Local Div. 732, Amalgamated Transit Union v. Metropolitan Atlanta Rapid Transit Authority

• Decision Date: 05 September 1984
• Docket Number: No. 39674,39674
• Citation: 320 S.E.2d 742,253 Ga. 219
• Parties: , 120 L.R.R.M. (BNA) 2615 LOCAL DIVISION 732, AMALGAMATED TRANSIT UNION et al. v. METROPOLITAN ATLANTA RAPID TRANSIT AUTHORITY.
• Court: Georgia Supreme Court

Page 742

320 S.E.2d 742

253 Ga. 219, 120 L.R.R.M. (BNA) 2615

LOCAL DIVISION 732, AMALGAMATED TRANSIT UNION et al. v. METROPOLITAN ATLANTA RAPID TRANSIT AUTHORITY.

No. 39674.

Supreme Court of Georgia.

Sept. 5, 1984.

Linda R. Hirshman, Jacobs, Burns, Sugarman & Orlove, Chicago, Ill., Harris Jacobs, Robert S. Clayman, Atlanta, Adair & Goldthwaite, Donald R. Livingston, for Local Division 732, Amalgamated Transit Union et al.

Terrence Lee Croft, W. Stell Huie, Kutak, Rock & Huie, Atlanta, John Caraway, New Orleans, Lawrence L. Thompson, C. Wilson Dubose, La., for Metropolitan Atlanta Rapid Transit Authority.

MARSHALL, Presiding Justice.

The United States Supreme Court, 465 U.S. 1016, 104 S.Ct. 1263, 79 L.Ed.2d 670, has granted certiorari in Local Division 732, Amalgamated Transit Union v. MARTA, 251 Ga. 15, 303 S.E.2d 1 (1983) (referred to hereinafter as Union v. MARTA ). Our judgment has been vacated, and the case has been remanded to us for reconsideration in light of the Supreme Court's subsequent decision in Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984).

1. In Div. 1 of Union v. MARTA, we addressed the question of whether the revocability of MARTA's consent to arbitrate additions to its 1977 collective-bargaining agreement with the union is governed by state law or federal law, i.e., the Federal Arbitration Act (FAA).

As noted in Union v. MARTA, the collective-bargaining agreement was to continue in force from year to year unless, within certain specified time limits, either party notified the other of its decision to terminate the agreement or to negotiate modifications or additions thereto.

As further noted in Union v. MARTA, MARTA entered into an agreement with the union to submit to arbitration "'any labor dispute or controversy regarding the application, interpretation, or enforcement of any of the provisions"' of the collective-bargaining agreement. 251 Ga., supra, at p. 17, 303 S.E.2d 1. This arbitration clause was part of a labor-protective arrangement entered into between MARTA and the union under the auspices of § 13(c) of the Urban Mass Transportation Act (UMTA). It is, therefore, referred to as a § 13(c) agreement.

In 1981, MARTA notified the union of its desire to negotiate a new collective-bargaining agreement. After negotiations broke down, the union invoked the arbitration clause.

In Union v. MARTA, we concluded that in Local Div. 732, Amalgamated Transit Union v. MARTA, 667 F.2d 1327 (11th Cir.1982), and Jackson Transit Auth. v. Local Div. 1285, Amalgamated Transit Union, 457 U.S. 15, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982), it has been held that Congress intended § 13(c) agreements to be governed by state law to be applied in state courts. We therefore held that the questions concerning the revocability of the arbitration clause in the § 13(c) agreement were governed by state law, and that the state law, as applied to the facts here, allowed MARTA to withdraw its consent to arbitrate before the award.

2. The union applied for certiorari from our decision to the United States Supreme Court. As previously stated, the Supreme Court granted certiorari and remanded the case for reconsideration in light of Southland Corp. v. Keating, supra.

In Southland Corp. v. Keating, supra, the California Supreme Court had interpreted California's Franchise Investment Law as requiring judicial consideration of claims brought under that statute, thereby rendering unenforceable arbitration clauses contained in such franchise agreements. However, the United States Supreme Court reversed. The Court held that, as interpreted by the California Supreme Court, the California statute conflicted with § 2 of the FAA, since the arbitration clauses under review were within its coverage. Section 2 of the FAA provides, "A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (1976).

