Herbert Kolbe, et al., Appellants,v.Christine J. Tibbetts,, et al., Respondents.BriefN.Y.November 14, 20130 To be Argued by: KARL W. KRISTOFF, ESQ. Estimated Time for Argument: (15 Minutes) STATE OF NEW YORK Court of Appeals HERBERT KOLBE, LYNNE NICHOLAS, JOANN SEEFELDT and PHYLLIS HARRIS, Plaintiffs-Appellants, vs. 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. APL-2013-00035. Appellate Division Docket Number: CA 12-00171. Niagara County Index No.: 143032. BRIEF FOR DEFENDANTS-RESPONDENTS HODGSON RUSS LLP Attorneys for Defendants-Respondents 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 The Guaranty Building 140 Pearl Street, Suite 100 Buffalo, New York 14202 Telephone: (716) 856-4000 Facsimile: (716) 849-0349 KARL W. KRISTOFF, ESQ. JEFFREY T. FIUT, ESQ. Of Counsel Date of Completion: May 28, 2013. BATAVIA LEGAL PRINTING, INC.- Telephone (866) 768-2100 i TABLE OF CONTENTS PAGE QUESTIONS PRESENTED......................................................................................1 PRELIMINARY STATEMENT ...............................................................................3 FACTS .......................................................................................................................5 A. The Parties...................................................................................5 B. The Three CBAs. ........................................................................5 C. Healthcare Under the 1999-2003 CBA.......................................6 D. Healthcare Under the 2003-2007 CBA.......................................7 E. Healthcare Under the 2007-2012 CBA.......................................8 F. Retirement Benefits Under the CBAs.........................................9 G. The December 30, 2009 Letters................................................11 H. The Complaint...........................................................................11 I. Trial Court Proceedings ............................................................12 J. The Appellate Division Memorandum and Order ....................12 ARGUMENT ...........................................................................................................13 POINT I. THE APPELLATE DIVISION CORRECTLY HELD THAT THE CBAs PERMIT THE DEFENDANTS TO MODIFY THE PLAINTIFFS’ PRESCRIPTION CO-PAYS ......................................14 A. The CBAs Clearly and Unambiguously Permit the Defendants to Modify the Plaintiffs’ Prescription Co-Pays .....14 B. The Appellate Division Correctly Rejected the Plaintiffs’ Interpretation of the CBAs.................................20 C. This Court Should Not Apply a Vesting “Inference”...............29 ii POINT II. NEW YORK STATE LAW PERMITS THE DEFENDANTS TO MODIFY THE PLAINTIFFS’ PRESCRIPTION CO-PAYS ......................................33 POINT III. THE APPELLATE DIVISION ORDER SHOULD BE AFFIRMED BECAUSE THE PLAINTIFFS HAVE NOT ESTABLISHED DAMAGES........................................38 CONCLUSION........................................................................................................41 iii TABLE OF AUTHORITIES PAGE FEDERAL CASES Am. Fed’n of Grain Millers v. Int’l Multifoods Corp., 116 F.3d 976 (2d Cir. 1997) .........................................................................30, 32 Anderson v. Alpha Portland Indus., 836 F.2d 1512 (8th Cir. 1988) ............................................................................30 Cherry v. Auburn Gear, Inc., 441 F.3d 476 (7th Cir. 2006) ..............................................................................25 Int’l Union, UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983) ................................................................29, 30, 32 Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W. v. Skinner Engine Co., 188 F.3d 130 (3d Cir. 1999) .........................................................................29, 30 Nichols v. Alcatel USA, Inc., 532 F.3d 364 (5th Cir. 2008) ..............................................................................29 Reese v. CNH Am. LLC, 694 F.3d 681 (6th Cir. 2012) ..............................................................................31 STATE CASES Citigifts, Inc. v. Pechnik, 112 A.D.2d 832 (1st Dep’t 1985), aff’d, 67 N.Y.2d 774 (1986)........................36 Clark v. Cuomo, 66 N.Y.2d 185 (1985) .........................................................................................37 Della Rocco v. City of Schenectady, 252 A.D.2d 82 (3d Dep’t 1998)....................................................................22, 23 DiBattista v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008)......................................23 Di Giulio v. City of Buffalo, 237 A.D.2d 938 (4th Dep’t 1997).......................................................................28 iv Goldman v. White Plains Ctr. for Nursing Care, LLC, 11 N.Y.3d 173 (2008) .........................................................................................19 Gordon v. Dino De Laurentiis Corp., 141 A.D.2d 435 (1st Dep’t 1988) .......................................................................40 Henry Modell and Co. v. Minister, Elders and Deacons of the Reformed Protestant Church of the City of N.Y., 68 N.Y.2d 456 (1986) .........................................................................................35 Hudock v. Vill. of Endicott, 28 A.D.3d 923 (3d Dep’t 2006)....................................................................23, 24 Kolbe v. Tibbetts, 101 A.D.3d 1623 (4th Dep’t 2012).....................................................................12 Lexington 360 Assocs. v. First Union Nat’l Bank of North Carolina, 234 A.D.2d 187 (1st Dep’t 1996) .......................................................................40 Lippman v. Bd. of Educ. of the Sewanhaka Cent. High Sch. Dist., 66 N.Y.2d 313 (1985) .........................................................................................32 Matter of City of Yonkers v. Yonkers Firefighters, 20 N.Y.3d 651 (2013) .........................................................................................35 Matter of Giblin v. Vill. of Johnson City, 75 A.D.3d 887 (3d Dep’t 2010)....................................................................19, 29 Matter of Westmoreland Coal Co. v. Entech, Inc., 100 N.Y.2d 352 (2003) .......................................................................................15 Myers v. City of Schenectady, 244 A.D.2d 845 (3d Dep’t 1997)............................................................23, 24, 25 Persky v. Bank of Am. Nat’l Ass’n, 261 N.Y. 212 (1933) ...........................................................................................20 Poole v. City of Waterbury, 831 A.2d 211 (Conn. 2003) ................................................................................31 R.P. Brennan Gen. Contractors & Builders, Inc. v. CPS 1 Realty, LP, 63 A.D.3d 619 (1st Dep’t 2009) .........................................................................40 v Schron v. Troutman Saunders LLP, 20 N.Y.3d 430 (2013) .......................................................... 