In the Matter of Susan M. Kent,, Respondent,v.Jerome Lefkowitz,, et al., Appellants.BriefN.Y.March 30, 2016 APL-2014-00229 Time Requested: 10 Minutes To Be Argued by David P. Quinn STATE OF NEW YORK – COURT OF APPEALS In the Matter of the Application of the SUSAN M. KENT, As President of the NEW YORK STATE PUBLIC EMPLOYEES FEDERATION, AFL-CIO, Petitioner, -against- JEROME LEFKOWITZ, as Chairman of the NEW YORK STATE PUBLIC EMPLOYMENT RELATIONS BOARD; the NEW YORK STATE PUBL IC EMPLOYMENT RELATIONS BOARD; the NEW YORK STATE GOVERNOR’S OFFICE OF EMPLOYEE RELATIONS, by GARY JOHNSON, Director; and the NEW YORK STATE RACING AN D WAGERING BOARD, by JOHN D. SABINI, Chairman, Appellants, ____ _______ REPLY BRIEF ON BEHALF OF APPELLANTS JEROME LEFKOWITZ and NEW YORK STATE PUBLIC EMPLOYMENT RELATIONS BOAR D ______ Albany County Index No. 5928-12 ______ DAVID P. QUINN Attorney for Appellants Jerome Lefkowitz and Public Employment Relations Board P.O. Box 2074 Empire State Plaza, Agency Building 2 20th Floor Albany, New York 12220-0074 TEL: (518) 457-2678 May 18, 2015 FAX: (518) 457-2664 Table of Contents Page Table of Authorities ........................................................................................... Preliminary Statement ..................................................................................... 1 ARGUMENT ................. ……………………………………………………….…..1 POINT I PERB’S CONSTRUCTION OF THE PARTIES’ SIDE LETTER AGREEMENT AND ITS EFFECT ON THE STATE’S BARGAINING OBLIGATIONS IS REASONABLE, RATIONAL, AND SUPPORTED BY THE LANGUAGE OF THE AGREEMENT. ....................................................................................... 2 A. The language of the parties’ side letter agreement makes it reasonably clear that the parties understood that the Budget Director had t e discretion to set the wages for the 1996 track meet. .................................................................................. 2 B. The cases on which PEF relies are in accord with PERB’s determination. ......... 4 POINT II THE APPELLATE DIVISION CORRECTLY HELD THAT PERB’S DECISION TO CONSIDER THE STATE’S “DUTY SATISFACTION” DEFENSE WAS NOT ARBITRARY, CAPRICIOUS OR CONTRARY TO LAW ........................ 7 POINT III THE DUTY SATISFACTION DEFENSE DOES NOT IMPOSE AN “UNTENABLE” NEGOTIATIONS BURDEN ON EMPLOYEE ORGANIZATIONS ........................................................................................ 11 CONCLUSION .............................................................................................. 13 TABLE OF AUTHORITIES Page(s) CASES Chenango Forks Cent Sch Dist v New York State Pub Employment Relations Bd, 21 NY3d 255 (2013) ..........................................................................................8, 13 Civil Serv Employees Assn v Newman, 88 AD2d 685 (3d Dept 1982), app dismissed 57 NY2d 775 (1982), affd, 61 NY2d 1001 (1984) ...............................................................................................8, 12 County of Livingston, 26 PERB ¶ 3074 (1993) ................................................................................................9 County of Nassau, 32 PERB ¶ 3034 (1999) ................................................................................................5 Couty of Nassau, 31 PERB ¶ 3064 (1998) ................................................................................................9 New York City Transit Auth, 20 PERB ¶ 3037 (1987), confirmed sub nom, New York City Transit Auth v New York State Pub Empl Relations Bd, 147 AD2d 574 (2d Dept 1989) .....................................................................................8 New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82, AFSCME, AFL-CIO v Kinsella, 197 AD2d 341 (3d Dept 1994) ...................................................................................12 Orchard Park School Related Professional Assn, 47 PERB ¶ 3029 (2014) ..........................................................................................4, 5, 6 Patrolmen’s Benevolent Assn of Vil of Walden v Kinsella, 263 AD2d 885 (3d Dept 1999) .....................................................................................8 Poughkeepsie Prof Firefighters’ Assn, Local 596, IAFF, AFL-CIO-CLC v New York State Pub. Empl Relations Bd., 6 NY3d 514 (2006) ...................................................................................................12 State of New York (Workers’ Comp Bd), 32 PERB ¶ 3076 (1999) ..............................10 Town of Shawangunk, 33 PERB ¶ 3042 (1999) ..........................................................................................4, 5, 6 STATUTES CPLR Article 78 ................................................................................................................1 