State of Delaware, Department of Correction v. Correctional Officers Association of Delaware

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
STATE OF DELAWARE, DEPARTMENT )
OF CORRECTION, )
)
Plaintiff, )
)
v. ) C.A. No. 11926-VCL
)
CORRECTIONAL OFFICERS )
ASSOCIATION OF DELAWARE, )
)
Defendant. )
MEMORANDUM OPINION
Date Submitted: September 2, 2016
Date Decided: November 18, 2016
Jason Staib, Aleine Porterfield, STATE OF DELAWARE, DEPARTMENT OF
JUSTICE; Counsel for State of Delaware, Department of Correction.
Lance Geren, FREEDMAN AND LORRY, P.C.; Counsel for Correctional Officers
Association of Delaware.
LASTER, Vice Chancellor.
The State of Delaware, Department of Correction (the ―Department‖) brought this
action to vacate an arbitration award dated November 29, 2015 (the ―Award‖). The
arbitration concerned a grievance brought by the Correctional Officers Association of
Delaware (the ―Association‖) under its collective bargaining agreement with the
Department (the ―Agreement‖). The grievance sought payment of an additional hour of
paid time or compensatory time for each overtime hour that a member of the Association
worked while state offices were closed due to severe weather on January 21 and 22,
2014. The grievance claimed that the Association‘s members are entitled to this payment
under the Executive Branch‘s policy for employee compensation during a weather
closure (the ―Weather Policy‖). The grievance contended that the Department‘s non-
compliance with the Weather Policy breached Article 19.2 of the Agreement, which
provides that ―work rules, policies, orders and directives shall be interpreted and applied
fairly to all employees.‖ The Department disputed the grievance, claiming that the
Weather Policy does not require equal time off for overtime, and even if it did, the
Weather Policy does not fall within the ambit of Article 19.2.
The arbitrator found that the Weather Policy is an ―order‖ and a ―policy‖ within
the meaning of Article 19.2 and therefore the grievance alleged an arbitrable violation of
the Agreement. The arbitrator upheld the grievance. The arbitrator interpreted the
Weather Policy as requiring equal time off for overtime and concluded that the
Department‘s refusal to pay breached its duty to apply the Weather Policy ―fairly.‖ The
Award ordered the Department to make all Association members whole by providing
1
them with equal time off for overtime worked during the weather closures on January 21
and 22, 2014.
In this action, the Department argues that the arbitrator‘s finding of arbitrability
should be reviewed de novo, that the grievance is not arbitrable, and that the Award is
unenforceable. The Association contends that the Award is valid in all respects. The
parties have cross-moved for summary judgment.
This decision grants the Association‘s cross-motion for summary judgment and
enforces the Award. The Agreement demonstrates a clear and unmistakable intent to
empower the arbitrator to decide whether the grievance was substantively arbitrable. The
arbitrator‘s finding of arbitrability was based on a rational interpretation of the
Agreement, foreclosing further judicial review. The Award claimed its essence from the
Agreement, and it does not violate state public policy.
I. FACTUAL BACKGROUND
The facts are drawn from the documentary record presented by the parties for
purposes of summary judgment. Where, as here, the parties have filed cross-motions for
summary judgment and agreed that there are no disputed issues of material fact, ―the
Court shall deem the motion to be the equivalent of a stipulation for a decision on the
merits based on the record submitted with the motion.‖ Ct. Ch. R. 56(h).
A. The Weather Policy
In 2005, personnel in the Human Resources Management function of the Office of
Management and Budget (the ―HR Division‖) drafted the current Weather Policy. In
January 2006, then-Governor Ruth Ann Minner issued Executive Order 77, which
2
adopted the Weather Policy ―as the policy to govern Executive Branch agencies during
severe weather conditions and other emergencies.‖ Exec. Order No. 77, 9 Del. Reg. 1269
(Jan. 3, 2006). The Weather Policy provides that ―[i]n appropriate circumstances, the
Governor shall issue an Order stating that, because of expected or existing conditions,
certain employees (as designated in this policy) are excused from reporting to work.‖ Id.
at Ex. A. Those designated by their respective agency or department as ―Non-essential
Employees‖ are excused from work without pay. Those designated as ―Essential
Employees‖ are still required to report to work during the weather closure. The Weather
Policy provides Essential Employees with additional compensation for working during a
weather closure by giving them equal time off. Id. ¶¶ 7–8.
