In the Matter of Gregory Floyd, Respondent,v.City of New York, et al., Appellants. (And Ten Other Proceedings.)BriefN.Y.September 11, 2014 Supreme Court, New York County To be argued by Index Nos. 102673/12 (and ten related proceedings) MICHAEL J. PASTOR (30 Minutes) COURT OF APPEALS STATE OF NEW YORK In the Matter of the Application of GREGORY FLOYD, as President and on behalf of Local Union No. 237, I.B.T., Petitioner-Respondent, For a Judgment and Order Pursuant to Article 78 of the Civil Practice Law and Rules, -against- CITY OF NEW YORK; MICHAEL BLOOMBERG, as Mayor of the CITY OF NEW YORK; NEW YORK CITY DEPARTMENT OF CITYWIDE ADMINISTRATIVE SERVICES; EDNA WELLS HANDY, as Commissioner of the NEW YORK CITY DEPARTMENT OF CITYWIDE ADMINISTRATIVE SERVICES, Respondents-Appellants. APPELLANTS’ BRIEF KRISTIN M. HELMERS, SPENCER FISHER, ANDREA FASTENBERG, MAXWELL LEIGHTON, MICHAEL J. PASTOR, of Counsel. October 28, 2013 MICHAEL A. CARDOZO, Corporation Counsel of the City of New York, Attorney for the Respondents-Appellants, 100 Church Street, New York, New York 10007. (212) 356-0838 or -0872 mpastor@law.nyc.gov i TABLE OF CONTENTS TABLE OF AUTHORITIES ....................................................................................iv PRELIMINARY STATEMENT ...............................................................................1 QUESTIONS PRESENTED......................................................................................4 JURISDICTIONAL STATEMENT ..........................................................................5 STATEMENT OF FACTS ........................................................................................5 A. Background: Petitioners’ Unique Legal Status as “Prevailing Wage” Titles ...........................................................................5 B. Grading “Ungraded” Titles: DCAS Review and Mayoral Personnel Orders 2012/1 and 2012/2 ..........................................7 C. Current Employees: Grandfathering........................................................11 DECISIONS BELOW..............................................................................................12 POINT I....................................................................................................................13 THE APPELLATE DIVISION’S DECISION SHOULD BE REVERSED BECAUSE THE COURT ERRONEOUSLY RELIED UPON A HOLDING THAT WAS SUPERSEDED BY THE STATE LEGISLATURE AND, IN SO DOING, IGNORED THE PLAIN LANGUAGE OF THE PERTINENT STATUTE. A. The Holding in Corrigan that Localities Must Comply with the Procedural Requirements in Civil Service Law § 20 was Superseded by the State Legislature.................................13 B. The Appellate Division’s Ruling is Further Untenable in Light of the Legislature’s Failed Attempt to Reinstate the Rule that Grading is Subject to the Procedural Requirements of Civil Service Law § 20 ..............................20 C. Neither the Scope of the City’s Grading nor its Effect, in Terms of Moving Titles to Coverage under the ii Taylor Law, Has Any Bearing on the Analysis under Civil Service Law § 20 ............................................................................22 POINT II ..................................................................................................................25 THE STATE LEGISLATURE DID NOT ENACT A LAW IN 1976 OR THEREAFTER THAT ABOLISHED OR IN ANY WAY LIMITED NEW YORK CITY’S AUTHORITY TO TAKE UNGRADED TITLES AND GRADE THEM. POINT III .................................................................................................................31 THE CITY CARRIED OUT THE GRADING OF PETITIONERS’ TITLES IN A REASONABLE MANNER, AND PETITIONERS’ ABILITY TO COLLECTIVELY BARGAIN OVER WAGES AND BENEFITS REMAINS FULLY INTACT AFTER GRADING. POINT IV.................................................................................................................35 THE LABOR LAW DOES NOT REQUIRE THAT THE CITY NEGOTIATE WITH COLLECTIVE BARGAINING REPRESENTATIVES OVER GRADING TITLES, AND THE CITY DID NOT ENTER INTO AGREEMENTS WITH SUCH REPRESENTATIVES FORFEITING THE AUTHORITY TO GRADE WITHOUT FIRST OBTAINING THEIR ASSENT. A. The City is not Required under the Civil Service Law, the Labor Law, or any Other Provision of Law to Bargain with Petitioners over the Establishment of Grades ......................................................................................................35 iii B. The City has not Consented by Agreement with the Unions to Forfeit its Lawful Power to Grade Titles ................................41 CONCLUSION........................................................................................................43 iv TABLE OF AUTHORITIES CASES Acunci v. Ross, 73 A.D.2d 643 (2d Dep’t 1979)..........................................................................18 Brukhman v. Giuliani, 94 N.Y.2d 387 (2000) .........................................................................................29 Buffalo Building Trades Council v. Bd. of Education, 36 N.Y.2d 782 (1975) ...................................................................................18, 26 Casey v. Catherwood, 34 A.D.2d 806 (2d Dep't 1970), aff'd, 28 N.Y.2d 702 (1971)............................26 Cayuga-Onondaga Counties BOCES v. Sweeney, 89 N.Y.2d 395 (1996) .........................................................................................29 Civil Service Employee Association, Inc. v. State of New York Public Employment Relations Board, 248 A.D.2d 882 (3d Dep't 1998) ........................................................................37 Consedine v. Portville Central School District, 12 N.Y.3d 286 (2009) .........................................................................................42 Goodwin v. Perales, 88 N.Y.2d 383, 88 N.Y.2d 383 (1996) .........................................................................................32 Kaye v. Lippman, 241 A.D.2d 159 (3d Dept. 1998) ........................................................................34 Marcus Associates, Inc. v. Huntington, 45 N.Y.2d 501 (1978) .........................................................................................16 Matter of Burri v. Kern, 180 Misc. 74 (Supt. Ct. N.Y. Cty. 1942), aff'd, 266 A.D. 841 (1st Dep't 1943), aff'd, 291 N.Y. 776 (1944) ......................................................................17 v Matter of City of New York v. Novello, 65 A.D.3d 112 (1st Dep’t 2009) .........................................................................16 Matter of Corrigan v. Joseph, 304 N.Y. 172 (1952) .................................................................................. passim. Matter of Delmar Box Co., 309 N.Y. 60 (1955) .............................................................................................27 Matter of Evans v. Newman, 100 Misc. 2d 207 (N.Y. Sup. Ct., Albany County 1979) .................................................................36 Matter of Evans v. Newman, 71 A.D.2d 240 (3d Dep't 1979), aff'd, 49 N.Y.2d 904 (1980)................... Passim. Matter of Hroncich v. Con Edison, __ N.Y.3d __, slip op. at 13 (decided October 15, 2013)...................................24 Matter of Johnson City Professional Firefighters Local 921, 18 N.Y.3d 32 (2011) ...........................................................................................42 Matter of Joyce v. Ortiz, 108 A.D.2d 158 (1st Dep't 1985)........................................................................19 Matter of Pell v. Bd. of Education, 34 N.Y.2d 222 (1974) .........................................................................................32 McFarland v. City of New York, 23 Misc. 3d 1127A (Sup. Ct., N.Y. Co. 2009) ...................................................41 N.Y.S. Court Clerks Ass'n v. Crosson, 269 A.D.2d 335 (1st Dept. 2000) .......................................................................34 People v. Fernandez, 20 N.Y.3d 44 (2012) ...........................................................................................19 People v. Miller, 18 N.Y.3d 704 (2012) .........................................................................................24 vi Perez v. City of New York, 41 A.D.3d 378 (1st Dep't 2007), lv. denied, 10 N.Y.3d 708 (2008) ..................27 Roberts v. New York City Health and Hosp. Corp., 97 A.D.3d 311 (1st Dept.), lv. denied, 17 N.Y.3d 717 (2011) ...........................32 Roberts v. New York City Office of Collective Bargaining, 114962/09 NYLJ 1202474686473 (Sup. Ct., N.Y. Co. October 15, 2010) ....................................41 Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311 (1991) ....................................................................................21, 30 Weber v. Lang, 13 A.D.2d 345 (1st Dept. 1961), aff'd, 11 N.Y.2d 997 (1962)...........................26 Wood v. City of New York, 274 N.Y. 155 (1937) .....................................................................................14, 27 STATUTES N.Y. City Charter § 814...........................................................................................25 N.Y. Civil Service Law § 20........................................................................... passim. N.Y. Civil Service Law § 41....................................................................................24 N.Y. Civil Service Law § 42....................................................................................24 N.Y. Civil Service Law § 52....................................................................................24 N.Y. Civil Service Law § 206....................................................................................6 N.Y. Constitution, Art. V, § 6..................................................................................25 N.Y. Labor Law § 220 .................................................................................... passim. 