Civil Service Law (“CSL”) § 209-a.1 (d) ..............................................................7, 8, 12 -1- PRELIMINARY STATEMENT Appellants, Jerome Lefkowitz, as Chairman of the New York State Public Employment Relations Board, and the New York State Public Employment Relations Board (together, “PERB” or “Board”), submit this brief in reply to the response filed by respondent Susan M. Kent, as President of the New York State Public Employees Federation, AFL-CIO (“PEF”), in this appeal brought by PERB and appellant State of New York and New York (Racing a d Wagering Board) (“State”) from a July 17, 2014 Memorandum and Order of the Appellate Division, Third Department, in a CPLR Article 78 proceeding iitiated by PEF. The Appellate Division, with two justices dissenting, reversed a March 28, 2013 Judgment of Supreme Court that confirmed PERB’s September 20, 2012 determination that the State satisfied its collective bargaining obligations with PEF concerning the wage rate for per diem seasonal track employees whom the State planned to hire for the 1996 track meet that was 25% lower than the rate set for employees who worked during the preceding track meet. ARGUMENT As discussed more fully in its primary brief, PERB respectfully submits that the Appellate Division should have deferred to PERB’s determination and affirmed the Judgment of Supreme Court, as the dissent opined. -2- POINT I PERB’S CONSTRUCTION OF THE PARTIES’ SIDE LETTER AGREEMENT AND ITS EFFECT ON THE STATE’S BARGAINING OBLIGATIONS IS REASONABLE, RATIONAL, AND SUPPORTED BY THE LANGUAGE OF THE AGREEMENT A. The language of the parties’ side letter agreement makes it reasonably clear that the parties understood that the Budget Director had the discretion to set the wages for the 1996 track meet. In concluding that the State satisfied its collective bargaining obligations with PEF, PERB relied on the statutory discretion of the Director of the Division of Budget to annually set the wages for per diem seasonal employees at any rate the Director deemed appropriate – whether more, less, or the same as preceding seasons – and a side letter agreement in the State/PEF 1995-1999 collective bargaining agreement that limited the Director’s exercise of that discretion by providing specific negotiated wage enhancements over the base wage rate as set by the Budget Director. PERB held that the side letter agreement made it reasonably clear that the parties satisfied their bargaining obligations concerning the Budget Director’s discretion, including the Director’s discretion to set the wage rates for the 1996 track meet. Simply put, the parties’ agreem nt shows that absent circumstances warranting the negotiated wage increases, they understood that the Budget Director’s statutory discretion over the wages remained unfettered. Indeed, -3- paragraph C of the side letter agreement is replete with express references to the Director’s discretion to set the base wage rate for each track season, limited only by the specific negotiated constraints on the exercis of that discretion. Because the side letter agreement did not contain a negotiated base wage for the 1996 track meet, PERB reasonably held that the parties understood that it remained within the Budget Director’s statutory discretion to set it. Thus, irrespective of the broad range of possible outcomes of the parties’ negotiations concerning the wages for the at-issue employees, thy entered into an agreement that finalized their bargaining obligations concerning the scope of the Budget Director’s discretion to set the wage rate for the at-issue employees. PERB respectfully submits that PEF’s main argument h re is grounded on a fundamental flaw. It relies on the absence of language in the side letter agreement that authorized the Budget Director to set the wages for the 1996 track season at a rate that was 25% lower than the rate set for the preceding season. However, the parties did not have to agree to provide that authority to the Budget Director; the Director already had it, as a matter of law, limited only by negotiated constraints to the contrary. Thus, PERB’s determination was not predicated on any specific language that permitted the at-issue wage reduction; i was grounded on the absence of negotiated limitations on the Director’s exercise of the discretion that the Director already had. Because the parties fulfilled their bargaining obligations -4- concerning the Budget Director’s discretion to set th wages for seasonal employees, PEF may not now obtain additional limitations on the Director’s discretion that it did not obtain in its negotiations with the State. PERB respectfully submits that its construction of the parties’ side letter agreement and its effect on the State’s bargaining obli ations under the Taylor Law are reasonable, rational, and supported by the language of the agreement. Accordingly, PERB respectfully submits that the Appellate Division should have deferred to and confirmed PERB’s administrative decision, as the dissent opined. B. The cases on which PEF relies are in accord with PERB’s determination. PEF relies on Town of Shawangunk, 33 PERB ¶ 3042 (1999), where PERB observed: “A satisfaction of the duty to negotiate necessitates record evidence of facts establishing that the parties negotiated an agreement upon terms which are reasonably clear on the subject presented to us for decision. We reject any lesser standard for it would compromise the right and duty to negotiate and the public policies underlying the creation of that right and duty.” PEF also cites PERB’s most recent analysis of the duty satisfaction defense in Orchard Park School Related Professional Assn, 47 PERB ¶ 3029 (2014), where PERB observed: “Duty satisfaction occurs when a specific subject has been negotiated to fruition and may be established by contractual terms that either expressly or implicitly -5- demonstrate that the parties had reached accord on that specific subject.” The threshold issue in both cases was the definition of the “subject” presented to PERB for decision Thus, for example, in County of Nassau, 32 PERB ¶ 3034 (1999), on which PEF also relies [cited in its brief as CSEA Local 1000] an employer unilaterally terminated a practice of providing bottled water to its employees. PERB defined the subject of the dispute differently than the employer. There, PERB observed: “Having found that the charge was based upon the unilateral withdrawal of a benefit, and not whether the tap water available to these employees is safe or healthy, the ALJ correctly found that the health and safety clause of the parties’ collective bargaining agreement has no bearing on the charge and cannot be argued by the County as evidence that it has satisfied its duty to negotiate his term and condition of employment. The cited contractu l provision being immaterial, no jurisdictional waiver or duty satisfaction defenses can be grounded upon it.” [Footnote omitted.] The analysis in Shawangunk, Orchard Park, and Nassau County is entirely consistent with PERB’s analysis here. PERB defined the “subject” presented for decision in the instant matter as the Budget Director’s exercise of his statutory discretion to set the wages for per diem seasonal track employees whom the State planned to hire for the 1996 meet at a rate that was below the rate that the Director set for the preceding track meet. Although PEF’s charge does not reference the Budget Dir ctor’s discretion, the -6- State raised the issue in its affirmative defense as cl rified at the hearing as waiver and “duty satisfaction.” Therefore, the subject presented to PERB for decision was necessarily directed to the Budget Director’s exercis of that discretion. Contrary to PEF’s argument, it is immaterial that the improper ractice charge focused on the result of the exercise of that discretion – the reduction in the wage rate. The subject of the dispute was not whether the Director ould set the wages, but whether the Director had the discretion to set them lower than in previous years. The next issue that PERB considered, as in Shawangunk, Orchard Park, and Nassau County, was whether the parties’ side letter agreement made it reasonably clear that they reached accord regarding the Directo ’s exercise of the statutory discretion to set the wage rate for the 1996 track meet. PERB emphasized that the side letter agreement cons ituted the entirety of the parties’ negotiations concerning the wages for the seasonal employees, and that it contained numerous negotiated wage enhancements – showing limitations on the Budget Director’s otherwise unfettered statutory discretion over such matters. PERB supported its determination that the parties’ n gotiations concerned the subject of the Budget Director’s discretion by emphasizing paragraph C of the side letter agreement, which expressly and repeatedly refers to the Budget Director’s discretion to set the wages for the employees. Thus, PERB held that the side letter agreement made it “reasonably clear” that the parties’ negotiations concerning the -7- wages for seasonal employees were grounded on their understanding that the Budget Director had the statutory discretion to set th wages. They agreed that the exercise of that discretion would be limited with respect to specific wage enhancements only, leaving the base pay to the Budget Director’s discretion. Accordingly, PERB held that it was reasonably clear th t the State satisfied its