| Matter of Chenango Forks Cent. School Dist. v New York State Pub.Empl. Relations Bd. |
| 2012 NY Slip Op 03700 [95 AD3d 1479] |
| May 10, 2012 |
| Appellate Division, Third Department |
| 2—In the Matter of Chenango Forks Central School District,Petitioner, v New York State Public Employment Relations Board et al.,Respondents. |
—[*1] David P. Quinn, New York State Public Employment Relations Board, Albany, for NewYork State Public Employment Relations Board, respondent. Richard E. Casagrande, New York State United Teachers, Albany (Frederick K. Reich ofcounsel), for Chenango Forks Teachers Association, NYSUT, AFT, AFL-CIO, Local 2561,respondent.
Peters, P.J. Proceeding pursuant to CPLR article 78 (transferred to this Court by order of theSupreme Court, entered in Albany County) to review a determination of respondent PublicEmployment Relations Board which found that petitioner had committed an improper employerpractice.
In June 2003, petitioner sent a memorandum to faculty and staff represented by respondentChenango Forks Teachers Association, NYSUT, AFT, AFL-CIO, Local 2561 (hereinafter theAssociation) announcing that it would cease its longstanding practice of reimbursing retirees'Medicare Part B premiums. Although the 2001-2004 collective bargaining agreement(hereinafter CBA) in place at the time between petitioner and the Association did not explicitlyobligate petitioner to make such reimbursements, petitioner had done so since at least 1980 whensuch reimbursement was required by the Empire Plan, the health insurance plan provided toemployees up until 1990. That year, petitioner and the Association entered into a [*2]new CBA, and health insurance coverage was changed to BlueCross/Blue Shield, which did not require the reimbursement of Medicare Part B premiums.Petitioner, however, continued to make such reimbursements.
As a result of the June 2003 memorandum, the Association initiated a grievance alleging aviolation of the CBA.[FN1]At the same time, the Association filed an improper practice charge with respondent PublicEmployment Relations Board (hereinafter PERB) alleging that petitioner violated Civil ServiceLaw § 209-a (1) (d) by failing to negotiate the discontinuance of reimbursement ofMedicare Part B premiums. PERB conditionally dismissed the charge subject to a motion toreopen the matter after the conclusion of the grievance procedure. When the grievance proceededto arbitration, an arbitrator determined that petitioner was under no contractual obligation tocontinue the payments.
Thereafter, the Association successfully moved to reopen the PERB proceeding. Following ahearing, an Administrative Law Judge (hereinafter the ALJ) found that petitioner's practice ofreimbursement had "giv[en] rise to a reasonable expectation by current employees that theyproceed under a promise of post-retirement [reimbursement]" and, thus, petitioner's unilateraldecision to discontinue reimbursement violated its collective bargaining obligations under CivilService Law § 209-a (1) (d). Upon administrative appeal, PERB rejected petitioner'sseveral exceptions, but remanded the case to the ALJ to take additional evidence from the partiesas to whether the Association and/or current employees had actual or constructive knowledge ofthe reimbursement so as to determine whether either had a reasonable expectation that thepractice would continue. Following a hearing during which testimony was presented from anumber of current and former employees of petitioner, as well as Association representatives, theALJ determined that both the Association and employees had been aware of the at-issuereimbursement for several years prior to the June 2003 memorandum and, thus, petitioner hadviolated Civil Service Law § 209-a (1) (d) by unilaterally ceasing the practice withoutnegotiation. PERB affirmed the ALJ's decision and this CPLR article 78 proceeding challengingPERB's determination ensued.
Under the Taylor Law, a public employer is obligated to negotiate in good faith with thebargaining representative of its current employees regarding "terms and conditions ofemployment" (Civil Service Law § 204 [2]), and the failure to do so constitutes animproper employment practice (see Civil Service Law § 209-a [1] [d]). "Pursuantto this duty to negotiate, where a past practice between a public employer and its currentemployees is established, involving a mandatory subject of negotiation, the Taylor Law wouldbar the employer from [*3]discontinuing that practice withoutprior negotiation" (Matter of Aeneas McDonald Police Benevolent Assn. v City ofGeneva, 92 NY2d 326, 331 [1998] [citations omitted]; see Matter of State of New York[Div. of Military & Naval Affairs] v New York State Pub. Empl. Relations Bd., 187 AD2d78, 82 [1993]; Matter of Incorporated Vil. of Hempstead v Public Empl. Relations Bd.,137 AD2d 378, 383 [1988], lv denied 72 NY2d 808 [1988]; Matter of Board of Coop.Educ. Servs. Sole Supervisory Dist., Onondaga & Madison Counties v New York State Pub.Empl. Relations Bd., 82 AD2d 691, 693-694 [1981]).
