The Massachusetts Appeals Court ruled on January 9, 2009 that the City of Lynn must pay nearly $300,000 in damages to the Lynn Police Association, Massachusetts Coalition of Police Local 302, for violating a memorandum of agreement.  In so ruling, the Appeals Court in City of Lynn v. Lynn Police Assn, MCOP Local 302, #07-P-1090, http://www.socialaw.com/slip.htm?cid=18734&sid=119 rejected the City’s claim that its failure to specifically budget for this expense allowed the City to escape liability for breaching the union contract.  The case vindicates unions that agree in good-faith to wage concessions based upon employer promises to return the favor when circumstances improve.  Sandulli Grace, PC, led by Attorney John Becker, represented MCOP in this proceeding.  Sandulli Grace partner Susan F. Horwitz assisted the Association in negotiating the original memorandum of agreement.

The case arose when the City, facing possible layoffs in 2003, asked the Association for concessions.  The Association agreed to forego approximately $300,000 in negotiated contractual benefits, but only on  condition that if the City later obtained additional state or federal grant funding, then the City would use those funds to offset the Association’s concessions.  As it happened, the police department later obtained a community policing grant of approximately $300,000.  However, the City refused to use the funds to offset the concessions.

An arbitrator agreed that the grant funds should have been paid to officers who had sacrificed their contractual benefits.  The City refused to abide by the arbitrator’s ruling, and appealed the decision to Superior Court and then, after losing at Superior Court, to the Appeals Court.

The City argued that its compliance with the arbitrator’s decision would violate the Lynn Bailout Act, Chapter 8 of the Acts of 1985.  The Lynn Bailout Act, as suggested by its title, was enacted at a time of severe fiscal crisis.  The Bailout Act sets forth a number of procedures for curbing irresponsible spending by the City and holding department heads personally liable for overspending.  According to the City’s argument, complying with the arbitrator’s award would force the City to spend more than the allotted budget for police department personnel for a particular year, and this expenditure was prohibited by the Bailout Act.

The Appeals Court rejected the City’s argument that it could avoid contractual obligations because of the Bailout Act.  First, the Bailout Act only prohibits paying liabilities that arise after the appropriated funds  have been exhausted.  The Appeals Court found that the City of Lynn’s obligation to pay police officers arose before the appropriation was exhausted, so the Bailout Act did not apply. 

Second, the Court pointed out other court cases that ordered municipalities to pay damages for breaching contracts even when they had not appropriated funds to pay the damages.  The Court concluded that the Bailout Act and similar laws (such as G.L. c. 44, § 31, which prohibits municipalities from spending in excess of appropriations) were not designed to protect cities and towns from the consequences of their unlawful actions.  Because Lynn had a contract with the Association, and breached that contract, it was obligated to pay the damages resulting from that breach, whether or not it had appropriated funds to pay for those damages.

The Court agreed with one aspect of the City’s appeal.  The City complained that the Superior Court failed to provide a declaratory judgment – a statement about the respective rights and obligations of the parties – as the City had requested.  The Appeals Court agreed.  In a case of be careful what you wish for, the Appeals Court directed the Superior Court to modify its decision to declare: “the arbitrator’s award does not require the city to violate any law, and payment of that award will not violate chapter 8 of the Acts of 1985 because that statute does not prohibit payment of awards for breach of contract.”

The Appeals Court’s decision is final unless the City asks the Supreme Judicial Court to review the decision and the Supreme Judicial Court agrees to do so.  (The SJC declines to review more than 90 percent of these requests.) 

In a surprisingly anti-employer decision, the Civil Service Commission enforced a preference for formerly disabled retirees at the expense of existing employees ready, willing and able to immediately accept a promotion appointment. In Faggiano, Jones & Cappuccio v. City of Medford and Human Resources Division, issued on July 3, 2008, the Commission backed the Human Resources Division (HRD)’s decision to bar the City of Medford from promoting one of the three top-ranked firefighters to a vacant lieutenant’s position. In denying the appeals of the top three firefighters on the promotional list, the Commission accepted HRD’s logic that preserving job openings for returning disability retirees while they are undergoing retraining sometimes means denying promotional opportunities to current employees.

