Toledo Police Command Officers' Assn. v. State Emp. Relations Bd. , 2014 Ohio 4341 ( 2014 )

[Cite as Toledo Police Command Officers' Assn. v. State Emp. Relations Bd., 2014-Ohio-4341.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
Toledo Police Command Court of Appeals No. L-13-1074
Officers’ Association
Trial Court No. CI0201103235
Appellee
v.
State Employment Relations
Board, et al. DECISION AND JUDGMENT
Appellants Decided: September 26, 2014
*****
Gregory T. Lodge, for appellee.
Mike DeWine, Ohio Attorney General, Lori Weisman and
Michael L. Stokes, Assistant Attorneys General, for appellant
State Employment Relations Board.
Adam W. Loukx, Director of Law, and Michael J. Niedzielski,
Chief, Labor and Employment, for appellant City of Toledo.
*****
YARBROUGH, P.J.
I. Introduction
{¶ 1} Appellants, the city of Toledo (the city) and the State Employment Relations
Board (SERB), appeal the judgment of the Lucas County Court of Common Pleas,
reversing SERB’s dismissal of appellee’s, the Toledo Police Command Officers’
Association (TPCOA), unfair labor practice (ULP) charge. For the following reasons, we
affirm.
A. Facts and Procedural Background
{¶ 2} The facts of this case, as set forth in SERB’s opinion, are not in dispute. As
stated by SERB, the city is a “public employer” under R.C. 4117.01(B), and TPCOA is
an “employee organization” under R.C. 4117.01(D). TPCOA consists of 130 police
officers at the rank of sergeant, lieutenant, and captain. It is the exclusive representative
for the city’s command officers. The relationship between TPCOA and the city is
governed by a collective bargaining agreement (CBA).
{¶ 3} In early 2009, TPCOA and the city began negotiating for a successor CBA
to replace the CBA that expired at the end of 2008.1 Certain issues arose during those
negotiations, including the amount of money the city would contribute to the officers’
pensions and the amount it would contribute toward officers’ health insurance premiums.
{¶ 4} Concerning pension contributions, section 65 of the expired CBA detailed a
“pension pickup” provision, which described the amount of money the city was to
contribute to each officer’s pension fund. Ordinarily, the officers would be required to
contribute ten percent of their income toward their pension. However, under section 65,
the city agreed to pay the entire pension contribution. According to testimony provided
1
CBAs between the city and TPCOA typically last for three years, with negotiations for a
new CBA beginning three months prior to the expiration of the current CBA.
2.
by TPCOA’s president, Terry Stewart, the city previously agreed to “pickup” the
officers’ pension contributions in lieu of increasing their wages. In addition to its
pension contributions, the city also agreed to pay the entire cost of the officers’ health
insurance premiums.
{¶ 5} As the negotiations for a successor CBA progressed, the city became aware
of an impending budget deficit, which was largely attributable to declining income tax
revenues and a faltering economy.2 Consequently, on April 9, 2009, the city sent a letter
to TPCOA withdrawing all economic proposals made by the city “due to a continuing
downturn in the city’s financial condition.” During that time, the city proposed passing
an ordinance declaring exigent circumstances, which would allow the city to reduce the
deficit by, among other things, eliminating its pension pickup obligation and reducing
officers’ wages by ten percent. The proposed ordinance that was presented to city
council acknowledged a budget deficit of $27 million for 2009. Additionally, on April 2,
2009, an article appeared in the Toledo Blade, reporting that then-mayor Carty
Finkbeiner was considering bankruptcy in light of the city’s “dire outlook.” Ultimately,
city council refused to pass the exigent circumstances ordinance.
{¶ 6} In May 2009, the Finkbeiner administration attempted, for a second time, to
pass an exigent circumstances ordinance. This time, the administration sought to utilize
2
According to the city’s director of finance, Patrick McLean, income tax revenue makes
up about 60 percent of the city’s total revenue. The revenue generated from the income
tax reached its peak in 2007, from which it declined “precipitously” starting in 2008.
3.
exigent circumstances in order to lay off 60 patrolmen and 15 command officers. The
second effort also failed.
{¶ 7} The city eventually resumed bargaining with TPCOA in July 2009. On
August 13, 2009, the city reached a tentative agreement with TPCOA in which the union
agreed that: (1) members would be responsible for paying seven percent of their pension
pickup for 15 consecutive pay periods; (2) medical copays would be added to members’
health insurance plans; (3) overtime would be reduced; (4) wage increases would be
eliminated for 2009; (5) promotions would be suspended; and (6) five positions would be
eliminated. According to Stewart’s testimony, the city saved between $3 million and $4
million as a result of these concessions.
{¶ 8} Eventually, TPCOA’s members ratified the tentative agreement and the city
adopted the agreement on August 18, 2009. The three-year agreement was retroactively
effective beginning January 1, 2009. The agreement does not contain a provision for
midterm bargaining.
{¶ 9} In November 2009, Michael Bell was elected mayor of Toledo. After the
election, Bell appointed Steve Herwat as deputy mayor of operations for the city. As
deputy mayor, Herwat was asked to lead Bell’s transition effort. During the transition
period, Herwat obtained a copy of the city’s 2010 budget that was submitted by the
Finkbeiner administration, which expressed a $30 million deficit. Mayor Finkbeiner
planned to eliminate the deficit by imposing a refuse fee and eliminating tax credits for
4.
city residents who work outside the city. However, city council failed to enact the
proposed changes prior to Bell taking office on January 4, 2010.
{¶ 10} By the time Bell took office, the city’s budget deficit had ballooned to $37
million. Attempting to address the budget issues, Herwat met with the city’s finance
director to discuss the accuracy of the city’s revenue projections for 2010. At the
meeting, Herwat learned that the city’s revenues were likely to fall short of the
projections.
