 7 N.Y.3d 458 (2006) .................................................................................... 16, 23 Smith v. People, 47 N.Y. 330 (1872) ....................................................................................... 24-25 Triborough Bridge & Tunnel Authority, 5 PERB, 3037 (1972) ....................................................................................... 17 United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977) ......................................................................................... 26, 29 v United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 u.s. 593 (1960) ........................................................................................... 14 United Steelworkers v. Warrior & GulfNav. Co., 363 u.s. 574 (1960) ........................................................................................ 9-10 Univ. of Haw. Prof Assembly v. Cayetano, 183 F.3d 1096 (9th Cir. 1999) ............................................................................ 28 STATUTES McKinney's Consolidated Laws ofNew York,§§ 221- 223 ........................... 24-25 N.Y. C.P.L.R. § 7503 ................................................................................................ 6 N.Y. Civil Service Law§ 200 [c] ............................................................................ 10 N.Y. Civil Service Law§ 201(4) ..................................................................... Passim N.Y. Civil Service Law§ 209-a(l)(e) .............................................................. Passim N.Y. L 2009, ch. 504, art. 22 ............................................................................ Passim N.Y. Retirement and Social Security Law, Article 22 ..................................... Passim N.Y. Retirement and Social Security Law§ 470 ............................................. Passim N.Y. Retirement and Social Security Law§ 384-d ............................................. 4, 16 N.Y. Retirement and Social Security Law§ 384-e ................................. 4, 16, 37, 41 CONSTITUTIONS N.Y. Const ............................................................................................................... 38 U.S. Const. art. 1, § 10 .............................................................................. ....... Passim OTHER AUTHORITIES Robert E. Casagrande, Steven M. Klein & Stephanie Baxter, Public Sector Bargaining in New York: Examining PERB's Sunset Doctrine In a New Light, 59 Alb. L. Rev. 481 ( 1995) ................................................................................ 20 vi Stephen F. Befort, Unilateral Alteration of Public Sector Collective Bargaining Agreements and the Contract Clause, 59 Buffalo L. Rev. 1 (2011) ............................................................................... 32 Vll INTRODUCTION The fundamental question presented to the Court in this case is narrow and straightforward, but the consequences of this Court's decision will be far-reaching. In December 2009, Chapter 504 of the New York Laws of 2009 added Article 22 to the New York Retirement and Social Security Law (hereinafter "RSSL"), which governs pension plans for public sector workers. Article 22 of the RSSL established a new Tier 5 applicable to New York State police and firefighters who joined, or will join, the RSSL on or after January 9, 2010. Tier 5 is a contributory tier wherein members are required to pay three percent (3%) of their salary to RSSL. However, the New York Legislature created an exception under Section 8 of Article 22 which states that the 3% contribution is inapplicable to collective bargaining agreements "in effect" on January 9, 2010 wherein an employer offers a non-contributory pension plan. The Triborough Law, codified as Civil Service Law § 209-a(l )(e), makes it "an improper practice for a public employer ... to refuse to continue all the terms of an expired agreement until a new agreement is negotiated." (emphasis added). As explained below, the Triborough Law, codified in 1982, expanded the application of the Triborough Doctrine by mandating that all terms of an expired public sector agreement remain in effect until a new agreement is reached, regardless of whether the subject is mandatory or permissive. Pursuant to the Triborough Law, the only way for employees to lose the protections guaranteed in Section 209-a( 1 )(e) is by striking. However, there is currently a split among New York State Appellate Division Departments over whether an expired public sector collective bargaining agreement, subject to continuation under the Triborough La\v, constitutes an agreement "in effect" which is entitled to be grandfathered under the Section 8 exception. In Matter of the Arbitration between City of Oswego and Oswego City Firefighters Ass'n., Local 2707, 93 A.D.3d 1243, 1246 (4th Dept. Mar. 16, 2012), the Fourth Department held that the: Triborough doctrine, as embodied in Civil Service Law§ 209-a( 1 )(e), [makes it] an improper practice ... 'to refuse to continue all the terms of an expired agreement until a new agreement is negotiated.' Because a new agreement between the city and the union had not yet been negotiated at the time the subject firefighters joined the PFRS [New York State Police and Fireman's Retirement System], all of the terms of the expired agreement were still in effect." (citations omitted) (emphasis added). The Fourth Department's holding directly conflicts with the ruling of the Second Department in the instant case, which held that ''the CBA [in existence pursuant to the Triborough Law], [] terminated by its own terms in June 2009, [and] was no longer 'in effect' at the time of the effective date of article 22 of the Retirement and Social Security Law, which was January 10, 201 0.'' (R. 401 ). The specific questions presented on appeaJ would guide the 2 lower courts and permit this Court to resolve the conflict between the Second and Fourth Departments. For the reasons outlined below, it is respectfully requested that this Court follow the Fourth Department's holding in City of Oswego. QUESTIONS PRESENTED FOR REVIEW • Whether the Appellate Division, Second Department erred by holding that the collective bargaining agreen1ent between the parties was no longer 'in effect'? • Whether the Appellate Division, Second Department erred by holding that arbitration of this dispute is barred by statute? JURISDICTIONAL STATEMENT The Appellate Division issued a final determination tn this case on December 27, 2011. Respondent-Respondent-Appellant Yonkers Firefighters, Local 628 IAFF, AFL-CIO, C'Appellant" or "Union'') filed a timely Notice of Motion to Appeal on February 23, 2012, which was granted by the Court of Appeals on May 3, 2012. (R. 398). PROCEDURAL HISTORY In the instant case, the arbitration arose out of a grievance alleging that Petitioner-Appellant-Respondent City of Yonkers ("Respondent" or "City") violated Article 15 (pensions) of the CBA, which states that: Members shall be entitled, pursuant to existing State law 3 and as heretofore granted by the City Council of the City of Yonkers, alternate optional retirement plans as follows: 15:01.01 - Twenty (20) year retirement plan as authorized by law with the City payment [sic] the complete cost of said pension plan, and granting an option for additional contributions thereto by the members who select this plan; and 5:01.02 - Twenty-five (25) year retirement plan with the commonly referred to 1/60th provision added thereto and to be paid for in full by the City and granting an option to the member who selects this pension plan to make additional contributions thereto. 