Engineers & Architects Assn. v. Community Development Dept.

• Decision Date: 30 November 1994
• Docket Number: No. B071955,B071955
• Citation: 30 Cal.App.4th 644,35 Cal.Rptr.2d 800
• Court: California Court of Appeals Court of Appeals
• Parties: , 148 L.R.R.M. (BNA) 2114 ENGINEERS AND ARCHITECTS ASSOCIATION, Petitioner and Appellant, v. COMMUNITY DEVELOPMENT DEPARTMENT OF the CITY OF LOS ANGELES et al., Defendants and Respondents.

Page 800

35 Cal.Rptr.2d 800

30 Cal.App.4th 644, 148 L.R.R.M. (BNA) 2114

ENGINEERS AND ARCHITECTS ASSOCIATION, Petitioner and Appellant, v. COMMUNITY DEVELOPMENT DEPARTMENT OF the CITY OF LOS ANGELES et al., Defendants and Respondents.

No. B071955.

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

Nov. 30, 1994.

Marr & Marchant, Cecil Marr and Diane Marchant, Los Angeles, for petitioner and appellant.

James K. Hahn, City Atty., Frederick N. Merkin, Sr. Asst. City Atty. and Molly Roff-Sheridan, Deputy City Atty., for defendants and respondents.

KITCHING, Associate Justice.

INTRODUCTION

This appeal arises from the denial of a petition to compel arbitration. The petition raised the question whether a collective bargaining agreement excluded from arbitration a managerial decision to lay off an employee because of lack of funding or lack of work. In answering this question, the trial court properly made factual findings in ruling on arbitrability. The contract, and substantial evidence, support the trial court's ruling that this dispute was not arbitrable. We affirm the denial of the petition to compel arbitration.

FACTUAL AND PROCEDURAL BACKGROUND

On June 24, 1992, petitioner Engineers and Architects Association ("the Association") filed a petition to compel arbitration, pursuant to Code of Civil Procedure section 1281.2, naming as respondents the Community Development Department ("the Department") of the City of Los Angeles and its General Manager, Parker Anderson ("Anderson"). The Association acts as an employee organization recognized by the City of Los Angeles ("the City") as bargaining representative for "administrative unit" employees, including those working in the Department. The petition specifically concerned Mark Vella ("Vella"), an Industrial Commercial Finance Officer ("ICFO").

The Association and the Department signed a collective bargaining agreement, the "memorandum of understanding," setting forth terms and conditions of employment in the administrative unit. Pursuant to Articles 1.9 and 3.1 of the memorandum, the parties agreed to submit certain disputes to a grievance procedure that concludes in binding arbitration.

The Industrial, Commercial and Development Division ("the ICD") of the Department employs ICFOs to undertake financial analyses associated with the production of loans. The City's employment materials describe an ICFO as developing and securing financing for small- and medium-sized businesses and industrial and commercial development projects. An ICFO also plans, designs, prepares, reviews, and processes loans for businesses and industrial and commercial development projects as part of the Department's comprehensive economic development program.

On March 19, 1992, Anderson informed Vella that the Department intended to lay him off due to lack of work and/or lack of funds. Vella filed a grievance on March 24, 1992, which contended that the action was unnecessary and hence unfair, that sufficient work and funds existed to provide for his position, and that no legitimate reason existed to warrant this action.

Responding to the grievance in an April 9, 1992, letter, the City argued that because Vella made no claim that the layoff was a pretext or subterfuge for discipline, the layoff remained within the City's exclusive management right to relieve a City employee from duty because of lack of work, lack of funds or other legitimate reasons, including abolishment of positions. Therefore the City concluded that the matter was not subject to grievance or arbitration.

Vella filed a second grievance on April 16, 1992. It alleged that on April 13, 1992, Vella was transferred to the enterprise zone section from the marketing section in anticipation that as of July 1, 1992, his position would be eliminated. Vella alleged that he was told his job was being eliminated, first, because there were too many people in the ICD in view of the work load, and second, because the ICD exceeded its budget for staff salary. Vella stated his belief that both reasons were not true, and that sufficient work and more than sufficient funds existed to provide for his position.