{¶ 11} In addition to its 2010 deficit, the city closed 2009 with a deficit of $8.4
million. Consequently, the city’s 2010 deficit grew to approximately $44 million. The
deficit presented a significant problem for the Bell administration because, under Ohio
law and the city’s charter, the city was required to pass a balanced budget by March 31,
2010.
{¶ 12} On January 10, 2010, Bell met with union leaders to discuss the budget
deficit and seek their help in balancing the budget. The leaders were invited to attend
meetings that Bell was conducting with members of the community in January and
February to discuss the budget.
{¶ 13} On January 14, 2010, Bell sent a letter to city council informing them of a
projected budget deficit of $43.86 million. Subsequent adjustments were made to the
assumptions contained in the budget, resulting in an increase in the deficit to $48 million,
which represented approximately 24 percent of the revenues generated in 2009.
5.
{¶ 14} With the budget deficit issues in mind, Herwat sent Bell a memo on
February 7, 2010, outlining the city’s options for balancing the budget. According to the
memo, the city had the potential to increase revenue by $35.9 million, cut expenditures
by $20.2 million, and reduce labor costs by $18.9 million through modifications to labor
contracts. Ultimately, Bell decided to address the deficit by utilizing a combination of all
three options.
{¶ 15} Having ascertained the extent of the budget deficit, and the options for
addressing it, Bell provided the adjusted figure to city council on February 10, 2010. On
that same day, representatives for the city, TPCOA, and other city unions met to discuss
concessions that would be necessary in order to balance the budget. At the meeting, the
city proposed the elimination of pension pickups, a reduction in its payment of employee
health care costs, and a reduction in base wages. The city asked the unions to respond to
its proposal by February 25, 2010. The unions did not respond.
{¶ 16} While awaiting a resolution with its unions regarding the proposed
concessions, the city began to address the deficit in other ways. By March 15, 2010, the
city had enacted expenditure reduction measures that brought the deficit down to $28
million.
{¶ 17} One week later, a meeting was held between the city and its unions. At that
meeting, TPCOA was informed that it would need to make concessions in the amount of
$902,000 in order to assist the city in addressing the remaining budget deficit. To reach
that amount, the city proposed eliminating the pension pickup and requiring TPCOA
6.
members to pay 20 percent of the total cost for their health insurance premiums. TPCOA
refused the city’s proposal, and suggested that their share of the concessions could be
reached by deferring overtime payments to the members. In addition, TPCOA’s board
member, Michael McGee, explained to Herwat that the city was already set to save a
substantial amount of money due to a hiring freeze implemented pursuant to the
concessions made by the TPCOA and embodied in the existing CBA. Furthermore,
TPCOA’s vice president, Dan Schultz, asserted that the concessions TPCOA made
during the CBA negotiations with the Finkbeiner administration were given in order to
address the economic situation facing the city at the time.
{¶ 18} In responding to TPCOA’s assertions, city officials explained that the
savings realized under the hiring freeze would not be credited toward the $902,000 goal
because that money was already taken into consideration in the budget. Further, Bell
informed Schultz that TPCOA would be given no credit for the concessions it made
during the course of CBA negotiations with the Finkbeiner administration. Finally,
TPCOA’s offer to defer overtime payments was rejected on the basis that such deferrals
were not a true savings since the payments would eventually need to be made. Notably,
the city agreed to a similar proposal made by the firefighters’ union, Local 92, resulting
in a 2010 savings of over $2 million.
{¶ 19} On March 26, 2010, the city’s safety director, Shirley Green, telephoned
TPCOA officials to ascertain whether TPCOA was willing to accept the city’s proposal.
During the four days between the meeting and the telephone call, the city reached a
7.
settlement with the Toledo Police Patrolmens’ Association. However, Green did not
offer the same settlement to TPCOA. Ultimately, TPCOA refused the city’s proposed
concessions.
{¶ 20} With the March 31 deadline looming, the city decided it would need to
unilaterally modify its labor contracts in order to pass a balanced budget and avoid
shutting down the city. Accordingly, on March 30, 2010, city council passed a number of
budget ordinances that included a declaration of exigent circumstances and a
modification of its labor contracts. The ordinances took effect on April 1, 2010.
Pursuant to the ordinances, the city unilaterally eliminated its pension pickup
responsibilities and increased the health insurance copays for its exempt employees and
members of six unions, including TPCOA. Members of two city bargaining units, Local
92 and Teamsters, were excluded from the unilateral modifications. According to
Herwat’s testimony before SERB, the city was forced to declare exigent circumstances
because the city “did not have sufficient revenues in its 2010 budget to be able to meet
the commitments that were made by the [Finkbeiner] administration in the contract that
they negotiated.” However, Herwat acknowledged that there were other options that
could be selected to balance the budget as an alternative to declaring exigent
circumstances, including laying off police officers, but those options were not feasible
because city council refused to adopt them, presumably for political reasons. Further,
Bell testified before SERB that he considered layoffs but decided not to utilize that option
as a deficit-reduction strategy because the city was already operating with a “lean” staff
8.
and further reductions in numbers could jeopardize the city’s economic development
efforts.3
{¶ 21} On March 31, 2010, TPCOA filed a grievance with the city in an effort to
prevent the city from making the changes to the CBA under the budget ordinances. The
city denied the grievance, noting that the matter was not subject to arbitration because it
involved “unilateral changes to the [CBA], via the enactment of Ordinance 103-10, that
affect wages, hours, terms and conditions of employment within the meaning of R.C.
4117.08(C).”
