Wausaukee Sch. Dist. v. Wausaukee Educ. Ass'n

• Decision Date: 10 May 2012
• Docket Number: No. 2011AP1716.,2011AP1716.
• Citation: 342 Wis.2d 251,816 N.W.2d 351,2012 WI App 73
• Parties: WAUSAUKEE SCHOOL DISTRICT, Plaintiff–Respondent, v. WAUSAUKEE EDUCATION ASSOCIATION, Defendant–Appellant.
• Court: Wisconsin Court of Appeals

342 Wis.2d 251

816 N.W.2d 351

2012 WI App 73

WAUSAUKEE SCHOOL DISTRICT, Plaintiff–Respondent,

v.WAUSAUKEE EDUCATION ASSOCIATION, Defendant–Appellant.

No. 2011AP1716.

Court of Appeals of Wisconsin.

May 10, 2012.

OPINION TEXT STARTS HEREAppeal from an order of the circuit court for Marinette County: David G. Miron, Judge. Reversed and cause remanded.

Before VERGERONT, HIGGINBOTHAM and BLANCHARD, JJ.¶ 1BLANCHARD, J.

The Wausaukee Education Association appeals a circuit court order vacating an arbitrator's award in which the arbitrator concluded that the Wausaukee School District violated the parties' collective bargaining agreement in partially laying off one teacher, Kurt Kostelecky. The arbitrator found that the District's position that budgetary and curriculum-based considerations compelled the partial layoff was not credible and that, instead, the District's action was in fact motivated by a purpose not allowed under the collective bargaining agreement and carried out in bad faith.

¶ 2 The circuit court concluded that the arbitrator exceeded her authority because she failed to make findings that the District violated any of the provisions of the collective bargaining agreement submitted for arbitration, because the question of whether it was necessary to lay off teachers was not within the arbitrator's contracted authority, and because the decision to lay off teachers is not a proper subject of collective bargaining. The Association argues that the arbitrator acted within her authority and that the circuit court should have confirmed the award. We agree with the Association. We therefore reverse the circuit court's order and remand for the court to issue an order confirming the award.

BACKGROUND

¶ 3 Kurt Kostelecky was appointed by the District to a 62.5 percent full-time-equivalent teaching position. For the 2009–10 school year, the District issued Kostelecky a notice of layoff and offered him a contract reducing his appointment to 37.5 percent.

¶ 4 Kostelecky filed a grievance with the District challenging the reduction in his appointment. He asserted that, while it was labeled as a partial layoff, the reduction was in fact disciplinary in nature, and an attempt by the District to force him to resign without following the procedures for termination for cause contained in the collective bargaining agreement.

¶ 5 The District denied the grievance, stating that the reduction in Kostelecky's appointment was permitted under Article XI of the collective bargaining agreement. Article XI is titled “layoff provisions” and provides, in relevant part, as follows: “If necessary to decrease the number of teachers, in whole or in part, the [District] may lay off the necessary number of teachers, in whole or in part....” ¹ The District rejected Kostelecky's assertion that the reduction in his appointment was for purposes of discipline. The District stated that the “reduction ... was due solely to the District's attempt to balance its long-term financial obligation[s] and reduce costs while maximizing the educational offerings provided to the students of the District.”

¶ 6 In order to resolve objections to the District's denial of the grievance, the parties made a joint request, pursuant to the procedures set forth in their collective bargaining agreement, for the Wisconsin Employment Relations Commission to assign an arbitrator to resolve their dispute. The parties stipulated that the issues submitted to the arbitrator were as follows:

Did the District violate the collective bargaining agreement [,] ... specifically, Articles [III, XI, XVI, or XVII], when it reduced [Kostelecky] from 62.5 percent full time equivalent teacher to 37.5 percent full time equivalent teacher for the 2009–2010 school year? If so, what is the appropriate remedy?

As already noted, Article XI pertains to layoffs. The other articles pertain to “laws, rules and regulations” (III), “fair dismissal” (XVI), and “fair disclosure” (XVII). The only article at issue in this appeal is Article XI.²

¶ 7 In proceedings before the arbitrator, the Association argued that the District's asserted concerns—addressing financial obligations while maximizing educational offerings—were pretextual and that the real reason Kostelecky's appointment was reduced was the District's dissatisfaction with Kostelecky and his prior conduct. The District maintained that the reduction of Kostelecky's appointment was a result of the District's financial difficulties and curriculum needs.

¶ 8 Addressing the District's position regarding a financial motivation, the arbitrator found that this position lacked credibility. The arbitrator acknowledged that the District had a history of financial difficulties, but found that a recent referendum allowing the District to exceed revenue limits, along with a recent reduction in District transportation costs, had improved the District's financial situation before Kostelecky's appointment was reduced. The arbitrator also noted that Kostelecky was the only teacher to receive a layoff in the 2009–10 school year, a fact which the arbitrator believed further undermined the District's asserted financial justification.

