CITY OF NEWPORT, KENTUCKY; AND PHILIP G. CIAFARDINI v. NEWPORT PROFESSIONAL FIREFIGHTERS UNION, I.A.F.F. LOCAL 45 AND KENTUCKY STATE LABOR RELATIONS BOARD
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RENDERED:
September 10, 2004; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2003-CA-001740-MR
CITY OF NEWPORT, KENTUCKY;
AND PHILIP G. CIAFARDINI
v.
APPELLANTS
APPEAL FROM CAMPBELL CIRCUIT COURT
HONORABLE LEONARD L. KOPOWSKI, JUDGE
ACTION NO. 03-CI-00148
NEWPORT PROFESSIONAL FIREFIGHTERS UNION,
I.A.F.F. LOCAL 45 AND
KENTUCKY STATE LABOR RELATIONS BOARD
APPELLEES
OPINION
AFFIRMING IN PART
AND REVERSING IN PART
** ** ** ** **
BEFORE: KNOPF, JUDGE; EMBERTON, SENIOR JUDGE;1 AND MILLER,
SENIOR JUDGE.2
KNOPF, JUDGE:
The City of Newport appeals from an order by the
Campbell Circuit Court affirming a final order issued by the
1
Senior Judge Thomas D. Emberton sitting as Special Judge by
assignment of the Chief Justice pursuant to Section 110(5)(b) of
the Kentucky Constitution and KRS 21.580.
2
Senior Judge John D. Miller sitting as Special Judge by
assignment of the Chief Justice pursuant to Section 110(5)(b) of
the Kentucky Constitution and KRS 21.580.
Kentucky State Labor Relations Board (Board) in favor of the
Newport Professional Firefighters Union, International
Association of Firefighters, Local 45 (Local 45), and awarding
damages to Local 45.
The City argues that the circuit court
erred by granting Local 45’s motion for summary judgment, and by
awarding damages and attorney’s fees to Local 45.
We conclude
that the trial court properly granted Local 45’s motion for
summary judgment thus enjoining the City from engaging in the
unfair labor practices identified by the Board.
However, we
also conclude that the trial court was not authorized to enter a
judgment awarding damages and attorney’s fees to Local 45.
Hence, we affirm in part and reverse in part.
The underlying facts of this action and its procedural
history are not in dispute.
Local 45 is a chartered labor
organization in which the firefighters employed by the City
participate.
On July 17, 2001, Local 45 filed an unfair labor
practices complaint with the Board, charging that the City had
implemented changes affecting the firefighters’ wages, hours,
and other conditions of employment without first engaging in
collective bargaining.
distinct matters.
Local 45’s complaint addressed two
First, Local 45 alleged that, in October of
2000, the City Manager, Philip Ciafardini, assigned on-duty
firefighters to hand-deliver copies of the City’s newsletter to
every home and business in the city, thereby imposing additional
2
duties upon the firefighters in violation of the parties’
collective bargaining agreement.
And second, Local 45 alleged
that, in June of 2001, the City’s Board of Commissioners had
approved Ciafardini’s proposal to increase the number of
firefighters in the department from 36 to 39, while maintaining
a minimum shift level of 12, thereby reducing the firefighters’
unscheduled overtime compensation in violation of the parties’
collective bargaining agreement.
The City admitted the factual
allegations, but denied that either of these actions constituted
a significant change in the firefighters’ working conditions.
Consequently, the City asserted that it was not obligated to
engage in collective bargaining with Local 45 on these issues.
Following a hearing, a hearing officer issued findings
of fact, conclusions of law and a recommended order on June 10,
2002.
The hearing officer first found that the delivery of the
newsletter falls within the firefighters’ job duties as
contemplated by the collective bargaining agreement.
As a
result, the hearing officer concluded that the City was not
obligated to engage in collective bargaining with Local 45.
On the second question, the hearing officer found that
the collective bargaining agreement provided that the total
number of members in the department would be 36, with a minimum
staffing level of 12 members per shift.
By increasing the total
number of firefighters from 36 to 39 without changing the
3
minimum staffing level, the City had affected the firefighters’
opportunity to work unscheduled overtime on occasions when a
scheduled member was off.
The hearing officer concluded that
this constituted a material change in the firefighters’ working
conditions, and that the City’s failure to engage in collective
bargaining prior to implementing this change violated KRS
345.050(1)(e) and (3).
Accordingly, the hearing officer
recommended that the Board issue a cease-and-desist order
compelling the City to engage in collective bargaining with
Local 45 on this issue.