{¶ 22} TPCOA filed several subsequent grievances with the city, complaining that
the city violated the “me too” provision of the CBA by offering Local 92 a deal prior to
the enactment of exigent circumstances that was never offered to TPCOA, and arguing
that its members were not receiving the pay to which they were entitled under the CBA as
a result of the elimination of the pension pickup. Once again, the city refused to process
the grievances.
{¶ 23} As a result of the city’s refusal to process the grievances, TPCOA filed a
complaint with the Lucas County Court of Common Pleas on May 12, 2010, seeking,
inter alia, to compel arbitration on the various grievances that had been filed with the
3
In its decision, SERB found that the city ended up passing a budget with a surplus of
$1.1 million for 2010. Further, SERB found that the city repealed the exigent
circumstances provisions for every union except TPCOA, deciding instead to utilize the
funds generated from the elimination of its pension pickup obligations to fund a new
police class of 60 police officers.
9.
city. In addition, TPCOA filed an unfair labor practice charge with SERB on May 3,
2010.
{¶ 24} In its ULP charge, TPCOA complained that the city violated the terms of
the CBA when it “announced that it would be unilaterally eliminating its payment of the
10% pension pick-up for bargaining unit employees, and also unilaterally increasing
bargaining unit employee contributions for health care benefits.” On June 3, 2010, SERB
issued its finding of probable cause, thereby authorizing a complaint to be issued and
referring the matter to an expedited hearing. SERB issued its complaint on July 12, 2010,
alleging that the city’s actions taken pursuant to the exigent circumstances ordinance
constituted a violation of R.C. 4117.11(A)(1), and also amounted to a refusal to bargain
in good faith in violation of R.C. 4117.11(A)(5).4 On that same day, SERB set the matter
for an evidentiary hearing. Subsequent to the filing of SERB’s complaint, TPCOA
moved to intervene in the action.
4
R.C. 4117.11 sets forth the activities that constitute an unfair labor practice. Relevant
here, subsection A provides:
(A) It is an unfair labor practice for a public employer, its agents, or
representatives to:
(1) Interfere with, restrain, or coerce employees in the exercise of the
rights guaranteed in Chapter 4117 of the Revised Code or an employee
organization in the selection of its representative for the purposes of
collective bargaining or the adjustment of grievances;
***
(5) Refuse to bargain collectively with the representative of his
employees recognized as the exclusive representative or certified pursuant
to Chapter 4117 of the Revised Code * * *.
10.
{¶ 25} A hearing was held before SERB on January 24, 2011. The issue to be
decided by SERB was “whether immediate action was required by the City due to exigent
circumstances that were unforeseen at the time of negotiations, thereby requiring the City
to modify an existing collective bargaining agreement without the negotiation by and
agreement of both parties.” SERB issued its decision on April 29, 2011, in which it
found that the city did not violate R.C. 4117.11(A)(1) and (5) when it “unilaterally
increased the health-care premiums for [TPCOA members] and rescinded its 10%
payment into the [TPCOA] pension fund.” Accordingly, SERB dismissed the complaint,
along with TPCOA’s ULP charge.
{¶ 26} With regard to the question of whether the budget deficit constituted
exigent circumstances, SERB stated:
[T]he employer’s predicament – facing a 24% funding deficit and
requiring a budget that must be balanced, submitted to the legislative body,
and a balanced budget adopted by said legislative body in less than three
months, with potential spending reductions spread across six different
bargaining units as well as exempt employees – certainly fits the
description of exigent circumstances in the present case.
{¶ 27} As to foreseeability of the exigent circumstances, the opinion stated:
Mayoral Candidate Michael Bell, while campaigning for the office,
attempted to ascertain the City’s financial situation. He was told that the
City had a potential deficit for the next fiscal year of $10-15 million in
11.
April 2009, $20 million during the summer of 2009, and $30 million by the
election. He was later told that the potential deficit would be $37 million
(in December 2009), then $40 million (by the time he took office in January
2010), and finally $48.2 million (in February 2010). With a moving target
that escalates from a potential deficit of 5% of expenditures to 24% of the
Fiscal Year 2009 revenues, it would have been impossible to have foreseen
those changes at the time that negotiations concluded in July 2009. This
foreseeability determination is further complicated by the retroactivity
within the CBA – it was negotiated in July 2009, but is effective from
January 1, 2009 through December 31, 2011.
{¶ 28} Following the issuance of SERB’s decision, TPCOA filed a timely appeal
to the Lucas County Court of Common Pleas, asserting that SERB’s decision was not
supported by the evidence, and was contrary to R.C. 4117.11. Specifically, TPCOA
argued that SERB’s decision should be reversed for the following reasons: (1) SERB’s
decision ignores the city’s duty to bargain to impasse prior to making a midterm
modification to the CBA; (2) SERB erroneously concluded that the exigent
circumstances were unforeseeable; (3) the decision erroneously permits the city to
rescind a contract merely because of a projected budget deficit; and (4) the city’s
response to the exigent circumstances was overbroad.
{¶ 29} SERB responded to TPCOA’s arguments by noting that (1) there was no
time to bargain to impasse because the city had only three months to pass a balanced
12.
budget, (2) there was substantial evidence that the city could not have foreseen the rapid
increase in the deficit and falling revenues, (3) its decision did not allow the city to
rescind the CBA, but rather, allowed it to address the exigent circumstances without
shutting down the city, and (4) TPCOA cannot argue that the city’s response was
overbroad because it failed to preserve the record on that argument.
{¶ 30} On April 22, 2013, the trial court reversed SERB’s decision. In its entry,
the court concluded that SERB failed to consider whether the city had bargained to
impasse with TPCOA prior to its unilateral changes to the CBA, as required under
SERB’s opinion in In re State Emp. Relations Bd. v. Toledo City School Dist. Bd. of Edn.,
SERB No. 2001-005, 2001 WL 36023280 (Oct. 1, 2001) (“Toledo City Schools”).
