VSEA v. VT Criminal Justice Training Council

VT State Employees' Assoc., Inc. v. VT Criminal Justice Training Council 
(96-576); 167 Vt. 191; 704 A.2d 769

[Filed 24-Oct-1997]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press. 



                                No. 96-576


Vermont State Employees'                          Supreme Court
Association, Inc., et al.
                                                  On Appeal from
     v.                                            Washington Superior Court

Vermont Criminal Justice                          April Term, 1997
Training Council


John P. Meaker, J.

       Samuel C. Palmisano, VSEA Legal Counsel, and Mark Heyman, Assistant
  Legal Counsel, Montpelier, for plaintiffs-appellants

       Jeffrey L. Amestoy, Attorney General, and David K. Herlihy, Assistant
  Attorney General, Montpelier, for defendant-appellee

PRESENT:   Gibson, Dooley, Morse and Johnson, JJ., and Allen, C.J.
          (Ret.), Specially   Assigned


       GIBSON, J.  The Vermont State Employees' Association, Inc. (VSEA) and
  five former state employees appeal the superior court's dismissal of their
  suit claiming that the Vermont Criminal Justice Training Council violated
  the state classification plan and its merits system principles by laying
  off the five employees and contracting out their work to a private company.
  Because we conclude that plaintiffs have failed to show that the Attorney
  General clearly abused his discretion in approving the contract privatizing
  the work previously done by the employees, we affirm the superior court's
  dismissal of the suit.

       The Council operates the Vermont Police Academy, providing basic and
  advanced training to law enforcement officers and firefighters.  Until July
  1993, it ran a food service staffed by civil servants employed under the
  State Employees Labor Relations Act and the collective bargaining agreement
  in effect at the time.  In the fall of 1992, the Council submitted its
  proposed budget for fiscal year 1994 to the Department of Finance and
  Management, which

 

  works with state agencies in preparing the Governor's proposed budget for
  each fiscal year.  The Department questioned why the Council had a
  full-time cafeteria staff to service a part-time training facility.  Based
  on the Department's estimate of the savings that would be realized by
  privatizing the food service at the Academy, the Governor proposed that the
  Council's budget for fiscal year 1994 be reduced by $73,000.  The
  Legislature approved the budget, and the five food service workers were
  laid off.  The Council contracted with a private company to provide meals
  at the Academy beginning July 1, 1993.  On August 4, 1993, the Attorney
  General certified that the food-service contract was not contrary to the
  spirit and intent of the classification plan and its merit system
  principles.

       Plaintiffs filed two separate actions challenging the layoffs and
  ensuing contract.  In September 1994, they filed a grievance with the
  Vermont Labor Relations Board, alleging that the State had violated the
  collective bargaining agreement by failing to demonstrate that the
  contracting out of their work met the contractual criteria required for
  such action, and by failing to give the VSEA a meaningful opportunity to
  discuss cost-saving alternatives to the layoffs before taking the action. 
  In October 1994, in a 2-1 decision, the Board dismissed plaintiffs'
  grievance, and this Court affirmed the Board's action in September 1995. 
  See In re VSEA, 164 Vt. 214, 666 A.2d 1182 (1995).

       In the other action, brought in August 1993, plaintiffs filed a
  complaint under V.R.C.P. 75 in superior court, requesting that the court
  declare the employees' layoffs to be in violation of state law and order
  the Council to restore the employees to their former positions.  The State
  filed a counterclaim asking the court to declare that state law and the
  collective bargaining agreement entitle it, for economic reasons alone, to
  lay off state employees and contract out their work to private employers. 
  In September 1996, the superior court dismissed both plaintiffs' complaint
  and the State's counterclaim.  The court found no basis for review of the
  Attorney General's certification of the contract privatizing plaintiffs'
  work, and concluded, in any case, that plaintiffs had failed to show an
  abuse of discretion.  The court also concluded that state law did not
  require express legislative authorization before state employees could be
  laid off and

 

  their work contracted out to private employers.  On appeal, plaintiffs
  argue that (1) the superior court had jurisdiction to adjudicate their
  complaint, and (2) the Attorney General abused his discretion in certifying
  the contract at issue.

                                   I.

       The first issue concerns the source and scope of the superior court's
  jurisdiction to review the Attorney General's certification of contracts
  between state agencies and private persons.  The Attorney General may
  certify to the Governor that such a contract is not contrary to the spirit
  and intent of the classification plan and merit system principles, in which
  case state laws concerning classified service do not apply to any positions
  resulting from the contract.  3 V.S.A. § 311(a)(10).  There is no statutory
  provision for review of the Attorney General's decision whether to certify
  such contracts.  Plaintiffs sought review of the Attorney General's
  decision in this case under V.R.C.P. 75(a).  On appeal, they argue that the
  superior court has jurisdiction to review the Attorney General's
  certification under both Rule 75 and the Declaratory Judgment Act, 12
  V.S.A. § 4711.

