UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK ____________________________________________________ DANNY DONOHUE, as President of the Civil Service

Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, and CIVIL SERVICE EMPLOYEES ASSOCIATION, INC., LOCAL 1000, AFSCME, AFL-CIO, and MILO BARLOW, THOMAS JEFFERSON, CORNELIUS KENNEDY, JUDY RICHARDS, and HENRY WAGONER on behalf of themselves and certain other RETIREES of the STATE OF NEW YORK formerly in the CSEA BARGAINING UNITS, Plaintiffs, -againstCOMPLAINT THE STATE OF NEW YORK, ANDREW M. CUOMO as Governor of the State of New York, NEW YORK STATE CIVIL SERVICE DEPARTMENT, PATRICIA A. HITE as Acting Commissioner, New York State Civil Service Department, NEW YORK STATE CIVIL SERVICE COMMISSION, CAROLINE W. AHL and J. DENNIS HANRAHAN as Commissioners of the New York State Civil Service Commission, ROBERT L. MEGNA as Director of the New York State Division of the Budget, THOMAS P. DiNAPOLI as Comptroller of the State of New York, the NEW YORK STATE AND LOCAL RETIREMENT SYSTEM, JONATHAN LIPPMAN as Chief Judge of the New York State Unified Court System, and the NEW YORK STATE UNIFIED COURT SYSTEM, Defendants. ____________________________________________________ Plaintiffs DANNY DONOHUE, as President of the Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, the CIVIL SERVICE EMPLOYEES ASSOCIATION, INC., LOCAL 1000, AFSCME, AFL-CIO (hereinafter CSEA), and retirees MILO BARLOW, THOMAS JEFFERSON, CORNELIUS KENNEDY, JUDY RICHARDS, and HENRY Civil Action No.

Demand for Jury Trial CLASS ACTION

WAGONER on behalf of themselves and certain other RETIREES of the STATE OF NEW YORK formerly in the CSEA BARGAINING UNITS by their attorneys STEVEN A. CRAIN and DAREN J. RYLEWICZ (PAUL S. BAMBERGER, of counsel) as and for their Complaint, respectfully set forth as follows: NATURE OF PROCEEDING 1. This is an action for declaratory and injunctive relief pursuant to 28 USC 2201

and 2202, and money damages, to redress the State defendants deprivation of plaintiffs rights secured pursuant to the Contract Clause of the United States Constitution, Article I, 10, the Fourteenth Amendments to the United States Constitution, 42 USC 1983, Article I, 6 of the New York State Constitution, and for breach of contract, and violation of Civil Service Law 167, resulting from the State defendants unilateral action effective October 1, 2011 increasing the contribution rates that plaintiffs-retirees pay for their retiree health insurance which impaired their contract rights under the terms of their collective bargaining agreements. 2. Plaintiffs further seek an order declaring Chapter 491 of the Laws of 2011,

amending Civil Service Law 167(8), unconstitutional, as applied, and enjoining the State defendants implementation thereof, to the extent that said law and any regulations adopted thereunder impermissibly impair the obligation of the contract between the State and individual plaintiffs-retirees and the class they represent, by increasing the contribution rates that such retirees are required to pay for health insurance benefits in retirement. JURISDICTION 3. Federal question jurisdiction exists over the Constitutional contract impairment

claims in the Complaint under 28 USC 1331 and 1343(3).

4.

This Court has supplemental jurisdiction to entertain plaintiffs-retirees State law

claims pursuant to 28 USC 1367. VENUE 5. Venue is proper under 28 USC 1391(b) in the United States District Court for

the Northern District of New York because the offices of Defendant Governor Andrew M. Cuomo, Plaintiff Donohue, and Plaintiff CSEA headquarters, are all located in Albany, New York. Moreover, the acts complained of occurred in Albany, New York. PARTIES 6. Plaintiff DANNY DONOHUE is the duly elected Statewide President of the

CSEA and sues herein pursuant to and within the scope of his authority as an elected statewide officer of CSEA. 7. Plaintiff CSEA is a not-for-profit corporation duly organized and existing under

the laws of the State of New York, and is an employee organization under the Public Employees Fair Employment Act, N.Y. Civil Service Law Article 14 (Taylor Law), and is the duly recognized collective negotiating representative for, among others, New York State employees in the Administrative Services Unit (hereinafter ASU), Institutional Services Unit (hereinafter ISU), Operational Services Unit (hereinafter OSU), and Division of Military and Naval Affairs Unit (hereinafter DMNA), as well as a unit of employees of the New York State Unified Court System (hereinafter UCS). 8. Plaintiff Milo Barlow is a resident of Warren County, State of New York, and was

an employee of the State of New York for 29 years. He held the title Highway Maintenance Supervisor and was covered by the OSU collective bargaining agreement at the time of his retirement in July 1992. He has individual retiree health insurance coverage. From the date of

9.