The case involves the public employee disability retirement law, which, after a 1996 overhaul, requires employers to reinstate retirees once they are determined to be fit for the jobs and no longer disabled. Formerly disabled retirees who have been out longer than two years must be reinstated only if a vacancy in the same or a similar position exists. If no such vacancy exists, then the retiree is “granted a preference for the next available position. . . .” G.L. c. 32, § 8(2)(a). For civil service employees (such as the Medford firefighters), the law adds another twist: anyone retired for at least five years must successfully complete retraining. The retraining program must be designed by the employer and approved by HRD.

In Medford, three fire lieutenants who had been granted disability retirements 15 years ago or more were cleared by Public Employee Retirement Administration Commission (PERAC) to return to work. Because they were all retired for so long, the Fire Chief designed a retraining program that required successful completion of the Massachusetts Fire Academy. HRD approved the plan. The Fire Academy, however, refused to enroll the firefighters. Fire Academy policy apparently prohibits firefighters with five years or more of seniority to attend its full-time program.

When a vacancy later arose in a lieutenant’s rank, HRD refused to certify a list containing the top-ranked three firefighters. According to HRD, the returning and formerly-disabled retirees had a statutory preference for the next vacant lieutenant’s position. The three firefighters in line for the promotion filed appeals with the Civil Service Commission, which their fire union local supported..

The Commission sided with HRD and the returning retirees. It agreed that HRD had the right to refuse to provide a promotional list as long as at least one PERAC-approved retiree waited to return. The Commission also rejected the existing firefighters’ argument that the retirees’ right to a preference does not materialize until after they successfully completed a retraining program. The Commission also criticized the City for failing to work with HRD to construct a retraining program that did not require the use of the Fire Academy, especially after the City learned of the Fire Academy’s refusal to retrain the retirees. Ultimately, the Commission prohibited the City from using anyone but one of the formerly disabled retirees to fill the vacancy.

The Commission’s decision contrasts with recent court cases that have outlined when retirees are entitled to their former positions. The SJC ruled in Sullivan v. Town of Brookline, 435 Mass. 353 (2001), that a returning retiree does not have the right to reinstatement until he completes the required retraining program. Just last year, the Appeals Court, in Facella v. City of Newton, 69 Mass. App. Ct. 459 (2007) concluded that a returning retiree reinstated before completing her retraining program is only conditionally reinstated and has no “just cause” protections under civil service law to appeal her termination. When PERAC amended its regulations to require that disability retirees seeking to return to work must obtain a unanimous vote of a medical panel, not merely a majority (thus making it more difficult to return), the Appeals Court approved the change in Pulsone v. PERAC, 60 Mass. App. Ct. 791 (2004). Also in 2004, the Appeals Court acknowledged in Thomas v. Department of State Police, 61 Mass. App. Ct. 747 (2004), that an existing collective bargaining agreement governs the terms of employment of the returning former retirees. The court rejected an argument by the returning retirees that the retirement laws guaranteed them better wages and benefits than the CBA.

It remains to be seen whether the Faggiano case signals a trend away from these pro-employer cases and back toward the pro-retiree cases of the late 1990s. One of the appellants has appealed the case, which means a court will have an opportunity to weigh in on the Commission’s new interpretation of Chapter 32, Section 8.

At first glance, the Supreme Judicial Court’s decision in Sheriff of Suffolk County v. Jail Officers and Employees (http://socialaw.org/slip.htm?cid=18288&sid=120, decided June 23, 2008), which upholds an arbitrator’s reinstatement of a public employee, is unremarkable. Unfortunately, the Court’s reasoning and commentary in the case signal a shift in the law away from unions and the finality of the arbitration process.