19, 22, 23, 24, 27, 28 Sega v. State, 60 N.Y.2d 183 (1983) ...................................................................................34, 36 Telaro v. Telaro, 25 N.Y.2d 433 (1969) .........................................................................................20 Van Wagner Adver. Corp. v. S & M Enter., 67 N.Y.2d 186 (1986) ...................................................................................40, 41 Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470 (2004) ...........................................................................................14 W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157 (1990) ...................................................................................15, 26 Wilkens v. Huber, 303 A.D.2d 986 (4th Dep’t 2003).......................................................................20 Williams v. Vill. of Endicott, 91 A.D.3d 1160 (3d Dep’t 2012)........................................................................24 Zuckerman v. City of N.Y., 49 N.Y.2d 557 (1980) .........................................................................................41 STATE STATUTES L. 1994, Ch. 729.................................................................................................33, 38 L. 1996, Ch. 83.........................................................................................................36 L. 2004, Ch. 25...................................................................................................36, 37 L. 2009, Ch. 30...................................................................................................33, 36 L. 2009, Ch. 504, pt. B, § 14..................................................... 33, 34, 35, 36, 37, 38 N.Y. Civ. Serv. Law § 201(4) (McKinney’s 2013) .................................................32 N.Y. State Fin. Law § 5 (McKinney’s 2013)...........................................................32 vi STATE RULES AND REGULATIONS 9 N.Y.C.R.R. § 9000.1, et seq. (2013).....................................................................32 CONSTITUTIONAL PROVISIONS N. Y. State Constitution, Art. V, § 7 .......................................................................32 OTHER AUTHORITIES 2011 Assembly Bill A04532 ...................................................................................35 2013 Assembly Bill A02459..............................................................................35, 36 QUESTIONS PRESENTED 1. The collective bargaining agreements at issue require the Defendants to provide the Plaintiffs with continued access to group health insurance. But they do not require the Defendants to provide the Plaintiffs with specific health insurance or fixed co-pay rates. The Plaintiffs contend that a phrase in an unrelated contractual provision - “the coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires” - prohibits the Defendants from modifying their prescription co-pays. Do the agreements permit the Defendants to modify the Plaintiffs’ prescription co-pays? Answer below: Yes. The Appellate Division correctly held that the collective bargaining agreements permit the Defendants to modify the Plaintiffs’ prescription co-pays. 2. New York State law permits a school district to modify retiree-healthcare benefits so long as it makes the same modifications to active-employee-healthcare benefits. Here, the Defendants equally modified prescription co-pays for both active employees and retirees. Does New York State law permit the Defendants to modify the Plaintiffs’ prescription co-pays? 2 Answer below: Because the Appellate Division answered the first question in the affirmative, it did not reach this issue. 3. The Plaintiffs’ alleged damages are the cost of increased prescription co- pays. But when the District increased the Plaintiffs’ prescription co-pays, it also increased its contributions to the Plaintiffs’ flexible-spending accounts. The Plaintiffs have not shown that the cost of increased co-pays exceeds the increase to their flexible-spending accounts. Does the Plaintiffs’ failure to show any damage bar their breach of contract claim? Answer below: Because the Appellate Division answered the first question in the affirmative, it did not reach this issue. 3 PRELIMINARY STATEMENT The Plaintiffs are retired non-instructional employees of the Newfane Central School District. The District has provided healthcare benefits to each Plaintiff throughout his or her respective retirement. In late 2009, the District agreed to a new collective bargaining agreement with its active employees. The agreement modified healthcare benefits in that it increased prescription co-pays as well as the District’s contributions to flexible-spending accounts. The District applied these changes to the Plaintiffs. In response, the Plaintiffs sued the District, its superintendent, the Newfane Board of Education, and the President of the Board of Education for breach of contract. The Complaint alleges that the Defendants could not change the Plaintiffs’ prescription co-pays because they are entitled to the co-pays set forth in prior, expired collective bargaining agreements. The Complaint does not mention the District’s increased contributions to the Plaintiffs’ flexible-spending accounts. The Appellate Division, Fourth Judicial Department reversed the trial court judgment, granted the Defendants’ summary judgment motion, and dismissed the Complaint. It held that the collective bargaining agreements relied on by the Plaintiffs did not guarantee them fixed prescription co-pays. Having ruled for the 4 Defendants on this basis, the Appellate Division did not reach the Defendants’ other arguments. This Court should affirm the Appellate Division Order for three reasons. First, the Appellate Division correctly held that the relied-upon collective bargaining agreements do not provide fixed co-pays. This interpretation is supported by the clear terms of the CBAs, each of which simply requires the Defendants to provide the Plaintiffs with continued access to healthcare - not unalterable prescription co-pays. Second, New York State law permits the Defendants to modify the Plaintiffs’ co-pays. Under Chapter 504, pt. B, § 14 of the Laws of 2009, the District may modify retiree-healthcare benefits so long as it equally modifies active-employee-healthcare benefits. Because the Defendants modified co-pays for both retirees and active employees, Chapter 504 bars the Plaintiffs’ claim. Third, the Plaintiffs failed to show that their increased prescription co- pays are not off-set by the District’s increased contributions to their flexible- spending-accounts. Nor have the Plaintiffs returned the increased flexible- spending-account contributions to the District. Therefore, because the Plaintiffs have no damages, their breach claim should be dismissed. 5 FACTS A. The Parties. The four Plaintiffs are retired non-instructional employees of Defendant Newfane Central School District (the “District”). R. 28-29. Joann Seefeldt retired in June 2003. R. 29. Lynne Nicholas retired in August 2006. R. 28-29. Herbert Kolbe retired in April 2008. R. 28. Phyllis Harris retired in September 2008. R. 29. Throughout their respective retirements, the Plaintiffs have continued to receive healthcare benefits from the District. R. 32-33. While employed by the District, the Plaintiffs belonged to the bargaining unit of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, Newfane Central School Unit 7695, Local #872 (“CSEA”). R. 29. CSEA is not a party to this action. R. 28-29. B. The Three CBAs. In December 2009, the District and CSEA agreed upon a new five- year collective bargaining agreement (“CBA”) (the “2007-2012 CBA”). R. 297- 337. The 2007-2012 CBA applies from July 1, 2007 to June 30, 2012. R. 301. The immediate predecessor to the 2007-2012 CBA was the 2003-2007 CBA. R. 256-96. And the immediate predecessor to the 2003-2007 CBA was the 1999- 2003 CBA. R. 219-55. 6 The District and CSEA are the sole parties to all three CBAs. R. 223; 260; 301. C. Healthcare Under the 1999-2003 CBA. Section 6.4 of each CBA is entitled “Health Insurance.” R. 241; 282; 323. Within Section 6.4, paragraph 6.4.2 sets forth different health insurance plans. Paragraph 6.4.2 of the 1999-2003 CBA offered three health insurance plans: (1) Plan 60/61; (2) Plan 57; and (3) Community Blue I. R. 241. Co-pays under the plans were as follows: 1. Plan 60/61: 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. 2. Plan 57: $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). 