15:01.03 - Final Average Salary The City shall adopt appropriate legislation to enact and maintain the one-year Final Average Salary Benefit pursuant to Retirement and Social Security Law sections 302(9) and 443(f) for all men1bers in the Department. (R. 49-50)( emphasis added). The plain language of the CBA, Article 15, provides that the City shall pay the full cost of pension contributions to the New York State Police and Fire Retirement System for all members of the Union. In addition, the City agreed to make available the 20 year plan (RSSL § 384-d), and the 25 year plan with the commonly referred to l/60th provision (RSSL § 384-e) to be paid in full by the City. The City's obligation in the collective bargaining agreement to pay the full amount of retirement contributions dates back to at least the 1986 collective bargaining agreement. (R.330). Pursuant to the CBA, disputes between the parties may be submitted for 4 resolution through a multi-level grievance procedure, set forth in Article 29 of the CBA. (R. 61). Unresolved grievances may be submitted for final and binding arbitration pursuant to a broad arbitration clause. (R. 61) ("In the event of a dispute between the parties to this Agreement involving the interpretation or application of any provision of this .Agreement, either party shall have the right to solve the dispute" by "submit[ting] the grievance to arbitration."). In December 2009, Chapter 504 of the New York La\VS of 2009 added Article 22, § 8 to the RSSL, which expressly provides: Notwithstanding any provision of law to the contrary, nothing in this act shall limit the eligibility of any member of an employee organization to join a special retirement plan open to him or her pursuant to a collectively negotiated agreement with any state or local government employer, where such agreement is in effect on the effective date of this act and so long as such agreement remains in effect thereafter; provided, however, that any such eligibility shall not apply upon termination of such agreement for employees otherwise subject to the provisions of article twenty-two of the retirement and social security law. (emphasis added). The City and the Union were parties to a CBA from July 1, 2002 through June 30, 2005. (R. 30-1 1 6). By Stipulation of Agreement dated April 26, 2007, the parties carried forward the terms of the CBA for the period July 1, 2005 through June 30, 2009. (R. 112-16). Pursuant to the Triborough Law1, 1 In 1982, the Triborough Doctrine was codified into law as Civil Service Law § 209- a(l)(e) (the "Triborough Law"). According to the Triborough Law, it is "an improper practice 5 codified at Civil Service Law § 209-a( 1 )(e), the current CBA between Local 628 and the City continued and was "in effect" on January 9, 2010, the effective date of Article 22. Thus, the CBA is still in effect, and both parties must comply with its terms until a new agreement is negotiated. On or about May 13, 2010, the Union filed a Charge with the New York State Public Employment Relations Board ("PERB"), Case No. U-29993 (R. 118- 22), alleging that the City "failed to continue and apply the terms of Article 15 of the CBA to Firefighters hired by the City after July 1, 2009 in violation of the Triborough Law." ld. Following a pre-hearing conference at PERB, PERB deferred the matter to arbitration on October 6, 201 0. (R. 226-27). The City did not appeal PERB's deferral to arbitration, but rather, moved to stay arbitration in New York State Supreme Court, pursuant to C.P.L.R. § 7503. On January 20, 2011, Justice Smith denied Respondent's application to stay the arbitration. (R. 4-14 ). Justice Smith held that: [T]he terms of the expired [CBA] agreement ... continue in effect pursuant to the Triborough Doctrine set forth in the Taylor Law. *** Dispositively, the Court rejects Yonkers' argument that the arbitration of this matter is prohibited by CSL Section for a public employer ... to refuse to continue all the terms of an expired agreement until a new agreement is negotiated." 6 20 1.4. That statute ... prohibits the ~negotiating' of retirement benefits. Here, however, no negotiating or modification of retirement benefits is occurring or being sought; rather, the Union is seeking to enforce what it claims are its existing rights under Article 15 of the previously negotiated CBA, and as such the matter properly falls within the ambit of the parties' arbitration agreement which provides that, 4 in the event of a dispute bet,:veen the parties to this .t\greement involving the interpretation or application of any provision of this Agreement, either party shall have the right to solve the dispute' by 'submit[ting] the grievance to arbitration.' Yonkers' reliance upon the PERB holding in Civil Service Employees Association, lnc., Niagara Chapter & Town of Niagara, 14 PERB 3049 ( 1981 ), as support for its argument that arbitration of this matter is statutorily prohibited is misplaced. While PERB did find therein that the union's demand was not a mandatory subject of negotiation because it violates State law and speci ficalJy Article 14 of the RSSL which provides a specific retirement plan for Tier 3 public employees requiring the public en1ployee to contribute 3 percent of their salaries, at issue in Niagara was the negotiability of a union proposal that sought to continue a prior contract provision wherein the employer fully paid for the retirement benefits. Here, as above stated, no negotiating of retirement benefits impermissibly is being sought by the Union. [The City's arguments] are all issues whjch properly may and seemingly shall be determined by arbitration. Accordingly, the petition seeking to permanently stay arbitration is hereby denied. (R. 5, 12-13) (emphasis in original). Thus, Justice Smith carefully considered Respondent's arguments and properly rejected them. On December 27, 2011, the Appellate Division reversed 7 Justice Smith, stating summarily and without citing to any case law, that the CBA was no longer "in effect" on January 10, 2010. (R. 401). The Appellate Division also held that Civil Service Law § 201 ( 4) and RSSL § 4 70 barred arbitration of the grievance. Id. In City of Oswego, the Fourth Department examined the same statute in a similar context as in the instant matter, but reached a different legal conclusion. 93 A.D.3d at 1243. In that case, Oswego City Firefighters and the City of Oswego were also parties to a collective bargaining agreement wherein the City would pay the firefighters' full costs in the New York State Police and Fireman's Retirement System ("PFRS"). The CBA was "to remain in full force and effect" through December 31, 2009. The City argued that firefighters hired after the effective date of Article 22- January 9, 2010- would have to contribute toward their retirements because the last contract expired on December 3 1, 2009. In affirming the arbitrator's award in favor of the Oswego Firefighters, the Fourth Department held that: [T]he award herein is not contrary to existing statutes, does not violate a strong public policy and is not irrational. . . . Pursuant to what is known as the Triborough doctrine, as embodied in Civil Service La\¥ § 209-a(1 )(e), it is an improper practice ... 'to refuse to continue all the terms of an expired agreement until a new agreement is negotiated.' Because a new agreement between the city and the union had not yet been negotiated at the time the subject firefighters joined the 8 PFRS, all of the terms of the expired agreement were still in effect. City of Oswego, 93 A.D.3d at 1246 (citations omitted) (emphasis added). The Fourth Department also found that a determination to apply the Section 8 exception to an expired agreement, still in effect under the Triborough Law, does not constitute a ''negotiation of retirement benefits'' as prohibited by Civil Service Law§ 201(4) and RSSL § 470. Appellant respectfully requests that this Court reverse the decision of the Appellate Division, Second Department, follow the decision of the Appellate Division, Fourth Department and order the City to proceed to arbitration. ARGUMENT I. NEW YORK STATE COURTS FAVOR ARBITRATION AND DISCOURAGE JUDICIAL INTERFERENCE New York courts have adopted the profoundly deferential policy articulated by the United States Supreme Court in the 4'Steelworkers Trilogy" - three seminal decisions that affirmed the central role of arbitration in the collective bargaining process and significantly limited judicia] intervention. See New York City Transit Authority v. Transp. Workers Union of Am., 99 N.Y.2d I, 7-8 (2002) (citing United Steelworkers v. Warrior & GulfNav. Co., 363 U.S. 574 ( 1960)). Judicia] restraint is particularly appropriate in arbitrations pursuant to public- sector collective bargaining agreements. New York City Transit Authority, 99 9 N.Y.2d at 7. In these situations, "the [l]egislature ... explicitly adopted a countervailing policy encouraging such public employers and such employee organizations to agree upon procedures for resolving disputes (Civil Service Law§ 200 [ c ]), as a means of promoting harmonious relations between governmental employers and their employees, and preventing labor strife endangering uninterrupted governmental operations." Id. (citations and quotations omitted). See also Board of Education v. Yonkers Federation of Teachers, 40 N.Y.2d 268, 273 ( 1976); Board of Education v. Associated Teachers of Huntington, Inc., 30 N.Y.2d 122, 131 (1972). Moreover, in labor disputes, arbitrators are mutually selected by both labor and management because of their particular expertise and insight into the relationship, needs of the parties, conditions existing in the specific bargaining unit, and the parties' "trust in [the arbitrator's] personal judgment to bring to bear considerations which are not expressed in the contract. ... The ablest judge cannot be expected to bring the same experience and competence to bear upon the determination of a grievance, because [the judge] cannot be similarly informed." Warrior & Gulf Navigation Co., 363 