The parties agree that the Weather Policy provides employees with equal time off
for regularly scheduled hours. They dispute whether employees are entitled to equal time
off for overtime. This issue has been a subject of longstanding debate. The Weather
Policy‘s immediate predecessor was an executive order issued by then-Governor Michael
Castle in 1987. Exec. Order. No. 36 (Feb. 12, 1987) (repealed by Exec. Order No. 77, 9
Del. Reg. 1269). Governor Castle‘s executive order cited ―ambiguity . . . concerning the
use of overtime pay and compensatory time to compensate State employees who are
required to work during an emergency.‖ It clarified that employees were entitled to equal
time off for regularly scheduled hours of work:
6. Essential Employees . . . who are required to work, are entitled to
compensation at their regularly hourly rate plus equal time off for all hours
worked during a normal work day and shift (7-1/2 or 8 hours, as
applicable). All [E]ssential [E]mployees who work additional consecutive
shifts shall be compensated for hours worked in excess of the normal shift
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in accordance with existing rules and personnel policies governing
overtime payment.
Id. ¶ 6.
When Governor Minner adopted the current Weather Policy, it muddied the
waters. The current Weather Policy added a sentence that, on its face, grants employees
equal time off for overtime as well. It then compounded matters by adding a new item
that might be construed as limiting equal time off to normal state business hours. The
current Weather Policy provides:
7. Essential [E]mployees . . . are entitled to compensation at their regular
hourly rate plus equal time off for all hours worked during their regularly
scheduled work hours or shift. All Essential [E]mployees who work
additional hours shall be compensated in accordance with existing rules and
policies governing overtime payment. Employees covered by the Fair
Labor Standards Act (FLSA) are compensated for overtime at time and a
half and receive equal time off while employees exempt from the FLSA are
compensated at straight time rates and receive equal time off.
8. During any specified time periods when Essential [E]mployees are
required to report to work and other State employees have been given
approval by the Governor to not report to work (during normal state
business hours of 8 a.m. to 4:30 p.m.), those who work will receive an
additional hour of compensation for each hour worked.
Exec. Order 77, 9 Del. Reg. 1269 ¶¶ 7-8 (emphasis added). The italicized phrase in item
7 appears to grant ―equal time off‖ for overtime. The italicized phrase in item 8, which
refers to ―any specified time periods,‖ can be interpreted in two ways. It might refer to
the time period specified by the Governor as the duration of the weather closure.
Alternatively, it might refer to any period within normal state business hours, as
suggested by the parenthetical.
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The HR Division adopted the latter interpretation and continued the prior practice
of not awarding equal time off for overtime. The HR Division provided a form
memorandum for state agencies to distribute to their employees after a weather closure.
Its standardized language limited equal time off to regular hours: ―[Essential Employees]
will be compensated with equal time off for all regularly scheduled hours [worked during
the weather closure].‖ From 2006 to 2010, the Department used this form language in the
memoranda that it distributed to Department employees after weather closures.
In 2010, the Statewide Labor Management Committee asked the HR Division to
clarify whether state agencies were awarding equal time off for overtime. The HR
Division‘s research revealed that they did not, consistent with the standardized language
of the memorandum. The HR Division also confirmed that it did not interpret the
Weather Policy as entitling employees to equal time off for overtime:
The intent of item #7 was to clarify that Essential [E]mployees working
greater than their normal shift during a [weather closure] would only
receive hour for hour compensatory time for the normal shift and not for
additional hours worked. Additional hours worked are handled in
accordance with existing rules and regulations governing payment of
overtime.
Dkt. 29, Ex. 6, Ex. A.
In 2011, the Department complicated matters by altering the language in the
memorandum that the Department distributed to its employees after a weather closure.
The new language stated that ―[Essential Employees] will be compensated with equal
time off for the hours specifically listed above [i.e. the duration of the weather closure].‖
This language suggested that Essential Employees also would receive equal time off for
5
any overtime they worked during the weather closure. The Department used this
language in the memoranda it sent to employees following weather closures until at least
March 2015. See Dkt. 28, Ex. K. Notwithstanding the revised language, the Department
does not appear to have compensated any employees with equal time off for overtime.
Dkt. 29, Ex. 3, ¶¶ 13-14.
B. The Agreement
The Department and the Association entered into the Agreement in November
2011. It was the parties‘ first formal collective bargaining agreement and followed nearly
ten years of negotiations. To align the Agreement with the state‘s fiscal year, the parties
entered into two successor agreements. First, they signed a contract covering the period
from December 1, 2011 through June 30, 2012, which included only non-compensation
terms. Second, they agreed to a three-year restated agreement that implemented all of the
terms of the Agreement effective July 1, 2012. The only revised term in the restated
agreement provided for annual wage increases of 2%. See id. at Ex. 9, art. 38.1.