       The Declaratory Judgment Act allows parties who have a dispute within
  a court's jurisdiction to petition that court for declaratory relief at an
  early stage of the proceedings; however, the Act does not increase or
  enlarge the jurisdiction of the court over any subject matter or parties. 
  Gifford Hosp. v. Town of Randolph, 119 Vt. 66, 70, 118 A.2d 480, 483
  (1955); accord McGlynn v. Town of Woodbury, 148 Vt. 340, 343, 533 A.2d 1187, 1189 (1987); Trivento v. Commissioner of Corrections, 135 Vt. 475,
  478, 380 A.2d 69, 72 (1977).(FN1)

 

  Accordingly, we must look to Rule 75 to determine whether the superior
  court has jurisdiction to review the Attorney General's certification
  decisions.  Cf. Molesworth v. University of Vermont, 147 Vt. 4, 6-7, 508 A.2d 722, 723 (1986) (superior court review of university's in-state
  tuition eligibility determinations was available under Rule 75; Declaratory
  Judgment Act did not increase or enlarge superior court's jurisdiction).

       Rule 75(a) provides that any action by a state agency "that is not
  appealable under Rule 74 (FN2) may be reviewed in accordance with this rule if
  such review is otherwise available by law." When, as here, legislation is
  silent on whether review is available, we have permitted appeal under Rule
  75 so long as review would have been available under any one of the
  extraordinary writs, such as mandamus, scire facias, prohibition, quo
  warranto, and certiorari.  Hunt v. Village of Bristol, 159 Vt. 439, 440,
  620 A.2d 1266, 1266 (1992).  Plaintiffs concede that the only possibility
  in this case is mandamus.  Generally, the purpose of mandamus is to require
  a public officer to perform a simple and definite ministerial duty imposed
  by law.  Eastern Advertising, Inc. v. Cooley, 126 Vt. 221, 222, 227 A.2d 294, 295 (1967); Rutland Cable T.V., Inc. v. City of Rutland, 121 Vt. 399,
  403, 159 A.2d 83, 85 (1960).  Thus, mandamus ordinarily is not available to
  compel discretionary decisions.  See State v. Forte, 159 Vt. 550, 555, 624 A.2d 352, 356 (1993).  The writ has been extended, however, to reach
  extreme abuses of discretion involving refusals to act or perform duties
  imposed by law.  Id. at 555-56, 624 A.2d  at 356; accord Bargman v. Brewer,
  142 Vt. 367, 370, 454 A.2d 1253, 1255 (1983).

       Here, notwithstanding plaintiffs' protestations to the contrary, the
  Attorney General's certification decision is plainly discretionary in
  nature.  Indeed, it is difficult to imagine a more discretionary act than
  determining whether, considering all relevant facts and circumstances, a
  particular contract violates "the spirit and intent" of a detailed statute
  such as the state

 

  classification law, 3 V.S.A. § 311(a)(10).  Given the above analysis, we
  conclude that the superior court had jurisdiction to review the Attorney
  General's certification decision under only a very limited standard of
  review to determine whether there had been a clear and arbitrary abuse of
  authority.

                                  II.

       We now address whether the Attorney General clearly abused his
  discretion in certifying that the food-service contract did not violate the
  spirit and intent of the classification plan and merit system principles.

       Under 3 V.S.A. § 311(a)(10), the classified service

     shall include all positions and categories of employment by the
     state, except as otherwise provided by law, and except the
     following:

       (10) A person or persons engaged under . . . contract, . . . when
       certified to the governor by the attorney general that such
       engagement is not contrary to the spirit and intent of the
       classification plan and merit system principles and standards
       provided by this chapter.

       The term "merit system" is defined as

     the system developed to maintain an efficient career service in
     state government under public rules, which, among other
     provisions, includes appointment through competitive examination;
     nondiscrimination because of race, sex, politics, national origin,
     or religion; an equitable and adequate compensation plan; tenure,
     contingent on successful performance; and promotion, contingent
     on evaluated capacity and service.

  3 V.S.A. § 312(a).

       "Merit system principles" include

     (1) Recruiting, selecting, and advancing employees on the basis of
     their relative ability, knowledge, and skills, including open
     consideration of qualified applicants for initial appointment;

     (2) [Repealed.]

