ALASKA LABOR RELATIONS AGENCY
3301 EAGLE STREET, SUITE 208
P.O. BOX 107026
ANCHORAGE, ALASKA 99510-7026
907-269-4895
FAX 907-269-4898
PUBLIC SAFETY EMPLOYEES )
ASSOCIATION, )
)
PETITIONER, )
)
vs. )
)
STATE OF ALASKA, )
)
RESPONDENT. )
_______________________________ )
Case No. 00-1029-CBA
DECISION AND ORDER NO. 255
Digest: 1. Legal indemnification is a mandatory subject of bargaining.
2. AS 23.40.210 requires that all collective bargaining agreements include a
grievance procedure that culminates in binding arbitration. AS 23.40.210 does
not require that all mandatory subjects of bargaining must be subject to the
parties' grievance-arbitration procedure.
Appearances: James Gasper, attorney for the Public Safety Employees Association;
Kent Durand, labor relations analyst for the State of Alaska.
Panel: Robert Doyle, Karen Mahurin, and Aaron Isaacs, Jr.
DECISION
Statement of the Case
The Public Safety Employees Association (PSEA) filed a petition to enforce its
collective bargaining agreement (CBA) with the State of Alaska (State). PSEA
asks this Agency to find that legal indemnification is a mandatory subject of
bargaining, that under AS 23.40.210, all mandatory subjects of bargaining must
be subject to the grievance arbitration process in the parties’ collective
bargaining agreement, and that Article 36 of the parties' collective bargaining
agreement is therefore illegal insofar as it excludes legal indemnification from
the grievance-arbitration process. The State disputes PSEA’s assertion. It
argues, among other things, that the parties agreed in negotiations to exclude
legal indemnification from the grievance-arbitration process, and AS 23.40.210
does not prohibit this exclusion.
The board panel heard this dispute on August 1, 2000. Hearing Examiner Mark
Torgerson presided. This matter was decided based on the evidence submitted and
the testimony of witnesses at the hearing. The record initially closed on August
1, 2000. However, before the panel could complete deliberations, Acting Chair
Blair Marcotte resigned from the agency Board. In subsequent deliberations, the
remaining members Robert Doyle and Karen Mahurin deadlocked. The record was
reopened to notify the parties that Acting Chair Aaron Isaacs, Jr. would join
the panel and assist in resolution of the petition. The parties were given the
opportunity to object to Mr. Isaacs siting on the panel, under AS 44.62. 450(c).
(April 20, 2001, letter). The record then closed again on May 7, 2001.
Issues
1. Is legal indemnification, under Article 36 of the parties' collective
bargaining agreement, a mandatory subject of bargaining?
2. Does AS 23.40.210 require that all mandatory subjects of bargaining must be
subject to the grievance-arbitration procedure in the parties' collective
bargaining agreement, or they are otherwise illegal? Alternatively, can a party
waive the right, during contract negotiations, to have the grievance-arbitration
procedure applicable to a mandatory subject?
Findings of Fact
The panel, by a preponderance of the evidence, finds the facts as follows:
1. The Public Safety Employees Association (PSEA) is recognized as the exclusive
bargaining representative for the Correctional Officers bargaining unit. (State/ASEA
Collective Bargaining Agreement (1996-1999), Joint Exh. 3, at 1.)
2. PSEA and the State of Alaska (State) entered into a collective bargaining
agreement for the period July 1, 1996, to June 30, 1999. Id. at 68.
3. Article 16.01(A) of the agreement contains the parties’ grievance procedure,
which provides for arbitration as its final step. It states as follows:
A grievance shall be defined as any controversy or dispute involving the
application or interpretation of the terms of this Agreement arising between the
Union or an employee or employees and the Employer. The parties agree that they
will promptly attempt to adjust all grievances arising between them. The Union
or the aggrieved employee or employees shall use the following procedure as the
sole means of settling grievances, except where alternative dispute resolution
and appeal procedures have otherwise been agreed to in this collective
bargaining agreement, in which case the applicable alternative procedure shall
be the exclusive appeal process available to the employee or employees.
Id. at 29.
4. Article 36 of the agreement addresses legal indemnification, that is, those
situations when the State decides if it will defend a bargaining unit member
sued in civil court. It states at Article 36(A):
If the employer determines that a bargaining unit member did not engage in
conduct beyond the scope of the bargaining unit member's authority or which
constituted willful misconduct or gross negligence in the performance of the
bargaining unit member's duties, upon request the employer agrees to provide for
the legal defense of the bargaining unit member in any civil legal action
brought against the bargaining unit member as a result of the performance of the
bargaining unit member's duties.
Id. at 70.
5. Article 36(B) requires the employee to make a timely request that the State
provide legal services. If the request is untimely, the State is relieved of any
obligation under the Article. Id.
6. Article 36(C) gives the State the right to determine "which attorney shall
represent the bargaining unit member." Id.
