IN THE COURT OF APPEALS OF IOWA
No. 3-1179 / 13-0879
Filed June 25, 2014
FORT DODGE COMMUNITY
SCHOOL DISTRICT,
Petitioner-Appellant,
vs.
IOWA PUBLIC EMPLOYMENT
RELATIONS BOARD,
Respondent-Appellee,
and
FORT DODGE EDUCATION ASSOCIATION,
FORT DODGE MAINTENANCE EMPLOYEES
BARGAINING UNIT (BUS DRIVERS),
FORT DODGE EDUCATION ASSOCIATION
(ASSOCIATES), FORT DODGE SECRETARIAL/
CLERICAL EDUCATION ASSOCIATION,
FORT DODGE MAINTENANCE EMPLOYEES
BARGAINING UNIT (BLUE COLLAR),
Intervenors-Appellees.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Robert J. Blink,
Judge.
A school district appeals from the district court ruling affirming the decision
of the Iowa Public Employment Relations Board. AFFIRMED.
Andrew J. Bracken of Ahlers & Cooney, P.C., Des Moines, for appellant.
Diana S. Machir of Iowa Public Employment Relations Board, Des Moines,
for respondent appellee.
2
Gerald L. Hammond of Iowa State Education Association, Des Moines, for
intervenors-appellees.
Heard by Vogel, P.J., and Tabor and McDonald, JJ.
3
MCDONALD, J.
The Fort Dodge Community School District (“the District”) appeals the
district court’s ruling affirming the Iowa Public Employment Relations Board’s
(“PERB”) ruling in a negotiability dispute arising under the Iowa Public
Employment Relations Act (“PERA” or “the Act”), Iowa Code chapter 20 (2011).
The subject of the dispute is whether the District’s proposal to eliminate
severance pay provisions from several collective bargaining agreements
(“CBAs”) is a topic of mandatory or permissive bargaining under the Act.
I.
The District is a public employer within the meaning of PERA. See Iowa
Code § 20.3(10) (defining “public employer”). The district has five employee
units organized for the purposes of collective bargaining under the Act.1 See
Iowa Code § 20.3(4) (defining “employee organizations”). The labor negotiations
between the District and the employee organizations are thus subject to PERA.
The supreme court recently summarized the collective bargaining process under
PERA:
PERA governs collective bargaining between public
employers and public employee organizations. Iowa’s PERA
contains both a provision establishing mandatory collective
bargaining on specified matters and a contrapuntal management
rights clause preserving exclusive, public management powers in
traditional areas. The public management powers are found in
1
The certified collective bargaining representatives for the five bargaining units are as
follows: Fort Dodge Education Association; Fort Dodge Maintenance Employees
Bargaining Unit (Bus Drivers); Fort Dodge Education Association (Associates); Fort
Dodge Secretarial/Clerical Education Association; and the Fort Dodge Maintenance
Employees Bargaining Unit (Blue Collar). The employee units and their certified
collective bargaining representatives shall hereinafter be referred to collectively as “the
employee organizations.”
4
Iowa Code section 20.7. . . . Iowa Code section 20.9 then
enumerates seventeen topics that are subject to mandatory
collective bargaining procedures:
The public employer and the employee
organization shall meet at reasonable times . . . to
negotiate in good faith with respect to wages, hours,
vacations, insurance, holidays, leaves of absence,
shift differentials, overtime compensation,
supplemental pay, seniority, transfer procedures, job
classifications, health and safety matters, evaluation
procedures, procedures for staff reduction, in-service
training and other matters mutually agreed upon.
Iowa Code § 20.9. This list is exclusive.
The classification of a bargaining proposal as either
mandatory or permissive is a critical issue.
If a subject is within the scope of mandatory
bargaining, the parties are required to bargain over
the issue, and if agreement is not reached, the
statutory impasse procedures, which ultimately lead
to binding arbitration, are available. If, on the other
hand, the proposal is a permissive subject of
bargaining under section 20.9, the public employer
may reserve the right to decide the issue unilaterally
by declining to participate in bargaining. When the
employer declines to bargain over a permissive
subject, the impasse procedures in PERA are not
available and decisions related to the subject remain
within the exclusive power of the public employer.
