Headley v. City of Miami

• Decision Date: 22 August 2013
• Docket Number: No. 1D12–2116.,1D12–2116.
• Parties: Walter E. HEADLEY, Jr., Miami Lodge No. 20, Fraternal Order of Police, Inc., Appellants, v. CITY OF MIAMI, Florida, Appellee.
• Court: Florida District Court of Appeals

118 So.3d 885

Walter E. HEADLEY, Jr., Miami Lodge No. 20, Fraternal Order of Police, Inc., Appellants,

v.CITY OF MIAMI, Florida, Appellee.

No. 1D12–2116.

District Court of Appeal of Florida, First District.

July 19, 2013.

Rehearing Denied Aug. 22, 2013.

Ronald J. Cohen of Ronald J. Cohen, P.A., Miami Lakes, for Appellants.

Julie O. Bru, City Attorney, Diana Vizcaino and John A. Greco, Assistant City Attorneys, Miami, for Appellee.

Thomas W. Brooks of Meyer Brooks, Demma & Blohm, P.A., Tallahassee; G. Hal Johnson, Tallahassee; and Paul A. Donnelly of Donnelly and Gross, P.A., Gainesville, for Amicus Curiae Florida Education Association, Communications Workers of America, and Florida Police Benevolent Association.

Richard A. Sicking, Coral Gables, for Amicus Curiae Florida Professional Firefighters, Inc., International Association of Firefighters, AFL–CIO.

David C. Miller and James C. Crosland of Bryant Miller Olive, Miami, for Amicus Curiae City of Hollywood.

WETHERELL, J.

Appellant, Walter E. Headley, Jr., Miami Lodge No. 20, Fraternal Order of Police, Inc. (hereafter “the Union”), seeks review of a final order of the Public EmployeesRelations Commission (PERC) dismissing the Union's unfair labor practice (ULP) charge against the City of Miami (City). The Union argues that (1) PERC erred in determining that the City was facing a “financial urgency” that required modification of the parties' collective bargaining agreement (CBA) pursuant to section 447.4095, Florida Statutes (2010), and (2) PERC erred in construing section 447.4095 to allow the City to implement changes to the CBA prior to completion of the impasse resolution process set forth in section 447.403. For the reasons that follow, we conclude that PERC properly interpreted and applied section 447.4095. Accordingly, we affirm the final order.

Factual and Procedural Background

The Union is a certified bargaining agent representing officers employed by the City's police department. The existing CBA between the City and the Union covered the period of October 1, 2007, through September 30, 2010. The parties began negotiations for a successor agreement in the spring of 2010 and, from the outset, the Union took the position that it would not agree to any modifications to the CBA on wages or pension benefits.

On July 28, 2010, while the parties were engaged in negotiations for a successor agreement, the City declared a “financial urgency” and invoked the process set forth in section 447.4095. The City informed the Union that it intended to implement changes to wages, pension benefits, and other economic terms of employment and that it was willing to meet with the Union and negotiate the impact of these measures. The Union did not request bargaining over the impact of the City's decision to declare a financial urgency, but the parties continued to meet and bargain for a successor agreement. During these negotiations, the Union maintained its position that it would not agree to any modifications concerning wages and pension benefits.

On August 16, 2010, the City notified PERC that the parties had engaged in negotiations concerning the financial urgency and that a dispute remained. PERC provided the parties a list of special magistrates for the impasse resolution process, and although the parties agreed upon the selection of a special magistrate, they did not pursue the impasse resolution process with respect to the declaration of financial urgency.

The parties continued to meet and bargain for a successor agreement and, during these negotiations, the City provided the Union with the specific changes it intended to make to address the financial urgency facing the City. The Union did not provide the City a formal counter-proposal. Thereafter, on August 31, 2010, the City's legislative body voted to unilaterally change the terms of the CBA in order to address the financial urgency.

The changes adopted by the City imposed a tiered reduction of wages, elimination of education pay supplements, conversion of supplemental pay, a freeze in step and longevity pay, modification of the normal retirement date, modification of the pension benefit formula, a cap on the average final compensation for pension benefit calculations, alteration of the normal retirement form, and modification of average final compensation. Some of the changes went into effect on September 30, 2010, while others went into effect on October 1, 2010, which was the first day of the City's 2010/2011 fiscal year.

