CITY OF STILLWATER v. INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS

CITY OF STILLWATER v. INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS
2010 OK 55
Case Number: 107477
Decided: 07/06/2010

THE SUPREME COURT OF THE STATE OF OKLAHOMA

CITY OF STILLWATER, OKLAHOMA, a Municipal Corporation, Plaintiff/Appellant,
v.
INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, LOCAL 2095, Defendant/Appellee.

APPEAL FROM THE DISTRICT COURT OF PAYNE COUNTY, STATE OF OKLAHOMA,
HONORABLE DONALD L. WORTHINGTON, DISTRICT JUDGE

¶0 The firefighters employed by the City of Stillwater chose the International Association of Fire Fighters, Local 2095, AFL-CIO/CLC, the appellee, to represent them in collective bargaining with the City. The Union and the City entered into a collective bargaining agreement on July 16, 2007, which covered from July 1, 2007 through June 30, 2009, two fiscal years. The agreement fixed a formula for compensation to the firefighters during that term. During the second year, the formula called for a wage increase of 6.1 percent, but the City appropriated funds for a 3 percent raise that was rejected by the Union, which would accept only a 6.1 percent raise. The matter was submitted to arbitration and the opinion of the Arbitration Board, granted December 10, 2008, entitled the firefighters to the 6.1 percent wage increase. The district court granted summary judgment to the Union and denied the City's petition to vacate the arbitration decision. The City appealed.

REVERSED AND REMANDED WITH INSTRUCTIONS.

John E. Dorman, City Attorney, Chanda R. Graham, Assistant City Attorney, Stillwater, Oklahoma , for plaintiff/appellant.

Steven R. Hickman, FRASIER, FRASIER & HICKMAN, LLP, Tulsa, Oklahoma, for defendant/appellee.

WINCHESTER, J.

¶1 The essential issue before this Court is whether a contractual term regarding an increase in salary in the second year of a two-year collective bargaining agreement between the City of Stillwater and the Union representing the City's firefighters is void because it violates Article 10, § 26, of the Oklahoma Constitution. We hold that the contractual term increasing the salary of the firefighters in the second year violates the constitution of this state.

I. FACTS AND PROCEDURE

¶2 The City of Stillwater, the appellant, and the International Association of Fire Fighters, Local 2095, the appellee, brought to arbitration a dispute over a collective bargaining agreement dated July 26, 2007. After the arbitrators heard the matter, the Opinion and Award of the Board, granted December 10, 2008, found the firefighters were entitled to a 6.1% wage increase. The City petitioned the District Court of Payne County to vacate the arbitration decision and both parties moved for summary judgment. The court granted the motion of the Union and denied the motion of the City.

¶3 The district court made findings of fact in its order dated July 29, 2009. Those facts include the following. The collective bargaining agreement covered two fiscal years, from July 1, 2007 through June 30, 2009. It contained a formula for fixing a salary scale based on the average salary paid to firefighters by certain named cities located in Oklahoma. In the first year, the firefighter's compensation was fixed and paid according to the formula. The agreement provided for a new survey of the cities in January 2008, the second year of the contract, and that the agreement be reopened in 2008 "for the sole purpose of this wage adjustment". If the City failed to appropriate funds by June 30, 2008, for the fiscal year 2008-2009, the City and Union were to immediately enter into good faith bargaining for the 2008-2009 contract year on monetary issues only.

¶4 Under the formula found in the agreement, the January 2008 wage survey indicated an average wage increase of 6.1%. However, the City appropriated funds for a 3% raise for the fiscal year. The Union declined that raise, but countered with an offer to accept a 6.1% raise. After the City declined the Union's offer, the matter was submitted to arbitration. The arbitration board awarded the Union the 6.1 % raise, the City appealed and this Court granted the City's motion to retain the cause.

II. COLLECTIVE BARGAINING AGREEMENT

¶5 In the City's Petition to Vacate Arbitration Decision the City asserts the arbitration board rendered a decision that does not draw its essence from the collective bargaining agreement, exceeds the board's authority and violates public policy. More specifically, the City argues that the decision (1) is based on general considerations of fairness and equity rather than the express terms of the agreement; (2) does not give effect to the express terms of the agreement; (3) imposes legislative requirements on the City that are not expressly provided in the agreement; and (5) commands a result that violates Oklahoma's constitution. The City relies on Wyatt-Doyle & Butler Engineers v. City of Eufaula,

¶6 The Union answered in a motion to dismiss. It asserted that the dispute taken before the arbitration board was interest arbitration and not grievance arbitration. "Grievance" arbitration involves interpreting a collective bargaining agreement and subsequently resolving a dispute between the public employer and the public employee. "Interest" arbitration involves the resolution of an impasse in collective bargaining over the terms of a new contract. City of Bethany v. Public Employees Relations Board,

