City of Portsmouth v. Association of Portsmouth Teachers, NEA-New Hampshire, NEA--NEW

• Decision Date: 04 October 1991
• Docket Number: No. 90-052,NEA--NEW,90-052
• Citation: 597 A.2d 1063,134 N.H. 642
• Parties: , 70 Ed. Law Rep. 843 CITY OF PORTSMOUTH v. ASSOCIATION OF PORTSMOUTH TEACHERS,HAMPSHIRE.
• Court: New Hampshire Supreme Court

Page 1063

597 A.2d 1063

134 N.H. 642, 70 Ed. Law Rep. 843

CITY OF PORTSMOUTH v. ASSOCIATION OF PORTSMOUTH TEACHERS, NEA--NEW HAMPSHIRE.

No. 90-052.

Supreme Court of New Hampshire.

Oct. 4, 1991.

Robert P. Sullivan, City Atty., on the brief and orally, and Thomas E. Cayten, Chief Negotiator, on the brief, Portsmouth for petitioner.

James F. Allmendinger, Concord, Staff Atty., on the brief and orally, NEA-New Hampshire, for respondent.

HORTON, Justice.

This case comes up on cross-appeals from a decision of the Superior Court (O'Neill, J.). After a hearing on the two parties' consolidated declaratory judgment actions, the court ruled that Portsmouth's 1987 City Charter Amendment D, which precludes binding interest arbitration on collective bargaining agreements, is lawful, but may only be applied to future contracts. The court also determined that the City's Charter Amendment B, which requires centralized negotiation and administration of collective bargaining agreements, and the city council's approval of contracts based on such agreements, is valid. We affirm.

Pursuant to Part I, Article 39 of the New Hampshire Constitution, and RSA chapter 49-B, the voters of the City of Portsmouth approved four amendments to their municipal charter. Two of these amendments, Amendments D and B, are contested in this case. Amendment D, placed on the ballot by a citizen initiative, provides that:

"No board, commission, or legislative body, whether elected or appointed, shall delegate its authority to anyone not a member of its body, through the inclusion of binding interest arbitration in collective bargaining agreements, such delegation abrogating the right of the people to control their taxes through their elected officials."

(Emphasis added.)

The purpose of Amendment D is to prohibit binding interest arbitration, a practice in which, if the parties to collective bargaining are unable to reach agreement, disputed terms are submitted to and decided by a neutral arbitrator. The arbitrator then imposes terms of the contract upon the parties. In the case before us, both the City and the Association of Portsmouth Teachers, NEA-New Hampshire ("association") have agreed to binding interest arbitration, by contract, since 1976, in order to provide for the final resolution of negotiation issues arising in the course of bargaining for the next succeeding contract.

The respondent association asserts that Amendment D is preempted by, and contrary to, RSA chapter 273-A, and is thus unenforceable. In addition to asserting the validity of Amendment D as applied to prospective agreements, the City challenges the practice of binding interest arbitration, generally, as an unlawful delegation of power. Therefore, in addition to soliciting confirmation of the legality of Amendment D, the City seeks to be relieved of its existing contractual obligation to engage in this practice.

The second issue involves Charter Amendment B, which provides:

"The Administrative Code shall provide for a municipal department which shall be solely responsible for the negotiation and administration of all collective bargaining agreements which are funded by the City of Portsmouth, including those agreements involving personnel of the Police Department, Fire Department, and School Department. Final approval of any contract shall be by vote of the City Council."

The association contends that the "final approval" provision extends to non-cost items, and therefore is prohibited by RSA 273-A:3, II(b), and that the City cannot circumvent the State statute via the "home rule" under part I, article 39 of the New Hampshire Constitution. The City contends that the required final approval concerns only cost items, and that the amendment should be read this way, to be consistent with the statute. The trial court agreed that the amendment seeks "bottom line" budget approval only and, therefore, does not conflict with RSA 273-A:3, II(b).

I. Legality of Binding Interest Arbitration

The City seeks to have the practice of binding interest arbitration in the current contract declared void as an unlawful delegation to a non-public, non-elected outside arbitrator of authority to determine public expenditures, and because the contract lacks sufficient standards by which to measure the delegation. The Public Employee Labor Relations Act ("act") permits the parties, in the course of collective bargaining, to "provid[e] for such lawful procedures for resolving impasses as the parties may agree upon; provided that no such procedures shall bind the legislative body on matters regarding cost items." RSA 273-A:12, V.

The City first asserts that, in the implementation of dispute resolution procedures, no delegation of the duty to bargain is permitted to non-governmental arbitrators. The binding interest arbitration implemented by the Portsmouth contract refers impasse items to an independent single arbitrator selected by the parties either at large or from an American Arbitration Association list.

