Court: Appellate Division of the Supreme Court of the State of New York; November 25, 1997; New York; State Appellate Court
An order issued by the Supreme Court (Caruso, J.) on July 18, 1996, in Schenectady County, granted plaintiffs’ motion for summary judgment and led to a judgment from which defendants are appealing. The plaintiffs represent retired employees of the City of Schenectady who were previously covered by collective bargaining agreements with the Civil Service Employees Association, Inc. (CSEA). These agreements stipulated that eligible employees would receive fully paid health insurance upon retirement after 15 years of service.
Retirees over 65 became eligible for Medicare, which includes mandatory participation in part A at no cost, while part B is optional with a premium. The City encouraged retirees to enroll in Medicare part B, which would make Medicare the primary insurance, reducing the City's costs. If a retiree opted for part B, the premium was deducted from their Social Security benefits, and the City reimbursed them. However, in March 1994, the City reduced the reimbursement to 50% and later ceased reimbursements entirely.
As a result, plaintiffs sought full retroactive reimbursement, claiming it as a vested contract benefit. After a class action status was granted and the issue joined, the Supreme Court ruled in favor of the plaintiffs. Defendants argued that the court wrongly considered extrinsic evidence regarding the intent behind the collective bargaining agreements. The court found no language in the agreements specifying the duration of retiree benefits, countering the City’s claim that benefits terminated with the expiration of each agreement. The court emphasized the distinction between retirees and current employees regarding entitlement to benefits.
The intent of the parties involved in the collective bargaining agreements regarding retirees' benefits is questioned, particularly since CSEA no longer represents retirees after the agreements expire and lacks bargaining rights or obligations for them. The initial collective bargaining agreement was effective for only one year, raising concerns that retirees could receive minimal benefits lasting only a few days or months. Each subsequent agreement had a minimum duration of two years, yet ambiguities remain regarding the duration of retiree health benefits. The Supreme Court appropriately considered extrinsic evidence, noting the City’s consistent 19-year practice of providing fully paid health insurance to retirees after the agreements expired, which strongly suggests the intent was to offer continuous benefits throughout retirement. The interpretation of contracts benefits from the actions of the parties involved. The court found defendants’ arguments either unpreserved or lacking merit, affirming the order and judgment with costs. Additionally, the Supreme Court granted class action status to the plaintiffs, representing all living retired members of the CSEA bargaining unit, with only a minor change in service requirements since 1975.
