O'Buckley v Paterson

[*1] O'Buckley v Paterson 2009 NY Slip Op 52031(U) [25 Misc 3d 1211(A)] Decided on September 14, 2009 Supreme Court, Albany County Platkin, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 14, 2009
Supreme Court, Albany County

Kevin O'Buckley, Roxanne McConnell, Kirk Schanzenbach and John Sebesta, Petitioners,

against

David A. Paterson, as Governor of the State of New York, Laura L. Anglin, as Director of the Division of the Budget of the State of New York and Gary Johnson, as Director of the Governor's Office of Employee Relations of the State of New York, Respondents.



1865-09



Hinman Straub

Attorneys for Petitioners

(John F. Black, of counsel)

121 State Street

Albany, New York 12207

Andrew M. Cuomo, Attorney General

Attorney for Respondents

(David Cochran, of counsel)

The Capitol

Albany, New York 12224

Richard M. Platkin, J.

Petitioners bring this CPLR article 78 proceeding seeking an order annulling respondents' rescission of the previously approved Vacation Exchange Option Program for State fiscal year [*2]2008-09 and requiring respondents to apply and implement the program for such year. Respondents oppose the petition through an answer.

BACKGROUND

Petitioners Kevin O'Buckley, Roxanne McConnell, Kirk Schanzenbach and John Sebesta are employees of the State of New York whose positions are designated as management or confidential ("M/C"). Respondents are the Governor, Director of the Budget and Director of the Governor's Office of Employee Relations ("GOER"), respectively.

Chapter 10 of the Laws of 2008 ("Chapter 10"), signed into law on January 28, 2008, amended various laws in relation to the compensation, benefits and other terms and conditions of employment of certain State officers and employees. At issue in this proceeding is the amendment made by section 9 of the bill to Chapter 474 of the Laws of 1980, which authorized a Vacation Exchange Option Program for M/C employees in State fiscal years 2008-09, 2009-10, and 2010-11.

Pursuant to the Vacation Exchange Option Program ("the Program"), eligible M/C employees can elect to exchange up to five days of accumulated vacation credit for an equivalent cash payment. The enabling statute provides, among other things, that "the availability of such vacation exchange option shall be subject to the approval of the director of the division of the budget for each respective state fiscal year." To be eligible to participate, M/C employees had to earn and accumulate at least 35 days of vacation credits as of the time of their election.

As alleged in the Verified Petition, on March 19, 2008, respondents informed the human resource directors for all State agencies that the Director of the Budget had approved the Program for fiscal year ("FY") 2008-09. Petitioners allege that in reliance on this approval, they and other M/C employees timely filed a written election to participate in the Program. Five days of accumulated vacation credits were therefore removed from petitioners' vacation accruals at the time of election, with an equivalent cash payment to be made to petitioners during the first week of December 2008.

By October 2008, however, Governor Paterson and his Budget Director projected a potential State budget gap of $1.2 billion for the remainder of FY 2008-09 and an out-year- budget gap totaling $20 billion. On November 12, 2008, Governor Paterson announced a proposed deficit reduction plan ("DRP") that included, among other measures, rescission of the Program for FY 2008-09.

Accordingly, on November 20, 2008, GOER announced that the Budget Director had rescinded the Program for FY 2008-09 based on the State's fiscal difficulties. Employees who had annual leave credits exchanged based on their election to participate in the Program had such credits restored effective January 2, 2009, thereby allowing the accrued time to be used at any time during the 2009 calendar year. However, employees who had elected to participate in the Program but separated from State service on or before January 1, 2009 would receive the vacation exchange payment, since restoration of credits would be ineffective at that point.

By their Verified Petition, petitioners allege neither Chapter 10 nor any other law authorized respondents to administratively rescind the program. Further, petitioners argue that the rescission constitutes improper legislative policy-making, in violation of the State Constitution and separation of powers principles. Finally, petitioners argue that respondents' determination to rescind the Program for FY 2008-09 is arbitrary and capricious. [*3]

In opposition to the petition, respondents argue that the determination to rescind the Program for FY 2008-09 based on the State's fiscal condition is rational and reasonable. They further contend that Chapter 10 authorizes the Budget Director both to rescind the Vacation Exchange Option Program at any time prior to the disbursement of payments and to withhold any payments made pursuant to the Program in order to reduce State spending to acceptable levels.

Oral argument was held on August 18, 2009. This Decision & Judgment follows.