U.S. at 582. In evaluating whether a party must be compelled to submit a particular dispute to arbitration, a court asks and answers two questions: ( 1) "whether there is any statutory, constitutional, or public policy prohibition against arbitration of 10 the grievance"; and, if there is no prohibition, (2) whether "the parties have agreed to arbitrate the dispute at issue." In re City of Johnstown and Johnstown Police Benevolent Ass'n, 99 N.Y.2d. 273, 278 (2002). The Court of Appeals refers to these two questions as the "May They Arbitrate" prong and the "Did They Agree to Arbitrate" prong. Id. In this case, the parties have a broad arbitration clause in the CBA to govern their disputes. (R. 61) ("In the event of a dispute between the parties to this Agreement involving the interpretation or application of any provision of this Agreement, either party shall have the right to solve the dispute" by "submit[ting] the grievance to arbitration."). After a pre-hearing conference before PERB, PERB determined that this matter would be best resolved by the parties' mutually selected arbitrator. (R. 226-27). Respondent only challenged the first prong of the arbitral inquiry, and conceded that it was unable to win on the second prong. (See Appellate Brief for the City at 27-28). The City's arguments must fail; as the Court of Appeals held, "[a]ny limitation upon the remedial power of the arbitrator must be clearly contained, either explicitly or incorporated by reference, in the arbitration clause itself." Board of Education of Dover UFSD v. Dover-Wingdale Teachers' Ass'n, 61 N.Y.2d 913, 915 (1984). In Board of Education v. Hess, the Court of Appeals described the enormous breadth of an arbitrator's authority: "[T]o achieve what the arbitration tribunal believes to be a just result, it may shape its remedies with a 11 flexibility at least as unrestrained as that employed by a chancellor in equity." 49 N.Y.2d 145, 152 (1979). Over the last thirty years, the Court of Appeals "has overwhelmingly rejected contentions by public employers that particular issues fall outside the scope of permissible grievance arbitration." In re Bd. of Educ. of Waterto\vn City Sch. Dist., 93 N.Y.2d 132, 139 (1999). "The decisional law reflects the reality of greatly increased public sector arbitration, and its acceptance, compatible with the government's public policy concerns." I d. at 139-40. See also In re Union Free Dist. #15 v. Lawrence Teachers Ass'n, 33 A.D.3d 808, 808 (2d Dept. 2006). ("[A] stay of arbitration is reserved for disputes involving a public policy of the first magnitude") (internal quotation marks and citation omitted). In the instant case, there is no statutory or constitutional prohibition against arbitration of the grievances, and there is no public policy prohibition against arbitration of the grievances. The Court of Appeals decision in In re City of Johnstown, requires reversal of the Second Department's decision. In that case, the union sought arbitration of a grievance concerning the computation of certain retirement benefits, which the City alleged was barred by statute. However, in determining the matter to be arbitrable, the Court explicitly held that the dispute "is not the negotiation of a provision of a CBA [],but the interpretation of a CBA provision." 99 N.Y.2d at 12 279 (emphasis in original). The Appellate Division, Second Department found that the current issue between the parties involves the negotiability of retirement benefits, and is therefore not arbitrable. As the Appellate Division, Fourth Department found, consistent with the Court of Appeals decision in In re City of Johnstown, that is incorrect. The Union is not seeking to negotiate over the amount of retirement benefits; rather, the Union is attempting to enforce its rights under Article 15 of the existing CBA, which requires the City to continue to pay the full cost of pension contributions to the PFRS. As the Fourth Department correctly held in City of Oswego: a determination to apply the Section 8 exception in this case does not constitute a ~negotiation' of retirement benefits as prohibited by Civil Service Law § 201 ( 4) and [RSSL] § 470 (cf. Matter of City of Yonkers v. Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 90 AD3d I 043 ). The determination whether a certain group of employees falls within a legislatively-created exception to a statute is not a negotiation of retirement benefits. It is merely an interpretation of [Article 22] as it applies to a previously-negotiated agreement. 93 A.D.3d at 1246-4 7. Thus, this is a matter that falls squarely within the confines of arbitration, and is expressly authorized by the Section 8 exception applicable to negotiated collective bargaining agreements "in effect" on January 9, 2010 under the new Article 22/Tier 5 law. 13 Moreover, an arbitrator has wide latitude in formulating remedies. As the United States Supreme Court stated in United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 ( 1960): When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, he is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especialJy true when it comes to formulating remedies. There the need is for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency. Accordingly, the City's claims are at best premature. The City can make its pitch to the arbitrator and, if unhappy with the outcome, can move to vacate an award that it believes conflicts with public policy or statutory law. See, e.g. Lawrence Teachers Ass'n v. Lawrence Pub. Sch., 38 A.D.3d 779, 780 (2d Dept. 2007) (denying petition to confim1 award: ''[ s ]ubmitting the dispute to arbitration did not authorize the arbitrator to fashion an award which violated public policy.") Indeed, in the instant case, Justice Smith herself stated that: Arbitration long has been favored as an alternative means for resolution of legal disputes, and while there is an exception to the foregoing for what may be considered public policy considerations, this exception is to be exercised by the courts with extreme restraint, particularly where, as here, at issue is arbitration required under collective bargaining agreements. 14 (R. 11) (emphasis added). Justice Smith emphasized that the Taylor Law was adopted ''for the very purpose of encouraging public employers and employee organizations to agree upon dispute resolving measures." Id. Thus, based upon the prior decisions of this Court in New York City Transit Auth., Yonkers Fed'n of Teachers and Associated Teachers of Huntington, arbitration is the appropriate and agreed upon tribunal to resolve the pending issues between the parties. II. THE CBA IS STILL IN EFFECT PURSUANT TO CIVIL SERVICE LAW§ 209-a{l)(e), THE TRIBOROUGH LAW AND TIER 5 LEGISLATION a. According to New York State Court of Appeals' Case Law, the Parties' CBA Is Still In Effect Both parties agree that pursuant to the Section 8 exception under Article 22 of the RSSL, Article 15 of the CBA is enforceable if the CBA between the parties was "in effect" on January 10, 20 l 0. If the CBA was "in effect" on that date, then the employer is obligated to pay pension costs, in full, pursuant to Article 15 of the negotiated CBA. Based upon the Triborough Doctrine, codified in Civil Service Law § 209-a( 1 )(e), the contract was "in effect" on January 10, 2010. The Section 8 exception to Article 22 of the RSSL states: nothing in this act shall limit the eligibility of any member of an employee organization to join a special retirement plan open to him or her pursuant to a collectively negotiated agreement with any state or local government employer, where such agreen1ent is in effect on the effective date of this act and so long as such agreen1ent remains in effect thereafter. 