1 COURT OF APPEALS STATE OF NEW YORK In the Matter of the Application of GREGORY FLOYD, as President and on behalf of Local Union No. 237, I.B.T., Petitioner-Respondent, For a Judgment and Order Pursuant to Article 78 of the Civil Practice Law and Rules, -against- CITY OF NEW YORK; MICHAEL BLOOMBERG, as Mayor of the CITY OF NEW YORK; NEW YORK CITY DEPARTMENT OF CITYWIDE ADMINISTRATIVE SERVICES; EDNA WELLS HANDY, as Commissioner of the NEW YORK CITY DEPARTMENT OF CITYWIDE ADMINISTRATIVE SERVICES, Respondents-Appellants. APPELLANTS’ BRIEF 0BPRELIMINARY STATEMENT In this Article 78 proceeding and ten related Article 78 proceedings, the municipal respondents-appellants (collectively referred to as “the City”) appeal from a decision and order (one paper) of the Appellate Division, First Department, entered on May 28, 2013 (2820).F1F In its order, the First Department affirmed eleven orders of the Supreme Court, New York County, entered July 11, 2012, July 1 All citations, unless otherwise noted, are to pages in the record on appeal, filed herewith. 2 24, and July 26 2012, all of which annulled Mayoral Personnel Orders 2012/1 and 2012/2 (“Personnel Orders”) (5, 14, 23, 32, 40, 49, 58, 67, 75, 84, 93).2 The Appellate Division’s order should be reversed. This case concerns a small segment of the City’s unionized work force (“petitioners”) who have wages set at private sector levels. These “prevailing wage” employees are unique in that every other represented City employee is paid wages similar to other public sector workers. The City determined that there was no valid basis to continue to treat these City workers uniquely and that, for purposes of collective bargaining over wages and benefits, they should be brought into the fold with the rest of the City’s work force. To accomplish this, the City utilized the historic managerial power of “grading” - i.e., establishing a structure for these titles by grouping them based on skill level and duties and assigning salary ranges to each group. Grading has the legal effect of terminating a title’s status as prevailing wage and moving that title to coverage under the Taylor Law and the New York City Collective Bargaining Law (“NYCCBL”). In an effort to minimize the disruption to incumbents in these prevailing wage titles, the Personnel Orders retain the status quo with respect to wages and benefits of incumbents. The Personnel Orders also do not change the civil service 2 The Supreme Court issued eleven separate orders and decisions, but the text of the decisions in each of the cases is essentially identical. 3 classification of any of petitioners’ titles. Indeed, nearly all of petitioners are in competitive class titles, and all of them remain in such titles after grading. However, as result of this grading, newly-hired employees in these titles will no longer be subject to prevailing wage laws; their wages will be set by reference to other public sector workers pursuant to collective bargaining under laws applicable to all the other unions in the City. The Appellate Division, First Department, annulled the Personnel Orders based upon its conclusion that this Court, in the seminal decision of Matter of Corrigan v. Joseph, had held that grading of prevailing wage titles was a form of “reclassification” subject to the procedural requirements of Civil Service Law § 20. This was plainly error. The portion of Corrigan cited by the Appellate Division has been expressly superseded by statute. The plain language of that statute and the legislative history that accompanied its enactment should have dictated the outcome in this case, but the First Department failed to even address the law. Moreover, the Appellate Division ignored the fact that both houses of the State legislature advanced a bill in 2001 that sought to accomplish precisely what petitioners seek in their suit: to require municipalities such as the City to comply with Civil Service Law § 20 when establishing grades or making changes to them. The bill would have essentially reinstated the superseded portion of Corrigan that was erroneously relied upon by the Appellate Division in the case at bar. But 4 Governor Pataki vetoed the bill, making clear beyond any doubt that Civil Service Law § 20, in its current form, does not apply to grading and, as such, to the Personnel Orders. In short, the Appellate Division erroneously relied upon a superseded holding, and, for that reason, its decision cannot stand. Because the City was not required to comply with Civil Service Law § 20 when it graded petitioners’ ungraded titles, and because the Personnel Orders were otherwise lawful and rational, the Appellate Division’s order should be reversed. 1BQUESTIONS PRESENTED 1. Did the Appellate Division err when it concluded that Civil Service Law § 20 applies to the grading of ungraded titles even though Civil Service Law § 20, by its terms, does not apply to grading? 2. Should this Court reject petitioners’ claim that the legislature has enacted a law eliminating or altering the power of the City to grade ungraded titles when no such law exists and, further, when this Court has repeatedly affirmed not only the validity of the power to grade but its importance in the State’s civil service system? 3. Did the Supreme Court erroneously conclude that the City’s grading was arbitrary and capricious when the provisions of the Personnel Order were wholly reasonable, particularly insofar as they retain the status quo in terms of wages and benefits of incumbent employees in affected titles? 5 4. Should this Court reject petitioners’ claim that the City is required to bargain with petitioners over the establishment of salary grades? 2B JURISDICTIONAL STATEMENT This Court granted leave to appeal in an order entered August 29, 2013. Pursuant to CPLR § 5602(a)(1)(i), this Court has jurisdiction to determine this appeal because the action originated in the Supreme Court, and the May 28, 2013 order of the Appellate Division finally determines the action. STATEMENT OF FACTS A. Background: Petitioners’ Unique Legal Status in Occupying “Prevailing Wage” Titles. Prior to the issuance of Mayoral Personnel Orders 2012/1 and 2012/2, nearly all of the titles of employees represented by the petitioner-respondent unions were in the competitive class (422, 439).F Employees in one of the petitioners’ represented titles were in the Labor Class (id.). Although their titles appeared in the City’s civil service directory of classified titles, no title was “graded” into delineated groups based on similar work skills and duties (440). The entirety of the City’s unionized work force, other than petitioners, is covered by and negotiates collectively pursuant to the New York City Collective Bargaining Law (“NYCCBL”) (439).3F The NYCCBL is authorized by, and 3 The City filed eleven verified answers with exhibits in the various cases below, but the averment of facts in each was nearly identical. For ease of reference, in its statement of facts the 6 generally implements, the provisions of Article 14 of the Civil Service Law, known as the “Taylor Law.” N.Y. Civil Service Law § 206. Under the NYCCBL, the City and collective bargaining representatives are required to negotiate over employee wages and benefits (424). If the parties fail to reach agreement through bargaining, either can invoke an impasse procedure with the Board of Collective Bargaining (“BCB”). Under this procedure, a panel appointed by the parties obtains evidence, hears testimony, and ultimately issues a report and recommendation for terms of settlement, including wages (id.). This recommendation can then be appealed to BCB, which issues a final decision affirming or modifying the panel recommendations in whole or in part (425). The BCB’s final determination is considered a final arbitration award under the CPLR (id.). 4 Employees represented by petitioners, who are City employees in “ungraded” titles, are not subject to the NYCCBL with respect to monetary issues, but rather to the prevailing wage provisions of Labor Law § 220 (423). They also negotiate through their representatives with the City over wages and benefits, but if their representatives fail to reach an agreement with the City, they do not appeal to BCB for resolution under impasse procedures (id.). Instead, they may file a City will cite to the verified answer in Floyd, et al. v. City of New York, et al. (102673/12) rather than to each verified answer, unless otherwise required by text accompanying the citation. 