Washington Federation of State Employees v. State

682 P.2d 869, 101 Wash. 2d 536

• Court: Washington Supreme Court
• Decided: May 17, 1984
• Docket: 48914-9
• Status: Published

Opinions

Dolliver, J.

In 1982 the Washington Legislature amended the state civil service laws to permit performance as well as seniority to be considered in matters of compensation, reduction in force, and reemployment. Substitute House Bill 1226, 47th Legislature (1982). The Governor approved Substitute House Bill 1226, except for section 30 and all references thereto. His veto message stated:

Section 30 calls for legislative review and approval of the proposed administrative rules for implementing the act. Failure of the legislature to approve the rules would void several sections of the act. In addition to presenting some constitutional issues relating to the functions of the legislative and executive branches, implementation of this section creates too much uncertainty as to when or whether the law will become effective.

Laws of 1982, 1st Ex. Sess., ch. 53, at 1511. Thereafter, plaintiff Washington Federation of State Employees, AFL-CIO, filed a complaint for declaratory judgment and injunction against defendants State of Washington; Governor Spellman; Higher Education Personnel Board, Douglas Sayan, Director; and State Personnel Board, Leonard Nord, Secretary.

The union alleged enactment of Laws of 1982, 1st Ex. Sess., ch. 53 would change the terms, rights, and benefits historically accorded to public employees under the state civil service law.

The challenged provisions of chapter 53 include:

1. Certification. The number of names referred to hiring authorities for vacancies, promotions, and reemployment from layoff is increased from two to four more names than there are vacancies to be filled. Sections 4(2) and 16(2).

2. Increment Salary Increases. Length of service (seniority) as the sole basis for awarding increment salary step increases is eliminated. Sections 4(18) and 16(18). Instead, employee performance evaluation standards will additionally be utilized to award salary increases. Sections 6, 8, and 21.

3. Layoffs. Reduction in force is no longer based solely upon seniority. The decision is now also founded upon an employee's performance. Sections 7 and 20.

4. Reemployment From Layoff. Rather than base reemployment on seniority, hiring authorities are also subject to the expanded certification law. Sections 10 and 23.

The union maintained public employees covered by the state civil service and higher education personnel laws relied on established practices and regulations under existing laws which amounted to contract expectancies under Const, art. 1, § 23. The amendments were alleged to have impaired substantially their contract with the State and hence to be violative of the contract clause of Const, art. 1, § 23. Additionally, plaintiffs challenged the validity of Governor Spellman's veto of section 30. See Laws of 1982, 1st Ex. Sess., ch. 53, at 1510.

Motions for intervention were granted to the following plaintiff unions: Washington Public Employees Association; United Food and Commercial Workers, Local 1001; and International Federation of Professional and Technical Engineers, Local 17.

Plaintiffs moved for summary judgment and defendants cross-motioned. The Superior Court granted (1) defendants' motion for summary judgment upholding the constitutional validity of Laws of 1982, 1st Ex. Sess., ch. 53, and (2) plaintiffs' motion for summary judgment invalidating the Governor's affirmative veto of section 30. Both parties appealed. Pursuant to RAP 4.2, direct review was accepted.

I

Contract Clause

"No . . . law impairing the obligations of contracts shall ever be passed." Const, art. 1, § 23. This provision is substantially the same as U.S. Const. art. 1, § 10 and is to be given the same effect. Ruano v. Spellman, 81 Wn.2d 820, 825, 505 P.2d 447 (1973).

Generally, a statute is treated as a contract when the language and circumstances demonstrate a legislative intent to create rights of a contractual nature enforceable against the State. United States Trust Co. v. New Jersey, 431 U.S. 1, 17 n.14, 52 L. Ed. 2d 92, 97 S. Ct. 1505 (1977).

The difficulty . . . has always been to distinguish what is intended by the legislature to be an exercise of its ordinary legislative function in making laws, which, like other laws, are subject to its full control by future amendments and repeals, from what is intended to become a contract between the State and other parties when the terms of the statute have been accepted and acted upon by those parties.

Hale, The Supreme Court and the Contract Clause: II, 57 Harv. L. Rev. 621, 663-64 (1944) (quoting New Jersey v. Yard, 95 U.S. 104, 114, 24 L. Ed. 352 (1877)). See Aetna Life Ins. Co. v. Washington Life & Disab. Ins. Guar. Ass'n, 83 Wn.2d 523, 539, 520 P.2d 162 (1974). Compare Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 104-05, 82 L. Ed. 685, 58 S. Ct. 443,113 A.L.R. 1482 (1938) (contract between teacher and school corporation evinced by the numerous uses of the word "contract" in the state act) with Dodge v. Board of Educ., 302 U.S. 74, 78-79, 82 L. Ed. 57, 58 S. Ct. 98 (1937) (teacher compulsory retirement law did not create a contractual obligation as neither the language of the law nor the circumstances of its adoption evinced such a legislative intent).