Plaintiff Thomas Jefferson is a resident of Monroe County, State of New York,

and was an employee of the State of New York, Unified Court System, for 42 years. He held the position Senior Court Clerk and was covered by the UCS collective bargaining agreement until his retirement in November 2000. As a retiree, he has family (dependent) coverage; his rate of contributions toward premiums for retiree health insurance was increased effective October 1, 2011, from 25 percent to 27 percent. 10. Plaintiff Cornelius Kennedy is a resident of Saratoga County, State of New York,

and was an employee of the State of New York for 35 years. He held the title Armory Mechanic I and was covered by the DMNA collective bargaining agreement at the time of his retirement in April 1995. He has family (dependant) retiree health insurance coverage. From the date of his retirement in 1995 until October 1, 2011 he contributed 25 percent toward the cost of his health insurance which was increased to 27 percent, effective October 1, 2011. 11. Plaintiff Judy Richards is a resident of Saratoga County, State of New York, and

was an employee of the State of New York for 30 years. At the time of her retirement in December 1992 she was covered by the ASU collective bargaining agreement and, she held the title Senior Stenographer. She has family (dependant) retiree health insurance coverage, and her rate of contributions toward retiree health insurance was 25 percent from the date of her retirement through October 1, 2011, which increased to 27 percent, effective October 1, 2011. 12. Plaintiff Henry Wagoner is a resident of Albany County, State of New York, and

was an employee of the State of New York for 40 years. He held the title of Maintenance Assistant and was covered by the ISU collective bargaining agreement at the time of his

13.

Defendant State of New York was and is the employer of the current and former

bargaining unit members represented by CSEA, and provides retiree health insurance to State retirees including the plaintiffs-retirees herein and the class they represent. 14. Defendant Andrew M. Cuomo is the Governor of the State of New York, and in

such capacity is the chief executive officer of the State of New York, with all the powers and duties set forth in the New York Constitution, Executive Law, and as otherwise prescribed by law, statutes, rules and regulations. 15. Upon information and belief, defendant Cuomo approved and directed the

implementation of increased rates of contributions for State retirees for retiree health insurance, effective October 1, 2011. 16. Defendant Civil Service Department is a department within the Executive Branch

of New York State government, with all the powers and duties set forth in the Civil Service Law and as otherwise prescribed by law, statutes, rules and regulations. 17. Defendant Civil Service Commission is a body within the Executive Branch of

the New York State government, with all the powers and duties set forth in the Civil Service Law and as otherwise prescribed by law, statutes, rules and regulations. 18. Upon information and belief, defendant Civil Service Department

administratively implemented increased rates of contributions for State retirees, including plaintiffs and the class they represent, for retiree health insurance, effective October 1, 2011.

19.

Defendant Patricia A. Hite purports to have acted in the capacity of

Commissioner and/or President of the Civil Service Department and/or Civil Service Commission when she took action to increase the contribution rates of State retirees, including plaintiffs and the class they represent. 20. Upon information and belief, defendant Hite has not attended or voted in an

official capacity as Commission President or Acting President at any public meeting of the Commission, nor has she been nominated by the Governor or confirmed by the Senate for said offices. 21. Defendants Caroline W. Ahl and J. Dennis Hanrahan, together constitute the Civil

Service Commission, with all the powers and duties set forth in the Civil Service Law and as otherwise prescribed by law, statutes, rules and regulations. 22. Defendant Robert L. Megna is the duly appointed Director of the New York State

Division of the Budget, with all of the powers and duties set forth in the Executive Law, Civil Service Law, and as otherwise prescribed by law, statutes, rules and regulations. 23. Upon information and belief, defendant Megna approved the administrative

increase in rates of contributions for State retirees for retiree health insurance, effective October 1, 2011, at the direction of defendant Governor or his staff. 24. Defendant Thomas P. DiNapoli, as Comptroller of the State of New York, is the

head of the Office of State Comptroller and the Department of Audit and Control, which is a department within the Executive Branch of the New York State Government and as such he is a necessary party because he is responsible for the administration of the New York State and Local Retirement System, including the monthly payment of pensions to eligible State retirees in the

25.

The New York State and Local Retirement System is also a necessary party

because it issues monthly payment of pensions to eligible State retirees in the Employees Retirement System, less any deductions for the payment of retiree health insurance premium costs. 26. Defendant Jonathan Lippman is the Chief Judge of the Unified Court System,

is sued herein in his official capacity, and is, by virtue of his position, responsible for supervising the administration and operation of the UCS. 27. Defendant Unified Court System was and is the employer of current and former

bargaining unit members represented by CSEA, who are and were covered under the collective bargaining agreements between CSEA and UCS. THE CLASS 28. The class represented by plaintiffs-retirees in this action, and of which plaintiffs-

retirees are members, consists of all living retirees of the State of New York who had ten or more years of State service who retired between January 1, 1983 and October 1, 2011, and who had been a member of one of the four executive branch bargaining units represented by CSEA or the UCS bargaining unit represented by CSEA at the time of their retirement, and all spouses and dependents of such retirees where such retirees spouses and dependents are receiving health insurance as hereinafter described. 29. The members of the class of retirees, who retired under one of the five CSEA

unit contracts, and their dependents, as hereinabove identified and described, is approximately

30.