4 Certain titles not at issue herein are permitted by State law to utilize impasse procedures of the New York State Public Employment Relations Board rather than those of BCB. 7 complaint with the City Comptroller seeking an investigation to determine the prevailing rate of wages and supplements (id.). Under this procedure, the Comptroller must hold a hearing, a requirement the Comptroller has delegated to the Office of Administrative Trials and Hearings (“OATH”), which then issues a report and recommendation on the prevailing wage (id.). The Comptroller is not bound by the OATH determination. He or she has sole discretion to accept, modify, or reject it in issuing a final order (423-24). The standard applicable to the Comptroller’s decision is set out in Labor Law § 220. It specifies that the wages must be set according to the “prevailing rate of wage,” which is defined as “the rate of wage paid by the locality . . . by virtue of collective bargaining agreements between bona fide labor organizations and employees of the private sector.” N.Y. Labor Law § 220(5)(a). B. Grading “Ungraded” Titles: DCAS Review and Mayoral Personnel Orders 2012/1 and 2012/2. Pursuant to its powers under the New York City Charter (“City Charter”), the Department of Citywide Administrative Services (“DCAS”) conducted a review of “ungraded” titles in the City’s personnel directory of titles, i.e., those titles classified by the municipal civil service commission in the competitive class, Rule X, Part 38, that were listed in the service titled the “Skilled Craftsman and Operative Service,” as well as the City Laborer title in the labor class in Rule X (425, 439-40). All of these titles were “ungraded” and thus covered by Labor Law 8 § 220 (id.). Their wages were set either by a “consent determination” with the collective bargaining representatives ratified by the Comptroller, by a wage agreement reached through bargaining (with a waiver of the Labor Law § 220 process), or by order of the Comptroller after a hearing held at OATH (440). DCAS recommended that the City grade these titles for two reasons. First, employees in these titles operate on a full-time, per annum basis (id.). DCAS concluded that similar private sector employees, however, often work on a seasonal or project basis (id.). Their hourly wages are thus higher, and having the Comptroller set wages for full-time employees at these private sector rates resulted in inequitable and sub-optimal salary determinations (id.). Second, DCAS found that leaving these titles outside an integrated, graded structure failed to further the constitutional mandate of merit and fitness in civil service hires and promotions (id.). DCAS thus determined that there was “no sound policy basis” for continuing to leave this segment of the City’s work force outside a graded framework (441). DCAS concluded that these titles should be graded and brought under the NYCCBL (426). In conjunction with the Mayor’s Office of Labor Relations (“OLR”), DCAS reviewed all the specified titles, considering tasks performed, the training and experience required to perform those tasks, required licenses and certifications and other similar factors (427). It also reviewed other similar City titles, state and 9 federal civil service grades and other information to determine wages set for similar public employers in the New York metropolitan area (441). DCAS determined that the affected titles had commonalities supporting the creation of fourteen services, which would then be graded (441, 442): • A Metal Work Service for titles such as Blacksmith and Welder; • An Electrical Maintenance Service for titles such as Electrician; • A Mechanical Maintenance Service for titles such as Auto Mechanic and Machinist; • A Plant Maintenance Service for titles generally responsible for the operation and maintenance of treatment plants; • A Plumbing Service for titles such as Plumber and Steamfitter; • A Building Maintenance Service for titles, such as Maintenance Worker and Locksmith, generally responsible for the upkeep of buildings; • An Infrastructure Maintenance Service for titles generally responsible for maintaining structures such as roads and bridges; • A Carpentry Service for titles such as Carpenter and Ship Carpenter; • A Painting Service for titles such as Painter and Letter/Sign Painter; • An Equipment Operation Service for titles which generally utilize specialized equipment, such as cranes and tractors, to perform their work; • A Structural Maintenance Service for titles such as Sheet Metal Worker and Rigger; • A Building Construction Service for titles such as Glazier and Plasterer; • A Press Operation Service for titles which are related to printing; and • A Maritime Service for titles which generally operate non- passenger marine vehicles. DCAS recommended that these titles be excluded from the Career and Salary Plan and instead be covered by the new Leave Regulations for the Maintenance and 10 Operation Services (id.). It further recommended that the labor class title for the City Laborer title be assigned to the Building Maintenance Service Pay Plan and also be covered by those same leave regulations (id.). As there were commonalities for each service DCAS established, there were also commonalities within each title “with respect to the increasing levels of responsibility in each service which support[ed] the establishment of a grading construct” (428, 442). Accordingly, DCAS recommended establishing four grades in each of the fourteen new services: “Grade I” is comprised of helper/entry level titles; “Grade II” is comprised of journey level (i.e., fully trained and experienced level) titles; “Grade III” is comprised of supervisor level titles; and “Grade IV” is comprised of supervising supervisor titles (id.). DCAS assigned a minimum and maximum salary range based on the review it had conducted for each grade (id.). Most of the salary ranges under the new titles, which by the terms of the Personnel Orders only apply to new hires, encompass the present salary of each title (461). The two exceptions are High Pressure Plant Tenders, whose salary is increased in the graded system, and Construction Laborers, whose salary is currently about $2,000 above the maximum set in the graded system (463, 465). Salaries will in any event be subject to collective bargaining, as is the case with all other represented City employees, and may be adjusted retroactively as a result of the bargaining process. 11 The Personnel Orders did not change the civil service classification of any of petitioners’ titles (430). Nearly all of petitioners are in the competitive class; all of these titles remain in such class (id.). The one Labor Class title remains in such class (id.). On April 10, 2012, upon the recommendation of DCAS, the Mayor of the City of New York signed Personnel Order 2012/1, which carries out in full the recommendations of DCAS with respect to the establishment of new services and the grading of each service (429, 445-51). On April 10, 2012, the Mayor also signed Personnel Order 2012/2, which establishes leave regulations for employees in the newly created “Maintenance and Operations Services Pay Plan” (429, 452- 60). C. Current Employees: Grandfathering. Consistent with the longstanding practice under which changes to titles are accomplished in a way that minimizes the impact on incumbent employees, DCAS elected to maintain the status quo with respect to salaries and time and leave for all present incumbents of the affected titles (451, 452). As a result, after the effective date of the Personnel Orders, incumbents will continue to receive their current wages (id.). However, because the titles of these incumbents have been graded, any future changes to the terms and conditions of employment, including wages, 12 will be negotiated pursuant to the procedures of the NYCCBL rather than by reference to private sector salaries under Labor Law § 220 (442). DECISIONS BELOW The Supreme Court annulled the Personnel Orders based upon its conclusion that the City failed to comply with the requirements of Civil Service Law § 20, which requires that changes to local civil service rules be made only subject to a public hearing and approval of the State Civil Service Commission (10). The Supreme Court further concluded that the Personnel Orders were arbitrary and capricious because of the effect they would purportedly have on the leave and wages of petitioners and future hires in the covered titles (9, 10). The Appellate Division affirmed, holding: “Pursuant to the subject Mayoral Personnel Orders, the City issued rules reclassifying ungraded civil service titles subject to prevailing wage bargaining under Labor Law § 220 as graded workers subject to bargaining under the New York City Collective Bargaining Law without complying with the procedures mandated by Civil Service Law § 20, i.e., notice, a public hearing, and approval by the State Civil Service Commission, which are applicable to those rules (see Matter of Corrigan v. Joseph, 304 NY 172, 185 [1952], cert. denied 345 US 924 [1953])” (2820). 