Plaintiff unions contend the state civil service laws form the basis of a contractual relationship between the State and its public employees. These laws are alleged to form a "statutory contract" which is binding under Const, art. 1, § 23, through the promise of "deferred benefits" in return for the acceptance and continued employment of public employees. Moreover, the public employees' reliance on the State's statutory promises is claimed to invoke the doctrine of promissory estoppel. Restatement (Second) of Contracts § 90 (1981). Additionally, plaintiffs maintain the public employee pension cases, beginning with Bakenhus v. Seattle, 48 Wn.2d 695, 296 P.2d 536 (1956), are analytically similar.

Bakenhus involved the modification of a pension statute, during the tenure of the plaintiff policeman, which would have deprived the officer of approximately one-third of his anticipated pension. Bakenhus v. Seattle, supra at 703. Affirming an increase in pension funds, we determined the State's obligation to pay a pension was contractual in nature and vested at the time the employee entered public service. Bakenhus v. Seattle, supra at 698-70.

Subsequent cases have affirmed the Bakenhus holding. See Washington Fed'n of State Employees Coun. 28 v. State, 98 Wn.2d 677, 658 P.2d 634 (1983) (pension rights of public employees unconstitutionally impaired by statute preventing the inclusion of the value of accrued vacation time in computing pension benefits); Horowitz v. Department of Retirement Sys., 96 Wn.2d 468, 635 P.2d 1078 (1981) (denial of refund of contributions to judicial retirement system due to contractual bar of pertinent statute); Eagan v. Spellman, 90 Wn.2d 248, 581 P.2d 1038 (1978) (a lowering of the mandatory retirement age after an employee commenced public service was invalidated as her potential pension was decreased from 28 percent to 18 percent of her average final compensation); Washington Ass'n of Cy. Officials v. Washington Pub. Employees' Retirement Sys. Bd., 89 Wn.2d 729, 575 P.2d 230 (1978) (the practice of Public Employees' Retirement System to include lump sum termination payments in the computation of "average final compensation", which determines pension payments, held to be a contractual obligation).

Defendants argue the state civil service laws do not create a contract between the State and its employees. Relying principally upon Association of Capitol Powerhouse Eng'rs v. State, 89 Wn.2d 177, 570 P.2d 1042 (1977), defendants maintain:

[T]he terms and conditions of public employment . . . are basically controlled by statute, not by contract . . . [as i]t is clearly within the province of the legislature to enact statutes regulating the "mode and appointment and tenure in public employment."

89 Wn.2d at 184 (quoting Gogerty v. Department of Insts., 71 Wn.2d 1, 5, 426 P.2d 476 (1967)). See Greig v. Metzler, 33 Wn. App. 223, 230, 653 P.2d 1346 (1982).

Additionally, defendants limit the Bakenhus rule to "pension" cases and distinguish "tenure" cases. This distinction was clearly defined in Eagan v. Spellman, 90 Wn.2d 248, 581 P.2d 1038 (1978). The majority in Eagan found the lowering of the mandatory retirement age affected a pension right and therefore did not need to "question the ability of public employers to terminate their employees nor the tenure rights of such employees." 90 Wn.2d at 255. The dissent found the law to be a "regulation of a term of public employment (tenure) which is the unchallenged right of the county to exercise unilaterally . . . unrelated to the contract rights involved in a pension scheme." 90 Wn.2d at 263 (Horowitz, J., dissenting).

We adopt the defendants' position as the correct statement of the law. The rights challenged here are neither deferred benefits nor do they give rise to contractual expectancies. Rather, the affected provisions (certification, increment salary increases, layoffs, and reemployment from layoffs) are best categorized as terms of public employment (tenure) and part of a system of personnel administration. Cf. RCW 41.06.010; RCW 28B.16.010. Tenure is regulated by legislative policy. We affirm the judgment of the trial court that the 1982 amendments do not constitute impairment of contract.

II

Governor's Veto

Plaintiffs challenge the Governor's veto principally on two grounds: (1) the veto is prohibited under Const. art. 3, § 12 (amend. 62) as an item veto; and (2) the veto is void as an "affirmative" rather than a "destructive" veto, Washington Ass'n of Apartment Ass'ns v. Evans, 88 Wn.2d 563, 564 P.2d 788 (1977). A third ground, argued without citation to authority, has no substance.