Pointing to the ongoing negotiations that took place between the city and TPCOA after
the exigent circumstances ordinance was passed, the court additionally concluded that the
record only supports a finding that the city did not bargain to impasse. Thus, the court
found that the city was not entitled to unilaterally modify the CBA. Ultimately, the court
ordered the midterm changes rescinded and stated that TPCOA members should be
provided equitable relief for the losses they sustained as a result of the midterm changes.
B. Assignment(s) of Error
{¶ 31} Appellants have timely appealed the trial court’s decision, each asserting
their own assignments of error as follows:
13.
SERB:
ASSIGNMENT OF ERROR #1: THE TRIAL COURT ERRED
WHEN IT REVERSED THE STATE EMPLOYMENT RELATIONS
BOARD’S DECISION DISMISSING THE TOLEDO POLICE
COMMAND OFFICERS’ ASSOCIATION (TPCOA) UNFAIR LABOR
PRACTICE CHARGE AGAINST THE CITY OF TOLEDO ON THE
BASIS THAT SERB MISINTERPRETED THE DOCTRINE OF
“EXIGENT CIRCUMSTANCES.”
ASSIGNMENT OF ERROR #2: THE TRIAL COURT ERRED
WHEN IT DETERMINED THAT SERB’S DECISION WAS NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE.
ASSIGNMENT OF ERROR #3: THE TRIAL COURT ERRED
WHEN IT SUBSTITUTED ITS JUDGMENT FOR THAT OF SERB AND
FAILED TO ACCORD THE REQUISITE DUE DEFERENCE TO
SERB’S FACTUAL FINDINGS AND SERB’S INTERPRETATION OF
THE LAW.
{¶ 32} The city:
ASSIGNMENT OF ERROR #1: THE TRIAL COURT ERRED
WHEN IT REVERSED AN ORDER FROM SERB AND RULED THAT
THE CITY HAD COMMITTED AN UNFAIR LABOR PRACTICE BY
14.
UNILATERALLY CHANGING THE COLLECTIVE BARGAINING
AGREEMENT BETWEEN THE CITY AND THE TPCOA.
ASSIGNMENT OF ERROR #2: THE TRIAL COURT ERRED
WHEN IT ADOPTED SERB’S REMEDY AND ORDERED THE CITY
TO PROVIDE RELIEF TO THE MEMBERS OF TPCOA FOR ANY
FINANCIAL LOSSES SUSTAINED AS A RESULT OF THE MID-
TERM CHANGES.
II. Standard of Review
{¶ 33} Our review of SERB’s decision in the underlying unfair labor practice case
is more deferential than that used by the trial court. Akron v. State Emp. Relations Bd.,
9th Dist. Summit No. 26227, 2013-Ohio-1213, ¶ 6; citing State Emp. Relations Bd. v.
Adena Local School Dist. Bd. of Edn., 66 Ohio St.3d 485, 491-492, 613 N.E.2d 605(1993). In Adena, the Supreme Court of Ohio stated:
[D]ifferent standards of review are to be applied by a common pleas
court and by a court of appeals when reviewing an order of SERB in a ULP
case. When a common pleas court reviews a SERB order, the court must
determine whether the order is supported by substantial evidence in the
record. This standard of review for a common pleas court is supplied by
R.C. 4117.13(D), which provides that “[t]he findings of the board [SERB]
as to the facts, if supported by substantial evidence, on the record as a
whole, are conclusive.” Adena at 491-492, quoting Lorain City Bd. of Edn.
15.
v. State Emp. Relations Bd., 40 Ohio St.3d 257, 259-261, 533 N.E.2d 264(1988).
{¶ 34} Substantial evidence has been defined as “such relevant evidence that a
reasonable mind might accept as adequate to support a conclusion, but less than the
weight of the evidence.” Oak Hills Edn. Assn. v. Oak Hills Local School Dist. Bd. of
Edn., 158 Ohio App.3d 662, 2004-Ohio-6843, 821 N.E.2d 616, ¶ 12 (1st Dist.), citing
Consol. Edison Co. v. Natl. Labor Relations Bd., 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed.
126 (1938). Substantial evidence has been further described as a “low burden.” Id.{¶ 35} In examining the trial court’s review of SERB’s decision, we are limited to
a determination of whether the trial court abused its discretion. Adena at 492. If no
abuse of discretion occurred, we must affirm the trial court. Id. An abuse of discretion
connotes that the trial court’s decision was unreasonable, arbitrary, or unconscionable.
Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983).
III. Analysis
A. SERB’s Interpretation of the Exigent Circumstances Doctrine
{¶ 36} In SERB’s assignments of error, it argues that the trial court erroneously
reversed SERB’s decision on the basis that the city did not bargain in good faith, to
ultimate impasse, as required under SERB’s decision in Toledo City Schools. Likewise,
in the city’s first assignment of error, it argues that the trial court failed to properly defer
to SERB’s interpretation of the exigent circumstances doctrine. Because the parties’
assignments of error are interrelated, we will address them simultaneously.
16.
{¶ 37} In Toledo City Schools, SERB was tasked with disposing of a dispute that
arose between the Toledo City School District Board of Education (school board) and the
Toledo Association of Administrative Personnel (TAAP). The dispute concerned the
school board’s decision to unilaterally implement an extended school day in order to
comply with a statute that went into effect three years earlier, which required students to
complete an increased number of units in order to graduate. The relevant CBA included
a provision governing extension of school days and a concomitant obligation to
compensate TAAP members when such an extension takes place. Despite the provision,
the school district’s superintendent sent TAAP a proposal to extend the work day without
an increase in members’ compensation. After extensive negotiations between the parties,
the school district notified TAAP that it was implementing its proposal over TAAP’s
objections. Soon thereafter, TAAP filed a ULP charge with SERB.
