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COURT OF APPEALS
DECISION
DATED AND FILED
March 9, 2011
A. John Voelker
Acting Clerk of Court of Appeals
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NOTICE
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official
Reports.
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See Wis. Stat. § 808.10 and Rule 809.62.
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Appeal No.
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STATE OF WISCONSIN
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IN COURT OF
APPEALS
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Washington
County,
Petitioner-Appellant,
v.
Wisconsin Employment
Relations Commission,
Respondent-Respondent,
Service Employees International Union Local 150,
Interested Party-Respondent.
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APPEAL
from an order of the circuit court for Washington County: Paul
v. malloy, Judge. Reversed.
Before Brown, C.J., Neubauer, P.J., and Reilly, J.
¶1 REILLY, J. Since 1974
the collective bargaining agreements between Washington County
and the Service Employees International Union Local 150 have given the County
the right to lay off employees or contract out for goods and services. The issue in this appeal is whether the
County had a unilateral duty during negotiations over the 2007-08 collective
bargaining agreement to disclose to the Union
that the County was seriously considering privatizing its laundry and
housekeeping services in the near future.
The Union argues that the County
negotiated in bad faith by not notifying it that the County was contemplating
subcontracting during the term of the 2007-08 collective bargaining
agreement. The County claims that it had
no such duty. The Wisconsin Employment
Relations Commission (WERC) ruled that the County did have a duty and that the
County negotiated in bad faith. The
circuit court affirmed. We hold that as
there is nothing in the record to indicate that the Union
brought up the issue of subcontracting during negotiations, the County did not
have a duty to disclose its intention to subcontract.
FACTS
¶2 Washington County has long owned and operated a nursing home
facility called Samaritan
Health Center. Many of the employees at Samaritan are
represented by the Union. The Union
and the County have negotiated the terms of collective bargaining agreements
since 1974. The collective bargaining agreements,
including the 2007-08 agreement at issue, have always included the contractual
right of the County to lay off employees and the right to contract out for
goods or services. Specifically, the
“management rights” article states that “[t]he County retains and reserves the
sole right to … layoff employees [and] to contract out for goods or services.”
¶3 In 2006, Samaritan was operating at a loss exceeding
$600,000. To reduce costs, the County
initially issued layoff notices to five Union members. Notice of the layoffs was also given to the Union in October 2006 during a bargaining session over
the 2007-08 collective bargaining agreement.
The Union responded by filing a
grievance alleging that the proposed layoffs violated seniority status
procedures and were done to avoid paying benefits. The County rescinded the layoffs in November
2006 and notified the affected Union employees that the County would look to
“other avenues to achieve operational savings in 2007. Rescinding your layoff is not a guarantee of
future employment.”
¶4 The collective bargaining agreement provides that five months
prior to the expiration of an agreement the Union is to give written notice to
the County if the Union wishes to negotiate
changes to the existing agreement. The
record reflects that the Union did not give
written notice, at any time, of any intent to change the existing
agreement. On December 18, 2006, the
County and the Union reached a tentative
agreement to extend the collective bargaining agreement through 2007-08. The agreement was formally ratified by the
County and the Union in early January
2007. The 2007-08 collective bargaining
agreement continued to grant the County the right to lay off employees and to
contract out for goods or services. The Union and the County agreed that the collective
bargaining agreement for 2007-08 was the “complete agreement” between them, and
that
[t]he
parties acknowledge that during the negotiations which resulted in this
Agreement, each had the unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed from the area of
collective bargaining; and that the understandings and agreements arrived at by
the parties, after the exercise of that right and opportunity, are fully set
forth in this Agreement. Each party,
therefore, waives the right to further bargaining on any subject or matter not
specifically referred to or covered in this Agreement, regardless if either the
subject or matter was known or contemplated by the parties at the time this
Agreement was negotiated.
¶5 Prior to ratifying the 2007-08 collective bargaining
agreement, the County internally met and discussed the issue of subcontracting
laundry and housekeeping services to determine whether there would be cost
savings. On April 4, 2007, the County authorized
a formal request for a proposal to subcontract Samaritan’s laundry and
housekeeping services. The Union filed a grievance on May 18, 2007, alleging that
the County’s proposed subcontracting violated the collective bargaining
agreement. The County proceeded ahead
and on June 7, 2007, subcontracted its housekeeping, custodial, and laundry
services to a private vendor, saving the County $234,165. The County mailed layoff notices to eighteen
affected Union members. The Union
responded by filing a complaint with WERC, alleging that the County committed
prohibited labor practices by failing to negotiate with the Union over the
proposed subcontracting in violation of Wis.
