Public Safety Employees Association v. City of Fairbanks

          Appeal from the Superior Court No. 4FA-15-02868 CI of the State of Alaska, Fourth Judicial District, Fairbanks, Michael P. McConahy, Judge.

          Molly C. Brown and Margaret Simonian, Dillon & Findley, P.C., Anchorage, for Appellants and Cross-Appellees.

          Paul J. Ewers, City Attorney, Fairbanks, for Appellee and Cross-Appellant.

          Notice of nonparticipation filed by Kimberly D. Rodgers, Assistant Attorney General, Anchorage, and Jahna Lindemuth, Attorney General, Juneau, for Appellee.

          Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

          OPINION

          WINFREE, JUSTICE.

         I. INTRODUCTION

         This appeal requires us to decide whether a city council's reconsideration and ultimate rejection of a labor agreement constituted an unfair labor practice under Alaska's Public Employer Relations Act (the Act). An Alaska Labor Relations Agency (ALRA) panel concluded a violation occurred, and on appeal the superior court affirmed that ruling. But because the record does not support a finding of bad faith on the city's part, and because the failure to ratify the agreement alone cannot be a violation of the Act, we reverse the superior court's decision affirming the ALRA panel's ruling.

         II. FACTS AND PROCEEDINGS

         A. Facts

         This case arises from disputed collective bargaining negotiations between City of Fairbanks and Public Safety Employees Association, AFSCME Local 803 (PSEA). PSEA is the labor representative for the City's police and dispatch employees.

         The City is governed by a home-rule charter vesting "executive and administrative power" in the mayor^[1] and "all [other] powers" in the city council.^[2] In 2013 the City and PSEA began negotiating a collective bargaining agreement for fiscal years 2014 through 2017. Then-Mayor John Eberhart was the lead negotiator for the City's bargaining team, ^[3] and PSEA was represented by its internally selected bargaining team.

         Mayor Eberhart and his bargaining team acted in concert with the city council during negotiations.^[4] It is undisputed that negotiations could not move forward until the city council tentatively approved the City's bargaining position. During months of negotiations the City's bargaining team would reach tentative agreement on financial terms with PSEA and then would present those terms to the city council for tentative approval in executive session.

         The negotiating teams reached a tentative agreement; on August 11, 2014, in accordance with a City ordinance, ^[5] the mayor presented the agreement to the city council in open public session for ratification as Ordinance 5953. The city council advanced the ordinance to its next regular meeting;^[6] in the interim the PSEA membership voted to approve the agreement.

         The city council heard public testimony about the agreement on August 25. Five people commented, focusing on the City's ability to fund the agreement, how the agreement would affect spending on other labor agreements, the need to attract new employees with higher wages, and the feasibility of reduced work hours. Council members then questioned City employees about the contract, focusing almost entirely on the proposed agreement's cost. The discussion ended with council members debating whether the agreement would save money or cost money in the long run and, if the latter, whether other benefits outweighed the cost. The city council ultimately voted 4 to 3 to adopt the ordinance, with Mayor Eberhart casting the tie-breaking vote. Before concluding the August 25 session, Mayor Eberhart introduced Ordinance 5955, which appropriated funds for the labor agreement. Ordinance 5955 was advanced by a 4 to 2 vote, and the meeting was adjourned at 12:05 a.m. on August 26.

         On August 27 then-Council Member Jim Matherly filed a written notice of reconsideration of Ordinance 5953, apparently believing that, because the August 25 meeting had adjourned after midnight, a motion for reconsideration would remain timely through August 27. But the City Clerk rejected his motion as untimely because it was not filed within 24 hours of the vote.^[7]

         Council Member Matherly took up the issue again at the city council's next meeting, on September 8, moving to suspend the rules of procedure to allow reconsideration of Ordinance 5953.^[8] Council Member Hilling requested clarification on suspension of the rules, and the Mayor, City Attorney, and City Clerk provided clarification based on the Fairbanks General Code and Robert's Rules of Order. The motion to suspend the rules then passed by a 5 to 1 vote.

         Once the city council rules were suspended, Council Member Hilling moved to reconsider Ordinance 5953. Council Member Matherly explained that after the August 25 vote he had reexamined the contract and that he was concerned it was overly costly to the City. He further explained that he thought his earlier motion to reconsider had been timely. Before voting on reconsideration, city council members asked several procedural questions of the Mayor, City Attorney, and City Clerk, including how many times an ordinance could be reconsidered and whether public comment was allowed prior to the vote. The three responded that an ordinance could be reconsidered only once regardless of the subsequent vote's outcome and that if the motion to reconsider carried, Ordinance 5953 would be reopened as if the original vote had never taken place. The City Clerk advised that allowing public comment was the city council's prerogative, and the city council then called for additional public comment before voting.