{¶ 38} In its charge, TAAP alleged that the school district violated R.C.
4117.11(A)(1) and (5) by unilaterally modifying the terms of the underlying CBA. Upon
a finding of probable cause, SERB held a hearing to determine “whether the District
engaged in bad-faith bargaining when it implemented its final proposal and modified
Article VIII of the CBA.” Toledo City Schools, SERB No. 2001-005, 2001 WL
36023280 at *3. In resolving this issue, SERB stated:
Where the parties have not adopted procedures in their collective
bargaining agreement to deal with midterm bargaining disputes, SERB will
apply the following standard to determine whether an unfair labor practice
17.
has been committed when a party unilaterally modifies a provision in an
existing collective bargaining agreement after bargaining the subject to
ultimate impasse as defined in [In re Vandalia-Butler City School Dist. Bd.
of Ed., SERB No. 90-003, 1989 WL 1633487 (Feb. 9, 1990)]:
A party cannot modify an existing collective bargaining agreement
without the negotiation by and agreement of both parties unless immediate
action is required due to (1) exigent circumstances that were unforeseen at
the time of negotiations or (2) legislative action taken by a higher-level
legislative body after the agreement became effective that requires a change
to conform to the statute. Id. at *6.
{¶ 39} Under the legislative-action prong, SERB found that the statute at issue
was passed before an agreement was reached regarding the relevant CBA. Id.
Consequently, SERB determined that the school board’s action was not justified under
the legislative-action prong. Further, SERB concluded that the action was not valid
under the exigent circumstances prong, because the school board waited over two years
to begin negotiations with TAAP regarding an extended school day. Id. Finding no
justification for the school board’s actions, SERB held that the school board violated R.C.
4117.11(A)(1) and (5) when it unilaterally extended the school day without providing
additional compensation to TAAP members. Id.
{¶ 40} Applying Toledo City Schools to this case, the trial court reversed SERB’s
decision, finding that the parties were not at ultimate impasse when the city modified the
18.
CBA. The court noted that SERB failed to make a finding that the city bargained in good
faith or to ultimate impasse with TPCOA prior to modifying the CBA. Further, the court
found that substantial evidence would not support such a finding.
{¶ 41} Having thoroughly examined the record that was before SERB, we agree
that the parties were not at ultimate impasse when the city unilaterally modified the CBA.
Regarding ultimate impasse, SERB has stated:
Ultimate impasse is a legal concept adopted from the private sector.
The test developed by the NLRB as to whether there is an ultimate impasse
is reflected and approved in the case of [Am. Fedn. of Television and Radio
Artists, AFLCIO, Kansas City Local v. National Labor Relations Bd., 395
F.2d 622, (D.C. Cir.1968)], and appears to be whether there is “no realistic
possibility that continuation of discussion at that time would have been
fruitful.” Under NLRB case law the existence of an impasse is very much a
question of fact, and many factors are considered in such factual
determinations. “The bargaining history, the good faith of the parties in
negotiations, the length of the negotiations, the importance of the issue or
issues as to which there is disagreement, the contemporaneous
understanding of the parties as to the state of negotiations are all relevant
factors to be considered in deciding whether an impasse in bargaining
exists.” Taft Broadcasting Co., 163 NLRB 475, 478 (1967). Thus, an
ultimate impasse is not a point in time which can be predetermined in
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theory. It is a case by case determination involving the development of a
record with enough factual data to determine whether at what point good
faith negotiations towards reaching an agreement have been exhausted.
Vandalia-Butler, supra, SERB No. 90-003, 1989 WL 1633487 at *7.
{¶ 42} Here, the record does not support a finding that the city bargained in good
faith to ultimate impasse. Appellants contend that ultimate impasse was reached on
March 30 (the day before the city was required to pass a balanced budget). However,
Vandalia-Butler did not create a bright-line rule allowing the city to determine that it is at
ultimate impasse simply because it is under an obligation to balance its budget and has
failed to do so by the deadline. Were we to adopt such a rule, we would be allowing the
city to shift its responsibility for balancing the budget to its unions. Moreover, we would
be ignoring the factor-based analysis instituted in Vandalia-Butler. We decline to do so.
We recognize that the city was running up against a deadline. However, TPCOA is
entitled to good faith bargaining to ultimate impasse and the city’s requirement to balance
its budget does not eliminate TPCOA’s rights.5
{¶ 43} Looking at the record before us, we find that TPCOA was given little
opportunity to bargain with the city. When presented with TPCOA’s offer to save the
city $902,000 by deferring overtime payments, the city flatly rejected the offer, stating
5
Notably, the record demonstrates that there were a range of available options that would
have allowed the city to balance its budget without forcing union concessions.
Nonetheless, the city elected to utilize a mix of those options that included union
concessions.
20.
that such deferrals were not a true savings since the payments would eventually need to
be made. Despite the city’s concerns, it allowed Local 92 to defer overtime payments as
a cost-savings measure. Additionally, the city reached a settlement with the Toledo
Police Patrolmens’ Association, but failed to offer the same arrangement to TPCOA.
