Ayanna Wright and American Federation of State, County, and Municipal Employees, Council 62, Local 4009, AFL-CIO v. City of Gary, Indiana

FOR PUBLICATION
ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEE:
WILLIAM R. GROTH SUSAN M. SEVERTSON
Fillenwarth Dennerline Groth & Towe, LLP Law Office of Susan M. Severtson
Indianapolis, Indiana Munster, Indiana
BONNIE C. COLEMAN
Hodges & Davis, P.C.
Merrillville, Indiana
FILED
Mar 15 2012, 9:30 am
IN THE
CLERK
COURT OF APPEALS OF INDIANA of the supreme court,
court of appeals and
tax court
AYANNA WRIGHT and AMERICAN )
FEDERATION OF STATE, COUNTY, AND )
MUNICIPAL EMPLOYEES, COUNCIL 62, )
LOCAL 4009, AFL-CIO, )
)
Appellants-Respondents, )
)
vs. ) No. 45A04-1107-PL-362
)
CITY OF GARY, INDIANA, )
)
Appellee-Petitioner. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable Jeffery J. Dywan, Special Judge
Cause No. 45D11-1007-PL-62
March 15, 2012
OPINION - FOR PUBLICATION
BARTEAU, Senior Judge
STATEMENT OF THE CASE
Following an arbitration award in favor of Appellants Ayanna Wright and the
American Federation of State, County, and Municipal Employees, Council 62, Local
4009, AFL-CIO (“AFSCME Local 4009” or, collectively with Wright, “the Union”),
Appellee City of Gary, Indiana (“the City”), petitioned the trial court to vacate the award.
The Union counterclaimed for enforcement of the award. Both parties moved for
summary judgment. After a hearing, the trial court granted the City’s motion for
summary judgment and denied the Union’s motion for summary judgment, vacating the
arbitrator’s award. Concluding that the arbitrator did not exceed his powers by issuing
the award to the Union, we reverse and remand.
ISSUE
The Union raises two issues, which we consolidate and restate as: whether the
trial court erred by granting the City’s motion for summary judgment and denying the
Union’s motion for summary judgment.
FACTS AND PROCEDURAL HISTORY
The City and AFSCME Local 4009 are parties to a collective bargaining
agreement (“CBA”). In setting forth which employees are covered by the CBA, Section
1.1 states, “The Employer recognizes the Union as the sole and exclusive collective
bargaining representative of employees not represented by another union. Excluded from
the bargaining unit are . . . confidential employee[s] as defined in Gary City Ordinance
6243.” Appellants’ App. p. 3. Gary City Ordinance 6243, in turn, defines a confidential
employee as “an employee whose unrestricted access to confidential personnel files or
2
whose functional responsibilities or knowledge in connection with the issues involved in
dealings between the employer and its employees would make his membership in an
employee organization incompatible with his official duties.” Appellee’s App. p. 86.
The CBA further states, “This agreement is applicable to the employees of the City of
Gary, Gary Park Department, and Gary Health Department, as noted in the job
classifications in Schedule A who are members of the unit described in Section 1.1.”
Appellants’ App. p. 3. Schedule A of the CBA lists the position of administrative
assistant to the Gary Fire Civil Service Commission (“GFCSC”) as a covered
classification. See id. at 23.
The CBA’s grievance procedure is “the exclusive method for resolution of
disputes between an employee or [AFSCME Local 4009] and the Employer of all claims
of breach and/or violation of the Agreement and applicable Personnel Rules.” Id. at 8.
The CBA further states that AFSCME Local 4009 may refer the grievance to arbitration
if it is not settled in accordance with the grievance procedure. Under an express
provision of the CBA, “[t]he arbitrator shall have no right to amend, nullify, ignore, add
to, or subtract from the provisions of this Agreement.” Id. at 10. According to the CBA,
the arbitrator’s decision is binding on both parties.
On December 10, 2008, the City informed Wright, a City employee as well as the
president of AFSCME Local 4009, that her City position was being eliminated due to
economic circumstances. The CBA sets forth a “bumping” process in the event of
workforce reductions, in which an employee whose position is being eliminated may
replace an employee with lower seniority. A seniority list is to be provided to AFSCME
3
Local 4009’s president every six months, and an employee’s standing on the list will be
final unless challenged within thirty days after the list is posted on AFSCME Local
4009’s bulletin boards.
The City’s human resources director, Shirley Walls, gave AFSCME Local 4009 a
seniority list on December 12, 2008. As the City’s human resources director, Walls was
also the custodian of the City’s employee personnel records. Walls certified the seniority
list as true to the best of her knowledge. The list indicated Wright’s hire date as
November 1, 1994. The list indicated the hire date of Pamela Oliver, the GFCSC’s
administrative assistant, as June 26, 1995. On December 18, 2008, Wright elected to
bump into Oliver’s position. At the instruction of the City’s human resources
department, the GFCSC’s chairman, Dwight Gardner, interviewed Wright on December
30, 2008. Gardner determined that she was fully qualified for the GFCSC’s
administrative assistant position.
Walls spoke with Wright and followed up that conversation with a letter, dated
December 30, 2008, which indicated that Wright could not bump into the GFCSC’s
administrative assistant position:
[T]he City’s position is that the Administrative Assistant position for the
Fire Commission is non union. Notwithstanding that the position is listed
in the bargaining unit contract, after a thorough review, it is determined that
the duties are of an administrative and confidential nature.
