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, ____ _______ BRIEF ON BEHALF OF APPELLANTS JEROME LEFKOWITZ and the NEW YORK STATE PUBLIC EMPLOYMENT RELATIONS BOARD ______ 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 January 23, 2015 FAX: (518) 457-2664 Table of Contents Page Table of Authorities .......................................................................................... i Preliminary Statement ..................................................................................... 1 Question Presented ......................................................................................... 2 Statement of the Case ............................................................................................ 2 Statutory Framework.......................... ………………………………………...……2 Record Facts and Procedural History………….……………………… ...... ............ 3 ARGUMENT ............... ……………………………………………………….…..10 THE APPELLATE DIVISION ERRED BY DECLINING TO DEFER TO, AND SUBSTITUTING ITS OWN JUDGMENT FOR, PERB’S CONSTRUCTION OF THE PARTIES’ COLLECTIVE BARGAINING AGREEMENT AND ITS EFFECT ON THE STATE’S BARGAINING OBLIGATIONS CONCERNING THE WAGES TO BE PAID TO PER DIEM SEASONAL TRACK EMPLOYEES FOR THE 1996 MEET A. The scope of judicial review applicable to PERB’s construction of the parties’ side letter agreement and its effect on the State’s duty to negotiate under the Taylor Law is limited. .................................................................... 10 B. PERB’s construction of the parties’ side letter ag eement and its effect on the State’s bargaining obligations under the Taylor Law is reasonable, rational, and supported by the language of the agreement ...................................... 14 CONCLUSION .............................................................................................. 20 -i- TABLE OF AUTHORITIES Page(s) CASES Chemical Specialties Mfrs Assn v Jorling, 85 NY2d 382 (1995).................................................................................................12 Chenango Forks Cent Sch Dist v New York State Pub Empl Relations Bd, 21 NY3d 255 (2013).................................................................................................10 County of Nassau v New York State Pub Empl Relations Bd, 151 AD2d 168 (2d Dept 1989) .............................................................................12, 14 Greece Support Serv Empls Assn v Pub Empl Relations Bd, 250 AD2d 980 [3d Dept 1998] ...................................................................................11 Incorporated Village of Lynbrook v New York State Pub Empl Relations Bd, 48 NY2d 398 [1979].................................................................................................10 Monroe County v New York State Pub Empl Relations Bd, 85 AD3d 1439 [3d Dept 2011] .............................................................................11, 19 Pell v Board of Educ, 34 NY2d 222 [1974].................................................................................................12 Professional Staff Congress- City Univ of New York v New York State Pub Empl Relations Bd, 7 NY3d 458 (2006) ................................................................................................11, 19 Quadrant Structured Products Co., LTD, v Vertin, 23 NY3d 549 (2014).................................................................................................17 Riverkeeper, Inc. v Planning Bd. of Town of Southeast, 9 NY3d 219 [2007] ...................................................................................................12 Rosen v New York State Pub Empl Relations Bd., 72 NY2d 42 [1988] ...................................................................................................10 Town of Islip v New York State Pub Empl Relations Bd, 23 NY3d 482 (2014).................................................................................................10 -ii- Webster Cent Sch Dist v New York State Pub Empl Relations Bd, 75 NY2d 619 [1990].................................................................................................10 Westchester County Police Officer’s Benevolent Assn. v New York State Pub Empl Relations Bd, 301 AD2d 850 (3d Dept 2003) ...................................................................................11 STATUTES Civil Service Law “CSL” Article 14 .................................................................................2 CSL § 200 ...........................................................................................................................2 CSL § 201.4 ..................................................................................................................3, 15 CSL §§ 203, 204.2 ............................................................................................................3 CSL § 205.5 (d) .............................................................................................................1, 3 CSL § 209-a ........................................................................................................................3 CSL § 209-a.1 (d) ..........................................................................................................3, 7 CSL § 209-a.1 (e) ............................................................................................................12 CPLR 5601 (a) ...................................................................................................................1 CPLR 7803 (3) ...................................................................................................................3 Finance Law §§ 44 and 49 .............................................................................................4, 15 OTHER AUTHORITIES State of New York GOER and Dept of Health (Public Empls Federation), 25 PERB ¶ 3005 (1992), confd sub nom. Public Empls Fedn v New York State Pub Empl Relations Bd,195 AD2d 930 (3d Dept 1993) .................................19 County of Nassau (Police Benevolent Assn of the County of Nassau), 31 PERB ¶ 3064 (1998) ................................................................................................14 New York City Transit Auth (TWU, Local 100), 41 PERB ¶ 3014 (2008) .................14 County of Nassau (Nassau County Sheriff's Correction Officers Benevolent Assn, Inc), 46 PERB ¶ 3002 (2013) ...........................................................................14 -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 support of their appeal from a June 6, 2014 Memorandum and Order of the Appellate Division, Third Department, in an Article 78 proceeding initiated by respondent Susan M. Kent, president of the New York State Public Employees Federation, AFL-CIO (“PEF”), for review of a September 20, 201 administrative decision and order that PERB issued in an improper practice proceeding under Civil Service Law § 205.5 (d). The appeal is before this Court psuant to CPLR 5601 (a). The Appellate Division, with two justices dissenting, reversed a March 28, 2013 Judgment of Supreme Court, Albany County, which confirmed PERB’s determination that appellants, State of New York and New York State Racing and Wagering Board (“State”), fulfilled its collective bargaining obligations with PEF concerning the wages to be paid to per diem seasonal track employees whom the State planned to hire for the 1996 track meet. Although Supreme Court deferred to PERB’s construction of a side letter agreement contained in the State/PEF 1995- 1999 collective bargaining agreement and the effect that the agreement had on the State’s collective bargaining obligations concerning the wages, the Appellate Division declined to do so, stating: “[W]e simply do not believe that the [side letter -2- agreement] . . . is amenable to the expansive construction adopted by PERB” (Record on Appeal [“R.”] 1254). QUESTION PRESENTED Did the Appellate Division err by declining to defer to, and substituting its own judgment for, PERB’s construction of the parties’ collective bargaining agreement and its effect on the State’s bargaining obli ations concerning the wages to be paid to per diem seasonal track employees for the 1996 track meet? PERB respectfully submits that it did. STATEMENT OF THE CASE Statutory Framework PERB is an executive agency of the State of New York, established to administer the Public Employees’ Fair Employment Ac(Civil Service Law “CSL” Article 14), known as the “Taylor Law.” The Taylor Law is a statutory scheme that grants public employees the rights of organization and collective representation in order to ameliorate conditions that can lead to strikes and other interruptions in the orderly flow of government services. CSL § 200. It requires public employers and public employee organizations t negotiate collectively in determining represented employees’ terms and conditi s of employment (CSL -3- §§ 203, 204.2), which it broadly defines as “salaries, wages, hours and other terms and conditions of employment” (CSL § 201.4). Under CSL § 205.5 (d), PERB has exclusive, “nondelegable” jurisdiction to develop procedures to prevent unlawful conduct defined in CSL § 209-a, called improper practices, and to issue remedial orders. It is an improper practice for a public employer to fail to satisfy its collective bargaining obligations with a recognized or certified public employee organization c ncerning represented employees’ mandatorily negotiable terms and conditions of employment. CSL § 209-a.1 (d). The procedures that PERB has devised to prevent improper practices are set forth in 4 NYCRR Part 204, et seq. Record Facts and Procedural History As limited by PEF’s petition (R. 15), which is confined to the questions specified in CPLR 7803 (3) (R. 23, 25, 28), the factu l foundation for PERB’s final decision and