Having examined the record, we agree with the trial court when it found that:
Toledo made no reasonable effort to meet the TPCOA part way
before unilaterally modifying the CBA. Rather, Toledo proposed that the
union members pay their own pension contributions and pay higher
premiums for health care insurance and summarily rejected the union’s
proposed alternatives. Eight days later, after the TPCOA declined to offer
any specific concessions, Toledo implemented its first and only specific
offer and passed the “exigent circumstances” ordinances eliminating
pension pick-ups and increasing health care costs for all City employees
except the members of two bargaining units. * * * Toledo did not bargain
in good faith, and instead engaged only in surface bargaining, before
unilaterally changing the terms of the TPCOA’s CBA.
***
Instead of engaging in meaningful negotiation, Toledo made the
unilateral changes and then negotiated with the union, as it did with five
other bargaining units. Such post-implementation bargaining was bad-faith
21.
bargaining that violated R.C. 4117.11(A)(1) and (A)(5) and the rule of law
set forth in Toledo [City] Schools. (Emphasis sic.)
{¶ 44} Moreover, we find that the exigent circumstances relied upon by the city
(i.e. the budget deficit) were foreseeable at the time the CBA was negotiated. Indeed, the
city was already facing budget deficits and a flailing economy when it executed the CBA
on August 18, 2009. As indicated above, Toledo City Schools only permits an employer
to unilaterally modify a CBA based on exigent circumstances that are unforeseen. Toledo
City Schools, SERB No. 2001-005, 2001 WL 36023280 at *6.6
{¶ 45} While we recognize that the budget deficits were initially smaller and
constantly escalating, the economic indicators that were before the city during CBA
negotiations should have led the city to conclude that the deficit would balloon over time.
For example, income tax revenues for the city dropped from $169,689,103 in 2007 to
$154,475,390 in 2008, a 9.4 percent decline. Thereafter, tax revenue declined another 8.7
percent from 2008 to 2009. Furthermore, the city was well aware of the crippling
national recession that hit Northwest Ohio particularly hard. Given the rising
unemployment throughout the city due to the recession, it was likely that the city’s
revenue from income taxes would continue to decline for the foreseeable future. This
downward trend in revenues was before the city at the time of CBA negotiations.
6
Here, the parties acknowledge that Toledo City Schools’ legislative-action prong does
not apply to this case. Thus, only the exigent circumstances prong is at issue.
22.
{¶ 46} That the city was aware of the impending deficit is demonstrated in its
letter sent to TPCOA on April 9, 2009, in which the city recognized “a continuing
downturn in the city’s financial condition.” Additionally, the city attempted to declare
exigent circumstances on two separate occasions based on budget issues prior to agreeing
to the CBA. The situation was so grim, in fact, that Mayor Finkbeiner was contemplating
bankruptcy.
{¶ 47} In light of the foregoing evidence, which is not in dispute, we find that
SERB’s decision was not supported by substantial evidence. By extension, we find that
the trial court did not abuse its discretion in reversing SERB’s decision. Accordingly,
SERB’s assignments of error and the city’s first assignment of error are not well-taken.
B. The Trial Court’s Remedy
{¶ 48} In its second assignment of error, the city argues that the trial court erred in
adopting SERB’s remedy directing the city to provide equitable relief to TPCOA
members for any losses sustained as a result of the unilateral changes to the CBA. The
city asserts that the trial court ignored the fact that all of the other unions were forced to
make concessions with the city. The city contends that TPCOA would have made
concessions had the city not declared exigent circumstances and unilaterally modified the
CBA. In light of those concessions, the city argues that the trial court’s judgment creates
a windfall for TPCOA members.
{¶ 49} TPCOA, for its part, argues that the trial court properly deferred to the
remedy set forth by SERB. TPCOA contends that the remedy provided is the “traditional
23.
remedy for unlawful unilateral changes in terms and conditions of employment.” We
agree with TPCOA’s contention that the remedy provided in this case was the
appropriate, customary remedy.
{¶ 50} Historically, SERB has remedied unlawful midterm modifications to a
CBA by ordering the employer to “rescind the unilateral implementation of [the midterm
changes], thereby returning the parties to the status quo ante.” Toledo City Schools,
SERB No. 2001-005, 2001 WL 36023280 at *7. That is precisely the remedy imposed in
this case. We see no reason to conclude that the trial court abused its discretion in
adopting SERB’s remedy. The city’s argument invites us to speculate as to the
concessions that might have been made had the unilateral modifications not been
imposed. We decline to so speculate.
{¶ 51} Accordingly, the city’s second assignment of error is not well-taken.
IV. Conclusion
{¶ 52} Having found each of appellants’ assignments of error not well-taken, we
affirm the judgment of the Lucas County Court of Common Pleas. Appellants are
ordered to pay the costs of this appeal pursuant to App.R. 24.
Judgment affirmed.
24.
Toledo Police Command
Officers’ Assn. v. State
Emp. Relations Bd.
C.A. No. L-13-1074
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Thomas J. Osowik, J. _______________________________
JUDGE
Stephen A. Yarbrough, P.J.
CONCUR. _______________________________
JUDGE
James D. Jensen, J.,
DISSENTS.
JENSEN, J.
{¶ 53} I respectfully dissent from the majority’s decision because in affirming the
trial court’s judgment, the majority has effectively undermined the broad authority that
the legislature granted to SERB to administer and enforce R.C. Chapter 4117.
{¶ 54} The trial court’s role in reviewing TPCOA’s appeal was to determine
whether substantial evidence existed in the record to support SERB’s decision. Univ.
Hosp., Univ. Cincinnati College of Medicine v. State Emp. Relations Bd., 63 Ohio St.3d
339, 343, 587 N.E.2d 835 (1992). As the majority recognizes, “substantial evidence” is a
low burden. Oak Hills Edn. Assn. v. Oak Hills Loc. School Dist. Bd. of Edn., 158 Ohio
App.3d 662, 2004-Ohio-6843, 821 N.E.2d 616, ¶ 12 (1st Dist.). “Substantial evidence,”
25.
as defined by the United States Supreme Court, means “such relevant evidence that a
reasonable mind might accept as adequate to support a conclusion, but less than the
weight of the evidence.” Id., citing Consol. Edison Co. v. Natl. Labor Relations Bd., 305
U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126 (1938).