bargaining obligations concerning the subject. While the parties were free to agree upon further restrictions on the Budget Director’s di cretion, such as by agreeing upon a base pay for the 1996 track meet, they didn’t. POINT II THE APPELLATE DIVISION CORRECTLY HELD THAT PERB’S DECISION TO CONSIDER THE STATE’S “DUTY SATISFACTION” DEFENSE WAS NOT ARBITRARY, CAPRICIOUS OR CONTRARY TO LAW The Appellate Division correctly held: “As the [State’s] answer, which raised the affirmative defense of waiver, was interposed in 1997, i.e., at a point in time when waiver and duty satisfaction still were regarded as essentially one and the same defense, we deem the [State’s] answer to have properly raised th duty satisfaction defense.” R. 1252. A public employer violates Civil Service Law (“CSL”) § 209-a.1 (d) by failing to satisfy its collective bargaining obligations concerning terms and -8- conditions of employment for represented public employees. See, e.g., Chenango Forks Cent Sch Dist v New York State Pub Employment R lations Bd, 21 NY3d 255 (2013). Here, PEF argues that PERB was powerless to determine whether the State satisfied its collective bargaining obligations concerning the Budget Director’s decision to set the wages for seasonal track employees for the 1996 track meet 25% lower than the wages it paid to employees who worked during the preceding track meet. In support, PEF argues that PERB had not recognized the “duty satisfaction” defense prior to 1998, two years fter PEF filed its improper practice charge and one year after the State filed its answer. PERB has consistently recognized that an employer may defeat an alleged violation of CSL § 209-a.1 (d) under an affirmative d fense characterized as “waiver.” See, e.g., Civil Serv Employees Assn v Newman, 88 AD2d 685 (3d Dept 1982), app dismissed 57 NY2d 775 (1982), affd, 61 NY2d 1001 (1984). Moreover, PERB has considered a waiver defense to ban affirmative defense that must be pleaded and proved. New York City Transit Auth, 20 PERB ¶ 3037 (1987), confirmed sub nom, New York City Transit Auth v New York State Pub Empl Relations Bd, 147 AD2d 574 (2d Dept 1989). Until 1998, the waiver defense encompassed what later c me to be called the defense of “duty satisfaction.” See, Patrolmen’s Benevolent Assn of Vil of Walden v Kinsella, 263 AD2d 885, 887 (3d Dept 1999) (Court observed that “a bargained- -9- for waiver satisfies the employer's bargaining obligation”). Indeed, the elements defining these two defenses were so intertwined that the defense of duty satisfaction was variously referred to as waiver by agreement, duty satisfaction, and waiver. For example, in County of Livingston, 26 PERB ¶ 3074 (1993), the Board held: “A union and an employer may satisfy by agreement their mutual duty to bargain a given subject, and thereby waive any further bargaining rights regarding the exercise of that contract right, without expressly stating in their contract that it was reached pursuant to the Act and was intended to fulfill the entirety of their statutory bargaining duty on that particular subject. Such a level of specificity has never been required as a condition to a finding of waiver by agreement either by this Board o in any other forum of which we are aware. We have, to the contrary, found a waiver by agreement in contract clauses which are broad when we have been persuaded that the language is a clear grant of right to the employer with respect to the subject matter of the improper practice charge.” [Footnote omitted.] Five years after County of Livingston, in 1998, PERB clarified the duty satisfaction aspect of a waiver defense. In Couty of Nassau, 31 PERB ¶ 3064 (1998), the question before PERB was whether a negotiated agreement reflected the county’s satisfaction of its bargaining obligatons concerning a particular subject about which the union claimed a bargaining right. Addressing the waiver defense, PERB explained: “We take the opportunity at the outset of our decision to clarify the nature of a defense grounded upon a claim that -10- the subject(s) sought to be bargained pursuant to a charging party’s demand have already been negotiated to completion. This Board’s decisions have sometimes characterized this defense as duty satisfaction, sometimes waiver by agreement, and sometimes simultaneously both duty satisfaction and waiver. Although the second and third characterizations cannot be considered wholly inaccurate, we believe that the first most accurately describes the true nature of this particular defense. Waiver concepts suggest that a charging party has surrendered something. [citing, CSEA v Newman supra] Although waiver may accurately describe a loss of right such as one relinquished by silence, inaction, or certain other