15 The plain language of the Section 8 exception explains that if the terms of the CBA are "in effect" on January 9, 2010, then any member of the Union may join a special retirement plan contained in the parties' CBA. As outlined above, the CBA between the parties Article 15 contains a special retirement plan that all members are entitled to join, including the 20 year plan, RSSL § 384-d, and the 25- year plan, RSSL § 384-e. Contrary to the decision of the Second Department, the word "expired" or "expiration" does not appear in Section 8, and therefore, the Union need only show that the CBA was "in effect" in January 2010 in order for all members to take advantage of Article 15 of the CBA. While some contracts contain sunset clauses, which might terminate a substantive provision in the CBA at a specified time or upon specified conditions, the CBA between the parties in this case contains no such clause, and thus, the CBA, including Article 15, is still "in effect." Based upon the New York State Court of Appeals and the legislative history of the Triborough Law, the parties' CBA was "in effect" on the effective date of the Act, January 9, 2010. Indeed, in a recent case, Professional Staff Congress v. New York State PERB, 7 N.Y.3d 458, 469 (2006), this Court explicitly held that "all terms of a CBA remain in effect during collective bargaining of a successor agreement." (emphasis added). See also id. at 469 ("The rule espoused by PSC-- that a waiver provision should be deemed to expire at the conclusion of the CBA 16 unless the parties include language indicating otherwise--is inconsistent with PERB precedent as well as Civil Service Law § 209-a ( 1) (e)"). In 1972, PERB adopted the Triborough Doctrine, which provided that a public employer could not make unilateral changes to the status quo of any mandatory term or condition of employment during the negotiations of a new CBA. See Triborough Bridge & Tunnel Authority, 5 PERB ~ 3037 (1972). In 1982, the Triborough Doctrine was codified into law as Civil Service Law § 209- a(1 )(e). According to the Triborough Law, it is "an improper practice for a public employer ... to refuse to continue all the terms of an expired agreement until a new agreement is negotiated." (emphasis added). The Triborough Law expanded the application of the Triborough Doctrine by n1andating that all terms of the expired agreement remain in effect until a new agreement is reached, regardless of whether the subject is mandatory or permissive. Matter of Board of Trustees v. Maplewood Teachers' Ass'n, 57 N.Y.2d 1025 (1982); County of Nassau v. New York State Public Employment Relations Bd., 151 A.D.2d 168, 175 (2d Dept. 1989). Association of Surrogates and Supreme Court Reporters Within the City of New York v. State of New York, 79 N.Y.2d 39 (1992) ("Surrogates II") is directly on point and involves a factually similar issue. On June 12, 1991, New York State attempted, via legislative amendments to the State Finance Law, to save $10.7 17 million dollars by paying employees for nine rather than ten days in each biweekly salary check over five payroll periods. Id. at 43-44. The State maintained that it could postpone the employees' pay because the contracts with the respective plaintiff unions had expired on March 31, 1991. at 44. However, this Court held that the Triborough Law: "extends[s} the contract, thereby affording plaintiffs protection under the Contract Clause of the Federal Constitution. To hold otherwise would mean that the State would be bound by the terms of an expired collective bargaining agreement only so long as it wished to be bound. I d. at 45 (emphasis added). Thus, this Court applied the Triborough Law to an expired collective bargaining agreement and nullified a lag payroll system imposed unilaterally by the State on public employees even though the payroll system was enacted after the expiration of the agreement. The Court of Appeals held that the contract itself is extended, and the parties are bound by their collective bargaining agreement until a new agreement is reached. Id. at 46 (the Court "conclude[s] that the contracts continued after the expiration of their stated term."). To hold otherwise would lead to en1ployer abuse and overreaching. I d. at 45 ("[ o ]ur construction of Section 209-a( 1 )(e) is consistent with the underlying purpose of the Taylor law"). See also Cobleskill Cent. School Dist. v. Newman, 105 A.D.2d 564, 565 (3d Dept. 1984), appeal denied, 64 N.Y.2d 1071 (1985) (public employer must continue annual incremental salary schedules which, prior to the Triborough Law, 18 were subject to discontinuance under the Court of Appeals decision in Board of Cooperative Educational Servs. of Rockland County v. New York State PERB, 71 N.Y.2d 753 (1977): "The salary schedule was one of the terms of the expired contract which was required to be extended."). The Court should follow the precedent established by its decision in Surrogates II and find: (1) that the Triborough Law extends the parties' CBA and (2) the CBA is protected under the Contract Clause of the federal Constitution and the Section 8 exception. In Cobleskill, a labor agreement between the school district and teachers association provided for increased salaries for teachers for each year of longevity in the school system, and for increases based on the 1evel of advanced education. 1 05 A.D.2d at 564. Upon expiration of the agreement, the school district froze each teacher's salary at the amount being paid at the end of the school year pending the negotiation of a new contract. Id. In upholding the violation, the Third Department held that: The Legislature, in enacting the [Triborough Law], purposely acted to alter the Rockland rationale .... The salary schedule was one of the terms of the expired contract which was required to be extended. The teachers association does not seek to modify the schedule. They disagree with the school district only in the application of the schedule. They contend that each teacher should have been paid pursuant to the schedule, but in accordance with that teacher's longevity and educational qualification status as it existed at the beginning of the new pay period. We agree. 19 105 A.D. 2d at 565. ln Matter of County of Niagara v. Newman, the Fourth Department determined that the county legislature violated § 209-a( 1 )(e) when it passed a resolution "depriv[ing] the employees of certain benefits and rights which they enjoyed under the prior agreement.'' 104 A.D.2d 1, 2 (4th Dept. 1984). The court held that '~the legislative body is precluded by the Triborough Amendn1ent from imposing a settlement which diminishes employee rights under an expired collective bargaining agreement." ld. at 4. According to County of Niagara, legislative enactments may not violate or conflict with the Triborough Law; as such, Article 22 should not change the terms of the expired CBA, which is entitled to full recognition untiJ a new agreement is negotiated. b. The Triborough Law, According to its Legislative History, Was Enacted To Strengthen Public Sector Unions And Provide Them With a Level Playing Field The legislature added the Triborough Law to the Taylor Law as an incentive for unions to avoid work stoppages, and to guarantee the status quo between public employers and its employees. See Robert E. Casagrande, Steven M. Klein & Stephanie Baxter, Public Sector Bargaining in New York: Examining PERB's Sunset Doctrine In a New Light, 59 ALB. L. REV. 481, 487-488 ( 1995). Pursuant to the Triborough Law, the only way for employees to lose the protections guaranteed in Section 209-a( 1 )(e) is by striking. 20 The statutory continuation of benefits established by the section 209-a( l )(e) is a quid pro quo for the prohibition against public employee strikes. Thus, the Triborough Law seeks to preserve a fundamental balance in negotiating power between public employers and employees, which is intended to further the important public policy of insuring uninterrupted government servtce. Id. at 485. See also County of Niagara, I 04 A.D.2d at 4-5 ("As a limitation on the legislative body ... section 209-a grants some measure of protection to employees, who will at least be assured of maintenance of the status quo until a new agreement is negotiated."). The Triborough Law was enacted in response to employer abuse. On July 14, 1982, the chief sponsor of the Triborough Law, Assemblyman Joseph R. Lentol, wrote to John G. McGoldrick, Governor's Counsel that: (R. 285). The purpose of the bill is to enhance the negotiating process by preserving the status quo until a new agreement is reached by the concerned parties. . . . [I]t has been past experience that some employers will not bargain in good faith, as they rely on the Taylor Law to serve as a tool for forcing en1ployees to accept a new contract that is less than agreeable to them. Moreover, some employers have abused the Taylor Law to better their own financial state, at the expense of their employees. . . . This act will remove one onerous provision of the Taylor Law which has allowed management to provoke labor unrest. 21 During the debate on the legislation regarding the Triborough Law, the Governor's Office of Employee Relations (GOER), representing the Governor/employer in New York State employee relations matters, actually supported its enactment. In a memorandum dated July 28, 1982, GOER advised the Governor's Counsel that: The trade-off of the prohibition against striking is the guarantee that provisions of an expired collective agreement would not be unilaterally denied by the public employer to the employees with whose representative it is negotiating. . . . public employees should be guaranteed a status quo in their employment rights as much as the pubUc and the government involved should be guaranteed its status quo in uninterrupted services." (R. 286-92) (emphasis in original). Without citing any case law or legislative history, the Appellate Division, Second Department found that the CBA in this case is no longer "in effect." However, this finding is belied by the City's own Verified Petition, where it states that the CBA "continue[ s] in effect in accordance with the 4Triborough' provisions of the Taylor Law." (R. 19). (emphasis added). Without relying on any authority, Respondent disingenuously claimed there is a distinction between the "terms" of the CBA and the CBA itself. (Appellate Brief for the City at 25). This position is nonsensical, and was rejected by the Court of Appeals in Surrogates II, where the Court of Appeals held that the Triborough Law "extend[s] the contract." 