{¶ 55} The trial court’s decision reversing SERB turned completely on its
conclusion that the city did not bargain in good faith and the parties did not reach
ultimate impasse. The majority’s decision concludes both that the city failed to bargain
in good faith to ultimate impasse, and that the budget deficit precipitating the declaration
of exigent circumstances was foreseeable. I dissent from the majority decision because I
believe there was substantial evidence in the record contrary to both conclusions.
{¶ 56} As discussed by both the trial court and the majority, the concept of the
exigent circumstances doctrine was expressed by SERB in In re Toledo City School Dist.
Bd. of Edn., SERB No. 2001-005, 2001 WL 36023280 (Oct. 1, 2001). There, the school
board entered into a CBA with the administrative employees’ union effective February 1,
1998, knowing that the legislature had passed legislation in 1997 that would require
students to have additional education credits in order to graduate after September 15,
2001. The CBA was extended by mutual agreement and remained in effect until March
of 2001. The school board waited until February of 2000 to begin efforts to comply with
the legislation. It proposed extending the school day to allow for additional credits,
without additional compensation to union members. When the union would not agree to
the school board’s proposal, the school board unilaterally modified the CBA.
26.
{¶ 57} SERB recognized that parties must be able to respond to emergencies that
arise during the term of a CBA, therefore, it devised a standard to be applied where the
parties have not adopted procedures for addressing mid-term bargaining disputes and
have failed to reach agreement “after bargaining the subject to ultimate impasse.” It
carved out the “exigent circumstances” and “legislative action” doctrines. In Toledo City
School Dist., it ultimately concluded that the school board’s two-and-one-half year delay
in taking action to comply with the legislation, despite knowing of the legislative changes
before finalizing the parties’ existing CBA, precluded it from availing itself of the
doctrine.
{¶ 58} What constitutes “ultimate impasse” was addressed in Toledo City School
Dist. and was discussed at length in In re Vandalia-Butler City School Dist. Bd. of Edn.,
SERB No. 90-003, 1989 WL 1633487 (Feb. 9, 1990). SERB described it as “the point at
which good faith negotiations towards reaching an agreement have been exhausted.”
Vandalia-Butler City School Dist. at *7. To be at ultimate impasse there must be “no
realistic possibility that continuation of discussion at that time would have been fruitful.”
Id.{¶ 59} As the majority acknowledges, SERB emphasized in Vandalia-Butler that
“an ultimate impasse is not a point in time which can be predetermined in theory.” Id.“It is a case by case determination involving the development of a record with enough
factual data to determine whether at what point good faith negotiations towards reaching
an agreement have been exhausted.” Id. It requires consideration of many factors,
27.
including “the bargaining history, the good faith of the parties in negotiations, the length
of the negotiations, the importance of the issue or issues as to which there is agreement,
and the contemporaneous understanding of the parties as to the state of negotiations.” Id.Whether a party has bargained in good faith must be determined by the totality of the
circumstances. Toledo City School Dist., SERB No. 2001-005, 2001 WL 36023280 at
*4.
{¶ 60} Although it recognizes the correct analysis to be applied, the effect of the
majority’s decision is to permit the trial court to usurp SERB’s role in making this highly
fact-specific determination.
{¶ 61} The parties developed an extensive record during administrative
proceedings and SERB issued a thorough opinion. In it, SERB recited the detailed
timeline of contacts that occurred between the parties. It recognized that Bell, while
transitioning into his new position as Toledo’s mayor, faced a March 31, 2010 deadline
for proposing a balanced budget that city council would pass. It found that Bell took
office January 4, 2010 and met with union leaders, including TPCOA, on January 10,
2010, to enlist their help in addressing the budget shortfall. SERB found that Bell and his
staff conducted meetings in the community throughout January, February, and March to
discuss the budget and invited union leaders to attend. He met with union leaders again
on February 10, 2010, and asked for mid-term concessions, setting forth his specific
proposal for trimming expenses and seeking a response by February 25, 2010. TPCOA
opted not to respond.
28.
{¶ 62} Mayor Bell met with TPCOA leadership again on March 22, 2010, again
setting forth his proposal for decreasing the budget deficit, but making clear that he
would welcome other proposals that could net the city savings of $902,000. Although
not specifically addressed in SERB’s findings, the only proposals made by TPCOA along
the way were to defer overtime compensation, which Mayor Bell told them was not a
feasible solution given the strain that would be placed on the 2011 budget, and to refrain
from filling positions vacated due to retirements—a “savings” the city had already
factored in. This was communicated to TPCOA. As the city approached the March 31,
2010 deadline for passing a balanced budget—a deadline of which TPCOA was well
aware—TPCOA president Sergeant Stewart unequivocally stated to Safety Director
Green on March 26, 2010, that TPCOA was making no concessions.
{¶ 63} SERB also detailed the efforts made by the city to close the budget deficit
by other means, including increasing fees to citizens, selling city-owned assets,
considering different taxes to increase revenue, and by seeking concessions from city
employees. With the March 31, 2010 deadline looming, a deficit still remaining, and
TPCOA’s heels firmly dug in, SERB found that the city was forced to take immediate
action by passing the exigent circumstances ordinance and going forward with unilateral
modifications.
{¶ 64} The majority insists that “bargaining to impasse” is a “factor-based
analysis” that it would be ignoring were it to find that impasse was reached the day
before the balanced budget was required to be passed. Toledo City School Dist., SERB
29.