order is not in dispute. See, Stipulation, R. 129, with Exhibits. PEF is the duly certified collective bargaining repr sentative of State employees in the Professional, Scientific and Technical Unit, including the at- issue track personnel, who hold per diem, seasonal positions. R. 129. Seasonal track personnel are in the exempt class of the classified civil service, and they serve at the pleasure of the Racing and Wagering Board’s Chairperson (“Chairperson”). R. 130. They are employed during a specific track meet, and -4- then must be re-appointed by the Chairperson to work another track meet. R. 130. Thus, seasonal positions expire at the end of each racing season, and staffing levels and deployment vary from season to season. R. 130. The seasonal track positions have never been allocated to a statutory salary grade. R. 130, 913. They are administratively designated “non-statutory” or “NS.” R. 913. The Department of Civil Service defin s NS as an administrative designation for salaries established by the Division of the Budget pursuant to Section 44 of the State Finance Law. R. 913-914. Wages for NS positions are subject to a distinct procedure under Finance Law §§ 44 and 49. R. 917-920. The wages for the at-issue per diem seasonal track employees are set each year by the Chairperson, subject to approval by the Dir ctor of the Division of the Budget (“Budget Director”). R. 918. Prior to each year’s track season, the Chairperson submits a request to the Division of the Budget for approval of the number of seasonal employees to work the upcoming meet and suggested rates of pay. R. 918. If approved, the Budget Director issues a certificate of approval along with a schedule of positions setting forth the approved salary rates for that meet. R. 918. The Budget Director has the authority to modify the Chairperson’s suggested wages for each track season. R. 131, 918. Following a review of operations at the Racing andWagering Board in the fall of 1995, as a means of cutting agency costs, the Budget Director exercised -5- his statutory discretion and set a per diem wage rate for seasonal track personnel to be hired for the 1996 track season that was 25% below the rate paid to seasonal employees who worked during the previous track season. R. 790-791. Then, on January 2, 1996, the Chairperson issued a memorandum announcing the reduction in the wages for seasonal appointments effective January 1, 1996. R. 123, 130. The new wage rate applied to all per diem s asonal track employees. R. 130. The wage reduction was unilaterally imposed and was unrelated to changes in job duties or qualifications. R. 130. In response, PEF filed both an improper practice charge with PERB and a grievance under the parties’ 1995-1999 collective bargaining agreement. R. 120, 143. The State filed an answer to the improper practice charge. R. 131. As an affirmative defense, the State alleged that PEF “waived” its right to negotiate concerning the reduction in wages. R. 140. Because PEF filed a contract grievance, the dispute was deferred to the contractual procedure for a determination regarding PEF’s contractual rights under PERB’s jurisdictional deferral policy. R. 143. Subsequently, an arbitrator issued an opinion and award concluding that the at-issue employees were properly designated “seasonal” and, therefore, that they were not covered by the general wage provisions in Article 7 of the parties’1995-1999 collective bargaining agreement which did not address or prohibit t e reduction in the per -6- diem wage rate. R. 145. Consequently, the improper practice charge, alleging a unilateral change in a non-contractual practice, was reopened by PERB (R. 154, 162), but its processing was delayed at the parties’ equest. Eventually, the parties entered into a stipulation of facts with dozens of exhibits (R. 129), and a hearing was conducted by PERB’s Assistant Director of Public Employment Practices and Representation (“Assistant Director”). At the hearing, the State introduced evidence in support of its affirmative defense that PEF waived whatever rights it may have had under the Taylor Law to complain of the at-issue wage reduction. Over PEF’s objection, the State argued that its affirmative defense encompassed both “waiver” and “duty satisfaction.” R. 801- 805. According to the State, the parties’ collective bargaining agreement contained “a comprehensively negotiated provision that…would supersede any kind of claim of extra contractual rights” (R. 801). In support, the State relied on a side letter agreement addressing the wages for the at-issue employees. R. 801. The side letter agreement incorporates many general el ments of the parties’ collective bargaining agreement, and it specifically outlines the compensation terms for unit employees in seasonal positions. R. 94-97. Paragraph A of the side letter agreement provides for lump sum payments in fi cal years 1996-97 and 1997-98 