The trial court found plaintiffs' first contention to be without merit. In considering the second contention it recognized "the Governor's veto has elements that are at once affirmative and destructive." However, it concluded "the veto which we are here concerned was used affirmatively to create different legislation than that which was made certain by the provision of SHB 1226 prior to the veto . . . [and] must be declared invalid."

Defendants urge abolition of the affirmative-negative veto analysis claiming it has an inherent subjectivity which fosters uncertainty in the legislative process and which involves the judiciary in the exercise of legislative powers. Alternatively, defendants maintain Governor Spellman validly exercised his veto power.

1. Item Veto

Const, art. 3, § 12 (amend. 62) provides in part:

If any bill presented to the governor contain [s] several sections or appropriation items, he may object to one or more sections or appropriation items while approving other portions of the bill: Provided, That he may not object to less than an entire section, except that if the section contain [s] one or more appropriation items he may object to any such appropriation item or items.

The intent of the Legislature in passing the measure is summarized in this colloquy:

Senator Grant: ". . . It is intended by this measure to return the veto power to its status as of about 1959. That is the governor, of course, can veto an entire bill. ... If an enactment is so structured in sections, he can veto entire sections of bills. The question now is the item veto and how that affects it. There would no longer be an item veto under this constitutional amendment, with the exception of appropriations amounts, that is less than a section. He can veto appropriations amounts out of a main budget bill or out of any bill that has an appropriation attached to it, but he cannot under this constitutional amendment, according to our caucus attorney, veto any less than a section; that is, language that is less than a section, except for the appropriation itself."

Senator Lewis (Harry): "Senator Grant, a further question. In the event an appropriation bill had a proviso in it which proviso would be less than a full section, would you clarify the intent of this constitutional amendment as to the right of the governor to veto that proviso or an amount within the proviso or an amount indicated as part of the proviso?"

Senator Grant: "It is my understanding and it is our intent, the intent of the sponsors of this measure, that he could not veto less than an entire section, a proviso that was less than an entire section, except for the appropriations amount."

Senate Journal, 43d Legislature, 3d Ex. Sess. (1974), at 116. Thus, except for appropriations, the sixty-second amendment abolished the item veto in Washington. See generally Washington Ass'n of Apartment Ass'ns v. Evans, supra; State ex rel. Ruoff v. Rosellini, 55 Wn.2d 554, 348 P.2d 971 (1960); Cascade Tel. Co. v. State Tax Comm'n, 176 Wash. 616, 30 P.2d 976 (1934); Burke, The Partial Veto Power: Legislation by the Governor, 49 Wash. L. Rev. 603 (1974). Const. art. 3, § 12 (amend. 62) also provides:

That within forty-five days next after the adjournment, Sundays excepted, the legislature may, upon petition by a two-thirds majority or more of the membership of each house, reconvene in extraordinary session, not to exceed five days duration, solely to reconsider any bills vetoed.

According to Senator Grant, the way the veto can be "gotten around" is to have "two-thirds [of the] members petition, call themselves back in for a veto session, if it really is contradictory to a two-thirds majority of the wishes of the members of the Senate." Senate Journal, supra at 89.

The veto of Governor Spellman was of an entire section and was valid. The deleted references to section 30 were incidentally vetoed purely as a ministerial act. If not deleted, the code reviser, pursuant to RCW 1.08.015(2)(m), would have taken out such "manifestly obsolete" references.

"In approving or disapproving legislation, the Governor acts in a legislative capacity and as part of the legislative branch of government." Hallin v. Trent, 94 Wn.2d 671, 677, 619 P.2d 357 (1980). In effect, the Governor holds one-third of the votes. The veto is upheld if the Legislature fails to override it. Fain v. Chapman, 94 Wn.2d 684, 688, 619 P.2d 353 (1980). To override the Governor's veto, the Senate and House must agree by a two-thirds vote. Const. art. 3, § 12 (amend. 62).

The Washington Legislature in 1983 passed Substitute House Bill 134, which restored much of the civil service law as it existed prior to passage of chapter 53, Laws of 1982, 1st Ex. Sess. Legislative Report, 48th Legislature (Final, 1983), at 59-61. This bill, however, was vetoed in its entirety by Governor Spellman on May 17, 1983. Legislative Report, at 333-34. Although the Legislature may reconvene in extraordinary session to reconsider any bills vetoed, it did not do so and this veto was not overridden.

