Matter of McFarland v City of New York

[*1] Matter of McFarland v City of New York 2009 NY Slip Op 50953(U) [23 Misc 3d 1127(A)] Decided on April 1, 2009 Supreme Court, New York County Sherwood, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 1, 2009
Supreme Court, NewYork County

Mickey McFarland, individually, as President of Local 1157, AFSCME, AFL-CIO, and on behalf of all present and former Supervisor Highway Repairers affected by the City of New York's reduction in leave benefits provided to Supervisor Highway Repairers, HOWARD LESSER, individually, as Treasurer of Local 1157, AFSCME, AFL-CIO, and on behalf of all present and former Supervisor Highway Repairers affected by the City of New York's reduction in leave benefits provided to Supervisor Highway Repairers, ROBERT GIALLANZO, individually, as Acting President of Local 1157, AFSCME, AFL-CIO, and on behalf of all present and former Supervisor Highway Repairers affected by the City of New York's reduction in leave benefits provided to Supervisor Highway Repairers, and LOCAL 1157, AFSCME, AFL-CIO, Petitioners

against

City of New York AND CITY OF NEW YORK OFFICE OF LABOR RELATIONS, Respondents



100452/2008



Petitioners was represented by Daniel R. Bright, Esq. of Schwartz, Lichten & Bright, P.C.

Respondents was represented by Michael A. Cardozo, Corporation Counsel of the City of New York (Basil C. Sitaras, AAC of counsel).

The Estate of Joyce Benjamin was represented by Harvey Sorid, Esq., 358 RXR Plaza, Uniondale, NY 11556.

O. Peter Sherwood, J.

In this action pursuant to Article 78 of the Civil Practice Law and

Rules (CPLR), petitioners consisting of municipal labor union Local 1157, District Council 37, AFSCME, AFL-CIO ("Local 1157") and Local 1157's top officers, on behalf of themselves and all similarly situated present and former Supervisor Highway Repairers ("SHRs") employed by the City of New York, challenge a determination of the City of New York Office of Labor Relations ("OLR"), dated September 26, 2007, which: (1) reduced the rate at which SHRs accrue annual leave and sick leave prospectively commencing September 6, 2007; (2) retroactively recouped annual leave and sick leave already accrued in order to match prevailing wage rates set in a Comptroller's Order and Determination, dated March 2, 2006; and (3) eliminated certain other types of leave such as bereavement leave. Petitioners seek a judgment, inter alia, declaring the reduction of paid leave to SHRs to be unlawful, enjoining respondents from implementing any further reduction in paid leave to SHRs and directing respondents to restore the level of benefits that existed prior to September 26, 2007 and to make each SHR whole for any loss of benefits suffered as a result of respondents' unlawful actions.

The City of New York and OLR (collectively "respondents") cross move pursuant to CPLR 7804(f) to dismiss the petition for failure to exhaust administrative remedies and on the ground that insofar as petitioners are seeking to challenge respondent's plans to "recoup" previously accrued annual and sick leave, the issue is nonjusticiable because respondents have not yet taken action.

Background

Local 1157 is a constituent part of District Council 37, AFSCME, AFL-CIO ("DC 37") that includes as members individuals employed in the title SHR. SHRs are "prevailing rate" employees, which means that these employees serve in titles that are covered by NY Labor Law § 220 ("§220"). Accordingly, these employees are paid wage rates and supplemental benefits that are dictated by the New York City Comptroller and mimic the wage rates and supplemental benefits received by the private sector. However, since 1984, § 220 has also provided that the public employer and the employee organization "shall in good faith negotiate and enter into a written agreement with respect to the wages and supplements..." of the employees in the title. When an agreement is reached, with respect to wages and supplements, the terms of that agreement are reflected in a "Consent Determination," which is issued by the local fiscal officer, which in New York City is the City Comptroller ("the Comptroller"). Section 220 further provides that if the public employer and the employee organization "fail to achieve an agreement," the employee organization can file a complaint that initiates the statutory process for obtaining an independent determination by the Comptroller. Once the Comptroller makes a determination, that determination may be appealed in the courts.

The last negotiated agreement covering SHRs was memorialized in a Consent Determination covering the period April 1, 1995 through March 31, 2000. As the expiration date of the Consent Determination drew near, the parties met but were unable to reach a voluntary settlement for a successor agreement on wages and benefits. Local 1157 then filed a Labor Law § 220 complaint with the Comptroller requesting that it commence the statutory process for determining the prevailing wage rate and supplemental benefits for SHRs for the period commencing April 1, 2000 (Pet. ¶ 12).