Appellee’s App. p. 100. At a January 2, 2009 meeting, the GFCSC voted unanimously to
retain Oliver because she had been a good employee.
4
Wright declined an invitation to bump into another position. The Union filed a
grievance on her behalf, which requested that Wright be permitted to bump into the
GFCSC’s administrative assistant position. The City denied the grievance. The Union
and the City subsequently submitted the matter to arbitration pursuant to the CBA. In
December 2009, an evidentiary hearing was held before Arbitrator Edward P. Archer. At
the outset of the hearing, the parties stipulated that the issue to be decided was whether
the City violated the CBA by denying Wright’s request to bump into the GFCSC’s
administrative assistant position, and if so, what should be the remedy. During opening
statements, the City asserted that the GFCSC “is semi autonomous to the Civil City,” id.
at 18, the GFCSC did not sign the CBA, and the CBA has no effect on the GFCSC’s
administrative assistant position.
At the hearing, the City contended for the first time that Oliver’s hire date on the
seniority list was incorrect and that her correct hire date was earlier than Wright’s. Oliver
testified that she has been a member of AFSCME Local 4009 since October 2003.1 She
also stated that she had never seen nor asked to see any prior seniority lists. The
GFCSC’s attorney, Clyde Compton, testified that Gary City Ordinance 5882 provides
that the GFCSC is to select its own administrative assistant. He also stated that the files
maintained by the GFCSC’s administrative assistant relate to the City’s firefighters.
Gardner testified that the City’s firefighters are represented by the Professional
Firefighters Association and not an AFSCME local.
1
At the hearing, Oliver testified that she looked through her paystubs the night before and realized that
the City recently stopped deducting union dues from her paychecks.
5
Arbitrator Archer issued a decision and award in favor of the Union in February
2010. In his decision, Arbitrator Archer determined that the GFCSC’s administrative
assistant position was not a confidential position within the exclusionary language of
Section 1.1 and was covered by the CBA. He also noted that because he has no authority
to modify or ignore the CBA, regardless of whether the CBA conflicts with a city
ordinance, the GFCSC’s administrative assistant position was listed in the CBA as part of
the bargaining unit and therefore subject to the bumping process. Arbitrator Archer
acknowledged the City’s argument that Oliver’s correct hire date was earlier than
Wright’s but found that because there was no evidence that Oliver timely challenged the
incorrect hire date, it was final for bumping purposes. Arbitrator Archer concluded that
the City violated the CBA by denying Wright’s request to bump into the GFCSC’s
administrative assistant position. He ordered Wright to be placed in that position and for
Oliver to be permitted to engage in the bumping process.
In May 2010, the City filed with the trial court a petition to vacate the arbitration
award. The Union counterclaimed for enforcement of the award. The parties filed cross-
motions for summary judgment. In June 2011, the trial court granted the City’s motion
for summary judgment and denied the Union’s motion for summary judgment. In its
order, the trial court found that the GFCSC is a separate political entity and that the
City’s execution of the CBA did not subject the GFCSC to the CBA. After citing Indiana
Code section 34-57-2-13(a)(5) (1998), the trial court concluded that “[t]he Arbitrator
went beyond the parties who agreed to the arbitration and ordered a remedy directed
against a non-party, the GFCSC.” Appellants’ App. p. 73. The trial court also concluded
6
that Arbitrator Archer exceeded his powers under Indiana Code section 34-57-2-13(a)(3)
by issuing an award that disregarded the city ordinance providing that the GFCSC is to
select its own administrative assistant, relied on Oliver’s incorrect hire date, and
determined that the GFCSC’s administrative assistant position was not confidential. The
Union now appeals.
DISCUSSION AND DECISION
The Union contends that the trial court erred by granting the City’s motion for
summary judgment and denying the Union’s motion for summary judgment. When
reviewing the entry or denial of summary judgment, our standard of review is the same as
that of the trial court: summary judgment is appropriate only where there is no genuine
issue of material fact and the moving party is entitled to a judgment as a matter of law.
Ind. Trial Rule 56(C); Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267,
1269-70 (Ind. 2009). All facts established by the designated evidence and reasonable
inferences drawn from those facts are construed in favor of the nonmoving party. Naugle
v. Beech Grove City Sch., 864 N.E.2d 1058, 1062 (Ind. 2007). The fact that the parties
filed cross-motions for summary judgment does not alter our standard of review. Nasser
v. St. Vincent Hosp. & Health Servs., 926 N.E.2d 43, 47 (Ind. Ct. App. 2010), trans.
denied. We consider each motion separately to determine whether the moving party is
entitled to judgment as a matter of law. Id. In the summary judgment context, the entry
of specific facts and conclusions aids our review by providing us with a statement of
reasons for the trial court’s decision, but it has no other effect. City of New Albany v.
Cotner, 919 N.E.2d 125, 131 (Ind. Ct. App. 2009), trans. denied.
