Ass'n of Or. Corr. Emps. v. Or. & Dep't of Corr.

• Citation: 295 P.3d 38,353 Or. 170
• Decision Date: 17 January 2013
• Docket Number: SC S059971).,CA A143552,(UP 3303
• Parties: ASSOCIATION OF OREGON CORRECTIONS EMPLOYEES, Petitioner on Review, v. STATE of Oregon and Department of Corrections, Respondent on Review.
• Court: Supreme Court of Oregon

353 Or. 170

295 P.3d 38

ASSOCIATION OF OREGON CORRECTIONS EMPLOYEES, Petitioner on Review,

v.STATE of Oregon and Department of Corrections, Respondent on Review.

(UP 3303; CA A143552; SC S059971).

Supreme Court of Oregon.

Argued and Submitted Sept. 21, 2012.

Decided Jan. 17, 2013.

On review from the Court of Appeals.^*

Becky Gallagher, Fenrich & Gallgher, P.C., Eugene, argued the cause and filed the brief for petitioner on review.

Leigh A. Salmon, Assistant Attorney General, Salem, argued the cause and filed the brief for respondent on review. With her on the brief were Mary H. Williams, Deputy Attorney General, and Anna M. Joyce, Solicitor General.

Todd A. Lyon, Barran Liebman LLP, Portland, filed the brief for amicus curiae Oregon Public Employer Labor Relations Association and The League of Oregon Cities.

Jason A. Wyland, Senior Legal Counsel, Oregon AFSCME, Salem, filed the brief for amicus curiae Oregon AFSCME. With him on the brief was Jennifer K. Chapman.

Before BALMER, Chief Justice, KISTLER, WALTERS, LINDER, and LANDAU, Justices, and DURHAM and DE MUNIZ, Senior Judges, Justices pro tempore.^**

WALTERS, J.

The Department of Corrections (DOC), a public employer, made changes to its employees' scheduled days off and their shift stop and start times without first bargaining with representatives of the employees' union, the Association of Oregon Corrections Employees (AOCE). As an affirmative defense to AOCE's ensuing complaint alleging that DOC had committed an unfair labor practice, DOC asserted that the terms of the parties' collective bargaining agreement (CBA) permitted its unilateral action. The Employment Labor Relations Board (ERB) rejected DOC's argument and concluded that DOC had committed an unfair labor practice under ORS 243.672(1)(e).¹ The Court of Appeals reversed. Assn. of Oregon Corrections Emp. v. State of Oregon, 246 Or.App. 477, 268 P.3d 627 (2011)( AOCE II ). We reverse the decision of the Court of Appeals and remand to that court to permit it to consider an assignment of error that it did not reach.

I. FACTS AND PROCEDURAL BACKGROUND

AOCE is the exclusive representative of a bargaining unit of correctional officers, sergeants, and corporals employed by DOC, a public employer, at the Oregon State Penitentiary. AOCE and DOC were parties to a collective bargaining agreement that was effective from July 1, 2001, through June 30, 2003. Shortly before May 27, 2003, AOCE learned that DOC intended to post a new work schedule. The new schedule changed, among other things, employees' scheduled days off and their shift start and stop times. At a bargaining meeting on May 27, 2003, AOCE informed DOC that, in its view, the intended changes affected mandatory subjects of bargaining and that DOC would be committing an unfair labor practice if it implemented them without bargaining with AOCE. On May 30, 2003, DOC posted the new schedule. On June 27, 2003, AOCE filed a complaint with ERB alleging, among other things, that DOC had committed an unfair labor practice under ORS 243.672(1)(e), the provision of the Public Employees Collective Bargaining Act (PECBA) that prohibits a public employer from refusing to bargain collectively in good faith with the bargaining representative of its employees.²

DOC denied AOCE's allegations and raised a number of affirmative defenses, one of which alleged that “the Collective Bargaining Agreement allows management to set the work schedule(s).” For that contractual defense, DOC relied on Article 3 of the CBA, which included a management rights clause providing that DOC “retains all inherent rights of management” and “retains all rights to direct the work of its employees, including but not limited to, the right * * * to schedule work * * * except as modified or circumscribedby the terms of this Agreement.” DOC also alleged as a separate affirmative defense that AOCE had waived its right to bargain by failing to file a timely demand, as required by ORS 243.698(3).

ERB first determined that “scheduling the particular hours of the day and days of the week that an employee is assigned to work constitutes ‘hours of work’, a per se mandatory subject of bargaining under ORS 243.650(7)(a).” Ass'n of Oregon Corr. Employees v. State of Oregon, Dep't of Corr., 20 PECBR 890 (2005). ERB then concluded that DOC had made a unilateral change with respect to those matters and, thus, had committed an unfair labor practice.³Id. at 899. In doing so, ERB rejected DOC's contractual defense, determining that DOC had not demonstrated that AOCE contractually had waived its statutory right to bargain over the contested changes.⁴Id. at 899–900.