2. Affirmative-Negative Veto Test

Prior case law limited the Governor's veto power by the so-called "affirmative-negative" test. Spokane Grain & Fuel Co. v. Lyttaker, 59 Wash. 76, 86, 109 P. 316 (1910).

[T]he Governor may use the veto power to prevent some act or part of an act of the legislature from becoming law. Likewise, the Governor may not use the veto power to reach a new or different result from what the legislature intended. In other words, the veto power must be exercised in a destructive and not a creative manner.

(Citation omitted.) Washington Ass'n of Apartment Ass'ns, 88 Wn.2d at 565-66. In Washington Ass'n, the Governor's veto of two full sections and parts of nine other sections of the Residential Landlord-Tenant Act of 1973 (RCW 59.18) was found to have substantially altered the act to be more favorable to tenants. We held all of these vetoes to be affirmative and therefore invalid.

The record of this court of employing the affirmative-negative test has been less than clear. See Fain v. Chapman, supra (section veto of law providing five new judicial positions in King County to be filled by election upheld); Hallin v. Trent, supra (veto of law providing for new superior court positions in three counties to be filled by election upheld because the veto was used destructively without affecting the basic thrust of the legislation); State ex rel. Ruoff v. Rosellini, supra (item veto of amount of Governor's salary held valid); Cascade Tel. Co. v. State Tax Comm'n, supra (veto of legislative command requiring public utilities to pass tax on to their customers upheld as negative).

Although we find the veto in this case not to have been an affirmative veto, we believe the affirmative-negative veto concept has outlived its usefulness. Its use by the judiciary is an intrusion into the legislative branch, contrary to the separation of powers doctrine, State ex rel. Gunning v. Odell, 58 Wn.2d 275, 278, 362 P.2d 254 (1961), modified, 60 Wn.2d 895, 371 P.2d 632 (1962); Household Fin. Corp. v. State, 40 Wn.2d 451, 455, 244 P.2d 260 (1952), and substitutes judicial judgment for the judgment of the legislative branch. See State Pub. Employees' Bd. v. Cook, 88 Wn.2d 200, 206, 559 P.2d 991 (1977). For an excellent discussion of the separation of powers doctrine with respect to this issue see State ex rel. Kleczka v. Conta, 82 Wis. 2d 679, 264 N.W.2d 539 (1978).

Moreover, we find the test to be unworkable and subjective; it is a conclusion, not a test. There are no standards to predict whether a veto will be perceived by the court as affirmative or negative. Compelling arguments against the affirmative-negative test were made in a recent Wisconsin case:

To hold that the exercise of the partial veto power may not have an "affirmative," "positive" or "creative" effect on legislation, or that the veto may not change the "meaning" or "policy" of a bill, as some courts elsewhere have done, would be to involve this court in disingenuous semantic games. While these tests may be appealing in the abstract, they are unworkable in practice. Every veto may be perceived in affirmative or negative terms, and as either conforming to or defying the general legislative intent, depending upon the observer's perspective. These tests are inescapably subjective. Without an objective point of reference, this court would be reduced to deciding cases upon its subjective assessment of the respective policies espoused by the legislature and the executive, an unseemly result which would foster uncertainty in the legislative process. More importantly, such a result would defeat its own purpose; the judicial department may no more assume the proper functions of the legislature, or interfere with their discharge, than may the governor.

State ex rel. Kleczka v. Conta, supra at 721 (Hansen, J., concurring in part, dissenting in part).

As the defendants note, the test perhaps was needed prior to adoption of amendment 62 when the item veto was not limited to appropriations and the Legislature did not have the authority to call itself back into session to reconsider vetoes. With the changes adopted in amendment 62, its use is no longer appropriate.

The veto of the Governor is upheld. We hereby abandon the affirmative-negative veto test. The Governor is free to veto "one or more sections or appropriation items”, without judicial review. The "check", as it has always been, will be the Legislature's two-thirds override. While it may be argued it is difficult for the Legislature to obtain the two-thirds concurrence to call itself into a special veto session or override a veto, these constitutional arrangements are for the people to determine, not this court. If these arrangements become unsatisfactory or subjected to abuse, the people are capable of making desired changes. See Const, art. 3, § 12 (amend. 62).

We affirm the decision of the trial court upholding the validity of Laws of 1982, 1st Ex. Sess., ch. 53, p. 1491 and reverse its judgment as to the validity of the veto.

Utter, Brachtenbach, Dimmick, and Pearson, JJ., and Cunningham, J. Pro Tern., concur.