7
The purpose of arbitration is to afford parties the opportunity to reach a final
disposition of differences in an easier, more expeditious manner than by litigation. Bopp
v. Brames, 677 N.E.2d 629, 631 (Ind. Ct. App. 1997). Courts may not review the merits
of arbitration awards de novo. See id. at 634. Relitigation of the merits of arbitration
awards by the courts would only serve to frustrate the purposes of arbitration. Id.Indiana’s Uniform Arbitration Act provides a mechanism for enforcing
agreements to arbitrate and for securing judicial review and enforcement of awards made.
Sch. City of E. Chicago, Ind. v. E. Chicago Fed’n of Teachers, Local No. 511, A.F.T., 622
N.E.2d 166, 168 (Ind. 1993). Judicial review of an arbitration award is extremely narrow
in scope. Id. An award should only be set aside when one of the grounds specified by
the Uniform Arbitration Act for vacation of an award is shown. Id. A party who seeks to
vacate an arbitration award under the Uniform Arbitration Act bears the burden of
proving the grounds to set the award aside. Id. Our review of an arbitration award is
limited to determining whether the party who seeks to vacate the award has established
any of the grounds for challenge permitted by the Uniform Arbitration Act.
The trial court here vacated the arbitration award on two grounds provided in
Indiana’s Uniform Arbitration Act:
Upon application of a party, the court shall vacate an award where:
...
(3) the arbitrators exceeded their powers and the award can not be
corrected without affecting the merits of the decision upon the
controversy submitted;
...
(5) there was no arbitration agreement and the issue was not
adversely determined in proceedings under section 3 of this chapter
8
(or IC 34-4-2-3 before its repeal), and the party did not participate in
the arbitration hearing without raising the objection;
but the fact that the relief was such that it could not or would not be granted
by a court of law or equity is not ground for vacating or refusing to confirm
the award.
Ind. Code § 34-57-2-13(a). We first discuss the trial court’s conclusion that Arbitrator
Archer could not order a remedy against the GFCSC under Indiana Code section 34-57-
2-13(a)(5). We then address whether Arbitrator Archer exceeded his powers under
Indiana Code section 34-57-2-13(a)(3) by finding that the GFCSC’s administrative
assistant position was covered by the CBA and by finding that Oliver’s applicable hire
date for bumping purposes was the date indicated on the seniority list.
I. REMEDY AGAINST THE GFCSC
In its summary judgment memorandum to the trial court, the City argued that the
arbitration award should be vacated pursuant to Section 34-57-2-13(a)(5) because there
was no arbitration agreement between GFCSC and AFSCME Local 4009. The trial court
apparently accepted this argument. In the portion of its order discussing Section 34-57-2-
13(a)(5), the trial court found that Arbitrator Archer “went beyond the parties who agreed
to the arbitration and ordered a remedy directed against a non-party, the GFCSC.”
Appellants’ App. p. 73.
According to the language of Section 34-57-2-13(a)(5), a party challenging an
award under that provision must show, among other things, that there was no arbitration
agreement. Although Section 34-57-2-13(a)(5) does not specify who must have an
arbitration agreement, we read the provision as permitting vacation of an award where
there was no arbitration agreement between the parties to the arbitration. This conclusion
9
is in line with our caselaw requiring a party seeking to compel arbitration to demonstrate
that an enforceable arbitration agreement exists and that the disputed matter is the type of
claim that the parties intended to arbitrate. See, e.g., Precision Homes of Ind., Inc. v.
Pickford, 844 N.E.2d 126, 130 (Ind. Ct. App. 2006), trans. denied. The parties before
Arbitrator Archer were the City and the Union. Because there is no question that the
CBA between the City and AFSCME Local 4009 included an agreement to arbitrate
grievances not settled in accordance with the CBA’s grievance procedures, we conclude
that any argument under Section 34-57-2-13(a)(5) must fail.
It appears, however, that the trial court’s order in this regard is actually a
conclusion that Arbitrator Archer exceeded his powers under Section 34-57-2-13(a)(3)
because he “ordered a remedy directed against a non-party, the GFCSC.” Appellants’
App. p. 73. Indeed, regardless of how the City framed its argument, the crux of its claim
appears to be concerned with the fact that Arbitrator Archer’s award would directly affect
the GFCSC, which the City asserts was not bound by the CBA. We address this issue in
Part II.A.
II. POSITION IS COVERED BY THE CBA
The Union contends that the trial court erred by concluding that Arbitrator Archer
exceeded his powers by finding that the GFCSC’s administrative assistant position is
covered by the CBA.
A factual question determined in arbitration cannot be relitigated. Fiducial Inv.
Advisors v. Patton, 900 N.E.2d 53, 64 (Ind. Ct. App. 2009); see United Paperworkers
Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 37-38, 108 S. Ct. 364, 98 L. Ed. 2d
10286 (1987) (“Because the parties have contracted to have disputes settled by an arbitrator
chosen by them rather than by a judge, it is the arbitrator’s view of the facts and of the
meaning of the contract that they have agreed to accept. . . . To resolve disputes about the
application of a collective-bargaining agreement, an arbitrator must find facts and a court
may not reject those findings simply because it disagrees with them.”).