         Nine people commented on the motion to reconsider. Most comments were focused on the cost to the City; people commented that they thought the agreement was too expensive, that the City could not afford the agreement, and that the agreement's costs were greater than the City had been promised during negotiations. City council members then questioned City staff about the City's ability to pay under the agreement's terms. City employees reported that the cost of the agreement was likely higher than calculated during negotiations, that approving the agreement would result in pressure for higher wages in other collective bargaining agreements, and that costs would drastically increase if either party opted out of the agreement. The city council debated the motion, with all six council members focusing comments on the cost to the City. The city council then voted 4 to 2 to reconsider Ordinance 5953.

         After the motion to reconsider carried, but before Ordinance 5953 was revoted on, Council Member Hilling moved to postpone the revote to the city council's September 22 meeting. The motion was amended to further postpone the revote to November 3, which Council Member Hilling praised as giving new city council members time to "get up to speed" on the contract dispute before voting.^[9] The motion to postpone consideration of Ordinance 5953 carried 5 to 1. The city council then approved an amended version of the previously advanced funding Ordinance 5955, increasing the police department's funding by $5, 939 but explicitly rejecting all increases contemplated in the tentative labor agreement.

         On November 3 the newly constituted city council voted unanimously not to adopt Ordinance 5953; the proposed collective bargaining agreement with PSEA thus was not approved by the city council.

         B. Proceedings

         A week after the city council's final vote, PSEA filed a charge with the ALRA; PSEA asserted the City had refused to bargain in good faith.^[10] PSEA requested that the ALRA find the city council's suspension of the rules and subsequent reconsideration of Ordinance 5953 was an unfair labor practice and order the City to let the tentative agreement stand as the final collective bargaining agreement between the City and PSEA. In April an ALRA hearing officer found probable cause to support the charge.

         In November an ALRA three-member board panel decided 2 to 1 that the City had committed an unfair labor practice and ordered the city council to execute the collective bargaining agreement.^[11] The ALRA panel concluded that: the City was accountable for all actions of the city council; the city council had unreasonably delayed, or "strung out, " negotiations;^[12] under the totality of the circumstances the city council's actions constituted bad faith; an enforceable contract was entered into between the City and PSEA after the first vote on August 25, 2014; the City had no valid excuse to rescind the contract; and the remedy for the violation was enforcement of the tentative agreement.^[13] The ALRA panel ordered the City to "execute the collective bargaining agreement it reached with [PSEA], and that it ratified on August 25, 2014."^[14]

         The City appealed the ALRA panel's decision to the superior court. The superior court held that the city council could not be a public employer under the Act^[15]but that the ALRA's material factual findings were supported by substantial evidence and the ALRA otherwise had authority to order execution of the tentative agreement.

         PSEA appeals the superior court's ruling that the city council is not a public employer under the Act. The City cross-appeals the court's affirmance of the ALRA panel's finding of an unfair labor practice and its order that the City execute the collective bargaining agreement.

         III. STANDARD OF REVIEW

         When a superior court acts as an intermediate appellate court in an administrative matter, "we independently review the merits of the agency's decision."^[16]We review an agency's factual findings to determine "whether they are supported by substantial evidence, " which is "such relevant evidence as a reasonable mind might accept as adequate to support" the agency's conclusion.^[17] " 'We view the evidence in favor of the findings, ' and we will not choose between competing inferences or evaluate the strength of the evidence."^[18] "We will look only to determine if substantial evidence exists in the record, taking into account evidence in the record detracting from the supporting evidence's weight."^[19] "The substantial evidence test is highly deferential, but we still review the entire record to ensure that the evidence detracting from the agency's decision is not dramatically disproportionate to the evidence supporting it such that we cannot 'conscientiously' find the evidence to be 'substantial.' "^[20]

         We review an agency's legal conclusions using our independent judgment only if "the agency's specialized knowledge and experience would not be particularly probative."^[21] In all other cases we apply the "reasonable basis standard, " deferring to an agency's legal interpretation "so long as it is reasonable."^[22]

         The parties strenuously dispute the proper application of these principles to the issues in this case. The City urges us to use our independent judgment in determining whether the city council is a public employer and whether the ALRA had authority to order execution of the collective bargaining agreement. The City also argues that whether an unfair labor practice occurred is a legal question within the ALRA's expertise, subject to rational basis review. PSEA counters that we should review the first two questions under the rational basis standard, and that whether an unfair labor practice occurred is a factual question subject to the substantial evidence standard.

