City of Wilmington v. Fraternal Order of Police Lodge 1

• Court: Court of Chancery of Delaware
• Decided: March 12, 2015
• Docket: CA 10329-VCG
• Status: Published

Opinion

COURT OF CHANCERY OF THE SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE VICE CHANCELLOR 34 THE CIRCLE GEORGETOWN, DELAWARE 19947

Date Submitted: March 11, 2015 Date Decided: March 12, 2015

David H. Williams, Esquire Jeffrey Weiner, Esquire Morris James LLP Law Office of Jeffrey M. Weiner PA 500 Delaware Avenue, Suite 1500 1332 King Street Wilmington, DE 19899 Wilmington, DE 19801

Re: City of Wilmington v. Fraternal Order of Police Lodge 1 Civil Action No. 10329-VCG

Dear Counsel:

Before me is the appeal of the City of Wilmington (the “City”) from a

decision of the Public Employment Relations Board (the “PERB”), itself affirming

on appeal an arbitrator’s decision resolving a collective bargaining dispute between

the Fraternal Order of Police Lodge 1 (the “FOP”) and the City in favor of the

FOP. Pursuant to the Police Officers’ and Firefighters’ Employment Relations Act

(the “Act”),1 arbitration on collective bargaining disputes between a public

employer and its employee police officers and firefighters are done “baseball

style,” in which after an unsuccessful negotiation mediation process, each side

presents to the arbitrator its last, best, final offer.2 The arbitrator is then required,

1 See 19 Del. C. §§ 1601–1618. 2 See id. §§ 1614–1615. based on an evaluation of the factors set out in 19 Del. C. § 1615(d), to choose

either the final offer of the government or the union; the arbitrator may not pick

and choose between provisions of those two offers.3 Among the factors which the

arbitrator must consider is

the financial ability of the public employer, based on existing revenues, to meet the costs of any proposed settlement; provided that any enhancement to such financial ability derived from savings experienced by such public employer as a result of a strike shall not be considered by the binding interest arbitrator.4

According to the City, subsection (d)(6) serves as a disqualifier for the union’s

offer: If the public employer cannot pay the costs of the union’s proposal from

“existing revenues,” by default the arbitrator must select the public employer’s

offer instead.

Here, the arbitrator (and, on appeal, the PERB) determined that the City had

the ability to meet the cost of the FOP’s proposal in light of existing revenues. The

arbitrator examined the other factors called for in Section 1615(d) and determined

that the FOP’s offer was superior in light of those factors.5 On appeal, the City

argues that the arbitrator and the PERB defined “existing revenues” improperly.

3 See id. § 1615(d) (“The binding interest arbitrator shall make written findings of facts and a decision for the resolution of the dispute; provided however, that the decision shall be limited to a determination of which of the parties’ last, best, final offers shall be accepted in its entirety.”). 4 Id. § 1615(d)(6). 5 The other factors for the arbitrator to consider include the interest and welfare of the public, comparison of pay to similarly situated employees, the overall compensation presently received by the employees, stipulations of the parties, the lawful authority of the public employer and

2 It is clear to me from a reading of the Act that it was meant to be applied to

negotiations of public employees’ prospective wages. That is, the Act anticipated,

reasonably, that employers and employees would be negotiating for wages to be

paid for hours worked in the future. Placed in that context, the phrase “existing

revenue” must mean revenue projected to exist during the contractual period to

which the contract was intended to apply. Here, however, the dispute involves the

FOP’s four-year contract proposal that is entirely retrospective: the proposal

applies to hours already worked by employees in fiscal years 201l, 2012, 2013 and

2014. The question becomes, what does “existing revenues” mean in such a

context? The FOP notes that, net of this four-year period, there were ample

surplus revenues to pay the modest increase in wages sought here. The City points

out that in one of those years, fiscal 2014, the City ran an actual deficit, and

therefore there were not “existing revenues” in that year to pay wages under the

contract consistent with the FOP’s proposal. According to the City, the PERB

should have determined that the FOP’s proposal was thus disqualified under

Section 1615(d)(6). In addition, the City argues that “existing revenues” should be

examined as the Legislature intended—prospectively—so that the arbitrator must

take into account the City’s ability to continue to pay wages at the contract rate,

which will necessarily hold over after the conclusion of fiscal year 2014 and

“such other factors not confined to the foregoing which are normally or traditionally taken into consideration” in setting public employee wages. See id. §1615(d).

3 continue until the resolution of another dilatory negotiation (and perhaps

arbitration) of a new labor contract. In order to prevail in this appeal, the City

must demonstrate that the arbitrator’s finding (adopted by the PERB) that the City

is financially able to meet the costs of the FOP’s last, best, final offer is wrong as a

matter of law.

The Act does not define “existing revenues.”6 Because the statutory

language, in the context of the negotiation of an entirely retroactive contractual

period, is unclear, the parties are entitled to submit extrinsic evidence on this point.

The parties came before me in oral argument after briefing on the City’s appeal

from the decision of the PERB. Within five business days of the issuance of this

Letter Opinion, the parties should inform me whether they wish to supplement the

record with extrinsic evidence on the meaning of “existing revenue” as the term

appears in the Act, or whether they consider the matter submitted on cross-motions

for a judgment on the record.7

6 See id. § 1602 (“Definitions”). 7 Nothing in this Letter Opinion relieves the parties of their obligation to supplement the record with information regarding annual surplus revenues for the contractual period, as discussed at oral argument.

4 To the extent the foregoing requires an Order to take effect, IT IS SO

ORDERED.

Sincerely,

/s/ Sam Glasscock III

Sam Glasscock III