ADRIANA RANTA V BD OF EDUCATION EATON RAPIDS SCHOOLS
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STATE OF MICHIGAN
COURT OF APPEALS
ADRIANA RANTA, SHERYL MEISTERHEIM,
TONYA JOHNSON, STEPHANIE BROWN,
JENNIFER SHULER, JASON ZELLER,
KIMBERLY GUM (WOODCOCK), GLORIA
ORR, KRISTIN PRIOR, MARK STICE, MARLA
HAMEL, and KIMBERLY RICHARDSON,
FOR PUBLICATION
June 6, 2006
9:15 a.m.
Petitioners-Appellees,
v
EATON RAPIDS PUBLIC SCHOOLS BOARD
OF EDUCATION,
Respondent-Appellant,
No. 258900
State Tenure Commission
LC No. 03-000033
Official Reported Version
and
MICHIGAN ASSOCIATION OF SCHOOL
BOARDS,
Amicus Curiae.
Before: Kelly, P.J., and Jansen and Talbot, JJ.
PER CURIAM.
This case is before us on remand from our Supreme Court, which, in lieu of granting
leave to appeal, remanded it to us for consideration as on leave granted. Ranta v Eaton Rapids
Public Schools Bd of Ed, 471 Mich 916 (2004). The Court has directed us "to pay particular
attention to whether the State Tenure Commission [STC] had jurisdiction over this dispute. See,
e.g., Farrimond v Bd of Ed of East Jordan, 138 Mich App 51[; 359 NW2d 245] (1984)." Id. We
reverse and remand to the STC for entry of an order dismissing this case for lack of subjectmatter jurisdiction.
I. Facts
This dispute arises from a breakdown in collective bargaining negotiations between
respondent and petitioners' union representative, the Eaton Rapids Education Association
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(EREA). Petitioners are unionized teachers employed by respondent. Anticipating the
expiration of their collective bargaining agreement, respondent and the EREA began negotiations
on a successor agreement. An unresolved element of these negotiations concerned payment of
health insurance premiums. According to the existing contract, which covered the 2002-2003
school year, respondent was obligated to pay teachers' insurance premiums in full. On the issue
of who would continue to bear this cost, the parties reached an impasse in negotiations, which
respondent observed by resolution. Consequently, respondent unilaterally implemented its most
recent bargaining proposal capping its obligation to pay health care premiums. Accordingly, if
insurance premiums were to increase to exceed the capped amount, employees would bear the
excess premium costs.
For the school year 2003-2004, insurance premiums increased and exceeded the capped
amount. Pursuant to the unilaterally implemented term, respondent paid the capped amount and
deducted the remaining balance from each employee's paycheck according to each employee's
elected health plan. The capped amount was a few cents more than the amount respondent had
paid the previous year. Petitioners' salaries were also greater in 2003-2004 than in 2002-2003.
The EREA subsequently filed a charge with the Michigan Employment Relations
Commission (MERC), alleging unfair labor practices under the Public Employment Relations
Act (PERA), MCL 423.201 et seq. The MERC case was settled when a successor collective
bargaining agreement was reached.
As individuals, petitioners filed a charge with the STC asserting that respondent's cap on
its contribution to health insurance premiums constituted a reduction in wages for the 2003-2004
school year, and that wage reduction amounted to a demotion as that term is defined in the
teacher tenure act (TTA), MCL 38.71 et seq. Petitioners further asserted that this demotion was
without just cause. Respondent immediately sought summary disposition, arguing that
petitioners were not demoted and that the STC lacked subject-matter jurisdiction because this
was a labor dispute governed by PERA and subject to MERC's jurisdiction.
The hearing referee entered a decision and order granting respondent's motion, stating
that the dispute involves "a contract issue, rather than a tenure issue." The hearing referee
further stated, "The insurance to which appellants are entitled is a matter solely determined by
the collective bargaining agreement and collective bargaining process." The hearing referee also
determined that petitioners were not demoted because their salary was not reduced. The full
STC reversed, stating:
The issue raised in this case is whether appellants have been improperly
demoted. Such claims traditionally arise under the [TTA]. . . . This Commission
does not lack jurisdiction over appellants' claim.
