Jones v Board of Educ. of Watertown City School Dist.

[*1] Jones v Board of Educ. of Watertown City School Dist. 2005 NY Slip Op 50306(U) Decided on January 6, 2005 Supreme Court, Jefferson County McGuire, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 6, 2005
Supreme Court, Jefferson County

Mary Jones, et al, Plaintiffs,

against

Board of Education of the Watertown City School District, Robert E. Reardon, in his capacity as Superintendent of the Watertown City School District, Marilyn H. Trainor, in her capacity as Interim Superintendent of the Watertown City School District, and the Watertown City School District, Defendants.



2004-875



NYSUT Office of General Counsel

(Robert T. Reilly, Esq. , Associate Counsel)

for Plaintiffs

Matthew R. Fletcher, Esq.

for Defendants

Joseph D. McGuire, J.

Before the Court is an application by Plaintiffs for an order allowing them to maintain their underlying plenary action, and CPLR Article 78 action as class actions. Plaintiffs also seek consolidation of their CPLR Article 78 action with their plenary action for all purposes and directing that any disclosure, motions and trial had pursuant to CPLR 7804(h) in the Article 78 action be had as the same time as any disclosure, motions and trial in their plenary action. Plaintiffs in their [*2]plenary action seek the equitable relief of a permanent injunction and a declaratory judgement pursuant to CPLR 3001 and 3017.

The Board of Education of the Watertown City School District, Robert E. Reardon, Marilyn H. Trainor, and Watertown City School District, (hereinafter Defendants) oppose Plaintiffs' requested relief.

Counsel for the parties agreed at oral argument that the request of the Court was to decide the entire action on the submissions made, that the matter was being mutually treated by them as akin to a Summary Judgment motion, with facts not in dispute, and the only issues being ones of law. The Court considered counsels submissions pursuant to CPLR 2219, and Counsel each made persuasive presentations on behalf of their clients at oral argument.

BACKGROUND

New York State enacted what is commonly known as the Retiree Healthcare Moratorium in 1994 (hereinafter the Moratorium, originally L 1994, ch 729, extended every year, most recently L 2003, ch 48 as amended by L 2004, ch 25). The Moratorium precludes any diminution of retirees' health insurance benefits " . . . unless a corresponding diminution of benefits or contributions . . . is effected. . . from the corresponding group of active employees."(Bryant v. Bd. of Educ., 4 Misc 3d 423 [Sup. Ct. Broome Co. 2004]); L 2003, ch 48, n1).

Plaintiffs are all district employees of the Watertown City School District who retired prior to May 5, 2004. Proposed class members are such retirees, and those who may retire during the pendency of the litigation, and who were members of a collective bargaining unit affiliated with New York State United Teachers. Plaintiffs contribute zero percent to the total premium cost for their health insurance coverage benefits, and the District pays one hundred percent. On November 5, 2003 the Board of Education passed a resolution requiring retired district employees who elect health coverage to contribute the same percentage of total premium costs as borne by active district employees, ten percent. The resolution was to be effective July 1, 2004, and would be phased in over three years: July 1, 2004- 3% of total premium costs; July 1, 2005- 6% total premium costs; and effective July 1, 2006 - 10% total premium costs. Defendants sent notices to Plaintiffs on or about January 12, 2004, onward advising them of the increases. On June 29, 2004, the Board of Education suspended collection of premiums pending further review at its August 2004 meeting. Allegedly, Defendants have stayed collection [*3]of the premiums, and none have been collected from Plaintiffs.

ARGUMENTS

Plaintiffs' Positions

The Moratorium prohibits school districts from diminishing the health insurance benefits, or the contributions made towards the procurement of such benefits, provided to retirees, unless the district diminishes by the same level the health benefits or contributions from a corresponding group of active employees. The Moratorium recognizes that retired district employees, unlike active employees, cannot collectively bargain with the District under the Taylor Law(Civil Service Law, §§ 200-225). The Moratorium therefore protects retirees by linking any reduction of their health benefits to a corresponding reduction of benefits to active employees, who can collectively bargain. If the District wants retired district employees to pay 10% of their total health care premium costs, the District needs to require an equal 10% contribution from active district employees. Plaintiffs point out that actual percentage of premium costs active employees would be required to pay is 20%, because active employees currently pay 10% of their premium costs. Plaintiffs claim that the 10% active employees currently pay was put in place over ten years ago, and that amount was negotiated prior to the existence of the Moratorium. Plaintiffs argue that when the District and the unions were negotiating in 1993 and early 1994 (prior to the Moratorium) they could not have envisioned that the District would attempt to use that agreement to bind retirees ten years later.