The value of binding arbitration in preventing public sector strikes has been recognized, see City of Detroit v. Detroit Police Officers, 408 Mich. 410, 436-437 n. 4, 294 N.W.2d 68, 73 n. 4 (1980), appeal dismissed, 450 U.S. 903, 101 S.Ct. 1337, 67 L.Ed.2d 326 (1981); Howlett, Interest Arbitration in the Public Sector, 60 Chi. [-]Kent L.Rev. 815, 829 (1984), and, often, practical considerations require that an arbitrator or board contain non-public members. See City of Richfield v. Local No. 1215, Etc., 276 N.W.2d 42, 48 (Minn.1979). In fact, arbitrators serve to breed trust on both sides, enabling both sides to reach a mutually satisfactory result. Thus, agreeing to properly circumscribed binding arbitration is not necessarily abdicating the duty to set terms of contracts, but is merely one approach to carrying out the duty.

Delegations of governmental functions to private individuals are permitted so long as proper safeguards are provided. See Corning Glass Works v. Ann & Hope, Inc. of Danvers, 363 Mass. 409, 422, 294 N.E.2d 354, 362 (1973); Medford Firefighters Ass'n v. City of Medford, 40 Or.App. 519, 595 P.2d 1268, 1272, review denied, 287 Or. 507 (1979), Milwaukee County v. Milwaukee Dist. Council 48, 109 Wis.2d 14, 24-25, 325 N.W.2d 350, 358 (1982). Therefore, the issue is not whether such delegation may occur, but rather whether sufficient safeguards against arbitrariness are provided. K. Davis, Administrative Law Treatise 54 (Supp.1970).

Various means of asserting such control are available. "Most statutes mandating arbitration establish some criteria for the arbitrators to follow in making their award." McAvoy, Binding Arbitration of Contract Terms: A New Approach to the Resolution of Disputes in the Public Sector, 72 Colum.L.Rev. 1192, 1199-1200 (1972). Some jurisdictions choose to limit the award to the terms contained in one or the other of the parties' "final offers." See, e.g., MICH. COMP. LAWS ANN. §§ 423.238 and 423.239 (West 1978); OHIO REV. CODE ANN. § 4117.14(D)(1) (Page 1991); ILL. REV. STAT. ch. 48, p 1614(h) (1990). Finally, residency requirements have occasionally been imposed on the arbitrators. See, e.g., R.I. GEN. LAWS, § 28-9.1-8; MICH. COMP. LAWS ANN., § 423.235. In addition to providing standards and intelligible principles by which the arbitrator must conform, the delegation can be further safeguarded by establishing a procedure whereby the arbitrator's discretion can be effectively reviewed. Cleveland Police v. City of Cleveland, 24 Ohio App.3d 16, 19, 492 N.E.2d 861, 865-66 (1985).

One of the greatest concerns to the issue of delegation is that the decision of the arbitrator may necessitate a public expenditure, thereby requiring an increase in taxes. See Dearborn Fire Fight., Etc. v. City of Dearborn, 394 Mich. 229, 245-46, 231 N.W.2d 226, 238 (1975). The danger exists that arbitration will be implemented simply because "a governmental official can avoid an unpleasant decision for which he would otherwise be politically accountable" by permitting public funds to be bound by the ruling of a non-GOVERNMENTAL entity. Comment, Collective Bargaining for Public Employees and the Prevention of Strikes in the Public Sector, 68 Mich.L.Rev. 260, 288 (1969); see also, State v. Johnson, 46 Wash.2d 114, 121, 278 P.2d 662, 666 (1955). We are not, however, confronted with such an unfettered delegation of authority.

The arbitrator cannot bind the City on cost items. "[C]ost items shall be submitted to the legislative body of the public employer for approval." RSA 273-A:3, II(b) (emphasis added). In addition, RSA 273-A:12 prohibits any impasse resolution procedure the parties may agree upon from binding the legislative body on cost items. As such, the municipal body has final review of all items which will place demands upon public funds. This assuages the primary concern that the delegation wrests fiscal responsibility from the hands of those public officials charged with financial decision-making authority, and also removes the concern over the improper exercise of legislative power through arbitration. Such final review of an agency's decisions is sufficient to protect otherwise objectionable delegations. Tremblay v. Berlin Police Union, 108 N.H. 416, 421, 237 A.2d 668, 672 (1968); see City of Cleveland, 24 Ohio App.3d at 18, 492 N.E.2d at 865.

In addition, other limitations applicable to non-cost items are imposed by statute and limit the arbitrator's discretion. RSA 273-A:1, XI excludes "managerial policy" in collective bargaining negotiations, and RSA 273-A:3, III prohibits matters regarding merit systems from such talks. Furthermore, any negotiated items are subject to the regulations of the department of education. See RSA ch. 186 et seq.; RSA ch. 189 et seq.; RSA 194:23. Among these are the length of the school year, N.H.Admin.Rules, Ed 306.01; teacher certification standards, id. ch. 500; teaching load, id. 306.06; class size, id. 306.06;...