Department of Transportation v. Michigan State Employees Assn ( 2017 )

STATE OF MICHIGAN
COURT OF APPEALS
DEPARTMENT OF TRANSPORTATION and UNPUBLISHED
OFFICE OF STATE EMPLOYER, June 13, 2017
Petitioners-Appellants,
v No. 331951
Ingham Circuit Court
MICHIGAN STATE EMPLOYEES LC No. 15-000701-CZ
ASSOCIATION,
Respondent-Appellee.
Before: SWARTZLE, P.J., and SAAD and O’CONNELL, JJ.
PER CURIAM.
Petitioners Michigan Department of Transportation (DOT) and Office of the State
Employer (OSE) filed a complaint in the trial court asking the trial court to vacate a
supplemental labor arbitration award. Michigan State Employees Association (MSEA) moved
for summary disposition. The trial court granted MSEA’s motion pursuant to MCR
2.116(C)(10)1 and dismissed petitioners’ complaint. Petitioners appeal as of right. We affirm.
I. FACTUAL BACKGROUND
OSE and MSEA entered into a collective bargaining agreement (CBA) that outlined
arbitration procedures to resolve grievances. OSE appointed DOT to administer the grievance
procedure for DOT employees.
DOT later fired employee Landon Clement. MSEA filed a grievance against DOT on
Clement’s behalf. The parties proceeded to arbitration. The arbitrator found that DOT lacked
just cause to terminate Clement and granted Clement’s grievance. The arbitrator ordered DOT to
1
MSEA also moved for summary disposition pursuant to MCR 2.116(C)(4) and (8). We
construe the motion as having been granted pursuant to MCR 2.116(C)(10) because the trial
court gave no indication that it relied on subsection (4) and considered documentary evidence
outside the four-corners of the pleadings, which would not occur in a subsection (8) analysis.
See Cuddington v United Health Servs, Inc, 298 Mich. App. 264, 270; 826 NW2d 519 (2012).
-1-
return Clement to his job or a comparable job, give Clement back pay, and “ma[k]e [Clement]
whole in all other ways that were caused directly by his termination.” Additionally, the
arbitrator “retain[ed] jurisdiction of th[e] case to resolve any disputes that might arise from the
implementation of th[e] Award.”
Clement later sought compensation for penalties from and a loss in growth of his 401(k)
plan incurred when he withdrew funds from his plan after his termination. DOT refused to pay,
and the parties brought the dispute before the arbitrator. The arbitrator found that Clement’s
wrongful termination caused the withdrawals and penalties. Therefore, the arbitrator granted
Clement a supplemental award of $15,528.13 as reimbursement “for the interest and penalty that
he had to pay for the early withdrawal of all of his 401(k) plan funds” and “the loss in value of
his 401(k) plan from the date he had to liquidate the fund until his return to work.”
DOT and OSE asked the trial court to vacate the supplemental award, arguing that it
exceeded the scope of the arbitrator’s authority under the CBA. All parties moved for summary
disposition. The trial court found that the arbitrator did not exceed the scope of his authority,
denied petitioners’ motion, granted MSEA’s motion, and dismissed petitioners’ complaint.
II. STANDARD OF REVIEW
Judicial review of an arbitrator’s decision is narrow. Ann Arbor v American Federation
of State, Co, & Muni Employees (AFSCME) Local 369, 284 Mich. App. 126, 144; 771 NW2d 843
(2009). Once a reviewing court verifies that an arbitrator arguably acted within the scope of his
or her contractual authority, “judicial review effectively ceases.” Id. (internal quotations and
citations omitted). We review de novo a trial court’s decision to enforce an arbitration award.
Id.
A motion for summary disposition pursuant to MCR 2.116(C)(10) tests the factual
sufficiency of a complaint. Spiek v Dep’t of Transp, 456 Mich. 331, 337; 572 NW2d 201 (1998).