An arbitrator’s mistake of law or erroneous interpretation of the law does not
constitute an act in excess of the arbitrator’s powers. Fiducial Inv. Advisors, 900 N.E.2d
at 60. An arbitrator’s manifest disregard of the law, however, is an exception to this
general rule. Sw. Parke Educ. Ass’n v. Sw. Parke Cmty. Sch. Trs. Corp., Bd. of Sch. Trs.,
427 N.E.2d 1140, 1147 (Ind. Ct. App. 1981). An arbitrator shows manifest disregard of
the law when he understands and correctly states the law but then proceeds to disregard
it. Id. “The application of this exception . . . is severely limited.” Id.In the context of arbitration pursuant to a collective bargaining agreement, an
arbitrator’s award is enforceable so long as it draws its essence from the collective
bargaining agreement. Citizens Gas & Coke Util. v. Local Union No. 1400, Int’l Bhd. of
Elec. Workers, 874 N.E.2d 391, 397 (Ind. Ct. App. 2007). A court will vacate an award
only when the arbitrator’s words manifest an infidelity to this obligation. Id. It is only
when the arbitrator must have based his award on some body of thought, feeling, policy,
or law that is outside the contract and not incorporated in it by reference that the award
can be said not to draw its essence from the collective bargaining agreement. Id. We
resolve any reasonable doubt regarding whether an award draws its essence from a
11
collective bargaining agreement in favor of enforcing the award. Id. We will therefore
vacate an award only if there is no possible interpretive route to the award. Id.Section 1.1 of the CBA indicates that AFSCME Local 4009 is the collective
bargaining representative of employees not represented by another union. One group of
employees excluded, however, are confidential employees. Further, the CBA “is
applicable to the employees of the City of Gary, Gary Park Department, and Gary Health
Department, as noted in the job classifications in Schedule A who are members of the
unit described in Section 1.1.” Appellants’ App. p. 3. Schedule A includes the GFCSC’s
administrative assistant as a covered classification. Arbitrator Archer considered all of
these factors as well as Ordinance 5882 when determining whether the GFCSC’s
administrative assistant position was covered by the CBA.
A. SECTION 1.1 AND SCHEDULE A
Arbitrator Archer found that “[t]he [GFCSC] Administrative Assistant was paid
out of City funds and this position was not one represented by another union.” Id. at 36.
He also found that “the parties expressly listed this position as one covered by the
collective bargaining agreement.” Id. Specifically, as to Schedule A, Arbitrator Archer
acknowledged that a number of the jobs listed were no longer in the bargaining unit –
some jobs no longer existed and one job was removed by mutual agreement. He found,
however, that the list was otherwise accurate:
Other than these changes, the list remains a valid list of positions included
in the unit. The [GFCSC] Administrative Assistant job has not been
eliminated. Nor have the parties agreed to its exclusion from the unit.
Accordingly, at least until the City’s assertion to the contrary on December
12
30, 2008, that position had been accepted by all as one included in the
bargaining unit.
Id. at 37.
Despite this finding, the City argued and the trial court agreed that the former
attorney for the City erroneously included the GFCSC’s administrative assistant position
in Schedule A. Arbitrator Archer heard the evidence regarding the City’s former attorney
but ultimately decided that the position was included in the bargaining unit. We conclude
that the trial court erred by substituting its judgment for that of the arbitrator.
As noted above, the City nonetheless argues that the GFCSC is a separate entity
and should not be bound by the City’s execution of the CBA. The City cites Eljer
Manufacturing, Inc. v. Kowin Development Corp., 14 F.3d 1250 (7th Cir. 1994), for
support. In that case, Kowin Development and Simonds Division, a subsidiary of Eljer
Manufacturing, formed Kowin-Simonds through an agreement. Kowin and Simonds
agreed to submit any disputes arising under the agreement to arbitration. When a dispute
arose, Eljer and Kowin participated in arbitration pursuant to the Kowin-Simonds
agreement. Eljer was ordered to pay Kowin, among other awards, one million dollars in
damages. However, that award represented damages suffered by a third party, the Bank
of China, which had already sued Eljer for fraud. The Seventh Circuit stated, “Though
the arbitration clause is broadly worded, it cannot be construed to delegate to the
arbitrator the power to arbitrate disputes between Eljer and a third party. The language of
the clause limits arbitration to disputes arising under the contract.” Id. at 1256. The
court therefore concluded that the arbitrator exceeded his powers by awarding Kowin
13
damages suffered by a third party and vacated the one million dollar damage award. Id.
at 1256-57.
Contrary to the City’s assertion, the holding in Eljer supports Arbitrator Archer’s
actions here. The issue of whether the GFCSC was properly included in the CBA by
virtue of the fact that it is a department of the City or whether it was separate from the
City and did not assent to being included in the CBA may be an issue to be resolved
between the GFCSC and the City. That dispute, however, is outside the scope of the
CBA and outside the scope of the issue stipulated by the City and the Union. The sole
issue before Arbitrator Archer was whether the City violated the CBA by denying
Wright’s request to bump into the GFCSC’s administrative assistant position, and if so,
what should be the remedy. As determined by Arbitrator Archer, the City and AFSCME
Local 4009’s own negotiated terms of the CBA provided that the GFCSC’s
administrative assistant position was a covered classification. The negotiated terms of
the CBA therefore subjected that position to the bumping process. We will not second-
guess this determination.
