City of Reno v. IAFF, Local 731 ( 2014 )

130 Nev., Advance Opinion I DO
IN THE SUPREME COURT OF THE STATE OF NEVADA
CITY OF RENO, No. 65934
Appellant,
vs.
INTERNATIONAL ASSOCIATION OF FILED
FIREFIGHTERS, LOCAL 731; JOHN
BECK; JOSHUA BELL; JAMES DEC 31 2014
BIDDLE; MICHAEL BREWER; MATAE CLE
I . LINDEMAN
CASTILLO; JASON EASTMAN; ay DEPUTY CLERK
BENJAMIN ENGLAND; JORDAN
HARRIS; TACY KELLY; MATTHEW
LUJETIC; KENNETH MCLELLAN;
SHAWN PRICE; GEORGE SEARCY;
SONNY SNODGRASS; TRAVIS
BERTRAND; WESLEY BOATMAN;
RICHARD CANADAY; WALTER
CORDOVA; JUSTIN GALLI; JOHN
GERBATZ; NATHAN GOINS; TREVOR
HALL; SEAN O 'BRIEN; JESSE
WASHINGTON; JEREMY BERNINSKI;
MARSHALL BRIN; ALBERT COREA;
JACOB LIGHTFOOT; LEONARD
MUOZ; TEGG ORDUNO;
CHRISTOPHER PEARSON; AND
JAMES SCHMIDT, INDIVIDUALLY,
Respondents.
Appeal from a district court order granting a preliminary
injunction in a labor dispute. Second Judicial District Court, Washoe
County; Lidia Stiglich, Judge.
Reversed.
John J. Kadlic, City Attorney, and Mark W. Dunagan and William E.
Cooper, Jr., Deputy City Attorneys, Reno; Fisher & Phillips LLP and Mark
J. Ricciardi and Whitney J. Selert, Las Vegas,
for Appellant.
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Dyer, Lawrence, Penrose, Flaherty, Donaldson & Prunty and Thomas J.
Donaldson, Sandra G. Lawrence, and Sue S. Matuska, Carson City,
for Respondents.
Neil A. Rombardo, District Attorney, and Randal R. Munn, Chief Deputy
District Attorney, Carson City,
for Amicus Curiae City of Carson City.
Steven B. Wolfson, District Attorney, and Mary Anne Miller, County
Counsel, Clark County,
for Amicus Curiae Clark County.
Mark B. Jackson, District Attorney, and Douglas V. Ritchie, Chief Civil
Deputy District Attorney, Douglas County,
for Amicus Curiae Douglas County.
Josh M. Reid, City Attorney, and F. Travis Buchanan, Assistant City
Attorney, Henderson,
for Amicus Curiae City of Henderson.
Holley, Driggs, Walch, Puzey & Thompson and Clark V. Vellis, Las Vegas,
for Amicus Curiae Nevada League of Cities and Municipalities.
Bradford R. Jerbic, City Attorney, and Morgan Davis, Chief Deputy City
Attorney, Las Vegas,
for Amicus Curiae City of Las Vegas.
McDonald Carano Wilson LLP and Jeff A. Silvestri and Seth T. Floyd, Las
Vegas,
for Amicus Curiae Nevada Taxpayers Association.
Sandra Douglass-Morgan, City Attorney, and Claudia E. Aguayo, Senior
Deputy City Attorney, North Las Vegas,
for Amicus Curiae City of North Las Vegas.
Brian T. Kunzi, District Attorney, Nye County,
for Amicus Curiae Nye County.
William A. Maddox, District Attorney, Storey County,
for Amicus Curiae Storey County.
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BEFORE THE COURT EN BANC.
OPINION
By the Court, HARDESTY, J.:
Appellant laid off certain firefighters claiming that it lacked
the money necessary to continue paying their salaries and benefits. The
district court enjoined appellant from implementing its decision while
respondents pursued arbitration of their grievance disputing that
appellant lacked the money to support the positions. In this appeal, we
must determine whether respondents' grievance is arbitrable where the
parties recited in their collective bargaining agreement appellant's
statutory right to lay off any employee due to a lack of funds. Because we
conclude that the underlying grievance is not arbitrable under the parties'
collective bargaining agreement and thus, there is no authority under
NRS Chapter 38 for the district court's injunctive relief decision, we
reverse the district court's order.
