Headley v. City of Miami

• Decision Date: 02 March 2017
• Docket Number: No. SC13–1882,SC13–1882
• Citation: 215 So.3d 1
• Parties: Walter E. HEADLEY, Jr., Miami Lodge No. 20, Fraternal Order of Police, et al., Petitioner, v. CITY OF MIAMI, Florida, Respondent.
• Court: Florida Supreme Court

215 So.3d 1

Walter E. HEADLEY, Jr., Miami Lodge No. 20, Fraternal Order of Police, et al., Petitioner,

v.CITY OF MIAMI, Florida, Respondent.

No. SC13–1882

Supreme Court of Florida.

[March 2, 2017]

Ronald Jay Cohen of Rice Pugatch Robinson & Schiller, P.A., Fort Lauderdale, Florida, and Robert David Klausner of Klausner, Kaufman, Jensen and Levinson, P.A., Plantation, Florida, for Petitioners

Victoria Mendez, City Attorney, John Anthony Greco, Deputy City Attorney, Diana Vizcaino, Former Assistant City Attorney, and Kerri Lauren McNulty, Assistant City Attorney, Miami, Florida, for Respondent

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

Noah Scott Warman of Sugarman & Susskind, P.A., Coral Gables, Florida, for Amicus Curiae Hollywood Fire Fighters, Local 1375, IAFF, Inc.

Thomas Wayne Brooks of Meyer, Brooks, Demma and Blohm, P.A., Tallahassee, Florida, for Amicus Curiae Florida Education Association

Paul Andrew Donnelly and Laura Ann Gross of Donnelly and Gross, P.A., Gainesville, Florida, for Amicus Curiae Communications Workers of America

G. Hal Johnson, Tallahassee, Florida, for Amicus Curiae Florida Police Benevolent Association

Daniel H. Thompson and Mitchell Wayne Berger of Berger Singerman LLP, Fort Lauderdale, Florida, and Stephen Hale Cypen of Cypen & Cypen, Miami Beach, Florida, for Amicus Curiae Board of Trustees of the City of Hollywood, etc., et al.

David Clayton Miller and James Chumley Crosland of Bryant Miller Olive P.A., Miami, Florida, for Amicus Curiae The City of Hollywood, Florida

Michael Patrick Spellman, Hetal Desai McGuire, and Jeffrey Douglas Slanker of Sniffen and Spellman, P.A., Tallahassee, Florida; and Harry Morrison, Jr. and Kraig Armantrout Conn, Florida League of Cities, Inc., Tallahassee, Florida, for Amicus Curiae Florida League of Cities

John Maxwell Hament, Sarasota, Florida, for Amicus Curiae East Naples Fire Control & Rescue District

QUINCE, J.

Walter E. Headley, Jr., Miami Lodge No. 20, Fraternal Order of Police, Inc. ("the Union"), seeks review of the decision of the First District Court of Appeal in Walter E. Headley Jr., Miami Lodge No. 20, Fraternal Order of Police v. City of Miami , 118 So.3d 885, 887 (Fla. 1st DCA 2013), on the ground that it expressly and directly conflicts with the decision of the Fourth District Court of Appeal in Hollywood Fire Fighters Local 1375 v. City of Hollywood , 133 So.3d 1042 (Fla. 4th DCA 2014),¹ regarding whether an employer must demonstrate that funds are available from no other possible reasonable source before unilaterally modifying a collective bargaining agreement. We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons that follow, we approve the decision of the Fourth District and quash the decision of the First District.

FACTS

This case involves a certified bargaining agreement ("CBA") between Miami Lodge No. 20, Fraternal Order of Police (the Union), which represents officers employed by the City of Miami's police department, and the City of Miami ("the City"). The agreement covered the period of October 1, 2007, through September 30, 2010. Headley , 118 So.3d at 888. On July 28, 2010, the City declared a "financial urgency" and invoked the process set forth in section 447.4095, Florida Statutes (2010). Id. It notified the Union that it intended to implement changes regarding wages, pension benefits, and other economic terms of employment. Id. Following negotiations concerning the financial urgency, the City informed the Public Employees Relations Commission (PERC)² that a dispute remained between the parties. Headley , 118 So.3d at 888. Despite agreeing on a special magistrate, the parties did not pursue the impasse resolution process. Id.