On August 19, 2004, the Comptroller's Bureau of Labor Law ("the Comptroller's Bureau") issued a preliminary decision in which it found that SHRs performed work that was the same as that performed by Supervisor Highway Repairers represented by Highway, Road and Street Construction [*2]Laborers Local Union No. 1010 and No. 1018 of the District Council of Pavers and Road Builders of the Laborers' International Union of North America, AFL-CIO ("LIUNA") (Pet. ¶ 13; Pet. Exhibit "F") ("Local 1018 foreman"). The Comptroller's Bureau provided the parties with a preliminary prevailing wage and benefits schedule for the period April 1, 2000 through June 30, 2005 and instructed them to have negotiations pursuant to Labor Law § 220(8)(d). Thereafter, Local 1157, DC 37 and respondents met in an effort to reach a voluntary settlement and negotiate a new contract based upon the Comptroller's Bureau's findings. The parties were unable to reach an agreement. Local 1157 sought a hearing pursuant to Labor Law § 220 before the New York City Office of Administrative Trials and Hearings ("OATH") (Pet. ¶ 15; Pet. Exhibit "G").

Following a hearing, Administrative Law Judge Kevin F. Casey issued a report and recommendation affirming the Comptroller's Bureau's preliminary determination of August 19, 2004 (Pet. ¶ 18; Pet. Exhibit "L"). On March 2, 2006, the Comptroller issued an order and determination adopting ALJ Casey's report and recommendation ("Comptroller's Order"). As a result of this order, the respondents were required to substantially increase the hourly wage paid to SHRs (paying an hourly rate of $35.73 rather than $24.43) and to pay SHRs substantial back pay for the period April 1, 2000 through June 30, 2005.

Respondents challenged the Comptroller's determination by way of a CPLR article 78 proceeding before the Appellate Division, First Department. Local 1157 was granted leave to intervene in the proceeding. On June 14, 2007, the Appellate Division denied the petition and dismissed the proceeding finding that the Comptroller's determination that persons in the SHR and Local 1018 foreman jobs perform comparable duties and were entitled to the same prevailing wage was supported by substantial evidence (In re Hanley v Thompson, 41 AD3d 307 [1st Dept. 2007]).

Thereafter, the parties made several unsuccessful attempts to negotiate an agreement. According to respondents, the City's costing calculations showed that the SHRs' prevailing wages ordered by the Comptroller plus existing supplemental benefits then in effect exceeded the Comptroller's total compensation figure. By letter dated September 26, 2007, OLR advised DC 37 [FN1] that OLR would be paying the increase in wages in compliance with the Comptroller's final order and determination retroactive to April 1, 2000, and that going forward SHRs would accrue 4 ½ fewer annual leave days and 5 fewer sick leave days per annum. OLR would also be recalculating retroactively the amount of over-accrued leave that would have to be taken from each SHR in order to match the rates contained in the Comptroller's order. In addition, SHRs would no longer be entitled to other benefits such as bereavement leave and jury duty leave (Pet. ¶ 26; Pet. Exhibit "A"). According to respondents, these changes were made in order to match SHRs' existing benefits with the Local 1018 foreman fringe benefit rate set forth in the Comptroller's Order. As a result of these changes, SHRs now accrue 7 instead of 12 days of annual sick leave, and 15 ½ to 22 ½ days of annual leave instead of 20 to 27 days, depending on years of service.

On October 7, 2007, Local 1157 filed an improper practice petition ("IPP") with the New York City Office of Collective Bargaining ("OCB") alleging that the City's action was a unilateral action concerning a mandatory subject of collective bargaining in violation of the New York City [*3]Collective Bargaining Law ("NYCCBL") § 12-306 and that the City's action was in retaliation for the union's exercise of its rights under Labor Law § 220. Local 1157 demanded that the OCB Board of Collective Bargaining ("BCB") petition the New York State Supreme Court for injunctive relief. In response to an objection by the City, the BCB determined that because DC 37 (and not Local 1157) holds the bargaining certificate, Local 1157 lacks standing to challenge the changes. The BCB deferred action on Local 1157's allegation of unlawful retaliation. Thereafter, DC 37 filed a petition with the OCB seeking the same relief.

On March 9, 2009, the BCB issued a split Decision and Order ("BCB Order") dismissing DC 37's IPP for lack of jurisdiction. The majority found that under NYCCBL § 12-307(a), public employers and certified employee organizations have the duty to bargain in good faith on wage rates, benefits and other identified subjects. However an employer's duty to bargain with respect to employees subject to Labor Law § 220 (such as the SHRs represented by Local 1157) is treated as an exception to the general rule. The BCB held that under NYCCBL § 12-307(a)(i); "issues of the duty to bargain over wages and supplements' are governed by § 220, not the NYCCBL and thus are excluded from our jurisdiction" (Local 1157, DC 37, 2 OCB 2d [BCB 2009] at 13).