ANALYSIS

The Court begins its discussion of petitioners' claims with a review of the pertinent statutory language. Immediately prior to the enactment of Chapter 10, Chapter 474 of the Laws of 1980 ("Chapter 474") authorized a vacation exchange program for fiscal years 2004-05 through 2006-07, whereby eligible state employees "may once per fiscal year elect to receive cash payment in exchange for such earned and accumulated credits . . . up to a maximum of five days, provided that at the time of such election such credits total thirty-five or more days, and provided further that the availability of such vacation exchange option shall be subject to the approval of the director of the division of the budget for each respective state fiscal year" (L 1980, ch 474, § 20). "[P]ayment for exchanged credits shall be made during the first week of December . . . . Such compensation shall be paid in addition to and shall not be part of an employee's basic annual salary, nor shall it be considered salary for the purpose of computing retirement benefits" (id.).

Section 9 of Chapter 10 amended the dates set forth in Chapter 474 to authorize the Program for fiscal years 2008-09 through 2010-11 (L 2008, ch 10, § 9 ["Section 9"]). In all other pertinent respects, Chapter 474 remained intact.

In addition, Section 15 of Chapter 10 includes unconsolidated language reading as follows: "Notwithstanding the provisions of any other section of this act or any other provision of law to the contrary, any increase in compensation provided . . . in this act . . . may be withheld in whole or in part from any officer or employee when, in the opinion of the director of the budget, such withholding is necessary to reflect the job performance of such officer or employee, or to maintain appropriate salary relationships among officers or employees of the state, or to reduce state expenditures to acceptable levels or when, in the opinion of the director of the budget, such increase is not warranted or is not appropriate" (id. § 15 [1] ["Section 15"]).

Respondents rely on two separate and distinct sources of authority to justify their determination to rescind the Program for FY 2008-09. First, respondents argue that the payments that petitioners would receive pursuant to the Program constitute an "increase in compensation" that may be withheld by the Director of the Budget pursuant to Section 15. In this connection, respondents rely upon the language within Chapter 474 describing "payments for exchanged credits" as "compensation", which "shall be paid in addition to and shall not be part of an employee's basic annual salary." Respondents also contend that the rescission of the Program is authorized by Section 9, which makes "the availability of such vacation exchange option . . . subject to the approval of the director of the division of the budget." The Court will consider each of these arguments in turn.

A.Section 15 [*4]

In any case involving questions of statutory interpretation, it is the duty of the Court to "discern and give effect to the Legislature's intent" (Matter of Ramroop v. Flexo-Craft Print, Inc., 11 NY3d 160 165 [2008]). "As the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" (Majewski v. Broadalbin-Perth Cent. Sch. Dist., 91 NY2d 577, 583 [1998]).

Here, the plain language of Chapter 10 describes payments to participating State employees as "compensation" and goes on to give the Director of the Budget express authority to withhold any increase in "compensation" provided for in the legislation. Under these circumstances, payments to State employees in exchange for accrued vacation credits must be deemed "compensation" within the meaning of Section 15. Accordingly, the Court rejects petitioners' contention that Chapter 10 does "not indicate a clear understanding by the Legislature that it intended these payments" to be deemed compensation within the meaning of Section 15 (Petitioner's Reply Memorandum of Law, at 13).

The Court further rejects petitioners' reliance on GOER publications that allegedly contradict this interpretation and deem vacation credits to be an attendance and leave benefit rather than compensation. The affidavit in sur-reply sworn to by Craig Dickinson, Assistant Director of GOER, demonstrates that while the accrual of vacation and leave credits is considered an attendance and leave benefit, the use of vacation accruals to cover an absence is deemed to be the receipt of compensation. Assistant Director Dickinson further avers that payments made pursuant to the Program are reported as taxable income to the employee. And where, as here, "the language of a statute is clear and unambiguous, courts must give effect to its plain meaning" (Pultz v. Economakis, 10 NY3d 542, 547 [2008] [internal quotations omitted]).

Nor does the Court see merit in petitioners' contention that if the Legislature intended for the Director of the Budget to have the authority to withhold vacation exchange payments in the manner set forth in Section 15, it could have amended Chapter 474 to include such authority directly within the Program or otherwise established an explicit linkage between the Program and Section 15. By defining payments made pursuant to the Program as "compensation" and within the same enactment authorizing the Director of the Budget to withhold "increases in compensation", the Legislature did establish a clear textual linkage between these provisions.

Further, the Court cannot agree that the second subdivision of Section 15 limits the types of compensation that may be withheld by the Budget Director pursuant to the first subdivision. The language of the second subdivision relied upon petitioners states that "the salary increases and lump sum payments provided for in this act shall not be implemented until the director of employee relations has delivered notice to the director of the budget and the comptroller that such amounts may be paid" (L 2008, ch 10, § 15 [2]). This requirement, which establishes a condition precedent to the implementation of salary increases and lump sump payments, in no way limits the authority conferred upon the Director of the Budget by the first subdivision to withhold increases in compensation for a variety of purposes.