Plaintiffs argue class action is appropriate as the proposed class would have approximately 250-300 members, and joinder of all would be impracticable. Further, the questions of law and fact raised are nearly identical for all class members, and they predominate over individual claims. The claims of representatives are typical of the class, and the representative parties will fairly and adequately protect the interests of class. Nor is there any conflict between class representatives and members. The proposed representatives attorneys have the competence and experience to prosecute the action. In sum the class action would be a superior method to prosecute the case rather than through 300 individual actions.

Plaintiffs allege that approximately 250 of the 300 retired employees were members of three bargaining units in the District: Watertown Education Association (WEA); Watertown Instructional [*4]Assistants Association (WITAA); Watertown Educational Clerical Association (WECA). Those units are affiliated with the New York State United Teachers (NYSUT). The remaining fifty retirees include members of other unions, in addition to four confidential/administrative employees, and approximately sixteen unaffiliated clerical workers.

On three dates, March 31, 2004, April 5, 2004, and April 23, 2004, the District received Notices of Verified Written Claims from approximately 178 retired District employees. Those notices were timely and were sufficient to advise the Defendants of the claims for all potential plaintiffs.

Plaintiffs' plenary action seeks permanent injunction and declaratory judgement, and has the same operative facts as the Article 78. Because the underlying facts are the same it is proper to consolidate the Article 78 action with the plenary action for all purposes and to direct that any disclosure, motions and trial had pursuant to CPLR 7804(h) in the Article 78 action be had at the same time as any disclosure, motions and trial in the plenary action.

Defendants' Positions

Defendants argue a class action is not a superior method for fair and efficient adjudication of a controversy against a municipality, or governmental entity. Nor is the proposed class too large, it is finite and all potential plaintiffs can be identified. Joinder of all individual plaintiffs is not impractical as the school database has identified 331 individuals who would be potential class members.

The Plaintiffs, by their attempt for class certification, are attempting to avoid the requirement of filing notices of claims pursuant to Education Law section 3813. Plaintiffs are not similarly situated, and there are differing issues of fact and law that may be applicable to different categories of retirees. The case caption has 192 names and include some duplicates. Plaintiffs' amended complaint limited class members to those who retirees who were members of bargaining units represented by public employee organization affiliated with NYSUT, but at least four named Plaintiffs are not members of bargaining units affiliated with NYSUT. There are potential conflicts between current employees and retired former employees. NYSUT's duty is to current active district members, and there are differing rights between that group of employees and the retirees. Further there are potential competing classes, and conflicts within the unions affiliated with [*5]NYSUT.

Class actions are rarely certified against the New York State retirement system. One reason for non-certification is the need for individual claims, and a written notice of claim is condition precedent to initiating court action. Plaintiffs' claims accrued when the Board of Education enacted its resolution on November 5, 2003, and any notices not filed by March 5, 2004 are late pursuant to Education Law section 3813. Plaintiffs have included 192 named Plaintiffs; but, as pointed out, Defendants have identified 331 retirees as of October 2003, and not all of those potential Plaintiffs filed the required notices. Plaintiffs and potential Plaintiffs have individual rights flowing from several differing bargaining units, and thus class certification and a Declaratory Judgment Action is inappropriate and untimely.

Plaintiffs' Article 78 action is also untimely, as they commenced it six months after the Board of Education's action on November 5, 2003. Under CPLR Article 78 the statute of limitations is four months. Further, the Board of Education's actions were a proper exercise of their discretion, not an error of law, nor arbitrary or capricious.

Defendants argue that each past collective bargaining agreement started a new period for compliance with the 1994 Moratorium. The Moratorium commenced June 30, 1994, and the District's collective bargaining agreement with the three main unions, WEA, WITAA, WECA, commenced the next day, July 1, 1994. Thus, according to the Defendants, the District complied with the requirements of the Moratorium, as active employees were required to pay 10% of their health insurance premiums, raised from 6%, during the effective dates of the Moratorium, albeit by only one day. Each successor agreement with unions superseded the prior negotiated agreement, which expired and were subsequent to the Moratorium. Prior to the November 5, 2003 resolution, a majority, but not all, of district employees who retired after 1982 received 100% of their health insurance premium. Some former retired employees do not qualify for paid health insurance from the District, as they were not part of the collective bargaining units, or are entitled to paid health insurance benefits through personal employment contracts.

