Herbert Kolbe, et al., Appellants,v.Christine J. Tibbetts,, et al., Respondents.BriefN.Y.November 14, 2013To be Argued by: TERRY M. SUGRUE (Time Requested: 15 Minutes) Court of Appeals of the State of New York HERBERT KOLBE, LYNNE NICHOLAS, JOANN SEEFELDT and PHYLLIS HARRIS, Plaintiffs-Appellants, – against – CHRISTINE J. TIBBETTS, as Superintendent of Schools of the Newfane Central School District, JAMES REINEKE, as President of the Newfane Board of Education, NEWFANE BOARD OF EDUCATION and NEWFANE CENTRAL SCHOOL DISTRICT, Defendants-Respondents. Niagara County Clerk’s Index No. 143032 Appellate Division–Fourth Department Docket No. CA 12-00171 BRIEF FOR PLAINTIFFS-APPELLANTS TERRY M. SUGRUE, ESQ. Of Counsel REDEN & O’DONNELL, LLP JOSEPH E. O’DONNELL, ESQ. Attorneys for Plaintiffs-Appellants 135 Delaware Avenue, Suite 410 Buffalo, New York 14202 Tel.: (716) 856-0277 Fax: (716) 843-8698 Date Completed: April 12, 2013 APL-2013-00035 i TABLE OF CONTENTS TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . i TABLE OF CASES AND AUTHORITIES . . . . . . . . . . . . . . . iii QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF JURISDICTION . . . . . . . . . . . . . . . . . . . 2 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . 2 ARGUMENT THE PLAINTIFFS, WHO RECEIVED HEALTH INSURANCE BENEFITS PURSUANT TO CBA SECTION 6.5.3, ARE ENTITLED TO THE SAME HEALTH INSURANCE COVERAGE THAT WAS IN EFFECT FOR THE BARGAINING UNIT WHEN THEY RETIRED, INCLUDING THE CONTRACTUALLY SPECIFIED PRESCRIPTION DRUG CO-PAY AMOUNTS, UNTIL THEIR SECTION 6.5.3 RETIREMENT BENEFITS EXPIRE WHEN THEY REACH AGE 70 . . . . . . . . . . . . . . . . . . . 13 POINT I THE WORD PLACEMENT, SENTENCE STRUCTURE, PUNCTUATION AND CONTEXT OF SECTION 6.5.3'S “COVERAGE PROVIDED” CLAUSE UNAMBIGUOUSLY DEMONSTRATE THAT “THE COVERAGE WHICH IS IN EFFECT FOR THE UNIT” IS QUALIFIED BY “AT SUCH TIME AS THE EMPLOYEE RETIRES;” THEREBY ESTABLISHING THAT THE COVERAGE PROVIDED TO RETIREES SHALL BE THE SAME COVERAGE AS WAS IN EFFECT WHEN THE EMPLOYEES RETIRED . . . . . . . . . . . 16 POINT II THE “COVERAGE PROVIDED” CLAUSE OF SECTION 6.5.3 CONTINUES TO OPERATE DURING RETIREMENT FOR SAME PERIOD OF TIME THAT THE REST OF SECTION 6.5.3 OPERATES: UNTIL THE EMPLOYEE REACHES AGE 70 . . . . . . . . . . . . . . . . . . . . . 22 POINT III HEALTH INSURANCE “COVERAGE” PROVIDED TO THE UNIT EXPRESSLY INCLUDES SPECIFIC CO-PAY AMOUNTS . . . . . . . 26 POINT IV THE DEFENDANTS’ ALTERNATIVE INTERPRETATIONS OF SECTION 6.5.3 ARE WITHOUT MERIT . . . . . . . . . . . . . . . . 28 A. Section 6.5.3 Provides Retirees With Rights To Health Insurance Coverage In Addition To Those Provided By Section 6.4.6 . . . . . . . . . . . . . 29 ii 1. Sections 6.5.3 And 6.4.6 Apply To Different Groups Of Retirees . . . . . . . . . . . . . . 29 2. Sections 6.5.3 And 6.4.6 Apply For Different Periods Of Time . . . . . . . . . . . . . . . 30 3. While Section 6.5.3 Expressly Links “Coverage” To What Was In Effect At The Time The Employee Retired, Section 6.4.6 Does Not . . . . . . . 32 4. The Prior Collective Bargaining Agreements Demonstrate That Sections 6.5.3 And 6.4.6 Have Historically Provided Different Benefits (i.e., “Hospitalization Plan” vs. “Health Insurance Coverage”) . . . . . . . . . . . . . 33 B. Section 6.5.3's Use Of The Term “Coverage” Refers To Health Insurance Coverage . . . . . . . . . . . 34 1. The Prior Collective Bargaining Agreements And Bargaining Proposals Demonstrate That Section 6.5.3's Use Of The Term “Coverage” Explicitly Referred To Health Insurance Coverage . . . . 36 C. The Health Insurance “Coverage” Provided To Unit Employees Is Specifically Identified In The Health Insurance Plans, Which Specifically Include Prescription Drug Co-pays . . . . . . . . . . . . . 39 1. The Prior Collective Bargaining Agreements And Bargaining Proposals Demonstrate That The Health Insurance “Coverage” Provided To Unit Employees Is Specifically Identified In The Health Insurance Plans, Which Specifically Include Prescription Drug Co-pays . . . . . . 39 POINT V PURSUANT TO SETTLED PRINCIPLES OF LAW INVOLVING THE INTERPRETATION OF COLLECTIVE BARGAINING AGREEMENTS, IT IS CLEAR THAT PLAINTIFFS’ HEALTH INSURANCE COVERAGE FROM THE COLLECTIVE BARGAINING AGREEMENTS IN EFFECT WHEN THEY RETIRED MAY NOT BE DIMINISHED WITHOUT THEIR CONSENT . . 43 POINT VI THE DEFENDANTS’ REMAINING DEFENSES SHOULD BE DISMISSED AND THE JUDGMENT AND ORDER OF THE TRIAL COURT SHOULD BE REINSTATED FOR THE REASONS STATED BY THE TRIAL COURT . . 47 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . 48 iii TABLE OF CASES AND AUTHORITIES Cases Aeneas McDonald Police Benevolent Ass'n v. City of Geneva, 92 N.Y.2d 326 (1998) . . . . . . . . . . . 9 Allied Chem. Wkrs. v. Pittsburgh Plate Glass Co., 404 U.S. 157, 180, fn 20 (1971) . . . . . . . . 42, 44, 45 Atwater & Co. v. Panama R.R. Co., 246 N.Y. 519 (1927) . . . . . . . . . . . . . . . . . . 17 Bogdan and Faist, P.C. v. CAI Wireless Sys., Inc., 295 A.D.2d 849 (3d Dept. 2002) . . . . . . . . . . . . . 10 City of Cohoes, 27 PERB ¶ 3058 (1994) . . . . . . . . . . . . 42 Corhill Corp. v. S.D. Plants, Inc., 9 N.Y.2d 595, 599 (1961) . . . . . . . . . . . . . . . . 19 Della Rocco v. City of Schenectady, 252 A.D.2d 82 (3d Dept. 1998) . . . . . . . 19, 42, 44, 45 DiBattista v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008) . . . . . . . . 42, 43, 45 Eighth Ave. Coach Corp. v. City of New York, 286 N.Y. 84 (1941) . . . . . . . . . . . . . . . . . . . 22 Greenfield v. Philles Records, Inc., 98 N.Y.2d 562 (2002) . . . . . . . . . . . . 24, 32, 34, 37 Hudock v. Village of Endicott, 28 A.D.3d 923 (3d Dept. 2006) . . . . . . . . . . 9, 42, 45 In re Jacob, 86 N.Y.2d 651 (1995) . . . . . . . . . . . . . . 20 International Union UAW v. Yard-Man, Inc., 716 F.2d 1476 (6 Cir. 1983)th cert. den. 465 U.S. 1007 (1984) . . . . . 9, 42, 43, 44, 45 Matter of Duchnowski, 31 N.Y.2d 991 (1973) . . . . . . . . . 45 Meyers v. City of Schenectady, 244 A.D.2d 845 (3d Dept. 1997) . . . . . . . . 9, 42, 44, 45 Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398 (2009) . . . . . . . . . . . . . . . . 15, 17 iv Reiss v. Financial Performance Corp., 97 N.Y.2d 195 (2001) . . . . . . . . . . . . . . . . . . 16 Other Authorities Civil Practice Law and Rules § 5601(a) . . . . . . . . . . 2, 45 Random House Webster’s Unabridged Dictionary, pg. 1965 (2 Ed. 2001) . . . . . . . . . . . . . . . .nd 20 1 QUESTIONS PRESENTED 1. Did the Appellate Division err by interpreting the contractual requirement that “the coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires” as meaning the retirees are only entitled to the same coverage provided to the unit at the time of retirement, but not thereafter? 2. Did the Appellate Division err by failing to interpret the express duration of the retirement benefit (§6.5.3.), providing the same coverage that was in effect at the time the employee retires, as continuing until the employee reaches age 70? 3. Did the Appellate Division err by failing to interpret the health insurance coverage provided to the bargaining unit when the plaintiffs retired as expressly including specific co-pay amounts? 4. Did the Appellate Division err by failing to interpret the retirement benefit of §6.5.3 (provided to certain eligible full-time employees until age 70) as giving retirees additional rights to health insurance coverage in addition to §6.4.6's eligibility to “continue” group health insurance (which is provided to all retirees, even after age 70)? 2 STATEMENT OF JURISDICTION This Court has jurisdiction pursuant to Civil Practice Law and Rules § 5601(a) because two Justices of the Appellate Division dissented on a question of law in a final order of reversal. The Appellate Division, Fourth Department, by Memorandum and Order dated December 21, 2012, reversed the Judgment and Order of the Supreme Court, Niagara County (Catherine Panepinto, J.), entered October 18, 2011. The Supreme Court had granted summary judgment to Plaintiffs. The Appellate Division majority ruled in favor of Defendants. STATEMENT OF FACTS This is an action by four retired employees of the Newfane Central School District to compel the District to live up to its contractual commitment to provide them, until they reach age 70, with the same health insurance coverage (i.e., the same plan) that was in effect for the unit when they retired. When each of the plaintiffs retired, their health insurance coverage limited their prescription drug co-payments to between $0.00-$5.00. The present dispute arose when the Defendants changed their health insurance coverage by increasing the prescription drug co-payments to a three tier system $7/$15/$35. While employed by the Newfane Central School District, each of the Plaintiffs were bargaining-unit members represented by the Civil Service Employees Association, Inc. (hereinafter “CSEA”) (R.29). The terms and conditions of plaintiffs’ employment were 3 governed by collective bargaining agreements (hereinafter “cba”) between CSEA and the Newfane Central School District (hereinafter “District” or “Defendant”). Section 6.5.3 Pursuant to Section 6.5.3 of the cba, certain eligible employees can cash in unused sick leave time in exchange for the District contributing towards their health insurance premiums, until they reach age 70. Section 6.5.3 also provides that retirees who obtain this benefit are entitled to the same “coverage” (i.e., plan) that was in effect when they retired. By expressly linking the coverage to the coverage that was in effect for the unit when they retired, retirees receiving Section 6.5.3 benefits are entitled to the same health insurance coverage that was in effect when they retired (until they reach age 70), regardless if the coverage provided to active unit employees changes sometime after the employee retired, namely: “Full-time employees who retire from the Newfane Central School District under the New York State Employees’ Retirement System plan shall be entitled to receive credit toward group health insurance premiums