¶7 The Union argued that when the City rejected the second year of the two-year agreement, the rejection reopened the monetary issues. As authority, the Union cites

¶8 However, the board concluded in making its award that the Union is "legally entitled to a 6.1% wage adjustment as negotiated by the parties pursuant to contract." In a dissenting opinion, one of the members of the board observed that the parties made a two-year agreement, and that to make the agreement legal the parties inserted language recognizing that any wage increases in year two of the agreement would be awarded only if funds were appropriated by the City Council. He continued in his dissent that the parties had a lengthy history of collective bargaining and the Union knew or should have known of the limitations on the city's funding abilities. Article 14, § 1 entitled "Wages/Hours" in the collective bargaining agreement included the sentence "Salary movement is subject to the appropriation of funds by the City Commission." The majority of the board of arbitration construed that language to reach a result favorable to the Union.

III. DISCUSSION

¶9 The board and the Union characterize this dispute as interest arbitration, but the board's opinion constantly referred to and construed the previous year's agreement between the City and the Union. The board used the formula provided in the previous year's agreement to set the salary of the firefighters and to bind the City to honor that agreement. Even though the agreement did not set the actual amount of their salaries in the previous year, the obligation is created in the previous year.

¶10 The method the City attempted to use to keep the contract from violating Oklahoma's constitution was to insert the wording that the salary increase would be "subject to the appropriation of funds by the City Commission" but when the City Commission agreed to an increase of only 3%, the board determined that the disputed language was a "mere recognition that the funds are to be appropriated by the City Commission once the deal [was] made, a condition subsequent."

¶11 Article 10, § 26 of the Oklahoma Constitution provides in pertinent part:

"Except as herein otherwise provided, no county, city, town, township, school district, or other political corporation, or subdivision of the state, shall be allowed to become indebted, in any manner, or for any purpose, to an amount exceeding, in any year, the income and revenue provided for such year without the assent of three-fifths of the voters thereof . . . ."

¶12 The Union, in their claim that the issue before the board of arbitration was merely interest arbitration, urges that such arbitration is permitted pursuant to

¶13 Our previous cases are consistent that a previous year's agreement cannot be used to set subsequent year's salaries of municipal employees because the municipality cannot create an obligation one year that results in a debt in a succeeding year. Wyatt-Doyle & Butler Engineers,

¶14 In the City of Tulsa one question answered by the Court was whether a municipality was obligated to continue paying its employees under a wage provision in an expired collective bargaining agreement until a new agreement is reached, and the Court answered that the city was not obligated. City of Tulsa,

¶15 In a similar case, the City of Del City, the Court addressed a legislative attempt to accomplish the same result as the judicially created dynamic status quo. The issue in that case was the constitutionality of the "Evergreen" clause as it appeared in the Oklahoma Fire and Police Arbitration Act,

¶16 As in Wyatt-Doyle & Butler, the Uniform Arbitration Act,

REVERSED AND REMANDED WITH INSTRUCTIONS.

CONCUR: EDMONDSON, C.J., TAYLOR, V.C.J., HARGRAVE, OPALA, WATT, WINCHESTER, REIF, JJ.

CONCURS IN RESULT: COLBERT, J.

NOT VOTING: KAUGER, J.

FOOTNOTES

1 2004 O.S.Laws, ch. 126, § 1, Article LI - FIRE AND POLICE ARBITRATION, § 51-108. Hearing - Opinions:

"A. 1. The arbitration board acting through its chair shall call a hearing to be held within ten (10) days after the date of the appointment of the chair and shall, acting through its chair, give at least seven (7) days' notice in writing to each of the other two arbitrators, the bargaining agent and the corporate authorities of the time and place of such hearing.

"2. At least seven (7) days before the date of the hearing the corporate authorities and the bargaining agent shall submit to each other and to the arbitration board members a written arbitration statement listing all contract terms which the parties have resolved and all contract issues which are unresolved. Each arbitration statement shall also include a final offer on each unresolved issue. The terms and offers contained in the arbitration statements shall be known collectively as each party's last best offer.

"3. The hearing shall be informal and the rules of evidence prevailing in judicial proceedings shall not be binding. Any and all documentary evidence and other data deemed relevant by the arbitrators may be received in evidence. The arbitrators shall have the power to administer oaths and to require by subpoena the attendance and testimony of witnesses, the production of books, records, and other evidence relative or pertinent to the issues presented to them for determination. A hearing shall be concluded within twenty (20) days from the time of commencement.

"4. Within seven (7) days after the conclusion of the hearing, a majority of the arbitration board members shall select one of the two last best offers as the contract of the parties. The criteria to be used by the board in determining which offer to select shall be limited to paragraphs 1 through 5 of Section 51-109 of this title. The arbitration board may not modify, add to or delete from the last best offer of either party. Written notice of the selection decision shall be mailed or delivered to the bargaining agent and the corporate authorities.