University of District of Columbia Faculty Association /NEA v. District of Columbia Financial Responsibility and Management Assistance Authority

• Decision Date: 22 December 1998
• Docket Number: Nos. 98-7024 and 98-7025,s. 98-7024 and 98-7025
• Citation: 333 U.S. App. D.C. 325,163 F.3d 616
• Parties: 160 L.R.R.M. (BNA) 2091, 333 U.S.App.D.C. 325, 131 Ed. Law Rep. 583 UNIVERSITY OF THE DISTRICT OF COLUMBIA FACULTY ASSOCIATION/NEA, et al., Appellees, v. DISTRICT OF COLUMBIA FINANCIAL RESPONSIBILITY AND MANAGEMENT ASSISTANCE AUTHORITY, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 616

163 F.3d 616

160 L.R.R.M. (BNA) 2091, 333 U.S.App.D.C. 325,

131 Ed. Law Rep. 583

UNIVERSITY OF THE DISTRICT OF COLUMBIA FACULTY ASSOCIATION/NEA, et al., Appellees, v. DISTRICT OF COLUMBIA FINANCIAL RESPONSIBILITY AND MANAGEMENT ASSISTANCE AUTHORITY, et al., Appellants.

Nos. 98-7024 and 98-7025.

United States Court of Appeals District of Columbia Circuit.

Argued Oct. 30, 1998.

Decided Dec. 22, 1998.

Appeals from the United States District Court for the District of Columbia (No. 97cv01080).

Daniel A. Rezneck argued the cause for appellants. With him on the briefs was Robin C. Alexander. John M. Ferren, Corporation Counsel, Charles L. Reischel, Deputy Corporation Counsel, and Lutz Alexander Prager, Assistant Deputy Corporation Counsel, entered appearances.

Andrew D. Roth argued the cause for appellees. With him on the brief was Laurence Gold. Jeffrey L. Gibbs entered an appearance.

Before: EDWARDS, Chief Judge, GINSBURG and ROGERS, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS, Chief Judge:

In response to the District of Columbia's "financial problems and management inefficiencies," Congress enacted the District of Columbia Financial Responsibility and Management Assistance Act of 1995, Pub.L. No. 104-8, 109 Stat. 97 (1995) ("FRMAA" or "Act"). Under the Act, a Control Board was granted substantial authority over the financial management of the District. The scope of this statutory authority is at issue in this case.

In 1997, in an effort to keep the District's budget under a congressionally-imposed deficit ceiling, the Control Board issued an order authorizing the Board of Trustees ("Trustees") of the University of the District of Columbia ("UDC") to reduce its faculty "[n]otwithstanding the provisions of any collective bargaining agreement." Joint Appendix ("J.A.") 88. Appellees--UDC faculty members--contend that the Control Board's order was ultra vires and, therefore, without legal effect. Accordingly, they assert, UDC violated the collective bargaining agreement between the university and the faculty when it conducted a reduction-in-force ("RIF") that disregarded the specific provisions covering RIFs in the parties' agreement.

We agree with the District Court that Congress did not grant the Control Board the authority to abrogate existing contracts between the District and its employees. Because the Control Board's action was ultra vires, we remand appellees' contract claim to the District Court for a determination as to whether the claim should now be submitted to arbitration.

I. BACKGROUND

Congress created the Control Board in April 1995, citing the District's "fail[ure] to provide its citizens with effective and efficient services," warning that "[t]he current financial and management problems of the District government have already adversely affected the long-term economic health of the District," and calling for "[a] comprehensive approach to fiscal, management, and structural problems ... which exempts no part of the District government." FRMAA § 2(a).

Sections 103 and 203 of the FRMAA delineate the authority of the Control Board, the members of which are appointed by the President. Under these provisions, the Control Board is empowered to hold hearings and receive evidence, obtain official data from the federal and District Government, issue subpoenas, enter into contracts, and approve or disapprove of Acts passed by the D.C. Council. See FRMAA §§ 103, 203; see also Shook v. District of Columbia Fin. Responsibility and Management Assistance Auth., 132 F.3d 775, 777 (D.C.Cir.1998) ("[T]he Control Board has been given wide-ranging powers to improve the District government's operations.").

In July 1996, Congress enacted the District of Columbia Appropriations Act, 1997, Pub.L. No. 104-194, 110 Stat. 2356 (1996) ("Appropriations Act"). Section 141(a)(1) of the Appropriations Act imposed on the District a deficit ceiling of $74 million for fiscal year 1997. See Appropriations Act § 141(a)(1). Section 141(a)(2) stated that the "Chief Financial Officer of the District of Columbia [and the Control Board] shall take such steps as are necessary to assure that the District of Columbia meets the requirements of this section." Id. § 141(a)(2).

