City of Somerville v. Commonwealth Employment Relations Board , 470 Mass. 563 ( 2015 )

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SJC-11620
CITY OF SOMERVILLE & another1 vs. COMMONWEALTH EMPLOYMENT
RELATIONS BOARD & others.2
Suffolk. November 3, 2014. - February 3, 2015.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, &
Hines, JJ.
School and School Committee, Retirement benefits, Group
insurance, Collective bargaining. Municipal Corporations,
Group insurance, Collective bargaining. Retirement.
Public Employment, Retirement benefits, Collective
bargaining. Insurance, Group.
Appeal from a decision of the Division of Labor Relations.
The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.
Matthew J. Buckley, Assistant City Solicitor, for the
plaintiffs.
T. Jane Gabriel for the defendant.
Laurie R. Houle, Ira Fader, Colin R. Confoey, & Jason
Powalisz for the interveners, submitted a brief.
1
School Committee of Somerville.
2
Somerville Teachers Association, Somerville Police
Superior Officers Association, Somerville Administrators
Association, and Somerville Municipal Employees Association,
interveners.
2
SPINA, J. At issue in this case is whether the city of
Somerville (city) and the school committee of Somerville (school
committee) violated G. L. c. 150E, § 10 (a) (5), and,
derivatively, G. L. c. 150E, § 10 (a) (1), when the city
unilaterally reduced its percentage contribution to retired
employees' health insurance premiums without engaging in
collective bargaining over the matter with current employees.3
We conclude that the city and the school committee did not
violate these statutory provisions. Accordingly, we reverse the
decision of the Commonwealth Employment Relations Board (board),
which reached a contrary conclusion.
1. Statutory framework. Our resolution of the present
dispute is based on the interplay between G. L. c. 150E and
G. L. c. 32B. General Laws c. 150E, § 2, protects the rights of
public employees to self-organization and collective bargaining.
Pursuant to G. L. c. 150E, § 6, "[t]he employer and the
exclusive representative . . . shall negotiate in good faith
with respect to wages, hours, standards [of] productivity and
performance, and any other terms and conditions of employment
. . . ." General Laws c. 150E, § 10, states, in relevant part:
"(a) It shall be a prohibited practice for a public
employer or its designated representative to:
3
A municipality and a school committee are a single entity
for purposes of collective bargaining. See City of Malden, 23
M.L.C. 181, 183-184 (1997).
3
"(1) Interfere, restrain, or coerce any employee in
the exercise of any right guaranteed under this chapter;
". . .
"(5) Refuse to bargain collectively in good faith with
the exclusive representative as required in section six
. . . ."
"Under the Home Rule Amendment, art. 89, § 6, of the
Amendments to the Massachusetts Constitution, municipalities of
the Commonwealth may choose to provide health insurance coverage
to their employees." Twomey v. Middleborough, 468 Mass. 260,
261 (2014). See Cioch v. Treasurer of Ludlow, 449 Mass. 690,
695 (2007). General Laws c. 32B is a so-called "local option"
statute that governs the provision of health insurance to active
and retired employees of a municipality once that entity has
voted to accept the terms of the statute.4 See Twomey v.
Middleborough, supra; Yeretsky v. Attleboro, 424 Mass. 315, 316
(1997). See generally D.A. Randall & D.E. Franklin, Municipal
Law and Practice § 10.25 (5th ed. 2006 & Supp. 2014). When
enacted, see St. 1956, c. 730, § 1, G. L. c. 32B, §§ 1 and 3,
authorized municipalities to offer certain eligible persons and
their dependents group indemnity health insurance coverage.
Beginning in 1971, municipalities were given the option of
making available to such individuals the services of a health
4
For the sake of simplicity, we use the term "municipality"
in this opinion to refer to the counties, cities, towns, and
districts covered by G. L. c. 32B.
4
maintenance organization (HMO) by accepting G. L. c. 32B, § 16,
inserted by St. 1971, c. 946, § 5.
