Amalgamated Transit Union, Local 1384 v. Kitsap Transit

• Decision Date: 14 April 2015
• Docket Number: No. 45687–7–II.,45687–7–II.
• Citation: 349 P.3d 1,187 Wash.App. 113
• Parties: AMALGAMATED TRANSIT UNION, LOCAL 1384, Appellant, v. KITSAP TRANSIT and the Public Employment Relations Commission, Respondents.
• Court: Washington Court of Appeals

187 Wash.App. 113

349 P.3d 1

AMALGAMATED TRANSIT UNION, LOCAL 1384, Appellant

v.KITSAP TRANSIT and the Public Employment Relations Commission, Respondents.

No. 45687–7–II.

Court of Appeals of Washington, Division 2.

Filed Nov. 22, 2013.

Decided April 14, 2015.

Christopher James Casillas, Cline & Associates, Seattle, WA, for Appellant.

Shannon E. Phillips, Summit Law Group PLLC, Seattle, WA, Mark Spencer Lyon, Office of the Atty General, Olympia, WA, for Respondents.

Opinion

BJORGEN, A.C.J.

¶ 1 The Amalgamated Transit Union, Local 1384 (ATU) appeals superior court orders (1) denying its motion to supplement the record in its appeal of a decision and order by the Public Employment Relations Commission (Commission) and (2) affirming the Commission's order. The Commission's order found that Kitsap Transit had committed two unfair labor practices related to the loss of one of the two health insurance options ATU's members had obtained through collective bargaining with Kitsap Transit, but ordered remedial measures that ATU contends were legally inadequate.

¶ 2 On appeal, ATU contends that (1) the superior court abused its discretion when it declined either to receive new evidence when considering ATU's petition for review or to remand the matter back to the Commission for further fact finding, (2) the Commission acted arbitrarily and capriciously and made factual findings unsupported by the record when determining that Kitsap Transit could not comply with an order requiring it to restore the lost health insurance option, and (3) the Commission erroneously interpreted or applied the provisions of chapter 41.56 RCW and acted arbitrarily and capriciously when it (a) declined to order Kitsap Transit to restore the lost health insurance option and (b) failed to order Kitsap Transit to pay monetary damages sufficient to make ATU's members whole for the loss of the health insurance option.

¶ 3 We hold that the superior court erred when it denied ATU's motion to remand the matter back to the Commission for further fact finding. We hold also that the Commission erroneously interpreted and applied the provisions of chapter 41.56 RCW when it declined to order Kitsap Transit to make ATU's members whole for the damages inflicted by its unfair labor practices and that the superior court therefore erred in upholding that commission action. Consequently, we reverse the superior court's decision upholding the Commission's order and remand this matter to the Commission for further proceedings consistent with this opinion.

FACTS

¶ 4 ATU and Kitsap Transit agreed to the collective bargaining agreements relevant to this appeal in 2004 and 2005. Under these agreements and past practice between the parties, Kitsap Transit provided ATU's members with two health insurance options. One was a preferred provider organization (PPO) plan offered by Premera Blue Cross. The second was a health maintenance organization (HMO) plan provided by Group Health. The HMO plan resulted in less out-of-pocket expense for ATU's members, but the PPO plan offered them a broader, national network of physicians and allowed enrolled workers to see a specialist without first obtaining a referral from a primary care physician.

¶ 5 In 2007 and 2008, the collective bargaining agreements between ATU and Kitsap Transit expired. ATU and Kitsap Transit tried and failed to negotiate successor agreements, eventually bargaining to an impasse. Because ATU's members were eligible for interest arbitration under state law, RCW 41.56.492, that impasse triggered mandatory arbitration proceedings. RCW 41.56.450.

¶ 6 State law also froze the terms of employment of ATU members during the pendency of the arbitration, preventing both ATU and Kitsap Transit from unilaterally changing the “existing wages, hours, and other conditions of employment.” RCW 41.56.470. Because the Commission's precedent “has long recognized that health insurance benefits are a form of wages,” Yakima County Law Enforcement Guild v. Yakima County, No. 19234–U–05–4887, 2006 WL 1547092, at *1 (Wash. Pub. Emp't Relations Comm'n June 2, 2006), RCW 41.56.470 prevented Kitsap Transit from unilaterally altering the health insurance options available to ATU's members without either successfully bargaining to do so or receiving an arbitrator's award.¹

¶ 7 By 2010 Kitsap Transit was experiencing budget shortfalls and facing service cuts. Its director of human resources, Jeff Cartwright, began looking for potential cost savings to alleviate these financial pressures. Cartwright determined that, although roughly equal numbers of ATU's members chose the PPO and HMO options, the PPO option cost Kitsap Transit over a million dollars more a year. Cartwright asked Kitsap Transit's insurance broker to look for a cheaper PPO option.