DISCUSSION

CLASS ACTION

Article 9 of the CPLR, defines the procedures for evaluating the propriety of a class action. One or more members of a class may sue [*6]or be sued as representative parties on behalf of all if: 1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable; 2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members; 3. the claims or defenses of the representative parties are typical of the claims or defenses of the class; 4. the representative parties will fairly and adequately protect the interests of the class; and 5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy (CPLR 901). A summary of the five prerequisites are numerosity, predominance, typicality, adequacy of representation and superiority (In re Colt Industries Shareholder Litigation, 77 NY2d 185). Plaintiffs who are seeking class certification have the burden of establishing compliance with the prerequisites of CPLR sections 901 and 902 (Askey v Occidental Chem. Corp., 102 AD2d 130).

Article 9 should be liberally construed, and the determination to grant or deny class action certification, "... rests in the sound discretion of the Supreme Court, . . . and any error should be resolved in favor of allowing the class action" (Kidd v. Delta Funding Corp., 289 AD2d 203). The Court is also given broad flexibility to fashion relief for both sides, and to modify its class determination, even to the extent of later reversing its initial decision (In re Colt, 77 NY2d 185). The Court may sever issues from the action, or divide and subdivide the class as it determines necessary (In re Colt, 77 NY2d 185).

Defendants have claimed the proposed class is finite, and joinder of all potential plaintiffs is not impractical. In certifying other class actions, courts have found a group of ". . . 300 identifiable individuals, are a large, readily definable class seeking relatively small sums of damages." (Holcomb v. O'Rourke, 255 AD2d 383). Courts have also found a class of over 200 so numerous as to render joinder of all individuals impracticable (Fleming v. Barnwell Nursing Home & Health Facilities, Inc., 309 AD2d 1132). The proposed class of approximately 250 to 331 retired school district members is a large enough group to warrant class action status.

The Court must also evaluate whether there are questions of law or fact common to the class which predominate over any questions affecting only individual members. It appears that not all of the proposed class members will be affected the same way in exactly the [*7]same manner. There are certain facts, such as retirement dates, union membership, right to health insurance, which will differ between proposed class members. Defendants have pointed out that not all potential class members receive health benefits per agreements with bargaining units, and according to Defendants that is a key point of the Moratorium. Some potential class members have health benefits because of individual contracts they had with the district, and were not members of any bargaining unit. It appears that approximately 81 retirees were members of unions not affiliated with NYSUT. There are the additional two administrative retirees who were former members of the Watertown Administrators and Supervisors Association, a group not affiliated with NYSUT. There are also two named Plaintiffs who were twelve month clerical employees and not represented by any union at the time of their retirement. The Court does not read the Moratorium as precluding from its protection retired members of unions not affiliated with NYSUT. Rather, the Moratorium references corresponding diminution of benefits "from the correspondent group of active employees for such retirees."

Obviously the vast majority of the class members will be affected by the same question, and applicable facts, whether the District is limited by the Moratorium in requesting Plaintiffs to pay 10% of the annual cost of health care premiums. "[T]he [commonality] rule requires predominance, not identity or unanimity, among class members" (Freeman v. Great Lakes Energy Partners, L.L.C.,12 AD3d 1170 [4th Dept. 2004]). One the strengths of Article 9 is the flexibility afforded the Court in approving and, if necessary, modifying the class. The Court has the ability to narrow the class members as needed, eliminating some proposed members who do not qualify. Defendants have claimed that some named Plaintiffs are affiliated with non-NYSUT affiliated unions. The Court does not see that as a problem if they are named Plaintiffs. A potential problem is, if there are retirees of non-NYSUT affiliated unions, or not affiliated with any union, who are not named Plaintiffs. Pursuant to the limitations of the Plaintiffs' request as to the class such retirees would not be members of the potential class, though they may be entitled to the same protections of the Moratorium.

Plaintiffs have demonstrated that the claims of the representative parties, the already named Plaintiffs, are typical of the claims of the class as a whole. Plaintiffs have also persuasively argued that the [*8]representative parties will fairly and adequately protect the interests of the class. The Defendants have failed to make clear their claims of conflict by the involvement of the New York State United Teachers, a non party. Defendants claim there exists a conflict between the current and retired employees of the affiliated unions, as the retirees are not employees pursuant to the Civil Service Law . According to Defendants, NYSUT has a duty to current members only, and they also predict further conflicts within the unions themselves. Retirees cannot bargain with the District, and to protect the retirees, the Moratorium requires any changes impact active employees who can bargain. Plaintiffs have properly pointed out the "conflict" the Court should be aware of is one potentially between the class representatives and members of the class, and that NYSUT is not a party (see Ackerman v. Price Waterhouse, 252 AD2d 179 ). Reviewing for such conflicts here, the Court fails to see the conflict Defendants claim to exist as having any significant impact to the extent claimed, and disregards it.