However, the hearing officer also found
that the firefighters were not entitled to be compensated for
lost overtime pay because there was no evidence concerning how
much overtime the firefighters lost as a result of the City’s
actions.
Local 45 filed exceptions to the hearing officer’s
report, specifically objecting to the hearing officer’s
conclusions with respect to delivery of the City’s newsletter
and that an award of overtime compensation was too speculative.
The City did not file exceptions to the hearing officer’s
report.
The Board reviewed the entire record compiled before
the hearing officer and entered a final order on December 30,
2002.
The Board substantially adopted the hearing officer’s
factual findings.
However, the Board found that the City’s
4
requirement that the firefighters deliver the newsletter did not
fall within the firefighters’ job description.
As a result, the
Board concluded that the City had engaged in an unfair labor
practice when it imposed this requirement.
In addition, the
Board agreed with the hearing officer’s conclusion that the
City’s hiring of three additional firefighters violated the
collective bargaining agreement.
But the Board also found that
the firefighters should be compensated for lost overtime pay.
Consequently, the Board issued a cease-and-desist order
compelling the City to engage in collective bargaining with
Local 45 on the issues involving the delivery of the newsletter
and the increase in the total number of firefighters.
The Board
further directed the parties “to determine an equitable formula
for making the firefighters whole for unscheduled overtime
opportunities missed as a result of hiring additional
firefighters without increasing minimum staffing levels.”
On January 29, 2003, the City filed an appeal to the
circuit court from the Board’s final order.
Local 45 filed an
answer and counter-claim, seeking judicial enforcement of the
Board’s final order, including imposition of damages.
The
matter was submitted to the court on Local 45’s motion for
summary judgment.
The City failed to file a written response to
the motion.
5
In an opinion and order entered on June 4, 2003, the
circuit court granted Local 45’s motion for summary judgment and
affirmed all aspects of the Board’s final order.
The court
found that the record supported the Board’s conclusions
regarding delivery of the newsletter and the staffing of the
fire department.
The court also ordered Local 45 “to prepare a
proposed order that will deter future violations and make the
City’s Firefighters whole for all wages and benefits that they
lost as a result of the City’s labor practices.”
Local 45
tendered an order which incorporated the Board’s prior ceaseand-desist order.
The tendered order also included a judgment
for lost overtime pay in the amount of $306,635.92 and for
attorney fees in the amount of $14,457.46.
The circuit court
entered the tendered order on June 19, 2003, and this appeal
followed.
As a preliminary matter, the circuit court found that
the City was precluded from raising objections to the Board’s
findings or conclusions because it had failed to file exceptions
from the hearing officer’s recommended order.
In Swatzell v.
Commonwealth,3 the Kentucky Supreme Court held that a party’s
failure to file exceptions to an administrative officer's report
and recommendation after a hearing constitutes a failure to
3
Ky., 962 S.W.2d 866 (1998).
6
exhaust administrative remedies, thereby precluding court review
of the final administrative order.4
However, the Kentucky
Supreme Court recently overruled this holding in Rapier v.
Philpot.5
The Court held that the filing of exceptions under
Chapter 13B is not a means of obtaining further administrative
review of a hearing officer's recommendation.
Rather,
regardless of whether exceptions are filed, the hearing officer
is required to submit to the agency head "a written recommended
order which shall include his findings of fact, conclusions of
law, and recommended disposition of the hearing, including
recommended penalties, if any."6
After receiving the recommended
order and the other material, the agency head is required to
"render a final order in an administrative hearing within ninety
(90) days."7
Further, "[i]n making the final order, the agency
head shall consider the record including the recommended order
and any exceptions duly filed to a recommended order."8
Nor is
the agency head limited to the issues raised by the exceptions
4
Id. at 870.
5
Ky., 130 S.W.3d 560 (2004).
6
KRS 13B.110(1).
7
KRS 13B.120(4)(b).
8
KRS 13B.120.
7
in rendering a final order.
The agency head is required to
review the entire record and to determine whether there is
justification--according to the facts and the applicable law-for adopting the recommended order.
If the agency head deviates
from the recommended order, it must make separate findings of
fact and conclusions of law for any deviation from the
recommended order.9
Thus, the Court concluded that the filing of
exceptions under a Chapter 13B administrative proceeding is not
a prerequisite to obtaining administrative review of a hearing
officer's recommended order, and the failure to file exceptions
to the hearing officer’s report does not deprive the circuit
court of jurisdiction to subsequently review the case.10
Accordingly, the City’s failure to file exceptions to
the hearing officer’s report did not deprive the circuit court
of jurisdiction to review the Board’s final order.