As discussed in an earlier blog entry , the SJC granted further review of an Appeals Court decision upholding an arbitrator’s award. The case involved a county jail guard who allegedly witnessed the beating of an inmate and was not fully forthcoming about the incident. After the sheriff fired the guard, his union filed a grievance and an arbitrator reduced the discipline to a six-month suspension. The sheriff appealed and lost at the Superior Court and Appeals Court levels.

The SJC upheld the award too, but only because it could not determine from the arbitrator’s award whether the arbitrator had found the officer had lied. Because the arbitrator had died, there was no way to remand for further findings. But the Court went out of its way to comment that, if the arbitrator had found that the guard had lied, then the reinstatement would have violated public policy. According to the decision, which was written by SJC newcomer Justice Margot Botsford:

In a situation where a jail officer actually witnesses fellow officers assault an individual who is held in the sheriff’s custody, and then lies about this fact and files false reports that memorialize the falsity, we have little doubt that established public policy would condemn such conduct and would require the discharge of such an officer.

Sheriff of Suffolk County, at page 3.

The SJC’s decision raises several serious concerns. First, there is no basis in the law for the Court to order a remand on the basis that the findings of fact are “ambiguous” or “not sufficiently clear.” Modification and correction of awards are allowed only under certain circumstances, such as when an award “is so indefinite or incomplete that it cannot be performed,” G.L. c. 150C, § 8, or there is “an evidence mistake in the description of any person, thing or property referred to”, or the award is “imperfect in a matter of form.” G.L. c. 150C, § 12(a). The Court may only order a rehearing under narrow circumstances, including a finding that the arbitrator has exceeded his authority. So, even if the arbitrator were still alive, a remand would have been improper.

Second, and more importantly, the Court’s casual statement of the consequences if the officer had been found to lie, if adopted as law, would expand the public policy exception dramatically. The controlling case is City of Boston v. Boston Police Patrolmen’s Ass’n, 443 Mass. 813 (2005), in which an arbitrator concluded that a discharged Boston Police officer lied about being assaulted by two citizens, brought false charges against the citizens and testified consistently (and untruthfully) that he had been assaulted. The arbitrator nonetheless reinstated the officer with a one-year suspension, based upon several factors, including the City’s treatment of officers committing similar or worse misdeeds. The SJC vacated the arbitration award on the grounds that it violated public policy. The SJC articulated the three-part test for the public policy exception: (1) the award violates a public policy that is defined by laws, regulations or statutes, not general ideas about right and wrong; (2) the employee’s conduct goes to the very heart of his employment duties; and (3) the public policy requires termination – no other discipline is sufficient. The Court in the City of Boston case held that the officer engaged in on-duty misconduct that involved multiple lies, perjuries and false reports, and that these actions amounted to several felonies under state law (even though the officer was never even charged with a crime). Because state law prohibits felons from serving as police officers, the Court determined that the public policies embodied in those statutes required termination of the officer.

In the Sheriff of Suffolk County case, the Court ignores key aspects of the test for finding a public policy exception. It appears to rely on allegations of on-the-job lying and false reports as the common link with the City of Boston case. But that is not enough under the SJC’s previous decision. The Sheriff of Suffolk County decision identified no statutes, regulations or laws that specifically define the public policy that the jail guard’s behavior violates. Worse, the Court did not show why termination was required by the public policy, as opposed to merely desired or permitted. Unlike the City of Boston case, the SJC’s decision here contains no reference to any statute requiring the termination of jail guards who commit felonies.

The SJC’s comments about the results of the public policy test are not necessarily binding on later decisions, but they may be a warning sign of things to come. As in previous cases, the SJC gives lip service to the notion that the parties have bargained for the arbitration award and it should not be touched. Unfortunately, in practice, judges are more than willing to second guess the arbitrators when a decision rubs them the wrong way.

