Kitsap Cnty. Deputy Sherrifs' Guild v. Kitsap Cnty.

• Decision Date: 11 June 2015
• Docket Number: No. 89344–6.,89344–6.
• Citation: 183 Wash.2d 358,353 P.3d 188
• Parties: KITSAP COUNTY DEPUTY SHERRIFS' GUILD, a Washington labor organization, Respondent/Cross–Appellant, v. KITSAP COUNTY, a Washington municipal corporation, Appellant, Cross–Respondent.
• Court: Washington Supreme Court

183 Wash.2d 358

353 P.3d 188

KITSAP COUNTY DEPUTY SHERRIFS' GUILD, a Washington labor organization, Respondent/Cross–Appellant

v.KITSAP COUNTY, a Washington municipal corporation, Appellant, Cross–Respondent.

No. 89344–6.

Supreme Court of Washington, En Banc.

Argued Sept. 30, 2014.

Decided June 11, 2015.

Jacquelyn Moore Aufderheide, Deborah Ann Boe, Kitsap County Prosecuting Attorney's Office, Port Orchard, WA, for Appellant/Cross–Respondent.

James Michael Cline, Cline & Associates, Seattle, WA, for Respondent/Cross–Appellant.

Timothy J. Donaldson, Walla Walla City Attorney, Walla Walla, WA, amicus counsel for Washington State Association of Municipal Attorneys.

Diane Hess Taylor, King County Sheriff's Office, Seattle, WA, amicus counsel for King County Sheriff's Office.

Opinion

FAIRHURST, J.

¶ 1 This case arose from an interest arbitration award that retroactively increased employee health care premiums for a period when there was no enforceable collective bargaining agreement (CBA). The Pierce County Superior Court struck a portion of the award that granted the retroactive increase, ruling that the award (1) was an unconstitutional taking in violation of the due process clause, (2) violated Washington's wage rebate act (WRA), chapter 49.48 RCW, and (3) was arbitrary and capricious. Kitsap County appealed this ruling and we granted direct review. We reverse, finding the arbitration award proper.

¶ 2 The Kitsap County Deputy Sheriffs' Guild (Guild) cross appeals the trial court's decision to deny the award of attorney fees and also seeks attorney fees for this appeal. We affirm the trial court's denial and also deny the Guild's request for attorney fees for this appeal.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

¶ 3 The present dispute occurred as a result of the statutory interest arbitration procedures found in the Public Employees' Collective Bargaining Act (PECBA), chapter 41.56 RCW. PECBA governs the collective bargaining negotiations between the Guild, who represents Kitsap County's deputies and sergeants, and Kitsap County (County).

¶ 4 The parties' last CBA was effective from 2008–2009. Under that CBA, deputies were not required to pay for their own health insurance premiums, but were required to pay 10 percent of their dependents' premiums. During negotiations for the 2010–2012 CBA, the County proposed a shift in premiums such that employees would have to pay 3 percent of their own premiums and 15 percent of their dependents' premiums. The Guild rejected this proposal, and the parties were unable to reach an agreement. They sought mediation services from the Public Employment Relations Commission (PERC) as required by PECBA. Mediation was unable to resolve the dispute, and the parties were declared to be at an impasse. Meanwhile, the 2008–2009 CBA expired and Kitsap County deputies have been working without a contract since the end of 2009.

¶ 5 When a public employer and its uniformed personnel are at an impasse in collective bargaining, PERC may require binding interest arbitration. RCW 41.56.450. Accordingly, the executive director of PERC certified any unresolved issues for statutory interest arbitration. Due to the lengthy negotiation and mediation process, the arbitration panel was not able to hold hearings until October 2012. The arbitration panel held a five day hearing and did not issue its award until February 2013, after the end of the 2010–2012 CBA term, which was the subject of the interest arbitration. Between the expiration of the 2008–2009 CBA and the issuance of the arbitration award, the County maintained the same level of pay and benefits provided under the 2008–2009 CBA as required by PECBA. RCW 41.56.470.

¶ 6 The arbitration award adopted the County's proposal to increase the employees' share of health care premiums such that employees were responsible for 3 percent of their own premiums and 15 percent of their dependents' premiums. The arbitration award applied these increases retroactively to the last six months of the contract period (July 2012–December 2012). To offset the cost of the retroactive increase, the award also granted an additional 0.5 percent increase in wages for the same period as the retroactive premium increase.

¶ 7 The Guild filed suit in Pierce County Superior Court, seeking to have the retroactive increase in health insurance premiums declared invalid. The court granted summary judgment in favor of the Guild, striking the retroactive increase in health care premiums but leaving the remaining award intact. The court ruled that the award amounted to an unconstitutional taking, violated the WRA, and was arbitrary and capricious. The Guild also sought attorney fees, but the court rejected this claim.