for certain seasonal employees who are paid on an hourly, per diem, or annual basis, who meet defined eligibility requirements. Paragraph B provides -7- salary increases for seasonal positions in fiscal ye rs 1997-98 and 1998-99 based on percentage increases over the 1996 wage rate. Pragraph C specifies the negotiated consequences of changes to the Federal minimum wage. Paragraph D states that the compensatory provisions and the provision concerning the Budget Director’s adjustment to the rate of compensation are applicable to those seasonal employees paid on a per diem basis, pro rata. The side letter also provides whether, when and to what extent seasonal employees ar entitled to holiday compensation, and makes seasonal employees covered by the Attendance Rules of the State Department of Civil Service eligible for Workers’ Compensation Benefits under Article 13 of the parties’ collective bargaining agreement. Significantly, the side letter agreement is the only relevant evidence of negotiations between the State and PEF regarding the wages for the at-issue employees, and there is no negotiations history regarding it. By decision dated January 28, 2010, the Assistant Director held that the State violated CSL § 209-a.1 (d) by unilaterally reducing the wages for the at- issue per diem seasonal track employees by 25%, and she ordered specific remedial measures. R. 45-65. The State filed exceptions with the Board contesting the Assistant Director’s decision, and PEF filed cross exceptions contesting the order. R. 1196, 1199. -8- On review, the Board agreed with the Assistant Director’s conclusion that the subject – wages for NS seasonal employees – is mandatorily negotiable. R. 34 - 44. However, it held that the side letter agreement reflected the State’s satisfaction of its duty to negotiate concerning the Budget Director’s discretion to set the wages for per diem seasonal employees for the 1996 track meet. R. 44. PERB reasoned that the side letter agreement constituted the whole of the parties’ agreement concerning the wages for the at-issue employees, and that it was grounded on the parties’ recognition of the Budget Director’s statutory authority to annually “adjust” (set) the wages for pe diem seasonal employees for each upcoming track meet. It emphasized that the parties agreed to constrain the Budget Director’s exercise of his statutory authori y to determine such wages under specific circumstances – meaning that, absent those circumstances, the parties understood that the Budget Director’s statutory authority to annually set the wages was unfettered. Thus, while the parties’ side letter agreement did not expressly grant the Budget Director discretion to set the wages for the at-issue employees (he already had it, as a matter of law), the parties simply agreed to limit the Budget Director’s discretion by imposing specific wage enhancements. Therefore, the Board held that the State satisfied its bargaining obligations with PEF concerning the wages to be paid to per diem s asonal track employees for the 1996 track meet, and it dismissed PEF’s charge. -9- PEF brought this Article 78 proceeding in Albany County Supreme Court which dismissed the petition. R. 5. Deferring to PERB’s construction of the side letter agreement and its effect on the State’s bargaining obligations, the Court stated: “PERB was uniquely qualified to frame the issue and having done so in a reasonable manner, the court may not interfere” (R. 10). PEF appealed. R.3. The Appellate Division reversed over the dissent of tw justices, stating: “[W]e simply do not believe that the side letter agreement at issue here is amenable to the expansive construction adopted by PERB and urged by respondents. To be sure, the side letter agreement did not have to expressly address the circumstances under which the affected employees’ salaries could be reduced in order to satisfy the state’s duty to negotiate in good faith. T e terms set forth and the language utilized in the sid letter agreement did, however, have to make it reasonably clear that PEF and the Board bargained and reached an agreement on this subject, thus demonstrating that the subject that formed the basis for the improper practice charge already was negotiated to completion. To our analysis, the provision in the side letter agreement addressing the discretion afforded to the Director of the Budget to increase the rate of compensation to be paid to seasonal track employees in order to comply with federal minimum wage requirements does not evidence the intent of the parties thereto to address any and all situations under which the Director of the Budget could unilater lly adjust wage rates for the affected employees. In other words, the side letter agreement is not, to our reading, sufficiently broad to demonstrate that the subject ma ter that formed the basis for the improper practice charge, i.e., the unilateral 25% reduction