for accumulated sick leave. The amount contributed by the District shall be # Unused Sick x 100 = Percent of Contribution paid by 205 the District until the employee reaches age 70 In the event of the retiree’s death, this benefit shall transfer to the surviving spouse. The coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” [Section 6.5.3 also contained two additional sentences concerning prorating the insurance benefits for employees 4 who worked 1950 hours or less per year] (R.244-45, 285, 326-27)(emphasis added). Thus, by way of example, pursuant to the above formula, a full-time employee who retires under the New York State Retirement Plan with 90 accumulated sick leave days would be eligible for the District to contribute 44% towards their health insurance premiums: [90] Unused Sick x 100 = 44% 205 Pursuant to the formula, the 44% contributions continue until the employee reaches age 70. Moreover, pursuant to the last sentence of Section 6.5.3, while the employee receives this benefit, they are entitled to the same “coverage” (i.e., plan) that was in effect when they retired. All of the above quoted language of Section 6.5.3 (including the last sentence’s reference to “the coverage which is in effect for the unit at such time as the employee retires”) was in effect when each of the plaintiffs retired (R.29-30). Such language has continued to remain in each successive cba between the District and CSEA (R.326-27). In addition to Section 6.5.3, there are other cba provisions concerning health insurance provided to retirees as well as active employees that are also relevant to this matter. Section 6.4.3 Section 6.4.3 describes the District’s payment obligations for health insurance coverage for active unit employees. The provision 5 expressly states the “coverage” provided to unit employees shall be the “plans” that are described in Section 6.4.2, namely: A. For full-time employees who work a minimum of 10 months per year six or more hours per day. The District shall fully fund the ‘Choice Plan’ described in paragraph 6.4.2A. The District will provide an employee coverage under ‘Plan 57', as described in paragraph 6.4.2B hereof, provided the employee pays the difference in premium cost between that Plan and the Choice Plan, as described in paragraph 6.4.2.A hereof. B. For all employees working at least ten (10) months per year and at least four (4) hours per day, the District shall pay fifty percent (50%) of the Choice Plan premium. (R.283, 325)(emphasis added). Section 6.4.2 Section 6.4.2 describes the health insurance plans offered to unit employees. When each of the Plaintiffs retired, Section 6.4.2 of the collective bargaining agreements in effect at those times specified prescription drug co-payments for unit employees. (2003-2007 Collective Bargaining Agreement) When Plaintiffs Kolbe, Nicholas and Harris retired, the 2003- 2007 cba was still in effect (R.31-32). At that time, Section 6.4.2 described the health insurance “plans” offered to unit employees. The “Choice Plan” and “Plan 57" expressly specified prescription drug co-payments, namely: A. Choice Plan, Traditional Blue POS 298 This plan shall be the same as the Blue Cross/Blue Shield Community Blue I plan with riders... $3.00 co-pay for prescriptions written by a participating provider and $5.00 co-pay for 6 prescriptions written by a non-participating provider. B. Plan 57 This plan shall be comprised of the Orleans-Niagara BOCES Wholehealth Plan including... 3. $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription (Prescription plans include contraceptives); (R.282)(emphasis added). (1999-2003 Collective Bargaining Agreement) When Plaintiff Seefeldt retired, the 1999-2003 cba was still in effect (R.30-31). At that time, Section 6.4.2 also described the health insurance “plans” offered to unit employees. “Plan 60/61,” “Plan 57,” and “Community Blue I” all expressly specified the prescription drug co-payments, namely: A. Plan 60/61 shall be comprised of the following... Drug Riders: RX Rider P (with Contraceptives) $1.00 Generic and $5.00 Name Brand RX Rider 8 (Dependents) $1.00 Generic and $5.00 Name Brand B. Plan 57 shall be comprised of the following: The Orleans-Niagara BOCES Wholehealth Plan including the following... 3. $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription, and $5.00 co-pay for a ninety (90) day supply of maintenance medications (Prescription plans include contraceptives)... C. Community Blue I The plan shall be the same as the Blue Cross-Blue Shield Community Blue I plan with riders... $0.00 co-pay for Generic prescriptions, $5.00 co- pay for brand name prescription, and $5.00 co-pay for a ninety (90) day supply of maintenance The change to the three tier prescription drug co-pays1 was also accompanied by a change in the flex spending amount. 7 medications (Prescription plans include contraceptives. (R.241-42)(emphasis added). Present Action When each of the Plaintiffs retired, they were full-time employees who retired from the Newfane Central School District under the New York State Employees’ Retirement System plan, entitling them to receive credit toward District-paid health insurance for sick leave accruals pursuant to Section 6.5.3. (R.32). Moreover, pursuant to Section 6.5.3, they received the same level of health insurance coverage offered to the unit when they retired (R.32). On December 30, 2009, Plaintiffs were advised that their health insurance coverage would be reduced, by significantly increasing their prescription drug co-pay obligations beyond the levels specified for the unit in the collective bargaining agreements when they retired (R.33). Specifically, they were advised that a new three tier $7/$15/$35 prescription drug co-pay would apply to them in place of less expensive co-pay costs ranging from $0.00-$5.00 (R.31-33). The District advised the retirees1 that the changes to their retiree coverage was the result of a new cba between the District and CSEA (their former bargaining unit representative) (R.67-71). The District neither asked for, nor obtained, Plaintiffs’ consent to alter their retiree health insurance coverage (R.79). 8 Plaintiffs brought the instant complaint and summary judgment motion on the grounds that (pursuant to Section 6.5.3 “[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires”) they were contractually entitled to the same health insurance coverage that was in effect for the unit when each of them retired, until they reached the age of 70. The 2007-2012 collective bargaining agreement continues the right to the same coverage that was in effect when they retired (Section 6.5.3), but does not specify what coverage was in effect when the Plaintiffs retired. Accordingly, Plaintiffs referred back to the prescription drug co-payment amounts in effect for unit employees when they retired, as specified in Section 6.4.2 of the respective cbas. Trial Court Before the Trial Court, the Defendants did not dispute the retiree plaintiffs’ interpretation that Section 6.5.3 required the District to provide them with the same health insurance coverage as when they retired, nor did the Defendants provide any extrinsic evidence challenging the meaning of Section 6.5.3. Instead, the Defendants made various other arguments. Principally, the Defendants asserted that the retiree health insurance moratorium law [Chapter 30 of the 2009 Laws of New York State] permitted the District to reduce contractually required retiree health insurance benefits, provided it reached an agreement But see, Aeneas McDonald Police Benevolent Ass'n v. City2 of Geneva, 92 N.Y.2d 326, 331 (1998) (labor organization had standing to sue employer over changes retiree health insurance benefits by demonstrating, inter alia, “that its membership, which consists of all past and present members of the Geneva Police Department, includes retirees that would have individual standing.” Decisions have established that retirees may rely on3 expired agreements to the extent those contracts delineate retirement benefits. See, Hudock v. Village of Endicott, 28 A.D.3d 923 (3d Dept. 2006); Meyers v. City of Schenectady, 244 A.D.2d 845 (3d Dept. 1997); International Union UAW v. Yard-Man, Inc., 716 F.2d 1476 (6 Cir. 1983) [“When the parties contract for benefitsth which accrue upon achievement of retiree status, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree.”]. (continued...) 9 with active employees to reduce their coverage to the same extent (R.207). The only extrinsic evidence Defendants offered in connection with the summary judgment motions were affidavits from individuals who bargained on behalf of the District for the 2007- 2012 cba stating that during bargaining the District and CSEA did not discuss whether the health insurance changes would affect employees who were already retired (and, thus, were no longer represented by CSEA) (R.215, ¶16, R.339, ¶3-7, R.342, ¶4-7). They assumed the law required the District to reduce retiree’s contractually required health insurance benefits (R.339, ¶5). The Defendants also argued the Plaintiffs lacked standing to enforce the contractual retiree provisions negotiated for their benefit as retirees (R.207, ¶6). The Defendants challenged the2 Plaintiffs’ ability to refer to the collective bargaining agreements in place when they retired -- which specified the health insurance coverage (including prescription co-pay amounts) received by bargaining unit employees when they retired (R.207, ¶7).3 (...continued)3 Notably, the current 2007-2012 cba, as well as the prior agreements, all contained the same language, to wit: “the coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” (emphasis added). Accordingly, the right to the same health insurance coverage is in the existing 2007-2012 cba and Plaintiffs only referred back to the co-pay amounts that were listed in the cbas when they retired; which are not listed in the 2007-2012 agreement. But see, Bogdan and Faist, P.C. v. CAI Wireless Sys.,4 Inc., 295 A.D.2d 849, 854 (3d Dept. 2002)(actual financial loss is a necessary element of a breach of contract claim “where specific performance is not available”). 