AFSCME Iowa Council 61 v. Iowa Pub. Emp’t Relations Bd., ___ N.W.2d ___,
___, 2014 WL 1884476, at *5 (Iowa May 9, 2014) (citations, internal quotations,
and internal emphasis omitted).
The district and each of the employee organizations have entered into
collective bargaining agreements. Each agreement between the District and the
respective employee organization contains a provision relating to the payment of
severance upon termination of employment. By way of example, the collective
bargaining agreement with the Teachers provides, in part, as follows:
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Article XII Wages
I. After ten (10) or more years of service, severance pay shall
be promptly made to each employee in an amount
equivalent to fifty (50%) of the per diem pay of the
employee’s beginning base salary in the year of separation
from the District and shall be equivalent to all unused sick
leave days (not to exceed 120) which the individual had
accumulated but did not use during employment with the
District.
The severance pay provisions are not uniform across the five agreements,
containing differences regarding, among other things, an employee’s eligibility for
severance pay and the calculation of the amount of severance pay owed an
eligible employee. The differences between and among the agreements are not
material to this appeal.
In 2012, the District and the employee organizations were negotiating
renewal of their respective CBAs. During negotiations, the District proposed
eliminating the severance pay provision from each of the CBAs. The District took
the position that the proposal was not a subject of mandatory bargaining. The
employee organizations took the contrary position, contending severance pay fell
within the meaning of “supplemental pay” and was thus a mandatory topic of
bargaining under Iowa Code section 20.9.
The District petitioned PERB for a ruling on negotiability. PERB held that
the proposals fell within the definition of “supplemental pay” within the meaning of
section 20.9 and were thus subjects of mandatory bargaining. In reaching that
conclusion, PERB first defined “supplemental pay” as “a payment of money or
other thing of value that is in addition to compensation received under another
section 20.9 topic and is related to the employment relationship.” Applying the
proposals to that definition, PERB reasoned that the severance pay proposals
6
related to cash payment not otherwise covered under section 20.9 and that the
proposals were related to the employment relationship. Specifically, PERB
reasoned the proposals were related to the employment relationship because
severance pay is paid on termination; is conditioned on length of service; is
calculated based on unused, accumulated sick leave; and was used to incent
employees to remain employed in the school district.
In a thorough and well-reasoned ruling, the district court affirmed PERB’s
ruling. The court began its analysis by setting forth the correct legal standard:
First, the burden is on the District to establish the invalidity of
PERB’s interpretation. Second, the Court must give deference to
PERB’s interpretation of section 20.9 and will only reverse if PERB
acted irrationally, illogically, or wholly unjustifiably. These are
heavy burdens for the District to overcome. On these principles
alone, the Court concludes the agency’s decision should be
affirmed.
The court then addressed each of the District’s arguments and found them
unavailing. This appeal timely followed.
II.
Judicial review of an agency ruling is governed by [the Iowa
Administrative Procedure Act, Iowa Code chapter 17A]. The district
court reviews the agency’s decision in an appellate capacity. In
turn, we review the district court’s decision to determine whether it
correctly applied the law. We must apply the standards set forth [in
the IAPA] and determine whether our application of those
standards produces the same result as reached by the district
court.
AFSCME Iowa Council 61, 2014 WL 1884476, at *3 (citations and internal
quotation marks omitted). If so, we affirm the judgment of the district court.
Where, as here, the question presented is whether the agency correctly
interpreted statutory text, the level of scrutiny applied during review of the
7
agency’s action depends on whether the legislature has vested the agency with
interpretive authority. In Waterloo Education Association v. Iowa Public
Employment Relations Board, 740 N.W.2d 418, 420 (Iowa 2007) (“Waterloo II”),
the supreme court held that such authority had not been vested in PERB. In
apparent response to that decision, the General Assembly amended the Act and
explicitly granted PERB the authority to “interpret, apply, and administer” the
provisions of chapter 20. See Iowa Code § 20.6(1). “Because the legislature
has now expressly vested PERB with discretion to interpret and apply chapter
20, we will review PERB’s interpretation and application of section 20.9 to
determine if it is “irrational, illogical, or wholly unjustifiable.” AFSCME Iowa
Council 61, 2014 WL 1884476, at *3 (quoting Iowa Code § 17A.19(10)(l), (m)).