The limited compensation terms in the Agreement reflect the restrictions on
collective bargaining for state employees who are subject to Delaware‘s merit system
(collectively, ―State Merit Employees‖). See 19 Del. C. § 1311A(a). The Merit Employee
Relations Board promulgates rules governing many aspects of the employment of State
Merit Employees. 19 Del. Admin. C. § 3001 (the ―Merit Rules‖). Chapter 4 of the Merit
Rules provides for a uniform pay plan. Id. at § 3001-4.0. Notably, state law does
contemplate that State Merit Employees will collectively bargain over certain aspects of
compensation. 19 Del. C. § 1311A(a)(1). But in every year since 2008, the General
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Assembly has passed an annual budget act that explicitly prohibited State Merit
Employees from collectively bargaining over any subjects covered by Chapter 4 of the
Merit Rules. See, e.g., 80 Del. Laws ch. 79, § 14 (2015) (FY 2016 Final Operating
Budget). Under the resulting framework, the Association could collectively bargain for
wage increases, which are not dictated by the Merit Rules, but it could not negotiate
many compensation provisions typically found in collective bargaining agreements, such
as base wage rates, overtime standards, and shift differentials, all of which are addressed
by Chapter 4 of the Merit Rules.
As required by state law, the Agreement contains a grievance procedure. See 19
Del. C. §1313(c). The Agreement defines a grievance as ―any dispute concerning the
application or interpretation of the terms of the [Agreement].‖ Dkt. 29, Ex. 9, art. 8.2.1.
Employees have the right to bring individual grievances, and the Association may also
bring a ―System-Wide Grievance.‖ Id. art. 8.6. If the parties are unable to resolve the
grievance, the Association may submit the matter to arbitration. The only grievances that
are not arbitrable are ―grievances alleging a violation of the Merit Rules.‖ Id. art. 8.7
(―Merit Rules Grievances‖). This exclusion reflects state law, which provides that the
grievance procedures contained in the Merit Rules are the exclusive remedy for violations
of the Merit Rules. 29 Del. C. § 5943(a); see 19 Del. Admin. C. § 3001-19.0.
Under the Agreement, the arbitrator‘s decision is ―final and binding on the
parties.‖ Dkt. 29, Ex. 9, art. 8.3.8. The arbitrator must apply the rules of the American
Arbitration Association (the ―AAA‖). Id. art. 8.3.11. The Agreement limits the
arbitrator‘s role to ―the application and interpretation of the provisions of [the
7
Agreement].‖ Id. art. 8.3.8. The arbitrator may not modify the Agreement and is
prohibited from ―establish[ing] or chang[ing] any individual wage rate, wage schedule or
the job content of any occupational specification.‖ Id. art. 8.3.9.
Article 19 of the Agreement is titled ―Working Conditions.‖ Article 19.2 provides
in its entirety: ―Work rules, policies, orders, and directives shall be interpreted and
applied fairly to all employees.‖ The bargaining history behind the provision is
unilluminating. The Department‘s chief negotiator has stated that ―discussion of the
content and the purpose of the Article was limited, and commanded relatively little of the
parties‘ attention.‖ Dkt. 29, Ex. 4, ¶ 11. But he avers that the parties only discussed the
provision in the context of policies promulgated by the Department. Id.
C. The Grievance
The Governor declared a weather closure from 12:00 pm on January 21, 2014
through 4:30 pm on January 22, 2014 (the ―January Weather Closure‖). Gordon Fletcher,
a physical plant trades mechanic, was an Essential Employee scheduled to work for the
Department from 7:00 am to 3:00 pm on both January 21 and January 22. Fletcher ended
up working continuously from 7:00 am on January 21 through 3:00 pm on January 22.
This resulted in sixteen hours of overtime for his work between 3:00 pm on January 21
and 7:00 am on January 22. In accordance with the Department‘s practice, Fletcher
received eleven hours of equal time off, one for each of his regularly scheduled hours
worked during the January Weather Closure: 12:00 pm to 3:00 pm on January 21, and
7:00 am to 3:00 pm on January 22. He did not receive equal time off for his sixteen hours
of overtime.
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Shortly after the January Weather Closure, Fletcher found the Weather Policy on
the HR Division‘s website. He interpreted the Weather Policy as entitling him to equal
time off for the overtime he worked during the January Weather Closure. He contacted
the Department and requested this compensation. The Department referred the question
to the HR Division. The HR Division reaffirmed its position that the Weather Policy does
not grant employees equal time off for overtime and refused to grant Fletcher an
additional sixteen hours of equal time off.
On February 4, 2014, the Association filed a System-Wide Grievance against the
Department. The grievance alleged that the Department had not fairly interpreted and
applied the Weather Policy, breaching Article 19.2 of the Agreement.
