Baltimore Teachers Union, American Federation of Teachers, Local 340, AFL-CIO v. Mayor and City Council of Baltimore

• Decision Date: 01 September 1995
• Docket Number: AFL-CIO,No. 710,710
• Citation: 108 Md.App. 167,671 A.2d 80
• Parties: , 151 L.R.R.M. (BNA) 2706, 106 Ed. Law Rep. 1214 BALTIMORE TEACHERS UNION, AMERICAN FEDERATION OF TEACHERS, LOCAL 340,v. MAYOR AND CITY COUNCIL OF BALTIMORE. ,
• Court: Court of Special Appeals of Maryland

Page 167

108 Md.App. 167

671 A.2d 80, 151 L.R.R.M. (BNA) 2706,

106 Ed. Law Rep. 1214

BALTIMORE TEACHERS UNION, AMERICAN FEDERATION OF TEACHERS, LOCAL 340, AFL-CIO v. MAYOR AND CITY COUNCIL OF BALTIMORE.

No. 710, Sept. Term, 1995.

Court of Special Appeals of Maryland.

Feb. 7, 1996.

Joel A. Smith (Christyne L. Neff and Kahn, Smith & Collins, P.A., on the brief), Baltimore, for appellant

James S. Ruckle, Jr. (Otho M. Thompson, Deputy City Solicitor, on the brief), Baltimore, for appellee.

Argued before BLOOM, CATHELL and DAVIS, JJ.

DAVIS, Judge.

This appeal arises out of a dispute between the Baltimore Teachers Union, American Federation of Teachers, Local 340, AFL-CIO (appellant) and the Mayor and City Council of Baltimore (appellee) over appellee's alleged breach of a wage agreement between the parties. Although a number of questions are presented for our review, we restate them, distilled to two substantive issues, as follows:

I. Was it a "mistake so gross as to work manifest injustice" for the arbitrator to determine that he was without authority to award a remedy for the breach of contract?

II. Was it a "mistake so gross as to work manifest injustice" for the arbitrator to determine that a valid contract existed under which appellee could be liable?

We answer both questions in the affirmative. As we shall explain, the result of our disposition of these questions is that the judgment of the Circuit Court for Baltimore City (Ward, J.) must be affirmed.

FACTS

The sad affair that gives rise to this appeal presents yet another setback for the most noble of professions whose members perform the most essential function in a well-ordered society. Appellants won a Pyhrric victory in their quest for parity in pay with the jurisdictions surrounding Baltimore City--that victory coming in the form of an agreement with appellees to grant the pay increases--only to then face the dual obstacles of procedural barriers and budget shortfalls.

On June 24, 1992, appellant filed suit against appellee in the Circuit Court for Baltimore City to compel appellee to submit to arbitration a contract grievance between the parties, the details of which are fully discussed below. On June 25, 1993, the circuit court ordered that the parties submit their dispute to arbitration. The circuit court amended this order on August 3, 1993, directing "that the Parties proceed to arbitration on all issues, both procedural and substantive." Collectively As ordered, the matter proceeded to arbitration. Over the course of several days in April and May of 1994, full hearings were held before an arbitrator from the Federal Mediation and Conciliation Service. Evidence was presented, testimony was taken, and arguments were submitted. On December 7, 1994, the arbitrator issued a lengthy written Opinion and Award. The Opinion and Award comprehensively recites the underlying facts of this dispute. As the parties do not dispute these facts, our discussion below summarizes the facts as set forth in the Opinion and Award.

these orders shall be referred to as the circuit court's Orders to Arbitrate.

Appellant represents appellee's teachers in collective bargaining negotiations with appellee. Salaries of Baltimore City teachers have historically been lower than the salaries of teachers in surrounding jurisdictions. This gap between salaries has reached $5,000 per year in recent years, and has caused difficulty in attracting quality teachers to Baltimore City and an ongoing loss of experienced teachers to higher paying surrounding jurisdictions. This disparity has been a concern of elected officials, including Mayor Schmoke, administrators, teachers, and appellant.

According to the testimony of witnesses for appellant, to address the wage disparity problem, appellant desired an 8% wage increase in the first two years of a three-year collective bargaining agreement and, in the third year, wage parity with surrounding jurisdictions. Appellant states that, in response, Mayor Schmoke stated something to the effect of "you've got it." According to appellant's witnesses, the Mayor was aware of anticipated APEX funding ¹ from the State, and the parties contemplated that parity would be achieved out of those funds.