A decision is “irrational” when it is “not governed by or
according to reason.” Webster’s Third New International Dictionary
1195. A decision is “illogical” when it is “contrary to or devoid of
logic.” Id. at 1127. A decision is “unjustifiable” when it has no
foundation in fact or reason. See id. at 2502 (defining
“unjustifiable” as “lacking in . . . justice”); id. at 1228 (defining
“justice” as “the quality or characteristic of being just, impartial or
fair”); id. (defining “just” as “conforming to fact and reason”).
Id. “The burden of demonstrating . . . the invalidity of agency action is on the
party asserting invalidity.” Id. (quoting Iowa Code § 17A.19(8)(a)).
III.
Prior to directly addressing the parties’ arguments, it is necessary to
provide some context. The District correctly notes that prior decisions of the
supreme court and this court restrictively interpreted the terms in section 20.9. In
City of Fort Dodge v. Iowa Public Emp’t Relations Bd., 275 N.W.2d 393, 396
(Iowa 1979), the court explained that it was not bound by PERB’s interpretation
8
of PERA, reasoned that PERA should be interpreted strictly, and held a clothing
allowance did not fall within the meaning of “wages” or “supplemental pay.”
Justice McCormick dissented, stating:
I agree the legislature did not adopt the broad scope of
mandatory bargaining provided in the NLRA. However, this does
not automatically require that the terms in § 20.9 be given a narrow
and restricted meaning. Instead I believe [section] 4.1(2) requires
that these terms be given their ordinary meaning.
City of Fort Dodge, 275 N.W.2d at 399. Similarly, in Charles City Community
School District v. Iowa Public Emp’t Relations Bd., 275 N.W.2d 766, 769 (Iowa
1979), the supreme court stated “we are not bound by Board interpretations of
law and must make an independent determination of the meaning of the statute.”
The supreme court further concluded “from the legislative history of [section] 20.9
and the cogent policy arguments for distinguishing public and private sector
bargaining that the Iowa legislative intent was to adopt a restrictive approach to
interpreting the subjects listed in [section] 20.9.” Charles City, 275 N.W.2d at
773. Justice McCormick, joined by Justices Uhlenhopp and Harris, dissented,
contending there was nothing in the statute or legislative history compelling the
conclusion that “the terms identifying mandatory subjects of bargaining should be
given a narrow as opposed to ordinary meaning.” Id. at 775.
Applying this restrictive interpretive overlay, our court has previously
addressed the issues of whether reimbursement of accumulated, unused sick
leave and severance pay are mandatory or permissive topics of bargaining. We
held both topics fell outside the scope of section 20.9 and were thus not
mandatory topics of bargaining:
9
The Association argues that reimbursement for unused sick
leave falls within the terms “wages,” “supplemental pay” and
“leaves of absence” which are mandatory bargaining items under
section 20.9. Several prior PERB decisions are cited as support
that this payment is compensation. Decisions from other
jurisdictions are also relied on. These are not persuasive. The
PERB decisions were made before the supreme court determined
that the specific listing in section 20.9 was to be restrictively
applied. Other jurisdictions have statutes similar or identical to the
NLRA, which we have already discussed contains broader
language and is more inclusive.