10 Finally, the Defendants asserted that Plaintiffs’ breach of contract action (seeking, among other things, the remedies of declaratory judgment, specific performance, and accounting), is precluded for failure to establish damages (R.208, ¶9).4 The Trial Court dismissed each of the Defendants’ affirmative defenses and accepted the interpretation of Section 6.5.3 proffered by the retiree Plaintiffs (i.e., the only one made). Accordingly, the Trial Court granted the Plaintiffs’ motion for summary judgment which granted, among other things, the remedy of specific performance, directing the District to reinstate the health insurance coverage provided to the unit when the plaintiffs retired (R.18-19, 25). Appellate Division On appeal, the Defendants, for the first time, disputed the meaning of Section 6.5.3. Despite Section 6.4.3’s explicit use of the term “coverage” to describe the health insurance “plans” described in Section 6.4.2 (“[t]he District will provide an 11 employee coverage under “Plan 57”, as described in paragraph 6.4.2B hereof, provided the employee pays the difference in premium cost between that Plan and the Choice Plan, described in paragraph 6.4.2A hereof.”), the District inaccurately argued the parties did not use the term “coverage” to describe benefits under the Choice Plan, Traditional Blue or Plan 57. The Appellate Division implicitly rejected the Defendants’ argument that Section 6.5.3's “coverage” sentence did not refer to health insurance coverage. However, in doing so, the Appellate Division majority found that the language of Section 6.5.3 unambiguously meant something that neither party had argued. It interpreted the relevant language of Section 6.5.3 as meaning that retirees were entitled to the same coverage provided to the unit, but only at the time of retirement and not thereafter: “The unambiguous language in section 6.5.3 provides that, at the time of his or her retirement, the retiree is entitled to the same coverage that is provided to the bargaining unit. The language does not specify that an equivalent level of coverage will continue during retirement.” (R.6). In making its interpretation, the majority did not interpret the words “[t]he coverage provided shall be the coverage in effect for the unit” as being qualified by the subsequent words “at such time as the employee retires,” which would require the insurance coverage to be kept the same as it had been when the employee retired. Nor did the Court interpret the duration of Section 6.5.3's benefit, which expressly lasts “until the employee reaches age 70.” As a consequence, the majority found “that defendants are The Trial Curt found that the retiree health insurance5 moratorium did not permit the reduction of contractually vested retiree benefits, even if the same changes were made with respect to current employees. It determined the law represented a floor below which benefits could not be dropped, not a ceiling prohibiting parties from agreeing to provide better coverage (R.23- 24). The Appellate Division did not address that issue. Since the Appellate Division erroneously found that the contract language of Section 6.5.3 did not require the District to provide the same coverage in effect when the plaintiffs retired until age 70, it did not need to address the parties’ arguments regarding what the moratorium permitted and/or proscribed with regard to contractually vested retiree benefits. Section 6.4.6 permits retirees to pay for their own6 health insurance (at a “group” rate rather than at a higher individual rate), by enabling them to “continue group health insurance upon payment of the premium to the District”. As explained more thoroughly in Point IV, infra, Section 6.4.6 applies to retirees who are not otherwise receiving District-paid health insurance coverage pursuant to Section 6.5.3. 12 not obligated to maintain health insurance coverage equivalent to that in effect at the time each plaintiff retired” (R.5). After the majority found that the collective bargaining agreement did not prohibit the Defendants from reducing health insurance coverage for those employees who had already retired, the majority found that the retirees’ benefits were not reduced below the level of coverage provided to active employees, as prohibited by the retiree health insurance moratorium [L. 1994, ch 729, as extended by L 2009, ch 30]. 5 Two Justices dissented from the Appellate Division’s majority opinion. The two dissenting justices found that “[t]he language in section 6.5.3 regarding the level of coverage for retirees conflicts with language found in section 6.4.[6] of the CBA” (R.7). The justices noted that “[i]n Section 6.5.3, the word6 ‘benefit’ is used to describe the sick-leave accrual and the word 13 ‘coverage’ is used to describe the particular plan, or health insurance” (R.7). The dissenting justices noted that “the words ‘benefit’ and ‘coverage’ may have been included in the same paragraph in order to distinguish between the two words and to establish different rights for retirees” (R.7). The dissenting justices found that the contract was ambiguous as to whether Section 6.5.3 gave retirees “additional rights to health insurance coverage in addition to those provided in section 6.4.[6]” (R.7). The dissenting justices found that the matter should be remitted to Supreme Court for a hearing at which parole evidence may be presented to establish the parties’ intent (R.7). ARGUMENT THE PLAINTIFFS, WHO RECEIVED HEALTH INSURANCE BENEFITS PURSUANT TO CBA SECTION 6.5.3, ARE ENTITLED TO THE SAME HEALTH INSURANCE COVERAGE THAT WAS IN EFFECT FOR THE BARGAINING UNIT WHEN THEY RETIRED, INCLUDING THE CONTRACTUALLY SPECIFIED PRESCRIPTION DRUG CO-PAY AMOUNTS, UNTIL THEIR SECTION 6.5.3 RETIREMENT BENEFITS EXPIRE WHEN THEY REACH AGE 70. The Plaintiffs were all full-time employees of the Newfane Central School District, who retired under the New York State Employees’ Retirement System plan, thereby entitling them to receive credit toward group health insurance premiums for the “coverage which is in effect for the unit at such time as the employee retires,” in accordance with Section 6.5.3 of the cbas between CSEA and the District (R.32). 14 A plain reading of the clear and unambiguous contract language in the instant case demonstrates that the contracting parties intended to provide those retired members receiving benefits under Section 6.5.3 with “the coverage” that was afforded to unit employees when they retired. The parties accomplished this by expressly linking the coverage to what was “in effect for the unit at such time as the employee retires” (R.326-27). If the parties had not intended to specify the level of coverage that was in effect when they retired, Section 6.5.3 would not have used the words “at such time as the employee retires.” Moreover, grammatically, the word “the” is used before a noun with a specifying or particularizing effect. In this context, the words “the coverage” denote the same coverage, which is even more specific than an “equivalent” level of coverage. Further, the parties used the word “shall” in the “coverage provided” clause to demonstrate that such coverage is required and will not be reduced even if current employees agree to other coverage (R.326-27). The retirement benefit of Section 6.5.3 has an explicit duration, lasting “until the employee reaches age 70.” Given its placement in Section 6.5.3, the “coverage provided” sentence must not be interpreted apart from the rest of Section 6.5.3. Therefore, the “coverage provided” clause lasts as long as the rest of the benefit, i.e., until the employee reaches age 70. The “coverage” describes the particular health insurance “plans” provided to the unit. In fact, Section 6.4.3 uses the term 15 “coverage” to describe the District-paid health insurance “plans” provided to unit employees, namely: “The District will provide an employee coverage under ‘Plan 57,' as described in paragraph 6.4.2B hereof, provided the employee pays the difference in premium cost between that Plan and the Choice Plan, as described in paragraph 6.4.2A hereof” (R.325)(emphasis added). Thus, the “coverage” afforded to unit employees is the health insurance “plans” described in Section 6.4.2. Section 6.4.2 specifies the contents of the health insurance “plans,” including certain identified prescription co-pay amounts. The “coverage” (i.e., “plan”) in effect for the unit when the plaintiffs retired included prescription drug co-pay amounts in the range of $0.00- $5.00 (R.31-32). By increasing the plaintiff retirees’ prescription drug co-pay amounts without their consent, Defendants have violated the plaintiffs’ Section 6.5.3 right to the same “coverage” that was in place when they retired. Not only was such an obligation present in the cbas in place when plaintiffs retired, but the current 2007- 2012 cba continues to state their right (at Section 6.5.3) to the same coverage as was in effect when they retired. 16 POINT I THE WORD PLACEMENT, SENTENCE STRUCTURE, PUNCTUATION AND CONTEXT OF SECTION 6.5.3'S “COVERAGE PROVIDED” CLAUSE UNAMBIGUOUSLY DEMONSTRATE THAT “THE COVERAGE WHICH IS IN EFFECT FOR THE UNIT” WERE QUALIFIED BY “AT SUCH TIME AS THE EMPLOYEE RETIRES;” THEREBY ESTABLISHING THAT THE COVERAGE PROVIDED TO RETIREES SHALL BE THE SAME COVERAGE AS WAS IN EFFECT WHEN THE EMPLOYEES RETIRED. “[W]hen parties set down their agreement in a clear, complete document, their writing should be enforced according to its terms.” Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 398 (2009). Courts may not “by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.” Reiss v. Financial Performance Corp., 97 N.Y.2d 195 (2001). In this case, the last sentence of Section 6.5.3 provides, as follows: “The coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” (R.326-27). The Appellate Division erred by interpreting this language as “not specify[ing] that an equivalent level of coverage will continue during retirement” (R.6). While the Appellate Division majority agreed with the Plaintiffs that they are entitled to the “same” “health coverage” in effect for the unit, the majority effectively found they were entitled to this “same coverage” only “at the time of his or her retirement,” but not thereafter (R.6). 