Compulsory Arbitration—Procrastination Leads to Supreme Counrt “injustice”

Compulsory Arbitration—Procrastination Leads to Supreme Counrt “injustice”

By Frank Guido, General Counsel

The Public Employment Relations Act prohibits a public sector union from engaging in a strike. Without the right to strike, a labor union lacks leverage in collective bargaining. Compulsory arbitration evolved to create a balance between management and labor so as to avoid disputes and work stoppages in the highly sensitive public safety arena.

The value of the Compulsory Arbitration Act, as an alternate, expeditious, effective and binding procedure to resolve disputes, is lost where labor and management abuse the procedure through unconscionable delay and procrastination in resolving disputes. It is because of such abuse that the Michigan Supreme Court recently issued the decision in Detroit Firefighters Association IAFF Local 344 v City of Detroit, which clearly seeks to teach labor, especially in Detroit, a lesson. Unfortunately, the decision does not teach management any lesson, though public employers, especially the City of Detroit, are often more culpable in procrastinating in the compulsory arbitration process. As a result, management temporarily has the table tilted in its favor in one respect in compulsory arbitration. The fallout from the Supreme Court’s decision is that the remainder of public safety unions outside of Detroit will suffer through a devaluing of a fundamental protection under the Compulsory Arbitration Act.

So, you ask, what is the problem created by the Supreme Court’s decision? When parties fail to reach a collective bargaining agreement through negotiation the Compulsory Arbitration Act may be utilized by either labor or management to resolve the dispute. One of the critical provisions within the statute is the status quo requirement under section 13 of the Act. This provision states:

During the pendency of proceedings before the arbitration panel, existing wages, hours and other conditions of employment shall not be changed by action of either party without the consent of the other but a party may so consent without prejudice to his rights or position under this Act.

In the past, when management has attempted to change a wage, hour or other condition of employment established in an expired collective bargaining
agreement or by practice, labor could file an action in the Circuit Court under section 13 of the Act seeking injunctive relief to maintain the status quo. The Michigan Employment Relations Commission, which exists under the Public Employment Relations Act to resolve labor-management issues, such as unfair labor practices, has long declined to exercise jurisdiction over section 13 status quo claims, thereby leaving the parties to the judicial system to resolve such disputes.

Under the 1985 decision, Detroit Police Officers Association v Detroit, 142 Mich App 248 (1985), it has been the law that a trial court is not required to make a finding of irreparable harm prior to issuing an injunction for a violation of the status quo requirement. It requires simple logic to understand that a unilateral change in the status quo has a negative impact on the Union’s ability to represent its membership, as well as the precarious balance in compulsory arbitration. The section 13 language, on its face, creates a statutory prohibition against alteration of the status quo, unbridled by judicial considerations of irreparable harm. That logic has carried forward since the 1985 decision until the Michigan Supreme Court, through curious logic, sought to teach labor in Detroit a lesson.

The Supreme Court’s decision now requires that the “traditional” elements for issuance of injunctive relief must be established in any proceeding seeking
to maintain the status quo under section 13 of the Compulsory Arbitration Act. To that end, a union seeking injunctive relief must prove (1) existence of irreparable harm if an injunction does not issue, (2) harm to the union outweighs harm to the employer if an injunction does not issue, (3) the union has a likelihood of success on the merits, and (4) there will be no harm to the public interest if an injunction is issued.

In reciting the facts, the Supreme Court noted that the last collective bargaining agreement between the union and the City of Detroit expired in 2001. The compulsory arbitration process was initiated in 2002 and the process remained pending after more than five years. Due to budgetary shortfalls, the City of Detroit sought restructuring of the Fire Department and layoffs. The Union sought injunctive relief, asserting a section 13 violation of the status quo. The Circuit Court issued the injunctive relief, which was later affirmed by the Court of Appeals. The Supreme Court granted leave to appeal.

The Supreme Court stated that the trial court failed to properly apply the four part test for issuance of injunctive relief, thereby overruling the 1985 Court of Appeals decision which held that irreparable harm was not a necessary consideration in a section 13 action. The Supreme Court reasoned that a dispute regarding the status quo provision of the statute should be treated no differently than any other injunctive relief matter. In reaching this sophomoric conclusion, the court completely ignored the significance of the statutory prohibition, in essence, creating a judicial amendment to the statute, infusing traditional standards for issuance of injunctive relief where, clearly, section 13 intended no such considerations. The net effect of the Supreme Court’s injustice is self-evident. An employer now can, with impunity, unilaterally change wages, hours and other terms and conditions of employment during the compulsory arbitration process without an effective ability of the union to restrain such conduct, thereby making it more difficult, once the unilateral changes are put into place, to convince a compulsory arbitration panel to retroactively undo what the employer has wrought, creating a gross imbalance in the delicate labor-management relationship.