The Court's conclusion that vacation exchange payments to State employees represent "compensation" within the meaning of Section 15 is not the end of the inquiry, however. Since Section 15 authorizes the Director of the Budget to withhold only "increases in compensation", the issue becomes whether participation in the Program and/or the vacation exchange payments [*5]made pursuant thereto represent an "increase in compensation" to State employees. Petitioners argue that the Program merely authorizes the exchange of vacation credits previously earned and accrued for their cash equivalent.

The Court sees merit in petitioners' contention. As GOER's Assistant Director explains in his sur-reply affidavit

When an M/C employee charges vacation accruals to cover an absence, he or she receives compensation in return for using those accruals. Similarly, under the terms of an approved M/C Vacation Exchange Program, an employee who exchanges vacation accruals under the Program receives compensation for those vacation credits exchanged. Whether accruals are used to cover an absence or are exchanged under the Vacation Exchange Program at issue herein the character of the monies received is the same. (¶ 5 [emphasis added]).

Thus, by respondents' own lights, an employee receives "compensation" whether the accrued vacation hours are used to cover an absence or are exchanged for a cash payment pursuant to the Program. Since the employee receives equivalent "compensation" in both circumstances, it cannot be said that the Program provides an "increase" in compensation.

Respondents nonetheless offer several arguments as to how a "cash payment in exchange for such earned and accumulated credits" (Section 9) represents an "increase in compensation" (Section 15). First, respondents raise the possibility that accrued vacation credits may be lost, either as a result of the employee accumulating vacation hours in excess of the maximum allowed for active State employees or by the employee leaving State service with accumulated vacation credits in excess of the maximum amount for which a cash payment will be made at the time of separation. The Court finds this contention speculative and unsupported by the record. There has been no showing that petitioners (or other affected employees) would necessarily lose accrued vacation time in the absence of the Program.

Respondents further contend that an increase in compensation arises from the time value of money. Even if an employee later uses his or her accrued vacation time to cover an absence or eventually receives the cash equivalent of such accruals, respondents assert, the receipt of an equivalent cash payment today confers a greater economic benefit than receipt of the same sum at a later date. Again, the Court finds respondents' contention speculative and unsupported by the record. Further, this argument ignores that the fact that the value of accrued vacation hours oftentimes increase in value as a result of intervening salary increases.

Based on the foregoing, the Court concludes that while the payments to State employees in exchange for vacation credits represent "compensation" within the meaning of Section 15, there has been no showing by respondents that such payments represent an "increase in compensation".

B.Section 9

As an alternative ground for upholding the challenged determination, respondents rely upon the language within Section 9 making "the availability of [the] vacation exchange option . . . .subject to the approval of the director of the division of the budget for each respective state fiscal year." It is respondents' contention that this grant of statutory authority carries with it authority for the Director of the Budget to rescind her approval of the Program at any time prior to the State making exchange payments. In response, petitioners argue that there is nothing in [*6]Section 9 that expressly authorizes the rescission of a prior approval and, therefore, the challenged determination constitutes improper legislative policy-making, in violation of the State Constitution and separation of powers principles.

"The constitutional principle of separation of powers, implied by the separate grants of power to each of the coordinate branches of government, requires that the Legislature make the critical policy decisions, while the executive branch's responsibility is to implement those policies"(Bourquin v. Cuomo, 85 NY2d 781, 784 [1995] [internal citations and quotations omitted]). Thus, "there need not be a specific and detailed legislative expression authorizing a particular executive act as long as the basic policy decisions underlying the regulations have been made and articulated by the Legislature" (id. at 785). "It is only when the Executive acts inconsistently with the Legislature, or usurps its prerogatives, that the doctrine of separation is violated" (Clark v. Cuomo, 66 NY2d 185, 189 [1985]).

There is nothing in the plain language of Chapter 10 that forecloses respondents from rescinding the Program prior to payments having been made. In reauthorizing the Program for FY 2008-09, the Legislature stated that "the availability of [the] vacation exchange option shall be subject to the approval of the director of the division of the budget for each respective state fiscal year" (L 2008, ch 10, § 9). This language does not prescribe any specific date by which such approval must be given, expressly preclude the Director of the Budget from withdrawing her approval based on a change in the State's fiscal condition or otherwise circumscribe the manner in which the Budget Director exercises the broad discretionary authority conferred upon her by the Legislature to decline to make the Program available to M/C employees in a given fiscal year. And Bourquin is fatal to petitioners' claim that the absence of express authority to rescind the Program renders the challenged determination ultra vires (85 NY2d at 785).