17 The Appellate Division majority reached this conclusion by erroneously construing the words “at such time as the employee retires” as if they stood alone, at the beginning of the sentence, isolated from the preceding words, rather than qualifying them. In other words, by construing “at such time as the employee retires” at the beginning of the sentence, the majority broke up a single operative clause and turned the qualifying words into a mere tautology: the retirement benefits begin the date the employee retires. However, the language chosen by the parties placed the reference to the employee’s retirement date at the end of the sentence in order to qualify the words immediately preceding them (i.e., “the coverage which is in effect for the unit”); thereby establishing that the coverage provided by the benefit must be of the same level of coverage as was in effect on the day the employee retired. It is well-established that when reviewing a contract, “[p]articular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby.” Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 N.Y.3d 298, citing Atwater & Co. v. Panama R.R. Co., 246 N.Y. 519 (1927). In contrast to the language and word order chosen by the parties, the majority’s rearranged construction breaks up the operative clause and has the distorting effect of specifying the time when the retirement benefit providing coverage becomes available (i.e., at the time of retirement), rather than specifying 18 what level of coverage is required by the benefit (i.e., the coverage in effect when the employee retired). It is, perhaps, easier to see the impact of the majority’s interpretation when actual dates for retirees are used. For example, Plaintiff Nicholas retired in August of 2006 (R.28-29). On the one hand, by substituting in this retirement date (instead of the words “at the time of his or her retirement”) into the majority’s interpretation of Section 6.5.3’s “coverage provided” sentence, the sentence would read as follows: “The unambiguous language in section 6.5.3 provides that, [on August 31, 2006], the retiree is entitled to the same coverage that is provided to the bargaining unit.” Interpreted in this order, the language only specifies what coverage is in effect on August 31, 2006, but does not specify that an equivalent level of unit coverage will continue after August 31, 2006. On the other hand, when the retirement date is placed at the end of the sentence, without being separated by any punctuation (as the parties actually chose to do), the sentence would read as follows: “The unambiguous language in section 6.5.3 provides that, the retiree is entitled to the same coverage that was provided to the bargaining unit [on August 31, 2006].” When Section 6.5.3 is read the way the parties chose, “the coverage in effect for the unit” is qualified by the subsequent date. It, thereby, specifies the level of coverage to be provided after August 31, 2006, namely: the same coverage as it existed on August 31, 2006. Compare Section 6.5.3 with Section 6.4.6, which makes7 employees eligible to “continue group health insurance” without linking the insurance coverage to the date of the employee’s retirement (R.326-27). By not linking the group health insurance to the date of the employee’s retirement, Section 6.4.6's benefit arguably only entitles retirees to continue paying for whatever group health insurance that the active employees have. Accordingly, if that “group health insurance” should subsequently change for unit employees, then arguably retirees “continuing” to pay for group health insurance pursuant to Section 6.4.6 would also see their group health insurance change. Significantly, Section 6.5.3 is different. In contrast to Section 6.4.6, it expressly ties the “coverage provided” for those eligible retirees to what was “in effect for the unit at such time as the employee retires” (R.326-27). 19 If the parties had intended that the level of coverage (i.e., “plan”) would change for those already retired when coverage (i.e., the “plan”) for active unit employees changed, they would not have used the words “at such time as the employee retires” at all. If the coverage (i.e., “plan”) was simply whatever the unit had, the sentence would have ended there, without stating “at such time as the employee retires.” In and of itself, this effect renders the7 majority’s interpretation untenable. See, Corhill Corp. v. S.D. Plants, Inc., 9 N.Y.2d 595, 599 (1961) (“It is a cardinal rule of construction that a court should not adopt an interpretation which will operate to leave a provision of a contract...without force and effect.”)(quotation omitted) (alteration in original). While the Appellate Division majority compared the instant language to the “equivalent” words used in Della Rocco v. City of Schenectady, 252 A.D.2d 82 (3d Dept. 1998), it apparently failed to consider or appreciate the meaning of those words. In Della Rocco, the contract provided that the City would provide insurance 20 coverage “equivalent to the plan presently in effect.” That Court stated: “[w]e find that the phrase in question means that the retiree is entitled to the same or equivalent coverage during his retirement as the coverage in effect at the time he retired.” Id. at 84. (emphasis added). The language used by the parties in this case is almost identical to what the Della Rocco Court found “equivalent to the plan presently in effect” to mean: “[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” Thus, both contracts specify a level of coverage during retirement by linking it to what was in effect at a certain time, i.e., when the employee retires. The contracts would have to be construed to read “the coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires, unless changed by the District sometime in the future” in order for the District’s reduction of coverage to be upheld. The District’s attempt to provide reduced coverage (i.e., a “plan” with a higher prescription drug co-pay obligation) does not constitute providing “the coverage which is in effect for the unit at such time as the employee retires.” The plain language of the agreement does not permit such a reading and such an interpretation tortures logic and the plain language of the agreement. Moreover, while the Appellate Division majority noted there was no “equivalent” language, presumably it was looking for language that specified the level of coverage (i.e., the “plan”) could not be changed. In this case, the language chosen by the 21 parties is even more specific than “equivalent” coverage. In relevant part, Section 6.5.3 states: “the coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” Grammatically, the word “the” is a definite article and is “used esp. before a noun, with a specifying or particularizing effect, as opposed to the indefinite article a or an”. See, Random House Webster’s Unabridged Dictionary, pg. 1965 (2 Ed. 2001). The use of grammar is a necessary tool of precisend expression. See, In re Jacob, 86 N.Y.2d 651, 678 (1995) (Bellacosa, J., dissenting). Thus, in the context of Section 6.5.3, the words “the coverage” denote a level of coverage more specific than an “equivalent” coverage (not less). Moreover, the mandatory nature of the word “shall” in Section 6.5.3, dispels any notion that the specific coverage provided need not be maintained, was optional or subject to change. Thus, based upon the word placement, sentence structure, punctuation and context of Section 6.5.3's “coverage provided” sentence, the words “the coverage which is in effect for the unit” are unambiguously qualified by the following phrase “at such time as the employee retires;” thereby, entitling the retiree to the same coverage that was in effect when he or she retired. 22 POINT II THE “COVERAGE PROVIDED” CLAUSE CONTINUES TO OPERATE DURING RETIREMENT FOR SAME PERIOD OF TIME THAT THE REST OF SECTION 6.5.3 OPERATES: UNTIL THE EMPLOYEE REACHES AGE 70. It is a fundamental cannon of construction that a “contract must be read as a whole in order to determine its purpose and intent, and that single clauses cannot be construed by taking them out of their context and giving them an interpretation apart from the contract of which they are a part.” Eighth Ave. Coach Corp. v. City of New York, 286 N.Y. 84, 88 (1941). In this case, the “coverage provided” sentence is expressly a component of the “Retirement Benefit” of Section 6.5.3. Accordingly, it must not be interpreted apart from the rest of Section 6.5.3. Therefore, if the retiree health benefit provided by Section 6.5.3 has a specific duration, the “coverage provided” sentence contained in Section 6.5.3 must also have the same duration. In this case, the formula for the retiree benefit provided by Section 6.5.3 expressly has a duration “until the employee reaches age 70" (R.326-27). The benefit is even transferrable to a “surviving spouse” (Id.). The “coverage provided” sentence is also a part of Section 6.5.3. Necessarily, it provides coverage while the retiree remains eligible for the benefit provided by Section 6.5.3. Accordingly, when read in the light of the context of the “The coverage provided shall be the coverage which is in8 effect for the unit at such time as the employee retires.” (Id.). 