¶ 9 Regarding the purported curriculum-based motivation, the arbitrator found that this reason also lacked credibility. The arbitrator observed that the District had failed to provide each of its specific curriculum-based reasons until the “litigation” phase of the grievance procedures, making those reasons suspect and subject to closer scrutiny. The arbitrator also made additional findings, based on the evidence before her, as to why the asserted curriculum-based reasons were not credible.³

¶ 10 Having found that each of the District's asserted reasons for reducing Kostelecky's appointment lacked credibility, the arbitrator turned to evidence suggesting that the reduction was based on hostility toward Kostelecky or on concerns with his performance. Based on that evidence, the arbitrator concluded that the District's reduction of Kostelecky's appointment was “for improper reasons and in bad faith and therefore violated the collective bargaining agreement.” The arbitrator awarded Kostelecky compensation for back pay equivalent to the fraction of his job reduction.⁴

¶ 11 Proceeding under Wis. Stat. § 788.10 (2009–10) ⁵ and related provisions in Wis. Stat. ch. 788 (“Arbitration”), the District filed a complaint in circuit court, and moved for an order vacating the award.⁶ The District argued that the arbitrator exceeded her authority. The Association disagreed and moved to confirm the award.

¶ 12 The circuit court granted the District's motion, denied the Association's motion, and vacated the arbitrator's award. The court concluded that the arbitrator exceeded her authority in three respects. First, the arbitrator failed to make any findings that the District violated Article XI, or the other articles submitted for arbitration, and therefore went beyond the issues submitted for arbitration. Second, the question of whether it was necessary to lay off teachers was not within the arbitrator's contracted authority. Third, the decision to lay off teachers is not a proper subject of collective bargaining and, therefore, not an issue the arbitrator had authority to address.

¶ 13 We reference additional facts as needed below.

DISCUSSION

¶ 14 The law in Wisconsin favors agreements to use final and binding arbitration in order to resolve municipal labor disputes. City of Oshkosh v. Oshkosh Pub. Library Clerical & Maint. Emps.: Union Local 796–A, 99 Wis.2d 95, 102, 299 N.W.2d 210 (1980). Judicial review of an arbitration award is limited. See Sands v. Menard, Inc., 2010 WI 96, ¶ 48, 328 Wis.2d 647, 787 N.W.2d 384. An arbitration award is “presumptively valid and the court exercises only a supervisory role in reviewing an arbitration award.” Fortney v. School Dist. of West Salem, 108 Wis.2d 167, 171, 321 N.W.2d 225 (1982). We set aside an arbitrator's award only if the award is shown to be invalid by “clear and convincing evidence.” City of Oshkosh, 99 Wis.2d at 102–03, 299 N.W.2d 210 (citation omitted).

¶ 15 Here, the parties' dispute centers on whether the arbitrator exceeded her authority. While our reviewing role is limited, we must vacate or modify the award if the arbitrator exceeds the arbitrator's authority. See Orlowski v. State Farm Mut. Auto. Ins. Co. 2012 WI 21, ¶ 14, 339 Wis.2d 1, 810 N.W.2d 775;see alsoWis. Stat. § 788.10(1)(d) (court must vacate award “[w]here the arbitrators exceeded their powers”). Whether the arbitrator exceeded her authority is a question of law for de novo review. Sands, 328 Wis.2d 647, ¶ 48, 787 N.W.2d 384.

¶ 16 An arbitrator's authority “is circumscribed by the terms of the contractual agreement to arbitrate and any other issues that the parties agree to submit to arbitration.” Orlowski, 339 Wis.2d 1, ¶ 31, 810 N.W.2d 775. In addition, “[a]n arbitrator exceeds his or her powers when the arbitrator demonstrates either ‘perverse misconstruction’ [of the contract] or ‘positive misconduct,’ when the arbitrator manifestly disregards the law, when the award is illegal, or when the award violates a strong public policy.” Id., ¶ 14, 810 N.W.2d 775 (quoting Racine Cnty. v. International Ass'n of Machinists & Aerospace Workers Dist. 10, 2008 WI 70, ¶ 11, 310 Wis.2d 508, 751 N.W.2d 312).

¶ 17 Because the District has the burden to show that the arbitrator's award is invalid, we focus on the District's arguments. See Fortney, 108 Wis.2d at 171, 321 N.W.2d 225;City of Oshkosh, 99 Wis.2d at 102–03, 299 N.W.2d 210. So far as we have been able to discern, those arguments correspond to three of the standards summarized above: (1) whether the arbitrator went beyond the issues submitted for arbitration, (2) whether the arbitrator's decision was within the scope of her contracted authority or instead was a “perverse misconstruction” of the collective bargaining agreement, and (3) whether the arbitrator's award manifestly disregards the...