It further ruled:
The fact that a teacher's salary is not reduced does not necessarily
establish that the teacher has not been demoted. The total compensation package
must be considered in determining whether there has been a reduction equivalent
to three days' compensation.
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Accordingly, the STC remanded the matter to the hearing referee for a determination whether the
statutory monetary threshold for demotion had been met and, if so, whether there was just cause
for petitioners' demotion. This Court denied respondent's application for leave to appeal. Ranta
v Eaton Rapids Schools Bd of Ed, unpublished order of the Court of Appeals, entered July 19,
2004 (Docket No. 256108). We now consider this case on remand as on leave granted.
II. Analysis
Respondent contends that the STC erred in determining that the cap on health insurance
benefits could be characterized as a demotion and that it has subject-matter jurisdiction over this
dispute. We agree.
A. Standard of Review
In reviewing the decisions of an administrative agency, a court may set
aside that decision or order only if substantial rights of the petitioning appellant
have been prejudiced "because the decision or order [was] . . . [in] violation of . . .
a statute . . . [or] . . . [a]rbitrary, capricious or clearly an abuse or unwarranted
exercise of discretion [or] . . . [a]ffected by other substantial and material error of
law". MCL 24.306 . . . . The reviewing court may not substitute its judgment for
that of the agency in the absence of fraud or jurisdictional defect. An agency's
findings of fact are conclusive unless they are unsupported by substantial
evidence. Regents of the University of Michigan v Employment Relations Comm,
389 Mich 96; 204 NW2d 218 (1973); Murphy v Oakland County Dep't of Health,
95 Mich App 337; 290 NW2d 139 (1980). Where a case has been submitted for
decision upon an agreed-upon statement of facts, that statement must be taken as
conclusive. The only question for the reviewing court then is whether the
judgment was supported by the stipulated facts. Kretzschmar v Rosasco, 250
Mich 9; 229 NW 446 (1930). [Farrimond, supra at 56.]
B. PERA and the TTA
Our Supreme Court has held that PERA is "the dominant law regulating public employee
labor relations." Rockwell v Crestwood School Dist Bd of Ed, 393 Mich 616, 629; 227 NW2d
736 (1975). PERA "imposes a duty of collective bargaining on public employers, unions, and
their agents." St Clair Intermediate School Dist v Intermediate Ed Ass'n/Mich Ed Ass'n, 458
Mich 540, 550; 581 NW2d 707 (1998). "Violations of ยง 10 of the PERA are deemed unfair
labor practices under MCL 423.216 . . . remediable by the [MERC]." St Clair, supra at 550.
Section 16 of PERA vests MERC with exclusive jurisdiction over unfair labor practices. Id.
Our Supreme Court held that the TTA, on the other hand, is designed to
"maintain an adequate and competent teaching staff, free from political and
personal arbitrary interference"; to promote "good order and the welfare of the
State and of the school system by preventing removal of capable and experienced
teachers at the personal whims of changing office holders"; and "to protect and
improve State education by retaining in their positions teachers who are qualified
and capable and who have demonstrated their fitness, and to prevent the dismissal
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of such teachers without just cause". [Rockwell, supra at 632, quoting Rehberg v
Ecorse School Dist No 11, 330 Mich 541, 545; 48 NW2d 142 (1951) (footnote
omitted).]
The STC is "vested with such powers as are necessary to carry out and enforce the provisions of
[the TTA]." MCL 38.137. Our Supreme Court has warned that the concurrent exercise of
jurisdiction by MERC and the STC "could result in competing claims and conflicting
adjudications with untoward and costly delay." Rockwell, supra at 631.