13 3BPOINT I THE APPELLATE DIVISION’S DECISION SHOULD BE REVERSED BECAUSE THE COURT ERRONEOUSLY RELIED UPON A HOLDING THAT WAS SUPERSEDED BY THE STATE LEGISLATURE AND, IN SO DOING, IGNORED THE PLAIN LANGUAGE OF THE PERTINENT STATUTE. The Appellate Division concluded that grading prevailing wage titles was a “reclassification” subject to the procedural requirements in Civil Service Law § 20. In so doing, it relied upon this Court’s Corrigan decision even though the portion of Corrigan that the Appellate Division cited was superseded by a later statute. The plain language of that later statute, the legislative history that accompanied its enactment, and later legislative efforts to reinstate the superseded portion of Corrigan (which ultimately failed) demonstrate beyond doubt that grading is not subject to the procedures set forth in Civil Service Law § 20. A. The Holding in Corrigan that Localities Must Comply with the Procedural Requirements in Civil Service Law § 20 was Superseded by the State Legislature. In Matter of Corrigan v. Joseph, 304 N.Y. 172 (1952), this Court evaluated an attempt by the City’s Municipal Civil Service Commission5 to grade prevailing wage titles held by employees of the City’s Board of Transportation. See id. at 5 DCAS has the relevant powers that the City’s Municipal Civil Service Commission had at the time of the Corrigan decision. 14 177-78. The petitioners-employees in Corrigan argued that even though their titles had been graded, they still were entitled to prevailing wages as determined by the Comptroller under Labor Law § 220. Id. This Court rejected their argument. It highlighted the central role that grading plays in the mandate of the State Constitution that appointments and promotions within the civil service be made based upon merit and fitness. In particular, it noted the link between grades and the requirement that promotions in the competitive class (i.e., from one grade to the next) only be carried out through competitive examination. See id. at 181. This Court concluded that to continue to allow wages to be set by reference to private sector rates rather than pursuant to salary grades would “nullify and destroy the civil service grading system which has prevailed as an essential factor in the administration of the merit system in this State since the enactment of the first civil service law in 1883.” See id. at 180. In so holding, the Court was not creating a new rule that graded titles are no longer covered by prevailing wage laws; rather, it was merely re-affirming that rule. See id. at 183 (quoting Wood v. City of New York, 274 N.Y. 155 (1937)): The fact that the competitive class of the civil service system has been graded according to the particular work required, and the salary paid, maximum and minimum, without challenge ever since the Civil Service Law was enacted indicates that the prevailing wage law was never 15 thought to be an invasion, a disruption of all civil service regulations. This Court then went on to hold, however, that the manner in which the City had carried out the grading was invalid because the City had not complied with the predecessor provisions of Civil Service Law § 20, which required that changes to the civil service rules be made only upon approval of the State Civil Service Commission. See Corrigan, 304 N.Y. at 185. It was upon this holding, and indeed on this very page of the Corrigan opinion, that the Appellate Division relied in striking down the grading carried out by the City in this case (2820). However, the Appellate Division failed to account for the fact, or even discuss, that just eight years after Corrigan, the State Legislature superseded this portion of the Corrigan decision. In 1960, the State Legislature adopted the following amendment to Civil Service Law § 20(1) (amendment language underlined): Scope of Rules. 1. Each municipal civil service commission shall prescribe, amend and enforce suitable rules for carrying into effect the provisions of this chapter and of section six of article five of the constitution of the state of New York, including rules for the jurisdictional classification of the offices and employments in the classified service under its jurisdiction, for the position classification of such offices and employments, for examinations therefor and for appointments, promotions, transfers, resignations and reinstatements therein, all in accordance with the provisions of this chapter. Nothing in this chapter or any other law shall be construed to require that positions in the competitive class be 16 specifically named or listed in such rules, or that the salary grade to which a position in any jurisdictional class is allocated be specified in such rules. Civil Service Law § 20 requires State Civil Service Commission approval for matters specified in the rules of each municipal civil service commission. The Legislature’s 1960 amendment provided that the allocation of positions to a salary grade need not even appear in the local civil service rules at all. If grading, the allocation of positions to grades, does not need to be specified in the rules, if follows ipso facto that the establishment of the grades therefore does not need to be approved by the State Civil Service Commission. Since the statute’s plain meaning is clear from its text, the Appellate Division should have given the words of the statute their full effect and held that Civil Service Law § 20 does not apply to the grading of titles. See Matter of City of New York v. Novello, 65 A.D.3d 112, 116- 117 (1st Dep’t 2009) (citing Marcus Associates, Inc. v. Huntington, 45 N.Y.2d 501, 505 (1978)) (“Where the statutory language is so clear and unambiguous as to belie any interpretation other than its expressed peremptory term, courts are without authority to enlarge or limit this unambiguous language”). Even if this Court were to look beyond the plain words of the statute, the law’s legislative history shows that the express purpose of the law was to overrule the holding in Corrigan upon which the Appellate Division relied below. In the 17 explanatory memorandum found in the bill jacket, the State Civil Service Department explained: There are no specific provisions in the Civil Service Law requiring that competitive class titles and the salary grade of each be specified in the rules of municipal commissions. However, the courts have taken cognizance of the practice in New York City and held that before a new title or grade may be effective, it must be adopted in the rules. (Burri v. Kern, 180 Misc. 74, aff’d, 266 App.Div. 841, aff’d, 291 N.Y. 776; Corrigan v. Joseph, 304 N.Y. 172.) Accordingly, we feel that this legislation is necessary in order to enable the termination of this City’s practice of including those matters in the rules of the Municipal Commission.6 Governor’s Bill Jacket, Laws of 1960, Chapter 73, Explanatory Memorandum of the State Civil Service Department, at 7 (emphasis added). The explanatory memorandum also pointed out that requiring State approval of grading made no sense because it did not “involve violations of the Civil Service Law merit system principles.” See id. Grading was thus viewed as differentiated from changes that would merit State review: e.g., changing a competitive class title, which could only be filled by competitive examination, to a non-competitive class title, which could be filled at the discretion of the employer. The memorandum concluded: “By what right or for what reason should the State Commission veto a salary grade adopted by the Board of Estimate or veto a competitive class job title prescribed by the 6 It is telling that numerous petitioners, in their briefs below, cited the Burri decision for the proposition that grading of ungraded titles was covered by Civil Service Law § 20. It too came before the 1960 amendment and, as is made clear from this reference here, was superseded by it. 18 municipal commission. It makes no sense that these matters should . . . have to be approved by the State Commission.” Id. Until the lower court decisions in this matter, not one Court since the 1960 law took effect had held that grading of ungraded titles is subject to the provisions of Civil Service Law § 20. Indeed, to the contrary, the cases that have affirmed the power of localities to grade ungraded titles have not even mentioned Civil Service Law § 20, presumably because it was plain that it was inapplicable to grading. For example, this Court affirmed the grading of ungraded titles by the Buffalo Board of Education that had been carried out without any reference to approval by the State Civil Service Commission. Buffalo Building Trades Council v. Bd. of Education, 36 N.Y.2d 782 (1975) (affirming the Fourth Department in a case where the Board of Education had placed ungraded titles in a graded structure). Similarly, in Acunci v. Ross, 73 A.D.2d 643 (2d Dep’t 1979), the Appellate Division upheld the ability of the Village of Mt. Kisco to grade ungraded titles and, again, the record is devoid of any evidence that Mt. Kisco needed to obtain the approval of the State Civil Service Commission. The absence of any such argument or discussion is telling: no approval was needed because grading is carved out of Civil Service Law § 20. In sum, it is beyond dispute that the intent of the 1960 amendment - which, the City attests, is clear enough by the words of the statute - was to remove grading and changes to competitive class titles from the coverage of Civil Service 19 Law § 20. And grading is all that the City has done