Case 18-3193, Document 148, 11/06/2020, 2969237, Page1 of 78
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`18-3193-cv
`Danny Donohue, et al. v. Andrew M. Cuomo, et al.
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`UNITED STATES COURT OF APPEALS
`FOR THE SECOND CIRCUIT
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`August Term, 2019
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`Argued: June 22, 2020 Decided: November 6, 2020
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`Docket No. 18-3193-cv
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`DANNY DONOHUE, AS PRESIDENT OF THE CIVIL SERVICE EMPLOYEES ASSOCIATION,
`INC., LOCAL 1000, AFSCME, AFL-CIO, CIVIL SERVICE EMPLOYEES ASSOCIATION,
`INC., LOCAL 1000, AFSCME, AFL-CIO, MILO BARLOW, ON BEHALF OF HIMSELF, ON
`BEHALF OF RETIREES OF THE STATE OF NEW YORK FORMERLY IN THE CSEA
`BARGAINING UNITS, THOMAS JEFFERSON, ON BEHALF OF HIMSELF, ON BEHALF OF
`RETIREES OF THE STATE OF NEW YORK FORMERLY IN THE CSEA BARGAINING UNITS,
`CORNELIUS KENNEDY, ON BEHALF OF HIMSELF, ON BEHALF OF RETIREES OF THE STATE
`OF NEW YORK FORMERLY IN THE CSEA BARGAINING UNITS, JUDY RICHARDS, ON
`BEHALF OF HERSELF, ON BEHALF OF RETIREES OF THE STATE OF NEW YORK FORMERLY
`IN THE CSEA BARGAINING UNITS, HENRY WAGONER, ON BEHALF OF HIMSELF, ON
`BEHALF OF RETIREES OF THE STATE OF NEW YORK FORMERLY IN THE CSEA
`BARGAINING UNITS,
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`
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`Plaintiffs-Appellants,
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`— v. —
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`ANDREW M. CUOMO, IN HIS OFFICIAL CAPACITY AS GOVERNOR OF THE STATE OF NEW
`YORK, PATRICIA A. HITE, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY AS ACTING
`COMMISSIONER, NEW YORK STATE CIVIL SERVICE DEPARTMENT, CAROLINE W. AHL,
`IN HER OFFICIAL CAPACITY AS COMMISSIONER OF THE NEW YORK STATE CIVIL
`SERVICE COMMISSION, J. DENNIS HANRAHAN, IN HIS OFFICIAL CAPACITY AS
`COMMISSIONER OF THE NEW YORK STATE CIVIL SERVICE COMMISSION, ROBERT L.
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`Case 18-3193, Document 148, 11/06/2020, 2969237, Page2 of 78
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`MEGNA, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE NEW
`YORK STATE DIVISION OF THE BUDGET, THOMAS P. DINAPOLI, IN HIS OFFICIAL
`CAPACITY AS COMPTROLLER OF THE STATE OF NEW YORK, JONATHAN LIPPMAN, IN
`HIS OFFICIAL CAPACITY AS CHIEF JUDGE OF THE NEW YORK STATE UNIFIED COURT
`SYSTEM,
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`Defendants-Appellees,
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`THE STATE OF NEW YORK, NEW YORK STATE CIVIL SERVICE DEPARTMENT, NEW
`YORK STATE AND LOCAL RETIREMENT SYSTEM, NEW YORK STATE UNIFIED COURT
`SYSTEM,
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`B e f o r e:
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`Defendants.
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`NEWMAN, HALL, and LYNCH, Circuit Judges.
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`Plaintiffs-Appellants the Civil Service Employees Association (“CSEA”)
`and officers and retired former members of CSEA challenge the State of New
`York’s 2011 reduction, through the amendment of a state statute and regulation,
`of its contribution rates to retired former state employees’ health insurance
`premiums. Plaintiffs-Appellants contend that the reduced contribution rates
`contravene the State’s contractual obligation, under CSEA’s collective-bargaining
`agreements with the State, to pay a fixed percentage of retirees’ health insurance
`premiums throughout their retirements. They bring claims for breach of contract
`under New York law and for impairing the obligations of contract in violation of
`the Contract Clause of the U.S. Constitution. We conclude that both of Plaintiffs’
`claims raise unresolved issues of state law that are appropriate for certification.
