City of Miami v. Fraternal Order of Police Lodge 20 , 248 So. 3d 273 ( 2018 )

Third District Court of Appeal
State of Florida
Opinion filed June 6, 2018.
Not final until disposition of timely filed motion for rehearing.
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No. 3D17-729
Lower Tribunal No. 16-18748
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City of Miami,
Appellant,
vs.
Fraternal Order of Police Lodge #20, etc.,
Appellee.
An appeal from the Circuit Court for Miami-Dade County, Barbara Areces,
Judge.
Victoria Mendez, City Attorney, and Kevin R. Jones and Forrest L.
Andrews, Assistant City Attorneys, for appellant.
Buschel Gibbons, P.A. and Robert C. Buschel and Eugene G. Gibbons (Ft.
Lauderdale), for appellee.
Before SUAREZ, LAGOA, and SCALES, JJ.
SUAREZ, J.
This is an appeal from a final order of dismissal, which upholds an
arbitration award against Appellant, the City of Miami (the “City”), in favor of
Appellee, the Fraternal Order of Police, Lodge 20 (the “FOP”). The City
challenges the Arbitrator’s authority to decide whether the City violated a
Collective Bargaining Agreement by precluding two police officers, Lieutenant
Javier Ortiz and Sergeant Edward Lugo (the “Officers”), from working extra duty
(commonly referred to as off-duty) at the Ultra Music Festival (“Ultra”). Because
we find that the Arbitrator did not have the authority to hear a dispute concerning
extra duty work, and that the City did not waive the issue of whether the Arbitrator
had such authority, we hold that the trial court erred in denying the City’s motion
to vacate and in confirming the award, and we reverse and remand for further
proceedings.
BACKGROUND
Prior to 2014, Ortiz and Lugo would routinely sign up to work extra duty at
Ultra. During the March 2011 Festival, the Officers were involved in the arrest of
Jesse Campodonico, who subsequently sued, alleging that the two Officers used
excessive force. An indemnity agreement between the City and Ultra required
Ultra to indemnify the City for any negligent acts committed by the City’s police
officers.1 In January 2014, Ultra’s insurer agreed to pay $400,000.00 to settle
Campodonico’s claim.
1Following an internal affairs investigation, the Officers were exonerated of any
wrongdoing.
2
In 2014 and 2015, Ultra contacted the City to request that the Officers not be
assigned to work at the 2014 and 2015 festivals. The City agreed to prohibit the
Officers from working at Ultra but permitted them to work at any other event
during the larger Winter Music Festival. Following the denial of their requests to
work at Ultra, both Officers filed grievances. The City denied the grievances, and
the parties2 proceeded to arbitration pursuant to a Collective Bargaining Agreement
(the “Agreement”).3
The City participated in arbitration but argued that the Arbitrator lacked the
authority to consider the Officers’ grievances because working an extra duty job
was not a subject covered under the Agreement. The Arbitrator disagreed and
concluded that he had authority to review the Officers’ grievances. The arbitration
award ultimately sustained the grievances and ordered that the Officers be
compensated and allowed to pursue extra duty at future Ultra events. Following
the award, the City filed a motion to vacate in the circuit court pursuant to section
682.13(1)(d), Florida Statutes, claiming the Arbitrator exceeded his authority. The
court denied the City’s motion and granted the Officers’ motion to confirm the
arbitration award. This appeal follows.
2 FOP is the exclusive bargaining representative of the Officers.
3 There are actually two collective bargaining agreements: (1) a 2012-2014
Agreement and (2) a 2014-2015 Agreement. The relevant language in the two
agreements is the same.
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ANALYSIS
A trial court’s role in determining arbitrability under the Revised Florida
Arbitration Code is limited to the following inquiries: “(1) whether a valid written
agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether
the right to arbitration was waived.” 3A Fla. Jur. 2d Arbitration and Award § 54;
see also Lucky Star Horses, Inc. v. Diamond State Ins. Co., 233 So. 3d 1159, 1161
(Fla. 3d DCA 2017) (citing Seifert v. United States Home Corp., 750 So. 2d 633(Fla. 1999)). Here, there is no dispute that a valid written agreement to arbitrate
exists. We therefore address the remaining two prongs: whether an arbitrable issue
exists and whether the City waived its objection to the Arbitrator’s authority.