in wages, was negotiated to completion, and PERB’s determination to the contrary was arbitrary and capricious.” [Interal citations and quotations omitted.] R. 1254. -10- Therefore, the Court remitted the matter to PERB “for further proceedings not inconsistent with this Court’s decision.” PERB and the State appealed (R. 1243-49), and, after completing a preliminary jurisdictional investigation, that Court permitted the appeal to proceed. ARGUMENT THE APPELLATE DIVISION ERRED BY DECLINING TO DEFER TO, AND SUBSTITUTING ITS OWN JUDGMENT FOR, PERB’S CONSTRUCTION OF THE PARTIES’ COLLECTIVE BARGAINING AGREEMENT AND ITS EFFECT ON THE STATE’S BARGAINING OBLIGATIONS CONCERNING THE WAGES TO BE PAID TO PER DIEM SEASONAL TRACK EMPLOYEES FOR THE 1996 MEET A. The scope of judicial review applicable to PERB’s construction of the parties’ side letter agreement and its effect on the State’s duty to negotiate under the Taylor Law is limited. This Court has consistently held that “[a]s the agency charged with implementing the fundamental policies of the Taylor Law, the board is presumed to have developed an expertise and judgment that requires us to accept its construction if not unreasonable” (Incorporated Village of Lynbrook v New York State Pub Empl Relations Bd, 48 NY2d 398, 404 [1979]. See also, Town of Islip v -11- New York State Pub Empl Relations Bd, 23 NY3d 482 (2014); Chenango Forks Cent Sch Dist v New York State Pub Empl Relations Bd, 21 NY3d 255 (2013). Although that which is being interpreted is relevant to the deference to be accorded (see, e.g., Webster Cent Sch Dist v New York State Pub Empl Relations Bd, 75 NY2d 619 [1990]), “[w]here interpretation ‘involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data,’ great deference is accorded the agency’s judgment” (Rosen v New York State Pub Empl Relations Bd., 72 NY2d 42, 47-48 [1988], quoting Kurcsics v Merchants Mut Ins Co., 49 NY2d 451, 459 [1980]). As relevant here, among the statutorily delegated functions in which PERB has developed particular competence to which the Courts have deferred is PERB’s construction of a collective bargaining agreement and its effect on the duty to negotiate under the Taylor Law. See, e.g., Professional Staff Congress- City Univ of New York v New York State Pub Empl Relations Bd, 7 NY3d 458 (2006) (this Court deferred to PERB’s reasonable construction of a contractual term as “more than a boilerplate management rights clause” but a waiver of the right to demand negotiations concerning certain matters not addressed in the collective bargaining agreement). Likewise, the Appellate Division, Third Department, has consistently held that PERB is entitled to deference in matters “involving the interpretation of a collective bargaining agreement and the application of the Civil Service Law to -12- that agreement . . .[as these] are within the area of PERB’s expertise and specifically delegated authority” (Greece Support Serv Empls Assn v Pub Empl Relations Bd, 250 AD2d 980, 982 [3d Dept 1998]). “[A]s long as that interpretation is reasonable, rational and supported by the language of the agreement,” the Court will defer to PERB’s interpretation (Monroe County v New York State Pub Empl Relations Bd, 85 AD3d 1439, 1441 [3d Dept 2011]). See also, Westchester County Police Officer’s Benevolent Assn. v New York State Pub Empl Relations Bd, 301 AD2d 850 (3d Dept 2003), citing Patrolmen’s Benevolent Assn. of Vil of Walden v Kinsella, 263 AD2d 885, 888 (3d Dept 1999). Compare, County of Nassau v New York State Pub Empl Relations Bd, 151 AD2d 168 (2d Dept 1989) (PERB’s construction of terms in an expired collective bargaining agreement that reached the opposite conclusion as aearlier decision held irrational). Indeed, the Taylor Law expressly grants PERB jurisdiction to determine whether an employer has refused to continue [ .e., breached] any term contained in an expired collective bargaining agreem nt. See, CSL § 209-a.1 (e). Moreover, “[i]t is well settled that a court may not substitute its judgment for that of the board or body it reviews [u]nless the decision under review is arbitrary and unreasonable and constitutes an abuse of discretion” (Pell v Board of Educ, 34 NY2d 222, 232 [1974]). See also, Chemical Specialties Mfrs Assn v Jorling, 85 NY2d 382, 386 (1995) (“This Court’s role in reviewing an agency action is ot to -13- determine if the agency action was correct or to substitute its judgment for that of the agency, but rather to determine if the action taken by the agency was reasonable”). Thus, “[i]t is not the province of the courts to second-guess thoughtful agency decision-making and, accordingly, an agency decision should be annulled only if it is arbitrary, capricious or unsupported by the evidence” (Riverkeeper, Inc. v Planning Bd. of Town of Southeast, 9 NY3d 219, 232 [2007]). As argued below, PERB contends that its construction of the parties’ side letter