Moreover, although the City attempts to compare the arbitrator’s award to Kowin
for damages suffered by a third party to Arbitrator Archer’s award here that affects the
GFCSC, the facts of Eljer are distinguishable. In Eljer, “[t]he transaction between the
Bank of China and Eljer was completely separate from the Kowin-Simonds agreement
and was therefore outside the scope of the arbitration clause.” Id. In contrast, the
GFCSC’s administrative assistant position was not completely separate from the CBA
because the CBA specifically provided that the position was a covered classification. See
14
Citizens Gas, 874 N.E.2d at 400 (distinguishing Eljer because “the life insurance
proceeds are not completely separate from the CBA because the CBA specifically
provided for life insurance as a fringe benefit”). Stated differently, the question as to
whether the City harmed the GFCSC by including the position in the CBA is a dispute
between the City and the GFCSC and outside the scope of the CBA. But because the
position was included in the agreement between the City and the Union, Arbitrator
Archer did not exceed his powers by concluding that it was part of the bargaining unit.
B. EXCLUSION FOR “CONFIDENTIAL EMPLOYEES”
Arbitrator Archer also considered whether the GFCSC’s administrative assistant
was a “confidential employee” within the exclusionary language of Section 1.1. A
confidential employee is “an employee whose unrestricted access to confidential
personnel files or whose functional responsibilities or knowledge in connection with the
issues involved in dealings between the employer and its employees would make his
membership in an employee organization incompatible with his official duties.”
Appellee’s App. p. 86. In his decision, Arbitrator Archer concluded that the GFCSC’s
administrative assistant’s membership in AFSCME Local 4009 was not incompatible
with the official duties of the GFCSC’s administrative assistant because the position dealt
with employees who were members of a different union:
The [GFCSC] Administrative Assistant has unrestricted access to personnel
files of firefighters, but firefighters are represented by a different union.
Accordingly, that access would not make the employee’s membership in
[AFSCME Local 4009] incompatible with the employee’s official duties.
15
Appellants’ App. pp. 35-36. He therefore concluded that there was no merit to the City’s
argument that the position was a “confidential” position to be excluded from the CBA.
The trial court disagreed that the GFCSC’s administrative assistant was a
“confidential employee.” In its reasoning, the court stated only that the GFCSC
considers the position “confidential” and that the GFCSC’s rules and regulations state
that the administrative assistant is required to create and maintain all sorts of files,
including personnel files. The court said nothing about the significance to Arbitrator
Archer that the GFCSC’s administrative assistant’s unrestricted access to files related
only to employees of a different union. We conclude that the trial court was not at liberty
to reverse the arbitration award merely because it disagreed with Arbitrator Archer’s
determinations. Arbitrator Archer’s decision shows a careful consideration of whether
the position was “confidential” and does not evince an infidelity to his obligations.
C. GARY CITY ORDINANCE 5882
The parties also disagree on whether Arbitrator Archer manifestly disregarded
Gary City Ordinance 5882 and thus exceeded his powers. At the arbitration hearing, the
City argued that Ordinance 5882 provides that the GFCSC is to appoint its own
administrative assistant and thus precludes a conclusion that that position was covered by
the CBA. Ordinance 5882 provides in pertinent part:
[The GFCSC] shall appoint a secretary[2] and chief examiner, who
shall keep the records of the commission, preserve all reports made to it,
superintend and keep a record of all examinations held under its direction,
and perform such other duties as the commission may prescribe.
2
There is no dispute that the “secretary” in Ordinance 5882 refers to the GFCSC’s administrative
assistant position.
16
The secretary and chief examiner shall be appointed as a result of
competitive examination, which examination may be either original and
open to all properly qualified citizens of the state, or promotional and
limited to persons already in the service of the fire department, as the
commission may decide.
Appellee’s App. pp. 63-64. The CBA, the City argued, is in conflict with the ordinance
because it provides a bumping process that could replace the GFCSC’s administrative
assistant without the GFCSC’s approval.
Arbitrator Archer acknowledged this ordinance as well as the Union’s argument
that Ordinance 6243, which authorized collective bargaining for City employees, prevails
over Ordinance 5882. However, he stated that he was “not persuaded that, as an
arbitrator, I have any authority to interpret and apply state statutes or city ordinances.
Arbitrators are to enforce the negotiated terms of the parties’ collective bargaining
agreement.” Appellants’ App. p. 39. He then indicated that he was without authority to
modify or ignore the CBA’s express inclusion of the GFCSC’s administrative assistant
position within its covered classifications:
[R]egardless of whether there is a conflict between the parties’ collective
bargaining agreement and a city ordinance, I have no authority to modify or
ignore the collective bargaining agreement. Under that agreement, the
[GFCSC] Administrative Assistant position was clearly listed as included
in the bargaining unit and, as such, was subject to the bumping process set
forth in [the CBA].