Congress subsequently amended the FRMAA. See Omnibus Consolidated Appropriations Act, 1997, Pub.L. No.104-208, 110 Stat. 3009 (1996). The amended § 207(d)(1) ("1996 Amendment") gives the Control Board the power to issue "such orders, rules, or regulations as it considers appropriate to carry out the purposes of [the FRMAA] ... to the extent that the issuance of such an order, rule, or regulation is within the authority of the Mayor or the head of any department or agency of the District government." Id. § 5203(f). The parties agree that the 1996 Amendment allows the Control Board to "stand in the shoes" of the Mayor and other District officials--such as the UDC Trustees--and perform whatever functions those officials would be authorized to perform themselves.

As fiscal year 1997 unfolded, the District was in grave danger of exceeding the $74 million deficit ceiling. UDC was a major contributor to the deficit, so university officials were obliged to consider spending limitations to cut costs. Among the options available to UDC was a RIF of faculty members. This option was less than ideal, however, because UDC was bound to comply with the enumerated RIF and employee benefit protections contained in the faculty's collective bargaining agreement ("CBA"). Although the CBA permits UDC to conduct a RIF when such action is compelled by a fiscal emergency, it affords important protections for the faculty in the event of a RIF. First, the agreement provides that senior members of the faculty must be retained ahead of junior members. See J.A. 163. Second, the agreement requires that faculty members receive one year's notice of a RIF or severance pay in lieu thereof. See id. at 165. The CBA also mandates that UDC "maintain" the retirement plans of existing faculty members. Id. at 152.

On January 13, 1997, Julius F. Nimmons, Jr., Acting President of UDC, wrote to Dr. Andrew F. Brimmer, chairman of the Control Board, requesting that the Control Board exempt UDC from the seniority, notice, and benefits provisions of the CBA. See id. at 84-85. Nimmons wrote that "[i]t would be impossible for the University to meet the goals of my [financial] plan without the legal authority" requested in the letter. Id. at 84.

Nine days later, the Control Board responded by issuing the order at issue in this case. Noting that "a state of fiscal crisis exists" at UDC and that the CBA represents a "significant impediment[ ] to the achievement of any budget savings through personnel reductions," the Control Board found that "there are no other less drastic means of achieving the required budget savings than through the unilateral modification of the [CBA]." Id. at 87. Accordingly, the Control Board authorized UDC, "[n]otwithstanding ... the provisions of any collective bargaining agreement, [to] ... conduct its [RIF] in a manner which will allow it to achieve its planned budget savings." Id. at 87-88. The order specifically directed that UDC contribute no more than 7% to its employee retirement plans, and allowed UDC to disregard the seniority and notice provisions of the CBA. See id. On February 4, 1997, the UDC Trustees implemented the Control Board's order by approving a RIF that did, in fact, disregard the applicable terms of the CBA. See id. at 103-05. UDC also lowered its contributions to the faculty retirement plan to 7%, effective March 1, 1997.

On February 14, 1997, the UDC Faculty Association ("Faculty") challenged the RIF by filing grievances pursuant to the grievance procedures outlined in the CBA. UDC responded on April 7, 1997, in a letter stating that UDC's actions were not reviewable under the CBA's grievance procedures, because its actions were "mandated by" the Control Board and "were taken notwithstanding the provisions of the [CBA]." Id. at 198-99.

The Faculty filed the instant lawsuit on May 15, 1997, naming the Control Board and UDC as defendants. The suit alleged that the Control Board had exceeded its congressionally-delegated authority, and that UDC had violated the terms of the CBA. On February 3, 1998, the District Court granted the Faculty's motion for summary judgment. See University of the Dist. of Columbia Faculty Ass'n/NEA v. Board of Trustees of the Univ. of the Dist. of Columbia, 994 F.Supp. 1 (D.D.C.1998) ("UDC Faculty"). The court surveyed the congressional acts that delineated the scope of the Control Board's authority and found no basis for the order that the Control Board had promulgated. See id. at 10. Accordingly, the court found UDC in breach of the CBA and ordered "full compliance by the University with the terms of the [CBA]." University of the Dist. of Columbia Faculty Ass'n/NEA v. Board of Trustees of the Univ. of the Dist. of Columbia, No. 97-01080 (D.D.C. Feb. 3, 1998) ("UDC Faculty Order"), reprinted in J.A. 244.

This appeal followed. In addition to challenging the District Court's interpretation of the relevant congressional statutes, appellants contend for the first time that the District Court lacked subject matter jurisdiction to consider this case.

II. ANALYSIS

A. The Ultra Vires Claim

1. Jurisdiction

Appellants now claim that, under District of Columbia law and the terms of the CBA, the Faculty should have sought redress through arbitration rather than in the District Court. They contend that the District Court improperly exercised subject matter jurisdiction over the case, and request a remand with orders to dismiss. It is, of course, axiomatic that a challenge to the jurisdiction of a federal district court may be raised for the first time on appeal. See Insurance Corp. v. Compagnie des Bauxites de Guinee 456 U.S. 694, 701-02, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). The Control Board...