DOC appealed to the Court of Appeals. Its primary argument on appeal was that ERB had erred in its analysis of DOC's contractual defense. ERB had erred, DOC contended, in evaluating the CBA to determine whether DOC had demonstrated a waiver of the statutory right to bargain. Instead, DOC argued, ERB legally was required to decide, as an initial matter, whether the CBA authorized DOC to make the changes at issue. The court agreed with DOC and did not reach DOC's other arguments: that Article 3 constituted a waiver of AOCE's right to bargain even under ERB's waiver analysis, and that AOCE had waived its right to bargain by failing to file a timely demand to bargain under ORS 243.698(3). The Court of Appeals reversed and remanded the case to ERB, instructing ERB to determine in the first instance “whether, under the terms of the CBA, DOC was authorized to make the changes * * * that it did.” Association of Oregon Corrections Employees v. DOC, 209 Or.App. 761, 770, 149 P.3d 319 (2006)( AOCE I ).

On remand, ERB determined that the terms of the CBA were ambiguous and, after considering extrinsic evidence, concluded that the parties had not authorized DOC to make the contested changes. Ass'n of Oregon Corr. Employees v. State of Oregon, Dep't of Corr., 23 PECBR 222 (2009). The Court of Appeals again reversed. AOCE II, 246 Or.App. at 479, 268 P.3d 627. The court determined that the terms of the CBA unambiguously granted DOC the right to make the contested changes and that ERB had erred in concluding that DOC had committed an unfair labor practice under ORS 243.672(1)(e). Id. AOCE sought review in this court, which we allowed.

Before we begin our discussion of the issues for our consideration, we note that DOC does not dispute that (1) employees' days off and shift stop and start times are mandatory subjects of bargaining; (2) DOC had a statutory obligation and AOCE had a statutory right to bargain over those matters; and (3) DOC made changes to those matters without first bargaining with AOCE. Thus, whether ERB was correct in concluding that DOC committed an unfair labor practice under ORS 243.672(1)(e) depends on whether ERB was correct in deciding that DOC had not established a sufficient affirmative defense to the charge that it made a change in a mandatory subject of bargaining without first bargaining with AOCE.

The first issue that we must reach in deciding that question is the correct legal framework by which to measure DOC's affirmative defense. In its 2005 decision, ERB had used a waiver analysis—an analysis that the Court of Appeals rejected in AOCE I. AOCE did not petition for review in AOCE I. Therefore, ERB used the method of analysis that the Court of Appeals required in AOCE I when it considered DOC's affirmative defense on remand in 2009 and again concluded that DOC had committed an unfair labor practice under ORS 243.672(1)(e). The question before us on review of the Court of Appeals decision in AOCE II is whether ERB was correct in its conclusion. Because whether DOC committed an unfair labor practice depends on the merits of its affirmative defense, we must decide, as an initial matter, the appropriate legal framework by which to evaluate that defense, and we must do so despite the fact that that matter was directly at issue in AOCE I and is only indirectly at issue here. The correct legal measure of DOC's affirmative defense is so inextricably intertwined with its merits that we consider the following questions in turn: First, did ERB err in deciding that, to prevail on its contractual defense, DOC was required to demonstrate that the terms of the CBA established a clear and unmistakable waiver of AOCE's statutory right to bargain? Second, did ERB err in concluding that the terms of the CBA did not meet the correct legal standard? ⁵

II. ERB'S WAIVER ANALYSIS

We begin our inquiry into whether ERB erred in its waiver analysis of DOC's contractual defense with the applicable unfair labor practice statute—ORS 243.672(1)(e)—which provides, in part:

“(1) It is an unfair labor practice for a public employer or its designated representative to do any of the following:

“ * * * * *

“(e) Refuse to bargain collectively in good faith with the exclusive [bargaining] representative [of its employees].”

“Collective bargaining” is defined in ORS 243.650(4) as

“the performance of the mutual obligation of a public employer and the representative of its employees to meet at reasonable times and confer in good faith with respect to employment relations for the purpose of negotiations concerning mandatory subjects of bargaining, to meet and confer in good faith in accordance with law with respect to any dispute concerning the interpretation or application of a collective bargaining agreement, and to execute written contracts incorporating agreements that have been reached on behalf of the public employer and the employees in the bargaining unit covered by such negotiations.”

(Emphasis added.)

“Employment relations”—about which a public employer must bargain in good faith—is defined in ORS 243.650(7)(a) to include

“matters concerning direct or indirect monetary benefits, hours, vacations, sick leave, grievance procedures and other conditions of employment.”

(Emphasis added.) “Employment relations” is further defined in ORS 243.650(7)(g) to exclude ...