Fraternal Order of Police, Colorado Lodge 19 v. City of Commerce City

996 P.2d 133, 2000 WL 224109

• Court: Supreme Court of Colorado
• Decided: April 10, 2000
• Docket: 99SC85
• Status: Published

Opinions

Justice RICE

delivered the Opinion of the Court.

We granted certiorari before judgment in the court of appeals pursuant to C.A.R. 50 to review the district court’s order declaring binding arbitration provisions contained in an amendment to the City Charter of Commerce City unconstitutional and unenforceable. The voters of Commerce City passed the charter amendment, designated as Question 2A on the ballot, in November 1998. The charter amendment provides for collective bargaining between police officers and Commerce City, as well as a system of binding arbitration to resolve impasses in negotiations. Following cross-motions for summary judgment, the district court ruled that the binding arbitration provisions violated the Colorado Constitution and were therefore void and unenforceable. We hold that the binding arbitration provisions provide the arbitrator with political accountability in compliance with article XXI, section 4 of the Colorado Constitution. Accordingly, we reverse the district court’s order and remand the case for further proceedings consistent with this opinion.

I. FACTS AND PROCEEDINGS BELOW

On November 3, 1998, the voters of the City of Commerce City (the City) approved an amendment to the City Charter, designated on the ballot as Question 2A (the charter amendment). The charter amendment provides for collective bargaining between police officers¹ and the City, as well as a system of binding arbitration to resolve impasses in negotiations. Mandatory subjects for collective bargaining in the charter amendment include wages, hours, vacation, insurance (contribution levels and levels of benefits only), special or additional pay, leaves of absence, promotion procedures, and other related subjects. The charter amendment requires the parties to begin the collective bargaining process on or before May 15 of any year in which the bargaining agreement expires. In the event that the employee organization and the City are unable to reach an agreement on a contract within thirty days of their first meeting, the charter amendment requires “any and all” unresolved issues to be submitted to binding arbitration.

The charter amendment establishes the following system of binding arbitration to resolve impasses in negotiations. Within thirty days after the adoption of the charter amendment, the City is required to solicit applications for a permanent panel of arbitrators.² The charter amendment specifies the qualifications and experience necessary to be eligible for the permanent panel of arbitrators and requires the City Council to create a permanent panel of at least three arbitrators from those qualified individuals who apply. The City Council is allowed to add arbitrators to the permanent panel at any time and may also remove arbitrators from the panel at any time, with the exception that an arbitrator who has been selected to hear a dispute may not be removed until after issuing a decision.

If the employee organization and the City are unable to agree on a contract within thirty days as specified above, the employee organization and the City engage in an alternating “strike process” whereby each party alternately eliminates³ one name from the list of members of the permanent panel of arbitrators until either one or two names remain.⁴ If one name remains, that person becomes the arbitrator for the dispute. If two names remain, the Mayor selects one of those remaining two persons to be the arbitrator. The employee organization and the City also are allowed to agree on an arbitrator from the permanent panel in lieu of the strike process.

The arbitrator is required to choose either the final offer of the City or the final offer of the employee organization on each issue in dispute. In arriving at a decision, the arbitrator is required to consider seven factors⁵ and issue a written decision. The arbitrator’s decision is final and binding on the parties. The charter amendment provides for limited judicial review in that a district court must affirm the arbitrator’s decision unless it determines: (1) the award was procured by corruption, fraud, or other undue means; or (2) the decision on any issue is arbitrary and capricious, i.e., there is no competent evidence in the record to support the decision; or (3) the decision on any issue was reached without considering the factors listed in section 21.14 of the charter amendment.

After the voters passed the charter amendment, the City filed a complaint pursuant to C.R.C.P. 57 requesting a declaratory judgment on the validity of the binding arbitration provisions and an injunction enjoining implementation of the arbitration provisions. Before a hearing was held on the City’s complaint, the parties filed cross-motions for summary judgment and stipulated that no disputed issues of material fact existed.

At a hearing on the cross-motions for summary judgment, the district court ruled that the binding arbitration provisions violated the Colorado Constitution and were therefore void and unenforceable. The court ruled that the remaining provisions of the charter amendment establishing collective bargaining were enforceable because they were severa-ble from the arbitration provisions.

II. ANALYSIS

The City contends that the binding interest arbitration provisions of the charter amendment constitute an unlawful delegation of legislative power because they delegate the authority to set the terms and conditions of municipal employment to an arbitrator who is not sufficiently accountable to an elective official. Petitioner Fraternal Order of Police contends that the arbitration provisions are constitutional because the arbitrator is politically accountable to the City Council. We hold that the binding arbitration system contained in the charter amendment is constitutional because it provides the arbitrator with the political accountability required under article XXI, section 4.

