Macomb Cnty. v. Afscme Council 25 Locals 411
| Decision Date | 12 June 2013 |
| Docket Number | (Calendar No. 2).,Docket No. 144303. |
| Citation | 833 N.W.2d 225,494 Mich. 65 |
| Parties | MACOMB COUNTY v. AFSCME COUNCIL 25 Locals 411 and 893. |
| Court | Michigan Supreme Court |
494 Mich. 65
833 N.W.2d 225
MACOMB COUNTY
v.
AFSCME COUNCIL 25 Locals 411 and 893.
Docket No. 144303.
(Calendar No. 2).
Supreme Court of Michigan.
Argued March 5, 2013.
Decided June 12, 2013.
[833 N.W.2d 228]
McConaghy & Nyovich, LLC (by Timothy K. McConaghy, Birmingham), for Macomb County, Macomb County Road Commission, and the 16th Judicial Circuit Court.
Miller Cohen PLC, Detroit (by Bruce A. Miller, Richard G. Mack, and Ada Verloren), and Ava Barbour, Detroit, for AFSCME Council 25 Locals 411 and 893 and International Union UAW Locals 412 and 889.
Anita Szczepanski, Okemos, for Michigan Nurses Association.
Plunkett Cooney, Bloomfield Hills (by Mary Massaron Ross), amici curiae, for the Michigan Municipal League, Michigan Township Association, Michigan Association of Counties and the State Bar Public Corporation Law Section.
YOUNG, C.J.
[494 Mich. 70]The public employment relations act (PERA) 1 requires public employers to
[833 N.W.2d 229]
bargain with their employees' designated representatives concerning the “terms and conditions of employment,” including the calculation of retirement benefits. Failure to do so constitutes an unfair labor practice. The unfair labor practice complaints at issue in this case arise out of the Macomb County Retirement Commission's decision to change the actuarial table used to calculate joint and survivor retirement benefits for employees retiring after July 1, 2007. We hold that the respondents did not commit an unfair labor practice when they refused to bargain with the charging parties over this decision and that the remedy for this dispute lies in the grievance and arbitration system these parties have created.
If a collective bargaining agreement covers the term or condition of employment in dispute, “the details and enforceability of the provision are left to arbitration.” 2 The unfair labor practice complaints in this case concern subject matters covered by the collective bargaining agreements. Thus, the grievance process contemplated in the collective bargaining agreements is the appropriate avenue to challenge respondents' actions. The collective bargaining agreements grant the retirement commission discretion to establish actuarial [494 Mich. 71]tables to calculate joint and survivor benefits. The retirement commission's 24–year practice of using the same actuarial table to calculate those benefits does not, on its own, constitute the clear and unmistakable evidence necessary to overcome the collective bargaining agreements' coverage of the matter and create a new term or condition of employment. As a result, none of the unfair labor practice charges can be sustained. We reverse the decision of the Court of Appeals and remand this case to the Michigan Employment Relations Commission for dismissal of the unfair labor practice complaints.
The Macomb County Board of Commissioners enacted the retirement ordinance and established the Macomb County Employees Retirement System to “provid[e] pension and retirement benefits for the employees of the County of Macomb....” 3 The ordinance vests the seven-member Macomb County Retirement Commission with “the general administration, management and responsibility for the proper operation of the Retirement System, and for construing and making effective the provisions of [the] Ordinance.” 4
The retirement ordinance grants a retiring county employee the option of receiving a monthly retirement allowance payable only until the employee's death, or receiving a reduced allowance during the retiree's life, the payment of which continues after this death and through the life of a named beneficiary.5 If the retiree [494 Mich. 72]chooses to allow a surviving beneficiary to receive payments in addition to his or her own “straight life benefit,” the monthly “joint and survivor” payment is reduced to ensure that it is “the actuarial equivalent ... of [the employee's] straight life retirement
[833 N.W.2d 230]
allowance....” 6 The retirement ordinance does not define the term “actuarial equivalent.”