Pursuant to G. L. c. 32B, § 9, retirees bear the full cost
of their health insurance premiums unless a municipality has
accepted the more generous provisions of G. L. c. 32B, § 9A or
§ 9E. If a municipality accepts G. L. c. 32B, § 9A, then it may
elect to pay fifty per cent of a retiree's premium for health
insurance coverage. If a municipality accepts G. L. c. 32B,
§ 9E, then it may elect to pay "a subsidiary or additional rate"
greater than fifty per cent of a retiree's health insurance
premium.
2. Factual and procedural background. We summarize the
relevant facts as stipulated by the parties in lieu of a hearing
before the board. The city is a public employer within the
meaning of G. L. c. 150E, § 1. The school committee is the
collective bargaining agent of the city for the purpose of
dealing with school employees. The Somerville Teachers
Association, Somerville Police Superior Officers Association,
Somerville Administrators Association, and Somerville Municipal
Employees Association (collectively, the unions) are employee
organizations within the meaning of G. L. c. 150E, § 1,5 and they
5
General Laws c. 150E, § 1, defines an "[e]mployee
organization" as "any lawful association, organization,
federation, council, or labor union, the membership of which
includes public employees, and assists its members to improve
their wages, hours, and conditions of employment."
5
are the exclusive bargaining representatives for various
individuals employed by the school committee and the city.
In 1979, the city accepted G. L. c. 32B, § 9E, by a vote of
the board of aldermen, thereby authorizing the city to pay more
than fifty per cent of a retired employee's monthly premium for
an indemnity health insurance plan. From that point forward
until August 1, 2009, the city contributed ninety-nine per cent
of the premium for a retired employee's health insurance
coverage under the indemnity plan offered by the city. Retired
employees contributed the remaining one per cent of the premium.
In addition, the city offered active and retired employees
health insurance coverage through several HMOs. The city paid
fixed percentages of the total premium costs, which varied
between eighty and ninety per cent, depending on the particular
plan. Employees and retirees paid the remainder of the premium
costs.
On or about July 1, 2009, the city had approximately 1,262
retirees who were participating in the city's group health
insurance plans. The majority of these individuals had retired
from positions in the unions' bargaining units. Effective
August 1, 2009, the city decreased the percentage of its
contribution for retired employees' health insurance coverage
under the indemnity plan from ninety-nine per cent to sixty per
cent, and it decreased the percentage of its contribution for
6
retired employees' health insurance coverage under all other
insurance plans to seventy-five per cent. These changes were
approved by the board of aldermen after a properly noticed
public hearing at which the new rates were proposed by the
mayor.6
Neither the city nor the school committee provided the
unions with notice of or an opportunity to bargain over the
decision to change contribution rates. None of the collective
bargaining agreements between the city and the various
bargaining units addressed the contribution rates for retired
employees' health insurance coverage, and such rates had never
been a subject of negotiation between the city and the
bargaining units. At all material times, the city has
maintained that the authority to set the contribution rates for
retirees' health insurance coverage is vested exclusively with
the board of aldermen and the mayor, and that such contribution
rates are not a mandatory subject of bargaining with current
employees.
On September 10, 2009, the Somerville Teachers Association
filed two prohibited practice charges with the division of labor
6
According to the city of Somerville (city), the board of
aldermen voted to amend the city's 1979 acceptance of G. L.
c. 32B, § 9E, thereby allowing the city to reduce its health
insurance contribution rates for retirees.
7
relations (division).7 It alleged that the city and, separately,
the school committee had violated G. L. c. 150E, § 10 (a) (5),
and, derivatively, G. L. c. 150E, § 10 (a) (1), by "failing to
provide notice and an opportunity to bargain over the future
benefits [on retirement] of active employees when the City
announced at the meeting of the Board of Aldermen, on May 28,
2009 that effective August 1, 2009 the percentage contribution
rate for all retirees would be increased."8 Based on essentially
the same grounds, the Somerville Police Superior Officers
Association filed a prohibited practice charge with the division
on December 21, 2009; the Somerville Administrators Association
filed two prohibited practice charges with the division on
January 26, 2010;9 and the Somerville Municipal Employees
Association filed a prohibited practice charge with the division
on April 13, 2010. The division investigated the allegations
and found probable cause to believe that statutory violations
had occurred. The division issued complaints with respect to
all six matters, and, on July 30, 2010, they were consolidated
7
The division of labor relations is now the Department of
Labor Relations. See St. 2011, c. 3, § 36.