1. Whether an Arbitrable Issue Exists
“Section 682.13(1) sets forth the only grounds upon which an award of an
arbitrator in a statutory arbitration proceeding may be vacated . . . .”
Schnurmacher Holding, Inc. v. Noriega, 542 So. 2d 1327, 1328 (Fla. 1989); see
also LeNeve v. Via S. Florida, L.L.C., 908 So. 2d 530, 534 (Fla. 4th DCA 2005)
(“Where the party moving to vacate fails to prove one of the [statutory grounds set
forth in § 682.13(1)], ‘neither a circuit court nor a district court of appeal has the
authority to overturn the award.’” (quoting Schnurmacher, 542 So. 2d at 1328)).
The City relies on section 682.13(1)(d), Florida Statutes (2017), which provides
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that the court shall vacate an arbitration award if “[a]n arbitrator exceeded the
arbitrator’s powers . . . .”
Arbitration is a matter of contract. An arbitrator’s authority to conduct an
arbitration and the issue(s) to be arbitrated are granted and limited by the operative
document(s) in question or by agreement of the parties themselves. The arbitrator
exceeds his or her authority by arbitrating any other issues. In the present case,
Article 6.8, step 4 of the Collective Bargaining Agreement refers certain
grievances to arbitration and limits the Arbitrator’s authority to hear only those
grievances:
2. The arbitration shall be conducted under the rules set
forth in this Agreement and not under the rules of the
American Arbitration Association. Subject to the
following, the Arbitrator shall have jurisdiction and
authority to decide a grievance as defined in this
Agreement. The Arbitrator shall have no authority to
change, amend, add to, subtract from, or otherwise
alter or supplement this Agreement, or any part
thereof, or any amendment hereto. The Arbitrator shall
have no authority to consider or rule upon any matter
which is stated in this Agreement not to be subject to
arbitration or which is not a grievance as defined in
this Agreement, or which is not covered by this
Agreement; nor shall this Collective Bargaining
Agreement be construed by the Arbitrator to supersede
any applicable laws.
(Emphasis added). Under this provision, the Arbitrator only has the authority to
decide a grievance, as defined in the Agreement.4 Article 6.2 defines the term
“grievance” as follows:
5
6.2 A grievance is any dispute, controversy or difference
between (a) the parties, (b) the City and a bargaining unit
member or bargaining unit members on any issues with
respect to, on account of or concerning the meaning,
interpretation or application of this Agreement or any
terms or provisions thereof.
(Emphasis added). In short, the Arbitrator is only given the authority to decide
disputes over the meaning, interpretation, or application of the provisions found in
the Collective Bargaining Agreement. The Arbitrator is not granted the authority
to decide any other disputes. See Schnurmacher, 542 So. 2d at 1329 (“[A]n
arbitrator exceeds his or her power . . . when he or she goes beyond the authority
granted by the parties or the operative documents and decides an issue not
pertinent to the resolution of the issue submitted to arbitration.”).
Nowhere in the Collective Bargaining Agreement is there a provision
concerning the privilege of extra duty work. As such, a dispute concerning extra
duty work is not a grievance that is subject to arbitration. In the instant case, the
Arbitrator found that he had the authority to arbitrate the Officers’ grievances by
engaging in a creative analysis of material outside of the Collective Bargaining
Agreement having to do with extra duty employment. Specifically, the Arbitrator
first relied on Article 23 of the Collective Bargaining Agreement—the “Prevailing
4 Relatedly, Article 4.4 of the Agreement provides as follows: “Those inherent
managerial functions, prerogatives, and policy making rights which the City has
not expressly modified or restricted by a specific provision of this Agreement are
not in any way, directly or indirectly, subject to the Grievance Procedure contained
in this Agreement.”