This action is brought by plaintiffs as a class action, on their behalf and on behalf

of all others similarly situated, under the provisions of Rule 23 of the Federal Rules of Civil Procedure for a declaration by this Court of the rights and other legal relations of the plaintiffs and the defendants under the United States Constitution, Article I, 10; for a declaration of the rights of plaintiffs created by reason of the collective bargaining agreements hereinafter described; for a declaration that the defendants are obligated to maintain certain health insurance contribution rates equivalent to those in effect at the time each plaintiff-retiree retired by reason of said agreements; for a declaration that a retirees rights are dictated by the agreement in effect at the time of said retirement; for a declaration that each agreement constitutes a binding and enforceable contract between plaintiffs-retirees and defendant State of New York; for a declaration that the defendants have breached their obligations to each plaintiff-retiree pursuant to each respective agreement; for a declaration that defendants acted outside the scope of their authority and in an arbitrary and capricious manner, in violation of law, when defendants implemented the increase in retiree contribution rates effective October 1, 2011, and that the Court order and direct defendants to account to and pay each plaintiff-retiree for all additional outlays and expenditures made by such plaintiff-retiree because of the changes in health insurance instituted by the defendants. 31. There are common questions of law and fact in the action that relate to and effect

the rights of each member of the class, namely whether: (a) the passage and implementation of Chapter 491 of the Laws of 2011 substantially impaired the contractual rights of plaintiffs without serving a necessary or important public purpose; (b) all members of the class had

32. 33.

The relief sought is common to the entire class. The claims of the named plaintiffs, who are representatives of the class herein,

are typical of the claims of the class in that the claims of all members of the class, including plaintiffs, depend on the showing of the unconstitutional, unilateral, improper acts of the defendants in altering vested benefits and rights, giving rise to the right of plaintiffs to the relief sought herein. There is no conflict as between any individually named plaintiff and other members of the class with respect to this action, or with respect to the claims for the relief set forth herein. 34. The named plaintiffs are the representative parties for the class; one of each of

the named plaintiffs are from each of the five CSEA bargaining units (ISU, OSU, ASU, DMNA and UCS) and are able to, and will, fairly and adequately protect the interests of the class.

35.

The attorneys for plaintiffs are experienced and capable in litigation in the field

of retiree health insurance and contract benefits pursuant to collective bargaining agreements. 36. This action is properly maintained as a class action inasmuch as the questions of

law and fact common to the members of the class predominate over any questions affecting only individual members and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. In support of the foregoing allegations, plaintiffs state as follows: (a) that since 1983 each collective bargaining agreement at issue, as clarified by the consistent practice, contains essentially identical rights which specified contribution rates for retirees; (b) that each member of the class is a participant in the health insurance plans provided by defendants; (c) that this action is the only feasible mechanism for pursuing the claims of individual members of the proposed class because of the relatively modest amount of damages sustained by many of the individual class members. STATEMENT OF FACTS CSEA Contract Language and Practice Regarding Retiree Health Insurance 37. Over at least the past 29 years, from at least April 1982 to October 1, 2011, CSEA

and the State have established a practice based on language in the parties collective bargaining agreements that each employee who retired with ten or more years of State service and was covered by a CSEA/State collective bargaining agreement on the employees date of retirement, pays the same unchanged contribution rate toward premiums for retiree health insurance for the life of the retiree. 38. The consistent practice, based on language in the parties collective bargaining

agreements, was that retirees who retired before January 1, 1983 did not contribute toward the

10

39.

From 1982 to 2011 there have been eight consecutive contracts between CSEA

and the State covering four executive branch bargaining units, ISU, OSU, ASU and DMNA. 40. The durations of those eight contracts have been: 1982-1985, 1985-1988, 1988-

1991, 1991-1995, 1995-1999, 1999-2003, 2003-2007, and 2007-2011. 41. There have been eight consecutive contracts between CSEA and UCS from 1982

to 2011 with the same durations as the executive branch contracts. 42. The 1982-1985 executive branch contracts between CSEA and the State contained

the following language in Article 9, in relevant part: Sub-section 1(b). The State agrees to continue to pay 100 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage provided under the Statewide Plan subject, however, to the limitations of Section 9.10 (c) of this Article. Sub-section 8. The unremarried spouse of [a retiree who predeceases the spouse] shall be permitted to continue coverage in the Health Insurance Program with payment at the same contribution rates as required of active employees. Sub-section 9. Employees added to the payroll and covered by the State Health Insurance Plan have the right to retain health insurance coverage after retirement, upon the completion of 10 years of State service. Sub-section 10(a). The State and CSEA agree to continue a Joint Committee on Health Benefits. Sub-section 10(b). The Joint Committee shall work with appropriate State agencies in a review and oversight capacity. Sub-section 10(c). The State shall not be solely responsible for absorbing increases in the cost of the Plan after July 1, 1982. The Joint Committee will monitor the cost experience of the Plan and

11

shall, if necessary adjust the employees and/or the employers share of the premium. 43. At the time that the 1982-1985 contract was signed by the parties, on May 20,