In Fort Dodge Community School District v. P.E.R.B., 319
N.W.2d 181, 183-84 (Iowa 1982), wages are defined as a specific
sum or price paid by an employer in return for the employee’s
services, and supplemental pay is pay for extra services relative to
the time, skill and nature of the services. The Fort Dodge case held
cash incentives for early retirement pay are not wages or
supplemental pay, and the rationale is controlling here. The
proposal here calls for reimbursement of unused sick leave in a
lump sum cash payment upon termination of employment. It is not
directly related to services rendered or to the time, skill, and nature
of additional services, but rather is a form of severance pay to be
paid to any employee leaving his or her employment, whether due
to retirement, lay-off, or any other reason. Under the proposal, the
payment is triggered by the termination of the employment
relationship, and not by the rendering of primary or additional
services. While it may be argued employees perform a service by
not taking sick leave, we believe this stretches the meaning of
service and is not what the legislature intended.
....
. . . The proposal is a permissive subject of bargaining.
....
The Association argues this proposal [severance pay] is also
mandatory under the categories, “wages” or “supplemental pay.”
Terms of this proposal would grant a payment to any employee
severed from employment for any reason after five years of service.
It is not a payment made for any actual services rendered. The
circumstance which triggers the payment is the termination of
employment, and not the performance of any primary or extra
services. As with the sick leave reimbursement proposal, no extra
service not already compensated is provided by the employee in
order to obtain this benefit. The severance pay proposal is likewise
a permissive subject of bargaining.
The Association makes several persuasive arguments
regarding the public benefit, including discouraging absenteeism,
rewarding those who do not use their sick leave and encouraging
10
continuity in the workforce, contending these desirable results
should elevate the matters to the mandatory-bargaining category.
Our courts have previously explained why more restrictive
bargaining is necessary in the public employment sector. We are,
therefore, unpersuaded by the public benefit argument because
other public benefits are also to be considered.
Prof’l Staff Ass’n of Area Educ. Agency 12 v. Pub. Emp’t Relations Bd., 373
N.W.2d 516, 518-19 (Iowa Ct. App. 1985) (citations omitted).
There are two developments subsequent to these cases that are relevant
here. First, in Waterloo II, the supreme court clearly articulated the analysis to be
applied in determining whether a topic is a mandatory or permissive subject of
bargaining:
The first prong for determining whether a proposal is subject
to collective bargaining, the threshold topics test, is ordinarily a
definitional exercise, namely, a determination of whether a proposal
fits within the scope of a specific term or terms listed by the
legislature in section 20.9. Once that threshold test has been met,
the next inquiry is whether the proposal is preempted or
inconsistent with any provision of law. Ordinarily, this two-step
process is the end of the matter. Only in unusual cases where the
predominant topic of a proposal cannot be determined should a
balancing-type analysis be employed to resolve the negotiability
issue. See Clinton Police Dep’t Bargaining Unit v. Iowa Pub.
Employment Relations Bd., 397 N.W.2d 764 (Iowa 1986) (hybrid
proposal involving both safety and staffing subjects held to primarily
relate to staffing and thus not subject to mandatory collective
bargaining).
Waterloo II, 740 N.W.2d at 429. Significantly, the court also adopted Justice
McCormick’s position by rejecting the conclusion the terms in section 20.9 should
be given a restrictive reading as opposed to their ordinary and common reading:
The topics listed in Iowa Code section 20.9 cannot be
defined in a fashion so expansive that the other specifically
identified subjects of mandatory bargaining become redundant, nor
are the topics subject to the narrowest possible interpretation.
Consistent with legislative intent, PERB must give each topic in
11
section 20.9 its common and ordinary meaning within the structural
parameters imposed by section 20.9.
AFSCME Iowa Council 61, 2014 WL 1884476, at *5 (citing Waterloo II).
The District contends the holdings of City of Fort Dodge, Charles City, and
Professional Staff Association were unaffected by the supreme court’s decision
in Waterloo II. The district argues those cases “are still valid decisions and
binding precedent on PERB.” The District solely “relies on these precedents in
maintaining that severance pay is not a mandatory topic of negotiation.” The
District’s reliance is misplaced. Whatever precedential value those decisions had
was largely undermined by Waterloo II’s rejection of the restrictive interpretive
approach and adoption of the common and ordinary meaning approach. For
example, in City of Fort Dodge, the majority applied the restrictive approach and
concluded non-monetary compensation could not fall within the meaning of
wages. The court did not consider the common and ordinary meaning of the
term. Justice McCormick on the other hand had no difficulty concluding the
common and ordinary meaning of “wages” included non-monetary compensation.