3. 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 medication (Prescription plans include contraceptives[)]. R. 241-42. Paragraph 6.4.2 of the 1999-2003 CBA also required the District to contribute to employee flexible-spending accounts: 7 The District shall contribute to full-time eligible employees, $215.00 for single coverage; $430.00 for couple coverage; and $480.00 for family coverage. Employees electing the traditional plan are not eligible for any District contributions to a flex plan. All employees shall have the right to contribute pre-tax dollars to a flex plan. R. 242. D. Healthcare Under the 2003-2007 CBA. The 2003-2007 CBA modified healthcare plans, prescription co-pays, and flexible-spending-account contributions. Under the 2003-2007 CBA, employees could choose between either Plan 57 or the Choice Plan, Traditional Blue POS 298. R. 282. The 2003-2007 CBA modified prescription co-pays as follows: 1. Plan 57: $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription (Prescription plans include contraceptives). 2. 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. R. 282-83. The 2003-2007 CBA increased the District’s contributions to flexible- spending accounts as follows: 8 [T]he District shall contribute to full-time eligible employees, $250.00 for single coverage; $500.00 for couple coverage; and $540.00 for family coverage. All employees shall have the right to contribute pretax dollars to a flex plan. R. 283. E. Healthcare Under the 2007-2012 CBA. Like the 2003-2007 CBA, the 2007-2012 CBA offered Plan 57 and the Choice Plan, Traditional Blue POS 298. R. 323-24. Also like the 2003-2007 CBA, the 2007-2012 CBA modified both prescription co-pays and the District’s contributions to flexible-spending accounts. Co-pays changed as follows: 1. Plan 57: $0.00 co-pay for Generic prescriptions, $5.00 co-pay for brand name prescription (Prescription plans include contraceptives). 2. Choice Plan, Traditional Blue POS 298: $7 co-pay for generic prescriptions, $15 co-pay for preferred brand name prescriptions, and $35 co-pay for non-preferred brand name prescriptions. Only a 30 day prescription is available at retail. One co-pay, respective of the prescription tier, is available for a ninety (90) day mail order supply of maintenance medications. Id. Flexible spending account contributions increased as follows: 9 [T]he District shall contribute to full-time eligible employees, $325.00 for single coverage; $625.00 for couple coverage; and $700.00 for family coverage. All employees shall have the right to contribute pretax dollars to a flex plan. R. 324. In addition, unlike the 1999-2003 and 2003-2007 CBAs, the 2007- 2012 CBA required the District to match employee contributions to flexible- spending accounts, up to the following levels: [T]he District will provide a matching contribution per full-time, eligible employee’s contribution to the flex account as follows: Single: $50.00 Couple: $75.00 Family: $100.00 (i.e., an employee eligible for single coverage contributes $50.00 to the flex account and the [D]istrict will contribute $50.00 to match it.). Id. F. Retirement Benefits Under the CBAs. Retirement benefits under the three CBAs are substantially the same. Paragraph 6.4.6 of each CBA governs retiree-health-insurance benefits: 6.4.6. Health Insurance for Retired Employees Retired employees shall be eligible to continue group health insurance upon payment of premium 10 to the District five (5) days prior to the first of the month in which the premium is due. R. 244; 284; 326. Paragraph 6.5.3 of each Agreement provides a mechanism pursuant to which retirees can convert unused sick time into premium payments for the above group-health insurance. It provides: 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 (including District contribution toward Flexible spending account) for accumulated sick leave. The amount contributed by the District shall be calculated as follows, but shall not exceed 100%: # Unused Sick x 100 = Percent of Contribution 205 paid by the District until the employee reaches age 70 Notwithstanding the foregoing, full-time employees who work less than 1950 hours per year shall have this benefit pro-rated by an amount equal to their annual hours divided by 1950. [Effective June 29, 2003, in the case of twelve month clerical employees hired prior to January 1, 1997, this benefit will be prorated by an amount equal to 1950 hours less the hours not worked by them during the Christmas and Spring recesses.] In the event of the retiree’s death, this benefit shall transfer to the surviving spouse. The coverage provided 11 shall be the coverage which is in effect for the unit at such time as the employee retires. R. 244-45; 285; 326-27 (the bracketed language is in the 2003-2007 and 2007-2012 CBAs, only). G. The December 30, 2009 Letters. The District and CSEA agreed upon the 2007-2012 CBA in December 2009. R. 337. On December 30, 2009, the District sent each Plaintiff a letter advising them that pursuant to the 2007-2012 CBA, the District was increasing their prescription co-pays as well as the contributions to their flexible-spending accounts. R. 67-71. Specifically, prescription co-pays would increase from $3 to $7 (generic) / $15 (preferred brand name) / $35 (non-preferred brand name), and flexible-spending account contributions would increase from $250 (single) / $500 (couple) / $540 (family) to $325 (single) / $625 (couple) / $700 (family). Id. H. The Complaint. The Plaintiffs filed a Summons and Verified Complaint on December 29, 2010. R. 27-28. The Complaint sets forth a single cause of action for breach of contract. R. 33-35. The Complaint alleges that the Plaintiffs’ healthcare is governed by the CBA that was in effect at the time of their respective retirements: the 1999- 2003 CBA for Plaintiff Seefeldt, and the 2003-2007 CBA for Plaintiffs Kolbe, 12 Nicholas, and Harris. R. 28-30. According to the Plaintiffs, the Defendants breached the 1999-2003 and 2003-2007 CBAs when it modified the Plaintiffs’ prescription co-pays to conform to the 2007-2012 CBA. R. 33-35. The Complaint does not mention the District’s increased contributions to the Plaintiffs’ flexible- spending accounts. I. Trial Court Proceedings. On May 31, 2011, the Plaintiffs moved for summary judgment on their breach of contract claim. R. 48-49. Thereafter, the Defendants cross-moved for summary judgment. R. 204-205.1 By order and judgment granted October 12, 2011, the trial court granted the Plaintiffs’ motion in its entirety and denied the Defendants’ cross-motion. R. 17-25. J. The Appellate Division Memorandum and Order. On December 21, 2012, the Appellate Division, Fourth Judicial Department reversed the trial court judgment, granted the Defendants’ summary judgment motion, and denied the Plaintiffs’ summary judgment motion. R. 5-8; Kolbe v. Tibbetts, 101 A.D.3d 1623 (4th Dep’t 2012). The Appellate Division granted judgment in favor of the Defendants as follows: 1 The trial court had previously denied the Defendants’ CPLR 3211 motion to dismiss the Complaint, but it allowed the Defendants to raise the arguments from that motion in their Answer. R. 401-02. 