This CPLR article 78 proceeding was commenced in January 2008. Petitioners allege that OLR's action in unilaterally reducing SHRs' benefits is arbitrary and capricious and beyond the scope of its authority.[FN2] Specifically, petitioners contend that OLR has a duty to negotiate in good faith and is not entitled to unilaterally alter mandatory subjects of collective bargaining such as wages and benefits provided to prevailing rate employees. Petitioners also argue that OLR's finding that the value of benefits provided to SHRs during the period April 1, 2000 through June 30, 2005 exceeded the prevailing benefits set forth in the Comptroller's Order is mistaken. Petitioner's aver that OLR has no right of recoupment of excess wages or benefits paid above the prevailing rates, but even if it did, respondents waived their right to assert that claim by failing to raise it before OATH or the Comptroller. Such sick time and annual leave as has already accrued is a constitutionally-protected property right which petitioners contend respondents are prohibited from confiscating.

Respondents did not file an answer to the petition. Instead, they filed a "cross-motion" seeking dismissal of this proceeding pursuant to CPLR 7804(f) on the ground that this court lacks subject matter jurisdiction as the petition sets forth an IPP which it claims is within the non-delegable jurisdiction of the BCB. They also argue that if the petition is found to be sufficiently distinguishable from an IPP, the court still lacks jurisdiction to entertain it "in light of the statutory process outlined in Labor Law § 220." With respect to the recoupment of previously accrued annual leave and sick leave, respondents contend that no final determination on this issue has been made and, therefore, no justiciable issue is presented.

In reply, petitioners acknowledge that an IPP was filed on their behalf but argue that their claims in this Article 78 proceeding are not predicated on rights that exist by virtue of the NYCCBL. Rather, their claims are grounded on alleged violations of the Taylor Law, Labor Law and state and federal constitutions which the BCB has no jurisdiction to enforce. In any event, the exhaustion of [*4]administrative remedies doctrine does not apply in situations, such the one here, where a government agency is accused of having violated a petitioner's constitutional rights or acted outside the scope of its authority.

Petitioners also assert that no administrative remedy is provided to resolve a dispute pursuant to Labor Law § 220. Under Labor Law § 220, the Comptroller is vested with authority to determine the statutory minimum wage and supplement for a given trade or occupation, but such authority does not extend to policing improper labor practices such as those at issue in this case. Nor will the Comptroller intervene to resolve such a dispute. In any event, petitioner's claims extend beyond Labor Law § 220 and include claims predicated upon the Taylor Law, namely a prohibition on employers' unilateral actions, and the federal and state constitutional protections of due process and equal protection.

Lastly, petitioners challenge respondents' argument that the issue as to recoupment does not present a justiciable controversy. They argue that the respondents' letter to DC 37 dated September 26, 2007, advising of its decision to recoup alleged overpayments of benefits was a final determination and all that was left to do was to determine how the recoupment would be implemented. Thus, it was a final determination within the meaning of CPLR § 7801(1).

Discussion

The NYCCBL and the New York State Civil Service Law ("CSL") prohibit a public sector employer from unilaterally making any change as to any mandatory subject of an expired collective bargaining agreement during a period of negotiation of a new agreement (see, NYCCBL § 12-306[a][5] and CSL § 209-a [1][e]). The NYCCBL authorizes the certified represented of workers who are covered by the law to seek to enforce these rights by filing an IPP with the BCB (see, Local 1157, DC 37, 10CB 2d 7 [BCB 2008]). The CSL contains a similar provision and authorizes the aggrieved authorized collective bargaining agent to seek redress before the Public Employment Relations Board ("PERB") (see, CSL § 209[1][e]).

The BCB has held that it lacks jurisdiction to review petitioners claim under the NYCCBL (see Local 1157, DC 37, 20 CB 2d 10 [BCB 2009]). Its decision is based on a reading of NYCCBL § 12-307(a)(1) which provides in part that:

public employers and certified or designated employee organizations shall have the duty to bargain in good fath on wages (including but not limited to wage rates, pensions, health and welfare benefits, uniform allowances and shift premiums), hours (including but not limited to overtime and time and leave benefits) [and] working conditions...except that:

(1) with respect to those employees whose wages are determined under section two hundred twenty of the labor law, the duty to bargain in good faith over wages and supplements shall be governed by said section...

The duty to bargain in good faith pursuant to the NYCCBL does not extend to SHRs because SHRs are "employees whose wages are determined under section two hundred twenty of the Labor Law".

Petitioners acknowledge that the BCB does not have jurisdiction stating that the rights it seeks to vindicate in this Article 78 proceeding are not predicted on rights that may exist by virtue of the NYCCBL. Petitioners argue instead that the rights being asserted here are "grounded in the Taylor Law, the Labor Law and the state and federal constitutions". However, petitioners have not identified the provisions of either the Taylor Law or the Labor Law on which their claims are [*5]grounded and have not cited any cases confirming the constitutional rights being asserted. They have not pointed to any law that expressly protect prevailing rate employees against unilateral changes and set forth a procedure for enforcing their employee rights.