23 full section, the “coverage provided” sentence of Section 6.5.3 applies until the employee reaches age 70. However, the Appellate Division apparently did not consider the benefit’s express duration when stating that the “coverage provided” sentence “does not specify that an equivalent level of coverage will continue during retirement” (R.6). This was in error. Section 6.5.3 of the contract specifies both what will be continued (i.e., the coverage that was provided to the unit when the employees retired) as well as how long it will continue (i.e., until the employee reaches age 70). As has been previously been demonstrated, the retiree is entitled to the same coverage (i.e., “plan”) that was in effect when the employee retired. Moreover, the use of the mandatory term “shall” in the “coverage provided” sentence dispels any notion that such coverage is optional or subject to change (R.326-27).8 Further, based upon the sentence’s surrounding context, such coverage lasts as long as the rest of the benefit, i.e., “until the employee reaches age 70.” If it is plausible to alternatively interpret the duration of the “coverage provided” sentence as not lasting as long as the rest of the section to which it is a part, as the Appellate Division majority apparently did, then that would justify the examination of extrinsic evidence. See, Greenfield v. Philles Records, Inc., 98 24 N.Y.2d 562, 569 (2002). Such evidence also supports the plaintiff’s interpretation. Historically, the health insurance “coverage” provided expressly lasted as long as the benefit. For example, accumulated sick leave was converted into health insurance coverage “at the rate of one year of health insurance coverage for each 30 days over 60.” Specifically, prior to 1996 Section 6.5.3 read as follows: “Full-time employees (7½-8 hours per day) who retire from the Newfane Central School District and who are eligible for Normal Retirement from the New York State Employees’ Retirement System shall be entitled to receive credit toward group health insurance premiums for unused sick leave accumulated in excess of 60 days at the rate of one year of health insurance coverage for each 30 days over 60, prorated. The coverage provided shall be the coverage which is in effect for the unit at such time as it is provided to the employee.” (R.104, 140)(emphasis added). In 1996, the parties changed the language by modifying the formula (R.182-83). The same language has appeared in each subsequent collective bargaining agreement, namely: “Full-time employees who retire from the Newfane Central School District under the New York State Employees’ Retirement System plan shall be entitled to receive credit toward group health insurance premiums for accumulated sick leave. The amount contributed by the District shall be # Unused Sick x 100 = Percent of Contribution paid by 205 the District until the employee reaches age 70 In the event of the retiree’s death, this benefit shall transfer to the surviving spouse. The coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires. [Section 6.5.3 also contained two additional sentences concerning prorating the insurance benefits for employees who worked 1950 hours or less per year] (R.244-45, 285, 326-27)(emphasis added). 25 For practical purposes, the following examples are an illustration of the differences between the two different formulas for an individual eligible for benefits under Section 6.5.3 who retires with 90 unused sick leave days. Under the formula for the pre-1996 cbas, the retiree with 90 unused sick leave days would receive District-paid health insurance for only one (1) year (i.e., 90 [unused sick days] - 60 = 30 days, 1 year of coverage is provided for each 30 days over 60, prorated). Under the revised formula for the post-1996 cbas, the retiree with 90 unused sick leave days would be eligible for the District to contribute 44% towards their health insurance premiums until the employee reaches age 70: [90] Unused Sick x 100 = 44% 205 Notably, however, under either formula, while the employee receives the Section 6.5.3 benefit, they are entitled to receive the same “coverage” (i.e., plan) that was in effect when they retired. There is absolutely no evidence that the formula modification was intended to decouple the duration of the “coverage provided” sentence from lasting as long as the benefit was provided to the retiree. Accordingly, pursuant to the plain language of the collective bargaining agreement (as well as the bargaining history), the “coverage provided” clause continues to operate during retirement for same period of time that the rest of Section 6.5.3 operates, i.e., until the employee reaches age 70. Notably, Section 6.4.3 differentiates between “coverage”9 and “premium” (Id.). Section 6.5.3 similarly uses both terms (R.326-27). Section 6.4.2 of the current collective bargaining10 agreement still describes the health insurance plans for current unit employees (R.323-24). Section 6.4.2 of the current collective bargaining11 agreement still specifies prescription drug co-pay amounts, but at the higher three-tier levels (R.323-24). 26 POINT III HEALTH INSURANCE COVERAGE PROVIDED TO THE UNIT EXPRESSLY INCLUDES SPECIFIC CO-PAY AMOUNTS. As discussed above, in the current 2007-2012 cba, Section 6.5.3 provides that retirees are provided with the same “coverage which is in effect for the unit at such time as the employee retires.” The current cba, at Section 6.4.3, uses the term “coverage” to describe the District-paid health insurance “plans” provided to unit employees, namely: “The District will provide an employee coverage under ‘Plan 57', as described in paragraph 6.4.2B hereof, provided the employee pays the difference in premium cost between that Plan and the Choice Plan, as described in paragraph 6.4.2A hereof.” (R.325)(emphasis added).9 While the current cba continues the retirees’ right to coverage (at Section 6.5.3), it does not specify what coverage (i.e., “plan”) was “in effect for the unit at such time as the [plaintiffs] retire[d].” However, Section 6.4.2 of the cbas in place when each plaintiff retired, did describe the health insurance “plans” in effect for unit employees at that time. Said10 “plans” expressly include prescription drug co-pay amounts. When11 Plaintiffs Kolbe, Nicholas, and Harris retired, the health 27 insurance plans offered to employees expressly specified prescription drug co-payments in the following amounts: A. Choice Plan, Traditional Blue POS 298 $3.00 co-pay for prescriptions written by a participating provider and $5.00 co-pay for prescriptions written by a non-participating provider. B. Plan 57 3. $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription (Prescription plans include contraceptives); (R.32, ¶16, R.282)(emphasis added). When Plaintiff Seefeldt retired the health insurance plans expressly specified the prescription drug co-payments in the following amounts: A. Plan 60/61 shall be comprised of the following... Drug Riders: RX Rider P (with Contraceptives) $1.00 Generic and $5.00 Name Brand RX Rider 8 (Dependents) $1.00 Generic and $5.00 Name Brand B. Plan 57 shall be comprised of the following: 3. $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription, and $5.00 co-pay for a ninety (90) day supply of maintenance medications (Prescription plans include contraceptives)... C. Community Blue I $0.00 co-pay for Generic prescriptions, $5.00 co- pay for brand name prescription, and $5.00 co-pay for a ninety (90) day supply of maintenance medications (Prescription plans include contraceptives. (R.31, ¶14, 241)(emphasis added). In summary, the “coverage” that is required to be provided to retirees by Section 6.5.3 is the same coverage that was afforded to 28 unit employees when the plaintiffs retired. Section 6.4.3 provides that the “coverage” afforded to unit employees is the health insurance “plans” described in Section 6.4.2. In turn, Section 6.4.2 specifies the contents of the health insurance “plans,” including certain identified co-pay amounts. At the time Plaintiffs retired, Section 6.4.2 specified lower prescription drug co-pay amounts. Therefore, the retirees’ “coverage” under Section 6.5.3 is the health insurance “plan” in effect at the time each plaintiff retired, as described in Section 6.4.2, including the co- pay amounts described therein. Presumably, the Defendants would not argue that they could unilaterally change fixed the co-pay amounts specified in the cba for active unit employees. The analysis is no different for retirees receiving retirement benefits under Section 6.5.3. Their co-pay amounts, like the rest of their coverage, are also fixed (until the retirement benefit expires when they reach age 70). POINT IV THE DEFENDANTS’ ALTERNATIVE INTERPRETATIONS OF SECTION 6.5.3 ARE WITHOUT MERIT. Notwithstanding the above, Defendants argued to the Appellate Division that it was not obligated to maintain the same health insurance coverage that was in effect at the time each plaintiff retired. Specifically, Defendants argued that Section 6.5.3 did not provide the right to healthcare during retirement (they argued that Section 6.4.6 provided that right). Moreover, Defendants Pursuant to Section 6.5.3's formula, an eligible employee12 retiring with 205 unused sick leave days would be entitled to the District paying 100% of the health insurance until the employee reaches age 70. 29 argued that Section 6.5.3's “coverage” sentence did not even refer to health insurance coverage. Finally, Defendants argued that Section 6.5.3's “coverage” did not include the co-pay amounts specified in the health insurance plans described in each collective bargaining agreement. As discussed below, each argument is without merit. A. Section 6.5.3 Provides Retirees With Rights To Health Insurance Coverage In Addition To Those Provided By Section 6.4.6. The Defendants had argued that Section 6.4.6 provided retirees with access to group health insurance, not Section 6.5.3. However, the plain and unambiguous language demonstrates that Section 6.5.3 provides an independent right to health insurance coverage in addition to and not dependent upon Section 6.4.6. 