This case focuses on the method that the retirement system uses to calculate the joint and survivor benefit as compared to the straight life benefit. Until 1982, the county used gender-based actuarial tables to calculate the joint and survivor benefit. However that year, in response to a United States Supreme Court decision 7 and a Michigan Attorney General opinion,8 the commission concluded that it could not continue to use gender-based actuarial tables. It sought the advice of its actuary, Gabriel, Roder, Smith & Company (GRS), in selecting a single, gender-neutral actuarial table to calculate the joint and survivor payment without regard to either the employee's or the beneficiary's gender. GRS outlined several alternative approaches and noted that the only approach “designed to make sure that no participant will receive a lesser benefit than under [existing] procedures,” would be to adopt the female actuarial table for all retirees. Ultimately, the retirement commission chose to adopt the female actuarial table for all retirees.
For 24 years, the retirement system applied the female actuarial table when calculating its retirees' [494 Mich. 73]monthly joint and survivor payments. However, GRS studied the retirement system over a five-year period (2001–2005) and concluded that the joint and survivor benefit was “more valuable than the single life annuity form of payment.” To ensure that the optional joint and survivor payment would “have the same present value, on average, as the straight life normal form of payment,” GRS proposed a different actuarial table for the commission to adopt. GRS determined that a blended table that assumed 60% male retirees and 40% female retirees would best approximate benefits that are equal in value among all the options. At its November 17, 2006 meeting, the commission voted 4–3 to adopt this 60% male actuarial table, to take effect for all employees who retire on or after July 1, 2007.9
The charging parties demanded collective bargaining over the change. 10 Respondents rejected this demand and claimed that the existing collective bargaining agreements gave the commission discretion to adopt new actuarial tables.11
[833 N.W.2d 231]
The charging parties then filed unfair labor practice complaints with the Michigan Employment Relations Commission (MERC).
[494 Mich. 74]After conducting a three-day hearing, the hearing referee recommended that the MERC dismiss the unfair labor practice charges. She determined that a retirement plan's actuarial assumptions are mandatory subjects of bargaining under the PERA. However, because the underlying collective bargaining agreements “contain extensive provisions ‘covering’ pension benefits,” and because “the parties were satisfied, and agreed, to have these benefits calculated as provided in the ordinance,” she concluded that the respondents had already fulfilled their statutory duty to bargain over the retirement system's actuarial assumptions. While “the meaning of the term ‘actuarial equivalent’ in the ordinance involved bona fide questions of contract interpretation,” those questions “are properly subject to resolution through the grievance arbitration procedures set out in the parties' contracts,” not in litigation over unfair labor practices.
The charging parties filed exceptions to the hearing referee's proposed decision.12 The MERC agreed with [494 Mich. 75]the charging parties and rejected the referee's decision and recommended order. It concluded that “[t]he actuarial assumptions at issue here were never memorialized in the Retirement Ordinance or any of the collective bargaining agreements referencing the Retirement Ordinance.” Although the ordinance did not define the actuarially equivalent benefits promised to retirees and their beneficiaries, the term's meaning “has been subordinated to the question of whether the parties have amended their agreements by the longstanding practice of calculating optional pension benefits that are not the actuarial equivalent of straight life benefits....” On this question, the MERC determined that the parties “tacitly agreed that joint and survivor benefits would continue to be calculated as they had [been] in the past.” As a result, the MERC concluded that respondents' unilateral change violated the duty to bargain and that respondents must revert to the female actuarial table.13
[833 N.W.2d 232]
The Court of Appeals affirmed the MERC's decision in a split opinion. 14 The majority agreed with the MERC that actuarial assumptions are mandatory subjects of [494 Mich. 76]bargaining, that “the term ‘actuarial equivalence’ as used in this case did not unambiguously mean ‘equal in value,’ ” 15 and that the parties' past practice of using the female actuarial table “constituted a ‘tacit agreement’ ” to continue using it absent collective bargaining.16 The majority further concluded that the continuous use of the female actuarial table “was ‘so widely acknowledged and mutually accepted that it created an amendment to the contract,’ ” even if the County's definition of “actuarial equivalence” unambiguously intended to establish options that were equal in value.17
The dissenting judge would have reversed the MERC's decision and would have adopted the hearing referee's recommended order. The dissenting judge believed that the term “actuarial equivalent” is unambiguous and required “optional retirement benefits [to] be equivalent or equal in value on the basis of actuarial assumptions.” 18 Because it “results in the optional benefits being more valuable than the straight-life benefit,” 19 the dissent opined that using the female actuarial table for all employees was inconsistent with the ordinance. The dissent further reasoned that by agreeing to incorporate the ordinance into their collective bargaining agreements, the employees' “retirement benefits and the methods used to calculate...
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