     (3) Training employees, as needed, to assure high-quality
     performance.

     (4) Retaining employees on the basis of the adequacy of their
     performance, correcting inadequate performance, and separating
     employees whose inadequate performance cannot be corrected;

 


     (5) Assuring fair treatment of applicants and employees in all
     aspects of personnel administration without regard to race, color,
     national origin, sex, or religious creed and with proper regard for
     their privacy and constitutional rights as citizens; and

     (6) Assuring that employees are protected against coercion for
     partisan political purposes and are prohibited from using their
     official position for the purpose of interfering with or affecting the
     result of an election or a nomination for office.

  3 V.S.A. § 312(b).

       Before approving the food-service contract, the Assistant Attorney
  General assigned to review the contract spoke with the Director of the
  Training Council, the Department of Finance and Management budget analyst
  who examined the Council's budget, and the General Counsel for the
  Department of Personnel.  He also reviewed the proposed food-service
  contract, the collective bargaining agreement, the Agency of
  Administration's Bulletin on personal service contracts (Bulletin 3.5), the
  budget analyst's financial calculations, the Council's proposed budget for
  fiscal year 1994, and various other documents and letters.  Based upon
  information gathered in these interviews and documents, the Assistant
  Attorney General certified that the food-service contract did not violate
  the "spirit and intent" of the classification plan and merit system
  principles.

       In rejecting plaintiffs' argument that the contract violated merit
  system principles, the superior court noted that (1) the contract complied
  with Bulletin 3.5 and would realize more than a ten percent cost savings
  for the Council; (2) the private contractor was selected through a formal
  bidding process; (3) the Legislature was aware of the privatization of the
  food-service employees' jobs, and endorsed it in the legislative budgeting
  process; and (4) the contract was consistent with the collective bargaining
  agreement, which permitted layoffs in situations where work could be
  performed more economically under an outside contract.

       Plaintiffs acknowledge that privatizing their jobs may save money and
  thus improve the efficiency of state service.  They also concede that the
  food-service contract would not impede the merit system goal of preventing
  a "spoils" system based on political favors rather than merit.

 

  They contend, however, that neither the Attorney General nor the superior
  court considered the full scope of the merit system principles, including
  selecting employees based on their skills following competitive examination
  and retaining employees based on the adequacy of their performance.

       We find no clear abuse of discretion in the Attorney General's
  decision to certify the food-service contract.  The historical and
  fundamental purpose of the civil service and its merit system principles is
  to insulate the state work force from political influence so as to improve
  the effectiveness and efficiency of state government.  See Moore v.
  Department of Transp., 875 P.2d 765, 769, 772 (Alaska 1994) (goal of
  establishing stable body of civil service workers is secondary to merit
  principle's primary objective of protecting state workers against spoils
  system); California State Employees' Ass'n v. State, 199 Cal. App. 3d 840,
  846-47 (Cal. Ct. App. 1988); Carter v. Department of Health, 504 N.E.2d 1108, 1109 (Ohio 1986); Michigan State Employees v. Civil Service Comm'n,
  367 N.W.2d 850, 852 (Mich. Ct. App. 1985).  Each of § 312's enumerated
  merit system principles is aimed at furthering this fundamental purpose. As
  plaintiffs themselves acknowledge, the food-service contract is not
  inconsistent with this goal, particularly considering that the contract was
  subject to formal competitive bidding.  See Note, Civil Service
  Restrictions on Contracting out by State Agencies, 55 Wash. L. Rev. 419,
  424 (1980) (empirical evidence strongly suggests that competitive bidding
  is more effective than merit system in insulating Washington state
  government from improper influences).  Nor is the contract inconsistent
  with merit principles aimed at ensuring an open and independent state work
  force.  Therefore, we can hardly conclude that the Attorney General clearly
  abused his discretion by certifying the contract.

       Plaintiffs argue, however, that cost savings is not an appropriate
  factor to consider in determining whether a contract is consistent with the
  spirit and intent of the classification plan and merit system principles
  because the classification statute does not specifically list cost savings
  as a factor to consider.  We disagree.  One of the stated purposes of the
  merit system is "to maintain an efficient career service in state
  government."  3 V.S.A. § 312(a) (emphasis

 

  added).  In any event, plaintiffs miss the point.  Under § 311(a)(10), the
  Attorney General determines whether a contract is contrary to the merit
  system, not whether it furthers the system.(FN3)  As other courts have
  recognized, government agencies operating under the merit system "have
  traditionally been accorded broad latitude to eliminate jobs for economic,
  as opposed to political reasons."  Moore, 875 P.2d  at 769; see, e.g.,
  Connecticut State Employees' Ass'n v. University of Connecticut, 345 A.2d 36, 40 (Conn. 1974); Moncrief v. Tate, 593 S.W.2d 312, 313 (Tex. 1980).