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Benefits” provision—which states that all benefits in effect when the Agreement
was entered into, including benefits provided by ordinance, “shall remain in full
force and effect for the duration of this Agreement.” Because Article 23 refers to
“benefits provided by ordinance,” the Arbitrator then impermissibly went outside
of the four corners of the Collective Bargaining Agreement to section 42-8(a) of
the City Code of Ordinances, which essentially states that the chief of police
evaluates off-duty requests pursuant to “the factors of existing laws, ordinances,
rules and regulations, personnel scheduling availability, risk of harm to
personnel, and police department efficiency.” (Emphasis added). Based on the
“rules and regulations” language from the Ordinance, the Arbitrator looked to a
second source outside of the Agreement: Departmental Order 12, which describes
the process to sign up for extra duty work. Although the Departmental Order
clearly states that “[w]orking special events or extra duty jobs shall be considered a
privilege, not a right,” (emphasis added) the Arbitrator concluded that extra duty
jobs were in fact benefits (despite the explicit wording that extra duty is a
privilege). He then concluded that since Article 23 of the Collective Bargaining
Agreement covered “Prevailing Benefits,” a dispute as to extra duty work would be
a grievance under the Collective Bargaining Agreement and subject to arbitration.
We have no difficulty concluding that the Arbitrator exceeded his authority
in considering a matter that was not subject to arbitration pursuant to the provisions
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of the Collective Bargaining Agreement. In order to reach the issue, the Arbitrator
went beyond the arbitration provisions of the Collective Bargaining Agreement.
The Arbitrator went from the Prevailing Benefits provision within the
Agreement—which makes no mention of “extra duty”—to a City Ordinance, and
finally to a Departmental Order, both of which are outside of the Collective
Bargaining Agreement. Moreover, the Departmental Order explicitly states that
extra duty is a privilege and not a right. Consequently, we find that the Arbitrator
exceeded his powers. See § 682.13(1)(d), Fla. Stat. But we next must address
whether the City waived its objection to the Arbitrator determining the issue of
arbitrability. If the City did waive its objection, the Arbitrator’s findings must be
affirmed even if the Arbitrator did exceed his authority.
2. Whether the City Waived Its Objection to the Arbitrator’s Authority
The Officers’ primary argument on appeal is that the City waived the issue
of arbitrability. We are bound by the rule set forth in Schnurmacher, which states
that an arbitration award “cannot be set aside for mere errors of judgment either as
to the law or as to the facts; if the award is within the scope of the submission, and
the arbitrators are not guilty of the acts of misconduct set forth in the statute, the
award operates as a final and conclusive judgment.” 542 So. 2d at 1328 (quoting
Cassara v. Wofford, 55 So. 2d 102, 105 (Fla.1951)). If the City waived
arbitrability, we would be compelled to uphold the arbitration award, even if the
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Arbitrator exceeded his authority under the Agreement. See LeNeve v. Via S.
Florida, L.L.C., 908 So. 2d 530, 534–35 (Fla. 4th DCA 2005) (“[U]nlike a court’s
subject matter jurisdiction which cannot be conferred by the parties, an arbitrator's
jurisdiction derives from the parties’ agreement and can broaden during the course
of arbitration by waiver, failure to object and consent.” (internal quotation marks
omitted)).
Most cases on waiver in the context of arbitration deal with the more
common issue of whether a party waives arbitration by litigation; however, waiver
can also work in reverse. That is, a party can waive its ability to litigate by
engaging in arbitration. See 92 Am. Jur. Proof of Facts 3d 1 (“Although a court is
usually the proper venue for decisions about arbitrability, if the parties clearly and
unmistakably submit the issue to the arbitrator without reservation, then the parties
have waived their right to have a court make the decision. When the parties to an
arbitration agreement have agreed to allow the arbitrator to decide arbitrability, the
court should give considerable leeway to the arbitrator, setting aside an award only
in certain narrow circumstances.”).
In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995), the
United States Supreme Court explained that “[c]ourts should not assume that the
parties agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’
evidence that they did so.” See also Rintin Corp., S.A. v. Domar, Ltd., 766 So. 2d
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407 (Fla. 3d DCA 2000). In the instant case, the trial court determined that “[t]he
City did not waive its objection to the Arbitrator’s authority throughout the
arbitration proceedings . . . .” We agree.
The Officers argue that the record “clearly shows” that the City consented to
the Arbitrator’s authority to decide the issue of arbitrability. They point us to the
following exchange at the beginning of the arbitration hearing:
THE ARBITRATOR: My question was not with regard
to that, but whether the City is prepared and is basically
deferring the question of arbitrability to the Arbitrator?
[THE CITY]: I think it’s a legal question. It's not
necessarily a factual question. I think the facts in that
issue are well-established.