FACTS AND PROCEDURAL HISTORY
In May 2014, the City of Reno decided to lay off 32 firefighters
after the City learned that its application to renew a federal grant, which
had funded those positions, had been denied. Pursuant to Article 2 of the
collective bargaining agreement (CBA) between the City and the
International Association of Firefighters, Local 731, the City based its
decision on its budget shortfalls—a "lack of funds"—and the need to
allocate money to other areas. Article 2 of the CBA provides that certain
rights, including the right to lay off any employee due to lack of work or
lack of funds, are not subject to mandatory bargaining and are reserved to
the City without negotiation. Before the layoffs occurred, the
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International Association of Firefighters, Local 731, and the 32 firefighters
who would be laid off (collectively, IAFF) challenged the City's decision by
filing a grievance using the grievance procedure of the CBA, asserting that
there was no lack of funds to support the City's decision to lay off the
firefighters.' The grievance was denied, and the IAFF requested that the
matter be submitted to arbitration.
Recognizing that the layoffs were set to occur and that the
arbitrator lacked authority to enjoin the layoffs pending arbitration, the
IAFF filed the underlying complaint in the district court, alleging four
claims for relief: anticipatory breach of contract, breach of the implied
covenant of good faith and fair dealing, injunctive relief, and declaratory
relief The complaint asserted that the layoffs violate the CBA, which
governs the terms and conditions of the firefighters' employment, and that
the City had sufficient discretionary funds and revenue to continue the
firefighters' employment. The IAFF also filed a motion for preliminary
injunctive relief under NRS Chapter 38. The City moved to dismiss the
complaint for lack of jurisdiction due to the IAFF's failure to exhaust
contractual and administrative remedies.
The district court concluded that it was empowered to rule on
the request for injunctive relief to ensure that the arbitration of the IAFF's
grievance was not frustrated pursuant to its statutory authority under
NRS 38.222 and its authority to administer equity in civil actions under
'Although it is difficult to discern the specific nature of the grievance
because it generally alleges violations of numerous articles of the CBA,
NRS Chapter 288, "and other agreements and documents," the grievance
specifically states that the violations arose when the City "gave layoff
notices to Local 731 members when there is no lack of funds or lack of
work."
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Article 6, Section 14 of the Nevada Constitution. Based on that
conclusion, the district court granted the IAFF's request for a preliminary
injunction and enjoined the City from proceeding with the layoffs while
the IAFF exhausts its contractual grievance and administrative remedies.
The City filed this appeal from the district court's preliminary
injunction order, and concurrently moved the district court to stay the
preliminary injunction pending resolution of the appeal. The district court
denied the City's request to stay the injunction while the City pursued this
appeal, but granted without prejudice the City's motion to dismiss the
IAFF's breach of contract and declaratory relief claims based on the
IAFF's failure to exhaust its administrative remedies. The district court
did not dismiss the injunctive relief claim, however, and the preliminary
injunction remains in effect.
DISCUSSION
To resolve this appeal, we must address whether the district
court had jurisdiction to grant the injunctive relief requested by the TAFF.
The City contends that the district court lacked jurisdiction to grant
injunctive relief because the underlying dispute regarding the propriety of
the layoffs is governed by NRS Chapter 288 and thus, falls within the
exclusive jurisdiction of the Employee-Management Relations Board
(EMRB). 2 The TAFF rejects this contention and instead defines its claim
2Although not dispositive of this appeal, to the extent that the
IAFF's grievance can be read to seek relief under NRS Chapter 288, it
does not provide a basis for the district court's preliminary injunction
because the EMRB has exclusive jurisdiction over such matters and the
district court would be required to dismiss the underlying claims as
nonjusticiable for failure to exhaust administrative remedies. See City of
Henderson v. Kilgore, 122 Nev. 331, 336-37 & n.10, 131 P.3d 11, 14-15 &
n.10 (2006) (explaining that the failure to exhaust administrative
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as a breach of the CBA, asserting that arbitration of its grievance is
therefore the appropriate remedy and that the district court
correspondingly had authority to enter a preliminary injunction.
In its order granting injunctive relief, the district court
focused on the contractual remedies sought by the TAFF and concluded
that it had authority under NRS 38.222 to grant a preliminary injunction
while the parties pursued arbitration of the dispute. That statute, part of
the Uniform Arbitration Act of 2000, provides that before an arbitrator is
authorized and able to act in a dispute, the district court "may enter an
order for provisional remedies to protect the effectiveness of the arbitral
proceeding to the same extent and under the same conditions as if the
controversy were the subject of a civil action." NRS 38.222(1). The TAFF
initiated arbitration under Article 24 of the CBA, which allows the TAFF
to submit a grievance to arbitration if that grievance is not settled with
the City Manager. 3 The TAFF contends that the arbitrator should
determine whether the City lacked the funds necessary to retain the
firefighters so as to properly lay off those employees pursuant to Article 2
of the CBA. Before that question can be addressed, however, we must first
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remedies renders the matter unripe for court review, and that the EMRB
must decide the complaint before any basis will exist for injunctive relief).