       Plaintiffs also argue that the Attorney General and superior court
  unjustifiably relied on Bulletin 3.5 and the collective bargaining
  agreement in approving the food-service contract. According to plaintiffs,
  because Bulletin 3.5 was intended to avoid liability for certain
  unemployment taxes rather than to safeguard the classification plan and
  merit system principles, the Attorney General and superior court should not
  have considered it.

       Plaintiffs read Bulletin 3.5 too narrowly.  Bulletin 3.5 sets forth
  the internal guidelines for personal services contracts.  Under the heading
  "Contractors and Employees," the Bulletin states the principle that
  contractors should not be used to do the continuing work of the government
  because such contracts would subvert the spirit and intent of the merit
  system.  The Bulletin also states that an agency generally should not enter
  into personal service contracts if it would be liable for employment taxes. 
  According to the Bulletin, these problems can usually be avoided by meeting
  criteria drawn from the so-called ABC test used for determining who pays
  unemployment compensation taxes.  In examining the test's second criterion
  -- that the

 

  service provided not be the kind usually provided by the agency -- the
  Bulletin states that contracting out may be specially approved when cost
  savings of ten percent or more are likely, unless the contractor (1) will
  be asked to exercise sovereign powers, establish state policy, or represent
  government policies to the government; or (2) will work in close proximity
  to state employees doing the same or a very similar task.  The Bulletin
  then warns that even if all of the ABC criteria are met, morale and labor
  relations problems may counsel agency managers against contracting for
  services substantially similar to work done by state employees within the
  agency. Viewed as a whole, the Bulletin is plainly aimed, at least in part,
  at satisfying merit system principles.(FN4)  Cf. Westchester County Civil
  Serv. Employees' Ass'n v. Cimino, 396 N.Y.S.2d 692, 694 (N.Y. Sup. Ct.
  1977) (under New York law, contract for provision of services by private
  sector to government can be constitutionally challenged only where private
  contracting parties are controlled and supervised by government; key
  question is extent of control government exercises over private employees,
  not whether duties performed by private employees are identical to duties
  that had been performed by terminated state employees).

       Plaintiffs also challenge the trial court's reliance on a provision of
  the collective bargaining agreement stating: "Consistent with statutory
  authority the State may contract out work. . . .  No employee will be laid
  off . . . as a result of contracting out except in circumstances where . .
  . the work or program can be performed more economically under an outside
  contract."  According to plaintiffs, this contractual language is
  irrelevant to the issue of whether the Attorney General abused his
  discretion in certifying the food-services contract under

 

  the classification statute.  Although the collective bargaining agreement
  may be informative as to what the parties considered the law to be, we
  agree that the provision was not determinative as to whether the Attorney
  General acted within his discretion in certifying the contract under the
  classification statute.  Nonetheless, as explained above, we find no abuse
  of discretion in the Attorney General's certification decision.

                                  III.

       Finally, plaintiffs request that this Court adopt an objective test
  for certifying whether a contract violates the spirit and intent of the
  classification plan and merit system principles. Their proposed test would
  ask (1) whether the work that would be contracted out is presently being
  done by classified employees; (2) whether the contract would result in the
  layoff, transfer, or diminution of duties of classified employees; and (3)
  if the answer to either (1) or (2) is "yes," then whether there is express
  legislative authority for the proposed contract.  Plaintiffs argue that,
  without such a test, the State can justify any contract based solely on a
  cost-savings analysis that fails to take into account the principles
  underpinning the classification plan and merit system.

       Absent any constitutional imperative, we decline plaintiffs'
  invitation to impose conditions on the Attorney General's legislatively
  derived power to approve contracts between state agencies and private
  persons.  See State v. LaBounty, 8 Vt. L.W. 201, 203 (1997) (because no
  First Amendment right of access attaches to presentence investigation
  reports, we must respect Legislature's decision to treat those documents as
  confidential; criticisms of such policy must be directed to Legislature). 
  We are concerned, however, over the lack of detailed guidelines and
  standards governing the privatization of state jobs, a growing nationwide
  phenomenon that, when viewed as a whole, has significant and often
  conflicting policy implications for the state personnel system.  While
  privatization can increase governmental efficiency and productivity through
  cost savings, it also affects the qualifications and employment conditions
  of those performing government services.  Moore, 875 P.2d  at 770-71. 
  Further, the competitive cost advantage of private companies may result
  from the absence of civil service constraints that are

 

  necessary to promote competence in government and ensure a politically
  independent civil service.  Colorado Ass'n of Public Employees v.
  Department of Highways, 809 P.2d 988, 994 (Colo. 1991).