A. THE PROHIBITION AGAINST DELEGATING LEGISLATIVE POWER

The prohibition against delegating legislative power to politically unaccountable persons is found in the following language in article XXI, section 4 of the Colorado Constitution:

Every person having authority to exercise or exercising any public or governmental duty, power or function, shall be an elective officer, or one appointed, drawn, or designated in accordance with law by an elective officer or officers, or by some board, commission, person or persons legally appointed by an elective officer or officers, each of which said elective officers shall be subject to the recall provision of this constitution....

The plain language of this section mandates that every person having authority to exercise a governmental power must either be an elective officer or be appointed or designated in accordance with law by an elective officer.

We first interpreted this prohibition against the delegation of legislative power in the context of a challenge to binding arbitration provisions. in Greeley Police Union v. City Council of Greeley, 191 Colo. 419, 553 P.2d 790 (1976). In Greeley Police Union we considered the constitutionality of binding interest arbitration provisions contained in a charter amendment passed by the voters of the City of Greeley. The arbitration system in the Greeley charter amendment provided for the American Arbitration Association (AAA), an independent organization with no political accountability, to submit a list of five names of potential arbitrators to each party. Each party then had the opportunity to cross off two names and number the remaining three names on their list in order of preference. The AAA then would select a single person who was granted the authority to resolve all disputed issues. The arbitrator’s decision was binding on the parties.

We held that the binding arbitration provisions in the Greeley charter amendment violated the Colorado Constitution.⁶ In reaching our holding, we explained that article XXI, section 4 prohibits the “delegation] of legislative power to politically unaccountable persons.” Id. at 422, 553 P.2d at 792 (emphasis added).

We reaffirmed the holding of Greeley Police Union one year later in City of Aurora v. Aurora Firefighters’ Protective Ass’n, 193 Colo. 437, 566 P.2d 1356 (1977). The arbitration system contained in the charter amendment in Aurora Firefighters’ paralleled the system in Greeley Police Union in all important respects in that the AAA was to submit a list of seven names of potential arbitrators to each party and the parties were then to each cross off two names from their list. The AAA was then to select three arbitrators from the names remaining to decide the disputed issues. The Aurora Firefighters’ system suffered from the same fatal flaw as Greeley Police Union: the organization charged with creating the list of potential arbitrators and making the final selection of the arbitrator had no political accountability. Accordingly, we held that Greeley Police Union controlled and invalidated the binding arbitration provisions. See id. at 440, 566 P.2d at 1358.

In City & County of Denver v. Denver Firefighters Local No. 858, 663 P.2d 1032 (Colo.1983), we considered the constitutionality of binding grievance arbitration provisions. We contrasted this type of arbitration with binding interest arbitration:

Grievance arbitration, on the other hand, arises only after the parties have reached complete agreement on terms and conditions of employment.... When an arbitrator is required to interpret the provisions of an existing agreement, he acts in a judicial capacity rather than a legislative one. The authority to interpret an existing contract, therefore, does not constitute legislative authority, and the nondelegation principle is not implicated in grievance arbitration.

Id. at 1038 (citation omitted). Therefore, in upholding the validity of the binding grievance arbitration provisions, we distinguished Greeley Police Union and Aurora Firefighters’ because those decisions both involved binding interest arbitration. See id. at 1037-38.

Finally, we most recently considered the validity of binding arbitration provisions in Regional Transportation District v. Colorado Department of Labor and Employment, 830 P.2d 942 (Colo.1992) [hereinafter RTD ]. In RTD we considered the validity of binding arbitration provisions contained in the Colorado Labor Peace Act, sections 8-3-101 to - 123, 3B C.R.S. (1986 & 1991 Supp.). The arbitration provisions were challenged as an unconstitutional delegation of legislative authority in violation of both article V, section 35 and article XXI, section 4 of the Colorado Constitution. We first addressed the provisions of article V, section 35⁷ and held that RTD was not a municipality and was not performing a municipal function within the meaning of that section and, therefore, the nondelegation requirement contained in section 35 &d not prevent the General Assembly from requiring binding arbitration. See RTD, 830 P.2d at 947.

We next considered the article XXI, section 4 challenge to the arbitration provisions and noted that the Director of the Colorado Department of Labor and Employment, Division of Labor (Director) was authorized to order arbitration and to appoint an arbitrator. We restated the test we formulated in Greeley Police Union by observing that “[t]o comply with article XXI, section 4, of the Colorado Constitution, the Director must be politically accountable." Id. (emphasis added). We found that this political accountability test was satisfied because the Director was appointed by the Executive Director of the Department of Labor, who, in turn, was appointed by the Governor, an elective official subject to recall. Consequently, we held that “the Director’s appointment of the arbitrator[ ] complied] with the requirements of article XXI, section 4.” Id. at 948.