1. Sections 6.5.3 And 6.4.6 Apply To Different Groups Of Retirees. The first difference between the two groups of retirees is who is paying for the health insurance coverage. Under Section 6.5.3, retirees receive District paid health insurance. Under Section12 6.4.6, health insurance is paid for entirely by retirees. There are also other differences. For example, Section 6.4.6 applies, without condition or limitation, to any “retired employees,” including both full-time and part-time employees. In Pursuant to Section 6.5.2, only competitive and non-13 competitive employees are required to join the New York State Retirement System. Employees in other classifications [e.g., labor or exempt] are not required to join the New York State Retirement System (R.326). 30 contrast, Section 6.5.3 is significantly more limited. Not only are part-time employees excluded, but certain full-time employees are excluded as well. Section 6.5.3 applies only to “full-time employees” who “retire under the New York State Employees’ Retirement System plan” with “accumulated sick leave.” Those full- time employees who retire without accumulated sick leave are not entitled to Section 6.5.3 benefits. Similarly, those full-time employee who do not retire under the New York State Retirement Plan are not entitled to Section 6.5.3 benefits. Rather, pursuant to13 Section 6.5.5, those full-time employees who leave the District but “who are not members of the NYS Employees Retirement System” are entitled to “a lump sum payment equal to their accumulated sick leave less thirty days (30)” (R.327). 2. Sections 6.5.3 And 6.4.6 Apply For Different Periods Of Time. Retirement benefits under Section 6.5.3 apply for only a limited period of time, i.e., “until the employee reaches age 70.” In contrast, a retiree’s eligibility to continue purchasing health insurance at the “group” rate (as opposed to at an individual rate) pursuant to Section 6.4.6 has no limitation of time. These different periods of time work to compliment one another. When District-paid health insurance coverage expires 31 under Section 6.5.3, retirees are then able to purchase on their own health insurance at a “group” rate under Section 6.5.3. Accordingly, a retiree is always afforded a means of obtaining affordable health insurance. This aspect of the two provisions was critically important prior to 1996. As discussed above, prior to 1996, an eligible individual retiring with 90 unused sick leave days would only be able to obtain District-paid health insurance for one (1) year under Section 6.5.3. Assuming the employee retired at age 55 (the initial age of eligibility), the employee would then be on their own paying for health insurance from age 56 forward (when the one year of District-paid coverage expired under Section 6.5.3). Such an employee would need access to affordable coverage, at least until they became eligible for Medicare. This is where Section 6.4.6 comes into play. Pursuant to Section 6.4.6 a retiree could purchase health insurance at a “group” rate, which is significantly less expensive than at an individual rate. Accordingly, Section 6.4.6 could provide a retiree with significant savings in the purchase of health insurance. After the 1996 formula modification to Section 6.5.3 (which extended the District-paid health insurance until the employee reaches age 70), the complimentary benefit of Section 6.4.6 became less important to those eligible for benefits under Section 6.5.3. After 1996, District paid health insurance under Section 6.5.3 lasts until the employee reaches age 70 (when an employee is already Medicare eligible). However, to those employees not 32 eligible for Section 6.5.3 benefits, the ability to purchase health insurance at the “group” rate under Section 6.4.6 is still significant. 3. While Section 6.5.3 Expressly Links “Coverage” To The Health Insurance That Was In Effect At The Time The Employee Retired, Section 6.4.6 Does Not. Section 6.4.6 permits retired employees to “continue group health insurance.” This means that they are able to “continue” purchasing health insurance on their own at the “group” rate that the District pays for its active employees. However, nothing in Section 6.4.6 links the health insurance to the “coverage” that was in effect at the time they retired. In fact, Section 6.4.6 does not even use the word “coverage.” Accordingly, should “group health insurance” change for the District’s active employees, Section 6.4.6 arguably does not prohibit the District from changing the health insurance “coverage” for retired employees. After all, retired employees purchasing “group health insurance” under Section 6.4.6 are arguably only able to “continue” purchasing the insurance offered to active employees. In contrast, Section 6.5.3 expressly links the retirees’ health insurance coverage to the coverage that was in effect for the unit when they retired. Accordingly, retirees receiving District-paid Section 6.5.3 benefits are entitled to receive the same health insurance coverage that was in effect when they retired (until they reach age 70), regardless if the coverage provided to unit employees changes sometime after the employee retires. If 33 retirees receiving District-paid coverage under Section 6.5.3 were only supposed to receive whatever coverage that current District employees receive (as Defendants argued), there would have been no reason for the parties to use the words “at such time as the employee retires” at all. 4. The Prior Collective Bargaining Agreements Demonstrate That Sections 6.5.3 And 6.4.6 Historically Provided Different Benefits (i.e., A Limited “Hospitalization Plan” vs. “Health Insurance Coverage”). Assuming, for the sake of argument, that the Defendant’s alternative interpretation -- that Sections 6.5.3 and 6.4.6 neither apply to different classes of retirees, nor provide different coverage -- is also plausible (it is not), then that would justify examining extrinsic evidence. See, Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). Historically, Sections 6.4.6 and 6.5.3 have provided different benefits for retirees. Prior to 1994, Section 6.4.6 only permitted retirees to pay for the “Hospitalization plan” of the District, namely: 6.4.6 Employees who retire shall be permitted to avail themselves of the Hospitalization plan of the District upon the payment of the premiums to the District five (5) days prior to the first day of the month in which premiums are due. (R.103)(emphasis added). In contrast, at that same time, Section 6.5.3 entitled retirees to District-paid “health insurance coverage,” namely: 6.5.3 Full-time employees (7 ½-8 hours per day) who retire from the Newfane Central School District and who are eligible for Normal Retirement from the New York State Employees’ Retirement System shall be entitled to receive credit toward group health insurance premiums for unused sick leave accumulated in excess of 60 days at the At that time, Section 6.4.1 of the parties’ collective14 bargaining agreement specified four components of health insurance coverage, the first of which was the “Hospitalization plan” (i.e., “Standard Hospital Plan 42/43,” “Select Medical Contract 60/61,” “Major Medical Riders,” and “Drug Riders”) (R.138). 34 rate of one year of health insurance coverage for each 30 days over 60, prorated. The coverage provided shall be the coverage which is in effect for the unit at such time as it is provided to the employee. (R.104)(emphasis added). It was not until the 1994-1996 collective bargaining agreement that Section 6.4.6 enhanced the scope of the insurance available to its retirees for purchase by making them eligible to “continue” to purchase “group health insurance,” rather than purchasing just the “Hospitalization plan” component of insurance (R.140).14 Thus, it is clear that the District and CSEA crafted Sections 6.5.3 and 6.4.6 to bestow different and complementary protections upon retirees. Contrary to the Defendants’ argument, such an interpretation is not “absurd.” For all of the foregoing reasons, Section 6.5.3 provides retirees with rights to District-paid health insurance “coverage” in addition to the rights of retirees to purchase “group health insurance” provided by Section 6.4.6. B. Section 6.5.3's Use Of The Term “Coverage” Refers To Health Insurance Coverage. The Defendants had argued that Section 6.5.3's use of the term “coverage” does not even refer to health insurance coverage. However, the plain and unambiguous language demonstrates otherwise. 35 The collective bargaining agreement repeatedly uses the term “coverage” in relation to health insurance. For example, as mentioned above, Section 6.4.3 uses the term “coverage” to describe the District-paid plans for unit employees under Plan 57 and the Traditional Blue Plan (R.325). Similarly, Section 6.4.2 uses the term “coverage” when describing the flex benefits available to unit employees: “single coverage,” “couple coverage,” and “family coverage.” (R.324). In addition, Section 6.4.4 uses the term “coverage” when discussing duplicate health insurance: “single coverage” and “health coverage” (R.325). Finally, the term “coverage” is used in Section 6.4.5 in relation to re-entering a group health insurance plan (R.325-26). In fact, in every instance Article 6 of the collective bargaining agreement uses the term “coverage,” it refers to health insurance coverage. In light of this context, there is no reasonable basis to believe that Section 6.5.3's use of the term “coverage” refers to something other than health insurance coverage. However, assuming, for the sake of argument, the District’s alternative interpretation -- that unlike every other time Article 6 uses the term “coverage,” only Section 6.5.3's use of the term “coverage” does not refer to health insurance coverage -- is plausible (it is not), then that would justify examining extrinsic evidence. See, Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). The “coverage” sentence is still at the end of Section15 6.5.3, only now between the formula and the coverage sentence there are two sentences specifying that the District-paid contributions are “pro-rated” for various employees as well as a sentence specifying that the benefit transfers to a “surviving spouse” in the event of the retiree’s death (R.326-27). 