Id.The trial court concluded that Arbitrator Archer exceeded his powers because he
“knew of Ordinance 5882 but intentionally disregarded it, writing that he had no
authority to interpret and apply state statutes and city ordinances.” Id. at 73-74. We
17
disagree. An arbitrator is limited by the bounds of the agreement from which he draws
his authority and is expected to be aware of those limits. Bopp, 677 N.E.2d at 632. An
arbitrator exceeds his powers if his decision is based solely on the arbitrator’s view of the
requirements of enacted legislation rather than on an interpretation of the collective
bargaining agreement. See Roadmaster Corp. v. Prod. & Maint. Employees’ Local 504,
Laborers’ Int’l Union of N. Am., AFL-CIO, 851 F.2d 886, 888 (7th Cir. 1988). In
Roadmaster Corporation, the collective bargaining agreement contained a “rollover”
provision stating that the agreement would remain in effect from year to year unless
either party served upon the other party written notice of its desire to amend or terminate
the agreement at least sixty days before the date it wished to do so. Pursuant to this
provision, the employer sent a timely letter indicating that it wished to terminate the
agreement. The employer also refused to bargain with anyone regarding a possible new
contract. Upon being submitted to arbitration, the arbitrator determined that the
employer’s letter was void because the employer violated a provision of the National
Labor Relations Act by refusing to bargain with the unions. The arbitrator thus
concluded that the “rollover” provision renewed the collective bargaining agreement’s
terms for another year.
The Seventh Circuit disagreed, noting that an arbitrator has no general authority to
invoke public laws that conflict with the bargain between the parties. The court therefore
concluded that the arbitrator exceeded his powers by going beyond the agreement’s terms
to consider the National Labor Relations Act: “When a contract, such as the one involved
here, specifically limits an arbitrator’s subject matter jurisdiction, the arbitrator should
18
restrict his consideration to the contract, even if such a decision conflicts with federal
statutory law.” Id. at 889.
Here, a provision of the CBA provides that “[t]he arbitrator shall have no right to
amend, nullify, ignore, add to, or subtract from the provisions of this Agreement.”
Appellants’ App. p. 10. Arbitrator Archer acknowledged Ordinance 5882 but ultimately
concluded that his job was to enforce the CBA and that he had no authority to modify or
ignore the express inclusion of the GFCSC’s administrative assistant position within its
covered classifications. Arbitrator Archer did not manifestly disregard Ordinance 5882
but instead acknowledged that the bounds of the CBA prevented him from considering it.
His decision not to consider Ordinance 5882 thus does not establish that he exceeded his
powers under Indiana Code section 34-57-2-13(a)(3). We therefore conclude that
Arbitrator Archer did not exceed his powers by concluding that the GFCSC’s
administrative assistant position was covered by the CBA.
Moreover, we conclude that Ordinance 5882 does not preclude this Court’s
enforcement of the CBA. Generally, a contract made in contravention of a statute is void.
Norlund v. Faust, 675 N.E.2d 1142, 1150 (Ind. Ct. App. 1997), clarified on reh’g, 678
N.E.2d 421 (1997), trans. denied. However, a contract will not automatically be held
void merely because it violates a statute. Id. Municipal ordinances have the same force
and effect as statutes in the localities in which they apply. French v. Bristol Myers Co.,
574 N.E.2d 940, 943 (Ind. Ct. App. 1991), trans. denied.
Here, the City entered into an agreement that provides for an outcome contrary to
an ordinance that it promulgated and retains. The City now seeks to avoid the
19
consequences of arbitration under that agreement. There is a strong presumption of
enforceability of contracts that represent the freely bargained agreement of the parties.
Cont’l Basketball Ass’n v. Ellenstein Enters., 669 N.E.2d 134, 139 (Ind. 1996). Despite
this strong presumption, courts have refused to enforce private agreements on public
policy grounds when they contravene statute, clearly tend to injure the public in some
way, or are otherwise contrary to the declared public policy of Indiana. Id.; Ind. Dep’t of
Transp. v. Shelly & Sands, Inc., 756 N.E.2d 1063, 1073 (Ind. Ct. App. 2001), trans.
denied. “[B]ecause we value the freedom to contract so highly, we will not find that a
contract contravenes a statute unless the language of the implicated statute is clear and
unambiguous that the legislature intended that the courts not be available for either party
to enforce a bargain made in violation thereof.” Ellenstein Enters., 669 N.E.2d at 140.
In Ellenstein Enterprises, our Supreme Court noted that a state franchise statute
did not expressly require that its violation renders a contract void and instead provided
remedial measures to be invoked in the event of a violation. The Court therefore
concluded that the legislature did not intend that every contract made in violation of the
statute be void. Thus, to determine whether the franchise statute rendered a franchise
agreement void, the Court applied a balancing test it had previously used to resolve
whether a contract was void as contrary to public policy. Id. (citing Fresh Cut, Inc. v.
Fazli, 650 N.E.2d 1126, 1130 (Ind. 1995)). The factors the Court considered were: (1)
the nature of the subject matter of the contract; (2) the strength of the public policy
underlying the statute; (3) the likelihood that refusal to enforce the bargain or term will
further that policy; (4) how serious or deserved would be the forfeiture suffered by the
20
party attempting to enforce the bargain; and (5) the parties’ relative bargaining power and
freedom to contract. Id.We must first determine whether the CBA contravenes Ordinance 5882. Like the
statute in Ellenstein Enterprises, Ordinance 5882 does not expressly require that its
violation renders a contract void. Like the statute in Ellenstein Enterprises, nowhere in
Ordinance 5882 does it clearly and unambiguously provide for the unavailability of the
courts—or here, arbitration—to enforce an agreement contrary to its provisions. The
CBA therefore does not contravene Ordinance 5882, and the balancing test our Supreme
Court applied in Ellenstein Enterprises likewise applies here.