One very practical result of the SJC’s decision is its recognition that those who witness bad behavior and engage in a cover-up are likely to be treated the same as those who commit the misconduct. Lawyers, doctors and other professionals already operate under rules that require them to report colleagues who engage in misconduct. It is not surprising, then, that these principles are being enforced in other areas. All employees, especially those in positions of public trust, should make every effort to avoid misstatements. Telling the truth, the whole truth and nothing but the truth is not only the right thing to do – it could save your job.
Of course, as Pilate famously said, “What is truth? We both have truths – are mine the same as yours?” The issue of truth vs. lies is more complicated that management might see it. Some would classify the failure to report another’s wrongdoing in a different category from the affirmative statement of a falsehood. Furthermore, not every misstatement is intentional, and not every intentional misstatement is material. (Compare these lies: “I didn’t take the money” and “I played on my high school basketball team.”) But don’t be surprised if employers cite this decision to support the idea that any misstatement (whether or not intentional, whether or not material) is grounds for termination.

Finally, a word of caution: While ‘the truth, the whole truth, and nothing but the truth’ may be the proper route in many if not most situations, the federal and state constitutions provide protections for public employees who are accused of misconduct that could lead to criminal charges. Consult with your personal or union attorney to find out when the best approach is to invoke your right to remain silent.

A recent Appeals Court decision gives employers another tool in keeping public employees from returning to work after disability retirement. In Facella v. City of Newton, 69 Mass. App. Ct. 459 (2007), the Court denied civil service rights to a police officer returning from retirement because her employer had fired her before she had completed a back-to-work retraining program. The case expands on the Supreme Judicial Court’s 2001 decision in Sullivan v. Town of Brookline.

The case arises from a complicated aspect of the public employee retirement laws. Individuals who are disabled from performing their duties because of an on-duty injury may retire with a benefit equal to 72% of their pay, tax free. Any retirees who subsequently become able-bodied had to return to work if a position was available and the employer chose to take them back. In 1996, after newspaper reports that disabled retirees were working in physically-demanding jobs while earning a state pension, the Legislature amended the law to eliminate the discretion of the employer. Now, the employer has to take back the employee if he or she is designated by the state as able to do the work. In two 1998 cases, White v. City of Boston, and O’Neill v. City of Cambridge, the SJC explained to reluctant employers that the law meant what it said and the returning retirees must be taken back, if a position was available. (To complicate matters further, if there is no position available, the returning retiree is given a preference for the next opening.)

At about this time, public employers whose employees were covered by civil service law pointed out that Section 39 of Chapter 31 of the Mass. General Laws required civil service employees who were returning to work after an absence of five years or more to successfully complete a retraining program designed by the employer and approved by the state Human Resources Division. A question arose: When does the right of reinstatement begin, before or after the retraining?

The SJC answered the question in Sullivan v. Town of Brookline, 435 Mass. 353 (2001), in favor of the employers, who generally wanted their obligation to reinstate the returning retiree to begin as late as possible. Sullivan, who was required to complete a retraining program, but had not yet completed it, had no right to reinstatement, the Court ruled. His right (and the town’s obligation) only began after he had successfully completed the retraining.

Facella v. City of Newton, decided in 2007, follows up on a question left unanswered by Sullivan: what are the rights of a returning retiree who has actually been reinstated, but has not completed retraining? The answer: few to none. In Facella, the Appeals Court strengthened the Sullivan court’s conclusion that successfully completing retraining is the key factor in determining the employment status of disability retirees who retired more than five years earlier. The state cleared Facella as physically fit to return to a police officer position after 19 years on disability retirement. The City reinstated her, relying on the law as it existed at the time. The City assigned her to a desk job for several months, and then sent her to the police academy for a 22-week retraining course. During the retraining course, health issues caused her to drop out of the academy and be placed on sick leave. When Facella had not completed the academy 18 months later, the City terminated her employment. Facella sought to appeal her termination using the legal protections for tenured employees under civil service law. Under that law, Facella would have the right to a hearing before the employer, and the right to appeal to the Civil Service Commission, which would order her reinstated unless the City could prove it had just cause to fire her. The Appeals Court backed the City, ruling that Facella had never finished the retraining program, so she had never been fully reinstated as a tenured officer. At best, she was “conditionally reinstated … subject to her completing a retraining program.” 69 Mass. App. Ct. at 464. In other words, a disability retiree cleared to return to work has no legal claim on the employment, and no right to just cause protection against termination, unless and until the retiree completes training.