The trial “court considers the affidavits, pleadings, depositions, admissions, and other
documentary evidence submitted or filed in the action to determine whether a genuine issue of
any material fact exists to warrant a trial.” Id. A trial court may grant an MCR 2.116(C)(10)
motion if “there is no genuine issue as to any material fact, and the moving party is entitled to
judgment or partial judgment as a matter of law.” We review a trial court’s order granting
summary disposition de novo. Ann Arbor, 284 Mich. App. at 131.
III. ANALYSIS
DOT and OSE argue that the trial court erred when it found that the CBA gave the
arbitrator authority to grant the supplemental award and, therefore, erred in granting MSEA’s
motion for summary disposition. We disagree.
The CBA allows an employee to file a grievance to dispute employer discipline issued
“without just cause.” If the employer and employee cannot resolve the grievance in the first two
steps of the CBA’s grievance procedure, the MSEA can seek arbitration. The CBA provides:
Settlement of grievances may or may not be retroactive as the equities of
the particular case may demand as determined by the Arbitrator.
-2-
***
It is the intent of this provision that employees be made whole in
accordance with favorable arbitral findings on the merits of particular disputes,
however, all claims for back wages shall be limited to the amount of straight time
wages that the employee would otherwise have earned less any unemployment
compensation, workers compensation, long term disability compensation, social
security, welfare or compensation from any employment or other source received
during the period for which back pay is provided; however, earnings from
approved supplemental employment shall not be so deducted.
This CBA passage envisions “retroactive” settlement. It allows the arbitrator to award
back pay, a “traditional make whole remedy for wrongful discharge.” See Ferrario v Escanaba
Bd of Ed, 426 Mich. 353, 385; 395 NW2d 195 (1986) (internal quotations and citations omitted).
It limits the amount of back wages an arbitrator may grant, but otherwise places no limitation on
an arbitrator’s authority to make an employee whole. The arbitrator’s authority to make a
grievant whole is broad enough to encompass reimbursement for penalties for withdrawal from
and a loss in value of a 401(k) plan necessitated by DOT’s termination of Clement’s employment
without “just cause.” Therefore, the arbitrator arguably acted within the scope of his authority
when granting Clement’s supplemental award, see Ann Arbor, 284 Mich. App. at 144, and, thus,
the trial court did not err in granting MSEA’s motion for summary disposition.
Petitioners’ argument that the arbitrator exceeded the scope of his authority by awarding
consequential damages that the parties did not know and should not have known were likely to
result from petitioners’ actions lacks merit. For support, petitioners cite Lawrence v Will Darrah
& Assoc, Inc, 445 Mich. 1; 516 NW2d 43 (1994). The Lawrence Court held that recoverable
damages in a claim for breach of a commercial contract include “ ‘damages that arise naturally
from the breach, or which can reasonably be said to have been in contemplation of the parties at
the time the contract was made.’ ” Id. at 13, quoting Kewin v Mass Mut Life Ins Co, 409 Mich.
401, 419; 295 NW2d 50 (1980) (emphasis in Lawrence). Petitioners cite no authority to suggest
that this rule applies to a trial court’s interpretation of the scope of an arbitrator’s authority under
a CBA in a labor arbitration dispute. Assuming the rule applies, it is reasonably foreseeable that
an employee uses wages to pay living expenses, must find other funding to pay those expenses if
he loses his job, and will suffer financial consequences from accessing those other sources.
Therefore, we do not conclude that Lawrence limited the arbitrator’s authority to grant Clement
the supplemental award.
Petitioners have abandoned their other arguments. Appellants “may not merely announce
a position and leave it to this Court to discover and rationalize the basis for the claim.” Ambs v
Kalamazoo Co Rd Comm, 255 Mich. App. 637, 650; 662 NW2d 424 (2003). Petitioners argue
that the Civil Service Rules and Regulations referenced in the CBA limited the arbitrator’s
authority, but cite no limiting provisions in the Civil Service Rules and Regulations. Petitioners
also argue that the supplemental arbitration process violated due process because they did not
have the opportunity to examine MSEA’s claims in support of the supplemental request.
However, petitioners cite no legal authority to support this claim.
-3-
We affirm.
/s/ Brock A. Swartzle
/s/ Henry William Saad
/s/ Peter D. O’Connell
-4-