79 N.Y.2d at 45. 22 The Court of Appeals language in Professional Staff Congress mirrors Article 22 of the RSSL: "all terms of a CBA remain in effect during collective bargaining of a successor agreement." 7 N.Y.3d at 469 (emphasis added). Thus, according to the Ne~ York Court of Appeals and the Triborough Law and its legislative history, the parties' CBA is "in effect", the Section 8 exception applies and Article 15 of the CBA is applicable to new Union members. Moreover, the legislative history of Article 22 and the Tier 5 legislation supports Appellant's interpretation of the law. (R. 230-84; 293-309). There is nothing in the legislative history of Article 22 supporting Respondent's interpretation of the law. Id. There is nothing in the deliberations of the New York State Assembly or the New York State Senate in passing Article 22 supporting Respondent's interpretation of the law. (R. 275-84). In the "Governor's Program Bill, 2009 Memorandum", describing the key components of Tier 5, it states that "Section 8 of Part A of the bill would provide that members of an employee organization that are eligible to join a special retirement plan pursuant to a collectively negotiated agreement with any state or local government employer, would be able to continue to enroll in that special plan after the enactment of this bill, until the date on which such agreement terminates." (R.293-300). Similarly, the State Assembly's summary of the bill uses the same language to describe Article 22. (R. 30 1-09). Therefore, in this case, the parties' CBA has not 23 terminated, since, as Respondent concedes, the terms are still in effect under the Triborough Law. c. Rules of Statutory Construction Support Appellant's Interpretation of the Tier 5 Legislation Respondent's interpretation of the Section 8 exception to Article 22 of the Tier 5 law is contrary to well-established rules of statutory construction and should be rejected. It is a well-recognized principle of statutory construction that statutes which are in pari materia must be construed in harmony with one another, even if they do not contain references to each other. See McKinney's Consolidated Laws of New York, Book 1, Statutes, §§ 221 - 223; Smith v. People, 47 N.Y. 330, 330 (1872); Hartnett v. Ballston Spa, 152 A.D.2d 83, 86 (3d Dept. 1989), appeal denied, 75 N.Y.2d 711 (1990). The Section 8 exception under Article 22 of the new Tier 5 law is intended to grandfather collective bargaining agreements "in effect" on the effective date of the law. The Triborough Law, codified at Section 209-a(l )(e) of the Civil Service Law, requires public employers, like the City of Yonkers, to continue the terms of the collective bargaining agreement after its expiration date. Because the statutes have a similar purpose, the interpretation of the phrase "in effect" under the Section 8 exception should be read in conjunction with the Triborough Law. If the two statutes are not harmonized by reading them together, a firefighter will be 24 deprived of having the full cost of his pens1on contributions paid for, clearly frustrating the intent of the Triborough Law. Based on Respondent's interpretation, the phrase "in effect" under the Section 8 exception means essentially "prior to expiration"; this is illogical and contrary to the case law and the letter of the statute. 2 The legislature's "intent must be primarily sought in the language of the statute, and if the words employed have a well understood meaning, are of themselves precise and unambiguous, in most cases no more can be necessary than to expound them in their natural and ordinary sense." Smith, 47 N.Y. at 336-37. There is no basis to accept Respondent's attempt to disregard the express language of the statute and to depart from a literal construction. See McKinney's Consolidated Laws of New York, Book 1, Statutes, §§ 221-223. Neither the text of Article 22 nor the legislative history uses the word "expire" or "expiration" when referring to the status of the collective bargaining agreement; rather, Appellant must show merely that the CBA was "in effect" during the relevant time period. Pursuant to the plain language of the statute, Appellant's interpretation is correct and consistent with case law and statutory construction. It would be illogical to construe the statutory language to apply only 2 While Appellant cites to a Comptroller letter in support of its position, that letter is not binding upon this case. Moreover, the Comptroller's letter is not supported by the legislative history, conflicts with the Civil Service Law, and violates rules of statutory construction. 25 to collective bargaining agreements which have not yet expired, and it would be in conflict with the statutory construction rule, in pari materia: when a statute is ambiguous, its n1eaning may be determined in light of other statutes on the same subject matter. ln sum, Appellant respectfully requests that this Court follow the Fourth Department's decision in City of Oswego and find that the CBA is still ~in effect' pursuant to the Section 8 exception and the Triborough Law. 93 A.D.3d at 1246. III. AFFIRMING THE APPELLATE DIVISION, SECOND DEPARTMENT'S DECISION WILL RESULT IN AN UNCONSTITUTIONAL IMPAIRMENT OF CONTRACT The contract clause of the United States Constitution provides that ~'No state shall ... pass any ... law impairing the obligation of contracts." U.S. Const. art. 1, § 10. ln 1977, the Supreme Court revitalized the contract clause in the context of government contracts. In United States Trust Co. of New York v. New Jersey, 431 U.S. 1 ( 1977), the Court invalidated a New Jersey statute that retroactively repealed a covenant between the state and certain bondholders that limited the use of revenues pledged as security for rail passenger transportation purposes. The Court adopted a heightened standard for scrutinizing laws that impair public contracts, and held that the impairment of public contracts is constitutional only if it is "reasonable and necessary to serve an important public purpose." ld. at 25. According to the Supreme Court, a "State is not completely free to consider impairing the obligations of its own 26 contracts on a par with other policy alternatives. Similarly, a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well." Id. at 30-31. After United States Trust, lower courts, in reliance on that decision, began applying a three-part test in analyzing the constitutionality of legislative modifications of government contracts. First, courts ask whether ''the state law has, in fact, operated as a substantial impairment on pre-existing contractual relationships." Equipment Mfrs. Inst. v. Janklow, 300 F.3d 842, 850 (8th Cir. 2002). This first prong involves a three-part inquiry: "[ 1] whether there is a contractual relationship, [2] whether a change in law impairs that contractual relationship, and [3] whether the impairment is substantial." General Motors Corp. v. Romein, 503 U.S. 181, 186 ( 1992). If substantial impairment exists, the court then determines whether the state has a "significant and legitimate public purpose behind the regulation." Educational Employees Credit Union v. Mut. Guar. Corp., 50 F.3d 1432, 1438 (8th Cir. 1995) (internal citation omitted). If there is no significant and legitimate public purpose, the state taw is unconstitutional under the Contract Clause. See Equip. Mfrs., 300 F .3d at 850. If, however, the state identifies such a public purpose, then the court lastly considers ''whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation's adoption." Energy Reserves Group, Inc. v. 27 Kan. Power & Light Co., 459 U.S. 400, 412 (1983) (internal quotations and citations omitted). In Condell v. Bress, the Second Circuit held that: Courts are deferential to a state's judgment of reasonableness and necessity when a state's legislation is self-serving and impairs the obligations of its own contracts. Indeed, a State is not con1pletely free to consider impairing the obligations of its own contracts on a par with other policy alternatives. 