13 It is ADJUDGED AND DECLARED that defendants are not obligated to maintain health insurance coverage equivalent to that in effect at the time each plaintiff retired. R. 5. The Appellate Division agreed with the Defendants that the relied-upon CBAs do not preclude changes to the Plaintiffs’ prescription co-pays because the CBAs do not guarantee a fixed and unalterable level of healthcare. R. 6. Having ruled for the Defendants on this basis, the Appellate Division did not reach the Defendants’ other arguments. R. 7. Two Justices dissented from the Appellate Division Memorandum and Order. Like the majority, the Dissent voted to deny the Plaintiffs’ summary judgment motion. But the Dissent would have also denied the Defendants’ summary judgment motion. According to the Dissent, additional trial court proceedings were needed to resolve a conflict between Section 6.4 and Paragraph 6.5.3 of the CBAs. Id. ARGUMENT This Court should affirm the Appellate Division Order for three reasons. First, the Appellate Division correctly determined that the CBAs do not guarantee fixed prescription co-pays. Second, New York State law permits the Defendants to modify the Plaintiffs’ prescription co-pays because the Defendants 14 also modified co-pays for active employees. Third, the Plaintiffs cannot survive summary judgment because they have no evidence of damages. They have not shown that their increased prescription co-pays are not offset by the District’s increased contributions to their flexible-spending accounts. POINT I. THE APPELLATE DIVISION CORRECTLY HELD THAT THE CBAs PERMIT THE DEFENDANTS TO MODIFY THE PLAINTIFFS’ PRESCRIPTION CO-PAYS The Appellate Division’s holding that the CBAs do not preclude the Defendants from modifying the Plaintiffs’ prescription co-pays should be affirmed for three reasons. First, the clear and unambiguous language of each CBA does not guarantee the Plaintiffs fixed prescription co-pays. Second, the Plaintiffs’ proffered interpretation of the CBAs, namely their reliance on Paragraph 6.5.3’s “coverage sentence,” does not guarantee them fixed co-pays. Third, the Plaintiffs’ proposed vesting “inference” is contrary to basic contract-interpretation principles, does not support their breach claim, and should be rejected. A. The CBAs Clearly and Unambiguously Permit the Defendants to Modify the Plaintiffs’ Prescription Co-Pays. When two parties set down their agreement in a clear and complete document, the document should be enforced according to its terms. Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475 (2004). The 15 document should also be read as a whole to ensure that undue emphasis is not placed upon particular words or phrases. Matter of Westmoreland Coal Co. v. Entech, Inc., 100 N.Y.2d 352, 358 (2003). And if the document is unambiguous, a court may not look to extrinsic evidence to alter the document’s plain meaning or to create an ambiguity. W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 162-63 (1990). Applying these contract-interpretation principals to the CBAs shows that the Defendants may modify the Plaintiffs’ prescription co-pays. In each CBA, retiree-health insurance is governed by Paragraph 6.4.6. Titled “Health Insurance for Retired Employees,” Paragraph 6.4.6 provides: Retired employees shall be eligible to continue group health insurance upon payment of premium to the District five (5) days prior to the first of the month in which the premium is due. R. 244; 284; 326. Paragraph 6.4.6 makes plain that retirees are entitled to continue group health insurance. But it does not identify specific health insurance, let alone guarantee that retirees will pay the co-pay rates stated in prior CBAs. Accordingly, Paragraph 6.4.6 necessarily means that the Plaintiffs are to receive the health insurance currently provided by the District to active employees. Here, because it is undisputed that the Plaintiffs and active employees receive the same benefits 16 (i.e., the benefits stated in Paragraph 6.4.2 of the 2007-2012 CBA), the Plaintiffs’ breach claim fails. Whereas Section 6.4 (specifically, Paragraphs 6.4.2 and 6.4.6) governs healthcare, Section 6.5 of each CBA governs retirement benefits. Within Section 6.5, Paragraph 6.5.3 permits certain employees who retire under the New York State Retirement System to convert their unused sick time into premium payments for the “group health insurance” provided by Paragraph 6.4.6. Paragraph 6.5.3 (which, unlike Paragraph 6.4.6, is untitled) provides: 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 (including District contribution toward Flexible spending account) for accumulated sick leave. The amount contributed by the District shall be calculated as follows, but shall not exceed 100%: # Unused Sick x 100 = Percent of Contribution 205 paid by the District until the employee reaches age 70 Notwithstanding the foregoing, full-time employees who work less than 1950 hours per year shall have this benefit pro-rated by an amount equal to their annual hours divided by 1950. [Effective June 29, 2003, in the case of twelve month clerical employees hired prior to January 1, 1997, this benefit will be prorated by an amount equal to 1950 17 hours less the hours not worked by them during the Christmas and Spring recesses.] 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. R. 244-45; 285; 326-27 (the bracketed language is in the 2003-2007 and 2007-2012 CBAs, only). A comparison of Paragraphs 6.4.6 and 6.5.3 shows that they serve separate and unique functions. Whereas Paragraph 6.4.6 provides retirees with continued access to healthcare, Paragraph 6.5.3 gives them the means to pay for it. Paragraph 6.5.3 does not endow retirees with healthcare benefits. If it did, then Paragraph 6.4.6 would be rendered meaningless, because its sole function is to continue healthcare benefits for all retirees. Paragraph 6.4.6 does not distinguish between different types of retirees. Indeed, it is expressly titled “Health Insurance For Retirees.” It is not titled “Health Insurance For Retirees Who Retired Without Unused Sick Time.” The Plaintiffs, however, claim that Paragraph 6.5.3 not only permits retirees to convert unused sick time into premium payments, but that it also provides them with the healthcare benefits that were in effect when they retired - including identical prescription co-pay rates. In support of their argument, the Plaintiffs point to the last sentence of Paragraph 6.5.3, which reads “[t]he coverage 18 provided shall be the coverage which is in effect for the unit at such time as the employee retires.” R. 245; 285; 327. Reading each CBA as a whole makes plain that the relied-upon “coverage sentence” does not guarantee the Plaintiffs fixed co-pays. Significantly, the parties placed the coverage sentence in a separate, two sentence paragraph at the end of Paragraph 6.5.3. The first sentence of this paragraph concerns transferring the unused sick-time benefit to a surviving spouse. Id. The second sentence then provides that “[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires.” Id. Thus, the coverage sentence - like the sentence immediately before it - solely applies to the premium-payment mechanism. It does not concern healthcare benefits. Even assuming, however, that Paragraph 6.5.3’s coverage sentence relates to healthcare benefits (although it does not), the Plaintiffs’ breach claim still fails because “coverage” is not synonymous with the prescription co-pay rates set forth in Paragraph 6.4.2. There is no evidence that “coverage” means defined prescription co-pay rates. Significantly, the healthcare-plan descriptions in Paragraph 6.4.2 - where co-pays are listed - do not use the word “coverage.” R. 241-42; 282-83; 323-24. And nowhere in the Agreements is coverage defined to include co-pays. 19 Thus, even if the coverage sentence in Paragraph 6.5.3 refers to healthcare benefits, it certainly does not lock-in unalterable co-pay rates. See Matter of Giblin v. Vill. of Johnson City, 75 A.D.3d 887, 888 (3d Dep’t 2010) (holding that CBA gave retiree continued healthcare benefits, but that the CBA did not freeze those benefits). In short, if the parties intended the CBAs to provide the Plaintiffs with fixed prescription co-pays, they easily could have inserted a provision to that effect. Schron v. Troutman Saunders LLP, 20 N.Y.3d 430, 437 (2013) (“[H]ad [the parties], represented by counsel, intended to make the $100 million loan payment a condition to the enforceability