On August 31, 2010, the City's legislative body voted to unilaterally alter the terms of the CBA in order to address the financial urgency, and adopted changes that:

[I]mposed 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.

Id. The Union then filed an unfair labor practice ("ULP") charge with PERC on September 21, 2010, arguing that the City improperly invoked section 447.4095 and unilaterally changed the CBA before completing the impasse resolution process provided for in section 447.4095. Id. at 889.

At a hearing before a PERC hearing officer, the City presented evidence of its financial situation. Id. The evidence showed that:

[T]he 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 negative equity.

Id. In response, the Union suggested 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. Id. These changes, according to the City, "would not adequately address the shortfall because they either failed to generate enough revenue to offset the deficit or they would increase the City's long term financial obligations." Id.

The hearing officer then issued an order recommending dismissal of the Union's ULP charge. Id. The hearing officer found that the statute had been properly invoked by the City and the parties were not required to proceed through the impasse procedures before implementing the changes. Id. In the final order, PERC first defined "financial urgency" as "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." Id. PERC went on to explain that a determination of financial urgency requires an examination "of the employer's complete financial picture on a case-by-case basis" and an evaluation of whether the employer acted in "good faith." Id. (quoting PERC's final order). As to good faith, PERC focused on whether "a reasonable person could reach the conclusion that ‘funding was not available to meet the employer's financial obligations to its employees.’ " Id. at 889–90 (quoting final order). The order also found that section 447.4095 did not require the City to proceed through the impasse resolution process before implementing changes to the CBA. Id. at 890. PERC interpreted the statute to require "impact bargaining," which allowed the employer to make the changes after providing notice and a reasonable opportunity to bargain. Id.

The First District affirmed PERC's final order, finding that it did not err in interpreting or applying section 447.4095. Id. at 896. Petitioner now seeks review, arguing that an employer must demonstrate that funds are available from no other possible reasonable source before unilaterally modifying a CBA and that modification can only be made after completing the impasse resolution process.

ANALYSIS

Petitioner first argues that before unilaterally modifying a CBA pursuant to the financial urgency statute, an employer must demonstrate that funds are available from no other possible reasonable source. Deciding this issue will require the interpretation of section 447.4095, Florida Statutes (2010). Issues of statutory interpretation are subject to de novo review. See, e.g. Fla. Dep't of Envtl. Prot. v. ContractPoint Fla. Parks, LLC , 986 So.2d 1260, 1264 (Fla. 2008). However, on judicial review of a PERC order, "the view of the PERC majority is ... presumptively the product of special expertise to which courts should defer." United Faculty of Fla. v. Pub. Emps. Relations Comm'n , 898 So.2d 96, 100 (Fla. 1st DCA 2005).

Thus, PERC's determination that the statute does not require the employer to demonstrate that the funds are available from no other possible reasonable source is an interpretation of chapter 447 that is entitled to deference. See Pub. Emps. Relations Comm'n v. Dade Cty. Police Benevolent Ass'n , 467 So.2d 987, 989 (Fla. 1985) ("[A] reviewing court must defer to an agency's interpretation of an operable statute as long as that interpretation is consistent with legislative intent and is supported by substantial, competent evidence."). Despite this tenet of appellate review, where an agency has erroneously interpreted a provision of the law, an agency's construction is not entitled to deference. See City of Safety Harbor v. Commc'ns Workers of Am. , 715 So.2d 265, 266 (Fla. 1st DCA 1998) (citing Pensacola Jr. College v. Public Emps. Rels. Comm'n , 400 So.2d 59 (Fla. 1st DCA 1981) ; Se. Volusia Hosp. Dist. v. Nat'l Union of Hosp. & Health Care Emps. , 429 So.2d 1232 (Fla. 5th DCA 1983) ).

The right to contract is expressly guaranteed by article 1, section 10 of the Florida Constitution. It is equally enforceable in labor contracts by operation of article 1, section 6 of the Florida Constitution. Petitioner argues that PERC's interpretation of the financial urgency statute violates the Union's right to collectively bargain under article 1, section 6 and its right to contract under article 1, section 10 because...