City of Oakland v. United Public Employees

• Decision Date: 28 March 1986
• Docket Number: D,AFL-CI
• Citation: 179 Cal.App.3d 356,224 Cal.Rptr. 523
• Court: California Court of Appeals Court of Appeals
• Parties: CITY OF OAKLAND, Plaintiff and Appellant, v. UNITED PUBLIC EMPLOYEES, LOCAL 390, SEIU,efendant and Respondent. A028565.

Page 523

224 Cal.Rptr. 523

179 Cal.App.3d 356

CITY OF OAKLAND, Plaintiff and Appellant, v. UNITED PUBLIC EMPLOYEES, LOCAL 390, SEIU, AFL-CIO, Defendant and Respondent.

A028565.

Court of Appeal, First District, Division 3, California.

March 28, 1986.

Review Denied July 23, 1986.

Stanley P. Hebert, Port Atty., James E. Allen, Jr., Deputy Port Atty., Oakland, for plaintiff and appellant.

W. Daniel Boone, Van Bourg, Weinberg, Roger & Rosenfeld, San Francisco, for defendant and respondent.

MERRILL, Associate Justice.

The City of Oakland (City), acting by and through its Board of Port Commissioners, appeals from a judgment confirming an award made in a labor arbitration proceeding between appellant and respondent United Public Employees. We affirm.

For several years, appellant, through the Port of Oakland (the Port), provided an airline information and reservation service at the Oakland International Airport known as "Fly Oakland." Under this program, Port employees responded to telephone inquiries from the general public for flight information and airline reservations; information was given out, and requests for reservations were forwarded to the individual airlines, which then issued tickets and received payments therefor. In or about June or July 1981, the Port management decided to discontinue the "Fly Oakland" service for budgetary reasons. On August 17, 1982, the Port terminated the service, effective August 31, 1982. Simultaneously, it entered into a lease agreement with a private travel agency to operate at the Oakland Airport as the "Fly Oakland Travel Service." This private travel agency was "full service," unlike the former Port-operated "Fly Oakland" service; that is, it provided and arranged for airline, rail, car, hotel, ship and tour reservations, wrote and issued travel tickets, and collected payment on behalf of carriers.

Eleven employees of the Port-operated "Fly Oakland" service were affected by the Port's decision to terminate it. Four reservation clerks, in positions classified as competitive civil service, were transferred to similar telephone operator positions, at the same rate of pay, elsewhere at the Port. Seven relief reservation clerks were given notices of layoff. ¹ Each of these employees was offered and accepted a position with the private travel agency. Prior to and in anticipation of layoff, the latter employees received specialized airline computer and travel agent training from outside consultants at the Port's expense.

On July 6, 1982, respondent filed a grievance regarding the Port's discontinuation of the "Fly Oakland" service. The grievance alleged that the Port's intended service discontinuance and announcement thereof were in violation of the city charter, Civil Service Rules of the City of Oakland, and the memorandum of understanding (MOU) between respondent and the Port. Respondent requested that the Port "remove and rescind" the announcement of its intention to discontinue its operation of the "Fly Oakland" service posted in the June 30, 1982, edition of the Oakland Tribune; "cease, desist and refrain from altering, amending or eliminating the present status of 'Fly Oakland' within the Port"; and make all affected employees aware, through respondent, "of any and all intended actions by the Port ... relative to their employment at 'Fly Oakland.' " No other relief was sought.

By letter dated July 12, 1982, the Port denied the grievance. It stated that it had kept respondent informed of its plans to discontinue the operation of "Fly Oakland" for over a year; that the Port's "Fly Oakland" service was being discontinued because its benefits were outweighed by the high costs involved; that the new private travel agency had only become a possibility because of recent changes in federal regulations unrelated to the Port's decision to discontinue the service; and that all affected employees would be provided with all layoff rights set forth in the MOU and applicable City and Port rules and regulations.