Sullivan in 2001 and Facella in 2007 may represent a trend towards strengthening the rights of employers in the returning disability retiree arena, after the strong pro-retiree statements of White and O’Neill in 1998. On the other hand, they may be only the courts’ response to a specific problem: how do the right to reinstatement and the retraining obligation intersect? With Sullivan and Facella, we have the answer to that question. Until another case comes along.

We’re not sure what to make of the Supreme Judicial Court’s decision to re-examine two decisions upholding labor arbitration awards, but there is no question that the SJC continues to show a strong interest in these matters, not always to the advantage of unions and their members. On October 31, 2007, the SJC granted further appellate review in the case of City of Somerville v. Somerville Municipal Employees Association, which was decided by the Appeals Court in July. (The citation is 69 Mass.App.Ct. 583.) The case involves a collective bargaining agreement that prescribes the method for assigning someone to a particular position in case of a vacancy. With skills and qualifications being equal, the contract says, the City must choose the internal candidate over an external one. When the City ignored this provision, the union grieved. An arbitrator agreed with the union and ordered the City to follow the procedure it had agreed to use and assign the internal candidate. Instead the City appealed, first to the Superior Court, where it lost, then to the Appeals Court, where it lost again. It could have ended there, but Massachusetts law provides for ‘further appellate review’ for litigants dissatisfied with the decision of the Appeals Court. Upon request, the SJC may (but doesn’t have to) choose to re-examine decisions of the Appeals Court. The City sought further appellate review and the SJC granted it.

An unscientific survey of further appellate review (FAR) requests shows that the SJC only grants a small percentage (maybe 10%). Of those cases taken on further appellate review, fewer than half are civil cases, most are criminal. So when the SJC grants FAR on a case involving labor arbitration, it is not an everyday occurrence.

While it was unusual for the SJC to grant FAR to City of Somerville, it is even more remarkable when we know that, on March 29, 2007, the SJC granted FAR in the case of Sheriff of Suffolk County v. Jail Officers & Employees of Suffolk County. (The Appeals Court citation is 68 Mass.App.Ct. 903 (2007).) This case involves a disciplinary matter, in which an arbitrator ordered the employer to reinstate an employee who had been discharged for misconduct. The employer argued that the reinstatement would violate public policy. This argument has been a popular one for employers ever since the SJC’s decision in City of Boston v. Boston Police Patrolmen’s Association, 443 Mass. 813 (2005). In that case, the SJC decided that the reinstatement of a police officer who was found to have misused his police powers to take away the rights of citizens and repeatedly lied about it violated public policy and vacated the arbitrator’s award. The SJC described the case as a ‘rare instance’ in which the public policy exception applied, but employers seem to find rarities whenever an arbitrator rules against them.

Sheriff of Suffolk County involves an application of the public policy doctrine. City of Somerville is another one in a long line of cases in which public employers have invoked their inherent management rights to ignore any provision of the contract they don’t like. And these are not the only labor arbitration decisions decided over the past year – see Todino v. Town of Wellfleet, 448 Mass. 234 (2007), upholding a pro-union arbitration award. The SJC recently heard oral arguments in Local 2071, IAFF v. Town of Bellingham, 67 Mass.App.Ct. 502 (2006), which involves the power of an interest arbitrator under the auspices of the Joint Labor Management Committee for Police and Fire to award a 24-hour shift.