3 Subsection (a) of Article 24 provides that "[a] grievance is a
disagreement between an individual, or the Union, and the City
concerning interpretation, application or enforcement of the terms of this
Agreement." And subsection (b) outlines the grievance process, which
begins with a discussion between the individual and his or her supervisor,
then continues with presenting a written grievance to the Fire Chief,
submitting the grievance to the City Manager, and finally, if still
unresolved, submitting the grievance to arbitration.
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determine whether the City's budget-related layoff decision is actually
subject to arbitration under the terms of the CBA. As discussed below, we
conclude that by its language reserving the non-negotiable right, Article 2
of the CBA exempts the City's layoff decision due to lack of funds from
arbitration.
Arbitration is a favored means of resolving labor disputes.
Port Huron Area Sch. Dist. v. Port Huron Educ. Ass'n, 393 N.W.2d 811,
814 (Mich. 1986). In Nevada, disputes concerning the arbitrability of a
subject matter are resolved under a presumption in favor of arbitration.
Clark Cnty. Pub. Emps. Ass'n v. Pearson, 106 Nev. 587, 591, 798 P.2d 136,
138 (1990). Courts should therefore "order arbitration of particular
grievances 'unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the
asserted dispute." Id. (quoting Int'l Ass'n of Firefighters, Local # 1285 v.
City of Las Vegas, 104 Nev. 615, 620, 764 P.2d 478, 481 (1988)). In cases
involving broadly worded arbitration clauses, when there is no express
provision excluding a particular grievance from arbitration, only the "most
forceful evidence of a purpose to exclude the claim from arbitration can
prevail." Id. (internal quotation omitted).
Nevertheless, "fliabor arbitration is a product of contract, and,
therefore, its legal basis depends entirely upon the particular contracts of
particular parties." Port Huron, 393 N.W.2d at 814. And as a matter of
contract, "a party cannot be required to submit to arbitration any dispute
which he has not agreed so to submit." AT&T Techs., Inc. v. Commc'ns
Workers of Am., 475 U.S. 643, 648 (1986) (internal quotation omitted). An
arbitrator's jurisdiction to resolve a dispute concerning the interpretation
of a collective bargaining agreement derives from the parties' advance
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agreement to submit the disputed matter to arbitration. Id. at 648-49; see
also Port Huron, 393 N.W.2d at 814-15 (explaining that an arbitrator
possesses no general jurisdiction to resolve disputes concerning the
interpretation of a collective bargaining agreement independent of the
terms of the contract itself). Thus, despite the presumption of
arbitrability, the arbitrator's jurisdiction derives from contract and the
arbitrator is limited to resolving disputes over the terms of that contract.
We must, therefore, look to the language of the CBA between the City and
the TAFF to determine whether the dispute here is subject to arbitration.
See Port Huron, 393 N.W.2d at 815 ("Parties consenting to arbitration
pursuant to written agreements consent to arbitrate within the framework
of the terms and conditions of such agreements.").
Article 24 sets forth the grievance procedure by which an
individual or the union may seek resolution of a dispute "concerning [the]
interpretation, application, or enforcement of the terms of this
Agreement." By its very language, the grievance procedure only applies to
the terms of the CBA, and therefore it cannot apply to matters outside the
CBA's scope. Arbitration, as the last step of the grievance process in the
CBA, is similarly limited to disputes that fall within the scope of the CBA.
See City of Reno v. Reno Police Protective Ass'n, 118 Nev. 889, 894, 59 P.3d
1212, 1216 (2002) (noting that when a collective bargaining agreement is
at issue, the arbitrator's award must be based on that agreement); see also
United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S.
574, 584 (1960) (explaining that if an act is specifically excluded from the
grievance procedure in the collective bargaining agreement or from
arbitration in any other agreement, then a grievance based solely on that
subject matter would not be arbitrable).
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The IAFF's grievance asserts that the City violated the CBA
when it "gave layoff notices to Local 731 members when there is no lack of
funds or lack of work." That action is discussed in Article 2 of the CBA.
