Schaber v. Ramsey Cnty.

• Decision Date: 23 May 2022
• Docket Number: A21-1453
• Parties: Allison Schaber, Respondent, v. Ramsey County, Appellant, Minnesota State Retirement System, et al., Defendants.
• Court: Court of Appeals of Minnesota

Allison Schaber, Respondent, v. Ramsey County, Appellant, Minnesota State Retirement System, et al., Defendants.

No. A21-1453

Court of Appeals of Minnesota

May 23, 2022

This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).

Ramsey County District Court File No. 62-CV-21-1228

Rebekah L. Bailey, Anna Prakash, Melanie A. Johnson, Charles O'Meara, Nichols Kaster, P.L.L.P., Minneapolis, Minnesota (for respondent)

Michelle E. Weinberg, Michelle A. Christy, Kennedy &amp Graven, Chtd., Minneapolis, Minnesota (for appellant)

Keith Ellison, Attorney General, Jennifer A. Kitchak, Kristine Nogosek, Assistant Attorneys General, St. Paul, Minnesota (for defendants Minnesota State Retirement System, et al.)

Considered and decided by Reyes, Presiding Judge; Johnson, Judge; and Cochran, Judge.

REYES JUDGE

Appellant-county appeals the district court's denial of its motion to dismiss respondent-employee's claims, arguing that the district court lacks subject-matter jurisdiction because the claims are subject to an agreement to arbitrate under a collective bargaining agreement. We reverse.

FACTS

Respondent Alison Schaber has worked for appellant Ramsey County (the county) since 2012. As part of her employment with the county, Schaber participated in the Minnesota Deferred Compensation Plan (the plan). The plan allows employees to save for retirement through deferred compensation. Employers may choose to match employees' deferred-compensation contributions to the plan.

Schaber is a member and president of the Ramsey County Deputy Federation (the union), a union representing certain Ramsey County employees. Schaber is subject to a collective bargaining agreement (the CBA) entered into between the county and the Law Enforcement Labor Services union on January 1, 2018.^[1] Article 25.10 of the CBA states that the county will provide a matching contribution to the employee's deferred compensation of up to $25 per month per contributing employee. The CBA also requires employee grievances to be resolved through a four-step procedure. Step 4 of the grievance procedure requires the grievance to be submitted to arbitration.

The county did not send the employer-match portion of Schaber's deferred-compensation funds to her deferred-compensation account. Instead, it remitted the "matching" funds directly to Schaber through her paycheck.

In May 2020, Schaber initiated a grievance under the CBA, alleging that the county violated article 25.10 of the CBA because the county failed to remit the matching funds directly to her deferred-compensation account. She went through the first three steps of the grievance process. At step 3, the county met with Schaber and union representatives to discuss the grievance. The union argued that the CBA's deferred-compensation-match provision is misleading because the county's matching contribution is made directly to the employee rather than the deferred-compensation account, resulting in a shortage of contribution to the account. On May 22, 2020, the county denied the union's step-3 grievance in a letter determining that it had not violated the CBA.

Nearly a year later, Schaber filed a putative class-action^[2] complaint against the county, alleging that the county breached its fiduciary duties and breached the unilateral contract created by its online summary of employment policies (the policies) by failing to remit its employer-match contribution to employees' deferred-compensation accounts.^[3] The policies state that full-time employees "are eligible to earn benefits." One of the listed benefits is "[d]eferred compensation." The policies further state that "[m]ost Ramsey County employees are eligible for an employer match." (Emphasis added.) However, the policies direct union employees, such as Schaber, to "check their bargaining agreement for information on the employer match." Schaber's complaint does not explicitly allege a breach of the CBA.

The county believed Schaber's original grievance was still open when Schaber filed the complaint. But Schaber confirmed in June 2021 that she considered the grievance process closed. Schaber and the union never attempted to move the grievance to step-4 arbitration.

The county moved to dismiss Schaber's claims, arguing that the district court lacks subject-matter jurisdiction because Schaber's claims are subject to the CBA's arbitration agreement. In the alternative, the county moved to dismiss for failure to state a claim, arguing that it does not have a fiduciary relationship with Schaber and that Schaber has not pleaded any policies with sufficiently definite terms to create a unilateral contract.