8
In its prohibited practice charge against the city, the
Somerville Teachers Association (association) also alleged that
the city had failed to provide certain health insurance
information that was reasonable and necessary for the
association to fulfil its obligations under the law. It
subsequently withdrew this claim on February 18, 2011.
9
One prohibited practice charge was against the city, and
the other was against the school committee of Somerville.
8
for hearing. Pursuant to G. L. c. 150E, § 11 (f), the parties
petitioned to have the consolidated complaints heard by the
board in the first instance (rather than by a hearing officer),10
and the request was granted. The parties then stipulated to the
facts.
By decision dated October 19, 2011, the board concluded
that the city and the school committee had failed to satisfy
their statutory bargaining obligations before unilaterally
reducing contributions for retired employees' health insurance
premiums. In the board's view, health insurance contributions
for municipal retirees are a mandatory subject of bargaining.
The board rejected the city's claims that current employees have
no right to bargain over such contributions made on behalf of
retirees, and that, pursuant to G. L. c. 32B, health insurance
rates for retirees must be established through the local
governmental process, not the collective bargaining process.
The board ordered the city and the school committee to
cease and desist from failing and refusing to bargain
collectively in good faith with the unions over changes to
future retirees' health insurance contribution rates. Further,
the board ordered the city and the school committee to restore
the terms of the retirement health insurance benefit that was in
10
The Commonwealth Employment Relations Board (board) is
the body within the division of labor relations that is charged
with reviewing orders from investigators and issuing decisions.
See G. L. c. 23, § 9R; G. L. c. 150E, § 11.
9
effect prior to August 1, 2009, for the unions' bargaining unit
members who were active employees before that date and retired
thereafter. In addition, the board ordered the city and the
school committee to make whole those bargaining unit members who
retired after August 1, 2009, for any losses they may have
suffered as a result of the unilateral change in retirement
health insurance contribution rates, plus interest. The city
and the school committee appealed the board's decision, the case
was entered in the Appeals Court, and we transferred it to this
court on our own motion.
3. Standard of review. We review the board's decision in
accordance with the standards set forth in G. L. c. 30A,
§ 14 (7), governing appeals from final administrative agency
decisions. See G. L. c. 150E, § 11 (i). See also Worcester v.
Labor Relations Comm'n, 438 Mass. 177, 180 (2002). The board's
decision will be set aside only if it is "[a]rbitrary or
capricious, an abuse of discretion, or otherwise not in
accordance with law." G. L. c. 30A, § 14 (7) (g). We defer to
the board's specialized knowledge and expertise. See Worcester
v. Labor Relations Comm'n, supra. However, the duty of
statutory interpretation rests ultimately with the courts. See
Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478, 481
(2006), citing Cleary v. Cardullo's, Inc., 347 Mass. 337, 343-
344 (1964).
10
4. Discussion. The thrust of the arguments made by the
city and the school committee is that current public employees
do not have the right to bargain collectively over the issue of
health insurance contribution rates for retirees. They contend
that, pursuant to G. L. c. 32B, such contribution rates are to
be determined solely by the local government. In their view, a
contrary conclusion would give the unions veto power over
decisions made by a municipality acting in accordance with its
statutory authority. Therefore, they continue, neither the city
nor the school committee violated G. L. c. 150E, § 10 (a) (5),
and, derivatively, G. L. c. 150E, § 10 (a) (1), when the city
unilaterally reduced its percentage contributions to retirees'
health insurance premiums. We agree.
When Congress enacted the National Labor Relations Act in
1935, it exempted public employers -- States and their political
subdivisions -- from the obligation to engage in collective
bargaining. See 29 U.S.C. § 152(2) (2012). See also Brookfield
v. Labor Relations Comm'n, 443 Mass. 315, 326 n.5 (2005).
States and their political subdivisions were "free to regulate
their labor relationships with their public employees."
Davenport v. Washington Educ. Ass'n, 551 U.S. 177, 181 (2007).
