Appellate Court Rules That Employer Has Duty To Meet And Consult About Binding Interest Arbitration

The California Court of Appeal has held that unions have a right to meet and confer about binding interest arbitration. Specifically, it affirmed the ruling of the Public Employment Relations Board ("PERB" or "Board") that the City of Palo Alto ("City") was required to consult in good faith over a ballot measure repealing binding interest arbitration. (City of Palo Alto v. Public Employment Relations Board (2016) 5 Cal.App.5th 1271.)

Facts
The City’s Charter contained a binding interest arbitration provision for disputes at impasse. In 2010, the City took preliminary steps to repeal this provision. The International Association of Firefighters, Local 1319 ("Union") asked to meet and confer with the City.

Over the next year, the City either refused or ignored the Union’s requests to meet and confer over this issue. On July 18, 2011, the City Council adopted a resolution calling for a special election on November 8, 2011, and for a measure to eliminate the binding interest arbitration requirement in the City Charter.

On July 28, 2011, the Union filed an unfair practice charge, alleging that the City’s failure to meet and confer violated the Meyers-Milias-Brown Act (MMBA).

On November 8, 2011, the election occurred and the ballot measure repealing the binding interest arbitration provision passed.

Procedural Background
In August 2014, PERB ruled that the City had violated its duty to meet and consult under Section 3507 of the MMBA. The Board held that it could not remedy this unfair practice by overturning the election results. Instead, it ordered the City Council to rescind its July 18, 2011 resolution referring the ballot measure to the voters. Thereafter, the Union and other interested persons could seek relief from the courts.

The City filed a petition for writ of extraordinary relief with the California Court of Appeal, seeking to annul the Board’s order to rescind the 2011 resolution.

Court of Appeal Decision
The Court of Appeal concurred with PERB that the Union sufficiently requested to meet and consult with the City, and that the City failed to satisfy this duty mandated by MMBA section 3507(a)(5). Section 3507(a) provides: A public agency may adopt reasonable rules and regulations after consultation in good faith with representatives of a recognized employee organization or organizations for the administration of employer-employee relations under this chapter. The rules and regulations may include provisions for all of the following: (5) Additional procedures for the resolution of disputes involving wages, hours and other terms and conditions of employment."

The Court acknowledged that binding arbitration is a permissive, not mandatory, subject of bargaining under MMBA sections 3504 and 3505. However, it ruled that the duty to consult in good faith under section 3507 is distinct from these sections. The Court noted that section 3504 discusses a labor organization’s authority to represent its members in certain employer relations disputes, such as those that involve wages, and that section 3505 concerns policy or courses of action regarding wages, hours, and other terms and conditions of employment. "Section 3507, on the other hand, deals with public agencies’ ability to establish reasonable rules and regulations regarding the administration of employer-employee relations under the MMBA. And section 3507 subjects the development of these reasonable rules and regulations to a requirement that the public agency must first consult with recognized employee organizations." The mandatory subjects for consultation in section 3507 concern the very system of collective representation established by the MMBA, rather than employee wages, hours, and terms and conditions of employment provided in sections 3504 and 3505.

The Court found that binding arbitration implicates section 3507, as this provision requires public agencies to meet and consult with recognized unions regarding the development of reasonable rules and regulations. The Court concurred with the Board that the City failed to satisfy its obligation to meet and consult with the Union on its binding arbitration resolution proposal.

The Court also upheld the determination by PERB that "consultation in good faith" mandated by section 3507 is very much like the "meet and confer" process mandated under section 3505. It recognized that "appellate courts have consistently held that the duty to meet and consult under section 3507 and the duty to meet and confer under section 3505 are comparable."

The Court then turned to PERB’s remedial authority. While the Court acknowledged that the Board has broad authority under Section 3509 of the MMBA to remedy unfair practice charges and restore the parties to the status quo ante, the Court held that this authority did not permit it to compel legislative action. Under the doctrine of separation of powers among the three coequal branches of government, neither courts nor quasi-judicial agencies such as PERB may command or prohibit legislative actions.

The Court distinguished between invalidating a public agency’s legislative action and ordering an agency to enact or rescind legislation. The former remedy appropriately concludes that a legislative act never occurred due to a procedural defect, while the latter remedy acknowledges a prior legislative act and unlawfully orders the public agency to adopt different legislation. The separation of powers doctrine prohibits this latter remedy. Consequently, the Court found that PERB lacked the remedial authority to compel the City Council to legislate and rescind its 2011 ballot measure. The Court annulled the Board’s decision regarding this aspect of the remedy.