983 F.2d 415, 418 (2d Cir. 1995) (emphasis in original) (internal quotations omitted). Judicial decisions during the 1990's focused primarily on the constitutionality of legislative acts that temporarily deferred or reduced public employee wages in violation of applicable collective bargaining agreements. Indeed, a number of decisions found "lag-payroll statutes" to be in violation of the contracts clause.3 The Second Circuit, in Association of Surrogates and Supreme Court Reporters Within the City of New York v. State ofNew York, 940 F.2d 766, 771 (2d Cir. 1991) ("Surrogates I"), and the New York Court of Appeals, in Surrogates II, determined that legislative enactments regarding payroll lags were unconstitutional impairments of contracts under the Contract Clause of the United States Constitution . .:::::..::...=.~;;;:..' Univ. of Haw. Prof. Assembly v. Cayetano, 183 F.3d 1096, 1101-06 (9th Cir. 1999); 983 at 417-20; Chiles v. United Faculty of Fla., 615 So.2d 671, 672-73 (Fla. 1993); In re Quirk v. Regan, 565 N.Y.S.2d 422,424-25 (N.Y. Sup. Ct. 1991). 28 The plaintiffs in both Surrogates cases were nonjudicial employees of the state Unified Court System whose collectively bargained-for rights were affected by state legislative action. In Surrogates I, New York State, facing a budget deficit, imposed a lag payroll scheme for certain non-judicial employees of the court system; the scheme was in direct conflict with the employees' collective bargaining agreement with the State. The Second Circuit found that the impairment was substantial, and held that the lag payroll statute in question did not survive the United States Trust test ( 431 U.S. at 25) because there was no legitimate public purpose. 940 F .2d at 773 ("It cannot be said that a lag payroll for only judicial employees was essential in order to finance the expansion of the court system.") The Second Circuit found that withholding an amount equal to 10 percent of an employee's pay over a 10-week period could prevent the employee from meeting short-term financial obligations like mortgages, loans, credit card payments and the like. Id. at 772. The court interpreted the "reasonable and necessary" requirement narrowly to mean that in order to pass constitutional muster, the impairment must be essential to implement the particular plan due to the absence of any other possible alternatives. Id. at 773 ("[T]he state could have shifted the seven million dollars from another governmental program, or it could have raised taxes."). Surrogates II involved the State's attempt, via legislative amendments to the State Finance Law, to save $10.7 million dollars by paying employees for nine rather 29 than ten days in each biweekly salary check over five payroll periods. 79 N.Y.2d at 43-44. The New York Court of Appeals, applying the rationale set forth by the Second Circuit in Surrogates I, struck down this legislation. I d. at 45. This Court held that the impairment of the expired collective bargaining agreement was substantial, as in Surrogates I, for the same reasons. at 46-47 . .<.t\s noted earlier, in Surrogates II, this Court also held that the Triborough Law "extend[s] the contract, thereby affording plaintiffs protection under the Contract Clause of the Federal Constitution." Id. at 45. Here, if the Appellate Division, Second Department's decision is affirmed, it will result in the tangible impairment of Union members' rights under the CBA by the City of Yonkers. The effect of the impairment is a 3% loss of salary for those employees hired on or after January 9, 2010. Moreover, that reduction in salary is not "reasonable and necessary to accomplish a legitimate public purpose." As stated by the Court in Surrogates II: The choice of which revenue-raising or revenue-saving devices should be used is for others, not the courts, but the menu of alternatives does not include impairing contract rights to obtain forced loans to the State from its employees. 79 N.Y.2d at 47. In 2008, the Eighth Circuit Court of Appeals ruled that the City of Benton, Arkansas violated the contract clause when it unilaterally reduced health insurance 30 premiums for retired city employees. AFSCME, Local 2957 v. City of Benton, 513 F .3d 87 4, 882 (8th Cir. 2008). Pursuant to the parties' collective bargaining agreement, the city was obligated to pay the full cost of health insurance premiums for retirees. The court held that the city's unilateral modification of the collective bargaining agreement, \¥hich reduced the city's premium contributions, was unlawful: "to survive a challenge under the Contract Clause, any law addressing such concerns must deal with a broad, generalized economic or social problem" and the concern should be related to "unprecedented" emergencies. Id. at 882. The court continued, "[h ]ere, although defendants offered testimony of Alderman Allen to suggest that the 2003 resolution was a matter of economic necessity, they never demonstrated that the City faced the 4 Unprecedented emergency' required to justify the abrogation of the CBA." Id. In Donohue v. Paterson, the Northern District of New York used the federal Contract Clause to strike down public employee wage and benefit freezes from a furlough plan initiated by Governor Paterson in the wake of the most recent fiscal emergency. 715 F.Supp.2d 306, 325 (N.D.N.Y. 2010). The court granted a preliminary injunction to the union plaintiffs, finding that "even a temporary loss of pay can have far reaching and dire consequences" amounting to irreparable harm. ld. at 3 16. In that case, defendants were also unable to show that the impairments were reasonable or necessary. "Where reasonable alternatives exist for addressing the fiscal 31 needs of the State which do not impair contracts, action taken that does impair such contracts is not an appropriate use of State power." Id. at 322. Thus, courts are more likely to find a constitutional impairment where legislative action reduces or eliminates compensation promised in a collective bargaining agreement, especially since such action abridges a right that likely 4'induced the parties to enter into the contract" and goes to "the very heart of an employment contract." See Stephen F. Befort, Unilateral Alteration of Public Sector Collective Bargaining Agreements and the Contract Clause, 59 Buffalo L. Rev. 1, 41- 42 (Jan. 2011 ); see also Baltimore Tchrs. Un. v. Mayor of Baltimore, 6 F.3d I 012, 1 018 (4th Cir. 1993) ("In the employment context, there likely is no right both more centra] to the contract's inducement and on the existence of which the parties more especially rely, than the right to compensation at the contractualJy specified Jevel. "). If the CBA in the instant case is not grandfathered under the Section 8 exception, Article 22 would run afoul of the Contract Clause of the U.S. Constitution since it is impairing the parties' mutually agreed upon contract. (art I, § 1 0, cl. 1 ). This is a substantial impairment as the effect would be a 3o/o Joss of salary for those Firefighters hired on or after January 9, 2010. Based on the cases cited above, including Donohue, AFSCME and the Surrogates cases, this type of impairment, which effects employee compensation as a result of unilateral state action, is subject to even greater scrutiny by the courts. 32 Moreover, the City has not shown that this type of impairment is reasonable and necessary to accomplish a legitimate public purpose, especially since there is no "unprecedented emergency." See AFSCME, Local 2957, 513 F.3d at 882. In its decision, the Appellate Division, Second Department failed to address this significant constitutional issue, which \Vas raised both at oral argument and in ft .. ppellant' s brief to the Appellate Division. Indeed, in Respondent's Reply Brief at the Appellate Division, it acknowledged that the Legislature enacted the Section 8 exception "so as to avoid constitutional contractuaJ infringement issues." (City's Appellate Reply Brief at 7). Thus, both sides agree that the Legislature created this specific exception in Article 22 so as not to run afoul of the Constitution and the Surrogates II case. Under Surrogates n, pub I ic-sector collective bargaining agreements continue in effect after their expiration pursuant to the Triborough Law. The Section 8 exception was added to Article 22 to prevent the State from impairing contracts, in violation of the Contract Clause. As such, the Section 8 exception must be read to include agreements such as the one before this Court, which are in effect under the Triborough Law; otherwise, it would run afoul of the Contract Clause of the U.S. Constitution since it would impair the parties' mutually agreed upon contract. 