In disputes between teachers and school boards similar to the dispute raised in this case,
Michigan courts have addressed the applicability of and the interaction between PERA and the
TTA. In Rockwell, a school board and a teachers' union were involved in a prolonged labor
dispute. Id. at 626. After two teachers' strikes, the teachers were ordered by the board to report
for work or submit letters of resignation; if neither occurred, their employment would be deemed
terminated. Id. at 626-627. Approximately 40 teachers returned to work, one submitted a letter
of resignation, and the nearly 200 remaining were deemed to have terminated their employment.
Id. at 627. The teachers' union, which had previously filed an unfair labor practice charge with
MERC, sought hearings under PERA. Id. One issue before our Supreme Court concerned
whether the PERA or the TTA procedures controlled. Id. at 624-625. In concluding that PERA
controlled, the Court noted that it
has consistently construed the PERA as the dominant law regulating public
employee labor relations. . . .
* * *
The teachers' tenure act was not intended, either in contemplation or
design, to cover labor disputes between school boards and their employees. The
1937 Legislature in enacting the teachers' tenure act could not have anticipated
collective bargaining or meant to provide for the resolution of labor relations
disputes in public employment. This Court's observation in Wayne County Civil
Service Commission [v Bd of Supervisors, 384 Mich 363, 372; 184 NW2d 201
(1971)] is pertinent: "In [no] instance could collective bargaining by public
employees have been in the minds of the people, or of the [1937] legislators. The
thought of strikes by public employees was unheard of. The right of collective
bargaining, applicable at the time to private employment, was then in comparative
infancy and portended no suggestion that it eventually might enter the realm of
public employment." [Id. at 629-630.]
The Court also noted that PERA allows discipline for collective strike action, while disciplinary
action subject to STC jurisdiction concerns individual teachers, pointing out that "[i]t should
therefore be a rare case where the line separating disputes subject to the jurisdiction of the [STC]
from those subject to the jurisdiction of the MERC will be unclear." Id. at 631. The Court
further rejected the argument that due process required a hearing before the employer could
terminate a teacher's employment, id. at 633, despite the fact that the TTA requires a prior
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hearing. See MCL 38.104. The Court determined that the hearing provided in PERA satisfied
due process requirements. Id. at 633-635.
Several years later, our Supreme Court, in Detroit Bd of Ed v Parks, 417 Mich 268; 335
NW2d 641 (1983), addressed whether the TTA applied to a discharge that resulted from a
tenured teacher's failure to pay agency service fees. Pursuant to a collectively bargained
contract, the board of education was required to discharge employees who failed to pay. Id. at
271-273. The Court first determined that section 10(1)(c) of PERA permitted such an
agreement. Id. at 275-278. The Court then rejected the argument that the "reasonable and just
cause" standard for discharge in the TTA could "coexist" with section 10(1)(c) of PERA. Id. at
280. The Court noted that "[w]hen there is a conflict between PERA and another statute, PERA
prevails, diminishing the conflicting statute pro tanto." Id. Also at issue was whether the board
of education was required to follow the TTA procedures in discharging the teacher. Id. at 282.
The Court noted that the TTA procedures did not necessarily conflict with PERA, which did not
contain any procedure for discharging a teacher for failure to pay agency service fees. Id.
Nonetheless, the procedural aspects of the TTA were "irrelevant to a discharge for failing to pay
agency fees" and the PERA procedures for adjudicating unfair labor practices satisfied due
process requirements. Id. at 282-283. Further, the Court noted that if an employer improperly
discharges an employee for failure to pay agency fees, it commits an unfair labor practice and
MERC has exclusive jurisdiction over unfair labor practices. Id. at 283.
Farrimond, supra, presented this Court with a factual situation more similar to the facts
in this case. In Farrimond, a tenured teacher filed a petition before the Teacher Tenure
Commission alleging that she was "demoted" under the TTA when a collective bargaining
contract required the school board to place her on a salary schedule, which caused her to receive
a half-step raise instead of a full step raise. Id. at 53-55. The commission determined that the
petitioner was not demoted and, therefore, it "had no subject matter jurisdiction over the dispute,
which was more properly resolved through collective-bargaining procedures." Id. at 56.