In its Decision and Order, dated March 14, 2009, the BCB held that the issues relating to the duty to collectively bargain over wages and supplements of SHRs are governed by Labor Law § 220. That section provides that the public employer and the certified employee organization "shall in good faith negotiate and enter into a written agreement with respect to the wages and supplements" of covered workers (Labor Law § 220[8][d]). The Labor Law also provides that "[i]f the parties fail to achieve an agreement, only the employee organization shall be authorized to file a single verified complaint pursuant to subdivision seven herein on behalf of [the covered employees] (id).

In the context of this case, subdivision seven authorizes the Comptroller to investigate the complaint and to make an order or any other disposition of the complaint (see, Labor Law§ 220 [7]).Unlike the CSL and the NYCCBL, section 220 does not expressly prohibit unilateral changes and set forth a procedure for redress. However, the law authorizes the Comptroller to adjudicate the complaints of aggrieved employee organizations. It does not by its terms proscribe the ability of the Comptroller to "make either an order, determination or other disposition...of [the] verified complaint" (Labor Law § 220[7]).

It is a well-established principle of law that a person aggrieved by the action of an administrative agency is generally required to exhaust the available administrative remedies before seeking judicial review of the agency's action (see, Watergate II Apts. v Buffalo Sewer Authority, 46 NY2d 52, 57 [2000]). Here, petitioners have not attempted to vindicate the rights asserted in this Article 78 proceeding by filing a complaint with the Comptroller pursuant to section 220 (7). Nor have petitioners cited any decision, rule or statute barring an aggrieved person from pursuing a claim before the Comptroller, arguably eliminating the exhaustion of administrative remedies requirement.Labor Law § 220 expresses a strong preference for resolving disputes relating to covered wages and supplements through the collective bargaining process and failing efforts through that process, an adjudication before the Comptroller. For this reason, the court is loathe to intervene where petitioners have not attempted to seek redress through that process. The administrative remedy could provide the required relief and, therefore, the failure to pursue this remedy cannot be excused. Accordingly, the court grants respondents' cross motion to the extent of dismissing that branch of the petition seeking to enjoin respondents from unilaterally changing leave benefits prospectively.

On September 26, 2007, OLR advised DC-37 that it will be paying the retroactive hourly wages ordered by the Comptroller and that it was recalculating the amount of accrued leave credits that will need to be taken from each SHR in order to match the rates contained in the Comptroller's Order. OLR advised that upon ascertaining that amount, the union will be advised as to how much "over-accrued" leave each SHR owes the City and when it will be debted from their existing leave balances. The letter makes clear the City's final decision to debit each SHR leaving for future determination only the precise amount of leave credits to be deducted from each SHR and when those leave credits will be taken from individual employees.

Where a public body has rendered a final decision on a matter but there remains further steps to be taken to implement the decision, the matter is justiciable and may be reviewed pursuant to [*6]CPLR § 7803 (see Matter of Nationwide Cellular Service, Inc. v Public Service Comission, 180 AD2d 24 [3d Dept, 1992]).

It is well settled that an employer may not use earned excess supplemental benefits to off-set wage underpayments (see, Matter of Georgakis Painters Corp. v Harnett, 170 AD2d 726 [3d Dept. 1991]). Further, a public employer may not cancel vested rights to employment benefits without due process (see, Gruen v. Suffolk County, 187 AD2d 560, 562 [2d Dept. 1993]).

Accordingly, that portion of the cross-motion seeking to dismiss petitioners' challenge to the City's decision to recoup accrued leave benefits as premature is denied.

Accordingly, it is hereby

ORDERED that the cross-motion to dismiss that portion of the petition relating to respondents decision to change leave benefits of SHRs prospectively is granted; and it is further

ORDERED that the cross-motion to dismiss that portion of the petition relating to the City's decision to recoup accrued leave benefits is denied; and it is further

ORDERED that respondents shall answer the petition within ten (10) days of entry of this Decision and Order.

This constitutes the decision and order of the court.

DATED: April 1, 2009

E N T E R,

______________________________

O. Peter Sherwood

J.S.C. Footnotes

Footnote 1:As holder of the bargaining certificate that covers SHRs, DC 37 is the authorized collective bargaining representative of these workers. SHRs are members of Local 1157 which is a constituent of DC 37.

Footnote 2:On October 11, 2007, petitioners and other SHRs commenced an action in this court to compel respondents to pay them back pay pursuant to the Comptrollers Order, plus accrued interest (McFarland v City of New York, Index No. 113721/2007). By order dated February 26, 2009, the court (Hon. Karen Smith) granted plaintiffs' motion for partial summary judgment in that action.