West Des Moines Ed. Ass'n v. Public Employment Relations Bd., 60460

• Decision Date: 17 May 1978
• Docket Number: No. 60460,60460
• Parties: 98 L.R.R.M. (BNA) 2875 WEST DES MOINES EDUCATION ASSOCIATION, Appellee, v. PUBLIC EMPLOYMENT RELATIONS BOARD, Appellant, and Iowa Association of School Boards, Intervenor.
• Court: Iowa Supreme Court

Page 118

266 N.W.2d 118

98 L.R.R.M. (BNA) 2875

WEST DES MOINES EDUCATION ASSOCIATION, Appellee, v. PUBLIC EMPLOYMENT RELATIONS BOARD, Appellant, and Iowa Association of School Boards, Intervenor.

No. 60460.

Supreme Court of Iowa.

May 17, 1978.

Rehearing Denied June 23, 1978.

Richard C. Turner, Atty. Gen., Marie A. Condon, Asst. Atty. Gen., John L. Ayers, Public Employment Relations Bd., Des Moines, for appellant.

Charles E. Gribble, of Dreher, Wilson, Adams & Jensen, Des Moines, for appellee.

John R. Phillips, Des Moines, for intervenor.

Meardon, Sueppel, Downer & Hayes, Iowa City, for amicus curiae League of Iowa Municipalities.

Considered by MOORE, C. J., and MASON, UHLENHOPP, REYNOLDSON and McCORMICK, JJ.

MASON, Justice.

The Public Employment Relations Board (PERB) appeals from the judgment of the Polk District Court reversing a declaratory ruling issued by PERB upon petition submitted to it by the West Des Moines Education Association (Association). In its ruling PERB held the phrase "impasse item" as used in sections 20.22(3) and 20.22(11) of the Public Employment Relations Act (Act) as it existed in the Code of 1975 meant subject category and, consequently, it held the parties must submit their final offers of a subject category to the arbitrator. The court in its judicial review of the PERB ruling reversed the PERB and determined the phrase "impasse item" referred to any word, clause, phrase, sentence or paragraph upon which the parties were in disagreement.

At this point it is necessary to explain certain matters about arbitration and to explain how the Public Employment Relations Act works. In its brief to this court the PERB set out explanations of both matters which are particularly succinct. It stated:

"In labor relations law, there are two basic kinds of binding arbitration of labor disputes. Arbitration is most frequently used for the resolution of grievances. The term-of-art for this type of arbitration is 'rights' arbitration. The second principal type of arbitration is used in the resolution of a contract negotiations dispute. This type of arbitration, which is of the type at issue here, is called 'interest arbitration.'

"Interest arbitration itself is of two basic types. 'Final offer' arbitration or 'conventional' arbitration. In conventional arbitration the arbitrator simply arrives at a result and makes his award either on the position advocated by one of the parties or at a point between the positions of the parties.

"In 'final offer' arbitration the arbitrator must select the position of one of the parties and may not select a compromise position.

"It is the 'final offer' system which the Iowa legislature incorporated into our statute. Final offer arbitration must be distinguished from conventional arbitration.

"As we stated to the court below, the differences between the forms of arbitration were recently summarized as follows:

" 'In conventional arbitration, the arbitrator tailors a resolution which resolves the bargaining impasse. The arbitrator can, and many times does, fashion a remedy somewhere between the last offers of the parties.

" ' * * *

" 'However, a problem commonly perceived concerning a conventional arbitration is its "narcotic effect. " This problem is believed to stem from the arbitrator's real or imagined tendency to "split the difference" between the parties' positions. Management argues that because the employee organization is primarily the demanding party in negotiations, with conventional arbitration as an end result, true collective bargaining will not occur if the employee representative feels ultimate victory lies in the hands of the arbitrator rather than at the bargaining table. In other words, the availability of conventional arbitration will have a "chilling" effect on the parties' incentives to bargain in good faith.

" 'In order to limit this chilling or narcotic effect, Legislatures have developed a form of arbitration which circumscribed the arbitrator's discretionary power final-offer arbitration. Final-offer arbitration limits the arbitrator to choosing between the last and the best offer of one party or the other on an entire package basis or on an issue-by-issue basis based upon a rule of reasonableness generally spelled out in the enabling legislation. The virtue of this type of arbitration is that it is final and binding on the parties based upon their proposed last and best offers without granting the arbitrator an undue amount of discretion. Thus, there is an element of coercion which encourages mutual agreement because a third party will select one of the offers as binding without compromise between them. In other words, "final offer arbitration should not have a chilling effect because it will function as a 'strikelike' mechanism by posing potentially severe costs of disagreement in a manner that conventional arbitration does not. " If the parties are sensitive to what will be perceived as reasonable by the arbitrator, they will tend to tailor their final offer in that manner.'