types of conduct the defense as described is not one under which a respondent is claiming that the charging party has suffered or should be made to suffer a loss of right. Under this particular defense, a respondent is claiming affirmatively that it and the charging party have already negotiated the subject(s) at issue and have reached an agreement as to how the subject(s) is to be treated, at least for the duration of the parties’ agreement. By expressing this particular defense as duty satisfac on, we give a better recognition to the factual circumstances actually giving rise to it and expect to avoid the confusion and imprecision in analysis which have sometimes been caused by the other noted characterizations of this defense.” See also, State of New York (Workers’ Comp Bd), 32 PERB ¶ 3076 (1999). Thus, in 1997, when the State filed its answer to PEF’s improper practice charge, the State’s affirmative defense of waiver encompassed what later came to be recognized by PERB as both waiver and duty satisfac on. Moreover, by the time the instant matter was presented for hearing before the Assistant Director, the -11- duty satisfaction defense had come to be a recognized hybrid of the waiver defense and it was a fully litigated aspect of the State’s defense. R. 801-805. Accordingly, PERB respectfully submits that the Appellate Division correctly held that the State’s duty satisfaction defense was properly considered by PERB as part of the State’s waiver defense. POINT III THE DUTY SATISFACTION DEFENSE DOES NOT IMPOSE AN “UNTENABLE” NEGOTIATIONS BURDEN ON EMPLOYEE ORGANIZATIONS The duty satisfaction defense directly rebuts an improper practice charge concerning an alleged unilateral change in terms and co ditions of employment. Under that defense, the charged party must show contractual language that makes it reasonably clear that it satisfied its bargaining obligations concerning the subject. When the defense is established, it shows that the at-issue change in terms and conditions of employment was not unilateral. By contrast, a waiver defense arises where the alleged change, albeit unilateral, was permitt d; i.e., the charging party relinquished whatever bargaining rights it may have had under the Taylor Law to negotiate concerning the subject. Put another way,“duty satisfaction” is based on principals of contract construction making it reasonably clear that the parties negotiated concerning the at-issue subject, whereas waiver is the knowing, -12- intentional and unambiguous relinquishment of the very right to negotiate concerning it. PERB respectfully submits that the different burdens of proof that it applies befit the consequences of each defense. Contrary to PEF’s argument, the duty satisfaction defense does not impair a union’s bargaining rights. To the contrary, it fully recognizes those bargaining rights and, in fact, effectuates them. Indeed, nothi g in PERB’s decision here changes the basic concept that a public employer must bargain with respect to mandatory subjects, but there cannot be a violation of CSL §209-a.1(d) when the employer has satisfied its duty to negotiate. Finally, contrary to PEF’s argument, the evidence that is necessary to establish or defeat an alleged violation of the Taylor Law is not a question of statutory construction. Rather, it is the sort of analysis that the Courts have deferred to, unless PERB’s evidentiary standard is arbitrary, capricious, or affected by error of law. See, e.g., Civil Serv Employees Assn v Newman, 88 AD2d 685 (3d Dept 1982), app dismissed 57 NY2d 775 (1982), affd, 61 NY2d 1001 (1984); Poughkeepsie Prof Firefighters’ Assn, Local 596, IAFF, AFL-CIO-CLC v New York State Pub. Empl Relations Bd., 6 NY3d 514, 522 (2006). New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82, AFSCME, AFL-CIO v Kinsella, 197 AD2d 341 (3d Dept 1994). -13- PERB respectfully submits that the development of the duty satisfaction defense falls well within PERB’s expertise and judgment to which the courts have deferred. Cf., Chenango Forks Cent Sch Dist v New York State Pub Employment Relations Bd, supra. CONCLUSION For the reasons stated in PERB’s primary brief in th s appeal and herein, PERB respectfully submits that the Court should reve se the Memorandum and Order of the Appellate Division and reinstate the Judgment of Supreme Court, which deferred to and confirmed PERB’s decision dismis ing PEF’s improper practice charge. Respectfully submitted, DAVID P. QUINN Attorney for Appellants Jerome Lefkowitz and New York State Public Employment Relations Board P.O. Box 2074 Empire State Plaza, Agency Building 2 20th Floor Albany, New York 12220-0074 TEL: (518) 457-2678 FAX: (518) 457-2664 ________________________________ DAVID P. QUINN May 18, 2015