In reaching our holding in RTD, we distinguished our decisions in Greeley Police Union and Aurora Firefighters’ by observing that “our concern in these cases was that the arbitrator was not politically accountable.” Id. In both of those cases, the original list of potential arbitrators was submitted by the AAA and the final selection of the arbitrator(s) was made by the AAA after a striking process. In contrast, we explained that in RTD the “selection of the arbitrator is by a politically accountable government official and complies with [ajrticle XXI, section 4.” Id.

B. THE ARBITRATION SYSTEM IN THE CHARTER AMENDMENT

Having reviewed the relevant constitutional section and our case law, we turn now to an examination of the arbitration provisions contained in the charter amendment. We divide our analysis of the arbitration provisions into two areas: (1) the political accountability required under article XXI, section 4; and (2) the standards and safeguards required for all delegations of legislative power.

1. Political Accountability

As discussed above, after the City Council has created a permanent panel of at least three arbitrators, if an impasse in negotiations during a collective bargaining session occurs, the parties engage in an alternating strike process, whereby each party removes one name from the list until either one or two names remain. If one name remains, that person is selected to be the arbitrator for the dispute. If two names remain,⁸ the Mayor selects the arbitrator from the two names remaining.⁹

As we have stated in our prior decisions, the prohibition against delegation of legislative power in article XXI, section 4 requires that an arbitrator empowered to make binding decisions on a public collective bargaining agreement must be politically accountable to an elected official.¹⁰ By requiring the City Council to create the permanent panel of arbitrators, and by allowing the City Council to remove persons from the arbitration panel at any time other than while actively hearing a case, we find that the charter amendment provides for the necessary political accountability we require under article XXI, section 4.

We observe that the arbitration system in the instant case contains important difier-enees from the arbitration systems we invalidated in both Greeley Police Union and Aurora Firefighters’. The key distinction between these arbitration systems lies in the fact that the charter amendment in the instant case requires the City Council, composed of elective officials, to create the permanent panel of arbitrators who can hear a dispute. In contrast, the arbitration systems in both Greeley Police Union and Aurora Firefighters’ required the American Arbitration Association, an independent organization with no political accountability, to create the list of potential arbitrators that may be selected, and then also to select the arbitrator(s) from the names remaining after the parties finished the striking process. The Greeley Police Union and Aurora Firefighters’ procedures resulted in the selection of an arbitrator with no connection to any elected officials and, consequently, a complete lack of political accountability. The arbitrator’s lack of political accountability compelled our holdings in those cases declaring the binding arbitration provisions to be unconstitutional.

In this case, by contrast, the arbitrator is directly politically accountable to the elective officials comprising the City Council of Commerce City. Any arbitrator selected to hear a case first will have been appointed to the permanent panel by the City Council. The City Council, therefore, has exclusive control over which arbitrators may hear a case.¹¹ Moreover, the City Council may modify this arbitration panel as they see fit by either removing arbitrators or adding arbitrators, provided the panel always has at least three members. The continuing exercise of control over the arbitrators by the elective officials of the City Council provides the political accountability we require under article XXI, section 4 and distinguishes this arbitration system from the systems we struck .down in Greeley Police Union and Aurora Firefighters’.

Additionally, an examination of the language of article XXI, section 4 supports our conclusion that an arbitrator selected by the provisions of the charter amendment to hear a case is not prohibited from exercising legislative power. As noted above, article XXI, section 4 provides, “Every person having authority to exercise or exercising any public or governmental duty, power or function, shall be an elective officer, or one appointed, drawn, or designated in accordance with law by an elective officer or officers_” (Emphasis added.) In this case, the arbitrator is designated (appointed by the City Council and then selected through the process described above) in accordance with law (the Charter of the City of Commerce City) by elective officers (the City Council). As such, the plain mandates of article XXI, section 4 are met and there is no constitutional violation of the prohibition against delegation of legislative power.

For these reasons, we conclude that the charter amendment’s binding arbitration procedures provide for the selection of an arbitrator with political accountability in compliance with article XXI, section 4.

2. Standards and Safeguards

As we recognized in RTD, a delegation of legislative power must contain “sufficient standards and safeguards” to protect against “unnecessary and uncontrolled exercise of discretionary power.” RTD, 830 P.2d at 948-49. We find that the charter amendment provides sufficient standards and safeguards to guide the arbitrator’s decision.

As noted above, the charter amendment requires the arbitrator to consider the following seven factors when issuing a decision: (1) the interests and welfare of the public and the financial ability of the City to bear the costs involved; (2) the lawful authority of the City; (3) stipulations of the parties; (4) comparison of the compensation, benefits, hours and other terms or conditions of employment of the members of the police department involved with other police department members performing similar services in public employment in comparable communities; (5) the cost of living; (6) any claims of failure of a party to bargain in good faith; and (7) other similar standards recognized in the resolution of interest disputes. By requiring the arbitrator to consider this comprehensive list of factors, the charter amendment provides the necessary standards we require for the exercise of legislative power.