in this case. A review of the Personnel Orders reveals that titles have been placed in grades, and salary ranges have been established (445-48). Although DCAS referred at times to the grading process as a “reclassification” for its own internal administrative reasons, there in fact have been no changes to the civil service classifications of petitioners’ titles. See People v. Fernandez, 20 N.Y.3d 44, 50 (2012) (in considering whether an accusatory instrument must conform to requirements for a complaint because it was denominated as such, substance controls over the title given to the form). For all these reasons, the Appellate Division’s conclusion that Civil Service Law § 20 applies to these Personnel Orders was erroneous.7 7 In holding that the City should have complied with Civil Service Law § 20 when issuing the Personnel Orders, the Supreme Court cited a decision of the First Department in which the First Department held that a change made to the means of filling the position of Chief of Department at the Fire Department was covered by Civil Service Law § 20. See Matter of Joyce v. Ortiz, 108 A.D.2d 158 (1st Dep’t 1985). In that case, however, the critical finding was that the City’s actions “[had] resulted in a reclassification of the title of Chief of the Department from the competitive to the non-competitive, or exempt class.” Id. at 164. This type of change, as described by the Court, is specifically covered by Civil Service Law § 20. Here, no change to any jurisdictional classification has occurred, and the Supreme Court thus erred in its reliance on Joyce. 20 B. The Appellate Division’s Ruling is Further Untenable in Light of the Legislature’s Failed Attempt to Reinstate the Rule that Grading is Subject to the Procedural Requirements of Civil Service Law § 20. If there was any doubt as to how Civil Service Law § 20 should be interpreted with respect to the grading of ungraded titles - and the City does not concede any such doubt - then the matter was settled in 2001. In that year, both houses of the legislature passed a bill that would have expressly required grading (or, as the Appellate Division incorrectly labeled it in its opinion, “reclassifying ungraded civil service titles . . . as graded workers”) to be subject to Civil Service Law § 20. It would have amended Labor Law § 220 to add a new subdivision ten to read, in part, as follows: 10. a. Notification and hearing on the reclassification of laborers, workmen or mechanics. No municipality shall administratively reclassify by local law or rule, regulation or otherwise any person who have been deemed subject to the prevailing rate and supplements defined in [Labor Law § 220] without providing proper notice to the impacted parties herein, and without amending the rules of the municipality in the manner set forth in section 20 of the civil service law . . . . See S4011/A6689 (2001) (emphasis added). It was thus clear to the legislature at the time that the City and other municipalities had the discretion to grade ungraded titles without State approval or otherwise complying with Civil Service Law § 20. This view is further confirmed by the Veto Message of Governor Pataki, who noted: 21 While it is extremely uncommon, laborers, workmen and mechanics who work for governmental employees in ungraded (non-salaried) positions are entitled to prevailing wages and supplements under Labor Law § 220 . . . . However, these positions can be reclassified by municipal civil service agencies into the classified civil service, in which case the positions would be paid a salary and would not be entitled to prevailing wage. This bill seeks to prevent such reclassification from occurring when the employer gives little or no notice to the public employees. Veto Message, Veto # 51 (2001). It is plain that the Governor also believed that the law as it currently stands does not require that grading prevailing wage titles requires state approval. This veto is highly probative of how the law should be interpreted in its current iteration and supports the City’s contention that Civil Service Law § 20 does not apply to the Personnel Orders. See Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311, 319-320 (1991) (noting that a Governor’s veto of a proposed change to a law supports the conclusion that the law subject to the vetoed bill remains unaltered in light of the veto). If the Appellate Division’s decision were correct, then this bill that passed both houses, at least as it relates to Civil Service Law § 20, would have been completely unnecessary. The better reading of this recent legislative history (as well as that accompanying the 1960 amendment to Civil Service Law § 20) is that the application of Corrigan to annul the City’s Personnel Orders was erroneous. 22 C. Neither the Scope of the City’s Grading nor its Effect, in Terms of Moving Titles to Coverage under the Taylor Law, Has Any Bearing on the Analysis under Civil Service Law § 20. Although this reasoning was not specifically adopted below, various petitioners argued before the Appellate Division that the language adopted in the 1960 amendment is either inapplicable in cases when ungraded titles are graded or, alternatively, only applies to minor modifications of grades, not to the establishment of grades. See, e.g., Brief for Roberts Petitioners, at 32-33. Neither of these arguments have merit. The argument that the carve-out for grading does not apply when prevailing wage titles are graded must be dismissed out of hand because the 1960 amendment was a specific reaction to Corrigan, which involved that very same act by the City. It is untenable to conclude that a statute adopted in reaction to a particular decision on the grading of prevailing wage titles should be construed to be inapplicable to such grading. Nor does any language in the statute itself support such a strained interpretation. Moreover, as the legislative history makes clear, those who adopted this amendment in 1960 were well aware of the grading of prevailing wage titles and its legal impact. Indeed, what has occurred in this case is the precise type of action the legislature intended to exempt from Civil Service Law § 20 in light of repeated references to Corrigan in the legislative memoranda. 23 Alternatively, petitioners argued below that Civil Service Law § 20 applies to major grading that results in the elimination of prevailing wage status as opposed to small changes to salary grades. In support of this proposition, they cited a reference in the bill jacket that amendment of Civil Service Law § 20 was needed because approval by the State Commission should only be required for civil service rules of the City that are “truly legislative in character.” Governor’s Bill Jacket, Laws of 1960, Chapter 73, Explanatory Memorandum of the State Civil Service Department, at 9. However, this statement must be read in light of the statute itself and the remainder of this memorandum, which unequivocally takes the position that there is no purpose in having the State review and approve salary grades or changes to the City’s competitive class titles. The statute itself, which of course controls over any legislative history, divides the universe in two: “legislative” changes are those where jurisdictional classifications are changed or when similar changes are made other than those excluded by the statute itself; grading and changes within the competitive classes are in fact excluded.8 In short, if the legislature had wanted to make sure that 8 Various petitioners at times implied below that the City argued in its briefs that the only changes covered by Civil Service Law § 20 are those where jurisdictional classifications are changed. It never did. However, a change in a jurisdictional classification (e.g., if the City had changed petitioners’ titles from competitive to non-competitive) is the paradigmatic change envisioned by Civil Service Law § 20 because such a change goes to the heart of the purposes underlying the State’s civil service scheme (i.e., merit and fitness as the primary goal in hiring and promotions, and the use of competitive examinations wherever practicable). And it did not occur in this case. 24 some category of “important” grading policies would remain covered, it could have exempted them, but it did not do so. See Matter of Hroncich v. Con Edison, __ N.Y.3d __ , slip op. at 13 (decided October 15, 2013) (“Presumably, if the legislature had wanted this to be the case, it would have said so”); People v. Miller, 18 N.Y.3d 704, 709 (2012) (“If the Legislature intended harmless error analysis to apply in cases like this, in had only to say so”). In addition, this attempt to argue that certain grading is exempt from § 20 while other types of grading are covered cannot withstand scrutiny in light of the fact that Corrigan itself did not involve minor changes to grading. If the statute, as amended in 1960, meant that grading of the sort carried out in Corrigan would not be covered, there is simply no basis to conclude that grading in this case would have been viewed in any other light. 9 In short, petitioners’ argument that the type of grading carried out by the Personnel Orders is somehow unique, and thus covered by Civil Service Law § 20, because it terminates their status as prevailing wage employees is baseless. 