of the option, they easily could have included a provision to that effect.”). But instead, under Paragraph 6.4.6, the parties agreed that the Defendants would simply provide the Plaintiffs with continued access to healthcare. This Court should enforce the CBAs according to their terms. Goldman v. White Plains Ctr. for Nursing Care, LLC, 11 N.Y.3d 173, 176 (2008). Finally, the Plaintiffs’ contention that the Defendants did not raise this contract interpretation before the trial court is irrelevant. Because the trial court’s memorandum decision squarely addressed the CBAs’ healthcare and retirement provisions, the Defendants properly challenged that decision before the Appellate 20 Division. R. 20-25. In addition, the CBAs’ healthcare and retirement provisions - and each parties’ interpretation of those provisions - appear on the face of the record. Because it is an issue of law that cannot be rebutted with additional evidence, the Defendants’ argument was properly before the Appellate Division, and is now properly before this Court. See Persky v. Bank of Am. Nat’l Ass’n, 261 N.Y. 212, 218-19 (1933); see also Telaro v. Telaro, 25 N.Y.2d 433, 439 (1969); Wilkens v. Huber, 303 A.D.2d 986, 986 (4th Dep’t 2003). Finally, the Plaintiffs did not ask the Appellate Division - and do not ask this Court - to preclude the Plaintiffs’ contract-interpretation argument. Rather, they address it on the merits, only. The Appellate Division therefore correctly accepted the Defendants’ argument, and this Court should affirm. B. The Appellate Division Correctly Rejected the Plaintiffs’ Interpretation of the CBAs. The Plaintiffs argue that the coverage sentence in Paragraph 6.5.3 requires the Defendants to provide them with the same exact healthcare plans - including co-pays - that were in effect at the time of their respective retirements. Because this argument is based on flawed textual arguments and extrinsic evidence, the Appellate Division correctly rejected it. In support of their argument that the coverage sentence guarantees fixed co-pays, the Plaintiffs argue that Paragraphs 6.4.6 and 6.5.3 provide different 21 healthcare benefits. But as detailed above, Paragraph 6.5.3 simply allows a retiree to convert unused sick time into premium payments until age 70. Upon turning 70, a retiree may still receive group-health insurance, but can no longer use unused sick time to pay for it. Paragraph 6.5.3 thus only gives retirees a way to pay for healthcare; it does not guarantee specific healthcare. The Plaintiffs also argue that the Appellate Division misconstrued Paragraph 6.5.3. Specifically, they believe that the Appellate Division read Paragraph 6.5.3 as providing each Plaintiff with the same healthcare benefits on his or her respective date of retirement, only. Pltfs.’ brief at 18. This argument is without merit. The Appellate Division actually held that at the time of each Plaintiffs’ retirement (and thereafter), he or she is to receive the same benefits that are provided to the “bargaining unit” - (that is, active employees). R. 6. The Appellate Division then stated that the Plaintiffs are not entitled to an equivalent level of benefits throughout their retirement; in other words, the Agreements do not freeze co-pays. Id. The Appellate Division thus did not, as the Plaintiffs contend, turn the Agreements into “a mere tautology.” Pltfs.’ brief at 17. In further support of their argument that the coverage sentence guarantees fixed co-pays, the Plaintiffs point to how “coverage” is used in unrelated CBA provisions, namely Paragraph 6.4.3, Paragraph 6.4.5, and the 22 Flexible-Benefit Plan descriptions. This argument is meritless because none of those provisions relate to retiree-healthcare benefits. For example, Paragraph 6.4.3, entitled “Funding,” governs plan funding for active employees - it has nothing to do with retiree healthcare. R. 243; 283; 325. Paragraph 6.4.5’s use of coverage likewise does not support the Plaintiffs’ position because it concerns an active employee’s right to re-enter the District’s healthcare plans. R. 243-44; 284; 325-26. As for the Plaintiffs’ reliance on “coverage” as it is used in the Flexible- Benefit Plan descriptions, the Flexible-Benefit Plan descriptions are separate from the actual healthcare plan descriptions in Paragraph 6.4.2. R. 242; 283; 324. The use of coverage in relation to flexible benefits thus does not at all suggest that the coverage sentence locks in co-pay rates. The Plaintiffs’ reliance on “coverage” as it is used in unrelated CBA provisions is likewise misplaced because the CBAs do not define coverage. The parties’ failure to define coverage shows that it is a general term that does not encompass costs, such as co-pay rates. The parties easily could have guaranteed fixed co-pay rates, but chose not to. This Court should not read such a term into the CBAs. Schron, 20 N.Y.3d at 437. In support of their interpretation of Paragraph 6.5.3, the Plaintiffs also cite three Appellate Division, Third Judicial Department cases: Della Rocco v. 23 City of Schenectady, Hudock v. Village of Endicott, and Myers v. City of Schenectady.2 But all three cases are distinguishable. In Della Rocco, the contract was (as the Plaintiffs concede) different from the CBAs in this case. Significantly, the provision granting retirees continued healthcare benefits was in the same sentence as the provision describing those benefits. Also, unlike our case, the retiree-healthcare provision in Della Rocco expressly connected the terms “coverage” and “plan”: [Defendant] at its own expense shall provide hospitalization and major medical insurance with coverage equivalent to the plan presently in effect for each member of the Department and his family, and for retired members and their families. 252 A.D.2d 82, 83 (3d Dep’t 1998) (emphasis added) (alteration in original). Della Rocco is also distinguishable because the defendant employer in that case switched healthcare plans, not just co-pays. Id. The new plan increased the retirees’ deductibles. Id. (Carpinello, J., dissenting) at 85. The contract in Hudock is likewise significantly different from the CBAs in our case. It provided: 2 The Plaintiffs also cite DiBattista v. County of Westchester, 35 Misc. 3d 1205(A) (Sup. Ct. Westchester Co. 2008), but that decision does not identify the specific contractual language that was at issue. 24 All unit members retiring during the terms [sic] of this agreement agree that subsequent to their retirement, and in consideration of [defendant’s] agreement to continue their health insurance coverage, they will continue to pay a contribution toward their annual health insurance premium and such contribution shall be a sum of $500.00 per annum for family coverage, and a sum of $200.00 per annum for individual coverage. 