1982, individuals who were covered by the four executive branch CSEA/State collective bargaining agreements while they were employed, who retired under those agreements with ten years of service, were receiving fully-paid retiree health insurance for individual coverage and were contributing 25 percent of the cost of dependent coverage for retiree health insurance, as required by Article 9 of those contracts. 44. 8.1 that stated: The State shall continue to provide the same health and prescription drug benefits administered by the Department of Civil Service for the State Executive Branch managerial and confidential employees at the same cost to the State as defined by the contracts in force on March 31, 1982 Effective April 1, 1980, employees under local option health plans shall be required to pay for any cost increase due to improvement of benefits. 45. On information and belief, pursuant to Article 9, sub-section 10(c) of the 1982The 1982-1985 contract between CSEA and UCS contained language in Article

1985 CSEA/State executive branch contracts and Article 8 of the 1982-1985 CSEA/UCS contract, the parties reached a Memorandum of Understanding (MOU) in or about November 1982, in which the parties agreed to implement a contribution rate for individual retiree health insurance coverage for future retirees, effective January 1, 1983. 46. CSEA and the State further agreed that those retirees who retired prior to January

1, 1983 would not be affected by the MOU and would thereby continue to receive fully-paid retiree health insurance for individual coverage in retirement and would continue to contribute 25 percent toward the cost of dependent coverage in retirement; however, the parties further

12

47.

The new requirement that retirees pay toward the cost of individual coverage was

enacted into law by Chapter 14 of the Laws of 1983, amending Civil Service Law 167(1). 48. The Governors Memorandum in Support of Chapter 14 of the Laws 1983 stated

that the purpose of the statute was to effectuate provisions of various memoranda of understanding executed pursuant to the collectively-negotiated agreements between the State and the employee organizations dealing with health insurance. 49. The four 1985-1988 executive branch collective bargaining agreements between

the CSEA and the State contained the following language in Article 9 of the contract, in relevant part: Sub-section 1(f). The State agrees to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage provided under the Empire Plan. Sub-section 14. The unremarried spouse of [a retiree who predeceases the spouse] shall be permitted to continue coverage in the Health Insurance Program with payment at the same contribution rates as required of active employees. Sub-section 15. Employees added to the payroll and covered by the State health insurance plan have the right to retain health insurance coverage after retirement, upon completion of 10 years of State service. 50. CSEA-represented executive branch employees who retired during the effective

dates of the 1985-1988 contracts contributed toward the cost of individual coverage in retirement and 25 percent toward the cost of dependent coverage for retiree health insurance. 51. Each of the six collective bargaining agreement between CSEA and the State

during the 22 years from 1988 through 2011, in each of the four executive branch CSEA units,

13

52.

After those agreements were executed, the State Legislature enacted statutes that

implemented the agreements between the CSEA and the State, including budget authority to fully pay individual health insurance premiums for retirees who retired before January 1, 1983 and to pay 75 percent of the cost of dependent coverage for retirees, as required by those contracts; and to pay 90 percent of the cost of individual coverage and 75 percent of the cost of dependent coverage for retirees who retired after January 1, 1983. 53. as follows: Sub-section 8.1: The State shall continue to provide the same health benefits administered by the Department of Civil Service for State Executive Branch managerial and confidential employees to the same extent and at the same cost to the State as defined by the contracts in force on March 31, 1985. Sub-section 8.2(a): In the event benefits are changed in the health insurance plan administered by the Department of Civil Service for State Executive Branch employees, employees shall receive health insurance benefits to the same extent, at the same contribution level, and in the same form that Executive Branch employees represented by CSEA covered by such plans receive such benefits. 54. 8.1 as follows: The State shall continue to provide the health insurance plan administered by the Department of Civil Service. Employees The 1988-1991 contract between CSEA and USC contained language in Article The 1985-1988 contract between CSEA and UCS contained language in Article 8

14

enrolled in such plan shall receive health insurance benefits to the same extent, at the same contribution level, and in the same form that Executive Branch employees represented by CSEA covered by such plan receive such benefits. 55. The language quoted from the 1988-1991 contract remained unchanged in the

1991-1995 and 1995-1999 contracts. 56. The 1999-2003 contract between CSEA and UCS contained the following

language in Article 8.1(a): The State shall continue to provide health and prescription drug benefits administered by the Department of Civil Service. Except as provided below, employees enrolled in such plans shall receive health insurance benefits to the same extent, at the same contribution level, and in the same form, including the Benefits Management Program, that the majority of represented Executive Branch employees covered by such plans receive such benefits and prescription drug benefits to the same extent, at the same contribution level, and in the same form that State Executive Branch managerial and confidential employees receive such benefits. 57. follows: The State shall continue to provide health and prescription drug benefits administered by the Department of Civil Service. Employees enrolled in such plans shall receive health insurance and prescription drug benefits to the same extent, at the same contribution level, in the same form and with the same copayment structure that Executive Branch employees represented by CSEA receive such benefits. 58. The 2007-2011 contract between CSEA and UCS contained the same language as The language from the 2003-2007 contract contained language in Article 8.1 as

is quoted above from the 2003-2007 contract. 59. Until October 1, 2011, State employees who were members of all five CSEA

units, ISU, ASU, OSU, DMNA and UCS, who retired on or before December 31, 1982 with ten

15

60.

