Iowa City Community School Dist. v. Iowa City Educ. Ass'n

• Decision Date: 21 December 1983
• Docket Number: No. 68574,68574
• Citation: 343 N.W.2d 139
• Parties: 116 L.R.R.M. (BNA) 2832, 15 Ed. Law Rep. 1248 IOWA CITY COMMUNITY SCHOOL DISTRICT, Appellant, v. IOWA CITY EDUCATION ASSOCIATION, Appellee.
• Court: Iowa Supreme Court

Page 139

343 N.W.2d 139

116 L.R.R.M. (BNA) 2832, 15 Ed. Law Rep. 1248

IOWA CITY COMMUNITY SCHOOL DISTRICT, Appellant, v. IOWA CITY EDUCATION ASSOCIATION, Appellee.

No. 68574.

Supreme Court of Iowa.

Dec. 21, 1983.

Rehearing Denied Jan. 19, 1984.

John R. Phillips and Russell L. Samson of Rogers, Phillips & Swanger, Des Moines, for appellant.

Charles E. Gribble and Gerald L. Hammond of Sayre & Gribble, Des Moines, for appellee.

Edgar H. Bittle and Elizabeth Gregg Kennedy of Ahlers, Cooney, Dorweiler, Haynie & Smith, Des Moines, for amicus curiae Iowa Ass'n of School Boards, Inc.

Considered en banc.

McCORMICK, Justice.

We granted further review of a court of appeals decision reversing a district court judgment upholding the award of an arbitrator in a teacher grievance proceeding. Plaintiff Iowa City Community School District and defendant Iowa City Education Association provided in their collective bargaining agreement for final and binding arbitration of teacher grievances. Applying the standard of judicial review adopted in Sergeant Bluff-Luton Education Association v. Sergeant Bluff-Luton Community School District, 282 N.W.2d 144, 147-48 (Iowa 1979), we find that the issue was arbitrable and that the arbitrator's decision drew its essence from the parties' contract. In addition, we reject the district's contention that enforcement of the award should be denied on public policy grounds. Therefore we vacate the decision of the court of appeals and affirm the district court.

The collective bargaining agreement for the 1979-80 school year contained grievance procedures culminating in arbitration for complaints "of an alleged violation, misinterpretation, or misapplication of ... specific provisions" of the contract. A teacher salary schedule was among the specific contract provisions. The schedule was based on years of teaching and educational achievement. Teachers were entitled to step increases upon completion of each additional year of service, "subject to the right of the district to withhold salary increases for unsatisfactory performance." An across-the-board salary increase was superimposed on the schedule in the 1980-81 contact, which otherwise contained the same relevant terms.

The present problem arose in March 1980 when the district notified Richard D. Bristol, a social studies teacher, that his 1980-81 salary would be frozen at the 1979-80 level of $19,205 because of "unsatisfactory service." The effect of the district action was to deny Bristol the benefit of the across-the-board increase that would have raised his salary to $21,236.

The association pursued grievance procedures in Bristol's behalf, resulting in a favorable arbitration decision. Besides sustaining the grievance, the arbitrator ordered the district to make retroactive payment of the salary increase. The district filed a district court petition asking that the arbitrator's order be vacated and its enforcement enjoined. The association resisted and requested enforcement. After hearing, the district court rejected the district's attack and ordered enforcement of the award. Upon appeal, the court of appeals reversed, and we granted further review.

The questions are whether the issue of unsatisfactory performance was arbitrable, whether the award drew its essence from the collective bargaining agreement, and whether enforcement should be denied on public policy grounds.

I. Arbitrability. In Sergeant Bluff-Luton this court said: "The threshold question in reviewing an arbitrator's award is to determine whether the issue in dispute is one which the parties had agreed to settle by arbitration." 282 N.W.2d at 147. The district does not challenge the arbitrability of teacher grievances under the contract. It does contend, however, that the contract does not give an arbitrator the authority to say what constitutes "unsatisfactory performance." The district asserts that the issue is reserved to management and is thus not arbitrable.

Arbitrability is a legal issue that is to be determined by interpretation and construction of the parties' contract. Hawkins/Korshoj v. State Board of Regents, 255 N.W.2d 124, 127 (Iowa 1977). Because arbitration is favored as a means of settling civil disputes without the expense and delay of litigation, arbitrability will be recognized "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." Sergeant Bluff-Luton, 282 N.W.2d at 147-48, quoting United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409, 1417-18 (1960).