We reject petitioner's assertion that reimbursement of Medicare Part B premiums is not a"term and condition of employment" subject to mandatory negotiation. Health benefits forcurrent employees are a form of compensation, and thus a term of employment that is amandatory subject of negotiation (see Matter of Aeneas McDonald Police Benevolent Assn. vCity of Geneva, 92 NY2d at 331-332). While Civil Service Law § 201 (4) prohibitsnegotiation of certain retirement benefits, the continuation of health insurance payments tocurrent employees after their retirement is not a retirement benefit within the meaning of thatprovision (see Matter of Incorporated Vil. of Lynbrook v New York State Pub. Empl.Relations Bd., 48 NY2d 398, 404 [1979]; Matter ofJefferson-Lewis-Hamilton-Herkimer-Oneida BOCES [JLHHO BOCES Professional Assn.],219 AD2d 801, 802 [1995], lv denied 87 NY2d 812 [1996]). Rather, such healthinsurance benefits, although paid after retirement, constitute a form of compensation earned bythe employee while employed. Thus, as the Court of Appeals has held, and PERB rationallyconcluded here, petitioner "ha[d] a duty to negotiate with the bargaining representative of currentemployees regarding any change in a past practice affecting their own retirement health benefits"(Matter of Aeneas McDonald Police Benevolent Assn. v City of Geneva, 92 NY2d at 332[emphasis omitted]; see Matter of Incorporated Vil. of Lynbrook v New York State Pub.Empl. Relations Bd., 48 NY2d at 404; Matter ofJefferson-Lewis-Hamilton-Herkimer-Oneida BOCES [JLHHO BOCES Professional Assn.],219 AD2d at 802; Matter of Corinth Cent. School Dist. [Corinth Teachers Assn.], 77AD2d 366, 367 [1980], lv denied 53 NY2d 602 [1981]).
We next address the question of whether a binding past practice was established. Initially, wecannot agree with the dissent's conclusion that PERB abused its discretion in declining to defer tothe arbitrator's finding in the grievance proceeding that a past practice did not exist.[FN2]The issue before PERB was whether, irrespective of any contractual obligation in the parties'CBA, a past practice of reimbursing retirees for Medicare Part B premiums was established suchthat petitioner was barred from discontinuing that practice without prior negotiation (seeMatter of Aeneas McDonald Police Benevolent Assn. v City of Geneva, 92 NY2d at 331;Matter of Incorporated Vil. of Hempstead v Public Empl. Relations Bd., 137 AD2d at383; Matter of Board of Coop. Educ. Servs. Sole Supervisory Dist., Onondaga & MadisonCounties v New York State Pub. Empl. Relations Bd., 82 AD2d at 693). In determiningwhether a binding past practice exists, PERB's inquiry focuses on whether the employer's"practice was unequivocal and was continued uninterrupted for a period of time under thecircumstances to create a reasonable expectation among the affected unit employees that the[practice] would continue" (Matter ofManhasset Union Free School Dist. v New York State Pub. Empl. Relations Bd., 61 AD3d1231, 1233 [2009] [internal quotation marks and citations omitted]; accord Matter [*4]of Fashion Inst. of Tech. v New York State Pub. Empl. RelationsBd., 68 AD3d 605 [2009]). In stark contrast, the specific issue before the arbitrator waswhether petitioner was under a contractual obligation to make Medicare Part B reimbursementpayments to retirees.