Article 2 concerns "Management Rights" that "are not within the scope of
mandatory bargaining and which are reserved to the local government
employer without negotiation." Included in these rights is the local
government employer's "right to reduce in force or lay off any employee
because of lack of work or lack of funds, subject to paragraph (v) of
subsection 2, of NRS 288.150." The fact that the parties expressly agreed
in Article 2 to reserve that right to the City without negotiation is the most
forceful evidence that layoffs for lack of funds is not a decision subject to
mandatory bargaining and therefore falls outside the scope of the CBA,
which encompasses the bargained-for terms between the parties. To
interpret Article 2 otherwise and require arbitration over the City's
decision to lay off employees based on a lack of funds would be
inconsistent with the language of the provision, and would render
meaningless the City's agreed upon reservation of that right. The
language of Article 2 itself provides the requisite evidence of the parties'
intent to exclude from arbitration the IAFF's grievance challenging the
City's layoff decision. Pearson, 106 Nev. at 590, 798 P.2d at 137 ("Whether
a dispute is arbitrable is essentially a question of construction of a
contract."); State v. Second Judicial Dist. Court, 125 Nev. 37, 44, 199 P.3d
828, 832 (2009) (explaining that "[fin interpreting a contract, we construe
a contract that is clear on its face from the written language, and it should
be enforced as written").
We further note that the reduction in force due to lack of funds
is excluded from mandatory bargaining and reserved to the local
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government employer without negotiation by law. See NRS 288.150(3)(b)
(reserving to the local government employer "[Ole right to reduce in force
or lay off any employee because of lack of work or lack of money" subject to
mandatory bargaining over the procedures for reduction in workforce as
delineated in NRS 288.150(2)(v)); see also Grievance Arbitration Between
Haw. Org. of Police Officers v. Haw. Cnty. Police Dep't, 61 P.3d 522, 529-31
(Haw. Ct. App. 2002). The TAFF argues that by merely incorporating
language almost identical to NRS 288.150(3) in Article 2 of the CBA, the
parties subjected the City's decision to lay off employees due to a lack of
funds to arbitration. We do not agree. Because the arbitration clause does
not encompass the matters listed in Article 2, it would exceed the
arbitrator's powers under the CBA to assume arbitral jurisdiction over the
IAFF's grievance challenging the City's determination that a lack of funds
required the reduction in force, which the parties agreed was a reserved
management right not subject to negotiation. See Inel Ass'n of
Firefighters, Local 1285 v. City of Las Vegas, 107 Nev. 906, 910, 823 P.2d
877, 879 (1991) (recognizing that if an arbitrator's award relies on an
interpretation that contradicts the express language of the collective
bargaining agreement, the arbitrator's action exceeds his or her
authority); see also Port Huron, 393 N.W.2d at 814-15 (noting that an
arbitrator's jurisdiction to resolve a dispute over a collective bargaining
agreement is derived exclusively from the agreement itself). Thus, the
IAFF's grievance is not subject to arbitration under Article 24 and the
reduction in force due to lack of funds instead remains within the City's
sole discretion in the first instance. 4
4 The IAFF's grievance did not allege that the City's layoff decision
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Here, the district court erroneously rejected the City's
contractual non-negotiable right to make budget-related reduction in force
decisions by concluding that such an interpretation of Article 2 "would
essentially mean public employees subject to NRS 288.150 have no ability
to bargain over the procedures for reduction in the workforce" because any
such bargaining over procedures "would be trumped by the City's
exclusive ability to determine a lack of work or funds exists." The district
court appears to conflate the right to reduce the workforce with the
procedures for carrying out such a reduction. NRS 288.150(2)(v) requires
mandatory bargaining over the "[p]rocedures for reduction in workforce
consistent with the provisions of [NRS Chapter 2881." The parties'
bargained-for terms of personnel reduction are contained in Article 35,
and require only that "reductions in force shall be in accordance with
departmental seniority" and "[n]o new employee shall be hired until all
laid off employees have been given a reasonable opportunity to be
rehired." Based on the record before us, the IAFF did not specifically
allege that the City violated these bargained-for procedures, which, if
grieved, would be subject to arbitration under the CBA as a violation of its
terms. Furthermore, even the district court recognized that aside from
bargaining over the procedure for reducing the workforce, "[n]o greater
limitation on the City's ability to lay off [the firefighters] could have been
agreed upon due to the statutory restriction" under NRS 288.150(3). 5 See
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was made in bad faith, and thus, this opinion does not address any other
possible challenges to the City's decision.