Stat. § 111.70(3)(a)1, 4 and 5 (2009-10)
of the Municipal Employee Relations Act (MERA).
¶6 Two disputes were before WERC: the Union’s grievance alleging that the
County breached the 2007-08 collective bargaining agreement and the Union’s prohibited practices complaint alleging that the
County violated
Wis. Stat. § 111.70(3)(a)1, 4, and
5 by unilaterally subcontracting the laundry and housekeeping operations at
Samaritan. The grievance was a matter
for arbitration through WERC per the collective bargaining agreement, whereas
the prohibited practices complaint was a matter for decision by declaratory
ruling of WERC per § 111.70(4)(b). The
parties agreed that Richard McLaughlin, a member of the WERC staff, would serve
as the arbitrator on the grievance matter.
WERC subsequently appointed McLaughlin as the hearing examiner in the
prohibited practices complaint.
¶7 Following an evidentiary hearing, McLaughlin denied the Union’s grievance after he concluded that the collective
bargaining agreement gave the County the power to subcontract and that the
County’s decision to subcontract was based solely on a desire to reduce labor
costs. The Union produced no evidence
that the County acted out of hostility towards the Union. Because the Union did not appeal McLaughlin’s
denial of the Union’s grievance, that issue is
not before this court.
¶8 In his capacity as the hearing examiner, McLaughlin also
dismissed the Union’s prohibited practices
complaint. McLaughlin first concluded
that the County did not violate its duty to bargain because the collective
bargaining agreement clearly addressed the issue of subcontracting such that
each party was entitled to rely on the bargain that it struck. Second, McLaughlin concluded that it was not
bad faith when the County failed to inform the Union
during negotiations that the County was considering subcontracting.
¶9 The Union appealed McLaughlin’s dismissal of the prohibited
practices complaint to WERC pursuant to Wis.
Stat. § 111.07(5). Upon review,
WERC modified McLaughlin’s findings of fact to reflect that the County did not
inform the Union during negotiation over the
2007-08 collective bargaining agreement that the County was “seriously”
considering subcontracting. Washington County, No.
32185-B at 2 (WERC Jan. 20, 2009). Based
upon this modification of fact, WERC concluded that the County failed to
bargain in good faith in violation of Wis.
Stat. § 111.70(3)(a)4, as the County had a duty to disclose that it
was “seriously” considering subcontracting as a way to reduce operating
costs. Washington County
at 14. WERC also noted that it was
limiting its holding to the facts of the case:
“We are not establishing a per se rule regarding a duty to
disclose any and all actions that either party is seriously considering taking
during the term of a contract then under negotiation.” Id. at
17.
¶10 The County appealed WERC’s decision to the circuit court
pursuant to Wis. Stat. § 227.52. The circuit court affirmed WERC’s decision
that the County had a duty to disclose to the Union
that the County was considering subcontracting.
The County appeals.
STANDARD OF REVIEW
¶11 We review the decision of WERC, not the circuit court. See Milwaukee Symphony Orchestra, Inc. v. DOR,
2010 WI 33, ¶30, 324 Wis. 2d 68, 781 N.W.2d 674. An administrative agency’s findings of fact
are reviewed using the “substantial evidence” standard. Id.,
¶31. We will only set aside WERC’s
findings of fact if we determine that they were unreasonable. See id. We
accept WERC’s finding of fact that the County did not inform the union during
negotiations over the 2007-08 collective bargaining agreement that the County
was seriously considering subcontracting.
¶12 In contrast to a finding of fact, an agency’s interpretation of
a statute is subject to one of three levels of deference. Id.,
¶¶32, 34. The most deferential standard
is “great weight” deference. This
standard applies when: (1) the agency is
charged by the legislature with administering the statute in question; (2) the
agency’s interpretation is long standing; (3) the agency employed its
specialized knowledge or expertise in interpreting the statute; and (4) the agency’s interpretation will
provide uniformity and consistency in the application of the statute. Id.,
¶35. Under great weight deference, an
agency’s interpretation of a statute will be sustained even if a court finds
another interpretation to be equally or more reasonable. Id.