As the arbitrator noted at the outset of his decision, his jurisdiction was derived solely fromthe parties' CBA and limited to interpreting the language contained within the four corners of theagreement. The arbitrator ultimately concluded that petitioner did not have a contractualobligation to reimburse retirees for Medicare Part B premiums because the CBA lacked languagerequiring such payments and did not contain a maintenance of benefits clause requiring thecontinuation of noncontractual past practices. Thus, the arbitrator's statement in the award thatthere was no past practice regarding the at-issue benefits was entirely dicta and, as noted byPERB, was neither convincing nor binding upon it (see Matter of Schuyler-Chemung-TiogaEduc. Assn. [Schuyler-Chemung-Tioga Bd. of Coop. Educ. Servs.], 34 PERB ¶ 3019[2001]). Moreover, while the dissent correctly notes that PERB has articulated a policy ofdeferring to an arbitrator's decision in an improper practice proceeding "under certain limitedcircumstances" (Matter of New York City Tr. Auth. [Transport Workers Union of Am.],4 PERB ¶ 3031 [1971]), PERB has also made clear that it "is not required to defer to adetermination made by an arbitrator and certainly should not defer to such a determination where[it] concludes that the statutory scheme is not effectuated by an award" (id.). Here, it isunclear what, if any, criteria the arbitrator used in summarily concluding, in dicta, that no bindingpast practice existed and, as PERB specifically noted in its decision, to the extent the arbitratormay have attempted to apply its past practice criteria, the arbitrator's conclusion was repugnant tothe Civil Service Law. Under these circumstances, PERB's declination to defer to the arbitrator'sfinding in addressing whether a past practice existed was neither arbitrary nor capricious (seeMatter of Civil Serv. Empls. Assn., Local 1000, AFSCME, AFL-CIO v New York State Pub.Empl. Relations Bd., 267 AD2d 935, 936-937 [1999]).
Turning to the merits of its past practice determination, PERB found a reasonableexpectation by unit employees that they would receive reimbursement of Medicare Part Bpremiums upon their retirement. This finding is supported by the stipulated facts that petitionerreimbursed Medicare Part B premiums to active employees and retirees since at least 1980 andthat, despite the fact that the health insurance coverage provided under the CBAs subsequent to1990 did not require such reimbursement, petitioner continued to do so until July 2003.Furthermore, numerous witnesses testified that they were made aware of petitioner's practiceprior to the June 2003 announcement through conversations with other employees or retirees.Contrary to petitioner's contention, PERB properly determined that these out-of-court statementsregarding what the witnesses were told were offered not to prove the truth of the statements, butto establish what the witnesses believed at the time, and therefore were admissible for thatpurpose (see Matter of Bergstein v Board of Educ., Union Free School Dist. No. 1 of Townsof Ossining, New Castle & Yorktown, 34 NY2d 318, 324 [1974]; Grossjahann v Wilkins& Sons, 244 AD2d 808, 810 [1997]). Moreover, to the extent that petitioner challenges theveracity of certain witnesses, highlights inconsistencies in their testimony and stresses the paucityof proof, it is not our role to weigh the evidence or assess the credibility of the testimonypresented (see Matter of Civil Serv.Empls. Assn., Local 1000, AFSCME, AFL-CIO v New York State Pub. Empl. RelationsBd., 2 AD3d 1197, 1198 [2003]; Matter of Romaine v Cuevas, 305 AD2d 968,968-969 [2003]; Matter of De Vito v Kinsella, 234 AD2d 640, 642 [1996]). Inasmuch asthe testimony credited by PERB supplies a rational basis to support its determination that therewas a qualifying past practice that was improperly terminated by petitioner, the determinationmust be upheld (see Matter of Manhasset Union Free School Dist. v New York State Pub.Empl. Relations Bd., 61 AD3d at 1234).[*5]
Nor can we conclude that, by entering into a new CBAfor the 2004-2007 period, which is silent regarding the reimbursement of Medicare Part Bpremiums, the Association waived its right to negotiate a change in petitioner's practice ofproviding Medicare Part B reimbursement. "A waiver is the intentional relinquishment of aknown right with both knowledge of its existence and an intention to relinquish it. . . Such a waiver must be clear, unmistakable and without ambiguity" (Matterof Civil Serv. Empls. Assn. v Newman, 88 AD2d 685, 686 [1982] [internal quotation marksand citation omitted], affd on op below 61 NY2d 1001 [1984]; accord Matter of Professional StaffCongress-City Univ. of N.Y. v New York State Pub. Empl. Relations Bd., 7 NY3d 458,465 [2006]; see Matter of County ofErie v State of New York, 14 AD3d 14, 17 [2004]). Despite petitioner's assertion to thecontrary, the boilerplate language in the 2004-2007 CBA—that it "constitutes the full andcomplete commitments of the [parties] whether or not any item contained [within it] was knownor should have been known, or was or was not discussed by the parties at the moment when theyentered into this agreement"—does not evince an explicit, unmistakable, and unambiguouswaiver of the Association's right to negotiate (see Matter of Board of Coop. Educ. Servs. SoleSupervisory Dist., Onondaga & Madison Counties v New York State Pub. Empl. RelationsBd., 82 AD2d at 694).