However, as was the case in most States, public employees in the
Commonwealth "had virtually none of the rights that had been
widely guaranteed since the nineteen thirties to employees in
11
private business to organize and bargain collectively and to be
protected in the associated activities of asserting and
negotiating grievances." Dedham v. Labor Relations Comm'n, 365
Mass. 392, 396 (1974). "[T]raditional hostility to
organizational rights on the part of public employees gradually
diminished in the post-war period, and in 1958 Massachusetts was
among the first States . . . to afford a measure of recognition
to those rights." Id. at 397. See St. 1958, c. 460, inserting
G. L. c. 149, § 178D. See also St. 1964, c. 637, inserting
G. L. c. 149, § 178F; St. 1965, c. 763, § 2, inserting G. L.
c. 149, §§ 178G-178N. In 1973, the public sector collective
bargaining law, G. L. c. 149, §§ 178D, 178F-178N, was repealed
and replaced with G. L. c. 150E, see St. 1973, c. 1078, §§ 1, 2,
as comprehensive legislation designed to provide organizational
and collective bargaining rights to public employees.11 See
11
Historically speaking, "the subjects of public sector
collective bargaining are more restricted than those in private
sector labor relations." School Comm. of Boston v. Boston
Teachers Union, Local 66, 378 Mass. 65, 70 (1979). See, e.g.,
G. L. c. 150E, § 9A (a) (prohibiting public employees and their
organizations from engaging in strikes). "'Public policy,
whether derived from, and whether explicit or implicit in
statute or decisional law, or in neither' may limit the ability
of a public employer . . . to bind itself to a given contractual
provision or to delegate to an arbitrator the power to bind it."
School Comm. of Boston v. Boston Teachers Union, Local 66,
supra, quoting School Comm. of Hanover v. Curry, 369 Mass. 683,
685 (1976). "While this principle may be raised in varied
contexts . . . the analysis to be utilized is essentially the
same in all instances: whether the ingredient of public policy
in the issue subject to dispute is so comparatively heavy that
collective bargaining . . . on the subject is, as a matter of
12
Labor Relations Comm'n v. Boston Teachers Union, Local 66, 374
Mass. 79, 93-95 (1977); Gallagher v. Metropolitan Dist. Comm'n,
371 Mass. 691, 693 (1977). Thus, the scope of matters for
negotiation has been defined, albeit somewhat broadly, by the
Legislature.
General Laws c. 150E, § 6, provides that the public
employer and the employee organization "shall negotiate in good
faith with respect to wages, hours, standards [of] productivity
and performance, and any other terms and conditions of
employment." These matters, subject to limited exceptions, are
deemed to be mandatory subjects of bargaining.12 See Local 1652,
Int'l Ass'n of Firefighters v. Framingham, 442 Mass. 463, 467
(2004). See also Worcester v. Labor Relations Comm'n, 438 Mass.
at 180-181 (certain types of managerial decisions must, as
matter of policy, be reserved for public employer's discretion).
The failure of a public employer to negotiate in good faith over
law, to be denied effect." Id. at 70-71. "Underlying this
development is the belief that, unless the bargaining
relationship is carefully regulated, giving public employees the
collective power to negotiate labor contracts poses the
substantial danger of distorting the normal political process
for controlling public policy." Id. at 71.
12
It has been observed by appellate courts that "[a]ny
attempt to define with precision and certainty the subjects
about which bargaining is mandated by [c.] 150E is doomed to
failure." Lynn v. Labor Relations Comm'n, 43 Mass. App. Ct.
172, 177 (1997), quoting Greenbaum, The Scope of Mandatory
Bargaining Under Massachusetts Public Sector Labor Relations
Law, 72 Mass. L. Rev. 102, 102 (1987). See Local 2071, Int'l
Ass'n of Firefighters v. Bellingham, 67 Mass. App. Ct. 502, 522
(2006) (Mills, J., dissenting), S.C., 450 Mass. 1011 (2007).
13
mandatory subjects of bargaining is a prohibited practice. See
G. L. c. 150E, § 10 (a) (5). See also Commonwealth v. Labor
Relations Comm'n, 404 Mass. 124, 127 (1989) ("A public employer
has a duty to bargain in good faith and, short of impasse, it
may not unilaterally implement changes to a mandatory subject of
bargaining without negotiation"); School Comm. of Newton v.