In 1988, appellee and appellant entered into negotiations over a collective bargaining agreement (Agreement). During these negotiations, then-Labor Commissioner Richard J. Whalen represented appellee. Whalen opposed the concept of automatic parity and refused to agree to the parity package. Appellant went to the Mayor, who supported appellant's position, and worked with appellant to craft a comparability formula. ² According to appellant's witnesses, appellee thereupon changed its position at the bargaining table and accepted appellant's parity concept.

The agreement that was eventually negotiated covered the period July 1, 1989 through June 30, 1992 (fiscal years 1990, 1991 and 1992). ³ The agreement provided wage increases of 8% in each of the first two fiscal years. The following "wage reopener" provision (Section 5.1.3. of Article V, Compensation and Related Matters, of the Agreement) controlled in the third year of the Agreement (fiscal year 1992):

The Employer and the Union agree to reopen negotiations on salaries for the 1991-92 school year. It is the goal of the City of Baltimore and the [Union] to support salary levels for teachers comparable to competitive area districts. Adjustments to the salary schedule for the third year shall be determined by the following methods:

a. A list of districts shall be identified and 1991-92 salary schedules obtained from those districts b. Benchmark positions are the minimum and maximum positions on each lane of the schedule.

c. The benchmark positions shall be averaged for all districts in the sample.

d. The City will cooperate with [Union] requests for revenue or expenditure estimates.

e. Once implemented, the schedule shall remain in effect until modified through subsequent agreements.

By the fall of 1990, when negotiations began between appellee and appellant under the wage reopener provision, the economy was stagnant, and appellee and the State were experiencing serious financial problems. The Opinion and Award refers to Baltimore Teachers Union v. Mayor and City Council of Baltimore, 6 F.3d 1012, 1020 (4th Cir.1993), wherein appellee's poor financial condition and its operational and budgetary actions in response thereto are fully described.

In early February 1991, in advance of fiscal year 1992, the parties attempted to negotiate a successor agreement to the 1989-1992 Agreement. Appellant sought both general and parity wage increases, asserting that such increases were due under the wage parity reopener provision of the Agreement and that revenues were available to fund the increases. Furthermore, appellant asserted that a wage gap between appellee's teachers and surrounding jurisdictions remained. Appellant's calculations for fiscal year 1992 indicated a 12.9% wage gap. Appellant insisted that the agreed-upon parity "goal" meant a definite commitment to "do something" about achieving parity, assuming revenues could be identified.

Appellee's position, on the other hand, was that there were no funds available for wage increases for fiscal year 1992. Moreover, based on arguments concerning national wage levels for teachers in large cities, appellee asserted that parity increases were not due. Appellee further argued that the Agreement's use of the word "goal" was insufficient to constitute a binding promise. The parties ultimately agreed to a wage freeze for fiscal year 1992.

The wage agreement for the fiscal year 1992 wage reopener was embodied in a September 12, 1991 letter from Jesse E. Hoskins, appellee's acting Labor Commissioner, to Irene Dandridge, appellant's President. The parties refer to this letter as the first "Side Letter." Dandridge counter-signed and dated the first Side Letter in an underlined space corresponding to the typed-word "ACCEPTED." Paragraph 3 of the first Side Letter reads, in pertinent part, as follows:

[Appellee] and [appellant] agree to restate our position on Article V--Compensation and Related Matters, Paragraph 5.1(3). The parties agree that the goal of [appellee] and [appellant] is to support salary levels for teachers comparable to our competitive area districts. To further our mutual commitment, effective July 1, 1992, a minimum annual parity increase of not less than one percent (1%) will be received. Such parity increases in the aggregate shall not exceed six percent (6%). During FY 1993 and subsequent years both parties agree that the parity increase will only be received provided revenues can be identified.

(Emphasis added).

During fiscal year 1992, the State cut funding to appellee twice, totalling approximately $37.5 million. These cuts, along with a decline in tax revenues, forced appellee to terminate or cut programs, and furlough and lay off employees. During the course of fiscal year 1992, appellee also imposed several unpaid furlough days ("K days") on teachers.

The Agreement and first Side Letter were set to expire at the end of fiscal year 1992. For fiscal year 1993, the parties signed a second Side Letter, dated June 19, 1992, in which the parties confirmed their agreement to extend for one year the Agreement and the terms of the first Side Letter. The Opinion and Award states that appellant had the second Side Letter approved by appellee's Board of Estimates, committing appellee to honor its terms for fiscal year 1993. The second Side Letter was stamped "APPROVED BY THE BOARD OF ESTIMATES JUL 29 1992," and signed by appellee's comptroller. According to the arbitrator, Board of Estimates During negotiations for fiscal year 1993 (and also for previous fiscal year 1992), Hoskins reviewed the proposed "provided revenues can be identified" language of the first Side Letter with Edward Gallagher, appellee's Director of...