33 IV. THE APPELLATE DIVISION, SECOND DEPARTMENT INCORRECTLY HELD THAT ARBITRATION OF THIS GRIEVANCE IS BARRED BY STATUTE Without citing to any case law, the Appellate Division tn this case disregarded Justice Smith's findings and held: Here, as the City correctly asserts, the arbitration of this dispute is barred by statute. Civil Service Law § 20 l ( 4) provides, among other things, that 'benefits provided by or to be provided by a public retirement system, or payments to a fund or insurer to provide an income for retirees, or payment to retirees or their beneficiaries' shall not be negotiated in the public en1ployn1ent sector. Retirement and Social Security Law § 4 70 provides that ' [ c ]hanges negotiated between any public employer and public employee ... with respect to any benefit provided by or to be provided by a public retirement system, or payments to a fund or insurer to provide an income for retirees or payment to retirees or their beneficiaries, shall be prohibited.' (R. 400). Appellant respectful1y disagrees with the Second Department holding; there is no statute, constitutional provision or public policy that bars arbitration of the Union's grievance. As the Fourth Department correctly held: a determination to apply the Section 8 exception in this case does not constitute a 'negotiation' of retirement benefits as prohibited by Civil Service Law § 20 1 ( 4) and [RSSL] § 4 70 ( cf. Matter of City of Yonkers v. Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 90 AD3d 1 043 ). The determination whether a certain group of employees falls within a legislatively-created exception to a statute is not a negotiation of retirement benefits. It is merely an interpretation of Section 8 as it applies to a previously-negotiated agreement. 34 See City of Oswego, 93 A.D.3d at 1246-4 7. As explained below, the Second Department mistakenly relies on CSL § 201(4) and RSSL § 470 in arguing that a stay of arbitration should be issued. a. New York Civil Service Law§ 201(4) Is Not Applicable to this Matter and Does Not Require That .Lt\ Stay of Arbitration Be Issued Civil Service Law§ 201(4) states that: The term 'terms and conditions of employment' means salaries, wages, hours and other terms and conditions of employment provided, however, that such term shall not include any benefits provided by or to be provided by a public retirement system .... No such retirement benefits shall be negotiated pursuant to this article, and any benefits so negotiated shall be void. As the Fourth Department correctly found in City of Oswego, a "determination to apply the Section 8 exception in this case does not constitute a 'negotiation' of retirement benefits as prohibited by Civil Service Law § 201 ( 4) and [RSSL] § 470." 93 A.D.3d at 1246. Appellant in this case is not seeking to negotiate over retirement benefits. Appellant is seeking arbitration to enforce Article 15 of the CBA (R. 49-50), which requires the City to pay 100% of pension contributions, in accordance with PERB 's Order deferring the case to arbitration. Thus, as Justice Sn1ith correctly found below (R. 12-13), Respondent's citation to Civil Service Employees Assoc., Inc., Niagara Chapter & Town of Niagara, 14 PERB ~ 3049 (1981) is inapposite. (R. 197). In Town ofNiagara, the 35 union alleged that the employer violated "its duty to negotiate in good faith by insisting upon the negotiation of nonmandatory subjects of negotiation." (R. 197- 98). In the instant case, the parties are not at the negotiating table, and Appellant is not requesting that Respondent negotiate over retirement benefits. Rather, i\ppellant is seeking to redress a grievance based upon the terms of the CB.A .... and Respondent's failure to adhere to the CBA and its negotiated provisions. It is disingenuous to compare the instant case with a case involving bargaining demands. Without any explanation, Respondent claims Town of Niagara is similar to the instant case because although the parties in Town of Niagara were at the bargaining table, "it was not a bargaining proposal to put language into a contract for the first time." (Appellate Brief for the City at 32; R. 12). However, Respondent is missing the key point and the obvious distinction between this case and Town of Niagara. In Town of Niagara, PERB did not hold that the retirement provision (which required the employer to pay in full) was unlawful or could not be continued under any circumstances; rather, PERB held that the retiren1ent provision involved a nonmandatory subject of negotiation, and thus, the union could not insist upon its negotiation. (R. 197 -98). In the instant case, Appellant is asking that the CBA be enforced; it is not asking that the City negotiate the contract. In fact, "it is well settled that 'there is no prohibition against arbitrating a dispute originating from the terms of a collective bargaining 36 agreement concerning ... benefits for retirees."' Matter of Peters v. Union- Endicott Central Sch. Dist., 77 A.D.3d 1236, 1239 (3d Dept. 2010) (citations omitted). Indeed, § 384-e of the RSSL, which is applicable to the 20-year retirement plan referenced in Article 15 of the parties' CBA, explicitly states that a party can "demand in collective negotiations [] the additional pension benefit provided by this section." Thus, Town of Niagara is inapplicable. Second, Town of Niagara is not "directly on point", nor does Town of Niagara concern ''the exact same principle the Union is espousing herein", as Respondent alJeged. (Appellate Brief for the City at 32). Unlike Town of Niagara, in the instant case, the Legislature has specifically stated, via the Section 8 exception of Article 22, that any contract 4'in effect" in January 2010 is grandfathered and allows the patties to maintain the previously negotiated retirement provisions. The Section 8 exception applies to the Yonkers CBA and permits members to be covered by a special retirement plan without payment of any contributions, as provided for in the parties' CBA, Article 15 (R. 49-50); Town of Niagara had no such clause. As such, the terms of the parties' CBA are ''in effect" and thus, Appellant has every right to seek arbitration to address a contract violation. Nevertheless, Respondent erroneously claimed that Justice Smith "missed the imperative concept that any contract language that is already in place is void as 37 a matter of law'' (Appellate Brief for the City at 18); if this were true, it would render the grandfather clause in Section 8 completely meaningless. It is telling that Respondent fails to cite to any case law to support that erroneous argument. Third, even assuming Appellant was asking Respondent to negotiate a contract, the courts have long recognized that the New York State Constitution does not prohibit parties to a CBA from negotiating special retirement plans. See Matter of Vill. of Fairport v. Newman, 90 A.D.2d 293, 295 (4th Dept. 1982) (holding that retirement and pension benefits, once conferred, are not "carved in stone."). In Matter of Westfall v. City of Cohoes, 86 CV 817, 1988 U.S. Dist. LEXIS 6925 (N.D.N.Y. July 11, 1988), the United States District Court in the Northern District of New York addressed a similar issue, concluding that 44With respect to employers participating in the New York State Police and Fire Retirement System and their employees, the prohibition contained in § 201 ( 4) does not apply." ld. at *9 (emphasis added)(copy at R. 367-372). The court reasoned that the retirement benefit exclusions of Section 20 l ( 4) of the Civil Service Law did not apply because there is an exception which allowed participating employers in New York State Policemen's and Firemen's Retirement System and their employees to continue to enjoy the right to negotiate with respect to any benefit 38 provided, including retirement and pension benefits. ld. The State Legislature periodically extended this exception until July 1, 2009.4 (See R. 380-81 ). Thus, collective bargaining agreen1ents addressing retirement or pens1on benefits are valid if negotiated prior to July I, 2009. Article 15 of the parties' collective bargaining agreement \vas negotiated at least as far back as the 1986 4 The Westfall court provided some of the legislative history of Section 201(4) of the Civil Service Law, which is helpful in understanding why the exception did not apply in Westfall and should not apply in this case: The retirement benefit exclusion of§ 201(4) was enacted as§ 6 of chapter 382 of the Laws of 1973. Section 48 of that same chapter added § 4 70 of New York's Retirement and Social Security Law, which suspended for a definite period the right of public employers and employees to negotiate 'with respect to any benefit provided by or to be provided by a public retirement system.' Chapter 625 of the Laws of 1975, however, provided that: notwithstanding any inconsistent provisions of this act or of any general, special or local law, on and after July first, nineteen hundred seventy-five and up to and including June thirtieth, nineteen hundred seventy-six: (a) a participating employer in the New York State Employees' Retirement System or the New York State Policemen's And Firemen's Retirement System and its employees shall continue to have the right to negotiate with respect any benefit provided by or to be provided by such employer to such employees as members of such system and not requtnng approval by act of the legislature.L.I975, Ch. 625, § 6. This provision, which extended a similar provision contained in § 31 of chapter 510 of the Laws of 1974, was incorporated by reference into N.Y. Retire. & Soc. Sec. Law§ 470 by§ I of chapter 84 of the Laws of 1977, with the effective date being extended through June 30, 1978. Periodic extensions have followed., and § 4 70 now provides that changes with respect to benefits provided or to be provided by a public retirement system "not requiring approval by act of the legislature may be implemented prior to July first, nineteen hundred eighty-nine, if negotiated as a result of collective bargaining authorized by section six of chapter six hundred twenty-five of the laws of nineteen hundred seventy-five.' N.Y.S. Retire. & Soc. Sec. Law§ 470 (McKinney Supp. 1988). (R. 371-72). 