Defendants have argued a class action is not superior to other available methods for the fair and efficient adjudication of the controversy here. "[C]lass actions are not necessary where governmental operations are involved, and where subsequent petitioners will be adequately protected under the principles of stare decisis" (Long Island College Hospital v. Whalen, 68 AD2d 274 [4th Dept. 1979]). Here the finite potential class members presents a different scenario from the potential indefinite members who would benefit from stare decisis when a government entity is involved (see Beekman v. New York, 65 AD2d 317). The potential members have already been advised of the potential fee increases, though the District has stayed the immediate collection of those increases.

The Plaintiffs have demonstrated the prerequisites of CPLR 901, prerequisites which must be met before the Court considers the other factors delineated in CPLR 902 (Evans v. Johnstown, 97 AD2d 1). Among the matters which the Court should consider in determining whether the action may proceed as a class action are: (1) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (2) the impracticability or inefficiency of prosecuting or defending separate actions; (3) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (4) the desirability or undesirability of concentrating the litigation of the claim in the particular forum; and [*9](5) the difficulties likely to be encountered in the management of a class action(CPLR 902). A majority of potential class members have already been named as party plaintiffs, that reflects they are not interested in individually controlling the prosecution of the action. Two hundred and fifty to three hundred separate actions would be inefficient and impractical to implement. Except for one other action by another potential class member for permission to file a late notice of claim the Court is unaware of any other litigation concerning this controversy before it.

The requirements of both CPLR 901 and 902 are satisfied. The class certification sought by Plaintiffs meets all of the criteria of Article 9 and should be and is granted. Judicial economy is better served by such certification rather than a "plethora" of individual suits, all with the same basic facts, and law, and conceivably with the same results.

NOTICE TO DISTRICT

Education Law §3813[1] requires a notice of claim be presented to a school district within three months of accrual of any claim as a condition precedent to any further action, and provides:

"...a written verified claim upon which such action or special proceeding is founded was presented to the governing body of said district or school within three months after the accrual of such claim, and that the officer or body having the power to adjust or pay said claim has neglected or refused to make an adjustment or payment thereof for thirty days after such presentment. In the case of an action or special proceeding for monies due arising out of contract, accrual of such claim shall be deemed to have occurred as of the date payment for the amount claimed was denied."

The notice provision is to provide the school district with prompt notice of claims to allow them time to properly investigate. The notice should contain the nature of the claim, along with the time, place, and manner in which the claim arose, and "...where an action in contract is involved, the monetary demand and some explanation of its computation. Satisfaction of these requirements is a condition precedent to bringing an action against a school district or a board of education". (Parochial Bus Systems, Inc. v. Board of Education, 60 NY2d 539).

Defendants have argued Plaintiffs have failed to comply with the [*10]notice requirement. They argue the notices which were submitted were untimely, and that is a fatal defect to the Plaintiffs action. Defendants claim the Boards' action of November 5, 2003 was the starting date for any time calculations, and they did not receive notices until March 23, 2004, more than three months later. Thus, they claim the notices are faulty and Plaintiffs have failed to meet the statutory requirements.

Plaintiffs have raised an issue of lack of prejudice to Defendants. Although absence of prejudice to the District is an insufficient grounds to waive the notice requirement (Parochial Bus Systems, Inc., 60 NY2d 539), nonetheless, the Court has discretion to permit the filing of late notice in its discretion, and the lack of prejudice may be considered in that context (see 302 Caldwell v. Convent Ave. Hous. Dev. Fund Corp., 272 AD2d 112 ; Sainato v. Western Suffolk BOCES, 242 AD2d 301). If notice is required, Plaintiffs have presented a strong argument that the District has suffered no prejudice from a late notice based upon the facts here. The Court notes it was the District which brought about the controversy, and by extension the claim, by their resolution raising the retirees' premiums. It appears disingenuous for the District to assert that in the absence of notices of claims, their ability to investigate has been harmed. "The [ school district] received timely actual notice of some of the facts underlying the petitioner's claim and has not demonstrated the validity of its claim of prejudice." (Sanna v. Bethpage Pub. Schs. Union Free Sch. Dist., 193 AD2d 606).

Plaintiffs have requested the Court grant permission for any late filings, should the Court find such notices required. The courts have broad discretion in whether to grant leave to file a late notice of claim (Hale v. Webster Cent. Sch. Dist., 12 AD3d 1052 [4th Dept.2004). The main limitation to a court in exercising that discretion as to a school district, is that the motion must not beyond the one year period as to claim accrual (First Bible Baptist Church, Inc. v. Gates-Chili Cent. School D..., 172 AD2d 1057 [4thDept.1991]). "[S]tatutory service requirements are not to be rigidly applied in proceedings to obtain leave to serve a late notice of claim and that the courts have broad discretion in entertaining applications for such leave; such discretion should be exercised when the respondent receives actual notice of the application "(Matter of Callahan v City of New York, 75 NY2d 899; see also Hale., 12 AD3d 1052). As indicated the District itself created the dispute, and received actual notice from similarly situated parties within a short time.