Vella also alleged that management gave "pretextual" reasons, and took the action against him because management: (1) used an expedient, easy way to respond to a management audit, which it feared would be negative, to make it appear that management made changes when in fact it made no significant changes at all, and sacrificed Vella to make management "look good to the CAO;" (2) intended to hire private consultants and new employees to perform Vella's work; (3) wanted to avoid further scrutiny of the ICD's operations because it feared unfavorable publicity; (4) wanted to divert attention from the ICD's failure to provide sufficient training to employees; and (5) wanted to camouflage poor management decisions regarding the ICD's loan programs.

On May 22, 1992, Vella and the Association invoked arbitration. The City of Los Angeles Employee Relations Board sent a list of seven arbitrators to the Department and the Association. On June 11, 1992, the Department again rejected Vella's grievance as involving issues within management's exclusive prerogative and not subject to the grievance process.

On June 24, 1992, the Association filed the petition from which this appeal arises. The petition prayed for an order directing the Department and Anderson to cooperate with the Association in selecting an arbitrator and submitting Vella's grievance to arbitration.

The Department's answer set forth the affirmative defense that the City is not required to arbitrate layoffs based on lack of funds, lack of work, or the abolishment of a position. It argued that the courts cannot compel the City to arbitrate a matter it did not agree to arbitrate.

The parties submitted declarations to the trial court supporting their various contentions. On September 4, 1992, the court granted the petition, but set this ruling aside after granting the Department's motion for reconsideration pursuant to Code of Civil Procedure section 1008 on October 8, 1992. The court's order stated that the Association did not sufficiently demonstrate that the layoff was anything other than an economic decision by the Department, which decisions are not subject to arbitration under the management rights provision of the memorandum of understanding. The court further stated that to allow the Association to proceed to arbitration based solely on inferences that sufficient funds may have existed to avoid the layoff would destroy the balance between the competing interests of management and employees.

On October 23, 1992, the Association filed a notice of appeal from the October 8, 1992, denial of its petition to compel arbitration. ¹ Further facts necessary to resolution of the issues in this appeal will appear in the "discussion".

ISSUES

The Association concedes the City's right to lay off employees because of a lack of work or funds, but argues: first, that the right to lay off does not arise unless there is actual lack of work or funds; second, that an employee may, by grievance and arbitration, challenge the City's assertion of lack of work or funds; and third, that an employee may grieve the practical consequences which the City's decision to lay off an employee may have on that employee's wages, hours, or other terms and conditions.

The Association also requests attorney fees. ²

DISCUSSION

1. The Documents Applicable to this Case.

In Chapter 8, "Employer-Employee Relations," of the Los Angeles Administrative Code, section 4.865 requires that every memorandum of understanding between the City and any employee organization contain a grievance procedure. In the words of section 4.865, "[s]uch grievance procedure shall apply to all grievances, as defined in Section 4.801 of this code, shall provide for arbitration of all grievances not resolved in the grievance procedure," and shall conform to procedural standards set forth in section 4.865.

Section 4.801 defines "grievance" as "[a]ny dispute concerning the interpretation or application of a written memorandum of understanding or of departmental rules and regulations governing personnel practices or working conditions. An impasse in meeting and conferring upon the terms of a proposed memorandum of understanding is not a grievance." Article 3.1, Section I of the memorandum of understanding between the Department and the Association adopts this definition.

Section 4.859 of the Los Angeles Administrative Code states: "Responsibility for management of the City and direction of its work force is vested in City officials and department heads whose powers and duties are specified by law. In order to fulfill this responsibility it is the mission of its constituent departments, offices and boards, [to] set standards of services to be offered to the public and exercise control and discretion over the City's organization and operations. It is also the exclusive right of City management to take disciplinary action for proper cause, relieve City employees from duty because of lack of work or other legitimate reasons and determine the methods, means and personnel by which the City's operations are to be conducted and to take all necessary actions to maintain uninterrupted service to the community and carry out is mission in emergencies; provided, however, that the exercise of these rights does not preclude employees or their representatives from consulting or raising grievances about the practical consequences that decisions on these matters may have on wages, hours and other terms and conditions of employment; ..."

Article 1.9 of the memorandum of understanding follows this section closely. Because that article, captioned "Management Rights," also contains additional language both more broad and more specific than that in section 4.859, we quote it in full. "As the responsibility for the management of the City and...