The Appeals Court, which, unlike the SJC, cannot pick the appeals it wishes to hear, has heard numerous labor arbitration cases in the past year, almost always upholding the award against an employer appeal. (Notice how the employer is always the one appealing? That’s because unions understand what ‘final and binding arbitration’ means.) In addition to the Somerville, Suffolk County, and Bellingham cases mentioned above, Appeals Court decisions included: Town of Duxbury v. Rossi, 69 Mass.App.Ct. 59 (2007), School Committee of Hull v. Hull Teachers Association, MTA/NEA, 69 Mass.App.Ct. 860 (2007), Sheriff of Suffolk County v. AFSCME Council 93, Local 419, 68 Mass.App.Ct. 222 (2007), Sheriff of Suffolk County v. AFSCME Council 93, Local 419, 67 Mass.App.Ct. 706 (2006). The Appeals Court upheld the arbitrator’s award in all but the last case. Two other arbitration awards were upheld by the Appeals Court (both public policy cases), but the decisions were not officially published and cannot be used as precedent.

The question is, why the SJC is so interested in these aspects of Massachusetts labor law? Do the justices feel that arbitrators are out of control and need to be reined in? Do they believe the Appeals Court decisions are inconsistent and they need to provide guidance? Do they feel that they have a special responsibility to look out for the interest of the citizens served by public employers and employees? We don’t know. No decision has been issued by the SJC in either the Suffolk County, Somerville or Bellingham case. Plus, the fact that the SJC granted FAR does not necessarily mean it will ultimately disagree with the Appeals Court decision. In another unscientific study, I reviewed decided civil cases in which the SJC had granted FAR. Of 17 cases decided in 2007, the SJC agreed with the Appeals Court in eight cases, slightly less than half. In six cases, the SJC agreed with parts of the Appeals Court decision, and disagreed with other aspects. In only three of 17 cases reviewed did the SJC completely reverse the decision of the Appeals Court. So there is hope yet.

A State judge has ordered the City of Lynn to pay $270,000 to the Lynn Police Association and its members for violating written promises to reimburse police officers for lost benefits. The Lynn Police Association (“the union”) is Local 302 of the Massachusetts Coalition of Police, AFL-CIO and is represented by attorneys from Sandulli Grace, P.C. The decision, which was issued May 15, 2007, prevents a public employer from exploiting financial hardship to reneging on negotiated agreements with public safety unions.

The case arose in 2003, when the City of Lynn encountered serious financial troubles. After intense negotiations with the City, the Union signed a memorandum of agreement in which the officers agreed to forego certain negotiated benefits for a one-year period. These voluntary give-backs saved the City about $290,000 and demonstrated the Union’s willingness to help the city weather difficult financial times. In making this arrangement, the City agreed that if it obtained any federal or state grant funds, it would pay back the benefits sacrificed by the Union. When the City obtained a $270,000 community policing grant, it refused to pay back the benefits. The Union filed a grievance under the collective bargaining agreement, and Arbitrator Richard Boulanger found that the City breached the memorandum of agreement when it failed to apply the grant to pay back the officers for the benefits they had sacrificed. He ordered the City to pay the Union a sum equal to the value of the community policing grant.

The City appealed the arbitration decision to the Essex Superior Court, arguing that a state law designed to rein in irresponsible spending on personnel expenses by City officials prohibited the City from complying with the award and paying the $270,000 to the Union. The City also argued that the subject matter of the grievance was a non-delegable management right and not subject to arbitration. Superior Court Judge Kathe M. Tuttman rejected every single argument. Judge Tuttman found that public policy favored upholding the arbitrator’s decision. She held that the public interest was furthered by enforcing an agreement to reimburse the Union that had sacrificed negotiated benefits in order to help the City in troubled times. Judge Tuttman wrote: “Public policy requires the court to hold the [City] accountable for the contractual obligation it undertook to reinstate benefits that the [Union] voluntarily conceded in order to accommodate the [City’s] fiscal crisis if it became possible to do so.”

Sandulli Grace Attorney Susan Horwitz represented the Union in negotiating the memorandum of agreement and successfully arbitrating the grievance. Sandulli Grace Attorney John Becker, assisted by Attorney Kevin Merritt, represented the Union in the appeal of the arbitration award at Superior Court.

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