[*11]There is the question of when the claim accrued. Generally, a claim accrues when the damages become ascertainable and not when a cause of action accrues ( Central School Dist. v. Samuel Kosoff & Sons, Inc., 53 AD2d 1058). "A claim under Education Law §3813 (1) is deemed to accrue when damages become ascertainable (cites omitted). In contrast, a cause of action accrues and the statute of limitations begins to run in contract actions from the time of the breach, which occurs when the plaintiff possesses a legal right to demand payment. Thus, we have consistently recognized that a claim under Education Law §3813 (1) may accrue at a different time than a breach of contract action may accrue." ( Albany Specialties, Inc. v. Shenendehowa Cent. Sch. Dist., 307 AD2d 514).

Here the Board took action and passed its resolution as to the premium increase on November 5, 2003 at a public board meeting. The Plaintiffs did not receive formal notice of the District's actions until written notices were received by them about January 23, 2004. It appears the 90 days would not have begun to run until January 23, 2004 (see Bader v. Board of Educ., 216 AD2d 708; Mutschler v. Board of Educ. of William Floyd Union Free School, 177 AD2d 629). Under that time frame Plaintiffs would have had until April 23, 2004, at a minimum, to file written notices of claims.

There is a solid argument that since the actual premiums would not be collected until July 1, 2004, the ascertainable date of Plaintiffs' actual damages could be as late as that date (see Matter of Application of Albee et al. v Board of Education of the Byron-Bergen CSC, Sup Ct, Genesee County, July 1, 2004,Noonan, J., Index No. 51715). Based upon the facts as presented herein, it may be the situation where the claim accrual date, and the cause of action date, are one and the same: July 1, 2004. It would be upon that date the Plaintiffs exact damages were due, and the District breached its agreement. As to contract actions, the last sentence of Education Law §3813[1] reads: " In the case of an action or special proceeding for monies due arising out of contract, accrual of such claim shall be deemed to have occurred as of the date payment for the amount claimed was denied." That section appears to apply generally to contract actions between the District and a third party. The District was not collecting the increased premiums until July 1, 2004, and it was at that point the 3% increase would have become due and owing to the District, and the same amount claimed owed to the Plaintiffs per the Moratorium, and the [*12]prior contracts.

Accepting the date of November 5, 2003 as most favorable to the Defendants, Plaintiffs would have one year to bring their claim to November 5, 2004. The date most unfavorable to the District would be July 1, 2004. Using the July 1, 2004 date, Plaintiffs' notices of claims would not have been required until October 1, 2004. Regardless of either date, the motion for submission of late notices of claims has been brought within the one year period required as to Plaintiffs' plenary action. Whether to grant or not is within this Court's discretion.

The Court is not convinced that notices of claims under Education Law §3813 are a condition precedent under the circumstances here. Plaintiffs are not seeking separate monetary damages, but rather equitable relief, both in their plenary action, and in their Article 78 action. The monetary damages, if any, are incidental to the underlying relief, and would be reimbursement for any payments/contributions taken from Plaintiffs (see Gross v Perales, 72 NY2d 231). It is not clear that in such equity situations the notice provisions of Education Law 3813[1] are applicable (see Ruocco v. Doyle, 38 AD2d 132; Union Free School Dist. v. New York State Human Rights Appeal Bd., 43 AD2d 749 affirmed 35 NY2d 371; Trehy v. Commack Union Free School Dist., 93 AD2d 891; contra see Grey v. Board of Education, 60 AD2d 361; Todd v Board of Educ., 272 App Div 618, affd without opn 297 NY 873). Such determination makes sense. The purpose of notice requirements is to protect school districts "... against fraudulent and stale claims for injuries to person and property . . . to afford the municipality opportunity to make an early investigation of the claim while the facts surrounding the alleged claim are still fresh."( Ruocco, 38 AD2d 132 ). Plaintiffs have commenced an Article 78 action to clarify their statutory rights, in addition to their plenary action, and as such the notice requirements of Education Law 3813 are not required (Capone v. Board of Educ., 245 AD2d 1045 [4 th Dept. 1997]; Delle v. Kampe, 296 AD2d 498).