         The ultimate issue we decide in the City's appeal is whether the City violated the Act by committing an unfair labor practice.^[23] That is a legal question, well within the scope of the ALRA's "specialized knowledge and experience."^[24] We therefore apply the reasonable basis standard to the ALRA panel's conclusion that the City violated AS 23.40.110(a)(5).^[25] The factual findings the ALRA panel made in reaching that conclusion, including whether the City bargained in bad faith and whether it strung out negotiations, are reviewed for substantial evidence.^[26]

         PSEA's appeal does not require such deference. The city council is a public employer under the Act only if the city council is a "political subdivision of the state."^[27] "Political subdivision" is a "non-technical statutory term" whose meaning can be determined without specialized agency expertise.^[28] We therefore interpret the meaning of AS 23.40.250(7) using our independent judgment, adopting "the rule of law that is most persuasive in light of precedent, reason, and policy."^[29]

         IV. DISCUSSION

         A. The City Council Is Not A Public Employer, But The ALRA's Unfair Labor Practice Order Was Against The City, Not The City Council.

         After the superior court held that the city council is not a public employer - even while the court affirmed the ALRA panel's decision - the parties began disputing the significance of the superior court's holding. The City argues that "[b]ecause the [c]ity [c]ouncil is not a[n] [Act] public employer, there can be no unfair labor practice." PSEA argues that "ALRA's decision stands even if this Court finds that the [c]ity [c]ouncil is not a 'public employer, ' " but it nonetheless contends that the superior court must be reversed.

         Our analysis begins with the plain language of the Act. Section 110(a)(5) provides that a "public employer or an agent of a public employer may not. .. refuse to bargain collectively in good faith with an organization that is the exclusive representative of employees in an appropriate unit."^[30] "Public employer" is defined in § 250(7) as:

the state or a political subdivision of the state, including without limitation, a municipality, district, school district, regional educational attendance area, board of regents, public and quasi-public corporation, housing authority, or other authority established by law, and a person designated by the public employer to act in its interest in dealing with public employees.^[31]

         We first determine whether the city council is "a political subdivision of the state."^[32]

         The answer to this question is no. The term "political subdivision, " as used throughout Alaska Statutes, does not contemplate legislative bodies as political subdivisions of the state. Instead, legislative bodies are treated as distinct subparts of a broader political subdivision, like a municipality. For instance, § 255 of the Act notes: "[The Act is] applicable to organized boroughs and political subdivisions of the state, home rule or otherwise, unless the legislative body of the political subdivision, by ordinance or resolution, rejects having the provisions . . . apply."^[33] Similarly, AS 39.35.950 provides: "The request [to become an employer in the Public Employees' Retirement System plan] shall be made after adoption of a resolution by the legislative body of the political subdivision . . . ."^[34] Also similarly, AS 26.23.500 provides: "A political subdivision may withdraw from participation in the Alaska instrastate mutual aid system .... To withdraw, the governing board of apolitical subdivision shall adopt a resolution . . ., "^[35] These are only a few examples of the distinction present in our statutes; the legislature has plainly not contemplated that legislative bodies are political subdivisions. Therefore the city council is not a public employer under the Act.

         This holding, however, does not resolve the real issue in this case. The ALRA panel did not decide that the city council was a public employer - such a conclusion cannot be found in its finding of facts, conclusions of law, or analysis. On the contrary, its decision plainly states that "[t]he City of Fairbanks is a public employer under AS 23.40.250(7)"; "the City of Fairbanks violated AS 23.40.110(a)(5)"; and "[t]he process the City applied under the facts of this case supports a conclusion that it bargained in bad faith."^[36]

         What the ALRA panel did conclude is that the City should be held accountable for the city council's actions, and it did so by finely parsing whether the actions of a legislative body could be attributed to a political subdivision at large. First, the ALRA panel noted that "[i]n the typical scenario, employees of the executive branch of a state or political subdivision comprise the 'public employer' in a negotiating process."^[37] Second, it determined that "the facts here indicate the [city council], the [C]ity's legislative branch, was actively involved in negotiations with PSEA."^[38] Third, it concluded that "[t]his active involvement makes the [c]ouncil members' actions accountable in determining whether there was an unfair labor practice violation in this case."^[39] This reasoning was not a legal conclusion that the city council itself had become the public employer, but rather the ALRA panel's resolution of the "threshold issue" of "whether the [city council]'s actions in the collective bargaining process . . . constitute actions by a public employer under [the Act]."^[40]

         We therefore conclude the city council is not a public employer under the Act, but the ALRA panel's unfair labor practice finding was directly against the City. There is no dispute that the City is a public employer; as such we must decide the City's cross-appeal.

         B. The Conclusion That The City Committed An Unfair Labor ...