Maquoketa Valley Community School District v. Maquoketa Valley Education Ass'n

REYNOLDSON, Chief Justice.

Maquoketa Valley Community School District appeals from a district court judgment validating a collective bargaining arbitration decision rendered pursuant to section 20.22, The Code 1975. We reverse and remand.

Plaintiff District is a public employer within the meaning of the Public Employment Relations Act. Defendant Maquoketa Valley Education Association is the employee organization representing the District’s teachers, guidance counselors and librarians.

In September, 1975, the District and Association began negotiations to reach their first collective bargaining agreement. By the end of 1975 the parties had reached agreement on all subjects except salary and supplemental pay. Mediation was unsuccessful. January 81, 1976, the parties went to fact-finding. The Association accepted but the District rejected the fact-finder's findings and recommendations. February 24, the District filed a request with the Public Employment Relations Board (PERB) for binding arbitration.

In compliance with section 20.22 each party filed with PERB its final offer on the impasse items, a copy of the draft of the agreement to the extent agreement was reached, and the name of its arbitrator. The selected arbitrators, Edward Beatty for the District and Patrick Connolly for the Association, appointed Martin E. Conway of Minneapolis, Minnesota, as the third arbitrator and panel chairman.

The panel’s first meeting was held March 18. Each party presented evidence and arguments supporting its final offer. During this hearing the parties agreed on supplemental pay and withdrew that subject from the panel’s consideration.

Sometime in April but indisputably more than fifteen days after the panel’s first meeting, Conway sent the other arbitrators and PERB an “Award of Neutral Chairman.” Association arbitrator Connolly by subsequent letter “voted in favor” of Conway’s award.

By this action the District sought a declaratory judgment that the arbitration award was invalid because it incorrectly defined “impasse item” and because the decision was rendered more than fifteen days after the panel’s first meeting. The District further alleged the panel took no vote and failed to provide the parties with written notice and explanation of its decision.

The Association, by answer and counterclaim, denied the District’s contentions and sought enforcement of the agreement as finalized by the arbitration decision.

Each party filed a summary judgment motion supported by affidavits. Trial court sustained the Association’s motion, overruled the District’s and entered judgment for the Association. Although minor factual disputes are reflected in the pleadings, motions and affidavits, neither party objects to the above procedure. We find no genuine issue of material fact in the dispos-itive issue. But see Young Plumbing & Heating Co. v. Iowa Natural Resources Council, 276 N.W.2d 377, 381 (Iowa 1979).

I. Appeal from agency action. As a preliminary matter, the District did not select the proper vehicle for challenging this arbitration decision. We are satisfied arbitration of a collective bargaining impasse is agency action, reviewable only pursuant to section 17A.19, The Code.

PERB is clearly an administrative agency subject to chapter 17A. See § 17A.2(1); Frazee v. Iowa Board of Parole, 248 N.W.2d 80, 82 (Iowa 1976). The sevéral PERA cases which have reached this court have followed the judicial review procedures of section 17A.19. See, e. g., City of Davenport v. PERB, 264 N.W.2d 307 (Iowa 1978).

The legislature has delegated to PERB some of its authority to control conditions of public employment. Determination of employment conditions in the public sector by collective bargaining is a privilege conferred by statute, and is conditioned upon the use of binding arbitration rather than strikes to resolve negotiation deadlocks. Supervision of bargaining and of impasse resolution is delegated to PERB. The legislature has determined, however, that absent agreement of the parties, an impasse shall be resolved by a panel of arbitrators.

“Agency action” means, among other things, all or part of an agency decision or its equivalent. § 17A.2(9). If the arbitration panel was composed of PERB members, officials, or employees, its decision would be agency action. There is no logical reason why the same decision by a panel of arbitrators should be viewed differently.

This conclusion is consistent with the premise underlying constitutional challenges to public employee collective bargaining statutes in other jurisdictions. See Annot., 68 A.L.R.3d 885, at §§ 3, 4 (1976). An examination of the cases there discussed indicates Iowa’s PERA delegates legislative authority, through PERB, to arbitrators. We need not consider the constitutionality of this delegation since the parties did not raise it.

In Salsbury Laboratories v. DEQ, 276 N.W.2d 830 (Iowa 1979), we held section 17A.19 provides the exclusive means of obtaining judicial review of agency action. As in that case, we will view the District’s timely filed petition as seeking judicial review of final agency action. See § 20.-22(13).

There is also a question of mootness in this case. The employment period expired June 30, 1977. We are being asked to declare a collective bargaining arbitration decision invalid due to defects in the arbitration process — which under our recent holding in City of Des Moines v. PERB, 275 N.W.2d 753 (Iowa 1979), did not occur until after the mandatory end point of negotiations under chapter 20 — and remand for reinstitution of the arbitration process to settle this wage dispute. Of course, the parties can always terminate the matter by settlement.