The Districts' obligation to not change the Plaintiffs' health benefits without a corresponding change for active employees was statutory, per the Moratorium. Nor does the Moratorium contain language requiring the health benefits which are protected to have been provided pursuant to contract (Moratorium, Laws of 2003, Chapter 48; Matter of Alice Baker et al. v Board of Education Wappingers Falls, CSD, Sup Ct, Dutchess County, May 26, 2004, [*13]Brands, J., Index No. 3771/03). Where the Defendants obligation is statutory as opposed to contractual a notice of claim is not a required prerequisite (Yris v. Comsewogue Union Free School Dist., 63 AD2d 648 affirmed 55 NY2d 840). If Plaintiffs were seeking only monetary damages for an alleged breach of contract by the District, their action would be one for breach of contract in a separate plenary action, not a proceeding pursuant to CPLR article 78 (Kerlikowske v. City of Buffalo, 305 AD2d 997 [4th Dept. 2003]).

The Court also notes that Plaintiffs, in their written notices of verified claims of the named Plaintiffs, also claimed notice on "behalf of all persons similarly situated." Plaintiffs have argued such claims may be made by potential agents for such claimants [i.e. the class], and applicable statutory law supports that argument (see Education Law §3813; General Municipal Law §50-e).

Because of the nature of relief sought by Plaintiffs, the Court does not find that notices of claims were required herein pursuant to Education Law §3813.

Alternatively, based upon the above, the Court finds that the notices which were submitted were timely in any event as to the named Plaintiffs, and as they were submitted on behalf of the proposed class members, they also sufficiently apprised the Defendant District of the potential claims. As to the Article 78 proceeding, the Court accepts the January 23, 2004 date of written notices as the beginning time. Notices would have been required by April 23, 2004 per the statute. To file late notices, the motion would have been needed by May 23, 2004. The motions were made on May 7, 2004, within the four month statute for an Article 78 action. Thus the Court has authority to exercise its discretion and grant permission for the late filing of notices as to the Article 78 action. "There is ample authority under CPLR 2214 (c) to overlook late service of a notice or paper if the court determines that no prejudice will ensue"(Whiteford v. Smith, 168 AD2d 885).

The Court, in the utilization of its discretion, also grants permission for the filing of any late notices of claims as to the underlying plenary action not already filed.

The Court need not reach the determination of whether the Plaintiffs seek to vindicate private rights or those of the public interest.

TIMELINESS OF ARTICLE 78

Defendants, claim as Plaintiffs are seeking a declaratory judgment, the four month time limit of Article 78 is controlling, and [*14]that Plaintiffs failed to properly file their action within the four months required in Article 78 actions (CPLR 217; (Solnick v. Whalen, 49 NY2d 224). Using the same time frames as discussed above, four months from the January 12, 2004 to January 23, 2004 would be between May 12th and May 23rd, 2004. Plaintiffs filed their hybrid action with the Jefferson County Clerk on May 7, 2004. The Court finds the Plaintiffs' Article 78 actions were timely commenced here (see Piaggone v. Board of Education, 92 AD2d 106).

ARTICLE 78

Plaintiffs have not attacked the validity or constitutionality of the Moratorium, but rather the Defendants' interpretation of the statute. Plaintiffs are seeking declaration and enforcement of their statutory rights, and as such they have the right to direct access to the courts, as opposed to exhaustion of any other administrative remedies(Cohn v. Board of Education, 58 AD2d 977 [4th Dept. 1977]). The Court also has the authority to convert a plenary action to a Article 78, or to combine the two as is necessary (see Manshul Constr. Corp. v. Board of Educ., 154 AD2d 38 ; CPLR 103[c]).

In an Article 78 with the facts presented herein the courts cannot interfere unless the administrative action complained of is 'arbitrary and capricious' or an 'error of law' (Matter of Pell v Board of Educ., 34 NY2d 222). The arbitrary or capricious test chiefly "relates to whether a particular action should have been taken or is justified * * * and whether the administrative action is without foundation in fact. Arbitrary action is without sound basis in reason and is generally taken without regard to the facts." (Matter of Pell., 34 NY2d 222). Generally with a claim as to an "error of law" the argument is that the agency misinterpreted the applicable statute, or made procedural errors (see Ideal Corp. v. New York State Tax Com., 132 AD2d 419).

Plaintiffs' claimed 'error of law' is the District's interpretation of the Moratorium. Defendants have claimed they raised the active employees premium contribution percentage by 4% (from 6% to 10%) effective the day after the Moratorium took effect. As such Defendants are entitled to raise the Plaintiffs' premium contributions to the same amount, 10%, eleven years later. Plaintiffs claim the intent of the Moratorium was that retirees benefits could be diminished only if the active employees benefits were reduced by the same amount at the same time. Plaintiffs have claimed that it was mere coincidence that the District's and the Union's agreements took effect one day after the [*15]Moratorium, July 1, 1994. Plaintiffs claim the July 1, 1994 date was effective for the Union contracts because that was the first day of the District's fiscal new year, not because it was one day after the Moratorium date.

