Werdlow v. Detroit Policemen & Firemen Retirement System Board of Trustees

711 N.W.2d 404, 269 Mich. App. 383
CourtMichigan Court of Appeals
DecidedMarch 31, 2006
DocketDocket 254516
StatusPublished
Cited by2 cases

This text of 711 N.W.2d 404 (Werdlow v. Detroit Policemen & Firemen Retirement System Board of Trustees) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Werdlow v. Detroit Policemen & Firemen Retirement System Board of Trustees, 711 N.W.2d 404, 269 Mich. App. 383 (Mich. Ct. App. 2006).

Opinions

FORT Hood, J.

A labor dispute between the city of Detroit and the Detroit Police Officers Association (DPOA) was submitted to binding arbitration pursuant to 1969 PA 312 (Act 312), MCL 423.231 et seq.1 The arbitration panel determined that the composition of the pension board would be altered. Previously an 11-member board, it was concluded that two board members would be replaced and a twelfth member would be added. The same pension board acted on behalf of four different unions, and participation in the arbitration was limited to plaintiff city and the DPOA. Although the arbitration involved only one union, the contract governing the union for the Detroit Police Lieutenants and Sergeants Association (DPLSA) contained an express provision adopting the conditions of the DPOA agreement.2 However, the remaining two unions,3 whose members’ retirement benefits were governed by the same pension board as the members of the DPOA, allegedly did not have the same language in [387]*387their collective bargaining agreements. Nonetheless, plaintiffs alleged that the two remaining unions were bound by the Act 312 arbitration award involving the city and the DPOA through the labor principle of parity.4 Plaintiffs noted the fact that, in the past, the unions had filed suit to obtain wages and compensation that had been negotiated in other Act 312 proceedings. Plaintiffs attempted to seat the 12-member pension board, but were rejected. Consequently, plaintiffs filed suit to seat the 12-member board and allow it to govern the four unions regardless of the participants in the Act 312 arbitration ruling that altered the composition of the board. The trial court granted defendants’ motion for summary disposition and denied plaintiffs’ motion for summary disposition, concluding that violations of due process of law would occur by requiring defendant unions to be bound by an arbitration proceeding in which they did not participate. We affirm the trial court’s decision regarding summary disposition, but remand for clarification of the order.

I. PROCEDURAL HISTORY

On October 9, 2003, plaintiffs filed a complaint for declaratory and injunctive relief.5 This complaint alleged that the Policemen and Firemen Retirement [388]*388System (the system) was a tax qualified, defined benefit plan established to provide retirement allowances to police officers, fire fighters, and their beneficiaries. Pursuant to federal and state statutory requirements, the assets for the system were held in a trust fund separate and distinct from city assets with administration of the system and the fund by the board of trustees. Plaintiffs asserted that the composition of this pension board was a mandatory subject of bargaining. On June 15, 2001, the DPOA filed with the Michigan Employment Relations Commission (MERC) a petition to initiate Act 312 binding arbitration proceedings involving employment condition disputes, including wages and hours, for a collective bargaining agreement to cover the period from July 1, 2001, to June 30, 2004. The prior collective bargaining agreement had a provision, article 46, that set forth the composition of the board of trustees. These 11 members were: (1) the mayor or his representative; (2) the president of the city council or other council member; (3) the city treasurer or deputy treasurer; (4) the chief of police or designated representative; (5) the fire commissioner or designated representative; and (6) to (8) three fire fighters who were members of the system and elected by their peers and (9) to (11) three police officers who were members of the system and elected by their peers (Union Board Members).

In the complaint, plaintiffs asserted that the function of the pension board was to render decisions for the benefit of the long-term operation of the retirement system. The board was to act on recommendations of the actuary and could not modify, expand, or increase pension benefits. During the collective bargaining pro[389]*389cess before the submission to arbitration, plaintiff city proposed amendments of article 46 that would have altered the board composition to provide for equal representation of the employer and the employees “to provide a method of resolving actuarial and non-actuarial issues in the event of a Board deadlock.” Because six of the 11 trustees on the board were Union Board Members and union officers, it was asserted that the unions utilized the majority status of the existing article 46 to obtain city benefits that could not be gained through collective bargaining or Act 312 arbitration. It was further alleged that the Union Board Members majority also utilized its status to obtain member benefits not authorized by the system, and that the DPOA opposed this proposal and included the issue in the arbitration.

Hearings were held between October 10, 2002, and April 11, 2003, before the arbitration panel issued an award on August 28, 2003. Plaintiffs asserted that the DPOA arbitration panel identified clear and convincing evidence that the unequal representation on the board had affected the city’s budget and member benefits. Therefore, the arbitration panel altered the composition of the board and determined that it would consist of: (1) the mayor or his representative; (2) city council president or other council representative; (3) city treasurer or deputy treasurer; (4) finance director or designated representative; (5) budget director or designated representative; (6) corporation counsel or designated representative; (7) to (9) three member fire fighters elected by peers; and (10) to (12) three member police officers elected by their peers. Plaintiffs alleged that the DPOA award incorporated the change of the composition of the board into the DPLSA agreement.

[390]*390Plaintiff city was also a party to the collective bargaining agreement with the Detroit Fire Fighters Association, Local 344 I.A.F.F. (DFFA). That agreement expired on June 30, 2001, but continued to be in effect by mutual agreement. Despite the fact that plaintiff city and defendant DFFA were involved in Act 312 arbitration, plaintiffs did not wait to determine the outcome of the proceeding and any effect on the pension board. Rather, plaintiffs alleged that the DFFA agreement provided that its members were the beneficiaries of the same system as the members of the DPOA. Specifically, plaintiffs alleged that the DFFA agreement provided for the same board and the same benefits. Therefore, the DPOA agreement addressing board composition was subject to parity and had to be incorporated into the DFFA agreement. On the basis of the contractual principle of “parity,” the wages and benefits, including pension benefits, automatically passed to members of the DFFA and were incorporated into the DFFA agreement. Plaintiffs further asserted that these benefits were not separately negotiated by plaintiff city and the DFFA and were not submitted to Act 312 proceedings. Thus, plaintiffs concluded that the DFFA agreement had to be amended to incorporate the DPOA award addressing board composition.

Plaintiffs also contended that the Union Board Members majority on the pension board constituted a “cash benefit” to DFFA members. A proposal submitted to the arbitration panel under Act 312 had to be defined as “economic” or “non-economic.” Economic proposals involved payment of compensation or benefits to union members, and the panel was required to adopt one party’s economic proposal as submitted without modification.

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Bluebook (online)
711 N.W.2d 404, 269 Mich. App. 383, Counsel Stack Legal Research, https://law.counselstack.com/opinion/werdlow-v-detroit-policemen-firemen-retirement-system-board-of-trustees-michctapp-2006.