`We therefore reserve decision and certify two questions to the New York Court of
`Appeals.
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`Case 18-3193, Document 148, 11/06/2020, 2969237, Page3 of 78
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`ERIC E. WILKE, Of Counsel, Civil Service Employees
`Association, Inc., Albany, NY (Daren J. Rylewicz,
`Jennifer C. Zegarelli, on the brief), for Plaintiffs-Appellants.
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`FREDERICK A. BRODIE, Assistant Solicitor General of Counsel,
`Albany, NY (Letitia James, Attorney General, State of
`New York, Barbara D. Underwood, Solicitor General,
`Andrea Oser, Deputy Solicitor General on the brief), for
`Defendants-Appellees.
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`GERARD E. LYNCH, Circuit Judge:
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`This case arises from the State of New York’s 2011 reduction, through the
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`amendment of a state statute and regulation, of its rate of contribution to certain
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`retired former employees’ health insurance premiums for the first time in almost
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`twenty-nine years, from 90% to 88% for individual coverage and from 75% to
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`73% for dependent coverage. The Civil Service Employees Association (“CSEA”),
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`the union representing the largest bargaining unit of employees of New York
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`State (“the State”), joined by certain officers and retired former members of
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`CSEA, brought suit on behalf of themselves and retired former members of that
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`bargaining unit. They contend that the State’s reduction of its contribution rate
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`contravenes its contractual obligations, under CSEA’s past collective-bargaining
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`agreements (“CBAs”) with the State, to pay a fixed percentage of retirees’ health
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`insurance premiums throughout their retirements. They seek relief for breach of
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`contract under New York State law and for impairment of the obligations of
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`contract in violation of the Contract Clause of the United States Constitution.
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`In order to prevail on either claim, Plaintiffs must establish that the
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`relevant CBAs provide for a vested right to health-insurance coverage at fixed
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`contribution rates for the life of the retiree. It is beyond dispute that the CBAs do
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`not expressly provide for a vested right to coverage at fixed contribution rates. As
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`a result, Plaintiffs’ suggested interpretation of the CBAs is tenable only if a vested
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`right – or, at minimum, ambiguity with respect to such a right, as is necessary for
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`the consideration of extrinsic evidence of the meaning of the CBAs – may be
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`inferred under the circumstances. Moreover, even if Plaintiffs can establish that
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`the State’s reduction of its contribution rates to retiree health-insurance
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`premiums breached a contractual obligation, the resolution of both of their claims
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`depends on whether the State, in reducing its contribution rates, merely breached
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`its contract, permitting a remedy for breach under state law, or completely
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`negated any such obligation so as to preclude plaintiffs from recovering damages
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`under state law. Both of these issues depend on aspects of New York law on
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`which the State’s courts have not conclusively ruled and that meet our other
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`criteria for certification. We therefore reserve decision and certify two questions
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`to the New York Court of Appeals.
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`BACKGROUND
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`In 1956, the State established the New York State Health Insurance Plan
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`(“NYSHIP”), an optional health-benefit plan for active and retired State
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`employees. Since the inception of NYSHIP, the State has contributed to both
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`active employees’ and retirees’ NYSHIP premium costs. Prior to 1983, the State,
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`pursuant to a State statute, paid 100% of both employees’ and retirees’ costs for
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`individual coverage and 75% of their costs for dependent coverage. In 1982, the
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`State and the unions representing State employees negotiated a reduction of the
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`State’s contribution rate for individual coverage from 100% to 90%, effective
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`January 1, 1983. Among the unions with which the State negotiated was CSEA,
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`which represents the largest bargaining unit of State employees. Members of that
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`bargaining unit include employees of the Administrative Services Unit,
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`Operational Services Unit, Institutional Services Unit, Division of Military &
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`Naval Affairs Unit, and some employees of the Unified Court System.