Applying that test, we cannot conclude that enforcement of the CBA provisions
subjecting the GFCSC’s administrative assistant position to the bumping process is so
contrary to the public policy interest of Ordinance 5882 that the CBA provisions are void.
The contract is a collective bargaining agreement between the City and AFSCME Local
4009, and there is no suggestion of unequal bargaining power between the parties.
Ordinance 5882 reflects a valid public policy of hiring a qualified individual for the
GFCSC’s administrative assistant position, and refusing to allow Wright to bump into the
position does nothing to further and may even diminish that policy as the GFCSC’s
chairman determined that Wright was fully qualified for the position. Further,
considering that the City promulgated Ordinance 5882 and yet freely bargained for the
GFCSC’s administrative assistant position to be subject to the bumping process, refusing
to allow Wright to bump into the position would certainly be undeserved. Simply put,
there is no contention that the CBA provides for an unqualified individual to hold the
21
administrative assistant position established by Ordinance 5882. Nor is there any
contention that Wright is unqualified for the position under the provisions of Ordinance
5882, though she arguably holds less seniority than Oliver, the GFCSC’s preferred
employee. The CBA provisions subjecting the GFCSC’s administrative assistant position
to the bumping process are thus not void.
III. OLIVER’S HIRE DATE FOR BUMPING PURPOSES
The Union also contends that the trial court erred by concluding that Arbitrator
Archer exceeded his powers by finding that Oliver’s hire date for bumping purposes was
later than Wright’s. The seniority list provided to Wright and certified by Walls as true
to the best of her knowledge indicated Wright’s hire date as November 1, 1994 and
Oliver’s hire date as June 26, 1995. At the arbitration hearing, evidence was presented
that Oliver’s actual hire date was in 1989.
Arbitrator Archer noted the provision of the CBA that provides that an employee’s
standing on the seniority list will be final unless challenged within thirty days after the
list is posted on AFSCME Local 4009’s bulletin boards. He then concluded, “Consistent
with this provision, the failure of any evidence of a timely Oliver protest of her stated
hire date in the bump list (which was apparently assembled by Walls from prior posted
information), resulted in her hire date, for bumping purposes at least, becoming final.”
Appellants’ App. p. 40.
The trial court found that Oliver never received notice of the incorrect hire date
and therefore could not protest. We acknowledge that the designated summary judgment
materials provided to us on appeal do not show that Wright, as the president of AFSCME
22
Local 4009, posted the seniority list on AFSCME Local 4009’s bulletin boards.
Nevertheless, Oliver testified at the arbitration hearing that she had been a member of
AFSCME Local 4009 since October 2003 but had never seen nor asked to see any prior
seniority lists. Arbitrator Archer was entitled to conclude from the evidence that
Wright’s seniority was greater than Oliver’s for bumping purposes.3 See Eljer Mfg., Inc.,
14 F.3d at 1254 (“Nor does an insufficiency of evidence supporting the decision permit
us to disturb the arbitrator’s order. Arbitration does not provide a system of ‘junior
varsity trial courts’ offering the losing party complete and rigorous de novo review.”).
Finally, the City argues that we should affirm the trial court’s vacation of the
award on public policy grounds. A court may refuse to enforce an arbitrator’s award
under a collective bargaining agreement because it is contrary to public policy. See Fort
Wayne Educ. Ass’n v. Fort Wayne Cmty. Sch., 753 N.E.2d 672, 677 (Ind. Ct. App. 2001)
(quoting Misco, Inc., 484 U.S. at 42). Any such public policy must be explicit, well-
defined, dominant, and ascertained by reference to the laws and legal precedents and not
from general considerations of supposed public interests. E. Associated Coal Corp. v.
United Mine Workers of Am., Dist. 17, 531 U.S. 57, 62, 121 S. Ct. 462, 148 L. Ed. 2d 354(2000).
The City asserts that because Wright failed to post the seniority list and Oliver
therefore had no notice that her hire date was incorrectly listed, it would violate public
policy to allow Wright to bump into Oliver’s position. The City has failed to show that
3
Arbitrator Archer acknowledged that personnel records of the City established that Oliver was initially
hired in 1989. Nevertheless, because he found that Oliver failed to timely protest her stated hire date, we
decline to address the City’s argument that seniority consists of an employee’s total continuous service.
23
this argument is anything more than a general consideration of supposed public interests.
See Misco, Inc., 484 U.S. at 44 (asserted public policy against the operation of dangerous
machinery while under the influence of drugs was not shown to be well-defined and
dominant). The City has thus failed to show that the award violates public policy.
Arbitrator Archer’s findings that the GFCSC’s administrative assistant position
was covered by the CBA and that Wright had greater seniority for bumping purposes
were a proper exercise of his powers. He therefore did not exceed his powers by ordering
Wright to be placed in Oliver’s position as the GFCSC’s administrative assistant. In
short, the trial court essentially conducted an improper de novo review and erred by
concluding that Arbitrator Archer exceeded his powers merely because he did not reach
the same conclusion as the trial court. See id. at 38 (“[A]s long as the arbitrator is even
arguably construing or applying the contract and acting within the scope of his authority,
that a court is convinced he committed serious error does not suffice to overturn his
decision.”).
CONCLUSION
For the reasons stated, we reverse the trial court’s order granting the City’s
summary judgment motion and denying the Union’s summary judgment motion and
remand with instructions to enter summary judgment for the Union.