28 A.D.3d 923, 923 (3d Dep’t 2006) (emphasis added) (second alteration in original). In Hudock, the plaintiffs sued the Village after it changed the stated $200 / $500 retiree-contribution amounts. The Third Department determined that the change breached the collective bargaining agreement. Id. at 924. But the Court did not interpret the meaning of “coverage.” In subsequent litigation over the same contract, however, the Third Department held that “coverage” under the contract was in fact ambiguous. Williams v. Vill. of Endicott, 91 A.D.3d 1160, 1162 (3d Dep’t 2012). The Plaintiffs’ third case, Myers, is also distinguishable. The CBA in Myers provided: All eligible employees in this bargaining unit shall be entitled to membership in the State Health Insurance Plan or a plan that offers the same or better benefits at no cost to the employee. Effective January 1, 1975, the City agrees to provide the same fully paid Health Insurance 25 coverage to retirees and their dependents upon retirement after fifteen (15) years service with the City. 244 A.D.2d 845, 845-46 (3d Dep’t 1997). In Myers, the issue was whether the City violated the contract when it stopped reimbursing retirees’ Medicare part B premiums. Id. at 846. The Third Department held that the above contractual language was ambiguous with respect to the duration of the retirees’ benefits. Id. at 847. The court therefore looked to the parties’ interpretation of the contractual language - namely, their past practice - to conclude that the City had to continue reimbursing Medicare Part B premiums. Id. at 847. Myers actually supports the Defendants because an examination of the District’s past practice reveals that it previously modified co-pays. When Plaintiff Seefeldt retired, co-pays were $0 and $5. R. 242. But when the other Plaintiffs retired, co-pays were $3 and $5. R. 282. The District’s December 30, 2009 letter to Plaintiff Seefeldt states that she had been paying a $3 co-pay - not the $0/5 co- pays that were in effect when she retired. R. 68. Moreover, from agreement to agreement, the District has modified other healthcare benefits, such as healthcare plans and flexible-spending-account contributions. Cf. R. 241-42; 282-83; and 323-24. This supports the Defendants’ argument that the Plaintiffs’ co-pays are not frozen. Cherry v. Auburn Gear, Inc., 441 F.3d 476, 483 (7th Cir. 2006) 26 (“[T]he parties’ practice of changing the contractual terms in succeeding agreements lends support to [Defendant’s] claim that neither party understood the benefits to be permanent or unalterable.”). For these reasons, the Plaintiffs’ textual arguments do not show that the CBAs freeze prescription co-pay rates. The Appellate Division thus correctly rejected the Plaintiffs’ textual arguments. In addition to their textual arguments, the Plaintiffs rely on extrinsic evidence to support their interpretation of the CBAs, namely the pre-1996 CBAs; bargaining proposals from 1996; and the subjective understanding of Plaintiff Kolbe. Their reliance on extrinsic evidence is misplaced and should be rejected. It is well settled that a court may consider extrinsic evidence only if it finds the contract at issue ambiguous. W.W.W. Assocs., Inc., 77 N.Y.2d at 163. It cannot use extrinsic evidence to create an ambiguity. Id. Moreover, each CBA in this case contains an identical merger clause, which further demonstrates that the Plaintiffs’ extrinsic evidence is inadmissible: This Agreement constitutes the entire agreement between the parties and supersedes any prior agreements or understandings with respect to the items covered in this Agreement and shall supersede any rules[,] regulations or practices of the District which shall be contrary or inconsistent with this Agreement. 27 R. 85; 120; 160; 223; 260; 301. Schron, 20 N.Y.3d at 436 (“[W]here a contract contains a merger clause, a court is obliged to require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing.”) (quotation omitted). The Plaintiffs’ extrinsic evidence is also rebutted by the Defendants’ own extrinsic evidence showing that the CBAs do not provide unalterable healthcare benefits. For example, the Schuler Affidavit challenges Plaintiff Kolbe’s contention that prescription co-pays “vested” upon each Plaintiffs’ retirement. R. 213-14 ¶¶ 12-13. The Reineke Affidavit states that the District believed that the 2007-2012 CBA modified the Plaintiffs’ healthcare benefits. R. 339 ¶ 5. And the VanVleet Affirmation states that the District did not distinguish between active employees and retirees when it negotiated the 2007- 2012 CBA. R. 342 ¶ 7. Thus, if this Court finds the contracts ambiguous and then considers extrinsic evidence (although it should not), it should remand the case for additional trial court proceedings because, as the Appellate Division Dissent recognized, the parties’ extrinsic evidence conflicts, thereby raising an issue of fact. R. 7.3 3 This Court could still, of course, affirm the Appellate Division Order for the reasons set forth in Points II and III. 28 In any event, the Plaintiffs’ extrinsic evidence does not show that the CBAs preclude the Defendants from modifying the Plaintiffs’ prescription co-pays. With respect to the Plaintiffs’ reliance on two pre-1996 CBAs, notwithstanding the fact that these Agreements are fifteen years old, Paragraph 6.5.3 in those CBAs also does not identify specific healthcare plans or prescription co-pays. R. 104; 140. Each of those CBAs is also expressly superseded by subsequent CBAs. R. 120; 160. As for the 1996 bargaining proposals, they do not help the Plaintiffs because, although they reference the premium-payment mechanism, they likewise do not reference fixed co-pay rates. R. 194-203. The Plaintiffs’ reliance on the proposals is also misplaced because the 1996-1999 CBA contains a merger clause. R. 160; see Schron, 20 N.Y.3d at 436. Finally, to the extent the Plaintiffs rely on Plaintiff Kolbe’s subjective understanding of the Agreements, Kolbe cannot speak for the District. R. 214. And his subjective understanding of the Agreements is not probative as to the meaning of the Agreements. Di Giulio v. City of Buffalo, 237 A.D.2d 938, 939 (4th Dep’t 1997). Accordingly, for these reasons, the Appellate Division correctly rejected the Plaintiffs’ interpretation of the CBAs. 29 C. This Court Should Not Apply a Vesting “Inference” This Court should not apply the “Yard-Man” vesting inference, or any other pro-vesting inference, proposed by the Plaintiffs. Instead, in deciding whether the CBAs provide fixed co-pay rates, the Court should apply basic contract-interpretation principles and enforce each CBA according to its plain terms. Matter of Giblin, 75 A.D.3d at 888. Here, because the CBAs do not guarantee fixed co-pays, the Plaintiffs’ breach claim fails. In support of their argument that there exists an “inference” that retirement benefits are “vested” and unalterable, the Plaintiffs rely on the Sixth Circuit case Int’l Union, UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983). In Yard-Man, the Sixth Circuit determined that the plaintiff retirees were entitled to the insurance benefits set forth in expired CBAs. Id. at 1480. In so holding, the Sixth Circuit noted that retiree benefits “carry with them an inference that they continue so long as the prerequisite status is maintained.” Id. at 1482. This Court should not follow Yard-Man because its “inference” is contrary to well-established contract-interpretation rules. Indeed, several courts have expressly rejected the Yard-Man inference. See Nichols v. Alcatel USA, Inc., 532 F.3d 364, 378 (5th Cir. 2008) (“This inference, known as the Yard-Man inference . . . has never been accepted by this Court.”); Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., U.A.W. v. Skinner Engine Co., 188 30 F.3d 130, 140 (3d Cir. 1999) (“We cannot agree with Yard-Man and its progeny that there exists a presumption of lifetime benefits in the context of employee welfare benefits”); Anderson v. Alpha Portland Indus., 836 F.2d 1512, 1517 (8th Cir. 1988) (“[W]e disagree with Yard-Man to the extent that it recognizes an inference of an intent to vest.”); see also Am. Fed’n of Grain Millers v. Int’l Multifoods Corp., 116 F.3d 976, 981 (2d Cir. 1997) (holding that agreements did not vest benefits). This Court also should not adopt the Yard-Man inference because Yard-Man concerns a private employer and federal employment law. This case, however, concerns a public employer and New York State law. In the public employment sphere, there exists even more compelling reasons to not apply the Yard-Man inference. The Connecticut Supreme Court, in declining to adopt an inference either for or against vesting in the public-employment context, set forth these compelling reasons: From the employer’s perspective, courts should not impose lightly an indefinite financial