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`CSEA’s and the State’s memorandum of understanding, which they
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`entered into in November 1982, provided that the State would pay 90% of the
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`cost of premium charges “for the coverage of State employees” and 75% of the
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`cost of premium charges “for the coverage of dependents of such State
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`employees.” J. App’x 1450. It did not expressly address the State’s contribution
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`rates for retirees or define the term “employee[].” The State legislature thereafter
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`amended New York Civil Service Law § 167 to codify the negotiated contribution
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`rates. As amended in 1983, Civil Service Law § 167(1) provided, in part, that:
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`The full cost of premium or subscription charges for the
`coverage of retired state employees who are enrolled in
`the basic, statewide health insurance plan established
`pursuant to this article and who retired prior to
`[January 1, 1983] shall be paid by the state. Nine-tenths
`of the cost of premium or subscription charges for the
`coverage of state employees and retired state employees
`retiring on or after [January 1, 1983] who are enrolled in
`such basic, statewide health insurance plan shall be paid
`by the state. . . . [T]hree-quarters of the cost of premium
`or subscription charges for the coverage of dependents
`of such state employees and retired state employees
`shall be paid by the state.
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`N.Y. Civ. Serv. Law § 167(1), eff. 1983. The substance of this portion of the statute
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`has remained largely unchanged to this day. See id. § 167(1). Between 1982 and
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`2011, CSEA and the State entered into eight successive collective-bargaining
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`agreements. Beginning in 1985, each of these agreements provided, in identical or
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`substantially similar language, that “[t]he State agrees to pay 90 percent of the
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`cost of individual coverage and 75 percent of the cost of dependent coverage”
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`under NYSHIP. J. App’x 918; see also id. at 943, 966, 993-94, 1013-14, 1034, 1051.1
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`These provisions did not specify the duration of the State’s agreement to
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`contribute at these rates. Each of the eight agreements also provided, in identical
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`or substantially similar language, that “[e]mployees covered by [NYSHIP] have
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`the right to retain health insurance after retirement upon completion of ten years
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`of service.” Id. at 923; see also id. at 946, 972, 997, 1018, 1038, 1055, 1069. Each of
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`the eight CBAs contained a duration clause, specifying the term of the CBA itself
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`to be either three or four years, depending on the CBA. See J. App’x 931, 949, 980,
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`1004, 1026, 1044, 1061, 1074.
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`Between January 1, 1983 and September 30, 2011, the State contributed to
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`the NYSHIP premium costs of eligible retired former State employees who had
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`retired on or after January 1, 1983 at the rates of 90% (for individual coverage)
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`1 The parties’ 1982-1985 CBA, which was in effect when the parties negotiated the
`reduction of the State’s contribution rate to individual coverage from 100% to
`90%, provided that the State would continue to pay 100% of individual coverage
`and 75 % of dependent coverage subject to negotiated rate changes. See J. App’x
`1066-67, 1070.
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`and 75% (for dependent coverage).
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`Beginning in December 2007, the United States economy (as well as other
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`economies around the world) was plagued by a severe financial crisis that has
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`become known as the “Great Recession.” In the wake of that crisis, the State faced
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`significant budget deficits for fiscal years 2009-2010, 2010-2011, and 2011-2012. In
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`2011, the State attempted to close its $10 billion budget gap for fiscal year 2011-
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`2012 through a variety of cost-reducing measures, including a $1.5 billion cut to
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`state agency operations. The State budgeted for $450 million of that operational
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`reduction to come from workforce-related reductions and asked all state agencies
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`to submit proposals for such reductions. The Department of Civil Service
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`proposed, among other contemplated reductions, a reduction to the State’s
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`contribution rates to NYSHIP premiums.
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`In June 2011, CSEA and the State agreed to the terms of a five-year CBA,
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`covering 2011-2016. Under the negotiated agreement, the State reduced its rates
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`of contribution to the NYSHIP premium costs of employees represented by
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`CSEA, with two sets of rates based on employees’ salary grades. According to the
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`CBA, “[e]ffective October 1, 2011 for employees in a title Salary Grade 9 or below
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`or an employee equated to a position title Salary Grade 9 or below . . . the State
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`agrees to pay 88 percent of the cost of individual coverage and 73 percent of the
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`cost of dependent coverage,” and “for employees in a title Grade Salary 10 or
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`above . . . the State agrees to pay 84 percent of the cost of individual coverage and
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`69 percent of the cost of dependent coverage.” Id. at 865.