D. The Arbitration
The arbitrator held a hearing on September 11, 2015. The arbitrator accepted
additional briefing from the parties, and the hearing was declared closed on November 2,
2015. On November 29, the arbitrator issued the Award. Dkt. 29, Ex. 1.
The Department contended before the arbitrator that the grievance was not
arbitrable because it alleged a purported violation of the Weather Policy and not the
Agreement. The Department argued that the words ―policy‖ and ―order‖ as used in
Article 19.2 do not include the Weather Policy and Executive Order 77. The arbitrator
rejected this argument, finding that ―the language of Article 19.2 imposes no such
limitation on the term ‗order‘‖ and that Executive Order 77 specifically refers to the
Weather Policy as a ―policy.‖ Id. at 11-12. The arbitrator concluded that ―the parties‘
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grievance and arbitration procedure . . . contemplates arbitration of the grievance here.‖
Id. at 12.
On the merits, the arbitrator rejected the Department‘s construction of the Weather
Policy. The arbitrator found that the plain language of the second sentence of item 7—
―Employees covered by the Fair Labor Standards Act (FLSA) are compensated for
overtime at time and a half and receive equal time off‖—grants equal time off for
overtime hours. Id. at 13. The arbitrator rejected the Department‘s argument that item 8
dictates a different conclusion. The arbitrator found that ―any specified time periods‖ in
item 8 ―refers to the time period specified by the Governor for a severe weather event
during which Essential Employees must report to work‖ and not normal state business
hours. Id. at 14. The arbitrator concluded that ―[b]ecause ‗any specified time period[s]‘ is
not restricted to regular business hours, it necessarily includes both regular shifts and
overtime.‖ Id. The arbitrator observed that this interpretation ―is reinforced by the final
clause [of item 8], which states that those who work will receive ‗an additional hour of
compensation for each hour worked.‘‖ Id.
The arbitrator also rejected the Department‘s fallback argument that, even if it had
misinterpreted the Weather Policy, it had not breached its obligation under Article 19.2 to
interpret and apply that policy ―fairly‖ because it had applied the Weather Policy in a
uniform and consistent manner to all Essential Employees. The arbitrator found that
―[a]ssuming that such a practice existed, however, it merely shows that [the Department]
has not discriminated in its application of [the Weather Policy].‖ The arbitrator construed
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―fairly‖ as requiring the Department to apply the Weather Policy in a manner consistent
with its language.
The arbitrator concluded that the Department ―improperly compensated
Correctional Officers for the weather emergency on January 21 and 22, 2014.‖ Id. at 15
The Award ―direct[ed] that [the Department] make whole all adversely affected
Correctional Officers.‖ Id.
E. This Litigation
On January 22, 2016, the Department brought this action to vacate and stay
enforcement of the Award. The Association counterclaimed to enforce the Award. After a
brief period of discovery, both sides moved for summary judgment.
II. LEGAL ANALYSIS
Summary judgment may be granted when ―there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law.‖ Ct. Ch. R.
56(c). A motion for summary judgment is ―a common method for this court to determine
whether to vacate or confirm an arbitrator‘s award.‖ TD Ameritade, Inc. v. McLaughlin,
Piven, Vogel Sec. Inc., 953 A.2d 726, 730 (Del. Ch. 2008) (internal quotations and
citations omitted).
A. Substantive Arbitrability
When a party invokes an arbitration provision, the court must decide whether an
arbitrator or a court has authority to determine whether the dispute is arbitrable. See DMS
Properties–First, Inc. v. P.W. Scott Assocs., Inc., 748 A.2d 389, 392 (Del. 2000).
Delaware law presumes that a court will decide substantive arbitrability ―unless the
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parties clearly and unmistakably provide otherwise.‖ James & Jackson, LLC v. Willie
Gary LLC, 906 A.2d 76, 78 (Del. 2006) (quoting Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 83 (2002)). The Delaware Supreme Court held in Willie Gary that parties
have demonstrated their clear and unmistakable intent to submit questions of substantive
arbitrability to the arbitrator when the contract ―generally provides for arbitration of all
disputes and also incorporates a set of arbitration rules that empower arbitrators to decide
arbitrability.‖ Id. at 80.
There is no dispute here that the second prong of Willie Gary is met. The
Agreement plainly provides that AAA rules govern the arbitration, and those rules state
that the arbitrator determines substantive arbitrability. The fight is over the first prong.
The Department contends that because the Agreement exempts Merit Rules Grievances
from arbitration, it does not ―generally provide for the arbitration of all disputes.‖ Dkt.
29, at 28. Therefore, the Department contends that ―something other than the
incorporation of the AAA rules [is] needed to establish that the parties intended to submit
arbitrability questions to an arbitrator.‖ Id. at 29 (citing Willie Gary, 906 A.2d at 81).