On September 21, 2010, the Union filed a ULP charge with PERC. The Union alleged that the City committed a ULP by improperly invoking section 447.4095 for the purpose of altering the terms and conditions of employment after expiration of the CBA. The Union further alleged that the City committed a ULP by unilaterally altering financial terms and conditions of employment before completing the impasse resolution process provided for in section 447.403.

The case proceeded to a hearing before a PERC hearing officer at which the City presented extensive evidence of the dire financial situation it was facing. The evidence established that the City's budget was approximately $500 million and that it faced a deficit of approximately $140 million for the 2010/2011 fiscal year; that the City had already implemented hiring freezes, completed all previously contemplated layoffs, ceased procurement, and instituted elimination of jobs as employees left; that labor costs comprised 80% of the City's expenses; that, if additional action was not taken to reduce expenditures, the City's labor costs would exceed its available funds, which would leave the City unable to pay for utilities, gas, and other necessities and render it unable to provide essential services to its residents; and that the City's unemployment rate was 13.5% and property values were in decline, with 49% of homes in the City having a negative equity.

The Union acknowledged that the City faced a difficult financial situation, but it took the position that the City's financial problems did not require modification of the CBA. The Union's witnesses suggested that the City could overcome its budgetary shortfall without modifying the CBA by raising the millage tax rate, installing red light cameras, imposing non-union employee layoffs and furloughs, freezing the current cost of living adjustment, and changing the pension funding methodology.

The City responded with evidence showing that the Union's suggestions would not adequately address the shortfall because they either failed to generate enough revenue to offset the deficit or because they would increase the City's long term financial obligations. For example, with respect to increasing the millage rate, the City Manager testified that, even if the City Commission raised the rate to the maximum allowed by law, the additional funds would make up less than 40% of the projected deficit and that the increased rate would negatively impact the City's already-reduced credit rating and its ability to borrow funds.

The PERC hearing officer issued an order recommending dismissal of the Union's ULP charge. The hearing officer found that the City properly invoked the provisions of section 447.4095 because the evidence established that the City was facing a financial situation that continued to deteriorate despite the actions taken by the City short of modifying the CBA. The hearing officer also rejected the Union's argument that the City was required to proceed through the impasse resolution process before implementing the changes in the CBA because the financial urgency statute contemplates “impact bargaining” pursuant to which the “employer may implement the action and then subsequently complete the impasse resolution process.”

In the final order, PERC adopted and expanded on the definition of financial urgency used by the hearing officer. PERC explained that “[a] financial urgency is a financial condition requiring immediate attention and demanding prompt and decisive action which requires the modification of an agreement; however it is not necessarily a financial emergency or bankruptcy.” PERC further explained that a determination of financial urgency requires “a close examination of the employer's complete financial picture on a case-by-case basis” and an evaluation of whether the employer was “acting in good faith when it declared financial emergency.” On the issue of good faith, PERC explained that the focus is whether a reasonableperson could reach the conclusion that “funding was not available to meet the employer's financial obligations to its employees.”

The final order also adopted the hearing officer's conclusion that section 447.4095 did not require the City to proceed through the impasse resolution process before implementing the changes to the CBA. Like the hearing officer, PERC interpreted the statute to require “impact bargaining” pursuant to which the employer need only provide notice and a reasonable opportunity to bargain before implementing the changes. PERC noted that if the statute was interpreted to require the City to proceed through the impasse resolution process before implementing changes to the CBA, the purpose of the statute would be frustrated because of the delays inherent in that process.

Commissioner Delgado filed a dissent. He disagreed with the majority's conclusion that the City properly invoked section 447.4095 because, in his view, the statute required the local government to prove that its financial condition required modification of the agreement, which pursuant to Chiles v. United Faculty of Florida, 615 So.2d 671, 673 (Fla.1993), required the local government to demonstrate that there were “no other reasonable alternative means of preserving its contract with public workers, either in whole or in part.” He also disagreed with the majority's conclusion that the local government could implement the changes to the CBA before proceeding through the...