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`Leaders of both the State and CSEA acknowledged in public statements
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`that the parties’ agreement had allowed the State to reduce its labor costs without
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`the need for widespread layoffs. Governor Andrew M. Cuomo called the CBA “a
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`win-win for CSEA members and the State of New York” that, “if adopted by the
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`other bargaining units, means layoffs needed to achieve needed workforce
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`savings would be avoided.” Id. at 854. CSEA President Danny Donohue referred
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`to the agreement as a product of “shared sacrifice” that was responsive to
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`“CSEA’s concerns about job security.” Id. The State and unions representing
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`other bargaining units subsequently agreed to terms for successor CBAs that
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`reflected the same reductions in the State’s contribution rates to employees’
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`NYSHIP premiums.
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`On August 17, 2011 the State legislature amended Civil Service Law
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`§ 167(8), which had previously provided that the State’s contribution rates to
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`eligible employees’ NYSHIP coverage costs could be “increased” subject to the
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`terms of a CBA, without any mention of modifications other than increases. See
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`Sp. App’x 6. As amended, § 167(8) provided that, “[n]otwithstanding any
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`inconsistent provision of law, where and to the extent that an agreement between
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`the state and an employee organization . . . so provides, the state cost of premium
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`or subscription charges for eligible employees covered by such agreement may be
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`modified pursuant to the terms of such agreement.” N.Y. Civ. Serv. Law § 167(8)
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`(emphasis added). The amended statute further provided that the President of
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`the Civil Service Commission, with approval from the Director of the Budget,
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`“may extend the modified state cost of premium or subscription charges for
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`employees or retirees not subject to an agreement referenced above and shall
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`promulgate the necessary rules or regulations to implement this provision.” Id.2
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`Thereafter, pursuant to the terms of § 167(8), the Acting Commissioner of
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`the Department of Civil Service sought and received approval from the State’s
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`Budget Director to extend the modified contribution rates, as defined in the
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`State’s CBAs with CSEA and other bargaining units, to retirees. The Department
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`2 The State legislature did not amend § 167(1), which continues to provide that
`90% of individual coverage costs and 75% of dependent coverage costs “of state
`employees and retired state employees retiring on or after” January 1, 1983 “shall
`be paid by the state.” N.Y. Civ. Serv. Law § 167(1).
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`of Civil Service implemented that extension of the modified rates by amending
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`its regulations. As amended, Title 4, § 73.3(b) of the New York Code of Rules and
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`Regulations provided that “for retirees who retired on or after January 1, 1983,
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`and employees retiring prior to January 1, 2012, New York State shall contribute
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`88 percent of the charge on account of individual coverage and 73 percent of the
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`charge on account of dependent coverage.” N.Y. Comp. Codes R. & Regs. tit. 4, §
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`73.3(b).3
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`The State estimates that the reduction of its rates of contribution to retirees’
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`NYSHIP coverage costs saved the State approximately $30 million annually and
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`that the premiums for retirees who retired between January 1, 1983 and
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`December 31, 2011 would increase by approximately $10.50 per month for
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`individual coverage and $28.50 per month for dependent coverage.
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`Following the State’s reduction of its contribution rates for retirees’
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`NYSHIP coverage costs, retired former State employees, the unions that had
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`3 The amended regulation also provided that the State would contribute to the
`coverage costs of retirees who retired on or after January 1, 2012 at the same rates
`at which it contributed to their coverage prior to retirement, based on salary
`grade: 88% (individual coverage) and 73% (dependent coverage) for retirees
`whose title had been Salary Grade 9 or below, and 84% (individual coverage) and
`69% (dependent coverage) for retirees whose title had been Salary Grade 10 or
`above. See N.Y. Comp. Codes R. & Regs. tit. 4, § 73.3(b).
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`represented them, and those unions’ officers brought suit in federal court, in
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`eleven separate actions. The CSEA plaintiffs filed the instant action on December
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`28, 2011. The United States District Court for the Northern District of New York
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`(Mae A. D’Agostino, J.) designated CSEA’s action as the lead case. Following
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`discovery, Defendants moved for summary judgment in all eleven actions. The
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`CSEA plaintiffs moved for summary judgment in this action. The district court
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`granted Defendants’ motions in all eleven actions, concluding, inter alia, that the
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`CBAs unambiguously did not provide for the vesting of the State’s agreement to
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`pay 90% of retirees’ individual coverage costs and 75% of their dependent
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`coverage costs under NYSHIP. The district court denied Plaintiffs’ cross-motion
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`for summary judgment.