Delaware courts have repeatedly rejected the Department‘s argument that, if an
arbitration provision contains any exceptions, then the parties did not intend to empower
the arbitrator to determine substantive arbitrability for all other contractual claims.1 In
1
See, e.g., Milton Inv., LLC v. Lockwood Bros., II, LLC, 2010 WL 2836404, at *7
(Del. Ch. July 20, 2016); McLaughlin v. McCann, 942 A.2d 616, 623 (Del. Ch. 2008)
(Strine, V.C.); BAYPO Ltd. P’ship v. Tech. JV, LP, 940 A.2d 20, 26-27 (Del. Ch. 2007);
Carder v. Nutzz.com, LLC v. Vertrue Inc., 2006 WL 2220971, at *6 (Del. Ch. July 25,
2006).
12
McLaughlin v. McCann, Chief Justice Strine, then serving as a Vice Chancellor,
explained that the first prong of Willie Gary does not require ―that an arbitration clause
must refer all disputes to arbitration without exception.‖ 942 A.2d at 623. Rather, the
Chief Justice held that an arbitration clause will satisfy the first prong of Willie Gary so
long as any exceptions are not ―obviously broad and substantial.‖ Id. at 625. He further
observed that the court should defer to the arbitrator on substantive arbitrability if ―there
is any rational basis for doubt‖ about whether the contract meets the first prong of Willie
Gary. Id. at 627.
Here, the Agreement commits to arbitration ―any dispute concerning the
application or interpretation of the [Agreement].‖ Dkt. 29, Ex. 9, art. 8.2.1. Without any
exceptions, this language would satisfy the first prong of Willie Gary.2 Merit Rules
Grievances are the sole carve-out from this general language. This does not amount to an
―obviously broad and substantial‖ exception. McCann, 942 A.2d at 625. The bulk of the
Agreement concerns topics that are either not addressed by the Merit Rules3 or areas
2
906 A.2d at 80. Compare Orix LF, LP v. Inscap Asset Mgmt., LLC, 2010 WL
1463404, at *7 (Del. Ch. Apr. 13, 2010) (Strine, V.C.) (―Delaware courts have found the
use of both ‗arising out of‘ and ‗relating to‘ language in an arbitration provision to be a
broad mandate.‖); Milton, 2010 WL 2836404, at *6 (holding that language referring to
arbitration ―all disputes involving or relating to … interpretation of Agreement‖ satisfies
Willie Gary).
3
See, e.g., Dkt 29., Ex. 9, arts. 5 (union security), 6 (release time for union
representatives during negotiations), 26 (drug testing), 32 (subcontracting).
13
where the Agreement trumps the Merit Rules under state law.4 The exception for Merit
Rule Grievances is a narrow carve-out to ensure that the Agreement does not circumvent
the grievance procedure contained in the Merit Rules themselves, which state law makes
exclusive. 29 Del. C. § 5943(a).
Accordingly, the Agreement provides for arbitration of all grievances except for
Merit Rule Grievances. The court‘s role, then, is limited to determining whether the
grievance in this case was a Merit Rules Grievance. Nutzz.com, 2006 WL 2220971, at *6.
If not, then Willie Gary applies, and the arbitrator was empowered to decide the issue of
substantive arbitrability.
It does not appear that the Department argued to the arbitrator that the grievance
was a Merit Rules Grievance. On its face, the grievance did not ―alleg[e] a violation of
the Merit Rules.‖ Dkt. 29, Ex. 9, art. 8.7. It alleged a violation of the Weather Policy,
which in turn violated Article 19.2 of the Agreement. The Weather Policy is a standalone
employment policy that has never been adopted by the Merit Employee Relations Board
as part of the Merit Rules. See 29 Del. C. § 5914 (outlining procedure for additions to the
Merit Rules). Its legal authority comes not from the Merit Rules, but from Executive
Order 77. See AFSCME, Local 2004 v. Dep’t of Servs. for Children, Youth, and their
4
See 29 Del. C. §5938(d) (outlining various sections where provisions in
collective bargaining agreements control over the Merit Rules, including probationary
periods, transfers, grievances, scheduling, and layoffs). Compare Dkt. 29, Ex. 9, arts. 7
(probationary period), 9-10 (employee discipline), 17 (seniority), 21 & 23 (scheduling),
24 (transfers), 34 (layoffs).
14
Families, 696 A.2d 387, 390 (Del. 1997) (treating an executive order as a binding
limitation on Executive Branch employment practices).
Although the Department did not argue the point to the arbitrator, in this action the
Department‘s core contention is that this grievance is a disguised Merit Rules Grievance.
While acknowledging that the grievance did not technically allege a violation of the
Merit Rules, the Department claims that it was ―in substance . . . about the proper pay
standard for overtime worked during a[] [weather closure].‖ Dkt. 29, at 31. This subject,
the Department claims, is covered by Merit Rule 4.13, which provides a ―universal
standard for overtime pay.‖ Id. at 31–32. The Department contends that, in seeking equal
time off for overtime worked during a weather closure, the grievance amounted to ―a
request for a modification of the Merit Rule‘s universal standard for overtime
compensation based on the Association‘s erroneous interpretation of the [Weather
Policy].‖ Id. at 32.
