Senior Accountants, Analysts & Appraisers Ass'n v. City of Detroit , 399 Mich. 449 ( 1976 )

Williams, J.

The issue in this case is limited to the consideration of whether an unappealed determination by the Michigan Employment Relations Commission that plaintiff is not entitled to "back pay” for a determined unfair labor practice operates as collateral estoppel to the subsequent maintenance of a suit in circuit court to recover the same reimbursement as "damages” for breach of contract.

We hold that plaintiffs are barred from suing for "damages” under a breach of contract theory by the doctrine of collateral estoppel because the questions of fact necessary for determination of "damages” by the circuit court in this case would be identical to questions of fact already determined by the Michigan Employment Relations Commission in concluding "back pay” was improper in this case.

Accordingly, we uphold the circuit court and the Court of Appeals.

I — Facts

This case was submitted to the Court of Appeals on an agreed statement of facts, in compliance with GCR 1963, 812.10. The Court of Appeals well summarized the pertinent facts as follows:

"Certain of the plaintiffs prior to 1970 were employed in various city departments where, pursuant to Ordinance 90-F and Ordinance 303-G, they were allowed a reduced work schedule of 35 rather than 40 hours per week. On July 17, 1970 the mayor of the City of Detroit ordered all employees to begin working 40 hours per week. This order was held in an action in the Wayne County Circuit Court to be ineffective because, under the ordinances, only department heads had the power to so alter the work schedule. A comparable order was subsequently issued by the appropriate department heads requiring these employees to work 40 hours for the same annual salary they had received for 35 hours of work per week.

"On August 24, 1970, many of the unions representing city employees affected by this change filed an unfair labor practice charge with the Michigan Employment Relations Commission. On December 28, 1970, a trial examiner rendered a decision and recommended issuance of a cease and desist order to compel the city to rescind its unilateral action, and also recommending that the employees’ claim for back pay for the extra five hours per week be denied. On March 12, 1971, the full Michigan Employment Relations Commission affirmed the trial examiner’s decision and order. The City of Detroit filed an application for leave to appeal to this Court which was denied. The affected employees and their unions made no effort to appeal the commission’s decision.

"In July, 1973, 200 members of the Senior Accountants, Analysts and Appraisers Association brought a class action seeking to recover compensation for the extra time worked during the period of approximately nine months before the cease and desist order was entered. On February 19, 1974, the trial court granted defendant city’s motion for a summary judgment accompanied by a letter to the attorneys indicating 'that the defense of res judicata and/or collateral estoppel is valid for the reasons and grounds asserted by defendant city in its brief.’ ” 60 Mich App 606, 608-609; 231 NW2d 479 (1975).

On April 25, 1975, the Court of Appeals affirmed the trial court.¹ Plaintiffs applied for leave to appeal. This Court granted leave on December 5, 1975.

II — Discussion

We granted leave in this case "limited to the consideration of this issue: Does an unappealed determination by the Michigan Employment Relations Commission, that plaintiff is not entitled to 'back pay’ for a determined unfair labor practice, operate as a collateral estoppel to the subsequent maintenance of a suit in circuit court to recover the same reimbursement as 'damages’ for breach of contract?”

In resolving this issue, it is essential that we keep in mind the precise questions of law and fact decided by the Michigan Employment Relations Commission (MERC) trial examiner. First, the trial examiner held, as a matter of law, that the city’s unilateral increase of the work week to 40 hours "without notice and bargaining with the representatives of its employees violated § 10(a) and (e) of [the public employment relations act] PERA.” Accordingly, the trial examiner recommended "the usual remedial order in such cases”.² This decision and order of the trial examiner was affirmed by the full Michigan Employment Relations Commission and is not in dispute in this appeal.

Second, the trial examiner was asked by the charging parties "that the city be required to pay all employees affected by the increase in hours time and one-half for all hours worked between 35 and 40” as an additional remedial order to the order stated supra. Clearly, it was within the trial examiner’s power to order such a "back-pay” remedy. As § 16(b) of the public employment relations act, MCLA 423.216(b); MSA 17.455(16)(b) provides in pertinent part:

"If upon the preponderance of the testimony taken the board is of the opinion that any person named in the complaint has engaged in or is engaging in the unfair labor practice, then it shall state its findings of fact and shall issue and cause to be served on the person an order requiring him to cease and desist from the unfair labor practice, and to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of this act.”