Labor Relations Comm'n, 388 Mass. 557, 572 (1983). The
commission of a prohibited practice is remediable through the
enforcement procedures set forth in G. L. c. 150E, § 11.
The issue here is whether the city's contribution rate for
retired employees' health insurance coverage is a mandatory
subject of bargaining such that its unilateral reduction
constitutes a prohibited practice in violation of G. L. c. 150E,
§ 10 (a) (5). As a general proposition, health insurance
coverage for public employees is "an unearned benefit, no
different in concept from holidays, future sick leave, or other
similar benefits." Larson v. School Comm. of Plymouth, 430
Mass. 719, 724 (2000). "As an unearned benefit, health
insurance, like 'wages, hours . . . and . . . other terms and
conditions of employment' is subject to mandatory collective
bargaining between public employers and public employees."
Massachusetts Nurses Ass'n v. Cambridge Pub. Health Comm'n, 82
Mass. App. Ct. 909, 911 (2012), quoting School Comm. of Medford
v. Labor Relations Comm'n, 8 Mass. App. Ct. 139, 140 (1979),
14
S.C., 380 Mass. 932 (1980). See Anderson v. Selectmen of
Wrentham, 406 Mass. 508, 511 (1990) (municipality's contribution
to unionized employees' group health insurance premiums is
mandatory subject of collective bargaining). The language of
G. L. c. 150E, § 6, governs the terms and conditions of the
public employee's existing employment. It goes without saying
that a retiree cannot bargain over the percentage contributions
made by a municipality to the retiree's health insurance
premiums, given that the retiree is no longer employed. With
respect to current employees, a municipality's contributions to
the health insurance premiums of retirees is not a term or
condition of employment that is subject to mandatory collective
bargaining where the Legislature expressly has conferred
authority over the provision of such a benefit on the
municipality.
The Legislature, by way of G. L. c. 32B, § 9, has stated
that retirees "shall pay the full premium cost" of their health
insurance, subject to the provisions of either G. L. c. 32B,
§ 9A, or G. L. c. 32B, § 9E, which, if accepted by a
municipality, permits the municipality to pay a portion of the
retirees' premiums. The authority conferred on a municipality
to decide whether and how much to contribute to the monthly
health insurance premiums of retired employees (within defined
statutory percentages) would be wholly undermined by an
15
obligation to collectively bargain the matter. See, e.g.,
Somerville v. Somerville Mun. Employees Ass'n, 451 Mass. 493,
494 (2008) (explicit legislative directive of G. L. c. 115,
§ 10, that city's director of veterans' services "shall be
appointed . . . by the mayor, with the approval of the city
council," precluded challenged appointment from being proper
subject of collective bargaining); National Ass'n of Gov't
Employees v. Commonwealth, 419 Mass. 448, 453, cert. denied, 515
U.S. 1161 (1995) (where Legislature reserved for itself in G. L.
c. 32A, § 8, power to change percentage of Commonwealth's
agreed-to contribution to employees' health insurance premiums,
such reserved power could not be overridden by collective
bargaining); Watertown Firefighters, Local 1347, I.A.F.F. v.
Watertown, 376 Mass. 706, 714 (1978) (characterization of matter
as term or condition of employment does not require its
submission to collective bargaining if to do so will "defeat[] a
declared legislative purpose"). See generally Energy Reserves
Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411
(1983), quoting Hudson Water Co. v. McCarter, 209 U.S. 349, 357
(1908) ("One whose rights . . . are subject to [S]tate
restriction, cannot remove them from the power of the State by
making a contract about them").
Except as provided in G. L. c. 150E, § 7 (d), which we
shall discuss next, "[t]here is no obligation to engage in
16
collective bargaining as to matters controlled entirely by
statute." Lynn v. Labor Relations Comm'n, 43 Mass. App. Ct.
172, 183 (1997).13 See Commonwealth v. Labor Relations Comm'n,
404 Mass. at 126; National Ass'n of Gov't Employees, Local R1-
162 v. Labor Relations Comm'n, 17 Mass. App. Ct. 542, 544
(1984). Here, current public employees cannot bargain over how
the city should exercise the authority conferred on it by G. L.
c. 32B, § 9E, because such bargaining effectively would negate
the Legislature's purpose in entrusting the matter to the city.