In addition, the charter amendment provides for adequate safeguards in the form of judicial review of the arbitrator’s decision. The judicial review is limited to a consideration of the following three factors: (1) whether the award was procured by corruption, fraud, or other undue means; (2) whether the decision on any issue is arbitrary and capricious, i.e., there is no competent evidence in the record to support the decision; or (3) whether the decision on any issue was reached without considering the factors listed above. The charter amendment’s judicial review provision provides appropriate safeguards for review of the arbitrator’s decision.¹²

In sum, we find that the charter amendment provides adequate standards to guide the arbitrator’s decision and sufficient safeguards for review of the decision.

III. CONCLUSION

We hold that the binding arbitration provisions of the charter amendment provide for the selection of an arbitrator with political accountability in compliance with article XXI, section 4. Additionally, we find that there are sufficient standards and safeguards for the arbitrator’s exercise of discretionary power. Accordingly, we reverse the order of the district court and direct the court on remand to enter summary judgment in favor of Petitioner.

1 . The charter amendment defines the bargaining unit as “all full time police officers employed by the Commerce City Police Department plus the community service officers and crime analysts, and excluding the chief of police, captains, and the community service officer supervisor.” For the sake of brevity, the term "police officers” is used to denote the bargaining unit.

2 . The City has never implemented these procedures due to these legal proceedings challenging the constitutionality of the binding arbitration system.

3 . A flip of the coin determines which party strikes first.

4 . If the panel originally consists of an even number of arbitrators, two names will remain; conversely, if the original panel consists of an odd number of arbitrators, only one name will remain after the striking process.

5 . Section 21.14 of the charter amendment defines these factors as:

(1) the interests and welfare of the public and the financial ability of the City to bear the costs involved; (2) the lawful authority of the City; (3) stipulations of the parties; (4) comparison of the compensation, benefits, hours and other terms or conditions of employment of the members of the police department involved with other police department members performing similar services in public employment in comparable communities; (5) the cost of living; (6) any claims of failure of a party to bargain in good faith pursuant to section 21.7(c); and (7) other similar standards recognized in the resolution of interest disputes.

6 . Our opinion in Greeley Police Union quotes both article XXI, section 4 and article V, section 35 of the Colorado Constitution as alternate sources of the prohibition against delegating legislative power. See id. at 422, 553 P.2d at 792. We recognize here that the provisions of article V, section 35 apply only to actions of the General Assembly by the plain language of the section ("The general assembly shall not delegate...."). Accordingly, we note that our holding in Greeley Police Union was based only on the article XXI, section 4 prohibition against delegating legislative power.

7 . Article V, section 35 provides: "The general assembly shall not delegate to any special commission, private corporation or association, any power to make, supervise or interfere with any municipal improvement, money, property or effects, whether held in trust or otherwise, or to levy taxes or perform any municipal function whatever.” This section applied in RTD because the arbitration provisions were contained in a statute enacted by the General Assembly.

8 . As discussed supra in note 4, if the permanent panel contains an even number of names when the parties begin the alternating strike process, the result will inevitably be that two names remain because to allow another strike by one parly would result in an unequal number of strikes.

9 . We note that section 4.9 of the Charter of the City of Commerce City provides that the Mayor shall preside over meetings of the City Council and shall have the same right to speak and vote as other City Council members. This charter provision eliminates any diffusion of political accountability that would otherwise result from the Mayor’s selection of the arbitrator if the Mayor’s office constituted an independent branch of city government.

10 .Both parties assert, and we agree, that article V, section 35 does not apply to this case because there is no action by the General Assembly.

11 . The City contends that the charter amendment’s qualification and experience requirements for arbitrators provide only limited discretion to the City Council with respect to the creation of the permanent panel. We disagree. The charter amendment provides that all members of the National Academy of Arbitrators and all persons on the American Arbitration Association panel of labor arbitrators are presumptively qualified.. Moreover, other persons may also be qualified if they have served as a neutral hearing officer in labor and management disputes for at least three years and have conducted at least five hearings per year in two of the last three years.

12 . We note that the charter amendment appropriately limits the scope of judicial review to avoid any potential separation of powers concerns that would arise if a judge were allowed to conduct de novo review of the arbitrator’s decision. See, e.g., Colorado Land Use Comm’n v. Board of County Comm’rs, 199 Colo. 7, 604 P.2d 32, 35 (1979) ("To place the ultimate determination in the courts through judicial review of this legislative action would violate the constitutional principle of separation of powers.”).