McRae v. New York State Thruway Authority, 687 F. App'x 22

Background

Six Thruway Authority M/C employees sued after the Authority did not pay salary increases, step advances, and longevity payments slated for 2009–2011 under a 2008 Board resolution (the “2008 Compensation Increases”).
Plaintiffs alleged a constitutionally protected property interest in those compensation increases and related retirement benefits and wages based on the 2008 Resolution and Executive Instruction.
The Thruway Authority moved to dismiss under Fed. R. Civ. P. 12(b)(6); the district court granted the motion for failure to state a due process claim.
Plaintiffs appealed, arguing the Resolution and repeated assurances created either a vested right or an implied contract entitling them to the increases.
The Second Circuit reviewed de novo and assessed whether the 2008 Resolution and related materials created a protected property interest under the Due Process Clause.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2008 Resolution created a constitutionally protected property interest in the 2009–2011 compensation increases	The Resolution and Executive Instruction committed to increases; language that salaries “will be increased” and prior assurances created a vested entitlement	The Resolution and enabling law reserved discretion to the Board and Executive Director; increases are discretionary under state law and policy	The court held no protected property interest: the Resolution and related documents reflect discretionary, not vested, authority
Whether an implied contract based on policy/practice and assurances created entitlement	Plaintiffs rely on an employer’s policy/practice and individual assurances (Ezekwo theory) to show an implied contract and detrimental reliance	Authority argues no consistent practice guaranteeing increases, no detrimental reliance pleaded, and the benefit is only financial	The court held plaintiffs failed to plead facts showing an implied contract or detrimental reliance; Ezekwo is distinguishable
Whether salary increases constitute non-discretionary property under due process precedents	Plaintiffs say language and prior Board actions made increases virtually assured	Defendants cite Taylor Law, Salary Manual, and statutory authority that authorize unilateral, discretionary action	The court held salary increases are discretionary absent facts showing intent to fetter future power; plaintiffs did not plead such facts
Whether alleged retirement benefits and wages tied to the increases are protected property	Plaintiffs asserted those downstream benefits were earned based on the increases	Defendants argued those benefits depend on discretionary increases and thus are not vested	The court held those benefits were not protected because the underlying increases were discretionary

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (establishes plausibility standard for complaints)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a claim plausible on its face)
Vasquez v. Empress Ambulance Serv., Inc., 835 F.3d 267 (2d Cir.) (standard of review on Rule 12(b)(6))
Bernheim v. Litt, 79 F.3d 318 (2d Cir.) (discretionary salary increases not protected property)
Leventhal v. Knapek, 266 F.3d 64 (2d Cir.) (salary increases are discretionary unless virtually assured)
Town of Castle Rock v. Gonzales, 545 U.S. 748 (financial entitlements distinguished from protectable property interests)
Ezekwo v. N.Y.C. Health & Hosp. Corp., 940 F.2d 775 (2d Cir.) (policy/practice can create implied contract where reliance and non-financial interests exist)
Pa. R.R. Co. v. New York, 11 N.Y.2d 504 (N.Y.) (resolutions construed as unilateral policy statements not creating vested rights)