In Southland Corp. v. Keating, the Supreme Court held that the FAA creates a body of federal substantive law applicable in state and federal courts. Accord Hilton Constr. Co. v. Martin &c. Contractors., 251 Ga. 701, 308 S.E.2d 830 (1983) and cits. In so holding, the Court noted, "We discern only two limitations on the enforceability of arbitration provisions governed by the Federal Arbitration Act: they must be part of a written maritime contract or a contract 'evidencing a transaction involving commerce' and such clauses may be revoked upon 'grounds as exist at law or in equity for the revocation of any contract.' We see nothing in the Act indicating that the broad principle of enforceability is subject to any additional limitations under State law." 465 U.S. p. ----, 104 S.Ct. p. 858 (Footnote omitted.). However, this "broad principle of enforceability" is subject to additional limitations under federal law. See Div. 3(c), infra.

3. Reconsidering this case in light of Southland Corp. v. Keating, we conclude that, for the three reasons which follow, the arbitration clause at issue here is not enforceable under the FAA.

(a) First, it would appear to us that this arbitration clause is revocable upon "grounds as exist at law or in equity for the revocation of any contract."

Prior to the Supreme Court's grant of the union's application for certiorari in this case, MARTA had argued that it lacked the authority to submit to arbitration the terms and conditions of a new collective-bargaining agreement with the union. Because of our conclusion that MARTA had validly withdrawn its consent to arbitrate, we found it unnecessary to decide whether it lacked the authority to give that consent in the first instance. Upon reconsideration, we conclude that it did lack such authority.

As pointed out in Union v. MARTA, prior to 1982 MARTA had not been given any express statutory authority to submit disputes with the union to arbitration.

"It was § 20(b) of the MARTA Act of 1965 (Ga.L.1965, pp. 2243, 2273), which authorized the Board of Directors of MARTA to bargain with MARTA employees 'through such agents in the same manner and to the same extent as if they were the employees of any privately-owned transportation system.' This created an exception for MARTA, because under Georgia law local governmental entities generally are not permitted to bargain collectively with employee representatives. See Intl. Longshoremen's Assn. v. Ga. Ports Auth., 217 Ga. 712(1b), 124 S.E.2d 733 (1962).

"However, the 1982 Session of the Georgia General Assembly passed an Act which, among other things, amended the 1965 MARTA Act by striking § 20(b) and replacing it with § 20(b)(1) through (b)(8). Ga.L.1982, pp. 5101, 5104, § 3. Section 20(b)(2) of the 1982 Act distinguishes between 'interest arbitration' ('arbitration which determines or formulates the terms and conditions of a labor agreement between the Authority and the authorized representative, including the formulation of contract provisions governing wages, hours, and working conditions.') and 'grievance arbitration' ('arbitration of a dispute between the Authority and the authorized representative acting on behalf of an employee which involves the application or interpretation of the terms and conditions of an existing labor agreement.'). Subsection (b)(2) requires MARTA to submit labor disputes to binding grievance arbitration; and labor disputes which involve the formulation of contract provisions other than wages, and which cannot be settled by collective bargaining or fact-finding under subsection (b)(5), shall be submitted to binding interest arbitration. Subsection (b)(2) further provides that '[a]ny labor dispute involving the formulation of contract provisions governing wages may, with the consent of both parties, be submitted to binding interest arbitration.' Subsections (b)(2)(A) through (G) specify certain inherent rights of MARTA management which cannot be diluted, diminished, or impaired by an arbitration award or labor agreement. Subsection (b)(3) requires any neutral arbitrator appointed or selected to decide any interest arbitration to be a resident of either Fulton or DeKalb County. Subsections (b)(4)(A) through (F) require the arbitrator in interest arbitration proceedings to give weight primarily to certain factors, e.g., financial ability of MARTA to pay wages, the amount of any fare increase which would be necessary to afford a wage or salary increase, a comparison of wages, hours, working conditions, etc., between MARTA employees and other workers in the public and private sectors of the metropolitan area who perform similar work. The 1982 Act became effective upon being signed by the Governor, which occurred on April 20, 1982." 251 Ga., supra, at p. 17, n. 1, 303 S.E.2d 1.

Our analysis of both Georgia law and the law of other states leads us to conclude that, without this express statutory authority, which did not exist in 1977 when the collective-bargaining agreement at issue was entered into or in February 1982 when MARTA revoked its consent to arbitration, MARTA's consent to arbitrate the terms and conditions of a new collective-bargaining agreement was an unlawful delegation of legislative authority. ¹

It has been said to be a "well-established general rule that counties and municipal corporations can exercise only such powers as are conferred on them by law, and a grant of power to such corporations must be strictly construed; and such a corporation can exercise no powers except such as are expressly given or are necessarily implied from express grant of other powers,...