36 1. The Prior Collective Bargaining Agreements And Bargaining Proposals Demonstrate That Section 6.5.3's Use Of The Term “Coverage” Refers To Health Insurance Coverage. As discussed above, in the collective bargaining agreements prior to 1996, Section 6.5.3 explicitly entitled retirees to “health insurance coverage,” with 100% of the premiums paid for by the District. The provision defined the “coverage” provided by the retirement benefit, in the next sentence following the use of the phrase “health insurance coverage,” by expressly stating it would be the health insurance coverage that the bargaining unit had when the retiree was still employed, namely: Full-time employees (7½-8 hours per day) who retire from the Newfane Central School District and who are eligible for Normal Retirement from the New York State Employees’ Retirement System shall be entitled to receive credit toward group health insurance premiums for unused sick leave accumulated in excess of 60 days at the rate of one year of health insurance coverage for each 30 days over 60, prorated. The coverage provided shall be the coverage which is in effect for the unit at such time as it is provided to the employee. (R.104, 140)(emphasis added). The parties placement of the “coverage provided” sentence immediately following the sentence setting forth the rate of paid “health insurance coverage” unambiguously demonstrates that the “coverage provided” sentence referred to “health insurance coverage.” 15 37 Moreover, the collective bargaining proposals from the District and CSEA also demonstrate that Section 6.5.3's use of the term “coverage” refers to “health insurance coverage”. For example, in 1996 when those parties modified Section 6.5.3 to its present language, they exchanged various proposals. In its first proposal, the CSEA proposed that the parties adopt the same language for retiree health insurance that was in the collective bargaining agreement between the District and the Teacher’s union (R.194-96). That language provided, in relevant part, as follows: Any teacher who retires may convert unused sick days into health insurance coverage according to the following plan: #Unused Sick & Escrow Days x 100 = Percent of premium 200 paid by District until the teacher reaches age 70 ...Example 1: Unused sick days of teacher equals 201 Formula…(201/200) X 100 = 100.5 percent. The District will pay 100 percent of the premium for full health coverage until age seventy (70) ...In order to be eligible for the above, the teacher must be eligible to retire under the New York State Retirement System, be at least 55 years of age, and retire from the Newfane Central School System. The health insurance coverage provided will be equivalent to the coverage in effect at the time of the teacher’s retirement... (R.195-96)(emphasis added). The CSEA subsequently withdrew its “Teacher’s model” proposal (R.197). In its place, CSEA proposed to modify the then-existing language by requiring fewer unused sick days to convert into one year of health insurance coverage. That language provided as follows: Employees who retire from the Newfane Central School District and who are eligible for Retirement from the New 38 York State Employees’ Retirement System shall be entitled to receive credit for toward health insurance premiums for unused sick leave at the rate of one year of health insurance coverage for each 20 days of unused sick leave. The coverage provided shall be the coverage which is in effect for the unit a such time as it is provided to the employees. (R.197)(emphasis added). In response, on June 17, 1996, the District made its own retiree health insurance benefit proposal based upon the formula used in the “Teacher’s model” for “convert[ing] unused sick days into health insurance coverage” (Compare, R.199 with R.195-96). The same District proposal also used the word “Coverage” under the bold words “Health Insurance” to refer to the “health insurance options” employee had (R.198). Further, the District’s next proposal, dated July 1, 1996, actually used the word “teacher” in its formula in the place of the word “employee,” just as the “Teacher’s model” did (R.203). Ultimately, the parties agreed to change the formula for converting unused sick days into health insurance coverage based upon the proposal by the District (compare, R.182 with R.203), which is itself based upon the formula for converting unused sick days into health insurance coverage in the District’s teacher’s union (compare, R.199 with R.195-96). Accordingly, not only did the language of Section 6.5.3 in prior collective bargaining agreements expressly use the term “coverage” to refer to “health insurance coverage,” but the parties’ bargaining proposals (including District proposals) similarly used the term “coverage” to refer to “health insurance coverage.” 39 Thus, Section 6.5.3's use of the term “coverage” unambiguously referred to health insurance coverage, not only based upon the four corners of the collective bargaining agreement, but upon the parties’ bargaining history as well. C. The Health Insurance “Coverage” Provided To Unit Employees Is Specifically Identified In The Health Insurance “Plans,” Which Specifically Include And Define Prescription Drug Co-pays. As explained at the outset of Point III, supra, contrary to the Defendants’ arguments, Section 6.4.3 of the current collective bargaining agreement expressly uses the term “coverage” to refer to the health insurance “plans” described in Section 6.4.2. Notwithstanding this fact, the Defendants argued that the collective bargaining agreements “do not define coverage.” In the event that the Court finds that Section 6.4.3's use of the term “coverage” to describe the benefits under “Plan 57" and the “Traditional Blue Plan,” do not provide a definite and precise meaning, resolution of this matter would permit consideration of evidence outside the four corners of the CBA. See, Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 569 (2002). 1. The Prior Collective Bargaining Agreements And Bargaining Proposals Demonstrate That The Health Insurance “Coverage” Provided To Unit Employees Is Specifically Identified In The Health Insurance Plans, Which Specifically Include Prescription Drug Co-pays. The 2003-2007 collective bargaining agreement, in place when plaintiffs Kolbe, Nicholas and Harris retired (R.31-32), contained the same language as the current collective bargaining agreement in 40 Section 6.4.3, which expressly uses the term “coverage” to refer to the health insurance “plans” described in Section 6.4.2. namely: “The District will provide an employee coverage under ‘Plan 57', as described in paragraph 6.4.2 B hereof, provided the employee pays the difference in premium cost between that Plan and the Choice Plan, as described in paragraph 6.4.2.A hereof” (R.283) (emphasis added). Moreover, the 1994-1996 collective bargaining agreement (the last agreement before Section 6.5.3 was revised to its current language) also expressly used the term “coverage” to describe the health insurance “plans,” namely: 6.4.1 The District will offer the following Blue Cross/Blue Shield Health Plan to employees eligible for coverage: (A) Standard Hospital Plan 42/43 with... Select Medical Contract 60/61 with... Major Medical Riders... Drug Riders: RX Rider P (with Contraceptives) $1.00 Generic and $5.00 Name Brand RX Rider 8 (Dependents) $1.00 Generic and $5.00 Name Brand (C) Health Maintenance Organization (HMO). Employees may choose to substitute the “Community Blue” HMO in lieu of the coverage noted in (a) above at a contribution level not to exceed that provided for in the Blue Cross/Blue Shield Plan noted above. (R.138)(emphasis added). Further, the previous 1990-1994 collective bargaining agreement similarly used the term “coverage” to describe the health insurance “plans,” namely: 6.4.1 The Board will pay the full premium for family or single coverage of Class 4 or 6 of Blue Cross Coverage including Rider 8 & 9; Class 82 or 83 Blue Shield coverage including Rider 3, 4, 5, 8, 12 & 16; Major Medical $50 deductible $1,000,000 limit. Prescription Drug Plan $1.00 co-pay, for all regular employees who are 41 scheduled to work at least ten (10) months per year, six (6) or more hours per day. 6.4.2 The Board will pay fifty percent (50%) of the premium for family or single coverage of Class 4 or 6 of Blue Cross Coverage including Rider 8 & 9; Class 82 or 83 Blue Shield coverage including Rider 3, 4, 5, 8, 12 & 16; Major Medical $50 deductible $1,000,000 limit; and Blue Cross $1.00 co-pay prescription drug plan for all regular employees who are scheduled to work at least ten (10) months per year, at least (4) hours per day, but less than six (6) hours per day. 6.4.5 Any employee who is the beneficiary of a health insurance plan at least equivalent to the coverage described herein shall not be eligible for health insurance provided by the District. (R.103)(emphasis added). Furthermore, the Defendant’s own bargaining proposals used the term “coverage” to describe the health insurance “plans.” For example, in its June 17, 1996 bargaining proposal (the same proposal that Defendants made to modify Section 6.5.3 -- which was adopted by the parties), the District described coverage under the employees’ health insurance options as follows: Health Insurance Coverage: Employees may select between three health insurance options: 1. The program provided in the 1994-96 Agreement (Current program) 2. Community Blue with riders: ...Drug plan (co-pay - $5 brand name, $0 generic) (R.198)(emphasis added). In addition, in the District’s same June 17, 1996 bargaining proposal, while describing the District’s obligations toward premiums, the District similarly used coverage in reference to the health insurance “plans” (Current, Community Blue I and ON Consortium): 42 Premiums: The District will contribute 100% of the Community Blue I premium toward option 1 or 2 above for family, couple or single coverage as the case may be. Proposed Classification Coverage Current Community Blue I ON Consortium Individual 228.65 134.27 175.09 Couple 510.08 275.58 292.38 Family 510.08 414.05 430.28 Current Classification Coverage Current Community Blue I ON Consortium Individual 228.65 134.27 175.09 Couple 510.08 374.85 292.38 Family 510.08 374.85 430.28 (R.198-99). In summary, the “coverage” provided to those receiving retirement benefits pursuant to Section 6.5.3, is the same as the health insurance “plans” described in the collective bargaining agreements that were in place when each plaintiff retired, as demonstrated by the following: Sections 6.5.3, 6.4.3, and 6.4.2 of the current 2007-2012 cba (R.323-27); Sections 6.5.3, 6.4.3, and 6.4.2 of the 2003-2007 cba (R.282-85); Section 6.5.3 in pre-1996 cbas (R.104, 140); Section 6.4.1 in the 1994-1996 cba (R.138); Sections 6.4.1, 6.4.2, 6.4.5 of the 1990-1994 cba (R.103); and the parties’ bargaining proposals for the 1996-1999 cba (when the parties adopted the current language of Section 6.5.3) (R.194-203). Moreover, since the “plans” specifically include and identify the prescription drug co-pay amounts, the retirees are entitled to those same amounts specified in the cbas that were in place when each plaintiff retired. 