Subsequently, respondent submitted the matter to arbitration. The arbitration took place on December 13 and 20, 1983, before an arbitrator selected in accordance with the MOU. The parties stipulated that the issue to be decided was as follows: "Whether the Port of Oakland violated the [MOU], the City or Port Civil Service Rules, and/or the Charter of the City of Oakland in its discontinuation of the Port of Oakland's 'Fly Oakland' program during 1982; and, if so, what is the appropriate remedy." The specific sections of the MOU at issue were as follows: article 33, section 3, requiring the Port to give timely notice to respondent of any plans to reduce personnel; article 34, requiring that the Port give advance notice of any contracting of services which might result in the loss of employment or salary by represented employees; and article 38, requiring that "[a]ny changes in wages, hours or terms and conditions of employment beyond those set forth [in the MOU] are subject to the requirements of meeting and conferring in good faith in accordance with the Meyers-Milias-Brown Act as amended."

Following two days of hearings on December 13 and 20, 1983, the arbitrator issued an award finding that the Port "did violate the [MOU] by discontinuing the 'Fly Oakland' telephone reservation service as a Port operation on August 16, 1982, and then replacing it with an expanded travel service operation run by a privately held concessionaire without meeting and conferring with [respondent] as required by the [MOU]." The award required the Port to make a written offer to meet and confer with respondent within 20 calendar days "about its decision to discontinue and replace the 'Fly Oakland' reservation service"; to "make whole" all employees laid off or transferred from the former "Fly Oakland" service as of August 31, 1982, for any losses in wages, benefits or seniority; to make respondent whole for any dues money lost as a result of the discontinuance of the "Fly Oakland" service; not to declare a genuine impasse in the meet and confer process "before three meet and confer sessions shall have taken place without an agreement, nor before all impasse procedures mandated by applicable laws and regulations shall have been followed and exhausted"; and to "make available to [respondent] all payroll records or other records necessary to compute the amounts owed" the employees and respondent under the award. The award was expressly based on the findings set forth in the arbitrator's written opinion. In the opinion, the arbitrator found that there was no violation of article 34 of the MOU or of city charter section 8.02(e) because the Port did not "contract out" work when it discontinued the "Fly Oakland" program and entered into the lease agreement with the travel agency; that the issue of whether the affected clerks were permanent civil service employees or exempt was therefore moot; and that the Port did not violate the provisions of article 33, section 3 of the MOU because there was no reduction in workforce.

These particular findings were based primarily on the arbitrator's key determination that the Port never really terminated its "Fly Oakland" service; rather, it merely continued that service in the form of the travel agency concession. Reasoning from certain provisions in the lease agreement between the Port and the private travel agency retaining for the Port a substantial amount of control over the operations of the travel agency, the arbitrator concluded that "Fly Oakland Travel Service has no independent existence of its own, but is a creature of the Port, created primarily to fulfill the Port's twin policy goals of increasing patronage at the Oakland Airport and increasing minority participation in Port generated business. In almost every area where labor relations questions may arise at Fly Oakland Travel Service--staffing, training, hours, equipment, hiring, affirmative action, or residency requirements--the Port retains substantial authority. [p] The characterization in the 'Agreement and Lease' of the relationship between the Port and Fly Oakland Travel Service as one of 'ownerconcessionaire' is fairly accurate. It is in precisely this sort of relationship that labor relations authorities such as the NLRB have found that a co-employer or a single employer situation exists, where the owner has retained substantial authority over labor relations. [Citation.] In the present case, the owner even retains substantial authority over the stock ownership of the concessionaire.... [p] In view of the foregoing, then, I find that the Port continues, at a minimum, to be a co-employer of the employees of Fly Oakland Travel Service and that unilateral changes were made in the wages, hours of employment, and working conditions of 'Fly Oakland' program employees."

On the basis of this finding that the Port's action constituted a change in the nature of its "Fly Oakland" operation rather than a discontinuation or termination thereof, the arbitrator went on to consider the meet and confer requirements of article 38 of the MOU. ² Because unilateral changes were made in the wages, hours, terms and conditions of employment of the "Fly Oakland" employees when the "Fly Oakland" service was transferred from the Port to the private concessionaire, the arbitrator concluded that the meet and confer requirements of article 38 of the MOU were applicable. He found that despite some initial discussions with the Union over the fate of the "Fly Oakland" program, in the early part of 1982 the Port unilaterally decided that it was not a meet and confer issue and refused to give the union any information until the change was announced as a "fait accompli" in June 1982; and he concluded that the Port had therefore failed in its obligation to meet and confer. In fashioning a remedy to effectuate the award, the arbitrator required the Port, among other things, to provide respondent with the payroll and...