9 The 1960 amendment also provided that changes within competitive class titles were also excluded from the requirements of a public hearing and State approval. Thus, even if there were changes to such classifications in the Personnel Orders, the changes would still not be covered by Civil Service Law § 20(1) because they only consisted of changes within the competitive class. In addition, with respect to the one labor class title, reclassifications within this class are exempted by virtue of the statutory structure of the Civil Service Law, which requires (in §§ 41(2) and 42(1)) that positions in the non-competitive and exempt classes be specifically named in the rules, while notably omitting any such requirement in § 44, which governs the labor class. 25 POINT II THE STATE LEGISLATURE DID NOT ENACT A LAW IN 1976 OR THEREAFTER THAT ABOLISHED OR IN ANY WAY LIMITED NEW YORK CITY’S AUTHORITY TO TAKE UNGRADED TITLES AND GRADE THEM. Petitioners argued below not only that the superseded portion of Corrigan remains good law, but that the other half of the decision, which reconfirmed the City’s power to grade titles, was abrogated by a law adopted in 1976 that allegedly stripped the City of its power to grade titles without bargaining over grades with petitioners (see, e.g., Roberts Br., at 40; Brief for Floyd Petitioners-Respondents (“Floyd Br.”), at 6). The text of the statute they cited for this proposition and the legislative history of the 1976 changes to the provision, as well as the 1984 changes and case law and legislative history since those changes, make clear that this argument lacks any merit. Before turning to the 1976 amendment cited by petitioners, it is necessary to state key background principles relating to the State’s civil service system and grading’s role in that system. The Mayor and DCAS are obligated under the N.Y. Constitution to create a system whereby appointments and promotions in New York City are made according to merit and fitness and, to the extent practicable, by competitive examination. N.Y. Constitution, Art. V, § 6. The Civil Service Law 26 contemplates salary grades, see, Civil Service Law § 52, and under the New York City Charter, the Mayor and DCAS have the power to establish classes and grades. N.Y. City Charter § 814. And the City’s power to grade titles is neither incidental nor ancillary to the operation of its civil service; to the contrary, grading has been viewed an “an essential factor in the administration of the merit system in this state since the enactment of the first civil service law in 1883.” Corrigan, 304 N.Y. at 180.10 Finally, court decisions issued before Corrigan, the Corrigan opinion itself ,and every decision since Corrigan (other than those in this matter) have placed beyond doubt the principle that when the State’s civil service provisions intersect with the application of the State’s prevailing wage laws to public sector employees, the latter yields (i.e., when ungraded titles are graded). Buffalo Building Trades Council v. Bd. of Education, 36 N.Y.2d 782 (1975) (affirming the Fourth Department in a case where the Board of Education had placed ungraded titles in a graded structure); Acunci v. Ross, 73 A.D.2d 643 (2d Dep’t 1979); Casey v. 10 The importance of grading relates, in large part, to its relationship to the role of examinations in the State’s civil service system. The Civil Service Law presumes that positions are graded: indeed, it explicitly provides that promotions in the competitive class be made from persons holding competitive class positions in a lower grade than the grade in which the vacancy exists. C.S.L. § 52(1). The state and its localities are prohibited from promoting persons to higher titles in the absence of a competitive examination. See, e.g., Weber v. Lang, 13 A.D.2d 345 (1st Dept. 1961), aff’d, 11 N.Y.2d 997 (1962) (holding that the assignment of employees to positions associated with a higher salary in the absence of competitive examination constituted an unlawful promotion). As this Court made abundantly clear in Corrigan, when titles are not graded, a key purpose of the State’s civil service mandate of merit and fitness is frustrated. 27 Catherwood, 34 A.D.2d 806 (2d Dep’t 1970), aff’d, 28 N.Y.2d 702 (1971); Wood v. City of New York, 274 N.Y. 155 (1937) (upholding the grading of an ungraded title). Against this legal backdrop, petitioners contend that by passage of Chapter 933 of the Laws of 1976, the legislature meant to make New York City unique by eliminating its power to grade previously ungraded titles (Roberts Br., at 41). The text of Labor Law § 220(8-d), as amended by Chapter 767 of the Laws of 1984, simply does not support this conclusion. Labor Law § 220(8-d) is a procedural requirement that does not mention grading or the Civil Service Law at all. It simply provides that City employees who are covered by § 220 (by reason of their not being graded) may have a bargaining representative file joint complaints with the City Comptroller rather than individual ones. Not only does this law not, by its terms, overrule Corrigan,11 but if the legislature meant to overrule a firmly-established rule such as the one in Corrigan, it needed to speak with a clear and unambiguous intent: “‘It is a cardinal principle of statutory interpretation that the intent to change a long-established rule or principle is not to be imputed to the legislature in the absence of a clear manifestation.’” Perez v. City of New York, 41 A.D.3d 378 (1st Dep’t 2007), lv. 11 References in the remainder of this discussion to Corrigan are to the portion of Corrigan concerning the municipal right to grade public sector prevailing wage titles. This portion of the decision was not superseded by the 1960 State legislation discussed earlier. 28 denied, 10 N.Y.3d 708 (2008) (quoting Matter of Delmar Box Co., 309 N.Y. 60, 66 (1955)). The legislative history of the amendment does not support petitioners’ arguments either, because the Governor actually stated at the time that the bill which he signed into law would leave the Corrigan rule undisturbed. New York Legislative Service (NYLS) Governor’s Bill Jacket, Laws of 1976, Chapter 933, Approval Memorandum of Gov. Hugh Carey, dated July 27, 1976. It seems odd to presume that the legislature and the Governor believed the enactment of this law would overturn Corrigan when the Governor’s approval message states the opposite. In addition, his statement must be taken in the context of an attempt to make a similar change in 1971, when then-Governor Rockefeller vetoed the bill based upon concerns that the change would overrule Corrigan. NYLS Governor’s Veto Jacket, Laws of 1971, Veto #305, dated July 6, 1971. Governor Carey signed the 1976 bill upon assurances from the State Department of Labor that “this bill is not in conflict with the Corrigan case.” Id., Memorandum of the State Department of Labor, dated July 16, 1976, at 2. Notably, District Council 37, a petitioner in one of these appeals, argued in favor of the 1976 amendment on administrative efficiency grounds without so much as mentioning, even in passing, the monumental shift it and other petitioners now claim was enacted by this law. Moreover, the bill jacket for a 1984 29 amendment to Labor Law § 220(8-d) also lacks any evidence that a longstanding managerial power was being waived or removed by the procedural changes set forth in the statute, as amended. It would again be odd if, several years after an explicit statement by the Governor that Corrigan was being preserved, it was suddenly overturned sub silentio by a procedural amendment. Later case law cements the conclusion that Corrigan was not overturned and has never been overturned. See Brukhman v. Giuliani, 94 N.Y.2d 387 (2000) (discussing Corrigan as central to the Court’s holding that the prevailing wage provisions of state law do not apply to public assistance recipients, who are not employees of any public or private entity covered by prevailing wage requirements); Cayuga-Onondaga Counties BOCES v. Sweeney, 89 N.Y.2d 395, 404 (1996). The legislature and the Governor acknowledged the continuing vitality of Corrigan in 2001 and 2002, when efforts were made to legislatively overturn Corrigan and require that grading of ungraded titles only be undertaken with the consent of the affected unions or after other procedures had been followed. See Governor’s Veto Jacket, Laws of 2002, Veto #9; Governor’s Veto Jacket, Laws of 2001, Veto #51. In 2001, the same bill that purported to apply the requirements of Civil Service Law § 20 to grading also had a provision requiring that grading be collectively bargained, and Governor Pataki vetoed the bill and stated that 30 “administrative reclassification of employees should remain within the independent discretion of the civil service agencies.” Veto #51 Message, Laws of 2001. In 2002, another bill to regulate grading was vetoed, with the State Civil Service Commission explicitly referencing Corrigan in discussing the potential effects of the bill without any reference to Corrigan having been abrogated. Governor’s Veto Jacket, Laws of 2002, Veto #9, at 9. These two vetoed efforts to overrule or modify Corrigan and its progeny place