No. 2001-005, 2001 WL 36023280 at *4, makes clear, however, that the totality of the
circumstances must be considered. SERB considered the totality of the circumstances,
including Mayor Bell’s multiple attempts to engage TPCOA in discussions, the other
efforts pursued by the city to balance the budget, the harm that would have befallen the
city had a balanced budget not been achieved, and TPCOA’s flat refusal to offer
concessions despite being aware that the city was up against a statutory deadline.
{¶ 65} SERB’s recitation of these facts immediately preceded its explanation of
what constitutes “ultimate impasse” under Vandalia-Butler City School Dist., SERB No.
90-003, 1989 WL 1633487, and its recognition of the duty to bargain in good faith. As
defined in Vandalia-Butler, the facts SERB cited make clear that TPCOA was unwilling
to make any concessions before the imminent deadline for passing the budget, thus
“continuation of discussions at that time would [not] have been fruitful.” (Emphasis
added.) Compare Twinsburg City School Dist. Bd. of Edn. v. State Emp. Relations Bd.,
172 Ohio App.3d 535, 2007-Ohio-957, 876 N.E.2d 580 (9th Dist.) (finding ULP where
school board unilaterally implemented its “last, best offer” despite union’s expressed
willingness to move with respect to all open issues). In concluding that the city properly
modified the CBA due to exigent circumstances, SERB implicitly and reasonably
determined that the parties had reached ultimate impasse and that the city bargained in
good faith.
30.
{¶ 66} In sum, there was substantial evidence contained in the record to support
SERB’s conclusion that an ultimate impasse had been reached. The trial court abused its
discretion by substituting its factual determinations for those of the agency.
{¶ 67} Although not addressed by the trial court, TPCOA also argued—and the
majority agrees—that the extent of the budget deficit was foreseeable at the time the
CBA was negotiated in mid-2009. While professedly refusing to engage in speculation,
the majority does just that in concluding that the city should have foreseen the
exponential increase in the amount of the deficit. I find that there was substantial
evidence to support SERB’s contrary conclusion that the extent of the deficit was
unforeseen.
{¶ 68} To continue operating, the city was required to approve a balanced budget
by March 31, 2010. That meant that Bell had 86 days to balance the budget. As SERB
described, the budget deficit was “a moving target that escalate[d] from a potential deficit
of 5% of expenditures to 24% of the Fiscal Year 2009 revenues.” At the time the CBA
was being negotiated in the summer of 2009, the deficit was projected at $10-$15 million.
By the time Bell was elected mayor, it had risen to $37 million and continued to climb to
over $48 million. The measures required to shrink a $10-$15 million deficit would
necessarily be different than what would be required to shrink a $48 million deficit. In
fact, had the deficit remained the same as it was when Bell first started inquiring about it,
it seems likely that the city may not have sought concessions from the unions at all.
31.
{¶ 69} The testimony of Stephen Herwat, the deputy mayor for operations under
the Bell administration, illustrates this point. Herwat testified that Bell asked him to lead
in transitioning from the former Finkbeiner administration to the new Bell administration.
In doing so, Herwat obtained a copy of the budget submitted to city council by the
Finkbeiner administration in November of 2009. That budget identified a $30 million
deficit with a proposal that the deficit be bridged by instituting a refuse fee in January
2010 and eliminating a tax credit for people who live in Toledo but work outside the city.
Herwat testified that when Bell took office on January 4, 2010, that proposal was before
city council but council had not yet acted. The landscape changed yet again in December
of 2009 when Finkbeiner told the Bell administration that the deficit would more likely
be in the neighborhood of $37 million, and again when the lower-than-expected revenue
from 2009 was accounted for.
{¶ 70} It is undisputed that Toledo anticipated a budget deficit for 2010. But it is
too simplistic to say that because the city anticipated a budget deficit, exigent
circumstances were foreseen. The projected deficit ranged between five percent-ten
percent ($10-$20 million) during negotiation of the CBA. There was no evidence in the
record to suggest that the city could have known in mid-2009 that the projected deficit
would quadruple to 24 percent ($48 million) by February of 2010. There was, therefore,
no reason that the city should have foreseen that concessions from the bargaining units
would have been so crucial in arriving at a balanced budget. The uncertainty of the
extent of the budget crisis makes this case far different than Toledo City School Dist.,
32.
SERB No. 2001-005, 2001 WL 36023280, where the school board waited two-and-one-
half years before approaching the union with the proposal for complying with legislative
changes.
{¶ 71} Given the rapidly-escalating deficit projections the city faced, I find that
SERB’s determination that “immediate action was required due to exigent circumstances
that were unforeseen at the time of negotiations” was supported by substantial evidence.
{¶ 72} Although I realize that as an appellate court we review the lower court’s
decision for an abuse of discretion only, it is our responsibility to investigate whether the
lower court accorded due deference to SERB. Univ. Hosp., 63 Ohio St.3d at 343, 587
N.E.2d 835. “Where the common pleas court has not properly deferred to the factual
determinations of the agency as required by R.C. 4117.13(D),” it is within our authority
to reverse the lower court and to reinstate the order of the agency. Id. at 343-344. Here,
the majority has allowed the trial court to disregard SERB’s “considerable expertise in
labor-management relations,” to ignore the extreme deference it owes to SERB’s factual
determinations, and to substitute its own judgment for that of SERB’s. Lorain City
School Dist. Bd. of Edn. v. State Emp. Relations Bd., 40 Ohio St.3d 257, 260-61, 533
N.E.2d 264 (1988); Univ. Hosp. at 343. I would reverse the trial court’s judgment and
reinstate the SERB decision.
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.
33.