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Classified Employees Ass'n. v. Matanuska-Susitna Borough School Dist.

Supreme Court of Alaska

April 3, 2009

MATANUSKA-SUSITNA BOROUGH SCHOOL DISTRICT, Matanuskasusitna School Board, and Chief School Administrator Robert Doyle, Appellees.

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[Copyrighted Material Omitted]

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Helene M. Antel, Palmer, for Appellant.

David M. Freeman, Scott M. Kendall, Holmes Weddle & Barcott, P.C., Anchorage, for Appellees.

Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.


MATTHEWS, Justice.


The Matanuska-Susitna Borough School District decided to provide custodial services for its schools through an independent contractor rather than by employing custodial workers. The main question in this case is whether the District's outsourcing decision is arbitrable under its collective bargaining agreement with the Classified Employees Union. We conclude that it is not, primarily because no reasonable argument has been made that outsourcing is prohibited under the agreement. We therefore affirm the superior court's decision.


A. The Parties and the Collective Bargaining Agreement

The Classified Employees Association (CEA) is a union that represents between six hundred and seven hundred employees in the Matanuska-Susitna Borough School District (District) " in a broad range of clerical, administrative,

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maintenance, special education, and computer services positions." The CEA and the District are parties to a collective bargaining agreement (CBA) that defines the terms and conditions of employment applicable to the CEA's members. The agreement at issue was in effect from July 1, 2005, to June 30, 2008. In the first article of the agreement, the CEA and the District state their aim as " promot[ing] harmonious and cooperative relations between the employer and the employees." The agreement also attempts to " provide a basis for the adjustment of matters of mutual interest covered by this agreement by means of amicable discussion."

Article XI of the agreement outlines the procedures for dealing with grievances made by employees. A grievance is defined as

a claim by an employee based upon an event or condition which affects the conditions or circumstances under which an employee works caused by misinterpretation or inequitable application of District policies or procedures on personnel matters directly pertaining to these conditions or circumstances, and/or the terms of this Agreement and amendments thereof.

Article XI sets out the stages in the grievance process. The fourth and final stage of the process allows for the parties to " submit the issue to arbitration" if the issue has not been resolved by the grievant's department director or administrator, the superintendent, or by mediation. Under the terms of Article XI the decision of the arbitrator " shall be final and binding upon both parties." The arbitrator " can add nothing to, nor subtract anything from the Agreement between the parties or any policy of the School Board."

Article XIII, the " Savings Clause," indicates that the " Labor Agreement contains the full and complete agreement between the parties on all subjects upon which the parties did bargain or could have bargained." The article continues that the " Agreement terminates all prior agreements and understandings" made between the parties. The agreement contains no clause describing specific powers that are reserved to management.

B. Bargaining History

In 1993 the District attempted to add a provision to the collective bargaining agreement which stated that " [t]he parties expressly agree that nothing in this Agreement shall be construed as prohibiting the District from contracting with independent contractors for activity drivers." The CEA did not agree to this language and the clause was not included in the contract; however, the CEA consented to a change to the 1993 agreement that allowed for outsourcing bus drivers if " an activity bus driver resigns, transfers, or takes a long term leave of absence."

The 2005-2008 agreement does not have any provision dealing with the outsourcing of activity drivers (or any specific provisions for outsourcing) because, according to the CEA, " the outsourcing of activity bus drivers was not successful." But apparently the question of outsourcing was a much-discussed subject during the negotiations for the 2005-2008 agreement. Robert Johnson, who was a member of the District's bargaining team and the school board in 2004, stated that " [o]utsourcing was [a] ... key issue[ ]" for both the District and the CEA in the negotiations. He said that the District " wanted to be able to outsource" CEA work in the new agreement but the " CEA members didn't want to change the way things had been done in the past" and " asked for the District's assurances that bargaining unit work would not be outsourced." Johnson claimed that the District gave assurances that work would not be outsourced,[1] although " [t]he parties did not come up with contract language to commemorate their agreement."