See Lynn v. Labor Relations Comm'n, supra at 184. Cf. Twomey v.
Middleborough, 468 Mass. at 271 (board of selectmen has
statutory authority to establish percentage of total monthly
premium for HMO coverage that is to be paid by town's retired
employees); Yeretsky v. Attleboro, 424 Mass. at 323-324
(municipal contribution rate for HMO premiums for retired
nonunionized employees determined at local government level).
In our view, the Legislature conferred authority on
municipalities to decide whether and how much to contribute to
13
In Lynn v. Labor Relations Comm'n, 43 Mass. App. Ct. at
182, the Appeals Court cogently explained: "In the range of
cases where the governmental employer acts pursuant to broad,
general management powers, the danger is presented, as pointed
out in School Comm. of Newton v. Labor Relations Comm'n, 388
Mass. [557,] 564-566 [(1983)], that to recognize the statutory
authority as exclusive would substantially undermine the purpose
of G. L. c. 150E, § 6, to provide for meaningful collective
bargaining as a general rule with respect to compensation and
other terms and conditions of employment. That danger simply is
not present when the governmental employer acts pursuant to a
specific, narrow statutory mandate."
17
retirees' health insurance premiums in recognition of the fact
that, as public employers, they must balance the needs of their
retired workers with the burdens of safeguarding their own
fiscal health, thereby ensuring their ability to provide
services for all of their citizens.
If we were to conclude that the city's percentage
contribution to retirees' health insurance premiums is a
mandatory subject of bargaining, we would have to confront the
import of the so-called "conflicts" statute, G. L. c. 150E,
§ 7 (d). See Adams v. Boston, 461 Mass. 602, 607-608 (2012).
General Laws c. 150E, § 7 (d), provides that, with respect to
matters within the scope of negotiations under G. L. c. 150E,
§ 6, the terms of a collective bargaining agreement prevail over
contrary terms in certain enumerated statutes. See Adams v.
Boston, supra; Chief Justice for Admin. & Mgt. of the Trial
Court v. Office & Professional Employees Int'l Union, Local 6,
441 Mass. 620, 625-626 (2004). Generally speaking, those
enumerated statutes "contain specific mandates regarding terms
and conditions of employment of public employees." Adams v.
Boston, supra at 607 n.11. See G. L. c. 150E, § 7 (d); School
Comm. of Newton v. Labor Relations Comm'n, 388 Mass. at 566.
General Laws c. 32B, § 9E, is not among the enumerated statutes.
It is well established that "statutes not specifically
enumerated in § 7 (d) will prevail over contrary terms in
18
collective bargaining agreements." Commonwealth v. Labor
Relations Comm'n, 404 Mass. at 126. See Chief Justice for
Admin. & Mgt. of the Trial Court v. Office & Professional
Employees Int'l Union, Local 6, supra; School Comm. of Natick v.
Education Ass'n of Natick, 423 Mass. 34, 39 (1996). "There is
no duty to bargain over the specific requirements of such
statutes." Commonwealth v. Labor Relations Comm'n, supra. As
pertinent to the present case, even if the city's contribution
to retirees' health insurance premiums was deemed to be a
mandatory subject of collective bargaining, the provisions of
G. L. c. 150E, § 9E, would prevail, and the city could
unilaterally change the percentage of its contribution in
accordance with the statute. See National Ass'n of Gov't
Employees, Local R1-162 v. Labor Relations Comm'n, 17 Mass. App.
Ct. at 544 (where statute not listed in G. L. c. 150E, § 7 [d],
public employer and union cannot amend statute's requirements
through collective bargaining).
5. Conclusion. The city and the school committee did not
violate G. L. c. 150E, § 10 (a) (5), or, derivatively, G. L.
c. 150E, § 10 (a) (1), when the city unilaterally reduced its
percentage contribution to retired employees' health insurance
premiums without engaging in collective bargaining over the
matter with current employees. Accordingly, the decision of the
board is reversed.
19
So ordered.