On March 2, 1993, the Board of Education of the Watertown City School District adopted a resolution approving and adopting the agreement between the District and the WITAA Union for July 1, 1992 to June 30, 1995. As part of that agreement, effective July 1, 1994, active employees premium contributions rose from 6% to 10%. On January 25, 1994 the Board adopted a resolution approving and adopting the agreement between the District and the WEA Union for July 1, 1993 to June 30, 1995. As part of that agreement, effective July 1, 1994, active employees premium contributions rose from 6% to 10%.

On April 5, 1994, the Board adopted a resolution approving and adopting the agreement between the District and the WECA Union for July 1, 1992 to June 30, 1995. As part of that agreement, effective July 1, 1994, active employees' premium contributions rose from 6% to 10%.

The Moratorium took effect June 30, 1994 and went to May 15, 1995, but it has been extended in each succeeding year. On June 30, 1994 the active employees of the three unions were paying 6% of their premium contributions, and retired employees were paying 0%. One day later, July 1, 1994, the active employees contributions rose by 4%, to 10%, an increase due as the result of previously negotiated agreements.

"A court, in construing a statute, should consider the 'mischief sought to be remedied' and should favor the construction which will 'suppress the evil and advance the remedy' " (NY Pub. Interest Research Group Straphangers Campaign v. Reuter, 293 AD2d 160). The language of the Moratorium supports the interpretation that for the year long period the Moratorium is in effect contributions to retirees health insurance cannot be diminished unless there is a corresponding diminution of benefits from the present level from active employees during that year period. Thus during the first year of the Moratorium, from July 1, 1994 to May 15, 1995, the District could have reduced the retirees contributions by 4%, as they had reduced the active employees contributions accordingly. With each passing year the Moratorium was extended, and to diminish the retirees' health [*16]benefits in each succeeding year, the active employees would needed an equal amount of diminution. When the District renegotiated its collective bargaining agreements with the three main unions it could have negotiated a diminishment of the active employees health benefits, and thereby met the Moratorium prerequisite to diminish the retirees health benefits. "It is apparent, from the basic premise and overall effect of the law, that the legislature intended to protect and preserve the health insurance benefits available to school district retirees, in light of tightening budgetary constraints that may make curtailing such benefits seem an attractive and expedient way to cut costs." (Bryant., 4 Misc 3d 423).

PERMANENT INJUNCTION

"A permanent injunction is embodied in a final judgment which may be granted after a trial on the merits", and cannot be the result of submitted papers(Byrne Compressed Air Equipment Co. v. Sperdini, 123 AD2d 368). Plaintiffs are not entitled to such relief here, but would need to wait to a resolution of their plenary action, or after a full hearing. The actions of the Defendants sought to be enjoined can be dealt with under the Article 78 and the legal remedy of mandamus which is adequate to redress the Plaintiffs' grievances (Kane v. Walsh, 295 NY 198).

DECLARATORY JUDGMENT

Pursuant to CPLR 3001: "The Supreme Court may render a declaratory judgment having the effect of a final judgment as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed." It is left to the sound discretion of the court to grant or deny such relief (Park Avenue Clinical Hospital v. Kramer, 26 AD2d 613 affirmed 19 NY2d 958 [4th Dept. 1966]). Under CPLR 3017 [b]: In an action for a declaratory judgment, the demand for relief in the complaint shall specify the rights and other legal relations on which a declaration is requested and state whether further or consequential relief is or could be claimed and the nature and extent of any such relief which is claimed. Declaratory judgment was unknown in common law, or by statute in 1894, as such there is no constitutional right to a jury trial in an issue for a declaratory judgment (see Independent Church of Realization of Word of God, Inc. v. Board of Assessors Nassau Co., 72 AD2d 554).

For all of the reasons discussed above, Plaintiffs are entitled to a [*17]declaratory judgment that the District cannot diminish their health benefits without an equal diminishment of corresponding active employees, during the applicable pendency of the Moratorium. The Court does not find persuasive the Defendants' argument that the union agreements which were approved later but took effect July 1, 1994, one day after the effective date of the Moratorium, meet the requirements of diminution of corresponding active employees benefits. Such an interpretation defeats the intent and interpretation of the Moratorium. "It is apparent, from the basic premise and overall effect of the law, that the legislature intended to protect and preserve the health insurance benefits available to school district retirees, in light of tightening budgetary constraints that may make curtailing such benefits seem an attractive and expedient way to cut costs."(Matter of Bryant et al. v Board of Education Chenago Forks, CSD, Sup Ct, Broome County, May 18, 2004, Rumsey, J., Index No. 2003-2565).

