Providence Sch. Bd. v. Providence Teachers Union

• Decision Date: 19 June 2013
• Docket Number: No. 2012–147–Appeal.,2012–147–Appeal.
• Citation: 68 A.3d 505
• Parties: PROVIDENCE SCHOOL BOARD v. PROVIDENCE TEACHERS UNION, LOCAL 958, AFT, AFL–CIO.
• Court: Rhode Island Supreme Court

68 A.3d 505

PROVIDENCE SCHOOL BOARD

v.PROVIDENCE TEACHERS UNION, LOCAL 958, AFT, AFL–CIO.

No. 2012–147–Appeal.

Supreme Court of Rhode Island.

June 19, 2013.

Jeffrey W. Kasle, Esq., for Plaintiff.

John J. DeSimone, Esq., for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice Goldberg, for the Court.

This case came before the Supreme Court on April 9, 2013, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not summarily be decided. The Providence Teachers Union, Local 958, AFT, AFL–CIO (union), appeals from a Superior Court order granting the motion of the Providence School Board (board), to vacate an arbitration award. The union contends that the trial justice erroneously concluded (1) that it did not have standing to pursue a grievance concerning the board's change in the calculation of group premium rates for retired teachers (retirees) in the school department's health insurance plan (plan) and (2) that the issue of the calculation of group premium rates was not arbitrable. After carefully considering the written and oral submissions of the parties, we are satisfied that cause has not been shown and that the appeal may be decided at this time. We affirm the order of the Superior Court.

Facts and Travel

The facts of this case are undisputed. The board provides health insurance to both active employees and retirees. Since 1989, in order to calculate the premium costs for the plan, underwriters developed working rates; these working rates were calculated by combining all active employees and retirees into a single group. In September 2004, active teachers and retirees began contributing to health insurance costs under the plan; and, for almost two years thereafter, any increase in premium costs was applied equally to active employees and retirees.

The landscape changed in the summer of 2006, however, when the underwriters separated active employees and retirees into two groups for purposes of calculating the working rates. This change in formula impacted the degree to which premium costs increased for each group; the premiums for active employees increased by approximately 10 percent, while retirees saw an increase of approximately 55 percent. By letter dated June 29, 2006, School Department Controller Michael D'Antuono (Controller D'Antuono) explained to the retirees the rationale for the change in premium-cost calculations, a move that was postponed until August 20, 2006:

“[V]arious groups (i.e. active * * * school * * * employees) were required to contribute much more to the system than they actually consumed in claims. Also, the City [of Providence] learned that the retiree group did not contribute nearly as much into the system as they exhausted in claims. Due to the fact that retirees use the system at a much higher rate than others [ sic ] groups there must, inevitably, be an increase in the healthcare contribution of retirees.”

In response, the union filed a grievance on September 25, 2006, protesting the difference in the increase of premium costs for retirees compared with the more modest increase in premium costs for active employees.¹ The union contended that the board's action violated three provisions of the collective-bargaining agreement (CBA) between the board and the union: Appendix C (relating to medical coverage); Article 19 (concerning past practice); and Article 17–6 (barring, inter alia, age discrimination). The dispute was submitted to arbitration.²

Before the arbitrator, the board, relying on our decision in Arena v. City of Providence, 919 A.2d 379 (R.I.2007), argued that the union had no standing to represent the retirees because they were not parties to the CBA or members of the bargaining unit. Additionally, the board contended that, because no provision of the contract restricts how the board may calculate insurance rates, the issue of calculation of group premium rates was not arbitrable. The union countered that it did have standing to enforce provisions negotiated when the retirees were still active employees. The union further argued that the issue of calculation of insurance rates was arbitrable and, further, that the clear language of the contract provided that retirees would receive the same coverage that they had when they were active employees.

The arbitrator ruled in the union's favor. First, he determined that the union had standing to pursue the grievance. The arbitrator pointed to a previous arbitration award between the board and union in 1995, in which the union sought to pursue a grievance challenging the board's decision to curtail certain insurance benefits for retirees when they attained a certain age; the board challenged the union's standing to pursue a grievance regarding retiree benefits, and the earlier arbitrator concluded that the union had standing. The arbitrator in the current case also found our decision in Arena distinguishable because it involved a situation “where the employer sought to prospectively change benefits for people who had already retired[,]” whereas this case involved the union's standing to “arbitrate to enforce a provision negotiated on behalf of people who were then active employees, but who have since retired.”