       Other jurisdictions are divided on whether merit system principles bar
  or restrict agency discretion to privatize government services.  Moore, 875 P.2d  at 770 (citing cases).  A least one state supreme court has held that
  state agencies cannot contract out state jobs absent legislation or rules
  establishing standards ensuring that privatization, when viewed as a whole
  rather than on a case-by-case basis, will not subvert the state personnel
  system.  Colorado Ass'n of Public Employees, 809 P.2d at 994-95; see
  Professional Engineers v. Department of Transp., 936 P.2d 473, 486 (Cal.
  1997) (California, like most states, has substantial restrictions and
  requirements to protect civil service system from deterioration through
  private contracting); cf. Mass. Gen. Laws Ann. ch.7, §§ 52-56 (West 1996)
  (comprehensive statute stating conditions and criteria for privatizing
  government services).

       As noted, we find no abuse of discretion in the Attorney General's
  decision to certify the instant contract.  Nor is there any suggestion that
  privatization as a whole has undermined Vermont's state personnel system or
  its merit principles.  But definite and specific standards setting forth
  conditions and requirements for privatization of state jobs are sorely
  lacking in this state.  Given the complex and far-reaching policy
  implications at stake, the Legislature, not this Court, is in the best
  position to rectify this situation.  See Medical Center Hosp. v. Lorrain,
  ___ Vt. ___, ___, 675 A.2d 1326, 1330 (1996) (problems concerning
  collection of hospital debts from underinsured married persons are best
  addressed in comprehensive way by Legislature).

       Affirmed.

                                 FOR THE COURT:



                                 _______________________________________
                                 Associate Justice



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                                  Footnotes


FN1.   Plaintiffs' attempt to distinguish these cases is unavailing. 
  Nor does Neal v. Brockway, 136 Vt. 119, 385 A.2d 1069 (1978) support their
  contention that the Declaratory Judgment Act provides jurisdiction for
  their claims.  In that case, the plaintiffs did not allege sufficient money
  damages to invoke the jurisdiction of the superior court.  This Court held,
  however, that the plaintiffs' request for declaratory relief invoked the
  court's jurisdiction and thus overcame their failure to allege the
  jurisdictional amount of damages.  Id. at 121, 385 A.2d  at 1070.  Unlike
  the instant case, there was no question that the subject matter of the
  parties' dispute -- common-law claims regarding the establishment and
  distribution of jointly held accounts -- was within the superior court's
  jurisdiction.

FN2.   V.R.C.P. 74 applies "whenever any party is entitled by statute
  to seek review of, or appeal from, the decision in a proceeding determined
  by any state board, commission, department or officer other than the
  legislature or courts."  Id. 74(a).  In short, Rule 74 applies when review
  is provided by statute.  Hunt v. Village of Bristol, 159 Vt. 439, 439, 620 A.2d 1266, 1266 (1992).

FN3.    Plaintiffs argue that the existence of other statutes
  expressly allowing for layoffs for reasons of economy demonstrates that
  legislative approval is required before an agency can contract out solely
  to save money.  The plain language of 3 V.S.A. § 311(a)(10) refutes this
  argument.  Under the statute, the classified service shall apply to all
  positions, "except as otherwise provided by law, and except the following,"
  including certification by the Attorney General that a contract for
  services is not contrary to the spirit and intent of the classification
  plan and merit system principles.  Further, the circumstances of this case
  demonstrate that the Legislature endorsed the contract, at least tacitly,
  by approving the 1994 fiscal-year budget after being informed of the
  Governor's proposed reduction of the Council's budget based on the
  contracting out of Academy food services.

FN4.  Plaintiffs complain that the superior court failed to consider
  that the certification of the instant contract was untimely under Bulletin
  3.5.  The Bulletin states: "No contract requiring prior approval should be
  executed until after all the required approvals have been obtained." Use of
  the word "should" and the absence of any stated consequences for failure to
  meet this obligation, however, suggest that the provision is directory
  rather than mandatory.  See In re O'Dea, 159 Vt. 590, 597, 622 A.2d 507,
  512 (1993) (although Judicial Conduct Board violated disciplinary control
  rule by waiting more than sixty days to issue final order, rule was
  directory rather than mandatory, and thus Board did not lose jurisdiction). 
  In any event, plaintiffs fail to explain how the delay in certification
  rendered the Attorney General's decision unreasonable.