The Broome County case is one of three unreported cases that have dealt with the Moratorium and were cited by Plaintiffs, and also by this Court. As to the merits of Plaintiffs' case the legislative history of Chapter 48, and prior to that Chapter 729, are instructive: "Unexpected changes to health insurance coverage can have a dramatic impact on one's ability to afford adequate coverage. This impact is even more acute for retirees who are faced with limited incomes." (Assembly Memorandum in Support L. 1996 cited in Matter of Application of Albee et al., Sup Ct, Genesee County, July 1, 2004,Noonan, J., Index No. 51715).

It is clear that the legislature intended to protect retirees from reductions in health coverage by requiring coordinate reduction from active employees involved in the collective bargaining process. While the District may reduce retirees benefits if they reduce active employee's benefits correspondingly, and such reductions occur at the same time during the Moratorium. Here the District is attempting to impose reductions upon retirees ten years after the fact. This Court finds such actions in violation of the spirit and the intent of the applicable law.

CONCLUSION

Based upon the foregoing it is hereby

ADJUDGED, that there exists questions of fact, and insufficient submissions, for the Court to make a determination as to protection under the Moratorium as to the four named Plaintiffs who were not [*18]members of a collective bargaining unit, George Mousseau and Charles Woodell of the WASA (now ESASA), and Mary Killeen and Francine Hanlon who were retired twelve month clerical employees who were not represented at the time of their retirement; and it is further

ADJUDGED, that based upon the nature of the relief sought by the Plaintiffs, the Court does not find that notices of claims are required pursuant to the Education Law §3813; and it is further

ADJUDGED, that the Watertown City School District has been provided with sufficient written notices of claims pursuant to Education Law §3813 as to named Plaintiffs, and also on "behalf of all persons similarly situated" such persons being within the Class proposed; and it is further

ADJUDGED, that pursuant to the Moratorium (originally L 1994,

ch 729, extended every year, most recently L 2003, ch 48 as amended by L 2004, ch 25) the other Plaintiffs and Class members should not have the contributions of the Watertown City School District made for Plaintiffs' health insurance coverage diminished without a corresponding diminution of contributions from the present level of contributions it makes for the corresponding group of active employees; and it is further

ADJUDGED, that the Watertown City School District has violated the Moratorium by diminishing, or attempting to diminish, contributions it will make for the health insurance coverage provided to Plaintiffs and the Class without effecting a corresponding diminution of contributions from the present level of contributions it makes for the corresponding group of active employees; and it is further

ADJUDGED, that the Watertown City School District in violating the Moratorium by diminishing or attempting to diminish health insurance coverage provided to Plaintiffs and the Class without effecting a corresponding diminution of contributions from the present level of contributions it makes for the corresponding group of active employees, made an error of law, and acted in a manner that was arbitrary and capricious; and it is further

ADJUDGED, that the Court has determined there are no questions of fact requiring a hearing under CPLR 7806 as to the Plaintiffs and Class members; and it is further

ORDERED, that as the Plaintiffs have moved for permission to file of notices of claims under Education Law §3813 as to the underlying plenary action, as to themselves and potential class [*19]members, such motion is hereby Granted, nunc pro tunc to the date of the notices filing; and it is further

ORDERED, that Petitioners are allowed to maintain their underlying plenary action, and CPLR Article 78 action as class action with Class members all district employees of the Watertown City School District who retired prior to May 5, 2004, or who may retire during the pendency of the litigation, and who were members of a collective bargaining unit (WEA, WITAA, WECA) affiliated with New York State United Teachers; and it is further

ORDERED, that the determination of the District and Defendants to diminish the Districts contributions made for Plaintiffs and other class members health benefits is hereby annulled; and it is further

ORDERED, that the District shall reimburse to the Plaintiffs and the Class members any contributions collected from them for health benefits in violation of the Moratorium; and it is further

ORDERED, that to the extent Plaintiffs seek to proceed further in their actions for a permanent injunction and other relief, or as to the named Plaintiffs who were not members of a collective bargaining unit (WEA, WITAA, WECA) affiliated with New York State United Teachers, their Article 78 action shall be consolidated with their plenary action and any disclosure, motions and trial(s) in either action shall be scheduled and held at the same time.

E N T E R

Dated: January 6, 2005

Lowville, New York Joseph D. McGuire , J.S.C.