5 The district court's order also concludes that "fflirefighter safety is
subject to collective bargaining pursuant to NRS 288.150(2)(r)," and that
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,
City of Phila. v. Int'l Ass'n of Firefighters, Local 22, 999 A.2d 555, 571 (Pa.
2010) (explaining that the exercise of nonbargainable managerial
prerogatives of a public employer lies beyond the scope of collective
bargaining and cannot be infringed upon).
Having concluded that the IAFF's grievance alleging a
violation of Article 2 is not a dispute that the parties agreed to submit to
arbitration pursuant to the terms of the CBA, see AT&T, 475 U.S. at 651(noting that if an arbitrator was free to impose obligations outside the
collective bargaining agreement, the result would be "antithetical to the
function of a collective-bargaining agreement as setting out the rights and
duties of the parties"), we now address the IAFF's argument that the
question of arbitrability should be left to the arbitrator to decide, subject
to judicial review. 6 It is well established that the question of whether a
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the IAFF's evidence that firefighter safety would be jeopardized by the
layoffs demonstrated a "reasonable probability of success on the merits."
Article 12 of the CBA sets forth the bargained-for provisions for firefighter
safety and health, but the IAFF's grievance itself does not list Article 12
as one of the provisions it alleged the City violated. Furthermore, by
challenging the layoff decision itself, the IAFF has not alleged a violation
of any of the terms of Article 12, which includes the process for
determining safety hazards and sets forth the protective equipment the
City is required to provide.
sAppellate courts generally do not construe collective bargaining
agreements and arbitration clauses in the first instance; an initial
determination of arbitrability is usually made by the district court. See
AT&T, 475 U.S. at 651-52 (remanding for the trial court to determine
whether a particular grievance was subject to arbitration). As a practical
matter, however, the district court referred the case to the arbitrator to
determine whether the City actually lacked the funds so as to properly lay
off the firefighters. Because the district court impliedly reached the
question of arbitrability, we review that determination on appeal.
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collective bargaining agreement creates a duty for the parties to arbitrate
a particular grievance is generally an issue for judicial determination,
except when the parties clearly and unmistakably provide otherwise. See
AT&T, 475 U.S. at 649. Although this court in International Ass'n of
Firefighters, Local # 1285 v. City of Las Vegas determined that a general
collective bargaining agreement provision directing the arbitrator to
determine the issue of arbitrability—similar to the broadly worded
arbitration clause in Article 24(h)—is clear and unmistakable evidence
that arbitrability is not to be decided by the court absent forceful evidence
otherwise, 112 Nev. 1319, 1324, 929 P.2d 954, 957 (1996), the very
language of the CBA here contains forceful evidence that the matter of
budget-related layoffs is excluded from bargaining and is therefore not
subject to arbitration. See IBEW Local 396 v. Cent. Tel. Co., 94 Nev. 491,
493, 581 P.2d 865, 867 (1978) (explaining that on judicial review of an
arbitration award, the reviewing court determines whether "the party
seeking arbitration is making a claim which on its face is governed by the
contract" (internal quotation omitted)). Consequently, we do not defer to
the arbitrator to determine arbitrability. Additionally, resolving the
question of arbitrability at this stage of the dispute furthers judicial
economy and the need to provide guidance to the parties on the important
and time-sensitive budgetary issues concerning the City and other local
government employers who may be affected by the decision set forth
herein. 7
7 The
cities of Henderson, Las Vegas, and North Las Vegas, Clark
County, and Nye County filed an amicus curiae brief in support of the City
of Reno's position, expressing their concerns about the effect that the
disposition of this appeal may have on all local government employers in
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Accordingly, we conclude that the district court lacked
•authority to rule on the request for injunctive relief and the preliminary
injunction was thus entered in error. We therefore reverse the district
court's order. 8
Hardesty
C.J. J.
Pickering
Gibbs
-V41
-- J. IA3 J.
Parraguirre Douglas—
J.
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Nevada. Douglas County, Storey County, Carson City, the Nevada
Taxpayer's Association, and Nevada League of Cities and Municipalities
also joined in the amicus curiae brief.
8 In
light of this opinion and given the district court's order
dismissing all of the IAFF's other claims, the district court's alternate
ground for granting injunctive relief based on its authority under the
Nevada Constitution to administer equity has no foundation and we need
not address it further here. This court's decision necessarily renders moot
the City's motion to stay the district court's preliminary injunction
pending resolution of this appeal.
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