As if the Supreme Court’s injustice in stripping section 13 of its legislative purpose was not enough, the Court, without cogent analysis, blindly adopted the conclusion of the Court of Appeals in the recent Oak Park Public Safety Officers Association v Oak Park decision, holding that any attempt by an employer to change staffing levels is not a mandatory subject of bargaining unless “inextricably intertwined with safety.” The Supreme Court adopted the Court of Appeals standard without any analysis whatsoever of the underpinning to the phantom “inextricably intertwined with safety” standard, whose origin long preceded the Oak Park case, and is rooted in many equally untenable decisions which, like a house of cards, if properly analyzed, fall apart for lack of a proper foundation at their origin.

The totality of the Supreme Court’s decision reflects a fundamental misunderstanding of the purpose of section 13 of the Compulsory Arbitration Act, driven by a transparent, yet evident, attempt to slam dunk the Union in Detroit because the long delay in the compulsory arbitration process is a byproduct of the injunction which issued, thereby forestalling both the layoffs and restructuring of the Fire Department.

While we understand the Supreme Court’s frustration with the delay in the compulsory arbitration process involving the City of Detroit, certainly the court was aware that its decision would not merely impact on the Detroit arbitration, but would also adversely affect the relationship of labor and management throughout the state. The Supreme Court was clearly sending a message that it would not tolerate an injunction issuing, thereby thwarting management’s ability, for the duration of a compulsory arbitration case,to make business decisions as occurred in the City of Detroit. While that frustration may be understandable, the decision remains unjustified in its analysis, as it is in direct odds with the legislative purpose of the Compulsory Arbitration Act, especially since the Act mandates in section one that it be “liberally construed.”

The question which next arises is what can be done to fix the problem created by the Supreme Court decision. At the outset, legislative strengthening of Act 312, specifically the section 13 status quo provision, is in order. At a minimum, a legislative amendment granting MERC jurisdiction to consider section 13 violations, under an explicit review standard which does not involve a showing of irreparable harm, would solve the dilemma and clearly restore a level playing field in the labor-management arena. In the alternative, absent legislative amendment, unions can refuse to agree to a waiver of time limits in the compulsory arbitration process, thereby forcing a dispute to conclusion within the time limits recognized by the Act. That tactic would undercut employer gamesmanship by a quicker resolution to the dispute. In addition, labor has the ability in the political arena to expose management representatives who seek, by gamesmanship, to obtain an upper hand through less than honorable unilateral changes in violation of the section 13 status quo standards.

While we at POAM are disheartened with the Supreme Court’s decision, we do specifically applaud the dissent of Justice Kelly which emphasized that the 1985 decision in Detroit Police Officers Association should not be overruled.

What should the Supreme Court have done? In my opinion the Supreme Court should not have abandoned an issue which it initially intended to consider. Initially, the court raised a question as to whether MERC has jurisdiction to consider violation of section 13 claims. Had the Court analyzed the question, it could have determined that the Compulsory Arbitration Act is, by section 14 of the Act, supplemental to the Public Employment Relations Act, hence MERC, through its supervising authority of the Compulsory Arbitration Process, is empowered, consistent with its otherwise exclusive jurisdiction under PERA, to consider section 13 violations. By that approach, irreparable harm would not have come to the forefront as a determining factor in whether a section 13 violation should be enjoined, thereby maintaining the fundamental purpose of the status quo requirement of section 13. Instead, the Court declined to address the issue, allowing its disgust with the Detroit situation, in conjunction with blind adherence to the “inextricably intertwined with safety” standard associated with manning issues, to dictate its decision.

Interestingly, prior to the Supreme Court’s decision, I drafted legislation to create a compulsory arbitration act for corrections officers which was introduced as House Bill No. 6112. The proposed legislation was patterned after Act 312 Compulsory Arbitration for law enforcement and firefighters, with procedural and substantive changes to streamline the compulsory arbitration process. I made a significant addition in the proposed legislation to the section 13 status quo format as found in Act 312. The proposed legislation provides that any claimed violation of the status quo may be filed with the Employment Relations Commission and remedied through its existing authority under section 16 of the Public Employment Relations Act. That modification removes the present constraint on the judicial system to consider irreparable harm under a status quo claim.

The Supreme Court decision is a classic example of a bad factual underpinning leading to an equally bad judicial outcome. While the impact of the Supreme Court’s decision can lead to abuse on the part of employers, it also presents an opportunity for labor to utilize a new approach in procedurally handling a compulsory arbitration case, as well as supporting needed legislation in order to keep law enforcement protected. That’s my column for this edition of the LEJ, generally speaking.