However, the
Court in Rapier went on to note that, under Chapter 13B, the
filing of exceptions provides the means for preserving and
identifying issues for review by the agency head.
In turn,
filing exceptions is necessary to preserve issues for further
judicial review.
This rule of preservation precludes judicial
review of any part of the recommended order not excepted to and
adopted in the final order.
9
10
Thus, when a party fails to file
KRS 13B.120(2).
Rapier, 130 S.W.3d at 563.
8
exceptions, the issues the party can raise on judicial review
under KRS 13B.140 are limited to those findings and conclusions
contained in the agency head's final order that differ from
those contained in the hearing officer's recommended order.11
In the current case, the City did not file exceptions
to the hearing officer’s finding that increase in staffing
levels above 36 violated the collective bargaining agreement.
Consequently, this issue was not preserved for review.
However,
the hearing officer found that the City properly ordered the
firefighters to deliver the newsletter and that Local 45 had
failed to prove the amount of overtime pay which the
firefighters had lost.
Therefore, the City was not required to
file exceptions to these findings.
The City next argues that the circuit court improperly
granted summary judgment for Local 45.
The City asserts that
the circuit court viewed its failure to file a written response
to Local 45’s motion as a waiver of the factual and legal
arguments raised on appeal.
The City also contends that the
circuit court should have addressed its substantive legal
challenges to the Board’s findings.
Given the circumstances of
this case, we conclude that summary judgment was appropriate.
11
Id. at 563-64.
9
Under KRS 13B.150(2), “[r]eview of a final order shall
be conducted by the court without a jury, and shall be confined
to the record, unless there is fraud or misconduct involving a
party engaged in administration of this chapter.
The court,
upon request may hear oral argument and receive written briefs.”
Furthermore, as noted by this Court in Aubrey v. Office of
Attorney General:12
[B]oth the circuit court's review and our
review of this issue is limited. Where the
legislature has designated an administrative
agency to carry out a legislative policy by
the exercise of discretionary judgment in a
specialized field, the courts do not have
the authority to review the agency decisions
de novo. American Beauty Homes Corp. v.
Louisville and Jefferson County Planning and
Zoning Commission, 379 S.W.2d 450, 458
(1964). Judicial review of the
administrative action is confined to a
determination of whether the action taken
was arbitrary. So long as the agency's
decision is supported by substantial
evidence of probative value, it is not
arbitrary and must be accepted as binding by
the appellate court. Substantial evidence
is defined as evidence of substance and
relevant consequence, having the fitness to
induce conviction in the minds of reasonable
persons. In its role as a finder of fact,
an administrative agency is afforded great
latitude in its evaluation of the evidence
heard and the credibility of witnesses,
including its findings and conclusions of
fact. However, this Court is authorized to
review issues of law on a de novo basis.13
12
Ky. App., 994 S.W.2d 516 (1998).
13
Id. at 518-19.
10
As the party seeking review of the Board’s final
order, the City had the burden of setting out its factual and
legal bases supporting its assertions that the Board’s factual
conclusions were not supported by substantial evidence or that
its legal conclusions were erroneous.
Contrary to the City’s
argument, the circuit court was not obligated to search the
administrative records to identify grounds supporting the City’s
positions.
Furthermore, a party opposing a properly supported
summary judgment motion cannot defeat that motion without
presenting at least some affirmative evidence demonstrating that
there is a genuine issue of material fact requiring trial.14
Because the City failed to identify to the circuit court any
grounds for review pursuant to KRS 13B.150, the circuit court
properly granted Local 45’s motion for summary judgment.
However, the Board’s final order did not award damages
to Local 45 for lost overtime pay or for attorney’s fees.
Indeed, the Board did not determine any amount of overtime pay
which the firefighters lost, and it did not address the matter
of Local 45’s attorney fees.
Rather, the circuit court entered
a judgment based upon Local 45’s counterclaim.
Therefore, these
issues are properly presented to this Court.
14
Steelvest, Inc. v. ScanSteel Service Center, Inc., Ky., 807
S.W.2d 476, 482 (1991).
11
The City’s primary argument is that the trial court
erred by awarding damages to Local 45 for lost overtime wages.
The General Assembly constitutionally may delegate to an
administrative agency the authority to award damages to a party
aggrieved by a violation of a right created by statute.15
The
legislature has specifically given to the Board the authority to
award back-pay which the firefighters lost as a result of the
City’s engaging in an unfair labor practice.16
However, the Board’s order is problematic for a number
of reasons.
First, the Board serves as the ultimate fact-finder
in this administrative proceeding.
The Board may accept the
recommended findings and order tendered by the hearing officer,
or it may reject or modify the recommended order in whole or in
part, or it may remand the matter to the hearing officer for
further proceedings.17
But the Board chose none of these
options.