See City of Fort Dodge, 275 N.W.2d at 398 (McCormick, J., dissenting) (“Even
the most restrictive definition of wages does not limit compensation to cash. It is
one thing to say wages are usually a payment of money but quite another to say
they are always a payment of money. . . . [P]ayment of wages may be made in
kind rather than cash even under the ordinary definition.”). Likewise, in
Professional Staff Association, our court concluded that severance pay was not
supplemental pay, in part, because “the specific listing in section 20.9 was to be
restrictively applied.” Prof’l Staff Ass’n, 373 N.W.2d at 518. As in City of Fort
12
Dodge, our court never considered the common and ordinary meaning of
“supplemental pay.” Judge Oxberger dissented, concluding that severance pay
fell within even a restrictive interpretation of supplemental pay. See Prof’l Staff
Ass’n, 373 N.W.2d at 519. While parts of our earlier decisions still have force,
the definitional analysis—the first prong of the Waterloo II test—contained in
those cases is of little value.
A greater obstacle to the District’s position on appeal relates to the second
legal development material to this case. The cases upon which the District relies
were decided prior to the time the legislature vested interpretive authority with
PERB. In those cases, we thus owed no deference to the agency’s interpretation
of the terms in section 20.9. See, e.g., Waterloo II, 740 N.W.2d at 420 (“Whether
a proposal is a mandatory subject of collective bargaining, as defined by Iowa
Code § 20.9, has not been explicitly vested in PERB’s discretion. Therefore, our
review is for correction of errors at law.”); Charles City, 275 N.W.2d at 769(stating “we are not bound by Board interpretations of law and must make an
independent determination of the meaning of the statute”); City of Fort Dodge,
275 N.W.2d at 396 (same); Prof’l Staff Ass’n, 373 N.W.2d at 517 (same). As
previously noted, in 2010 the legislature gave PERB express authority to
interpret and apply the provisions of Iowa Code chapter 20. Instead of dealing
with this development directly, the District merely argues PERB’s definition is
overbroad and ignores forty years of precedent. Whether PERB’s definition is
overbroad, whether the prior cases set forth the more logical definition of
“supplemental pay,” and whether the prior definitions appear more consistent
13
with the legislature’s intent in balancing management and labor rights are no
longer the controlling questions. The only controlling question presented in this
appeal is whether PERB’s definition of “supplemental pay” is irrational, illogical,
or wholly unjustifiable.” See Iowa Code § 17A.19(10)(l), (m).2 This is a
deferential standard.
In conducting our analysis, we are guided by the supreme court’s most
recent discussion of the issue. “The topics listed in Iowa Code section 20.9
cannot be defined in a fashion so expansive that the other specifically identified
subjects of mandatory bargaining become redundant, nor are the topics subject
to the narrowest possible interpretation.” AFSCME Iowa Council 61, 2014 WL
1884476, at *5. “Consistent with legislative intent, PERB must give each topic in
section 20.9 its common and ordinary meaning within the structural parameters
imposed by section 20.9.” Id. PERB’s decision contains seven pages of
historical analysis to derive the proper principles to apply to the question whether
the contract provisions fall within the definition of “supplemental pay” in Iowa
Code section 20.9. The decision then contains fifteen pages of analysis
regarding the common and ordinary meaning of “supplemental pay.” PERB
considered its own prior interpretations, relevant case law, dictionary definitions
2
Waterloo II set forth a two-step inquiry. The first inquiry is whether the proposal falls
within the definition of a mandatory topic of bargaining. Waterloo II, 740 N.W.2d at 429.
“Once that threshold test has been met, the next inquiry is whether the proposal is
preempted or inconsistent with any provision of law.” Id. The District limited its
argument to whether the proposal falls within definition of a topic of mandatory
bargaining. Although a strong argument could be made PERB’s interpretation so
changes the nature of public employee bargaining as to be inconsistent with PERA and
in violation of the second stop of Waterloo II, the argument was not made here and will
not be considered.