Affirming the commission's ruling, this Court stated:
[S]everal Tenure Commission decisions had held that terms of collectivebargaining agreements must be considered when determining whether a demotion
has occurred. Where a collective-bargaining agreement allowed deviation from
the applicable step of the salary schedule, retention at one level of a teacher with
observed deficiencies resulted in no "reduction in compensation"; hence there was
no demotion.
In keeping with this interpretation, the commission has refused to rule on
matters which, even though they involved a reduction of pay, were actually labor
disputes or differences of opinion in contract interpretation.
Considering the historical precedent for the commission's ruling that it did
not have jurisdiction over what was, in the instant case, a labor dispute between
appellant and appellee, we cannot say that the commission's order was arbitrary,
capricious or an abuse or unwarranted exercise of its discretion. Nor can we say
that its decision resulted from a misinterpretation of the statute. [Id. at 58-59
(citations omitted).]
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The Court held that where the collective bargaining agreement required all teachers to be placed
at a step level applicable to his or her experience, the petitioner's placement on the salary
schedule involved a labor dispute and presented an issue of contract interpretation. Id. at 59-60.
It further held that the petitioner's remedy was "properly provided for by the grievance
procedures included in the collective-bargaining agreement" or a civil suit. Id. at 61.
C. Application to This Case
1. Provisions Relied on by the Parties
Respondent asserts that this dispute is governed by PERA, which obligates a public
employer to bargain collectively and authorizes the employer to enter into collective bargaining
agreements with its employees' representatives. MCL 423.215(1) provides:
A public employer shall bargain collectively with the representatives of its
employees as defined in section 11 and is authorized to make and enter into
collective bargaining agreements with such representatives. Except as otherwise
provided in this section, for the purposes of this section, to bargain collectively is
the performance of the mutual obligation of the employer and the representative
of the employees to meet at reasonable times and confer in good faith with respect
to wages, hours, and other terms and conditions of employment, or the negotiation
of an agreement, or any question arising under the agreement, and the execution
of a written contract, ordinance, or resolution incorporating any agreement
reached if requested by either party, but this obligation does not compel either
party to agree to a proposal or require the making of a concession.
The "mandatory subjects of bargaining" include health insurance benefits. St Clair, supra at
551.
After the parties have met in good faith and bargained over the mandatory
subjects placed upon the bargaining table, they have satisfied their statutory duty.
* * *
If the parties are not able to agree on the terms of a mandatory subject they
are said to have reached an "impasse". Under [PERA][1] when good faith
bargaining has reached an impasse, the employer may take unilateral action on an
issue if that action is consistent with the terms of its final offer to the union.
1
The original statutory reference was to the National Labor Relations Act, 29 USC 158, but both
the context and subsequent holdings make clear that the statement is equally applicable to the
analogons provision of PERA. See e.g., Ottawa Co v Jaklinski, 423 Mich 1, 33-34; 377 NW2d
668 (1985).
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[Detroit Police Officers Ass'n v Detroit, 391 Mich 44, 55-56; 214 NW2d 803
(1974).]
Accordingly, respondent contends that this dispute, which arose from the unilaterally
implemented contract term capping respondent's payment of health insurance premiums, is a
labor dispute, subject to PERA.
Petitioners contend that because they are tenured teachers, the TTA applies and prohibits
the discharge or demotion of a tenured teacher, except on reasonable and just cause. MCL
38.101. The TTA gives the STC jurisdiction to determine whether a discharge or demotion of a
tenured teacher was done with such cause. MCL 38.104(5)(i), (m). According to MCL 38.74,
[t]he word "demote" means to reduce compensation for a particular school year
by more than an amount equivalent to 3 days' compensation or to transfer to a
position carrying a lower salary.