Rather, the Board adopted the hearing officer’s
finding that “the record is devoid of information” which would
allow even an approximation of damages.
Nevertheless, the Board
concluded that the firefighters were entitled to overtime wages
15
Kentucky Commission on Human Rights v. Fraser, Ky., 625 S.W.2d
852, 854-55 (1981).
16
KRS 345.070(2).
17
KRS 13B.120(2).
12
lost as a result of the City’s actions.
But the Board did not
attempt to determine the amount of those damages, did not
identify any evidence which would have supported an award of
damages, nor did it remand the matter to the hearing officer for
additional findings.
The Board simply directed the parties to
negotiate an amount which would compensate the firefighters for
their lost overtime opportunities.
We find no authority for the Board to act in this
manner.
Local 45 suggests that the Board relied on KRS
345.070(2), which authorizes the Board to “take any affirmative
action including reinstatement of firefighters with or without
back pay, as will effectuate the policies of this chapter.”
The
statute goes on to provide that “[t]he final order may require
the person to make reports from time to time showing the extent
to which he has complied with the order.”
The Board apparently
assumed that it could direct the parties to reach an agreement
regarding the amount of lost overtime opportunities.
KRS 345.070(2) clearly contemplates that the Board
could require a party who has been found to engage in an unfair
labor practice to show compliance with the affirmative relief
ordered by the Board.
The Board may also order the parties to
engage in collective bargaining, require periodic reports from
the parties, and make findings if such negotiations become
13
deadlocked.18
But KRS 345.070(2) was not designed to allow the
Board to delegate its authority to make necessary findings on
disputed facts.
Indeed, the calculation of damages is a core
fact-finding responsibility which cannot be delegated.
By
failing to make any findings regarding the amount of damages,
the Board abrogated its obligation as the trier of fact.
Furthermore, the circuit court was not authorized to
enter an award of damages for lost overtime pay.
As previously
noted, in reviewing an order by the Board, the circuit court
sits as an appellate court.
The circuit court’s role in
reviewing an award of damages by an administrative agency is
whether there was substantial evidence to support the award made
by the agency.19
In the absence of sufficient findings by the
Board, the circuit court was not authorized to make its own
factual findings.
KRS Chapter 345 vests the Board with
jurisdiction to decide disputes related to collective
bargaining.20
If the circuit court deemed the Board’s order to
be deficient, the court should have remanded the case to the
18
KRS 345.080.
19
See Kentucky Commission on Human Rights v. Lesco Manufacturing
& Design Co., Inc., Ky. App., 736 S.W.2d 361, 364 (1987).
20
City of Louisville v. Louisville Professional Firefighters
Association, Ky., 813 S.W.2d 804, 808 (1991).
14
Board for further proceedings.21
Instead, the circuit court
acted outside of its authority, and took it upon itself to award
damages even though the Board had failed to do so.
Unfortunately, the procedural posture of this case
renders that remedy impossible.
As a matter of law, damages may
not be recovered unless proven with reasonable certainty.22
The
Board expressly found that Local 45 failed to prove the amount
of their lost overtime pay with reasonable certainty.
factual finding is not deficient.
This
Rather, it is entirely at
odds with the Board’s legal conclusion that damages should be
awarded.
Moreover, the Board’s finding that Local 45 failed to
prove damages with reasonable certainty has not been appealed by
any party.
Therefore, the matter is not properly presented on
appeal to this Court.
The City also argues that damages for lost overtime
pay are not available as a matter of law.
In Maggard v.
Commonwealth, Cabinet for Families and Children,23 a panel of
this court addressed the issue of whether an illegallydischarged employee is entitled to recover overtime pay as part
of back-pay compensation.
21
This Court concluded that any award
KRS 13B.150(2).
22
Pauline's Chicken Villa, Inc. v. KFC Corp., Ky., 701 S.W.2d
399, 401-02 (1985).
23
Ky. App., 991 S.W.2d 659 (1998).
15
of overtime pay for that period would necessarily be based in
part upon speculation and conjecture.
Consequently, the Court
concluded that the employee was only entitled to recover backpay which would have been earned as a part of the employee’s
base salary.24
We question whether Maggard can be read as broadly as
the City asserts.
In this case, the firefighters had more than
an expectancy of working overtime – it was a right guaranteed by
their collective bargaining agreement.
Unlike it Maggard, the
firefighters negotiated their base-pay with the understanding
that they would have the right to work scheduled and unscheduled
overtime.