43 In view of all of the above, the “coverage provided” to retirees with Section 6.5.3 Retirement Benefits has a definite and precise meaning, unattended by danger of misconception, and concerning which there is no reasonable basis for a difference of opinion. Accordingly, the Appellate Division erred by determining that Defendants are not obligated (pursuant to Section 6.5.3) to maintain (until the plaintiffs reach age 70) the same health insurance coverage that was in effect at the time each plaintiff retired. POINT V. PURSUANT TO SETTLED PRINCIPLES OF LAW INVOLVING THE INTERPRETATION OF COLLECTIVE BARGAINING AGREEMENTS, IT IS CLEAR THAT PLAINTIFFS’ HEALTH INSURANCE COVERAGE FROM THE COLLECTIVE BARGAINING AGREEMENTS IN EFFECT WHEN THEY RETIRED MAY NOT BE DIMINISHED WITHOUT THEIR CONSENT. In attempting to determine the intent of parties to a contract, basic principles of contract law apply. Parties to a collective bargaining agreement can provide that benefits vest upon retirement and survive expiration of the contract. See, Hudock v. Village of Endicott, 28 A.D.3d 923 (3d Dept. 2006); Della Rocco v. City of Schnectady, 252 A.D.2d 82 (3d Dept. 1998); Meyers v. City of Schnectady, 244 A.D.2d 845 (3d Dept. 1997); DiBattista v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008). See also, International Union UAW v. Yard-Man, Inc., 716 F.2d 1476 (6 Cir. 1983), cert. den. 465 U.S. 1007 (1984). th 44 Absent the consent of all parties, a union does not represent retirees when it negotiates with an employer in collective bargaining. See, Allied Chem. Wkrs. v. Pittsburgh Plate Glass Co., 404 U.S. 157, 180, fn 20 (1971). Indeed “vested retirement rights may not be altered without the pensioner’s consent” (Id.). In City of Cohoes, 27 PERB ¶ 3058 (1994), this principle was expressly extended to public employees, namely: “Because the union is not the representatives of retirees, it has no bargaining rights or obligations on behalf of retirees. Similarly, the employer could not compel the union to negotiate on their behalf and there are questions under Pittsburgh Plate Glass, supra, as to the parties’ right to even bargain voluntarily on behalf of retirees, at least to be extent the bargaining would effect a change in retiree benefits which was unacceptable to them.” See also, Della Rocco v. City of Schnectady, 252 A.D.2d 82 (3d Dept. 1998); Meyers v. City of Schnectady, 244 A.D.2d 845 (3d Dept. 1997); DiBattista v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008). Where there is no durational limit in the immediate prior collective bargaining agreements as to retiree health insurance benefits “it is unlikely that such benefits, which are typically understood as a form of delayed compensation for past services, would be left to the contingencies of future negotiations.” International Union UAW v. Yard-Man, Inc., supra. See also, DiBattista v. County of Westchester, supra. Thus, “when the parties contract for benefits which accrue upon achievement of retiree status, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary As thoroughly discussed in Point III, supra, the16 “coverage” provided to unit employees specifically includes the prescription drug co-pay amounts listed in Section 6.4.2 of the cbas. Pursuant to Section 6.5.3, the plaintiff retirees are entitled to such coverage as was in effect when each plaintiff retired. 45 remains a retiree.” International Union UAW v. Yard-Man, Inc., supra. The inference raised in Yard-Man (that “it is unlikely that [retirement] benefits...would be left to the contingencies of future negotiations”) is even stronger in the instant case. Here, the retirement health insurance benefits are expressly extended until the employee reaches “age 70" (R.326-27). Moreover, the coverage such benefits confer are expressly stated in the collective bargaining agreement, to wit: “...The coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” (Id.)(emphasis added). To permit the16 Defendants to change the retiree health insurance “coverage” (i.e., plan) before the retiree reaches age 70, would render the express contractual obligations illusory. To prevent employers from eviscerating the contractual retirement benefits enjoyed by their retirees, the Courts of this state have adopted the standards and rationales outlined by the Court of Appeals in Yard-Man and by the United States Supreme Court in Allied Chem. Wkrs. v. Pittsburgh Plate Glass, supra. For example, in Meyers v. City of Schenectady, 244 A.D.2d 845 (3d Dept. 1997), the Appellate Division upheld the presumption that retiree health insurance benefits is a vested right, based upon the 46 rule of labor law that unions are not the exclusive representative of retirees, as follows: “We must question, however, whether the parties to the collective bargaining agreements at issue here intended the retirees’ benefits to be as fungible [as active employees], inasmuch as at the expiration of such agreements CSEA no longer represents the retirees, has no bargaining rights or obligations on their behalf and, indeed, may not even have the right to bargain voluntarily on their behalf [citing, Pittsburgh Plate Glass].” Similarly, in Della Rocco v. City of Schnectady, 252 A.D.2d 82 (3d Dept. 1998), the Appellate Division observed: “We first note that the contracts at issue had a duration of approximately one to two years and it is clear that once employees retire, they are no longer represented by the union and would not possess collective bargaining rights on their own (see, Chemical Workers v. Pittsburgh Glass, 404 US 157, 172; Meyers v. City of Schnectady, 244 A.D.2d 845, lv. denied 91 N.Y.2d 812). Thus, since the retirees are not involved in subsequent negotiations, it is logical to assume that the bargaining unit intended to insulate retirees from losing important insurance rights during subsequent negotiations by using language in each and every contract which fixed their rights to coverage as of the time they retired.” (emphasis added). Therefore, pursuant to settled principles of law involving interpretation of collective bargaining agreements, it is clear that plaintiffs’ right to health insurance coverage as of the time they retired, as stated in each and every contract (including the current 2007-2012 cba), survived and may not be diminished without their consent. See, Allied Chem. Wkrs. v. Pittsburgh Plate Glass Co., 404 U.S. 157, 180, fn 20 (1971); Hudock v. Village of Endicott, 28 A.D.3d 923 (3d Dept. 2006); Della Rocco v. City of Schnectady, supra; Meyers v. City of Schnectady, supra; DiBattista 47 v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008); International Union UAW v. Yard-Man, Inc., supra. In this case, Defendants neither asked for, nor obtained, Plaintiffs’ consent to alter their retiree health insurance coverage (R.79, ¶28). POINT VI THE DEFENDANTS’ REMAINING DEFENSES SHOULD BE DISMISSED AND THE JUDGMENT AND ORDER OF THE TRIAL COURT SHOULD BE REINSTATED FOR THE REASONS STATED BY THE TRIAL COURT. Assuming the Court accepts the contractual interpretation advanced by the Plaintiffs (supported by both the four corners of the agreement as well as the extrinsic evidence), the plaintiffs request, in the interests of justice, that the Court, reverse the Order of the Appellate Division, dismiss the Defendants’ remaining defenses and reinstate the Judgment and Order of the Trial Court for the reasons stated in the Memorandum and Decision (R.20-25). See, Matter of Duchnowski, 31 N.Y.2d 991 (1973)(“once an appeal lies as of right under subdivision (a) of CPLR 5601, all questions properly raised below may be reviewed on the ensuing appeal”). CONCLUSION For all of the foregoing reasons, we respectfully request that the Court reverse the Appellate Division's order granting summary judgment to the Defendants and (1) reinstate the Trial Court's judgment and order; or, in the alternative, (2) declare that the collective bargaining agreement language requires the Defendants to maintain the same coverage in effect when the plaintiffs retired, until they reach age 70, and remand to the Appellate Division for a determination on Defendants' remaining affirmative defenses; or, in the alternative, (3) if the Court finds that the language is ambiguous, remand to the Trial Court for the consideration of further extrinsic evidence and/or a decision by a trier of fact, together with such other and further relief as this Court may deem just and proper. Dated: Buffalo, New York April 10, 2013 48 Joseph E. O'Donnell, Esq. Terry M. Sugrue, Esq. Attorneys for Plaintiffs- Appellants 135 Delaware Avenue, Suite 410 Buffalo, New York 14202 Telephone: (716) 856-0277 Facsimile: (716) 843-8698