Further, the challenged rescission is in no way inconsistent with the basic policy established by the Legislature and does not otherwise usurp legislative prerogatives. The evident purpose of conditioning Program availability upon the Budget Director's approval is to ensure that State's fiscal condition is adequate in any given year to give its workforce the option of exchanging vacation accruals for cash payments. Respondents' interpretation of the statute as allowing the Director of the Budget to rescind her approval of the Program based on intervening changes to the State's fiscal condition gives effect to this purpose. Indeed, the Budget Director's initial approval was given sometime in March 2008, prior to the commencement of State fiscal year 2008-09, with payments not to be made until the first week of December 2008, almost nine months later.[FN1]

In view of the foregoing, the Court is not persuaded that the Director of the Budget's determination to rescind her approval of the Program for FY 2008-09 based on intervening changes in the State's fiscal condition is ultra vires or in violation of separation of powers principles. In this connection, the Court finds that the authorities relied upon by petitioners are distinguishable. Thus, in Gilligan v. Stone (20 AD3d 697, 700 [3d Dept 2005]), the Third [*7]Department held that the Budget Director exceeded her authority in withholding performance advance payments pursuant to language similar to Section 15 because such payments were not "provided" by the legislation at issue in that case (see also id. [upholding cancellation of lump sum merit awards]). And in Matter of Neary v. New York State Div. of Budget (192 Misc 2d 375, 378 [Albany County Sup Ct 2002] [Malone, J.]), the Court held that DOB lacked the authority to impose a cap on overtime in "extreme emergency situations" where the Legislature established such a cap only in "nonextreme emergency situations". In both cases, the Director of the Budget was therefore acting in contravention of statute, which is not the case here.

C.Abuse of Discretion

Petitioners further contend that even if Chapter 10 authorized the Director of the Budget to rescind the Program, her determination to do so under the facts and circumstances of this case is arbitrary, capricious and lacks a rational and reasonable basis

In a proceeding pursuant to CPLR article 78 to review an administrative determination, the Court's role is limited to determining "whether respondent's determination is arbitrary and capricious, is affected by an error of law or constitutes an abuse of discretion" (Matter of Solomon v. Administrative Review Bd. for Professional Medical Conduct, Dept. of Health, 303 AD2d 788 [3d Dept 2003]; see also Matter of Pell v. Board of Ed. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222 [1974]). It is not for the Court to revisit the underlying factual determinations, reweigh the evidence, nor substitute its judgment for that of responsible executive branch officials (see Matter of Heintz v. Brown, 80 NY2d 998 [1992]; Pell, supra, at 230).

The Court is satisfied that respondents' determination to revoke the Program based on a worsening of the State's fiscal condition is rational and reasonable. While the State undoubtedly was facing serious fiscal challenges at the time of the Budget Director's initial approval, the record amply supports respondents' contention that the State's fiscal condition worsened appreciably in the intervening eight months. Further, even if petitioners are correct in their contention, made at oral argument, that the Budget Director's initial approval of the Program was improvidently given, it does not render her subsequent determination to protect the State's fisc arbitrary or capricious. Further, the Court rejects petitioners' contention that there is something irrational or unreasonable about seeking to restrain $5 million in State spending when faced with a multi-year budget gap of $20 billion. Finally, while petitioners complain about the hardship caused by rescission of the Program, the record is devoid of any proof of injury beyond the fact that they did not receive the December 2008 vacation exchange payments as expected.[FN2]

CONCLUSION

Based on the foregoing, the Court concludes that petitioners have not demonstrated that the respondents' rescission of the previously approved FY 2008-09 Vacation Exchange Option Program is contrary to law, arbitrary or capricious. Accordingly,[FN3] it is [*8]

ADJUDGED and DECREED that the petition is denied in all respects.

This constitutes the Decision & Judgment of the Court. The original Decision & Judgment is being returned to counsel for the respondents; all other papers are being transmitted to the County Clerk. The signing of this Decision & Judgment shall not constitute entry or filing under CPLR Rule 2220, and counsel is not relieved from the applicable provisions of that Rule respecting filing and service.

Dated: Albany, New York

September 14, 2009

RICHARD M. PLATKIN

A.J.S.C. Footnotes

Footnote 1: Thus, a contrary interpretation of the statute as committing the State to the Program during this lengthy period may actually harm M/C employees in future years by forcing the Director of the Budget to disapprove the Program if there is even the slightest doubt as to the State's fiscal outlook.

Footnote 2: Petitioners recognize, as they must, that a claim of estoppel will not lie against the State under these circumstances.

Footnote 3: The Court has considered the parties' remaining contentions and finds them unavailing or unnecessary to the disposition of this proceeding.