obligation when, unlike with pension plans, the employer lacks the ability to protect or control costs. Indeed, this concern is of heightened importance in the public employment sphere. A municipality must ensure its fiscal integrity to provide not only benefits for past and future employees, but also necessary services to its residents. Furthermore, courts should hesitate to presume a vesting intent when the 31 result could well be to discourage employers from providing such benefits in the first instance. Poole v. City of Waterbury, 831 A.2d 211, 223 (Conn. 2003) (holding that agreements permitted the City to make reasonable modifications to retiree- healthcare benefits). The above reasoning equally applies to this case. If the Plaintiffs’ benefits are “vested,” then the District could be required to offer several different healthcare plans to different classes of retirees. The District could also be required to provide, at a great expense, discontinued healthcare plans (assuming it could even obtain those discontinued plans). Presumably, even the Plaintiffs would not want the healthcare plans provided for in long-expired CBAs, as those plans do not provide the most advanced health-care technology and medicine. Reese v. CNH Am. LLC, 694 F.3d 681, 683-84 (6th Cir. 2012) (“Retirees, quite understandably, do not want lifetime eligibility for the medical-insurance plan in place on the day of retirement, even if that means they would pay no premiums for it. They want eligibility for up-to-date medical-insurance plans, all with access to up-to-date medical procedures and drugs. Whatever else vesting in the healthcare context means, all appear to agree that it does not mean that beneficiaries receive a bundle of services fixed once and for all.”). 32 This Court should also reject Yard-Man because it attempts to treat retiree-healthcare benefits like pension benefits, even though the two benefits are distinguishable. For instance, in New York, public employers and employees are prohibited from negotiating over benefits provided by a public retirement system. N.Y. Civ. Serv. Law § 201(4) (McKinney’s 2013). Moreover, only pension benefits - not retiree-healthcare benefits - are protected by Article V, Section 7 of the New York State Constitution. See Lippman v. Bd. of Educ. of the Sewanhaka Cent. High Sch. Dist., 66 N.Y.2d 313, 315 (1985). Federal law also distinguishes between pension and retiree-healthcare benefits. For example, under ERISA, there is automatic vesting of pension benefits, but not healthcare benefits. Am. Fed’n of Grain Millers, 116 F.3d at 979 (noting that Congress did not provide for automatic vesting of healthcare benefits because healthcare benefits have “unstable variables [that] prevent accurate predictions of future needs and costs.”). Similarly, the Plaintiffs’ attempt to analogize retiree-healthcare benefits to deferred-compensation plans fails, as deferred compensation plans are controlled by their own specific rules. See, e.g., N.Y. State Fin. Law § 5 (McKinney’s 2013); 9 N.Y.C.R.R. § 9000.1, et seq. (2013). Accordingly, this Court should not apply a pro-vesting inference. It should instead apply basic contract-interpretation tools and require a CBA to expressly provide for fixed-healthcare benefits before imposing that obligation on 33 a public employer. Because the CBAs at issue in this case do not freeze co-pay rates, the Appellate Division Order should be affirmed. POINT II. NEW YORK STATE LAW PERMITS THE DEFENDANTS TO MODIFY THE PLAINTIFFS’ PRESCRIPTION CO-PAYS The Appellate Division Order should also be affirmed because New York State law permits the Defendants to modify the Plaintiffs’ co-pays. Under Chapter 729 of the Laws of 1994, as amended and made permanent by Chapter 504, pt. B, § 14 of the Laws of 2009 (“Chapter 504”)4, a school district may diminish retiree-healthcare benefits so long as a corresponding diminution is applied to active-employee-healthcare benefits.5 Chapter 504 provides: From on and after June 30, 1994 a school district, board of cooperative educational services, vocational education and extension board or a school district as enumerated in section 1 of chapter 566 of the laws of 1967, as amended, shall 4 The Appellate Division’s Memorandum Decision refers to Chapter 30 of the Laws of 2009 - the 2009 extender of Chapter 729 of the Laws of 1994. The Appellate Division did not decide whether Chapter 30 (or Chapter 504) permitted the Defendants to modify the Plaintiffs’ co-pays. Instead, it only decided that the Defendants “complied” with Chapter 30 because it modified co-pays for both active employees and retirees. R. 6-7. 5 The Defendants’ argument assumes that the modifications at issue actually diminished the Plaintiffs’ healthcare benefits. As set forth in Point III, the Plaintiffs have not established that they receive less under the 2007-2012 CBA than they did under the prior CBAs. 34 be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such board or district makes for such health insurance coverage below the level of such benefits or contributions made on behalf of such retirees and their dependents by such district or board unless a corresponding diminution of benefits or contributions is effected [sic] from the present level during this period by such district or board from the corresponding group of active employees for such retirees. L. 2009, Ch. 504, pt. B, § 14 (reproduced at R. 386). Here, the Defendants “effected” a “corresponding diminution of benefits” because they equally modified healthcare benefits for both active employees and retirees. Thus, even assuming that the CBAs preclude the Defendants from modifying the Plaintiffs’ prescription co-pays (although they do not), Chapter 504 warrants dismissal of the Plaintiffs’ claim. In the Appellate Division, the Plaintiffs argued that Chapter 504 did not bar their claim because it only applies to voluntarily-conferred benefits, not contractual benefits. This argument fails for two reasons. First, Chapter 504 should be enforced as written. Sega v. State, 60 N.Y.2d 183, 190-91 (1983) (“Generally, a statute is to be construed according to the ordinary meaning of its words . . . and resort to extrinsic matter is inappropriate 35 when the statutory language is unambiguous and the meaning unequivocal.”). Here, as written, Chapter 504 permits school districts to diminish retiree-healthcare benefits so long as the same diminution is applied to active-employee-healthcare benefits. The law does not distinguish between voluntary-conferred benefits and contractual benefits. Because Chapter 504 is clear and unambiguous, this Court should not add a term to the law precluding its application to contractual benefits. See Henry Modell and Co. v. Minister, Elders and Deacons of the Reformed Protestant Church of the City of N.Y., 68 N.Y.2d 456, 462 (1986) (“[W]e decline to rewrite the statute to add language that the Legislature did not see fit to include.”). If the Legislature wanted the law to protect contractual benefits, it easily could have inserted a term to that effect. See Matter of City of Yonkers v. Yonkers Firefighters, 20 N.Y.3d 651 (2013). For example, the Legislature has introduced bills similar to Chapter 504 that would bar all public employers from reducing retiree-healthcare benefits unless active-employee-healthcare benefits are likewise reduced. See, e.g., 2011 Assembly Bill A04532; 2013 Assembly Bill A02459. However, unlike Chapter 504, these bills include the following term expressly carving-out contractual benefits: Nothing contained in this act shall supersede or diminish the terms of a collective bargaining agreement. 