agreement and its effect on the State’s bargaining obligations under the Taylor Law was reasonable, rational, and supported by the language of the agreement. Because PERB’s determination fell within t e particular competence, expertise, and judgment that it has developed in administering the Taylor Law, the Appellate Division should have deferred to PERB’s determination. Instead, the Appellate Division impermissibly substituted its own judgment for PERB’s because it “simply [did] not believe that the [side letter agreement] . . . is amenable to the expansive construction adopted by PERB” (R. 1254). In contrast, PERB respectfully submits that the dissent correctly held: “[W]hen PERB’s interpretation of the side letter agreement is afforded the deference it is due, its determination that the [State] met its burden of establishing that it satisfied its duty to negotiate with [PEF] is rational and not arbitrary and capricious” (R. 1257). [Internal citations omitted.] -14- B. PERB’s construction of the parties’ side letter agreement and its effect on the State’s bargaining obligations under the Taylor Law is reasonable, rational, and supported by the language of the agreement. The issue before PERB was whether the State/PEF side letter agreement showed that the State satisfied its bargaining obligations with PEF concerning the wages to be paid to per diem seasonal track employees for the 1996 track meet. The issue is an affirmative defense that has come t b called “duty satisfaction.” See, County of Nassau (Police Benevolent Assn of the County of Nassau), 31 PERB ¶ 3064 (1998). In New York City Transit Auth (TWU, Local 100), 41 PERB ¶ 3014 (2008), the Board held: “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.” Id., at 3078. Similarly, in County of Nassau (Nassau County Sheriff's Correction Officers Benevolent Assn, Inc), 46 PERB ¶ 3002 (2013) (cited with favor by the Appellate Division here), the Board observed: “When parties negotiate a subject to completion and have reached an agreement with respect to that subject, a respondent has satisfied its duty to negotiate and, therefore, cannot be found to have acted unilaterally in violation of §209-a.1(d) of the Act when it takes an action permitted under the terms of their agreement.” Id., at 3003 -15- Applying the “duty satisfaction” standard here, it was reasonable, rational, and legally permissible for the Board to conclude that the parties’ side letter agreement reflected the State’s satisfaction of its du y to negotiate with PEF concerning the wages to be paid to per diem seasonal employees for the 1996 track meet at a rate lower than it paid to such employees during the previous track meet. Sections 44 and 49 of the State Finance Law grant the Budget Director broad discretion to set the wages for per diem seasonal track employees at any rate he deems appropriate, whether more than, the same as, or less than the wages paid during previous years. However, because the subject of the Director’s statutory discretion – wages – is mandatorily negotiable under th Taylor Law (see, CSL § 201.4), the scope of the Budget Director’s discretion may be limited through collective bargaining. Put simply, negotiated agreem nts affecting the employees’ wages inherently limit the Budget Director’s otherwise unfettered statutory discretion over such matters. Here, the parties’ side letter agreement constitutes the entirety of the parties’ agreement concerning the wages to be paid to per diem seasonal track employees. Paragraph A of the agreement makes seasonal employees eligible for certain lump- sum payments during the 1996 and 1997 track meets. Paragraph B grants raises for the 1997 and 1998 meets. -16- In contrast to the specific negotiated wage enhancements for seasonal employees under paragraphs A and B of the side letter agreement, the agreement makes no mention of the employees’ base pay for the 1996 track meet. Thus, the side letter agreement does not limit the Budget Director’s statutory authority to set it. Indeed, the wage increases specified in paragrph B for the 1997 and 1998 seasons have no meaning except in relation to the Budget Director’s exercise of his statutory authority to set the base pay for the 1996 meet. Likewise, the lump sum payments to which seasonal employees may be entitled under paragraph A are necessarily in addition to their 1996 base pay as set by the Budget Director. Moreover, paragraph C of the side letter agreement, entitled “Effect of Minimum Wage Level,” expressly and repeatedly refers to the Budget Director’s discretion to set the wages for the at-issue employees relative to changes in minimum wages. It states: “If during the term of this Agreement the rate of compensation of any employee in a seasonal position is increased at the discretion of the Director of the Budget for the purpose of making such rate equal to the Federal minimum wage level, the provisions of [Subp]aragraphs