beyond any doubt the conclusion that the 1976 and 1984 amendments did not effect the change ascribed to them by petitioners. See Solomon R. Guggenheim Foundation, 77 N.Y.2d at 319-320. Nor is there any basis to conclude that Corrigan should be overruled. The key finding in Corrigan - that setting wages by reference to private sector wages runs contrary to the overarching merit and fitness requirements of the State’s civil service scheme - remains as true today as it was in 1952. The purpose of grading is to establish a coherent structure of salary ranks; having the City Comptroller set wages by reference to the private sector (or even setting them pursuant to negotiation, but with the Comptroller’s reliance upon private sector wages as a statutory backstop) is inherently inconsistent with the public sector merit and fitness requirement. Indeed, if one were to establish a grading system from scratch, 31 one would never do so by reference to the fluctuating private labor market. Instead, one would approach it, as the State itself has done, by establishing grades and negotiating with State employees over wages under the Taylor Law with reference to that graded structure. See Civil Service Law § 130 (listing salary grades for competitive, non-competitive and labor class employees in State service). The reasoning in Corrigan is sound. It remains good law and stands for a sensible principle: When the State or local governments allocate positions to grades, the statutory provisions related to applying private sector prevailing wages to public sector employees no longer apply in order to further the purposes of the State’s civil service system. POINT III THE CITY CARRIED OUT THE GRADING OF PETITIONERS’ TITLES IN A REASONABLE MANNER, AND PETITIONERS’ ABILITY TO COLLECTIVELY BARGAIN OVER WAGES AND BENEFITS REMAINS FULLY INTACT AFTER GRADING. The Supreme Court indicated in its decision that in addition to allegedly violating Civil Service Law § 20, the Personnel Orders were arbitrary and capricious because of their purported effect on the wages and benefits of petitioners’ members (9, 10). In so doing, the Supreme Court made two analytical 32 errors. First, it failed to account for the grandfathering of incumbents. And second, it implied that the petitioners’ ability to bargain over wages and benefits had been diminished or eradicated. Both conclusions are incorrect and, as a result, the Supreme Court’s finding that the orders lacked a rational basis or were arbitrary and capricious should be reversed. As an initial matter, to have the Personnel Orders invalidated under Article 78 on reasonableness grounds, petitioners must meet a high bar. Indeed, the Personnel Orders can be disturbed only if they are so lacking in reason that they are essentially arbitrary. See Goodwin v. Perales, 88 N.Y.2d 383, 395-96 (1996). “Arbitrary action is without sound basis in reason and is generally taken without regard to the facts.” Matter of Pell v. Bd. of Education, 34 N.Y.2d 222, 231 (1974). This high bar is consistent with the principle that courts should avoid substituting their policy judgments for those of legislative bodies or rule-making agencies. See Roberts v. New York City Health and Hosp. Corp., 87 A.D.3d 311, 327 (1st Dept.), lv. denied, 17 N.Y.3d 717 (2011) (reversing lower court’s decision to invalidate agency action on the ground that it was not the province of the courts to “weigh the desirability of any action or choose among alternatives”) (internal citations omitted). There is simply no evidence in the record that supports the conclusion that the Personnel Orders are arbitrary or were drafted and issued without regard to 33 facts. Leaving these titles in ungraded positions fails to advance the goals of the State’s civil service system and results in wage determinations that are arbitrary in relation to a public sector wage system. Bringing them under the Taylor Law, on the other hand, solves these problems while at the same time affording the employees all bargaining rights possessed by every other represented employee in the City, including the right to bargain to adjust retroactively the City’s initial numerical salary determinations. The manner in which the grading is to be implemented is also reasonable, especially in light of the City’s acknowledged duty to bargain over salaries after the initiation of the new grading structure. The City had many options at its disposal to implement the grading process. It could have set initial salary grade ranges below current wages for the affected titles. It also could have implemented the change without any grandfathering of current employees, rather than applying it prospectively. Instead, the City set salary ranges that for all but two titles encompass the salaries of current titles. Therefore, until the City and petitioners negotiate new agreements pursuant to the NYCCBL, which may be retroactive in nature, new hires will be made at salaries generally commensurate with the salaries that employees would have earned had they been hired under the § 220 scheme. For example, the salary range for the “Supervisor Locksmith” hired after the effective 34 date of the Orders will be between $54,000 and $70,000, which encompasses the current salary of that title, $56,731 (465). In addition, the City sought to smooth the transition into the new framework by grandfathering in current incumbents so that they would see no diminution in their salaries pending newly-negotiated agreements. This was not only reasonable, but consistent with precedent regarding the benefits of grandfathering. See N.Y.S. Court Clerks Ass’n v. Crosson, 269 A.D.2d 335 (1st Dept. 2000) (holding that grandfathering incumbents in the context of a downward reclassification “is an accepted practice”); Kaye v. Lippman, 241 A.D.2d 159, 162-63 (3d Dept. 1998) (denying petitioner’s request for reclassification to secretarial title in a higher salary grade, and finding that grandfathering of certain secretaries was a rational decision by respondent). The Personnel Orders were thus not arbitrary and capricious but a reasonable and measured approach to grading petitioners’ titles while causing as little disruption as possible to persons hired and now working in prevailing wage titles. For those reasons, the Supreme Court’s alternative basis for annulling the Personnel Orders was erroneous. It too should be reversed. 35 POINT IV THE LABOR LAW DOES NOT REQUIRE THAT THE CITY NEGOTIATE WITH COLLECTIVE BARGAINING REPRESENTATIVES OVER GRADING TITLES, AND THE CITY DID NOT ENTER INTO AGREEMENTS WITH SUCH REPRESENTATIVES FORFEITING THE AUTHORITY TO GRADE WITHOUT FIRST OBTAINING THEIR CONSENT. Petitioners final argument below was that Labor Law § 220 requires that the City bargain with them prior to grading or, alternatively, that the City entered into agreements with petitioners in which the City forfeited its power under the Charter to grade without first obtaining the approval of petitioners. Although the Appellate Division did not address these arguments, case law from this Court makes clear that petitioners’ first point is meritless - the City has no obligation to bargain over the act of grading. And the City has entered into no agreement with the unions forfeiting its power to grade titles. If raised on this appeal, these arguments should similarly be rejected. A. The City is Not Required under the Civil Service Law, the Labor Law, or any Other Provision of Law to Bargain with Petitioners Over the Establishment of Grades. The City had no obligation to bargain with petitioners over the Personnel Orders because the decision to allocate positions to grades does not relate to a 36 “term or condition” of employment. This Court, in affirming a decision of the Appellate Division, Third Department, has held that grading is a matter related to the “mission” of the employer and is not a term or condition of employment subject to bargaining. See Matter of Evans v. Newman, 71 A.D.2d 240 (3d Dep’t 1979), aff’d, 49 N.Y.2d 904 (1980) (unanimously affirming for the reasons stated in the Third Department’s decision). In Evans, the Public Employee Relations Board (“PERB”) rendered a decision in which it found that the allocation of positions to salary grades was a mandatory subject of bargaining. Evans, 71 A.D.2d at 242. The Supreme Court had held that grading is a matter that the legislature has left outside the scope of mandatory bargaining, noting that unilateral allocation of salary grades would not deprive the unions of their rights under the Taylor Law since individual salaries within the salary grades will remain subject to negotiation along with other terms and conditions of employment. Matter of Evans v. Newman, 100 Misc. 2d 207 (N.Y. Sup. Ct., Albany County 1979). The Third Department affirmed this holding: Allocation of positions to salary grade is primarily related to a ‘mission’ of an employer and not to terms and conditions of employment. PERB was in error when it determined otherwise. Evans, 71 A.D.2d at 246. 