The late start for arbitration does not moot this case. City of Des Moines was expressly based on a union’s request for arbitration, in which request the employer did not join. Here the District requested arbitration when it was impossible to complete it timely. Both parties took affirmative statutory steps to implement the process. The Association never objected, despite the fact that at the time PERB was holding March 15 to be a bargaining and arbitration deadline. See City of Des Moines, 275 N.W.2d at 760. We took pains in City of Des Moines not to hold the March 15 deadline jurisdictional. Without an objection from one of the parties City of Des Moines simply does not apply; we need not search for a helpful exception. In this case the only objection raised was District’s repeated warning that the arbitration must be completed in fifteen days.

Arbitrating a salary schedule for an employment period which has expired may be anomalous, but enforcement of the rights of public employers and employees provided by chapter 20 makes it necessary. Inevitable trial and appellate time sequences will always force courts to consider legal issues produced by negotiations for a contract period already in full swing if not terminated when a final decision is reached. If this case is moot, most appeals from decisions rendered by PERB or arbitration panels will be. This would be an intolerable result.

There is no difference between this situation and our frequent adjudications involving back pay. See, e. g., Kitchen v. Stockman National Life Insurance Co., 192 N.W.2d 796 (Iowa 1971). Of course, a disputed provision in an employment contract cannot always be reduced to a question of dollars and cents. But where it can be, an after-the-fact settlement or arbitration can restore to the prevailing party, via the next budget, whatever benefits were improperly withheld or mandated. In this case the dispute is purely monetary.

II. Definition of “impasse item.” On the merits a reversal is mandated by West Des Moines Education Association v. PERB, 266 N.W.2d 118 (Iowa 1978), filed after these parties’ briefs were filed.

Section 20.22(11) requires the arbitration panel to select either of the final offers or the fact-finder’s recommendations “on each impasse item.” In West Des Moines we held “impasse item” means any section 20.9 subject of bargaining on which the parties cannot agree.

In this case, settlement of the supplemental pay item during arbitration left only the impasse item of wages (termed salary schedule by the parties) for the panel’s consideration. Within that item there were several points of disagreement. The parties were seventy-five dollars apart on base rate, and they disagreed on the number of time steps in each educational lane. Their maximum salary proposals in each lane differed accordingly. The fact-finder combined the District’s base rate with the Association’s steps. The District also proposed a lane for non-degree employees and conditioned entry into the master’s degree lane upon receiving that degree in the employee’s assigned teaching category. Neither the Association’s final offer nor the fact-finder’s report contained a response to either proposal.

The panel selected the Association’s final offer on every aspect of the salary schedule but also installed the non-degree lane proposed by the District. That result is in conflict with West Des Moines and cannot stand. The panel should have selected either of the final offers on salary or the fact-finder’s report, in toto.

Upon oral submission the Association urged us to overrule West Des Moines and hold “impasse item” means any word, phrase, clause, sentence, or paragraph on which the parties cannot agree. We decline. The legislature’s goal of hard bargaining and reasonable offers is promoted by construing “item” as broadly as the statutory language otherwise permits. “Item” means any section 20.9 subject of bargaining.

We return the parties to the arbitration process, which shall be triggered without delay by an appropriate request and shall follow, to the extent feasible, the section 20.22 guidelines. The same fact-finder’s report shall be used but the parties may submit new final offers and nominate different arbitrators.

Our reversal and remand on the “impasse item” definition moots remaining issues. But because some are of continuing interest in public employment and are likely to recur, we treat them here. See Catholic Charities v. Zalesky, 232 N.W.2d 539, 542-43 (Iowa 1973).

III. Statutory fifteen-day limitation on arbitration process. The District contends an arbitration decision rendered more than fifteen days after the panel’s first meeting is invalid. Section 20.22(11) provides:

A majority of the panel of arbitrators shall select within fifteen days after its first meeting the most reasonable offer, in its judgment, of the final offers on each impasse item submitted by the parties, or the recommendations of the fact-finder on each impasse item.

The panel in this case did not comply with this fifteen-day requirement. The Association insists, however, a late decision is valid unless prejudice is shown.