A and B above shall be applied to such seasonal employee in the following manner: 1. The seasonal employee’s rate of compensation shall remain at the adjusted rate established by the Director of the Budget from the effective date stablished by the Director of the Budget until the date of the next general salary increase provided for in [Subp]aragraphs A or B. -17- 2. Effective on the effective date of the next general salary increase provided for in [Subp]aragraphs A or B such employee’s rate of compensation shall be either the adjusted rate established by the Director of the Budget; or his/her rate prior to the adjustment, increased by the percentage provided for in the applicable paragraph, whichever is higher.” R. 96. [Emphasis added]. Paragraph D, which provides for holiday compensation and workers’ compensation leave with pay, are linked to the wages established above. Therefore, the Board reasonably concluded that by negotiating specific limitations on the Budget Director’s statutory discretion to set the wages for the at- issue employees under paragraphs A and B, and by expressly referencing that discretion in paragraph C concerning similar limitations on the Budget Director’s discretion relative to changes in minimum wages, the side letter agreement reflects the parties’ understanding that absent such limitations the Budget Director had the discretion to set the wages for the 1996 track meet. Pu another way, expressio unis est exclusio alterius. Cf., Quadrant Structured Products Co., LTD, v Vertin, 23 NY3d 549 (2014). In rejecting PERB’s construction of the agreement and its effect on the State’s bargaining obligations, the Appellate Division held: “[W]e simply do not believe that the side letter agreement . . . is amen bl to the expansive construction adopted by PERB” (R. 1254). It explained: “To our analysis, the provision in the side letter agreement addressing the discretion afforded to the -18- Director of the Budget to increase the rate of compensation to be paid to seasonal track employees in order to comply with federal minimum wage requirements does not evidence the intent of the parties thereto to address any and all situations under which t e Director of the Budget could unilaterally adjust wage rates for the affected employees.” R. 1254 – 1255. However, contrary to the Appellate Division’s reading, PERB did not base its duty satisfaction analysis solely on the Budget Director’s discretion as it relates to changes in the Federal minimum wage. Although that limitation is consistent with the other limitations on the Budget Director’s di cretion under paragraphs A, B, and D of the side letter agreement, PERB’s reference to paragraph C only served to further support its conclusion that the parties’ expressly incorporated the Budget Director’s discretion into their agreement. PERB held that the side letter agreement, as a whole, made it reasonably clear that the State satisfied its bargaining obligations with PEF concerning the Budget Director’s authority to determine the wages for the 1996 meet. The only limitations on the Budget Director’s discretion were those specifically negotiated. That the side letter agreement contains no negotiated limitation on the Budget Director’s discretion to set the 1996 wages below, the same as, or higher than the base pay of previous years shows that the parties’ negotiations were grounded on their understanding that the Budget Director had the statutory discretion to set the wages for the 1996 track season. That the Budget Dir ctor has rarely set the wages -19- below those of the previous year has no bearing on whether he possesses that discretion. Cf., State of New York GOER and Dept of Health (Public Empls Federation), 25 PERB ¶ 3005 (1992), confd sub nom. Public Empls Fedn v New York State Pub Empl Relations Bd, 195 AD2d 930 (3d Dept 1993) (employer’s annual exercise of discretion to sponsor a picnic did not extinguish its discretion to decline to do so). Accordingly, as in Staff Congress- City Univ of New York v New York State Pub Empl Relations Bd, 7 NY3d 458 (2006), PERB’s determination that the State satisfied its bargaining obligations concerning the Budget Directors exercise of his statutory discretion to set the wages for the 1996 track meet was “reasonable, rational and supported by the language of the agreement” Monroe County v New York State Pub Empl Relations Bd, 85 AD3d 1439, 1441 (3d Dept 2011). That the Appellate Division simply did not believe that the agreement supported PERB’s determination based on its own reading of the agreement does not make PERB’s determination arbitrary or capricious. -20- CONCLUSION The Court should reverse the Memorandum and Order of the Appellate Division and reinstate the Judgment of Supreme Court, which deferred to and confirmed PERB’s decision dismissing PEF’s improper ractice 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 January 23, 2015