39 collective bargaining agreement. (R. 330). Assuming arguendo that payment of retirement contributions even falls within Section 201(4) of the Civil Service Law, under the reasoning of Westfall and the legislative history described therein, the restrictions in Section 201 ( 4) of the Civil Service La\v do not apply to this case. Therefore, contrary to Respondent's arguments, there are no statutes or constitutional provisions prohibiting arbitration of Appellant's grievance. b. RSSL § 470 Is Not Applicable to this Matter and Does Not Require That A Stay of Arbitration Be Issued Similar to Civil Service Law§ 201(4), RSSL § 470 is inapplicable. RSSL § 4 70 prohibits public employers and employees from negotiating with respect to any benefit provided by any public retirement system. As outlined above, Appellant is not seeking to negotiate any retirement benefits with Respondent; Appellant, pursuant to Article 22 and the Taylor Law, is seeking to enforce its rights under the negotiated CBA, which the legislature expressly grandfathered under Article 22. As the Fourth Department held, "a determination to apply the Section 8 exception in this case does not constitute a 'negotiation' of retirement benefits as prohibited by ... [RSSL] § 470." City of Oswego, 93 A.D.3d at 1246. In fact, "it is well settled that 'there is no prohibition against arbitrating a dispute originating from the terms of a collective bargaining agreement concerning ... benefits for retirees."' Union-Endicott Central Sch. Dist., 77 A.D.3d at 1239 (citations omitted). See also Matter of Westfall, 1988 U.S. Dist. LEXIS 6925, at 40 *9 (copy at R. 367-372). Additionally, as mentioned, § 384-e of the RSSL, which is applicable to the 20-year retirement plan referenced in Article 15 of the parties' CBA, explicitly states that a party can "demand in collective negotiations [] the additional pension benefit provided by this section." Moreover, according to PERB, requiring employees to pay an increase in retirement costs is a "mandatory subject of negotiation" and there is no "statutory, decisional or administrative prohibition" regarding such negotiation. Matter of Old Brookville Policemen's Benevolent Ass'n, 16 PERB ~ 3094 (1983)(R. 373-79) (citing Town of Huntington v. Associated Teachers, 30 N.Y.2d 122 (1972)). See also Matter of the Arbitration between City of Plattsburgh and Plattsburgh Police Officers Union AFSCME Local 82, 250 A.D.2d 327, 329 (3d Dep't 1998) (" ... the supplemental payments at issue are not statutorily prohibited as they do not affect the benefit the employee will receive from the retirement system nor do they impose any obligation upon the retirement system since the benefit will be paid by petitioner."). Similarly, in this case, the Respondent's payment of the full amount of pension contributions does "not affect the benefit" firefighters will receive from the retirement system. See id. Nor does it impose any obligations on the retirement system since the contributions will be paid by Respondent. 41 The Court of Appeals cases cited by the Second Department do not bar the arbitration of the Union's grievance. Matter of County of Chautauqua v. Civil Serv. Employees, Ass'n. Local 1000, 8 N.Y. 3d 513 (2007) involved a motion to stay two different grievances. The Court of Appeals stayed one grievance involving a challenge to layoffs of certain employees but refused to stay another grievance involving displacement rights. The Court of Appeals ruled that "[n]o explicit language in Section 80( 4) [of the New York Civil Service Law] can be read to prohibit'' the displacement grievance and that "it is sufficient that an arbitrator, fashioning an award under the CBA, could comply with the statute." 8 N.Y. 2d at 521-22. The Court of Appeals concluded, "because no clear public policy precludes arbitration of CSEA's secondary grievance, CSEA's cross-motion to compel arbitration is granted to that extent." Id. at 522. Similarly, in this case, there is no clear public policy prohibiting arbitration of the Union's grievance. To the contrary, the arbitration is expressly authorized by the Section 8 exception applicable to collective bargaining agreements "in effect'' on January 9, 2010 under Article 22. Similarly, the Second Department's reliance on the Court of Appeals' decisions in Matter of City of Long Beach v. Civil Serv. Emplys. Ass'n, Inc. - Long Beach Unit, 8 N.Y.3d 465 (2007), Matter of Patrolmen's Benevolent Ass'n of City of N.Y., Inc. v. New York State Pub. Empl. Relations Bd., 6 N.Y.3d 563 42 (2006) and In re City of Johnstown, 99 N.Y. 2d 273, is misplaced. In City of Long Beach, the union sought to arbitrate grievances which sought continued employment of certain provisional employees in direct conflict with time limitations contained in the Civil Service Law. In the instant case, there is no conflict between the Union's grievance and the Tier 5 law. The Section 8 exception expressly grandfathers special retirement plan benefits such as the benefits contained in the parties' CBA which is the subject of the Union's grievance in this case. Matter of Patrolmen's Benevolent Ass'n involved the longstanding policy favoring management authority over police disciplinary matters which was embodied in local laws enacting procedures for disciplining police. The Court of Appeals ruled that these "legislative commands are to be obeyed even where the result is to limit the scope of collective bargaining." 6 N.Y.3d at 576. Here, the "legislative command" is to expressly enforce the special retirement benefit plans negotiated in the parties' collective bargaining agreement under the Section 8 exception and Patrolmen's Benevolent Ass'n is therefore inapplicable. Finally, in In re City of Johnstown and Johnstown Police Benevolent Ass'n, the Court of Appeals affirmed the dismissal of a motion to stay arbitration of a grievance to provide retirement benefits to Tier II employees. The Court of Appeals concluded, "[t]here is no exception in the CBAs for grievances concerning 43 retirement benefits, either generally or for Tier II employees. Therefore, we conclude that the reasonable relationship test is readily met, and this dispute is arbitrable." 99 N.Y. 2d at 279-80. The Court of Appeals in City of Johnstown rejected the same argument made by the City in this case and properly found that the "the dispute at the heart of this case is not the negotiation of a provision of a CBA .... [T]here is no statutory, constitutional or public policy bar preventing the parties from agreeing that an arbitrator will decide whether they intended in these clauses to extend benefits to Tier II employees if and when it became lawful for municipalities to do so." Id. at 278-279. Thus, the Court of Appeals' decision in City of Johnstown requires reversal of the Second Department's decision and denial of the City's motion to stay arbitration. 44 CONCLUSION No statute or public policy forbids arbitration of this matter. The CBA contains a broad arbitration provision, and there is simply no reason why the parties' mutually selected arbitrator cannot decide this matter. Appellant respectfully requests that this Court reverse the Second Department and find: ( 1) that the Appellate Division, Second Department erred by holding that the collective bargaining agreement between the parties was no longer 'in effect'; and (2) that the Appellate Division, Second Department erred by holding that arbitration of this dispute is barred by statute. Appellate respectfully requests that this Court order the City to proceed to arbitration. Dated: New York, New York July 2, 2012 MEYER, SUOZZI, ENGLISH & KLEIN, P.C. Richard S. Coren thai J oni H. Kletter Attorneys for Respondent-Appellant Meyer, Suozzi, English & Klein, P.C. 1350 Broadway, Suite 501 P.O. Box 822 New York, New York 10018-0026 212-239-4999 45