The Department reasons that the Association‘s interpretation of the Weather
Policy necessarily modifies the overtime standards by providing additional pay during
time that qualifies for overtime. But this does not follow. Overtime is ―additional
compensation for work performed in excess of the standard work week.‖ Laborers’ Int’l
Union of N. Am., Local 1029 v. State Dep’t of Health and Social Servs., 310 A.2d 664,
668 (Del. Ch. 1973). While working overtime, employees may remain eligible for other
wage premiums that are triggered by different events other than the number of hours
worked. One apt example is holiday pay, which is closely analogous to the Weather
Policy. See Int’l Ass’n of Firefighters, Local 1590 v. City of Wilm., 2015 WL 2358627
15
(Del. Ch. May 15, 2015) (―It is generally accepted that employers compensate employees
for holidays by either given them the day off with pay or pay them extra for working—
colloquially, ‗the pay for the day.‘‖).
Depending on the policy for holiday pay, employees may receive holiday pay
during only regularly scheduled hours, or for some or all of overtime. See id. at 1–3
(comparing Wilmington law granting city employees double pay for all hours worked
during a Mayor-declared weather closure with the city‘s collective bargaining agreement
with city firefighters capping such pay at 16 hours for each shift). If they do receive
holiday pay for overtime, it does not ―modify‖ the overtime standard. It simply extends
an additional wage premium to overtime hours. The employee‘s eligibility for the wage
premium accompanying overtime remains determined by the overtime policy and
applicable law.
The equal time off provided by the Weather Policy is similarly a distinct wage
premium. Like holiday pay, it applies when an employee works during a period when
other employees are excused from work with pay. This premium bears no relationship to
overtime, which applies based on the number of hours an employee works in a given
period. Accordingly, the Weather Policy alone, not the overtime provisions of Merit Rule
4.13, determines whether equal time off under the Weather Policy includes overtime. It
does not modify Merit Rule 4.13‘s standards for overtime eligibility.
The grievance was what it purported to be: an allegation that the Department has
misapplied the Weather Policy and thereby breached its obligation under Article 19.2 of
the Agreement to fairly interpret and apply that policy. The Association‘s interpretation
16
of the Weather Policy does not modify the overtime standards in Merit Rule 4.13 or any
other compensation standard contained in the Merit Rules. The grievance was not a Merit
Rules Grievance. Whether it was arbitrable was for the arbitrator to decide. Willie Gary,
906 A.2d at 80.
B. The Merits of the Arbitrator’s Ruling
―[R]eview of an arbitration award is one of the narrowest standards of judicial
review in all of American jurisprudence.‖ SPX Corp. v. Garda USA, Inc., 94 A.3d 745,
750 (Del. 2013) (internal quotations and citations omitted). Delaware courts ―will not
disturb a labor arbitration award unless (a) the integrity of the arbitration has been
compromised by, for example, fraud, procedural irregularity, or a specific command of
law; (b) the award does not claim its essence from the [collective bargaining agreement];
or (c) the award violates a clearly defined public policy.‖ Meade v. Wilm. Hous. Auth.,
2003 WL 939863, at *4 (Del. Ch. Mar. 6, 2003). An arbitration award does not claim its
essence from the collective bargaining agreement only if it ―bears no reasonable
relationship to the underlying contract from which it is derived.‖ Id. ―If there is any
rational construction of the [collective bargaining agreement] that would support the
arbitrator‘s award, the award must be upheld.‖ Id. Where, as here, the court has found
that the parties committed the issue of substantive arbitrability to the arbitrator, the
arbitrator‘s determination of this issue is subject to the same narrow standard of review.
First Options of Chicago v. Kaplan, 514 U.S. 938, 943 (1995).
In this action, the Department does not contest the arbitrator‘s construction of the
Weather Policy. It rather challenges the arbitrator‘s conclusion that the grievance was
17
arbitrable. It first contends that the arbitrator erred in construing the terms ―policies‖ and
―orders‖ in Article 19.2 to encompass the Weather Policy. The Department claims that
Article 19.2 was intended only to include policies and orders issued by the Department
and not statewide compensation policies that the Department applies. Dkt. 29, at 48. The
Department argues that the bargaining history supports this construction, claiming that
―the only reason offered by [the Association] for including this Article was to ensure that
[the Department‘s] comprehensive body of policies would be applied consistently.‖ Id. at
Ex. 4, ¶ 11. The Department also finds textual support for its argument in the heading of
Article 19, ―Working Conditions.‖ The Department claims that this is ―a term of art that
connotes workplace safety. It does not encompass wages, salaries, or other forms of
employee compensation.‖ Id. at 48. For this proposition, the Department relied on
Corning Glass Works v. Brennan, 417 U.S. 188, 202 (1974).