C. The District's Decision To Outsource and Initial Court Proceedings

In December 2005 the District advertised that it would " consider proposals for Custodial Services and Light Duty School maintenance for specified facilities within the School District." NANA Management Services submitted a proposal, and the District entered into a contract with NANA. In March 2006

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the CEA filed a grievance against the District under the CBA. CEA specified that the " nature of the grievance" was that " [t]he proposed contracting-out of bargaining unit work constitutes a violation of the parties['] written and express verbal agreement on the subject." It also alleged that " the District has violated its duty to negotiate on mandatory subjects in good faith." Although the Matanuska-Susitna School Board debated a motion to terminate the contract with NANA, the motion failed. The District then went ahead with the contract, replacing its custodial workers with contract employees from NANA.

The parties, in anticipation of future arbitration, selected an arbitrator and set a hearing date of October 25, 2006. But Before the CEA's claim reached arbitration, the District withdrew from the grievance process, claiming " the grievance issues [were] non-arbitrable" and stating its intention to take the matter to superior court for a declaratory judgment that outsourcing was not arbitrable.

In response, the CEA filed suit to force the District to participate in the grievance proceeding, including " the arbitration hearing ... scheduled for October 25, 2006." The CEA also alleged that state law, AS 14.14.060(f), prohibits the outsourcing of school district custodial work and sought a declaratory judgment to that effect. The District denied the CEA's allegations and counterclaimed, asking for " [a]n order declaring as a matter of law that the grievance is based on a managerial decision that is not a matter for arbitration under the CBA." The District later moved for declaratory judgment: in its memorandum in support of declaratory judgment, it argued that the CBA did not include an agreement to arbitrate decisions related to outsourcing and that such decisions were not a matter of mandatory bargaining under Alaska law. In its opposition to the District's motion and cross-motion for declaratory judgment, the CEA stressed " [t]he presumption in favor of arbitration" that has been " cited with favor by the Alaska Supreme Court on numerous occasions." It argued that the grievance clause of the collective bargaining agreement should be interpreted to encompass the decision by the District to outsource custodial services. There were further replies and responses by each party.

On October 24, 2006, Superior Court Judge Beverly W. Cutler decided in favor of the District as a matter of law, treating the parties' filings as motions for summary judgment because the parties had " stipulated that there are no genuine issues of material fact in dispute." The court also concluded that AS 14.14.060(f) does not prohibit the school board from privatizing its custodial services. Accordingly, the superior court declined to grant the declaration sought by the CEA.

D. The Superior Court's Decision and the Motion To Reconsider

The superior court's memorandum of decision did " not attempt to address each and every point raised" in the parties' briefing. After ruling that the question of arbitrability was a question for the courts to resolve, the superior court declared it was " persuaded by the District's reasoning." The court said that the grievance clause of the CBA left " no doubt" that it " was not intended to apply to disputes over decisions to privatize the custodial workforce." The court in particular found it implausible that the decision to outsource could be considered a dispute about the conditions under which employees work. The court stated that " [t]he plain language of the clause indicates that the parties designed it to address grievances by employees related to unfair treatment by the District relating to the wages, hours and conditions of employment." It concluded that the CEA's interpretation of the contract was " overbroad" and found the power to outsource was " within the District's overarching power to manage the economical well-being of the borough's school system." Accordingly, the superior court granted the District's request to vacate the scheduled October 26 arbitration.

The CEA filed a motion to reconsider, arguing that the court failed to give weight to the presumption in favor of arbitrability, that it too narrowly interpreted the CBA, and that it ignored the bargaining history

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between the parties. The superior court denied the motion for reconsideration.

The CEA appeals.


The question of whether an issue is arbitrable is a question of law subject to de novo review.[2] We adopt the rule of law that is " most persuasive in light of precedent, reason, and policy." [3] We will affirm a lower court's grant of summary judgment if there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.[4] We draw all reasonable inferences in favor of the non-moving party.[5]


A. The Superior Court's Grant of Summary ...

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