¶ 8 Cartwright then took the step that ultimately caused Premera to refuse to continue covering ATU's members with the PPO plan. Cartwright offered incentives to PPO members to abandon the plan, even though the insurance broker warned that decreasing the number of Kitsap Transit workers covered by Premera could make the pool of insured workers so small as to make coverage uneconomical for Premera. Eventually, as the broker had warned, so few of Kitsap Transit's employees chose PPO coverage that Premera withdrew its bid to continue PPO coverage for ATU's members in 2011.

¶ 9 The search by Kitsap Transit's insurance broker for other, comparable PPO coverage proved futile. Consequently, ATU members lost the ability to choose PPO coverage for 2011, and all ATU members received HMO coverage.

¶ 10 ATU responded by filing a complaint with the Commission alleging, among other things, that Kitsap Transit had violated RCW 41.56.140(4) by refusing to engage in collective bargaining with it by unilaterally taking the steps resulting in the elimination of the PPO coverage.

¶ 11 The parties contested ATU's allegations before one of the Commission's hearing examiners. Ultimately, the examiner determined that Kitsap Transit had refused to bargain with ATU when it caused the loss of PPO coverage for ATU's members.

¶ 12 The examiner, in her remedial order, required Kitsap Transit to cease and desist its unlawful labor practices and to take affirmative action “to effectuate the purposes and policies of Chapter 41.56 RCW.” Administrative Record (AR) at 1905. Among these affirmative acts, the examiner ordered Kitsap Transit to:

[2]a. Restore the status quo ante by reinstating a health insurance plan with benefit levels substantially equivalent to the December 31, 2010 Premera PPO plan or implementing another plan option as agreed upon by the union.

[2]b. Make bargaining unit employees who were on the Premera PPO plan in 2010 or who documented their desire to switch to the Premera PPO plan in 2011 whole by paying these employees the premium savings (difference in cost of the 2011 Premera and Group Health plans, minus employee contribution rates as described in the collective bargaining agreement), plus interest, from the time the employer terminated the Premera PPO plan on January 1, 2011, until the time that the employer either: 1) restores a comparable PPO plan option, 2) reaches a negotiated agreement with the union on health benefit plans, or 3) implements health benefits as determined by an interest arbitration award.

AR at 1905–06 (emphasis omitted).

¶ 13 Kitsap Transit appealed to the Commission, arguing that the examiner had erred by finding it had committed the unfair labor practice, by rejecting its excusal defense, and by ordering monetary remedies that amounted to an impermissible windfall for ATU's members. The Commission rejected Kitsap Transit's first two claims and affirmed the examiner's conclusion that Kitsap Transit had committed unfair labor practices. However, the Commission determined that compliance with the examiner's order to reinstate the PPO coverage could prove impossible and agreed with Kitsap Transit that the examiner's monetary remedies were punitive. Accordingly, the Commission adopted the examiner's findings of fact, conclusions of law, and order, but modified the remedies section set out above so that

I. Paragraph 2 a. is stricken.

II. Paragraph 2 b. is modified as follows:

b. Make bargaining unit employees who were formerly covered under the Premera PPO plan whole for their losses incurred as a result of the employer's unilateral elimination of the Premera PPO plan. The employer shall reimburse the employees the difference between what would have been paid under the Premera PPO plan less any payments made under the HMO plan for all medical expenses. We order the employer to make these reimbursements from the date the employer unilaterally stopped offering the PPO plan until the parties negotiate, and implement, a good faith agreement or obtain, and implement, an award from an interest arbitrator on health insurance coverage.

AR at 1986.

¶ 14 ATU petitioned the superior court for review of the Commission's order, contending that the Commission erroneously interpreted or applied the law, acted arbitrarily and capriciously, and made factual findings unsupported by substantial evidence. To remedy these errors, ATU sought reinstatement of the examiner's remedial order.

¶ 15 In conjunction with its appeal of the Commission's order, ATU moved in the superior court to supplement the record with additional evidence, either through its admission in superior court or through a remand to the Commission for further fact finding. ATU's evidence showed that, subsequent to the examiner's decision but before the Commission's, Cartwright informed it that he had located a health plan he considered comparable to the lost PPO coverage. After the Commission's decision, Kitsap Transit made the coverage available to ATU's members, with ATU's assent. Eventually ATU's bargaining units ratified new collective bargaining agreements that allowed ATU's members to choose the new PPO-like coverage or the HMO coverage. ATU contended in superior...