[FN3]Further, while the 2004-2007 CBA, like the previous CBAs, requires petitioner to pay premiumsfor other forms of insurance after retirement and provides that it "shall supersede any. . . practice of [petitioner] which shall be contrary to or inconsistent with its terms,"it is entirely silent with respect to Medicare Part B insurance, and whether such premiums will orwill not be reimbursed. Moreover, it is undisputed that the subject was not discussed duringnegotiations for the 2004-2007 CBA. In the absence of any provision in the 2004-2007 CBAregarding the reimbursement of Medicare premiums and without any record evidence todemonstrate a conscious discussion of the issue during collective bargaining that could supportpetitioner's contention that the Association waived its right to negotiate with respect to this issue,PERB's conclusion that the Association did not waive its right to negotiate is rational andsupported by substantial evidence (see Matter of County of Erie v State of New York, 14AD3d at 17; Matter of City of Poughkeepsie v Newman, 95 AD2d 101, 104 [1983],appeal dismissed 60 NY2d 859 [1983], lv denied 62 NY2d 602 [1984];Matter of Civil Serv. Empls. Assn. v Newman, 88 AD2d at 686; Matter of Board ofCoop. Educ. Servs. Sole Supervisory Dist., Onondaga & Madison Counties v New York StatePub. Employment Relations Bd., 82 AD2d at 694; see also Matter of Odessa-MontourCent. School Dist. v New York State Pub. Empl. Relations Bd., 228 AD2d 892, 894 [1996];compare Matter of Frontier Ins. Co. v Koppell, 225 AD2d 93, 95 [1996], lvdenied 90 NY2d 806 [1997]).[FN4][*6]
Finally, reimbursing active employees for Medicare PartB premiums does not constitute an improper gift of public funds (see NY Const, art VIII,§ 1), as the reimbursements represent compensation earned by employees while employedand in consideration for a benefit furnished to petitioner (see Gagliardo v Dinkins, 89NY2d 62, 74-75 [1996]; Board of Educ. of Union Free School Dist. No. 3 of Town ofHuntington v Associated Teachers of Huntington, 30 NY2d 122, 128 [1972]).
Petitioner's remaining contentions, to the extent not specifically addressed herein, have beenreviewed and found to be without merit.
Kavanagh and Garry, JJ., concur.
Lahtinen, J. (dissenting). Respectfully, we dissent and would grant the petition. Nearly nineyears ago, escalating health care costs ostensibly resulted in petitioner notifying its employeesthat it was planning to cut a non-contractual benefit that at that time cost the school over$100,000 per year. Respondent Chenango Forks Teachers Association, NYSUT, AFT, AFL-CIO,Local 2561 (hereinafter the Association) filed a grievance under the 2001-2004 collectivebargaining agreement (hereinafter CBA) in July 2003. Some months later, in September 2003,the Association filed an improper practice charge with respondent Public Employment RelationsBoard (hereinafter PERB). PERB made a pre-arbitral deferment to the pending arbitration andhence conditionally dismissed the charge subject to a motion to reopen.
In November 2004, the arbitrator determined that petitioner had not violated the CBA sincethere was no requirement therein for such a payment. The arbitrator's decision reflects that theAssociation had argued and relied upon past practice evidence regarding Medicare Part Breimbursements at the arbitration and, noting that evidence, the arbitrator held that "suchpractices originated from the former Empire Plan and a now repealed statutory obligation on thepart of [petitioner], and once the statutory obligation was removed, [petitioner] made voluntaryMedicare Part B reimbursement payments to retirees. The voluntariness of [petitioner's] conduct,given the origin of [petitioner's] Medicare Part B reimbursements, does not contain sufficientevidence of a mutual understanding and agreement to establish a binding past practice." Unhappywith the result and seeking to relitigate the issue of past practice, the Association moved toreopen the improper practice charge. PERB granted the application and, well over five years afterthe arbitrator's decision, PERB rendered a determination in April 2010 in favor of theAssociation and directed petitioner to rescind its June 2003 announcement.
