City of Lynn v. Lynn Police Ass'n

• Decision Date: 06 January 2010
• Docket Number: SJC-10422.
• Citation: 455 Mass. 590,919 N.E.2d 158
• Parties: CITY OF LYNN v. LYNN POLICE ASSOCIATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

919 N.E.2d 158 455 Mass. 590 CITY OF LYNN
v.
LYNN POLICE ASSOCIATION. SJC-10422. Supreme Judicial Court of Massachusetts, Essex. Argued October 8, 2009. Decided January 6, 2010.

[919 N.E.2d 159]

David F. Grunebaum, Wellesley, for the plaintiff.

John M. Becker for defendant.

Present: MARSHALL, C.J., IRELAND, SPINA, COWIN, CORDY, BOTSFORD, & GANTS, JJ.

IRELAND, J.

455 Mass. 590

We granted further appellate review to decide whether the arbitration award in this case should be vacated. In his award, the arbitrator ordered the city of Lynn to restore wages and other benefits voluntarily relinquished by the members

455 Mass. 591

of the Lynn Police Association (union)¹ pursuant to a memorandum of agreement that modified the then-existing collective bargaining agreement between the parties. The city filed a complaint in the Superior Court requesting declaratory relief and seeking to vacate the arbitration award. The union filed an answer and a counterclaim requesting confirmation of the award. The city moved for summary judgment and the union moved for a judgment on the pleadings. A Superior Court judge denied the city's motion, allowed the union's motion, and entered a judgment confirming the award. The city appealed, and the Appeals Court essentially affirmed the judgment of the Superior Court (the Appeals Court ordered modification of the judgment to reflect a declaration of rights). See Lynn v. Lynn Police Ass'n, 73 Mass.App.Ct. 489, 495-496, 899 N.E.2d 106 (2009). On the grant of its application for further appellate review, the city argues that we vacate the award, contending that compliance with it would violate a State statute, namely, the so-called "Lynn Bailout Act," see St.1985, c. 8 (Bailout Act), and that the arbitrator exceeded his authority in ordering payment to the union. For reasons different from those stated by the Appeals Court, we affirm.

Background. The parties do not dispute the relevant facts. As noted by the Appeals Court, "[t]he dispute between the city and the union is rooted in a statute [the Bailout Act] enacted in 1985 when the city was on the verge of bankruptcy and unable to meet financial obligations, including wage obligations under its collective bargaining agreements." Lynn v. Lynn Police Ass'n, supra at 489, 899 N.E.2d 106. To prevent a cessation of municipal services, the city requested a loan from the State. In response, the Legislature enacted the Bailout Act, "under which it loaned the city $3.5 million [interest-free] but required the city to comply with certain financial safeguards to prevent spending in excess of revenues, the practice that had created the city's crisis." Id. at 490, 899 N.E.2d 106.

The Appeals Court correctly summarized some of the safeguards of the Bailout Act:

919 N.E.2d 160

"The [Bailout Act] amended the city's charter to require,

455 Mass. 592

among other things, that each department head submit to the city's chief financial officer quarterly spending schedules, or allotments, within ten days after the mayor and city council set the department's annual appropriation. Under the amended charter, no department may overspend a quarterly allotment without the mayor's approval. If the mayor approves excess spending within a quarter, the department head must adjust the remaining quarterly allotments to ensure that future spending does not exceed the department's annual appropriation. See St.1985, c. 8, § 3.

"Under the charter as amended by the [Bailout Act], any city official who intentionally causes his or her department to overspend an appropriation is personally liable to the city for the excess. [Id.]"

Lynn v. Lynn Police Ass'n, supra.

In addition, § 3 of the Bailout Act provides:

"On or before August first of each year ... the city officials in charge of departments or agencies including the superintendent of schools for the school department, shall submit to the chief financial officer, with a copy to the city clerk, in such form as the chief financial officer may prescribe, an allotment schedule of the appropriations of all personnel categories included in said budget, indicating the amounts to be expended by the department or agency for such purposes during each of the fiscal quarters of said fiscal year.... Whenever said chief financial officer determines that any department or agency, including the school department, will exhaust or has exhausted its quarterly ... allotment and any amounts unexpended in previous periods, he shall give notice in writing to such effect to the department head, the mayor, the city solicitor, and to the city clerk who shall forthwith transmit the same to the city council....

"The mayor within seven days after receiving such notice, shall determine whether to waive or enforce such allotment. If the allotment for such period is waived or is not enforced, as provided above, the department or agency head shall reduce the subsequent period allotments appropriately. If the allotment for such period is enforced

455 Mass. 593

or not waived, thereafter the department shall terminate all personnel expenses for the remainder of such period....

"No personnel expenses earned or accrued, within any department, shall be charged to or paid from such department's ... [quarterly] allotment of a subsequent period without approval by the mayor, except for subsequently determined retroactive compensation adjustments.[²] Approval of a payroll for payment of wages, or salaried or other personnel expenses which would result in an expenditure in excess of the allotment shall be a violation of this section by the department or agency head .... If the continued payment of wages, salaries or other personnel expenses is not approved in a period where a department has exhausted the period allotment or allotments as specified above, or, in any event, if a department has exceeded its appropriation for a fiscal year, the city shall have no obligation to pay such personnel cost or expense arising after such allotment or appropriation has been exhausted."

919 N.E.2d 161

Last, § 3 requires all collective bargaining agreements executed after the effective date of the Bailout Act "be subject to" and "expressly incorporate the provisions of this section."

The city and union negotiated a collective bargaining agreement for the period July 1, 2001, through June 30, 2004(CBA), that governed employment and compensation, and provided for binding arbitration of grievances.³ As a result of a reduction of aid to the city from the State in fiscal year (FY) 2004 (June 30, 2003, through June 30, 2004), the city and union entered into a memorandum of agreement (MOA) on October 1, 2003, that temporarily and conditionally modified the CBA for FY 2004. Pursuant to the MOA, the union agreed to relinquish (in FY 2004 only) certain wages and benefits in the amount of $290,360 (concessions),⁴ to avoid layoffs, on the condition that the city would restore the concessions if it received additional funds

455 Mass. 594

from the State or Federal government.⁵ The MOA saved the city $290,360, and there were no layoffs in the police department.

In December, 2003, the Lynn police department received a "community policing" grant in the amount of $277,815 from the Massachusetts Executive Office of Public Safety (EOPS) for FY 2004. Under the program, grant funds were to supplement, and not supplant, local police department budgets. While grant funds could only be used for "community policing," the funds could be used, at the discretion of the chief of police, to defray personnel costs; to defray costs of training law enforcement and civilian personnel; for overtime; for supplies, operating expenses, and equipment; and to defray other reasonable costs intended to facilitate or enhance community policing. In light of these permitted uses of the grant funds, the arbitrator concluded, and the city does not challenge this conclusion, that the grant "was for all intents and purposes unrestricted." Taking note of the fact that the FY 2004 budget was in place when the grant was received, and that there was no change in the budget as a result of the grant, the arbitrator further concluded (and, again, the city does not challenge this conclusion) that the grant funds were used to supplement

919 N.E.2d 162

the department's budget for FY 2004. The city did not use the grant funds to repay the union members for the

455 Mass. 595

MOA concessions, but did expend all the grant funds in FY 2004.⁶

The union became aware of the grant funds in February, 2004, and requested termination of the MOA and use of the grant funds to repay the MOA concessions. The city refused and...