The district court denied the county's motions. It determined that, because Schaber's "causes of action are independent of-and liability can be determined without reference to-the CBA," Schaber's claims fall outside of the scope of the CBA's grievance procedure. It also determined that Schaber pleaded sufficient facts to proceed on her claims for breach of fiduciary duty and breach of a unilateral contract. This appeal follows.

DECISION

I. Schaber's motion to strike is granted.

Schaber moved this court to strike all references in the county's brief to a September 14, 2021 email exchange between Schaber and the county, arguing that the email is outside of the record. We agree.

The appellate record consists only of documents filed in the district court, offered exhibits, and transcripts of the proceedings. Minn. R. Civ. App. P. 110.01. "An appellate court may not base its decision on matters outside the record on appeal, and may not consider matters not produced and received in evidence below." Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988). We will strike references in a party's brief to matters outside of the appellate record. See Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn.App. 1992), aff'd, 504 N.W.2d 758 (Minn. 1993). Motions to reconsider are prohibited except by permission of the district court. Minn. R. Gen. Prac. 115.11. A party may not use a motion for reconsideration to supplement the record on appeal. Am. Bank of St. Paul v. Coating Specialties, Inc., 787 N.W.2d 202, 206 (Minn.App. 2010).

The county submitted the September 14 email exchange to the district court to support its request for leave to file a motion for reconsideration. The district court did not respond to that request or grant permission to file the motion. Accordingly, the email attached to the request has not been properly received by the district court, and it is not part of the appellate record. We therefore strike any reference in the parties' briefs to the September 14 email and do not consider it in deciding the merits of this appeal.

II. Standard of review

The county argues that the district court lacks subject-matter jurisdiction because Schaber's claims must go through the CBA's grievance procedure, including arbitration.

"Subject-matter jurisdiction is a question of law that [appellate courts] review de novo." Daniel v. City of Minneapolis, 923 N.W.2d 637, 644 (Minn. 2019). Subject-matter jurisdiction involves "a court's authority to hear and determine a particular class of actions and the particular questions presented to the court for its decision." Zweber v. Credit River Township, 882 N.W.2d 605, 607 (Minn. 2016) (quotation omitted). When a plaintiff brings a putative class action, we evaluate whether the district court has jurisdiction over the named plaintiff's claims without regard to the court's jurisdiction over other potential class members. See Ward v. Smaby, 405 N.W.2d 254, 261-62 (Minn.App. 1987) (affirming district court's refusal to certify class action when named plaintiffs' claims were moot); Pruell v. Caritas Christi, 645 F.3d 81, 84 (1st Cir. 2011) (noting that when district court lacks jurisdiction over claim of class representative, it has no jurisdiction over class action). Courts will dismiss a case for lack of subject-matter jurisdiction when a plaintiff-employee fails to exhaust a grievance-procedure remedy provided under a collective bargaining agreement. See Edina Educ. Ass'n v. Bd. of Educ. of Indep. Sch. Dist. No. 273, 562 N.W.2d 306, 310 (Minn.App. 1997), rev. denied (Minn. June 11, 1997).

III. Under Minn. Stat. § 572B.06(b) (2020), the district court had authority to determine whether Schaber's claims fall within the scope of the CBA's arbitration agreement.

The county argues that, under Minn. Stat. § 572.06(b), the initial determination of whether Schaber's claims fall within the scope of the CBA's arbitration agreement must be made by an arbitrator, not the district court. We disagree.

Under section 572B.06(b), "The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, except in the case of a grievance arising under a collective bargaining agreement when an arbitrator shall decide." (Emphasis added.) The county argues that, when there is a question of whether a dispute falls within the scope of a collective bargaining agreement's arbitration provision, section 572B.06(b)'s grievance exception requires an arbitrator, not the district court, to decide the initial question of arbitrability. Schaber argues that the grievance exception does not apply here because her claims were not brought as a grievance and do not arise under the CBA.

The parties' arguments require us to interpret and apply section 572B.06(b). "The interpretation of a statute is a question of law that we review de novo." Cocchiarella v. Driggs, 884 N.W.2d 621, 624 (Minn. 2016). When interpreting a statute, we first determine if the statute is ambiguous, meaning that it is subject to more than one reasonable interpretation. Peterson v. City of...