The statutory construction rule invoked here is the mandatory-directory distinction discussed in Taylor v. Department of Transportation, 260 N.W.2d 521, 522-24 (Iowa 1977). See also State v. Lint, 270 N.W.2d 598 (Iowa 1978); State v. Lohr, 266 N.W.2d 1, 5-6 (Iowa 1978). Because section 20.-22(11) uses “shall” the statute imposes a duty to produce a decision in fifteen days. § 4.1(36)(a); Lohr, 266 N.W.2d at 5. The issue is whether failure to perform that duty invalidates a belated decision. Taylor provides the test:

If the prescribed duty is essential to the main objective of the statute, the statute ordinarily is mandatory and a violation will invalidate subsequent proceedings under it. If the duty is not essential to accomplishing the principal purpose of the statute but is designed to assure order and promptness in the proceeding, the statute ordinarily is directory and a violation will not invalidate subsequent proceedings unless prejudice is shown.

260 N.W.2d at 522-23.

In City of Des Moines v. PERB, 275 N.W.2d 753 (Iowa 1979), this court concluded a primary purpose of the PERA is providing public employees the benefits of collective bargaining in a manner consistent with effective and orderly government. Consequently the manifest legislative intent that bargaining, and arbitration when necessary, be completed by the employer’s budget submission date made that date a mandatory deadline.

The legislature fashioned an impasse procedure timetable that, if observed with reasonable care, will result in a negotiated or arbitrated agreement well before the deadline. See § 20.19 et seq. Although the parties may create their own impasse procedures, section 20.19 requires such procedures to be implemented on the same date as are statutory procedures: 120 days before budget submission date.

The word “shall” is sprinkled liberally throughout the statutory impasse steps. The purpose of most of the duties thereby created obviously is “to assure order and promptness in the proceeding.” Taylor, 260 N.W.2d at 523. Por purposes of this analysis we may assume those time sequences within control of a single party, mediator, or fact-finder may be construed as directory-

This construction is in accord with the general rule that statutory provisions fixing the time, form and mode of proceeding of public functionaries are directory because they are not of the essence of the thing to be done but are designed to secure system, uniformity and dispatch in public business. Such statutes direct the thing to be done at a particular time but do not prohibit it from being done later when the rights of interested persons are not injuriously affected by the delay. Younker Brothers, Inc. v. Zirbel, 234 Iowa 269, 274, 12 N.W.2d 219, 223 (1943); Bechtel v. Board of Supervisors of Winnebago County, 217 Iowa 251, 257, 251 N.W. 633 (1933); Yengel v. Allen, 179 Iowa 633, 161 N.W. 631 (1917); Dishon v. Smith, 10 Iowa 212, 218 (1859) (“And it is a general rule of law, that statutes directing the mode of proceeding of public officers, relating to time and manner, are directory.”).

Taylor, 260 N.W.2d at 523. Accord, City of Spokane v. Spokane Police Guild, 87 Wash.2d 457, 553 P.2d 1316 (1976). Contra, Garden City Educators’ Association v. Vance, 224 Kan. 732, 585 P.2d 1057 (1978).

We may assume employers and unions will obey the statutory mandate to participate in good faith in the impasse procedures. §§ 20.10(2)(g), (3)(d). We may also assume the obligation to follow statutory time sequences will not be ignored by the mediator or the fact-finder. Sufficient slack is left in the timetable to permit reasonable good-cause delays and still obtain an agreement before the mandatory deadline.

But the specific duty violated in this case — the fifteen-day limitation on arbitrators’ deliberations — is different from the others. Under Iowa’s hybrid of the typical final-offer arbitration scheme, the three arbitrators have the right to select from three options: (1) the employer’s final offer, (2) the union’s final offer, and (3) the fact-finder’s recommendations. See § 20.22(11). There is no guarantee that either party will adopt the fact-finder’s position, did in this case. Neither

It is not unlikely that the employer’s arbitrator would adopt the employer’s final offer on all items, the employee organization’s arbitrator would adopt the organization’s final offer, and the “neutral” arbitrator would adopt the fact-finder’s recommendation. As the number of impasse items increases, the chances of arbitration panel impasse increase. The potential for this deadlock is highlighted by a letter the neutral arbitrator sent to the other arbitrators in the case before us. He suggested each “write up [his] decision,” and directed distribution of copies. He added:

I am aware that there may be an issue or two or perhaps more on which the three of us do not agree and have potentially three separate opinions. In that event, it seems we will not have a binding arbitration Award on that matter.

As we recognized in City of Des Moines, completion of the bargaining process before the budget submission date is essential. The public employer’s ability to grant wage and benefit concessions depends upon the availability of additional tax revenues. See §§ 20.17(6), ,22(9)(e), ,22(9)(d). Only if agreement is reached before budget submission can the employer accurately request funds sufficient to cover the new agreement. Nothing in chapter 20 or in chapter 24 (Local Budget Law), The Code, suggests an employer should have to submit a budget containing estimated provisions contingent on unfinished negotiations or arbitration.