In the present case, the district contends it had the exclusive right to determine what constitutes "unsatisfactory performance." The district argues this result is dictated by this court's decisions giving a narrow interpretation to the list of mandatory bargaining topics in Iowa Code section 20.9 (1983). See, e.g., Charles City Community School District v. PERB, 275 N.W.2d 766, 773 (Iowa 1979). This argument overlooks the concomitant favorable legislative view of arbitration as a means of resolving grievances noted by this court in Sergeant Bluff-Luton. See 282 N.W.2d at 147. Moreover, the restrictive interpretation of mandatory bargaining topics does not inhibit voluntary bargaining and agreement on permissive topics.

The district's reliance on the statutory delineation of employer rights in Code section 20.7 is similarly misplaced. This court recognized the right of parties to agree on submission of teacher termination issues to arbitration in Shenandoah Education Association v. Shenandoah Community School District, 337 N.W.2d 477, 480-81 (Iowa 1983). No difference in principle exists in the present situation.

Finally, nothing in the contract provides a positive assurance that the dispute is not arbitrable. The district's right to withhold a salary increase depends on the teacher's "unsatisfactory performance." The contract does not define the term. Arbitrable grievances include any complaint of "alleged ... misinterpretation, or misapplication of ... specific provisions" of the agreement. Bristol's grievance was based on a complaint that the district misinterpreted and misapplied the salary freeze provision. The contract contains no express limitation on arbitrability of the issue. This is so despite an express contractual provision limiting arbitrability of other issues including just cause for termination. The absence of an express exclusion supports finding exclusion was not intended. See Carey v. General Electric Co., 315 F.2d 499, 506 (2d Cir.1963), cert. denied, 377 U.S. 908, 84 S.Ct. 1162, 12 L.Ed.2d 179 (1964).

The district alleges an express prohibition is manifested in a contract provision that the arbitrator "shall not amend, modify, nullify, ignore, or add to the provisions of the Agreement." This provision mirrors the statutory provision in Code section 20.18. The statutory provision also states: "Negotiated procedures may provide for binding arbitration of public employee grievances and of disputes over the interpretation and application of existing agreements." We have consistently recognized the distinction between ascertaining the proper legal meaning of an agreement and changing its legal meaning. See generally Hamilton v. Wosepka, 261 Iowa 299, 154 N.W.2d 164 (1967). The present grievance required the arbitrator to interpret and apply the agreement, but it did not require a change or addition to it. Arbitrability is not precluded in these circumstances. See West Jefferson Hills School District v. Jefferson Federation of Teachers, 61 Pa.Commw. 374, 378, 433 A.2d 643, 645 (1981); Civil Service Employees Association v. Lombard, 50 A.D.2d 708, 709, 374 N.Y.S.2d 894, 896-97 (1975).

We hold that the collective bargaining agreement made the issue of unsatisfactory teacher performance arbitrable. This includes authority of the arbitrator, pursuant to Code section 20.18, to interpret and apply the relevant contract provision.

II. Authority for the award. In Sergeant Bluff-Luton, this court said: "Once arbitrability of [an] issue is established, the sole question ... is whether the arbitrator's award 'drew its essence' from the collective bargaining agreement." 282 N.W.2d at 148. The district seeks to upset the arbitrator's award on the ground it did not "draw its essence" from the agreement.

We relied on relevant federal authority in adopting a narrow scope of judicial review of arbitration decisions in Sergeant Bluff-Luton: "It is not the function of the court to determine whether the arbitrator has resolved the grievance correctly." 282 N.W.2d at 148. This court also said:

The "essence" of a collective bargaining agreement is an extremely broad concept. It requires a casting aside of traditional views of contract law in favor of a multitude of other considerations, including not only the written and unwritten agreements, themselves, but also the practices of the parties or the industry in general.

Id. at 150. The court quoted with approval the following from Warrior & Gulf Navigation Co., 363 U.S. at 581-82, 80 S.Ct. at 1352, 4 L.Ed.2d at 1417:

The labor arbitrator's source of law is not confined to the express provisions of the contract, as the industrial common law--the practices of the industry and the shop--is equally a part of the collective bargaining agreement although not expressed in it. The labor arbitrator is usually chosen because of the parties' confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment.

282 N.W.2d at 150. This court added:

The essence of the agreement even draws upon other vaguely defined concepts of the particular industry having their roots in considerations of fairness, reasonableness and...