THE ARBITRATOR: I understand that.
[THE CITY]: But we can defer it, if you’d like, and
proceed, and we’ll bring it up at the end, if you'd like.
I mean--
THE ARBITRATOR: I’m prepared to hear evidence
with regards to the procedural question of arbitrability,
but I need some clarification that indeed the City is
deferring the matter of arbitrability for resolution to the
Arbitrator.
[THE CITY]: I see. Sure. I'll defer it.
(Emphasis added).
While this statement may seem to indicate that the City waived its objection
to arbitrability, the transcript as a whole suggests that the City consistently
maintained its position that the Arbitrator was without authority to decide the issue.
During the hearing, the City also made the following statements:
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But, I think, for the two watershed issues, One, they have
to establish that they have a right to this. They have to
put on some evidence to demonstrate or show somebody
that they had a right that was contravened, if we get
beyond the arbitrability part, which I've already
agreed that we will move forward and we will reserve
on that issue.
....
After you finish [r]edirecting Lieutenant Ortiz, I'd like to
call them out of turn, still reserving on the issue of
arbitrability and whether or not they've proven
anything in regard to a right or a privilege that's
arbitrable, they've got to go somewhere else. So I want
to get them on the record –
Based on the record evidence as a whole, the City’s agreement to defer is far
from a “clear and unmistakable” agreement to waive the issue of arbitrability.
Instead, the City allowed arbitration to go forward while explicitly and repeatedly
reserving on the issue of arbitrability.
The Officers also argue that the City should have done more if it wanted the
option to litigate arbitrability. They rely on Infinity Design Builders, Inc. v.
Hutchinson, 964 So. 2d 752 (Fla. 5th DCA 2007), one of the few Florida cases
addressing waiver of litigation by engaging in arbitration.5 In Hutchinson, Infinity
5 The Fifth District in Hutchinson distinguishes its decision from “two significant
cases in Florida in which a participant in arbitration has been determined to have
waived its right to litigate in the courts.” Id. at 756. Those cases are also
distinguishable from the case before us. In LeNeve, 908 So. 2d 530, LeNeve
waived, in writing, his right to submit arbitrability to the circuit court. In Victor v.
Dean Witter Reynolds, Inc., 606 So. 2d 681 (Fla. 5th DCA 1992), the Fifth District
found that a brokerage firm had waived its right to have the courts decide a statute
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took a number of preliminary steps consistent with its participation in arbitration.
Before the actual arbitration, however, it filed an objection, asserting that no
arbitration agreement existed between it and Hutchinson. Infinity also moved to
stay the arbitration proceedings. Although the circuit court found that the
arbitration provision had been struck from the agreement, it denied the motion to
stay based on Infinity’s participation in the arbitration process. The Fifth District
reversed, finding that although Infinity participated, it did not knowingly intend to
relinquish its right to litigate because it immediately acted to enforce its rights once
it knew that the contract did not contain an arbitration provision. Id. at 756.
Hutchinson does not stand for the proposition that a party waives its right to
litigate unless it refuses to participate in arbitration or files a motion to stay.
Rather, the decisive inquiry is whether a party voluntarily and knowingly intended
to waive its right to litigate arbitration. Id. at 755 (“Waiver is the voluntary and
intentional relinquishment of a known right or conduct which implies the voluntary
and intentional relinquishment of a known right.” (internal quotation marks
omitted)).
Here, although the City participated in arbitration, it consistently and
repeatedly raised the issue of arbitrability. See Kaplan, 514 U.S. at 946 (“[M]erely
arguing the arbitrability issue to an arbitrator does not indicate a clear willingness
of limitations issue because of its long, active, knowledgeable, and intentional
participation in the arbitration process.
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to arbitrate that issue, i.e., a willingness to be effectively bound by the arbitrator's
decision on that point.”). We therefore agree with the trial court that City did not
waive its objection to the Arbitrator’s power.
Because the Arbitrator exceeded his authority to decide the Officers’
grievances and the City did not waive its objection to arbitrability, we affirm the
trial court’s determination on waiver but reverse with respect to the court’s denial
of the City’s motion to vacate the arbitration award.
Affirmed in part, reversed in part, and remanded for further proceedings.
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