The fifteen-day limitation on arbitration deliberation is essential to the primary purpose of PERA, enunciated in City of Des Moines. Arbitration is the last opportunity in the impasse procedure to force an end to bargaining. Once the impasse is submitted to the panel, the parties lose control over its resolution; unless they compromise, see § 20.22(11), they must await a decision. A deadlock within the panel, however, could prevent a decision from being reached before the budget submission date, thereby frustrating the entire bargaining process and the goal of PERA to ensure labor peace in the public sector.

Consequently, the statutory fifteen-day limitation is mandatory. An arbitration decision rendered more than fifteen days after the panel’s first meeting is invalid and unenforceable. At the end of the fifteen-day period either party can trigger the selection of a new panel pursuant to section 20.22 by an appropriate request. It would not be necessary, as asserted by the Association, to go back to square one in the impasse procedures.

The conclusion we reach is supported by authority, International Association of Firefighters, Local 463 v. City of Johnstown, 468 Pa. 96, 360 A.2d 197 (1976); Town of Tiverton v. Fraternal Order of Police, Lodge # 23, - R.I. -, -, 372 A.2d 1273, 1275-76 (1977), although other decisions would support a contrary result. An-not., 56 A.L.R.3d 815 (1974). The Iowa three-choice statute, as we have noted, creates a potential for irreversible deadlock which authorities cited by the Association were not required to confront.

The opinion most relied on by the Association, and by PERB as amicus curiae, is City of Spokane v. Spokane Police Guild, 87 Wash.2d at 457, 553 P.2d at 1316. It is distinguishable. We find nothing in the Spokane case nor in the Washington Code, see RCW 41.56.450, .460, which indicates that state has adopted final-offer arbitration, much less the three-selection anomaly presented by Iowa’s PERA. The Washington court relied in part on a provision of the act which permits either party to seek an appropriate compelling order from the superior court, a provision not contained in our legislation. There also is some uncertainty in the decision whether a party may unilaterally violate a statutory time requirement. See 87 Wash.2d at 464 n. 2, 553 P.2d at 1320 (“We leave open the question whether a party is entitled to a delay in meeting a particular timetable requirement in RCW 41.56.450 in the absence of consent by the opposing party.”). Finally, Spokane speaks of impasse procedure time requirements in general and gives no attention, like we must, to a particular deadline.

Our holding does not, of course, restrict the parties’ right to agree on impasse procedures which eliminate any limitation on arbitrator deliberation. See § 20.19. This section also gives parties who have not already done so the right, in the midst of arbitration, to agree to extend or lift the fifteen-day bar. Under either of those situations the only mandatory deadline which cannot be modified by agreement is the certified budget submission date.

Nor does the construction we give section 20.22(11) cost more in delay than it is worth. Termination of a panel’s authority will ordinarily occur only when the basis for our conclusion occurs: a deadlock within a three-member panel. It will not occur when a single arbitrator is chosen pursuant to section 20.22. We also anticipate the consent of the parties to extend the time will ordinarily be forthcoming when a panel or a single arbitrator simply needs extra time. In those few instances where a deadlock dissolves one or even two panels, the cost in extra delay is worth the opportunity to achieve an arbitrated agreement and secure labor peace. The automatic termination upon deadlock clearly would save the time required to complete a court proceeding to disband the deadlocked panél. The suggestion in City of Des Moines to start negotiations early is appropriate here as well.

IV. Other issues. Remaining issues the District raises may be treated summarily.

Section 20.22(13) provides that the arbitrator’s decision “shall be by majority vote.” It also provides that the panel shall inform the parties of its decision and give written explanation. The District contends no vote was taken and no explanation or notice of the decision was provided.

Neutral arbitrator Conway mailed copies of a thirty-page decision to the other arbitrators, PERB, and representatives of both parties. We conclude that regardless of its merits the decision was adequately explained. District suggests Conway’s letter indicated the decision was nothing more than his proposal which invited more discussion. We conclude that when arbitrator’ Connolly concurred in Conway’s “proposal” it became a “decision.”

The District also complains it was never informed of the vote and that no formal “vote” was ever taken by the arbitrators. Conway instructed the arbitrators to send him their “decisions.” Both responded. Arbitrator Connolly concurred in each portion of Conway’s decision.

We do not endorse this procedure. A better voting procedure should be devised. The parties or their representatives should have been notified more formally. PERB could help by promulgating a more detailed rule to guide arbitration panels through these procedural matters. See § 20.6(5); 660 I.A.C. § 7.5(8).

We have considered other arguments urged by the parties. They require no treatment in this decision.

The district court judgment is reversed. The case is remanded for further proceedings in conformance with this opinion.

REVERSED. AND REMANDED.

All Justices concur except McCORMICK, J., who dissents.