14
of the term, definitions from other jurisdictions, and treasury regulations. In
reviewing these authorities, PERB recognized that “supplemental pay” could be
limited to that involving monetary compensation or could also include non-
monetary compensation. PERB adopted the definition that supplemental pay
included non-monetary compensation related to the employment relationship. To
avoid an overly-expansive definition that rendered the other specifically identified
subjects of mandatory bargaining redundant, PERB specifically excluded from its
interpretation any proposal that could be subject to mandatory bargaining under
any other term in section 20.9. PERB then concluded that the proposals
regarding severance pay fell within this definition.
We cannot say the definition or its application to the proposals at issue is
irrational, illogical, or wholly unjustifiable. PERB cites sufficient authority in
support of its interpretation. In addition to the authorities cited by PERB we note
Justice McCormick, in City of Fort Dodge, reached a similar conclusion regarding
the meaning of wages—concluding that wages was commonly understood to
include non-monetary forms of compensation. See City of Fort Dodge, 275
N.W.2d at 398. Judge Oxberger, in Professional Staff Association, concluded
the severance pay proposal at issue in that case fell within a restrictive
interpretation of “supplemental pay.” Prof’l Staff Ass’n, 373 N.W.2d at 519. A
fortiori, he would also conclude that severance pay fell within a less restrictive
interpretation of the same. Given the authority cited by PERB in support of its
interpretation and our own case law on the same issue, we cannot say PERB’s
interpretation is irrational, illogical, or wholly unjustifiable.
15
IV.
For the foregoing reasons, the judgment of the district court is affirmed.
AFFIRMED.
Vogel, P.J., concurs specially.
16
VOGEL, P.J. (concurring specially)
While I agree with the majority’s reasoning, I concur specially to illustrate
the consequences of our court’s conclusion.
The history of mandatory subjects of collective bargaining in Iowa is
illustrative. As Waterloo II noted:
In PERA, the legislature declined to adopt the NLRA model on the
question of what subject matters are mandatory subjects of
collective bargaining. Instead of incorporating the expansive NLRA
language mandating collective bargaining over wages, hours and
“other terms and conditions of employment,” the Iowa legislature
instead specifically enumerated seventeen topics subject to
collective bargaining.
740 N.W.2d at 421.
The supreme court approached the issue of whether a subject was a
mandatory subject of bargaining by using a two-pronged test—first, whether a
particular proposal fell within the scope of the specific terms in section 20.9, and
second, whether collective bargaining over the proposal would be illegal. See
Charles City, 275 N.W.2d at 772. However, Charles City struggled with
balancing the terms delineated in section 20.9 with section 20.7, which set forth
the exclusive rights of management. As such, the court returned to the strict two-
pronged approach, that is, a topics test. State v. Pub. Emp’t Relations Bd., 508
N.W.2d 668, 672–75 (Iowa 1993).
Waterloo II, though, departed from the previous precedent’s narrow
interpretation of the laundry list of terms, see City of Fort Dodge, 275 N.W.2d at
397, and instead adopted “the common or ordinary meaning of words” approach.
Waterloo II, 740 N.W.2d at 430. Thus, it appears Waterloo II overruled prior
17
precedent sub silentio, as well as wandered away from Iowa’s more restrictive
approach to mandatory subjects of collective bargaining (that is, as opposed to
the NLRA’s more expansive style).
The problem now, of course, is that the legislature vested authority with
PERB to interpret chapter 20 in 2010. Combined with Waterloo II’s liberal
approach to defining terms in section 20.9, PERB, as it has done in this case, is
allowed to interpret terms regardless of our courts’ precedent. Then, given our
narrow standard of review, we are restricted from any meaningful judicial review
of PERB’s definition. Consequently, PERB may now determine an issue is a
mandatory subject of bargaining, despite years of precedent to the contrary.
Regardless of these practical issues, I agree with the majority that, given
Waterloo II and the amended section 20.6, PERB’s interpretation should be
upheld and the district court affirmed.