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`This appeal – along with ten others, by plaintiffs in the related cases –
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`followed.
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`DISCUSSION
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`Plaintiffs contend that each of the eight successive CBAs between CSEA
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`and the State in effect between 1982 and 2011 gave retiring employees a vested
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`right to retain NYSHIP coverage with the State contributing 90% of the cost of
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`individual coverage and 75% of the cost of dependent coverage. If, as plaintiffs
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`allege, such an obligation exists under the agreements, the State plainly violated
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`that obligation by reducing its contribution rates for retirees’ coverage. The State
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`does not dispute that it unilaterally reduced its contribution rates for CSEA
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`members who retired between 1983 and 2011; rather, it maintains that it acted
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`within its legal rights by doing so.
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`Plaintiffs bring two claims arising from their theory that the CBAs provide
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`for a vested right to coverage at a fixed contribution rate. First, they argue that
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`the State breached the CBAs in violation of New York contract law.4 Second, they
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`argue that the State impaired its contractual obligation, in violation of the
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`Contract Clause of the U.S. Constitution.
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`As explained below, we find that resolving Plaintiffs’ claims requires that
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`we apply New York law at two junctures in our analysis of both the state
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`contract-law and federal constitutional claims. First, Plaintiffs cannot prevail on
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`either claim unless we interpret the CBAs to provide for a vested right to
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`4 The parties place primary emphasis on Plaintiffs’ federal constitutional claim,
`perhaps because it is that claim that gives the federal courts jurisdiction over this
`action and allows for the exercise of supplemental jurisdiction over Plaintiffs’
`state-law claim. See 28 U.S.C. §§ 1331, 1367(a). However, because (as discussed
`below) the issues raised by Plaintiffs’ state-law claim are logically prior to those
`raised by their federal constitutional claim, we address their state-law claim first.
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`NYSHIP coverage at fixed contribution rates for retirees – either because they
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`unambiguously so provide, or because they are ambiguous as to such a right and
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`extrinsic evidence resolves that ambiguity in Plaintiffs’ favor.5 In order to reach
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`such a conclusion, we would need to infer the existence of a vested right, or
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`ambiguity with respect to the existence of such a right, notwithstanding that the
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`CBAs do not provide for such vesting in explicit terms. That analysis begins –
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`and, in the case of Plaintiffs’ state-law breach-of-contract claim, ends – with the
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`application of state-law principles of contractual interpretation.
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`Second, if we conclude that the CBAs do provide for a vested right to
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`NYSHIP coverage at fixed contribution rates, we must consider what remedy is
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`available to Plaintiffs in light of the State’s failure to comply with its alleged
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`contractual obligation. Plaintiffs can prevail on their breach-of-contract claim
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`only if a state-law remedy is available to them, meaning that the State’s reduction
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`of its contribution levels to retirees’ premiums breached but did not invalidate its
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`5 Plaintiffs seek to establish the asserted contractual obligation solely on the
`theory that each now-expired CBA in effect between 1983 and 2011 conferred on
`employees who retired during the term of that CBA a vested right to continued
`NYSHIP coverage at the existing contribution rates throughout their retirements.
`As they clarified at oral argument, Plaintiffs do not contend that the 2011-2016
`CBA provided any rights to specific contribution rates to already-retired former
`members of the bargaining unit.
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`contractual obligation. Conversely, Plaintiffs’ federal constitutional claim for
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`contractual impairment is tenable only if the State has impaired, rather than
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`merely breached, its obligation by negating any remedy under state law. See TM
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`Park Ave. Assocs. v. Pataki, 214 F.3d 344, 349 (2d Cir. 2000). The task of
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`determining the existence of a state-law remedy for breach of contract requires
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`that we consider and apply state law.