Reversed and remanded.
BAILEY, J., concurs.
BRADFORD, J., dissents with separate opinion.
24
IN THE
COURT OF APPEALS OF INDIANA
AYANNA WRIGHT and AMERICAN )
FEDERATION OF STATE, COUNTY, AND )
MUNICIPAL EMPLOYEES, COUNCIL 62, )
LOCAL 4009, AFL-CIO, )
)
Appellants-Respondents, )
)
vs. ) No. 45A04-1107-PL-362
)
CITY OF GARY, INDIANA, )
)
Appellee-Petitioner. )
BRADFORD, Judge, dissenting.
I conclude that I cannot concur with the approach taken by the majority. I cannot
agree with either the conclusion that we may not reach the legality of the CBA or the
conclusion that the CBA’s conflict with Gary Ordinance 5882 should be resolved in favor
of enforcing the CBA. Consequently, I respectfully dissent.
I agree with the majority that the arbitrator was bound by the terms of the CBA
and could not take Ordinance 5882 into account when rendering his decision. The
arbitrator is a creation of the contract whose powers are absolutely limited by the
contract. This does not mean, however, that we cannot take Ordinance 5882 into account.
The enforceability of the CBA is a different question than whether the arbitrator
25
exceeded his authority under the CBA. The Florida Court of Appeals has recognized this
distinction in two cases I believe to be on point. See Jupiter Med. Ctr., Inc. v. Visiting
Nurse Ass’n of Florida, Inc., 72 So. 3d 184, 186 (Fla. Dist. Ct. App. 2011), reh’g denied
(Nov. 10, 2011) (“If the contract is found to be illegal, a prior arbitration will not prevent
the trial court from vacating the award.”); Party Yards, Inc. v. Templeton, 751 So. 2d 121,
123 (Fla. Dist. Ct. App. 2000) (“A claim that a contract is illegal … is not a matter which
can be determined by an arbitrator. An arbitrator cannot order a party to perform an
illegal act.”). In my view, the City can challenge the underlying CBA on appeal just like
any other contract, and if it runs afoul of Ordinance 5882, we should refuse to enforce it
to that extent.
The test for evaluating such questions was provided by the Indiana Supreme Court
in the case of Continental Basketball Ass’n, Inc. v. Ellenstein Enterprises, Inc., 669
N.E.2d 134 (Ind. 1996). Although there is a strong presumption of the enforceability of
contracts in Indiana, “courts have refused to enforce private agreements on public policy
grounds in three types of situations: (i) agreements that contravene statute[4]; (ii)
agreements that clearly tend to injure the public in some way; and (iii) agreements that
are otherwise contrary to the declared public policy of Indiana.” Id. at 139. If a contract
contravenes a statute or ordinance, it (or the offending provisions) is declared void.
However, “because we value the freedom to contract so highly, we will not find that a
contract contravenes a statute unless the language of the implicated statute is clear and
4
“Municipal ordinances have the same local force and effect as statutes[,]” French v. Bristol Myers Co., 574
N.E.2d 940, 943 (Ind. Ct. App. 1991), and so law relating to statutes has equal applicability to ordinances. For
purposes of this dissent, the terms will be used interchangeably.
26
unambiguous that the legislature intended that the courts not be available for either party
to enforce a bargain made in violation thereof.” Id. at 140.
Here, Ordinance 5882, despite making it abundantly clear that the GFCSC may
choose its own secretary, nonetheless contains no clear or unequivocal language
indicating that contracts made contrary to its terms are void or unenforceable. As such,
we are required to analyze the CBA using the following considerations: “(i) the nature of
the subject matter of the contract; (ii) the strength of the public policy underlying the
statute; (iii) the likelihood that refusal to enforce the bargain or term will further that
policy; (iv) how serious or deserved would be the forfeiture suffered by the party
attempting to enforce the bargain; and (v) the parties’ relative bargaining power and
freedom to contract.” Id. at 140.
This is where my path diverges again from the majority’s, who conclude that the
CBA should be enforced instead of Ordinance 5882. Applying the Ellenstein factors, I
would conclude that Ordinance 5882 trumps the CBA. While some of the factors do not
seem to lean one way or the other in this case, as a general rule I do not believe that it is
for us to say that enforcement of a duly-enacted and constitutional ordinance is against
public policy when the ordinance is, in fact, the embodiment of public policy. Put
another way, because the stated public policy of Gary is that the GFCSC may hire the
secretary of its choice, to rule in favor of enforcement of the CBA is to thwart public
policy rather than to serve it. “[P]ublic policy is a matter for the General Assembly
subject only to constitutional limitations on legislative authority.… In the absence of any
constitutional challenge, the wisdom of the policy reflected in the statute is not for us to
27
resolve.” Murray v. Conseco, Inc., 795 N.E.2d 454, 457 (Ind. 2003). While this result
may seem slightly unfair to Wright, who was merely following the bumping procedure
provided for in the CBA, in my view that unfairness is not nearly enough to overcome the
public policy as stated in Ordinance 5882. I believe it should be a very rare case in which
we conclude that a contractual provision be enforced despite conflicting with a statute or
ordinance, and I see nothing in the record to suggest that this should be one of those
cases.
I respectfully dissent.
28