36 2013 Assembly Bill A02459. Chapter 504’s application to contractual benefits makes further sense because a party generally cannot enforce the terms of an expired contract, including an expired CBA. Citigifts, Inc. v. Pechnik, 112 A.D.2d 832, 834 (1st Dep’t 1985), aff’d, 67 N.Y.2d 774 (1986); see also L. 1996, Ch. 83 (Assembly Mem., Bill Jacket) (reproduced at R. 374-75) (“Absent the provisions of chapter 729 as amended, there is no statutory requirement for public employers to provide healthcare coverage to retirees and because retirees are not represented in the collective bargaining process, they are powerless to stop unilateral depreciation or even elimination of health insurance benefits once the contract under which they retired has expired.”). Second, Chapter 504’s legislative history shows that the law applies to contractual benefits.6 For example, the Senate Introducer’s Memorandum in support of the 2009 extender of the law provides that the law “does not . . . prevent school districts from taking cost-cutting measures, so long as these [measures] apply equally to active employees and retirees.” L. 2009, Ch. 30 (Senate Mem., Bill Jacket). And the Assembly Memorandum in support of the 2004 extender states that “school districts . . . remain free to reduce health insurance coverage for 6 This Court need not consider Chapter 504’s legislative history because, as set forth above, the law is clear and unambiguous. Sega, 60 N.Y.2d at 190-91. 37 retirees so long as they negotiate a parallel reduction with active employees.” L. 2004, Ch. 25 (Assembly Mem., Bill Jacket). Importantly, this legislative history - which expressly recognizes that a school district may take cost-cutting measures - does not show that contractual benefits are to receive extra protection. In the Appellate Division, the Plaintiffs argued that other legislative history supported their position that the law applies to contractual benefits. The Plaintiffs primarily relied on the December 1, 1994 Final Report of the Temporary Task Force on Health Insurance for Retired Educational Employees. R. 376-85. But the Plaintiffs’ reliance on the report is misplaced because the Task Force never issued a final recommendation. R. 384. Rather, in its report, the Task Force set forth a number of “alternatives,” one of which was to clarify that a school district could modify contractual benefits. R. 383-84. The Plaintiffs argue that the Legislature’s failure to adopt this “alternative” shows that Chapter 504 does not apply to contractual benefits. This argument is meritless. There is no proof that the Legislature expressly considered, and rejected, the relied-upon alternative. In addition, legislative inaction does not equal legislative intent. Clark v. Cuomo, 66 N.Y.2d 185, 190-91 (1985). The Task Force Report also does not help the Plaintiffs because the report was not released until December 1, 1994 - four months after the State 38 enacted Chapter 729 of the Laws of 1994 (i.e., the first version of Chapter 504). Cf. R. 372; 376. The Legislature then annually renewed the law in substantially the same form before making it permanent in 2009. For these reasons, even assuming that the CBAs in this case preclude the Defendants from modifying the Plaintiffs’ prescription co-pays (although they do not), Chapter 504 permitted the modifications. The Plaintiffs’ claim thus fails as a matter of law. POINT III. THE APPELLATE DIVISION ORDER SHOULD BE AFFIRMED BECAUSE THE PLAINTIFFS HAVE NOT ESTABLISHED DAMAGES This Court should also affirm the Appellate Division Order because the Plaintiffs have no evidence of damages. The Plaintiffs ignore that the 2007-2012 CBA increases not only their prescription co-pays, but also the District’s contributions to their flexible-spending accounts. The increases can be seen by comparing the three CBAs: 1999-2003 CBA: The District shall contribute to full-time eligible employees, $215.00 for single coverage; $430.00 for couple coverage; and $480.00 for family coverage. Employees electing the traditional plan are not eligible for any District contributions to a 39 flex plan. All employees shall have the right to contribute pretax dollars to a flex plan. R. 242. 2003-2007 CBA: [T]he District shall contribute to full-time eligible employees, $250.00 for single coverage; $500.00 for couple coverage; and $540.00 for family coverage. All employees shall have the right to contribute pretax dollars to a flex plan. R. 283. 2007-2012 CBA: [T]he District shall contribute to full-time eligible employees, $325.00 for single coverage; $625.00 for couple coverage; and $700.00 for family coverage. All employees shall have the right to contribute pre-tax dollars to a flex plan. [T]he District will provide a matching contribution per full-time, eligible employee’s contribution to the flex account as follows: Single: $50.00 Couple: $75.00 Family: $100.00 (i.e., an employee eligible for single coverage contributes $50.00 to the flex account and the [D]istrict will contribute $50.00 to match it.). R. 324. 40 The Plaintiffs have failed to show that the co-pay increase is not completely offset by the increased flexible-spending-account contributions. R. 216 ¶ 21. Nor have the Plaintiffs offered to return the increased flexible-spending- account contributions to the District. R. 216 ¶ 22. The Plaintiffs’ breach claim thus fails as a matter of law. They cannot rely on threadbare and boilerplate allegations of damages to survive summary judgment. Gordon v. Dino De Laurentiis Corp., 141 A.D.2d 435, 436 (1st Dep’t 1988) (“The complaint contains only boilerplate allegations of damage. In the absence of any allegations of fact showing damage, mere allegations of breach of contract are not sufficient to sustain a complaint, and the pleadings must set forth facts showing the damage upon which the action is based.”); see also Lexington 360 Assocs. v. First Union Nat’l Bank of North Carolina, 234 A.D.2d 187, 189-90 (1st Dep’t 1996). In the Appellate Division, the Plaintiffs argued that they did not need evidence of damages to survive summary judgment because they are requesting specific performance. This argument should be rejected because damages - not specific performance - are the gravamen of the Plaintiffs’ requested relief. R.P. Brennan Gen. Contractors & Builders, Inc. v. CPS 1 Realty, LP, 63 A.D.3d 619, 619 (1st Dep’t 2009). Moreover, specific performance is not warranted in this case because the Plaintiffs’ alleged damages are easily calculable. See Van Wagner 41 Adver. Corp. v. S & M Enter., 67 N.Y.2d 186, 193 (1986). They amount to the cost difference between the prescription co-pay rates. The Plaintiffs’ specific performance argument should also be rejected because they have not shown that money damages would be an inadequate remedy. Id. at 189. In fact, the Plaintiffs’ Complaint requests damages. R. 36 ¶ f. The Plaintiffs are therefore not entitled to specific performance. Thus, to survive summary judgment, they had to submit proof of damages. Zuckerman v. City of N.Y., 49 N.Y.2d 557, 560 (1980). But they did not. The Appellate Division Order should be affirmed on this basis as well. CONCLUSION The Appellate Division Order should be affirmed in its entirety. The Appellate Division correctly held that the CBAs do not provide the Plaintiffs with fixed, unalterable co-pay rates. Moreover, the Defendants permissibly modified the Plaintiffs’ prescription co-pays because co-pays were simultaneously modified for active employees. Finally, the Plaintiffs’ claim fails as a matter of law because they have not shown damages - there is no evidence that the co-pay increase is not off-set by the District’s increased contributions to their flexible-spending accounts. 42 Dated: May 28, 2013 HODGSON RUSS LLP Attorneys for Defendants- Respondents By: s/Jeffrey T. Fiut Karl W. Kristoff, Esq. Jeffrey T. Fiut, Esq. The Guaranty Building 140 Pearl Street, Suite 100 Buffalo, New York 14202 Telephone: (716) 856-4000 018647.00021 Business 11355492v2