¶13 Below great weight deference is “due weight” deference. Id.,
¶36. This standard applies when the
legislature gives the agency the authority to interpret the statute and the
agency has experience in the area, but the agency is not in a better position
to interpret the statute than the reviewing court. Id. When applying due weight deference, a court
will sustain an agency’s interpretation if it is not contrary to the clear
meaning of the statute—unless the court determines that a more reasonable
interpretation exists. Id.
¶14 Finally, a reviewing court owes no deference to an agency’s
decision when any of the following
conditions are met: (1) the issue
presents a matter of first impression; (2) the agency has no experience or
expertise relevant to the legal issue presented; or (3) the agency’s position
on the issue has been so inconsistent that it provides no real guidance to the
reviewing court. Id., ¶37.
¶15 In City of Marshfield,
No. 28973-B (WERC Mar. 23, 1998), WERC faced a fact pattern similar to this
case. There, the union alleged that the
City of Marshfield
engaged in bad faith bargaining by not informing the union that a wage increase
would result in layoffs. Id. at
5. The union argued that because it had
no knowledge that a wage increase would lead to layoffs, it was the City’s duty
to provide that information. Id. at
6. The City responded that the union
easily could have asked about the implications of a wage increase. Id. WERC ruled that the City did not
negotiate in bad faith because the union “knew or should have known enough to
ask the layoff question.” Id. at
8. WERC based this conclusion on
testimony that indicated that a union representative was aware of the
relationship between wage increases and layoffs from conversations he had with
a union member in a different City unit.
Id. WERC did not delineate a bright-line
rule for when a municipality has a duty to disclose, and cautioned:
Where a
union has no reason to know that it should ask for certain relevant and
reasonably necessary information, there may be circumstances in which the
employer’s failure to provide said information violates the duty to bargain in
good faith. In such circumstances, a
union’s failure to ask for the information is not a valid defense.
Id.
WERC concluded that the City of Marshfield did not negotiate in bad faith
because the union had notice and the opportunity to ask for the pertinent
information and did not. Id.
¶16 WERC has also noted:
Intertwined
with the duty to bargain in good faith is a duty on the part of an employer to
supply a labor organization representing employees, upon request, with sufficient information to enable the labor
organization to understand and intelligently discuss issues raised in
collective bargaining…. Information
requested by a labor organization must be relevant and reasonably necessary to its
dealings in its capacity as the representative of the employees.
Mayville Sch. Dist., No.
25144-D at 26 (WERC May 5, 1992) (emphasis added).
¶17 The bargaining principles extracted from these WERC cases are
that when a union requests information that is relevant and reasonably
necessary to the bargaining process, the municipality must furnish that
information, but the municipality has no duty to provide information that the
union does not request. WERC ruled in City of Marshfield that the City did not have
a duty to disclose to the union the relationship between wage increases and
layoffs because a union representative was already aware of this relationship in
another unit, so the union should have known to ask for the information. City of Marshfield, No. 28973-B at 8. Similarly, the Union in this case was aware
that Washington County
was considering cost-saving measures as the County informed the Union during a negotiating session that the County was
laying off five Union employees. As WERC
did not cite to City of Marshfield, it is
unknown if WERC was aware of this decision when it ruled that Washington County
had a duty to disclose that it was “seriously” considering subcontracting, even
though the Union never requested this information and even though the Union was put on notice that the County was exploring
cost-saving measures. As City
of Marshfield conflicts
with WERC’s decision in this case, we hold that WERC’s position on this issue
has been inconsistent and provides no real guidance to this court. We therefore apply de novo review.
DISCUSSION
¶18 Wisconsin Stat. § 111.70(1)(a)
of MERA imposes an obligation upon municipalities and labor unions to
collectively bargain in “good faith.”
There is no specific definition of what it means to bargain in “good
faith,” and the Wisconsin Supreme Court has said that the “[e]xistence or
nonexistence of good faith … involve[s] only inquiry as to fact.” St. Francis Hosp. v. WERB, 8
Wis. 2d 308,
311, 98 N.W.2d 909 (1959). The supreme
court has also stated that MERA imposes a duty upon municipalities to
collectively bargain with labor unions over the issue of subcontracting. See Unified School Dist. No. 1 of Racine County
v. WERC, 81 Wis.