As noted by the arbitrator, the plain language of Article 19.2 contains no limitation
on the ―orders‖ and ―policies‖ that the Department must apply fairly. ―When no
ambiguity is present in a contractual provision, the court will not resort to extrinsic
evidence in order to aid in interpretation, but will enforce the contract in accordance with
the plain meaning of its terms.‖ Wilm. Firefighters Ass’n v. City of Wilm., 2002 WL
418032, at *7 (Del. Ch. Oct. 17, 2007) (Strine, V.C.) (citing City Investing Co. Liquid.
Trust v. Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993)). The arbitrator here
reasonably found that the plain language of Article 19.2 unambiguously included the
Weather Policy. He had no obligation to consider the bargaining history offered by the
Department.
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Nor does the heading of Article 19 mandate a different interpretation of the text.
While contract headings may be evidence of meaning, they are not conclusive. Cantor
Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 581 n.35 (Del. Ch. 1998). Moreover, ―working
conditions‖ has been interpreted more broadly than the Corning decision construed that
term under the Equal Pay Act.5 Limited Delaware authority suggests that the term can
take on a broader meaning when used in a collective bargaining agreement. See Bd. of
Educ. of Sussex Cnty. Vocational Tech. Sch. Dist. v. Sussex Cnty. Vo-Tech Teachers’
Ass’n, 1995 WL 1799135, at *2 (Del. Ch. June 28, 1995) (upholding arbitrator‘s finding
of arbitrability on the grounds that ―working conditions,‖ as used in the parties‘ collective
bargaining agreement, ―may be broadly interpreted to include the right to bump‖). As
―working conditions‖ lacks precise meaning, its use as a heading in the Agreement does
not mandate the Department‘s narrow interpretation of Article 19.2.
The Department next contends that the Award ―amended the [Agreement] to
include a compensation standard that was not negotiated.‖ Dkt. 29, at 44. The
Department claims that this result cannot claim its essence from the Agreement because
its grievance provisions prohibit the arbitrator from modify[ing] . . . the terms of the
Agreement‖ or ―establish[ing] or chang[ing] any individual wage rate.‖ Id. at Ex. 9, art.
8.3.9. This misapprehends the Award. The arbitrator did not create a contractual right to
5
See, e.g., Indep. Fed. of Flight Attendants v. Trans World Airlines, 655 F.2d 155,
157 (8th Cir. 1984) (observing that ―the term ‗working conditions‘ is to be broadly
interpreted‖ as used in the Railway Labor Act); Jurva v. Attorney Gen. of Mich., 351
N.W.2d 813, 819 (Mich. 1984) (finding that ―working conditions‖ as used in a state
statute includes fringe benefits).
19
receive equal time off for overtime, as if such a term were collectively bargained. Rather,
he found that the Department was obligated to follow the terms of the current Weather
Policy, which he construed as providing employees with equal time off for overtime. The
Association‘s members are accordingly only entitled to this benefit so long as the current
Weather Policy remains in effect. The Award does nothing to prevent the Executive
Branch from changing the Weather Policy to exclude overtime.6
A similar flaw undermines the Department‘s argument that the Award cannot
claims its essence from the Agreement because ―overtime and other forms of premium
pay beyond base wage rates‖ are compensation matters determined by the Merit Rules,
which may not be collectively bargained under state law. Dkt. 29, at 43. This decision has
already rejected the argument that the Weather Policy implicates the overtime standards
contained in the Merit Rules. The Department has not identified any other Merit Rules‘
provision that addresses the premium awarded by the Weather Policy. Even assuming
that compensation during a weather closure may not be collectively bargained, the Award
6
See, e.g., Armstrong Cnty. Mem’l Hosp. v. United Steel, Paper and Forestry,
Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union, 419 Fed. App‘x 217,
222 (3d. Cir. 2011) (holding that an employer‘s contractual right to ―make or change
reasonable Employer rules, regulations, policies, and practice‖ gives the employer
unilateral right to change smoking policy, and vacating arbitrator award imposing
additional limitations); CP Kelco US, Inc. v. Int’l Union of Operating Eng’rs, 381 Fed.
App‘x 808, 814–15 (10th Cir. 2010) (holding that the employer retained right to
unilaterally change call-in policy under management rights provision, and vacating
arbitrator‘s award imposing additional limitations); Enloe Med. Ctr. v. NLRB, 433 F.3d
834, 838–39 (D.C. Cir. 2006) (holding that contractual provision allowing employer to
adopt or change policies during course of agreement permitted employer to unilaterally
change on-call policy).