On the merits, the arbitrator determined that the board violated the medical-coverage and past-practice provisions of the CBA by failing to include retirees and active employees in a single group when it calculated the healthcare premium rates. He found the provisions of the CBA relating to health insurance coverage for retirees to be ambiguous. Confronted with this ambiguity, the arbitrator turned to past practice to discern the parties' mutual intent. He concluded that the union had sustained its burden of proving the existence of a past practice with respect to the meaning and applicability of the phrase “the Providence School Department's group premium rate,” which was left undefined in the CBA. Specifically, the arbitrator found as follows:

“Since 1989, the [b]oard developed working rates for all of the various insurance plans and coverages using a unified group composed of all School Department employees. Never before June[ ] 2006 did the [b]oard assert that there could be separate group premium rates for active employees and for retirees and their spouses. Up until June[ ] 2006, there was never any suggestion that ‘the Providence School Department's group premium rate’ meant anything other than the rate developed for the group composed of all active and retired participants in the insurance plans.”

The arbitrator determined that this past practice bound the board to calculate the group premium rate using a single group of active employees and retirees. The arbitrator ordered the board to “recalculate the premiums * * * using the unified group and make whole the retirees and spouses for any extra premium charges.”

Pursuant to G.L.1956 § 28–9–18(a), the board moved to vacate the arbitration award in the Superior Court, where it reiterated its positions that the union had no standing to pursue this grievance and that the issue of calculation of the group premium rate was not arbitrable. In opposition to the board's motion, the union similarly repeated the arguments it had made during arbitration.

The trial justice vacated the arbitration award. In so doing, he first concluded that our decision in Arena compelled the conclusion that the union did not have standing to pursue a grievance on behalf of retirees. The trial justice determined that the arbitrator had exceeded his powers by concluding to the contrary. The trial justice next identified an alternative basis for vacating the arbitration award: Because the CBA was silent on how the group premium rate was to be calculated, the trial justice declared that the issue of the calculation of that rate was not arbitrable. The union appealed.

Standard of Review

“It is well settled that, in the typical case, the judiciary's role in the arbitration process is limited.” Drago Custom Interiors, LLC v. Carlisle Building Systems, Inc., 57 A.3d 668, 670 (R.I.2012); see also Metropolitan Property and Casualty Insurance Co. v. Barry, 892 A.2d 915, 918 (R.I.2006). When, as here, an arbitration provision is contained “in a written contract between an employer and an association of employees, a labor union, trade union, or craft union, * * * the provisions of [chapter 9 of title 28]” govern judicial review. Section 28–9–1. Specifically, upon timely application for an order confirming an arbitration award, “the court must grant the order unless the award is vacated, modified, or corrected as prescribed in §§ 28–9–18 and 28–9–19, or unless the award is unenforceable under the provisions of § 28–9–13.” Section 28–9–17.

Section 28–9–18(a) sets forth the limited circumstances in which an arbitration award must be vacated:

“(a) In any of the following cases the court must make an order vacating the award, upon the application of any party to the controversy which was arbitrated:

“(1) When the award was procured by fraud.

“(2) Where the arbitrator or arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final, and definite award upon the subject matter submitted was not made.

“(3) If there was no valid submission or contract, and the objection has been raised under the conditions set forth in § 28–9–13.” ³

However, “[t]he issue of whether a dispute is arbitrable is a question of law that this Court reviews de novo.” State Department of Corrections v. Rhode Island Brotherhood of Correctional Officers, 866 A.2d 1241, 1247 (R.I.2005) ( RIBCO ); see also State (Department of Administration) v. Rhode Island Council 94, A.F.S.C.M.E., AFL–CIO, Local 2409, 925 A.2d 939, 944 (R.I.2007)( Local 2409 ).

Analysis

We first address whether the union had standing to pursue this grievance. “[A]rbitration is a matter of contract and a party cannot be required...