Accordingly, petitioners contend that requiring them to pay a portion of their health insurance
premiums resulted in a reduction in the compensation for the school year by more than an
amount equivalent to three days' compensation.
2. Can Respondent's Cap on its Payment of Health Insurance Premiums be Considered a
Demotion?
Respondent's cap on its payment of health insurance premiums did not result in
petitioners being demoted as that term is used in the TTA. MCL 38.74. It is undisputed that, for
the 2003-2004 school year, petitioners all received salary increases between approximately
$2,000 and $2,500. It is further undisputed that respondent paid insurance premiums for each
petitioner, during the 2003-2004 school year, in amounts slightly exceeding those paid the
previous year. Petitioners' allegation of demotion stems from their having to pay for insurance
premium increases to the extent they exceeded the capped amounts paid by respondent pursuant
to contract. This does not constitute a "reduction" in their compensation, however, when their
compensation was actually increased, not reduced. This is similar to Farrimond, in which the
teacher's compensation was not reduced when her salary was increased by only a half-step rather
than a full step pursuant to a contract term. Id. at 60-61. The failure to satisfy an employee's
"reasonable expectation" based on an employer's prior actions does not amount to a demotion.
Id. at 60. In this case, it is even more evident that there was no demotion when it was the health
insurance provider, not the employer, who increased the cost of health care premiums. Thus,
while respondent actually paid more in health care benefits from one year to the next, plaintiffs,
as well as every other employee subject to the collective bargaining agreement, were still
required to pay a portion of their premium due to the increased rates. This was not a demotion
under MCL 38.74.
3. Does the STC Have Jurisdiction?
Moreover, regardless of whether petitioners are tenured teachers, brought individual
claims before the STC, and characterized respondent's action as a demotion under the TTA,
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PERA is controlling in this dispute and, therefore, the STC does not have jurisdiction. As in
Rockwell, no claim is or could be made that the change in health care benefits was "occasioned
by any cause other than the labor dispute." Rockwell, supra at 632. After the EREA and
respondent reached an impasse in negotiations on the mandatory bargaining subject of health
care benefits, respondent, in compliance with PERA, unilaterally implemented its most recent
bargaining proposal, capping its obligation to pay health care premiums. As in Farrimond, the
contractual provision capping health care benefits applied to all employees represented by the
EREA, not just petitioners and not just tenured teachers. This is simply not the "rare case where
the line separating disputes subject to the jurisdiction of the . . . [STC] from those subject to the
jurisdiction of the MERC . . . [is] unclear." Id. at 631. This case presents a matter governed by
PERA. Because the STC's "jurisdiction and administrative expertise is limited to questions
traditionally arising under the teachers' tenure act," it is without subject-matter jurisdiction over
this dispute. Id. at 630. MERC alone has jurisdiction, id., and this dispute was already raised
before MERC and resolved by a successor agreement.
Petitioners assert that if the STC is denied jurisdiction over this dispute, they will be
unlawfully precluded from pursuing and enforcing their rights under the TTA. We disagree.
Our Supreme Court rejected this line of reasoning in Parks. Despite the fact that a tenured
teacher was discharged, Parks, supra at 274, the Court refused to graft the "reasonable and just
cause" TTA standard onto PERA. Id. at 281. Similarly, the teacher in Parks was precluded from
invoking TTA procedures when PERA controlled. Id. at 283. Accordingly, precedent dictates
that the TTA's vesting of tenured teachers with certain statutory rights does not necessitate that
these rights govern matters related to collective bargaining that are subject to PERA. Our
conclusion is further supported by the general purpose of the TTA, which has been identified as
protecting tenured teachers from removal for personal or political reasons without just cause,
Rockwell, supra at 632, and not covering labor disputes between school boards and their
employees, id. at 630.
Because the STC improperly exercised subject-matter jurisdiction over this case, we
reverse and remand for entry of an order of dismissal. We do not retain jurisdiction.
/s/ Kirsten Frank Kelly
/s/ Kathleen Jansen
/s/ Michael J. Talbot
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