¶ 8 The County moved for reconsideration, including a request that the trial court reconsider whether it should remand the entire award to the arbitration panel rather than striking the individual provision. The trial court denied the motion. Subsequently, the County sought direct review, which we granted. The Guild also cross appealed the denial of attorney fees, and we granted review.

II. ISSUES

¶ 9 A. Does the interest arbitration award violate the due process clause of the Fifth and Fourteenth Amendments to the United States Constitution by retroactively increasing employees' health insurance premiums during a period where the parties had no effective contract?

¶ 10 B. Does the retroactive increase in employee health insurance premiums violate the WRA when there was no expectation of the same level of health benefits?

¶ 11 C. Was the interest arbitration award arbitrary and capricious?

¶ 12 D. Should the Guild be awarded attorney fees in an action challenging an interest arbitration award that has only a corollary effect on wages?

III. ANALYSIS

¶ 13 This is a case of first impression. We have never addressed whether an interest arbitration award can retroactively increase health care premiums for the period after a CBA expires but before the terms of the new CBA are decided (interim period). We hold that such increases are proper.

¶ 14 The trial court granted summary judgment in favor of the Guild. We review a summary judgment de novo, engaging in the same inquiry as the trial court. City of Sequim v. Malkasian, 157 Wash.2d 251, 261, 138 P.3d 943 (2006).

A. A retroactive increase in employee health insurance premiums does not amount to a taking under the due process clause

¶ 15 The Fifth Amendment to the United States Constitution provides that “[n]o person shall ... be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” The Fifth Amendment applies to the County through the Fourteenth Amendment. State v. Bobic, 140 Wash.2d 250, 260, 996 P.2d 610 (2000).

¶ 16 In order for the retroactive increase to constitute a taking in violation of the Fifth Amendment, the deputies must have a property interest in health care benefits. A property interest in a benefit exists if a person has a “legitimate claim of entitlement to it.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). A mere “abstract need or desire” or “a unilateral expectation” of the benefit is insufficient to create a property interest. Id.;see alsoGodfrey v. State, 84 Wash.2d 959, 963, 530 P.2d 630 (1975) (“A vested right ... must be something more than a mere expectation based upon an anticipated continuance of the existing law.” (emphasis omitted)).

¶ 17 The parties do not dispute that the 2008–2009 CBA created a property interest in the compensation package for work performed during those years. Nor do they dispute that the arbitration award could have prospectively adjusted their share of health care premiums. This issue depends on whether the deputies had a property interest to the same level of health care premiums from an expired CBA during the interim period. We hold that they did not.

1. Neither the 2008–2009 CBA nor RCW 41.56.470 created a property interest to an expired compensation package

¶ 18 The 2008–2009 CBA did not create a property interest during the interim period because “[a]n expired CBA itself is no longer a ‘legally enforceable document.’ ” Office & Prof'l Emps. Ins. Trust Fund v. Laborers Funds Admin. Office of N. Cal., Inc., 783 F.2d 919, 922 (9th Cir.1986) (quoting Cement Masons Health & Welfare Trust Fund v. Kirkwood–Bly, Inc., 520 F.Supp. 942, 945 (N.D.Cal.1981) ). Although it does not create a property interest, the expired CBA does retain some legal significance. Under PECBA, neither the County nor the Guild may unilaterally change the conditions of employment during the pendency of an arbitration proceeding. RCW 41.56.470. Thus, the terms of the expired CBA retain legal significance only because they define the status quo for purposes of the prohibition on unilateral changes. Accordingly, neither party made any unilateral changes since the expiration of the 2008–2009 CBA.

¶ 19 The Guild argues that the terms of the 2008–2009 CBA rolled over into the interim period by operation of RCW 41.56.470, creating “ ‘the floor’ ” for any new agreements. Corrected Resp't's Br. at 24. According to the Guild, the deputies had a property interest in any benefits earned once services were performed. We reject this interpretation of RCW 41.56.470.

¶ 20 The Guild relies on Navlet v. Port of Seattle, 164 Wash.2d 818, 194 P.3d 221 (2008), and Foley v. Carter, 526 F.Supp. 977 (D.D.C.1981). Navlet addressed a CBA that required the Port of Seattle to maintain the same level of health and welfare benefits to eligible retirees for life. 164 Wash.2d at 824, 194 P.3d 221. After the CBA expired, the port ceased contributions to the trust that funded these retirement benefits, causing the trust to terminate along with the benefits for eligible retirees. Id. at 823, 194 P.3d 221. We held that the retirement welfare benefits constituted a form of deferred compensation that could not be...