From January 1, 1983 until October 1, 2011, State employees who were members

of all five CSEA units, ISU, ASU, OSU, DMNA and UCS, who retired between January 1, 1983 until October 1, 2011 with ten or more years of service, contributed toward the cost of individual coverage and 25 percent toward the cost of dependent coverage for health insurance in retirement as described in the above contracts. Unilateral Implementation of Higher Contribution Rates for 1983-2011 Retirees 61. Chapter 491 of the Laws of 2011 (hereinafter Chapter 491) was signed by the

Governor and enacted into law on August 17, 2011, amending Civil Service Law 167(8). 62. Prior to the enactment of Chapter 491, Civil Service Law 167(8) provided, in

relevant part, that the State cost of premium or subscription charges for employees may only be increased pursuant to the terms of a collective bargaining agreement; however, the statute further stated that such increase shall not be applied during retirement. 63. The amendment to Civil Service Law 167(8) by Chapter 491, states that where

and to the extent that an agreement between the state and an employee organization so provides the contribution rates charged to employees may be modified pursuant to the terms of such agreement. 64. With respect to retiree contribution rates, Chapter 491 further states: The

president [of the Civil Service Commission], with the approval of the director of the budget, may extend the modified state cost of premium or subscription charges for retirees not subject to

16

65.

Civil Service Law 167(1)(a) sets the levels of State contribution rates for retirees

who retired after January 1, 1983 at 90 percent for individual coverage and 75 percent for dependent coverage, leaving the rates at for retirees with individual coverage and 25 percent for retirees with dependent coverage. 66. Civil Service Law 167(1)(a) further provides that retirees who retired before

January 1, 1983 shall not contribute to the cost of premiums for individual coverage. 67. At no time did the State Legislature amend Civil Service Law 167(1)(a) to raise

the contribution rates for retiree health insurance above for individual and 25 percent for dependent coverage. 68. At no time have the State defendants or the State legislature issued a declaration

or any other kind of finding stating that it is necessary to raise the contribution rates that retirees contribute toward the cost of their health insurance to serve an important State purpose. 69. Upon information and belief, raising the contribution rates for retirees was not

part of the 2011-2012 State budget. 70. Upon information and belief, defendant Hite has not been nominated by the

Governor, has not been confirmed by the Senate and has not filed an oath of office as Commissioner of the Civil Service Department or President of the Civil Service Commission. 71. Upon information and belief, defendant Hite, in her capacity as Acting

President of the Civil Service Commission, has not attended or voted at any official meeting of the Civil Service Commission.

17

72.

Notwithstanding the failure of State defendants to properly appoint defendant Hite

to these offices, defendant Hite sent a letter to defendant Budget Director Megna on September 21, 2011 purporting to increase the rates toward premiums that are contributed by plaintiffsretirees and the class they represent, from to 12 percent for individual coverage and from 25 percent to 27 percent for dependent coverage. 73. Defendant Megna countersigned the September 21, 2011 Hite letter on September

22, 2011, indicating his agreement with the increased rates. 74. On or about September 27, 2011, State defendants approved and filed emergency

regulations, 4 NYCRR 73.3(b) and 73.12, to implement the aforesaid increases in retiree contribution rates effective October 1, 2011. 75. In certifying the regulations on September 27, 2011 that increased the retiree

contribution rates effective October 1, 2011, defendant Hite claimed in her written certification that she was implementing the terms of a collective bargaining agreement covering, inter alia, members of the four CSEA executive branch units, ASU, ISU, OSU and DMNA. 76. However, contrary to defendant Hites statement in her September 27, 2011

certification, the contracts between CSEA and the State for the ASU, ISU, OSU and DMNA units did not provide for an increase in retiree rates. 77. To the contrary, the four new ASU, ISU, OSU and DMNA contracts between

CSEA and the State, in effect from 2011 to 2016, contained language in Article 9 stating only that the contribution rates for employees would be increased; the contracts contain nothing providing for a change in rates for those who had already retired. 78. CSEA and UCS have not concluded a successor to the 2007-2011 collective

bargaining agreement, and are still in negotiations for a new contract; therefore, the 2007-2011

18

79.

On October 1, 2011, State defendants implemented new retiree rates, which

resulted in a two percent increase in the contribution rates for individual coverage, from to 12 percent, and an increase from 25 percent to 27 percent for dependent coverage. 80. The effect of this change in the retiree contribution rate was to require plaintiffs-

retirees and the class they represent to pay more for their health insurance than they would have paid under the provisions of the contracts in effect on the dates of each plaintiff-retirees retirement. Announcement of Rate Change Prematurely 81. On September 1, 2011, the Civil Service Department sent a mass mailing of its

August 2011 newsletter entitled Empire Plan Special Report to all State retirees, including plaintiffs and the class they represent, announcing the implementation of the new increased retiree contribution rates. 82. 83. The August 2011 newsletter was received by the retirees in early September 2011. However, at the time that the newsletter was mailed-out and received, the State

defendants had not even attempted to comply with Civil Service Law 167(8), as amended by Chapter 491, because defendants Hite and Megna had not approved the increase, nor had regulations been adopted by defendant Civil Service Department to increase the rates. 84. By reason of Defendants unconstitutional actions, plaintiffs-retirees have

suffered and will continue to suffer a deprivation of their constitutional, contractual and other legal rights. AS AND FOR A FIRST CAUSE OF ACTION (United States Constitution, Article I, 10, Impairment of Contract)

19

85.

Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 86. part: No State shall pass any law impairing the obligation of contracts. 87. CSEA has been party to eight consecutive contracts with the State between 1982 The United States Constitution, in Article I, 10, Clause 1, provides, in relevant

and 2011 covering the four CSEA executive branch units. 88. and 2011. 89. Plaintiffs-retirees and the class they represent have retired under one of the CSEA has been party to eight consecutive contracts with the UCS between 1982

aforesaid contracts with ten or more years of service, or are the dependents of said retirees. 90. At the time of the retirement of each plaintiff-retiree, he or she contributed

toward the cost of individual coverage and 25 percent toward the cost of dependent coverage, which became a vested right for life on the date of each plaintiff-retirees retirement. 91. The passage and implementation of Chapter 491 of the laws of 2011 raising

plaintiffs-retirees health insurance premium contribution rates from to 12 percent toward the cost of individual coverage and from 25 percent to 27 percent toward the cost of dependent coverage constitutes an impairment of the aforesaid contracts by legislative act in violation of the impairment clause (Article 1, 10, Clause 1) of the United States Constitution. 92. Such impairment is substantial and is not reasonable or necessary to achieve a

significant public purpose.

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93.

The defendants substantial impairment of the contracts and contractual rights of

plaintiffs-retirees was an abuse of police power, unreasonable and unnecessary to achieve legitimate government purposes. 94. The State defendants failed to advance any legitimate rationale or significant

public purpose for the substantial impairment of plaintiffs-retirees contract rights to continued health insurance benefits. 95. In fact, the only rationale or purpose asserted by the defendants for

substantially impairing the plaintiffs-retirees contract rights was that it was necessary to implement the negotiated agreement between the State and CSEA. 96. The substantial impairment of plaintiffs-retirees contractual rights was not

necessary for the State to implement the negotiated agreement between the State and the CSEA and the substantial impairment of those rights served no legitimate public purpose. 97. To the contrary, the substantial impairment of plaintiffs-retirees contractual

rights actually defeats the significant public purpose of ensuring adequate and affordable health care for retirees who are least able to suffer such a retroactive diminution of their health care benefits. 98. This sole rationale or purpose asserted by the State, was and is, therefore,

irrational, false and contrary to law. 99. Such impairment has caused, and will continue to cause, injury and damages,

including but not limited to, monetary damages and a deprivation of plaintiffs-retirees rights under the United States Constitution. 100. Plaintiffs-retirees are entitled to monetary damages to make them whole, and are

entitled to prospective relief including, but not limited to, an order that State defendants reinstate

21

101.

By virtue of State defendants violations of the United States Constitution,

plaintiffs have stated a cause of action pursuant to 42 USC 1983 for a violation of their civil rights and are therefore also entitled to reasonable attorneys fees and the costs and disbursements of this action. AS AND FOR A SECOND CAUSE OF ACTION (Breach of Contract) 102. Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 103. Each plaintiff-retiree herein had, prior to his or her retirement, faithfully rendered

services to the State and, as such, has completely performed his or her duties pursuant to the contract. 104. The maintenance of contribution rates of for individual coverage and 25 percent

for dependent coverage after retirement is a bargained-for form of deferred compensation for services duly and faithfully rendered by each plaintiff-retiree pursuant to the respective contract retired under. 105. Each plaintiff-retirees rights are dictated by the agreement in effect at the time of

his or her retirement, as clarified by the consistent 28-year practice, regardless of whether the agreement expired thereafter as to active employees. 106. Each of the contracts covering plaintiffs-retirees constitutes a binding and

enforceable agreement between each retiree and the State, to provide health insurance at the contribution levels then in effect, for the life of the retiree and dependents.

22

107.

The State is thereby obligated to maintain the same contribution levels in effect at

the time each plaintiff-retiree retired, by reason of the aforementioned contracts. 108. Each plaintiff-retiree has relied on the aforesaid contracts in good faith and has

fully performed all obligations under said contracts. 109. The State has breached its contractual obligations to each plaintiff-retiree by

failing to maintain the required contribution levels for health insurance effective October 1, 2011. 110. Each plaintiff-retiree has been damaged by the defendants breach of the

referenced collective bargaining agreements and will continue to sustain such damage and further damage if the defendants are left to willy-nilly change contribution rates for retiree health insurance and renege on contractual requirements unfettered. 111. By reason of defendants breach of contract, plaintiffs-retirees and the class they

represent are entitled to monetary damages to make them whole, and are entitled to prospective relief including, but not limited to, an order that State defendants reinstate the contribution rates of toward the cost of individual coverage and 25 percent toward the cost of dependent coverage. AS AND FOR A THIRD CAUSE OF ACTION (Fourteenth Amendment Due Process Claim) 112. Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 113. The Fourteenth Amendment of the United States Constitution provides in

relevant part that no State shall deprive any person of life, liberty, or property, without due process of law. 114. Under the Fourteenth Amendment, the State may not deprive a party to a contract

of an essential contractual attribute without due process of law.

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115.