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`At both of these junctures, New York law does not provide settled
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`principles that we may apply in order to conclusively resolve the issues in this
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`case. The New York Court of Appeals has previously declined to either adopt or
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`reject an inference that retirees’ health benefits vest under CBAs in the absence of
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`express vesting language, but it has suggested that CBAs may be ambiguous
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`with respect to the vesting of such benefits under certain circumstances. See Kolbe
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`v. Tibbetts, 22 N.Y.3d 344, 354-55 (2013). In addition, the question whether the
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`New York legislature, by amending Civil Service Law § 167(8) to permit the
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`extension of modified contribution rates (as negotiated by the State and unions
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`representing State employees) to retirees, and the New York Civil Service
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`Commission, by promulgating amended regulations that reduced the State’s
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`contribution rates to retirees’ NYSHIP coverage, thereby invalidated any contrary
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`Case 18-3193, Document 148, 11/06/2020, 2969237, Page16 of 78
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`contractual obligations under the State’s CBAs (as opposed to merely breaching
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`those obligations) is one that, in our view, is both novel and uniquely suited to
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`the judgment of the State’s judiciary. Therefore, and for the reasons explained
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`below, we certify two questions to the New York Court of Appeals and reserve
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`decision on this case.6
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`I.
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`Standard of Review
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`“We review a district court’s decision granting summary judgment de novo,
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`6 We also reserve decision in the other ten cases on appeal, which were brought
`by other unions and their retired former members, and which were briefed and
`argued in tandem with this appeal: Kreh v. Cuomo (18-3220-cv); Spence v. Cuomo
`(18-3140-cv); New York State Law Enforcement Officers Union Council 82 v. Hite (18-
`3142-cv); New York State Correctional Officers and Police Benevolent Association v.
`Cuomo (18-3151-cv); New York State Police Investigators Association v. Cuomo (18-
`3066-cv); Police Benevolent Association of New York State v. Cuomo (18-3183-cv);
`Police Benevolent Association of New York State Troopers v. Cuomo (18-3049-cv);
`Roberts v. State of New York (18-3172-cv); New York State Court Officers Association
`v. Hite (18-3221-cv); and Brown v. Cuomo (18-3122-cv; 18-3166-cv; 18-3345-cv).
`Although each of these cases raises different issues turning in part on the
`different terms of CBAs entered by different groups of State employees, the
`instant case – as suggested by the fact that it has been treated throughout this
`litigation as the lead case – presents questions the resolution of which will
`significantly advance, if not control, the dispositions of the other cases. We
`therefore think it prudent to certify questions to the New York Court of Appeals
`in this case, rather than to burden that Court with a host of variations on the most
`significant theme common to all of the cases. We expect that once those questions
`are resolved, the principles of state law determined in this case will enable us to
`resolve the issues in the remaining cases without further resort to certification.
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`and will affirm only if the record, viewed in the light most favorable to the non-
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`movant, shows no genuine dispute of material fact and demonstrates the
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`movant’s entitlement to judgment as a matter of law.” FIH, LLC v. Found. Capital
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`Partners LLC, 920 F.3d 134, 140 (2d Cir. 2019) (internal quotation marks omitted).
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`We also review issues of contractual interpretation de novo. Id.
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`II.
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`Determination of Applicable Law
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`The relationship between Plaintiffs’ state-law and federal constitutional
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`claims, and between the roles of state and federal law in resolving those claims, is
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`somewhat complicated. We therefore begin our analysis by clarifying that
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`relationship and identifying the legal authorities that we apply to each of these
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`claims.
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`Both Plaintiffs’ claim for contractual impairment, in violation of the
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`Contract Clause, and their claim for breach of contract, in violation of New York
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`law, rest initially on a single, disputed premise: that CSEA’s CBAs with the State
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`between 1982 and 2011 guaranteed to employees upon their retirement a vested
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`right to retain health-insurance coverage at the specific contribution rates set
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`forth in those agreements. Thus, our first task in resolving both claims is one of
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`contractual interpretation.