37 This very reasoning was adopted by this Court in its order affirming the Appellate Division, a decision that has never been questioned or undermined by any later decision. To the contrary, the Third Department has since relied upon Evans in deciding a case in favor of a county on the ground that the county had no obligation to bargain over grades. See Civil Service Employee Association, Inc. v. State of New York Public Employment Relations Board, 248 A.D.2d 882, 884 (3d Dep’t 1998). The Third Department’s application of Evans, which concerned state employees, in the local civil service context is highly significant, especially since the Court also cited with approval an earlier similar decision of the Public Employment Relations Board involving another county. That decision found that “local government should not be compelled to negotiate allocation of jobs to salary grades as such matters are ‘an essential aspect of the level and quality of services to be provided by a public employer’ . . .” Id. (citation omitted). Evans is in fact controlling precedent. The City has not unilaterally set a wage or benefit; rather, it placed existing competitive class titles in a graded structure of services, thereby removing them from the coverage of the State’s prevailing wage laws.F12F Wages and benefits are thereafter left to bargaining. 12 Although newly hired employees must be hired at salaries within the ranges set by the new grades, these salaries will immediately become subject to bargaining, and may even be adjusted retroactively if necessary based upon the outcome of the bargaining process. 38 Under Evans, the City’s grading was not a mandatory subject of collective bargaining. In spite of this clear and binding case law, petitioners below argued that amendments to Labor Law § 220(8-d) had in some manner overruled Evans. In so arguing, they appear to conflate certain procedural requirements of that section of law (i.e., how parties must negotiate over terms and conditions with respect to employees subject to Labor Law § 220) with the substantive coverage of the law. Labor Law § 220 simply establishes the procedures to be followed in setting the prevailing wage for covered employees. It does not, however, subject grading itself to those procedures. Grading precedes negotiations over the specific salary for any particular employee and is the managerial prerogative of the government employer in furtherance of the constitutional goals of merit and fitness as described in Corrigan. Once grading is established, then negotiations must occur over the actual wages of employees in that grade. See Corrigan, 304 N.Y. at 185 (salary is the “essence of a ‘grade’, and hence no valid grade may be established until the salary therefore has been fixed” by the municipal civil service commissioner). These negotiations would then take place in the framework of the Taylor Law and the NYCCBL and by reference to the standards for establishing salaries of employees in the public sector, not in the framework of Labor Law § 220, which 39 sets forth standards for employees outside the public sector. The trial court in Evans cogently described the relationship between salary grades and bargaining: Furthermore, petitioner’s unilateral allocation of salary grades does not deprive the intervening respondents of their rights under the Taylor Law. An employee’s salary within each salary grade will remain a subject of negotiation as will other terms and conditions of employment. Similarly, percentage increases of the maximum and minimum salary, i.e., cost of living increases would presumably be negotiable. See Matter of Evans v. Newman, 100 Misc. 2d 207, 211 (N.Y. Sup. Ct. 1979), aff’d, 71 A.D.2d 240 (3d Dep’t 1979), aff’d, 49 N.Y.2d 904 (1980). Nor does any legislative history of Labor Law § 220 demonstrate an intent to require bargaining over grading. For example, in 1984, an amendment was passed to the procedures for setting prevailing wage titles. See NYLS Governor’s Bill Jacket for L. 1984, Ch. 767, Letter to the Governor Mario Cuomo from Legislative Representative Claudia Wagner, dated July 5, 1984. The City noted that it understood that the change effected by the bill - permitting the recognition of one labor organization as the exclusive representative for § 220 bargaining - was intended to create a more efficient system. It would reduce costs and streamline an administrative process that permitted individual complaints to be filed with the Comptroller. Nowhere in the bill jacket, however, is there any mention of stripping the City of its powers to grade without first negotiating over the terms of 40 the grades with petitioners. There is similarly no language in the legislative history of the 1976 amendment to Labor Law § 220(8-d) indicating that grading was meant to be made a mandatory subject of bargaining. This discretionary power to grade harmonizes well with the bargaining framework of the Taylor Law itself. If the City had to bargain under Labor Law § 220 over whether properly graded salaries are to be bargained under the Taylor Law rather than under § 220, it would be caught in an “endless loop.” The very purpose of both grading, which is rooted in the State Constitution, and the Taylor Law, rooted in longstanding statutory policy, is to establish salaries in a public sector setting by reference to public sector criteria, and this purpose and its underlying constitutional and statutory mandate would be thwarted if petitioners’ theories were adopted. Finally, in 2001, when both houses of the State legislature advanced the bill in relation to prevailing wage titles, the bill also included language that would have required municipalities to obtain the consent of affected unions before grading. Governor Pataki vetoed the bill based upon on his objection to this very clause. See Veto Jacket, Veto #41, Laws of 2001, at 3. Given this veto, it is indisputable that the law as it stands today does not require the City to obtain the consent of petitioners before grading their titles. 41 B. The City Has Not Consented by Agreement with the Unions to Forfeit its Lawful Power to Grade Titles. Petitioners’ argued below that the City has “abrogated” agreements with them, an argument which is also meritless (e.g., Brief for Klein Petitioners, at 32). The agreements to which petitioners refer (“consent determinations”) make no mention of grading whatsoever. More importantly, all those agreements have expired. To the extent they could have been construed to prohibit or limit the City’s managerial prerogative to grade, they no longer are in effect. Their terms are followed by the City as a matter of practice until it and petitioners negotiate new agreements. But they cannot be viewed as a bar to grading as a managerial prerogative done pursuant to the City Charter and in furtherance of the State Constitution’s merit and fitness provisions (Art. V, § 6). Petitioners nonetheless insisted in both lower courts that the agreements remain in effect pursuant to the Triborough Amendment of the Taylor Law (Civil Service Law § 209-a(1)(e)). Until the titles are graded (which petitioners seek to prevent by the claims in these cases), the Taylor Law does not apply to the terms of employment covered by Labor Law § 220. See McFarland v. City of New York, 23 Misc. 3d 1127A (Sup. Ct., N.Y. Co. 2009) (Board of Collective Bargaining does not have jurisdiction to review a claim brought by § 220 employees pursuant to the NYCCBL); Roberts v. New York City Office of Collective Bargaining, 114962/09 NYLJ 1202474686473 (11/15/10), at *1 (Sup. Ct., N.Y. Co. October 15, 2010) 42 (Board of Collective Bargaining lacks jurisdiction over disputes regarding wages and supplements of § 220 employees). Indeed, it is ironic that petitioners, who premise the entire theory of their cases on the argument that they must be treated differently from all other City employees who are fully covered by the Taylor Law, seek to have the Courts of this State apply only the provision of the Taylor Law that would benefit them (and not all others). Further, it makes little sense to apply the protections of the Taylor Law to “agreements” that are not subject to free bargaining or impasse resolution under its terms, but rather are extracted by virtue of the underlying power of the Comptroller, derived from a statute outside the Taylor Law, to fix wages by reference to the private sector. Finally, to uphold petitioners’ theory on the consent determinations requires a determination that the City waived its powers to grade titles, a power which derives from State law and the City Charter. Any waiver by the City of such an important right as the right to grade employees in furtherance of the constitutional mandate of merit and fitness should be explicit and unambiguous, and there was no such waiver here. Matter of Johnson City Professional Firefighters Local 921, 18 N.Y. 3d 32 (2011) (“. . . the no-layoff clause in this [collective bargaining agreement] is not arbitrable because it is not explicit, unambiguous and comprehensive”); see also Consedine v. Portville Central School District, 12 N.Y.3d 286, 294 (2009). 43 CONCLUSION THE ORDER APPEALED FROM SHOULD BE REVERSED IN ITS ENTIRETY. Respectfully submitted, MICHAEL A. CARDOZO Corporation Counsel of the City of New York Attorney for Respondents-Appellants By: _______________________ MICHAEL J. PASTOR Senior Counsel KRISTIN M. HELMERS, SPENCER FISHER, ANDREA FASTENBERG, MAXWELL LEIGHTON, MICHAEL J. PASTOR, of Counsel. October 28, 2013