2d 89, 103, 259 N.W.2d 724 (1977). WERC
has previously described the “fundamental principles of collective bargaining”
under MERA:
When parties bargain a contract, they agree that for
the duration of that contract their rights and privileges are established by
the terms of that agreement. Thus, it is
well settled that during the term of a contract, neither party has the
obligation to bargain with the other over matters addressed by that
contract. Inevitably, opportunities or
circumstances may arise during the term of a contract which can cause either
party to regret the terms of the agreement into which they have entered. However, that regret does not provide a valid
basis for compelling the other party to reopen the terms of a contract. Instead,
it is commonly understood by all parties that when bargaining a contract, they
must try to anticipate potential opportunities and changed circumstances
which arise during the term of their contract and then to seek contract
provisions which may allow them to take advantage of these opportunities or
changed circumstances.
Village of Saukville,
No. 28032-B at 22 (WERC Mar. 22, 1996) (italics added).
¶19 The language of the 2007-08 collective bargaining agreement
clearly gave the County the right to subcontract. Specifically, the “management rights” article
states that “[t]he County retains and reserves the sole right to … lay off
employees [and] to contract out for goods or services.” The Union
had the right to ask the County during negotiations whether any changed
circumstances might arise during the term of their next agreement. Had the Union done this, it could have sought
to change the existing subcontracting language, but the record indicates that
the Union never brought up the issue of
subcontracting during negotiations. If
in fact the Union did raise the issue during
negotiations, it had a duty to provide WERC with this evidence. Because the Union provided no evidence that
it raised the issue of subcontracting during negotiations, the Union’s silence indicates that it assented to the
subcontracting language.
¶20 We note that the Union knew the County was exploring
cost-saving measures as the County notified the Union
during a negotiating session that the County was laying off five Union
members. The County’s decision to subcontract
therefore should not have come as a surprise to the Union. The Union
had notice and an opportunity to voice its concerns at the bargaining table and
it did not.
¶21 This court previously held that there is no violation of the
duty to bargain under MERA when a party exercises a contractual right that is
already covered by a collective bargaining agreement. Cadott Educ. Ass’n. v. WERC, 197 Wis. 2d 46, 49, 540
N.W.2d 21 (Ct. App. 1995). In Cadott,
a union member was denied holiday pay because he was on medical leave the day
before and the day after a holiday. Id. at
49-50. The union filed a prohibited
practices complaint against the school district for failure to bargain, arguing
that the collective bargaining agreement required the district to bargain with
the union before denying holiday pay to those who missed work the day before
and the day after a holiday. Id. at
50-51. WERC rejected this argument,
holding that the holiday pay provision read in conjunction with the rest of the
collective bargaining agreement sufficiently defined the union members’ holiday
pay rights. Id. at 56. WERC held that the union’s remedy was through
the grievance arbitration process. Id. This court affirmed, and held that
the subject of holiday pay had been bargained over by the parties. Id.
at 58. The union’s remedy was to file a
grievance and argue that the school district violated the terms of the
collective bargaining agreement. Id.
¶22 Cadott is significant because it held that it was not a
prohibited practice for a party to exercise a right that was collectively
bargained for. The union in Cadott
may not have anticipated the scenario of a union member being on
medical leave the day before and the day after a holiday and how that would
affect holiday pay benefits, but that did not change the fact that the parties
already bargained over holiday pay.
Likewise, Washington County
exercised a right that was collectively bargained for. The Union may not have anticipated that the
County would subcontract or perhaps the Union
was just careless in its negotiations, but layoffs and subcontracting were
nonetheless addressed in the collective bargaining agreement. The Union’s
only recourse, like that of the union in Cadott, was to seek a remedy in the
grievance-arbitration process. The fact
that an arbitrator denied the Union’s
grievance after he found that the collective bargaining agreement expressly
allowed for subcontracting underscores that the issue of subcontracting was
already bargained over. The County was
therefore within its rights to subcontract.
CONCLUSION
¶23 We hold that the County did not act in bad faith when it
exercised its clear contractual right to subcontract as the mandatory subjects
of layoffs and subcontracting were bargained for by the parties. While the Union may regret that it failed to
limit or eliminate language in the collective bargaining agreement that allowed
the County to subcontract, the Union still
ratified the agreement. As the County
was acting within its rights, its conduct does not amount to bad faith. The order of the circuit court is reversed.
By the
Court.—Order reversed.