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`Under both federal law and New York law, “[w]e interpret collective-
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`bargaining agreements . . . according to ordinary principles of contract law.” M &
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`G Polymers USA, LLC v. Tackett, 574 U.S. 427, 435 (2015); see Kolbe, 22 N.Y.3d at 353
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`(“[W]e must look to well established principles of contract interpretation to
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`determine whether the parties intended that the contract give rise to a vested
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`right.”). The National Labor Relations Act (“NLRA”) guarantees to employees
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`“the right to self-organization, to form, join, or assist labor organizations, [and] to
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`bargain collectively” and prohibits employers from refusing to bargain
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`collectively with its employees’ representatives. 29 U.S.C. §§ 157, 158(a)(5). The
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`Labor Management Relations Act (“LMRA”) “grants federal courts jurisdiction to
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`resolve disputes between employers and labor unions about collective-
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`bargaining agreements,” Tackett, 574 U.S. at 434. See 29 U.S.C. § 185(c). It also
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`“ensures that federal law will be the basis for interpreting collective-bargaining
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`agreements.” Hawaiian Airlines, Inc. v. Norris, 512 U.S . 246, 262 (1994) (internal
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`quotation marks omitted). But the protections of the NLRA are available to
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`private-sector workers, not to state employees. See 29 U.S.C. § 152(2). New York
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`State employees’ right to bargain collectively is provided for solely by New York
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`law. See N.Y. Civ. Serv. Law § 203. The CBAs between CSEA and the State are
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`therefore contracts created under and governed by New York law.
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` “Contract law is a general area of law[] traditionally regulated by the
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`states.” Geweke Ford v. St. Joseph’s Omni Preferred Care Inc., 130 F.3d 1355, 1359 (9th
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`Cir. 1997); see also Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287, 293 (3d Cir.
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`2001), abrogated on other grounds by Hall Street Assocs., L.L.C. v. Mattel, Inc., 552
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`U.S. 576, 584 n.5 (2008) (“Contract law is mostly state law, and it varies from state
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`to state.”) While principles of contractual interpretation are often consistent
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`between states (and, when a contract is governed by federal law, between state
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`and federal law), state courts and legislatures retain the authority to diverge from
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`traditional contract-law principles. Federal courts, when applying state law, are
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`bound to apply the law as established by the state’s highest court. “State
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`autonomy and the relationship between state and federal authority would be
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`impaired were the federal courts to set state policy independently and follow
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`their own instincts as to state contract law.” Pineman v. Oechslin, 637 F.2d 601, 606
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`(2d Cir. 1981).
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`In analyzing Plaintiffs’ breach-of-contract claim, which alleges that
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`Defendants violated state contract law by breaching the terms of CBAs executed
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`under New York law, we are therefore obligated to apply New York law. The
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`parties discuss two recent decisions of the Supreme Court of the United States
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`interpreting private-sector CBAs under federal law with respect to the vesting of
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`retiree health benefits, M & G Polymers USA, LLC v. Tackett, 574 U.S. 427 (2015)
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`and CNH Industrial N.V. v. Reese, 138 S. Ct. 761 (2018). But those decisions are not
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`controlling insofar as we apply New York law to interpreting the CBAs here.
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`However much respect we, and the New York courts, accord to pronouncements
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`of the United States Supreme Court as highly persuasive authority, its
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`interpretations of CBAs created under the authority of the NLRA are neither
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`based on New York law nor binding on New York courts, when such courts
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`interpret CBAs created under the authority of New York statutes in accordance
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`with New York’s understanding of contract law principles. In applying New
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`York law to Plaintiffs’ breach-of-contract claim, we are similarly obliged to regard
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`the Supreme Court’s decisions in Tackett and Reese as persuasive rather than
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`binding authority.
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`In evaluating Plaintiffs’ federal constitutional claim for contractual
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`impairment, “the existence of the contract and the nature and extent of its
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`obligation become federal questions for the purposes of determining whether
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`they are within the scope and meaning of the Federal Constitution, and for such
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`purposes finality cannot be accorded to the views of a state court.” Irving Trust
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`Co. v. Day, 314 U.S. 556, 561 (1942). Because the Contract Clause protects only
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`those contractual obligations recognized as such by the federal Constitution, “in
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`order that the constitutional mandate may not become a dead letter, we are
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`bound to decide for ourselves whether a contract was made [and] what are its
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`terms and conditions.” State of Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 100
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`(1938). In this way, states may not “evade the restraint of the [Contract] Clause by
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`determining, through legislation or adjudication, that an arrangement previously
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`regarded as a contract was no longer