Plaintiffs-retirees, and the class they represent, have a vested property right to

maintain the same contribution rates contained in the contract that was in effect on the date each retiree retired. 116. State defendants increase in plaintiffs-retirees contribution rates for health

insurance has deprived plaintiffs-retirees of their property and, absent due process, works an impermissible forfeiture of their vested property rights in violation of the Fourteenth Amendment. 117. Plaintiffs-retirees, and the class they represent, have been deprived of this

property right without adequate notice and a reasonable opportunity to be heard before being deprived of property to which they were lawfully entitled by the Fourteenth Amendment. 118. Plaintiffs-retirees, and the class they represent, are entitled to a declaration that

State defendants actions are unconstitutional in violation of the Fourteenth Amendment, and a permanent injunction enjoining State defendants from implementing reduced State contribution rates for retired State employees and prohibiting the irreparable constitutional injury. 119. Such violation of the Fourteenth Amendment has caused, and will continue to

cause, injury and damages, including but not limited to, monetary damages and a deprivation of plaintiffs-retirees rights under the United States Constitution. 120. Plaintiffs-retirees are entitled to monetary damages to make them whole, and are

entitled to prospective relief including, but not limited to, an order that State defendants reinstate the contribution rates of toward the cost of individual coverage and 25 percent toward the cost of dependent coverage. 121. By virtue of State defendants violations of the United States Constitution,

plaintiffs have stated a cause of action pursuant to 42 USC 1983 for a violation of their Civil

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AS AND FOR A FOURTH CAUSE OF ACTION (Violation of State Law) 122. Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 123. The State defendants increase in plaintiffs-retirees health insurance contribution

rates was implemented in an arbitrary and capricious manner, was contrary to law, including but not limited to the provisions of Civil Service Law 167(1)(a) and the amended Civil Service Law 167(8), and was an abuse of discretion. 124. Civil Service Law 167(1)(a) provides that retirees shall contribute toward the

premium cost of individual coverage and 25 percent toward the cost of dependent coverage. This provision has been in effect since 1983 and is still in full force and effect. 125. Accordingly, State defendants actions increasing retiree health insurance

contribution rates above those rates dictated by Civil Service Law 167(1)(a) is in direct violation of that statute. 126. Civil Service Law 167(8) provides that rates for retirees health insurance

premium contributions may be extended to retirees not subject to an agreement; however, plaintiffs-retirees and the class they represent have vested rights to the contribution rates provided by the collective bargaining agreement in effect on the date of each retirees retirement. 127. Therefore, plaintiffs-retirees were not in the statutorily-referenced category of

retirees not subject to an agreement. For that reason, Chapter 491 did not authorize the State defendants to increase the contribution rates charged to plaintiffs-retirees for health insurance. To the contrary, the contribution rates charged to plaintiffs-retirees are subject to the collective

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128.

Civil Service Law 167(8) provides that retiree health insurance contribution rates

may be modified based only on terms contained in a collective bargaining agreement, however, the relevant CSEA collective bargaining agreements did not provide for an increase in retiree rates. 129. Therefore, State defendants implementation of increased retiree contribution

rates was not based on any collective bargaining agreement, as required by the statute, and was in direct violation of Civil Service Law 167(8). 130. Civil Service Law 167(8) provides that only the president of the Civil Service

Commission may take action to modify the contribution rates for State retirees, however, that office was vacant in September 2011 when defendant Hite purported to act in that capacity. 131. During all relevant times herein, the office of President of the Civil Service

Commission has been vacant, the Governor has not nominated nor has the State Senate confirmed an individual to fill that office, as required by law. 132. Upon information and belief, defendant Hite, in her supposed capacity as Acting

Commissioner of the Civil Service Department, and Acting President of the Civil Service Commission, has not filed an oath of office as Commissioner or President, respectively, nor has she attended or voted at any official meeting of the Civil Service Commission in that capacity. 133. Defendant Hite lacked authority pursuant to Civil Service Law 167(8) to

increase contribution rates for retirees, including plaintiffs-retirees, and the class they represent.

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134.

As a result of defendant Hites lack of authority, defendant Megna lacked

authority on September 22, 2011, to approve the increase of contribution rates for retirees pursuant to Civil Service Law 167(8). 135. For these reasons, Defendant Hite lacked authority pursuant to Civil Service Law

167(8) to approve a resolution on September 27, 2011, adopting regulations at 4 NYCRR 73.3(b) and 73.12, to increase contribution rates for retirees, therefore, such regulations are null and void. 136. The State defendants actions pursuant to these emergency regulations, raising

retiree contribution rates, therefore, constitute an abuse of discretion. 137. By reason of defendants abuse of discretion, arbitrary and capricious

implementation of the increased retiree contribution rates which are contrary to law, plaintiffsretirees and the class they represent are entitled to monetary damages to make them whole, and are entitled to prospective relief including, but not limited to, an order that State defendants reinstate the contribution rates of toward the cost of individual coverage and 25 percent toward the cost of dependent coverage. AS AND FOR A FIFTH CAUSE OF ACTION (New York State Constitution, Article 1, 6, Due Process) 138. Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 139. Article 1, 6, of the New York State Constitution provides that no person shall

be deprived of life, liberty or property without due process of law. 140. Under Article 1, 6, of the New York State Constitution, the State may not

deprive a party to a contract of an essential contractual attribute without due process of law.

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141.