20
does not recognize the Association‘s authority to do so. Rather, it recognizes the
Association‘s authority to hold the Department to the letter of its own employment
policies. The Award plausibly found this authority in Article 19.2‘s requirement that
―work rules, orders, policies, and directives shall be interpreted and applied fairly.‖ Id. at
Ex. 9, art. 19.2.
Finally, the Department argues that the Award is contrary to Delaware‘s public
policy. ―The public policy exception is narrow.‖ City of Wilm. v. AFSCME Local 1102,
2003 WL 1530503, at *5 (Del. Ch. Mar. 21, 2003) (quoting E. Ass’n Coal Corp. v.
UMW, 531 U.S. 57, 63 (2000)). ―The public policy must be explicit, well-defined, and
dominant.‖ Id. (internal citation and quotations omitted). The parties have not identified,
and the court is not aware of, any Delaware case vacating an arbitrator‘s award under the
public policy exception. Here, the Department contends that the Award results in only the
Association‘s members receiving equal time off for overtime, which ―no other [Essential
Employee] has received, ever.‖ Dkt. 29, at 5. The Department argues that this violates the
―fundamental precept of the Merit System‖ that State Merit Employees be treated
uniformly. Id.
The precept is not as fundamental as the Department represents. Delaware‘s policy
of uniformity for State Merit Employees is significantly qualified by the countervailing
policy favoring collective bargaining rights for public employees.7 Not only does this
7
Section 1301 of Title 19 states:
21
policy contemplate resolution of grievances by a binding grievance-arbitration
procedure,8 but the process of collective bargaining will necessarily result in some
differences between groups of State Merit Employees. Delaware courts have noted the
difficulty of reconciling collective bargaining and the merit system.9 The Department
itself characterizes the interaction as ―fairly complex.‖ Dkt. 29, at 39. The Delaware
Code contemplates areas where bargaining units may negotiate different terms from other
It is the declared policy of the state and the purpose of this chapter to
promote harmonious and cooperative relationships between public
employers and their employees and to protect the public by assuring the
orderly and uninterrupted operations and function of the public employer.
These policies are best effectuated by:
(1) Granting to public employees the right of organization and
representation;
(2) Obligating public employers and public employee organizations which
have been certified as representing their public employees to enter into
collective bargaining negotiations with the willingness to resolve
disputes relating to terms and conditions of employment and to reduce
to writing any agreements reached through such negotiations.
19 Del. C. § 1301.
8
See 19 Del. C. § 1313(c) (mandating that public employers and unions negotiate
grievance procedures ―by means of which bargaining unit employees . . . may appeal the
interpretation or application of any term or terms of an existing collective bargaining
agreement.‖).
9
See, e.g., AFSCME, Local 2004, 696 A.2d at 389 (describing interaction of merit
system with state collective bargaining rights as ―somewhat complex‖); Del. Nurses
Ass’n v. Del., Dep’t of Health & Soc. Servs., 1984 WL 484508, at *1 (Del. Super. Jul. 30,
1984) (noting that Delaware legislature‘s attempts to reconcile these statutory provisions
―has proved less than comprehensive‖); Laborers’ Int’l Union of N. Am., Local 1029, 310
A.2d at 666 (noting that much of Delaware‘s merit system ―inevitably conflict[s] with the
scope of collective bargaining authorized under state law.‖).
22
groups of State Merit Employees. See 19 Del. C. § 1311A(a). Whatever the ―dominant‖
public policy is in this area, it demands something less than perfectly uniform treatment
among State Merit Employees.
This decision need not determine the precise bounds of the public policy, for the
Award stays within them. The Award gives equal time off for one event to a limited class
of State Merit Employees: Association members that were designated as Essential
Employees and worked overtime during the January Weather Closure. Claims for
previous events are time-barred under the Agreement. See Dkt. 29, Ex. 9, arts. 8.3.2, 8.5
(individual and System-Wide Grievances must be filed either within 14 days of the event
giving rise to the grievance or 14 days that the grievant could reasonably be expected to
have knowledge of those events). It is also within the Executive Branch‘s power to
prevent further disparities resulting from the Award. The Executive Branch may (i) pay
all Essential Employees equal time off for overtime, (ii) amend the Weather Policy to
foreclose equal time off for overtime, or (iii) negotiate an amended version of Article
19.2 of the Agreement that excludes the Weather Policy. Under these circumstances, the
Award creates only a de minimis deviation in compensation. This is insufficient to
undermine a Delaware public policy concerning uniform treatment of State Merit
Employees.
III. CONCLUSION
The Department‘s cross-motion for summary judgment on its claim to vacate the
Award is denied. The Association‘s cross-motion for summary judgment on its claim to
enforce the Award is granted.
23