"(Rynicki and Gausden, 'Current trends in public sector Impasse Resolution' State Government, Autumn 1976 at 274-276).

" * * * "We now describe the context in which collective bargaining negotiations take place when a 'impasse' exists, i. e. where the parties cannot agree on the terms of the collective bargaining agreement they may seek the assistance of a series of 'neutrals' in resolving the dispute.

"Arbitration under the Public Employment Relations Act is but the last of three steps in the statutory procedure. The first step in this process is mediation. Section 20 of the Public Employment Relations Act provides for the appointment of a mediator at the request of either party to the dispute. The mediator's function is to guide the parties toward a resolution of the dispute by persuasion, by analysis, and by seeking modifications in each side's position. Mediation is not an adjudicative or quasi-adjudicative process. The number of issues which are unresolved going into mediation is reduced substantially during this process and typically, where complete settlement is not achieved, only a handful of issues remain for the next step in the process.

"Failing a settlement of the dispute in mediation, Section 21 of the Public Employment Relations Act requires the appellant Board to appoint a fact-finder. The fact-finder is required to conduct a hearing, take evidence and issue written findings of fact and a recommendation for the resolution of the dispute. The fact-finder is not limited to the final offers of the parties when making his recommendation but is permitted to recommend any solution. We submit that the definition of impasse item sought by the appellee is more appropriately restricted to a proceeding in front of a fact-finder who does not function under a statutory mandate wherein he must choose one of two offers submitted to him.

"Frequently, after the fact-finding stage of the process, the parties reach agreement on some of the issues and typically the arbitrator is asked to resolve fewer issues than was the fact-finder.

"The parties are not compelled, however, to accept the fact-finder's report and either party may request, under § 22 of the Public Employment Relations Act, the appointment of a panel of three arbitrators or a single arbitrator.

"The panel or the single arbitrator conducts a hearing, takes evidence and issues an award which is final and binding on the parties.

"The Iowa 'final offer' scheme contains a wrinkle not found elsewhere and not at issue here wherein the arbitrator may choose among not only the offers of the parties, but also may choose the position taken by the fact-finder on the issue.

"Thus, in a contract negotiation, the parties would ordinarily commence with all items at issue and unresolved and would proceed through few or many negotiation sessions to seek and reach agreements on numbers of issues.

"Then, if they require the help of neutral third parties, the Public Employment Relations Act provides a system which clearly contemplates a continued narrowing or reduction of the unresolved issues. This process continues to the last point, final offer arbitration, known also as last offer arbitration, or forced-choice arbitration, which is designed to encourage hard bargaining by the parties before they resort to arbitration. Final offer interest arbitration enables 'the parties to retain maximum participation all the way up to finalization of a decision with minimum exercise of power by a third party.' " (Emphasis in original).

We set out the chronological order of events in this case. July 22, 1976, the Association filed a petition with the PERB wherein it sought a declaratory ruling on the meaning of the phrase "impasse item" as used in sections 20.22(3) and 20.22(11), The Code, 1975. July 30, the Iowa Association of School Boards (IASB) requested an opportunity to intervene in the proceedings by way of presentation of evidence. August 16 this request was granted. October 8 the PERB filed its declaratory ruling. October 19 the Association applied for rehearing which was denied two days later. November 17 the Association filed a petition for judicial review in the Polk District Court. February 2, 1977, the trial court filed its findings of fact, conclusions of law and decree reversing the PERB and holding the phrase "impasse item" referred to any word, clause, phrase, sentence or paragraph upon which the parties to arbitration under the Act were in disagreement. The PERB appeals from this decree.

July 15 the League of Iowa Municipalities (League) filed with this court a motion for leave to file a brief amicus curiae. The motion was sustained and the League has filed its brief with this court.

In its petition before the PERB, the Association asked for a declaratory ruling pursuant to section 17A.9, The Code, 1975. That section of the Iowa Administrative Procedure Act provided:

"Each agency shall...