Plaintiffs-retirees, and the class they represent, have a vested property right to

maintain the same contribution rates contained in the contract that was in effect on the date each retiree retired. 142. State defendants increase in plaintiffs-retirees contribution rates for health

insurance has deprived plaintiffs-retirees of their property and, absent due process, works an impermissible forfeiture of their vested property rights in violation of New York State Constitution Article I, 6. 143. Plaintiffs-retirees, and the class they represent, have been deprived of this

property right without the due process rights to be afforded adequate notice and a reasonable opportunity to be heard before being deprived of property to which they were lawfully entitled. 144. Plaintiffs-retirees, and the class they represent, are entitled to a declaration that

State defendants actions are unconstitutional in violation of New York Constitution Article 1, 6, and a permanent injunction enjoining State defendants from implementing reduced State contribution rates for retired State employees and prohibiting the irreparable constitutional injury. 145. Such impairment has caused, and will continue to cause, injury and damages,

including but not limited to, monetary damages and a deprivation of plaintiffs rights under the New York Constitution. 146. Plaintiffs-retirees are entitled to monetary damages to make them whole, and are

entitled to prospective relief including, but not limited to, an order that State defendants reinstate the contribution rates of toward the cost of individual coverage and 25 percent toward the cost of dependent coverage. AS AND FOR A SIXTH CAUSE OF ACTION (New York State Constitution, Article 3, 1)

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147.

Plaintiffs repeat and reallege each and every preceding paragraph of this

Complaint, as if fully set forth herein. 148. Article 3, Section 1 of the New York State Constitution provides: The

legislative power of this State shall be vested in the Senate and Assembly. 149. Civil Service Law 167(1)(a), providing retiree health insurance contribution

rates of for individual coverage of 25 percent for dependant coverage, has not been repealed; therefore, defendants Hite and Megna did not have authority to increase those statutorily established rates, and State defendants were attempting to serve in a legislative role by doing so. 150. State defendants acted in a legislative capacity to set public policy by increasing

retiree health insurance contribution rates, thereby acting outside the scope of their authority. 151. By reason of State defendants violation of Article 3, Section 1 of the New York

State Constitution, plaintiffs-retirees and the class they represent are entitled to monetary damages to make them whole, and are entitled to prospective relief including, but not limited to, an order that State defendants reinstate the contribution rates of toward the cost of individual coverage and 25 percent toward the cost of dependent coverage. JURY DEMAND 152. Plaintiffs demand that this case be tried by a jury on all issues and causes of

action except those which are a matter of law or equity for the Court to determine. WHEREFORE, Petitioners respectfully pray for an Order and Judgment: (a) Declaring that State defendants actions increasing contribution rates paid by plaintiffs and the class they represent, are unconstitutional in violation of the Contract Clause of Article I, 10 of the United States Constitution, and permanently enjoining State defendants from implementing same;

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(b)

Declaring that State defendants actions increasing contribution rates paid by plaintiffs and the class they represent violates the CSEA/State contracts;

(c)

Declaring that State defendants actions increasing contribution rates paid by plaintiffs and the class they represent, are unconstitutional in violation of Article I, 6, and Article 3, 1 of the New York Constitution, and permanently enjoining State defendants from implementing same;

(d)

Declaring that State defendants actions increasing contribution rates paid by plaintiffs and the class they represent, are unconstitutional in violation of their Fourteenth Amendment Due Process rights under the United States Constitution, and permanently enjoining State defendants from implementing same;

(e)

Declaring Chapter 491 of the Laws of 2011 unconstitutional and in violation of State law as applied under Civil Service Law 167(8), to the extent that State defendants actions increased contribution rates paid by plaintiffs and the class they represent which impair the plaintiffs contract rights;

(f)

Declaring that State defendants actions increasing contribution rates paid by plaintiffs and the class they represent, are unlawful, unauthorized pursuant to New York Civil Service Law 167(1)(a) and 167(8), in excess of jurisdiction, ultra virus, and null and void;

(g)

enjoining, prohibiting and restraining defendants DiNapoli and the Retirement System from making any deductions from the monthly pension payments of retired State employees, including plaintiffs, and the class they represent, or passing along any additional costs or charges, as a result of the reduced State contribution rates implemented by State defendants challenged herein;

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(h)

directing State defendants to reimburse and make whole plaintiffs, and the class they represent, for any and all additional payments or deductions to pension payments, made as a result of the reduced State contribution rates implemented by State defendants challenged herein;

(i)

awarding plaintiffs reasonable attorneys fees, costs and disbursements of this action pursuant to 42 USC 1988, and as otherwise allowed by law; and

(j)

granting such other and further relief as the Court may deem just and proper.

Dated: Albany, New York December 28, 2011

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Yours, etc., STEVEN A. CRAIN and DAREN J. RYLEWICZ Attorneys for Plaintiffs

By: /s/ Paul S. Bamberger Paul S. Bamberger, of counsel Bar Roll No.: 104706 Civil Service Employees Association, Inc. Box 7125, Capitol Station 143 Washington Avenue Albany, New York 12224 (518) 257-1443 paul.bamberger@cseainc.org

PL 11-1568/PSB/kb/Complaint/#219457

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