Strong public policy supports permitting willing parties to frame their issues and resolvetheir disputes through arbitration, which almost always expedites the matter and conservesresources (see Stark v Molod SpitzDeSantis & Stark, P.C., 9 NY3d 59, 66 [2007]). Once parties have charted that course,with its benefits and concomitant risks, " '[i]t has long been the policy of the law to interfere aslittle as possible' " (Westinghouse Elec. Corp. v New York City Tr. Auth., 82 NY2d 47,54 [1993], quoting Matter of Siegel [Lewis], 40 NY2d 687, 689 [1976]). The issue ofpast practices may be considered by arbitrators (see Matter of Aeneas McDonald PoliceBenevolent Assn. v City of Geneva, 92 NY2d 326, 332 [1998]), and " '[a]rbitrators may dojustice' and 'are not bound by principles of substantive law or rules of evidence' " (id.,quoting Lentine v Fundaro, 29 NY2d 382, 386, 385 [1972]).[*7]
Consistent with these general arbitration policies, it haslong been the policy, both of PERB and in national labor relations matters, to accord post-arbitraldeference to an arbitrator's decision so long as the disputed issue was presented and consideredby the arbitrator, the arbitration proceeding was fair, and the arbitrator's decision was not clearlyrepugnant to the purposes and policies of PERB (see e.g. Matter of New York City Tr. Auth.[Transport Workers' Union of Am.], 4 PERB ¶ 3031, 1971 WL 252455;Hammontree v National Labor Relations Bd., 925 F2d 1486, 1491 [1991]; seegenerally 48 Am Jur 2d, Labor and Labor Relations § 646). Here, the Associationsought arbitration, it urged past practice as supporting its position in the arbitration,[FN5]there is no allegation that it did not have a full opportunity to advocate its position in thearbitration, and the arbitrator's decision was not clearly repugnant to PERB's purpose. Thearbitrator addressed in a relatively prompt fashion the issues that had significant financialramifications for all parties, as well as for taxpayers in the school district. Under thesecircumstances, PERB abused its discretion in disregarding its established post-arbitral deferencepolicies.[FN6]Such arbitrary disregard resulted in a procedure that was unduly protracted, and a determinationthat is not free of constitutional concern (see NY Const, art VIII, § 1; cf. Matterof Karp v North Country Community Coll., 258 AD2d 775, 775-776 [1999] [payments notexpressly authorized by statute, resolution or contract are unconstitutional public gifts, and priorpractice alone does not permit circumvention of the constitution]; but see Matter of Baker v Board ofEduc., 29 AD3d 574, 575 [2006], lv denied 7 NY3d 708 [2006]).
Rose, J., concurs. Adjudged that the determination is confirmed, without costs, and petitiondismissed.
Footnote 1: A group of retirees alsocommenced a CPLR article 78 proceeding to annul petitioner's determination to discontinueMedicare Part B premium reimbursements (Matter of Bryant v Board of Educ., Chenango Forks Cent. School Dist.,21 AD3d 1134 [2005]). This Court remitted the matter to Supreme Court for further recorddevelopment to determine whether there had been a "corresponding diminution of benefits orcontributions" effected by petitioner from active employees (L 2003, ch 48, § 1; seeMatter of Bryant v Board of Educ., Chenango Forks Cent. School Dist., 21 AD3d at1137-1138). The instant proceeding, by comparison, involves current employees of petitioner.
Footnote 2: We note that the dissent raisesthis issue despite the fact that it was not argued by petitioner in either its petition or brief to thisCourt.
Footnote 3: Notably, this clause, as well asthe "supersession clause," was carried over from the 2001-2004 CBA and left completelyunchanged.
Footnote 4: In reaching this result, we rejectpetitioner's contention that PERB's determination was arbitrary and capricious for failing tofollow its own precedent. Matter of Waverly Cent. School Dist. (Waverly Assn. of SupportPersonnel) (20 PERB ¶ 4569 [1987]), relied upon by petitioner, is readilydistinguishable in that there, unlike here, the CBA entered into between the parties containedlanguage that was explicitly at odds with the past practice sought to be enforced.
Footnote 5: The Association should notbenefit from a contention that, by addressing past practices, the arbitrator exceeded the issuesbefore him when, as stated in the arbitrator's decision, it was the Association that presented thatissue at the arbitration.
Footnote 6: The petition, which seeks to setaside PERB's determination as, among other things, arbitrary, includes among its manyallegations the arbitrator's ruling on past practices. Petitioner's brief, referring to the issue at onepoint as collateral estoppel (cf. National Labor Relations Bd. v Roswil, Inc., 55 F3d 382,386 [8th Cir 1995] [noting interrelated questions including deference and collateral estoppel]),asserts the arbitrator's ruling on past practices as a ground to grant the petition.