Given the limited number of firefighters and the
availability of evidence concerning their individual wage rates
and overtime history, it would seem that there should be some
way to quantify the value of the lost overtime.25
24
Nonetheless,
Id. at 661.
25
Although the matter is not properly before this Court, we do
not believe that the evidence presented by Local 45 was
sufficient to calculate the amount of lost overtime with any
reasonable certainty. Local 45 presented evidence showing that,
between June of 2001 and June of 2003, there were a total of 512
shifts when there was an absence which would have required a
replacement firefighter working overtime at the prior staffing
levels. However, both the hearing officer and the Board noted
that there was no evidence of how many absences were caused by
the new firefighters, which firefighters commonly chose to
accept overtime, or the various wage rates of the firefighters
who were off-duty. The evidence offered by Local 45 was
insufficient to allow an accurate calculation of overtime pay
the firefighters have lost as a result of the policy change.
16
even if overtime pay may be recoverable as a matter of law, the
Board found that the amount had not been proven with reasonable
certainty.
Therefore, any question regarding the extent of
Maggard is moot.
Lastly, the City argues that the circuit court erred
by entering an award of attorney’s fees to Local 45.
The City
contends that there is no express statutory authorization for an
award of attorney’s fees, and that an award was not justified in
any event because the firefighters are not entitled to any back
pay.
Local 45 responds that its counter-claim raised a valid
cause of action in the circuit court for lost overtime wages and
attorney’s fees.
KRS 337.385(1) authorizes a circuit court to
award damages against an employer who improperly withholds wages
or overtime compensation to which such employee is entitled.
In
addition, KRS 337.2385(1) and KRS 337.060 authorize the court to
award costs and reasonable attorney’s fees.
In this case, however, the Local 45 has never alleged
that the City has improperly withheld overtime compensation
which the firefighters have earned.
Rather, Local 45 alleges
that the City violated their collective bargaining agreement by
limiting the firefighter’s opportunities to earn overtime pay.
The absence of evidence on these variables would render
speculative any attempt to calculate the amount the lost
overtime pay.
17
As such, this action is not governed by KRS Chapter 337, but by
KRS Chapter 345.
The language used in the KRS 345.070(2) is broad
enough to encompass most forms of relief which could make
employees whole for a violation of their collective bargaining
rights, including compensation for attorney’s fees.
Although
the firefighters are not entitled to compensation for overtime
opportunities which they lost as a result of the City’s conduct,
the City still engaged in an unfair labor practice by refusing
to bargain collectively on the matters relating to the staffing
of the fire department and delivery of the City’s newsletter.
If attorney’s fees are not available, then the lack of a
monetary remedy and the cost of vindicating these rights would
undermine any benefit that the firefighters might otherwise
gain.
Under the circumstances, we conclude that the Board would
have been authorized to make an award for attorney’s fees.
However, as noted above, the circuit court’s review of
the Board’s final order is limited by KRS 13B.150.
The court
may also enter an order enforcing the Board’s final order,
including a judgment and any injunctive relief necessary to
carry out the Board’s order.26
But there is no statutory
authorization for the circuit court to enter a separate judgment
26
KRS 345.070(2).
18
for attorney’s fees.
Furthermore, Local 45 concedes that it
never sought to recover attorney’s fees during the proceedings
before the Board.
Therefore, the issue was not properly before
the circuit court, and the circuit court did not have the
authority to award attorney’s fees to Local 45.
Accordingly, the order of the Campbell Circuit Court
is affirmed insofar as it upheld the State Labor Relations
Board’s final order enjoining the City from engaging in the
unfair labor practices identified by the Board, but is reversed
insofar as the court awarded damages and attorney fees to Local
45.
EMBERTON, SENIOR JUDGE, CONCURS.
MILLER, SENIOR JUDGE, CONCURS BY SEPARATE OPINION.
MILLER, SENIOR JUDGE, CONCURRING BY SEPARATE OPINION.
I concur but write separately to express my concern as to a
labor contract which limits the hiring of additional employees.
Though the issue is not clearly presented, I am not of the
opinion that a limitation upon the hiring of additional
employees is a fit subject for a collective bargaining
agreement.
19
BRIEF AND ORAL ARGUMENT FOR
APPELLANTS:
BRIEF AND ORAL ARGUMENT FOR
APPELLEE
NEWPORT PROFESSIONAL
FIREFIGHTERS UNION:
Mary Ann Stewart
Adams, Stepner, Woltermann &
Dusing, PLLC
Covington, Kentucky
Dennis F. Janes
Segal, Stewart, Cutler,
Lindsay, Janes & Berry PLLC
Louisville, Kentucky
20
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