The trial examiner correctly noted that the legal test for determining whether a "back-pay” order (or monetary reimbursement) is appropriate is "whether or not the employee in question would have been paid absent the unlawful unilateral action”. Hooker Chemical Corp, 186 NLRB No 49; 75 LRRM 1357 (1970). Applying this test to the case before him, the trial examiner made the following determinations of fact:

"The record in the instant case conclusively establishes that under the ordinances and the collective bargaining agreements applicable to employees working a 35 hour week, the practice has been that the pay week is computed on a 40 hour basis and no overtime is paid for work between 35 and 40 hours in a normal work week. The only exception to this policy and practice has been those instances where the employees involved worked a 35 hour week and were called in to work a sixth day of work. This exception to the policy of crediting overtime only for work in excess of 40 hours was designed to alleviate a hardship on employees required to work a sixth day without forcing them to work five hours without any compensation or compensatory time.

In the absence of any evidence to establish that under past practice, ordinance, or contract such payment has ever been made for the additional five hours work in a normal work week, or that such payment even could be made under existing city policy, the undersigned can find no basis for a reimbursement remedy herein. Therefore, the undersigned will refuse to recommend any monetary reimbursement or compensatory time as part of the remedy in this case.”

The full MERC also affirmed this decision of the trial examiner. Furthermore, as mentioned in the facts, the affected employees and their unions made no effort to appeal the affirmance of the full commission.

Plaintiffs Senior Accountants, et al., then brought suit in circuit court against the city alleging breach of contract and asking the court to award damages "in an amount equal to five hours wages per, at overtime rates, for the full period they were forced to work 40 hours, plus interest at five percent (5%) from the date of work * * * ”, i.e. damages based on the extra 5 hours per week worked since the 40-hours work order went into effect (essentially the same remedy sought before MERC). The question before us is whether plaintiffs are barred from maintaining this suit because of the doctrine of collateral estoppel. In this particular case, the answer to this question is yes.

It is established law in this state that the doctrines of res judicata and collateral estoppel apply to administrative determinations which are adjudicatory in nature, where a method of appeal is provided, and where it is clear that it was the legislative intention to make the determination final in the absence of an appeal. Roman Cleanser Co v Murphy, 386 Mich 698, 703-704; 194 NW2d 704 (1972), reversing and adopting Judge (now Justice) Levin’s dissent in Roman Cleanser Co v Murphy, 29 Mich App 155, 166-171; 185 NW2d 87 (1970).

The applicable test for collateral estoppel in this case is accurately stated in § 68 of the Restatement Judgments, p 293:

"Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between parties in a subsequent action on a different cause of action * * * ,”³

See Howell v Vito’s Trucking & Excavating Co, 386 Mich 37, 41-42; 191 NW2d 313 (1971); Jones v Chambers, 353 Mich 674, 680-681; 91 NW2d 889 (1958).

In the instant case, if the trial court were to rule on whether plaintiffs are entitled to the "damages” for which they complain ("an amount equal to five hours wages per, at overtime rates, for the full period they were forced to work 40 hours”), the court would have to determine whether the legal basis of plaintiffs’ employment relation — past practice, ordinance, contract, or existing city policy — required such monetary reimbursement. But the trial examiner made these precise determinations in finding "back pay” was improper in this case. See Joint Appendix, exhibit A, pp 48-50, and discussion supra. In other words, the questions of fact necessary for a determination of "damages” by the trial court in this case would be identical to the questions of fact already determined by the trial examiner in his conclusion that "back pay” was improper in this case. Consequently, plaintiffs are barred under the doctrine of collateral estoppel from re-litigating these same questions of fact in their subsequent action for "damages” based on a breach of contract theory.

We uphold the circuit court and the Court of Appeals.

No costs, a public question.

Coleman, Fitzgerald, and Lindemer, JJ., concurred with Williams, J.

1 The Court of Appeals noted:

"The grounds asserted in support of the motion were that the issues raised in the complaint were barred by a prior judgment. The motion should properly have been brought under the accelerated judgment provisions of GCR 1963, 116.1(5). Dunlap v Southfield, 54 Mich App 398, 399, 400; 221 NW2d 237 (1974).” 60 Mich App 606, 608, fn 1.

2 The order was to "require the city to cease and desist from unilaterally changing hours and other terms and conditions of employment of its employees without notice and bargaining with the collective bargaining representatives of said employees; restore the status quo by placing all employees whose hours were unlawfully increased back on the same work week which they were working prior to the unlawful increase in working hours; require the city to bargain collectively with the collective bargaining representatives of their employees with respect to hours and other terms and conditions of employment; and post appropriate copies of a notice to all employees, setting forth the terms of the recommended order herein.”

3 The doctrine of collateral estoppel also requires that "the second action is between the same persons who were parties to the prior action”. Restatement Judgments, § 68, p 294; see, also, Howell, supra, and Jones, supra. Plaintiff union was, of course, party to the action before MERC. The individual plaintiffs in this case do not dispute the Court of Appeals holding that "[t]he individual plaintiffs here are substantially identical to the labor organizations which represented them as charging parties before MERC”, 60 Mich App 612. See Steelman v Portage, 12 Mich App 334; 162 NW2d 837 (1968), and cases cited therein.