7. Article 36(D) provides that if the State concludes the employee did not act
beyond the scope of the employee's authority or in a manner that constituted
willful misconduct or gross negligence, the State agrees to pay the employee's
usual rate of pay plus per diem necessary to prepare the case for negotiation or
trial. The State also agrees to pay any judgment "rendered against the
(employee) if the State has provided legal services" on behalf of the employee,
"pursuant to this Article." Id.
8. Article 36(E) gives the State discretion to defend the employee under the
article, "with reservation." If the State does defend the employee, and a court
finds that the employee acted beyond the scope of his or her authority or with
willful misconduct or gross negligence, "then the [State] has no liability
whatsoever to the bargaining unit member or any other person as a result of such
determination." Article 36(E) adds that when this occurs, the employee is
responsible for the associated judgment, costs and fees. Id.
9. Article 36(F) addresses applicability of the grievance-arbitration process
contained in the parties' agreement. It states in relevant part: "Consistent
with past practice, decisions of the Employer pursuant to this Article shall not
be subject to the grievance-arbitration procedures." Id. at 71.
10. Two correctional officers, members of the PSEA bargaining unit, were
disciplined for incidents involving prison inmates. In separate civil court
actions, each was sued by the inmates for damages allegedly resulting from the
work incidents.
11. The State investigated the allegations to determine whether to represent the
officers in civil court, pursuant to contract Article 36. In letters to the two
correctional officers, the Attorney General's office notified them that the
State would not provide legal representation or otherwise defend them in civil
court. It concluded from its investigation that the officers had committed
willful misconduct or gross negligence in performing their work duties related
to the incidents. (PSEA Exh. 1, attachments 6 and 11.)
12. PSEA filed grievances on the officers' behalf, requesting in part that the
State indemnify the officers in the lawsuits. (PSEA Exh. 1, attachment 7.) The
State returned the grievances to PSEA without accepting them. Citing to Article
36F of the parties' agreement, the State contended that the issue of legal
indemnification (whether the State would represent the employees in the lawsuit)
was not subject to the parties' grievance/arbitration process. The State
notified PSEA that, based on its investigation under Article 36, it would not
indemnify these officers. (PSEA Exh. 1, attachment 13.)
13. PSEA filed a petition to enforce the contract. (January 14, 2000, petition.)
According to the petition, the parties' contract provides for final and binding
arbitration of all contractual disputes. The petition further asserts: "The
contract also expressly prohibits the filing of grievances where the issue of
indemnifying state employees is concerned. Art 36F. Under Alaska law, no
mandatory subject may be excluded from the grievance arbitration mandated by AS
23.40.210(a). . . ." PSEA requested that the Agency enforce the grievance
arbitration clause and issue a declaration "that the contract language
prohibiting grievance review of the State's determination as to indemnification
is invalid, and should be stricken from the contract as illegal language
contrary to AS 23.40.210(a)."
14. In its response to the petition, the State contends that "[a]s a matter of
Public Policy, the cost and initiation of litigation is exclusively within the
control of the Office of the Attorney General (AS 23.40.250(9) and AS 44.23.020)
and therefore is not subject to control and review by a third party." (State's
March 10, 2000, response.) The State's response also asserts that employee
indemnification is a permissive subject of bargaining and may therefore be
excluded from the grievance-arbitration process. Alternatively, the State argues
that even if employee indemnification is a mandatory subject of bargaining, the
parties may agree, as they did in their collective bargaining agreement, "to
exclude employee indemnification provisions from the grievance/arbitration
procedure."
ARGUMENTS
In its Prehearing Statement, PSEA argues that "decisional law holds that
mandatory subjects of bargaining cannot be excluded from the grievance procedure
by contract waiver." (PSEA prehearing statement at 1.) PSEA contends that in
this case, the State violated the parties' collective bargaining agreement "by
refusing to process the grievances . . . over the State's refusal to indemnify
those Correctional Officers in lawsuits brought by inmates . . . ." PSEA
concludes that "[c]ontract language precluding grievances of indemnification
decisions is therefore illegal, void under Alaska law, and not binding on the
parties." (Id. at 1-2.)
In its hearing brief, PSEA contends that 1) PERA (23.40.210) mandates that
collective bargaining agreements have a grievance procedure that culminates in
final and binding arbitration; 2) Hemmen v. State, 710 P.2d 1001 (Alaska 1985),
held that a collective bargaining agreement cannot waive the right to grieve to
arbitration any mandatory subject of bargaining, "[t]hus, to the extent Article
36F excludes legal indemnification determinations of the State from grievance
arbitration, it is void;" and 3) legal indemnification in Article 36F is a
mandatory subject of bargaining (PSEA brief at 5.)
PSEA argues that indemnification is a "mandatorily negotiable" subject of
bargaining. PSEA acknowledges that "[r]efusal to indemnify is clearly within
management's prerogative," but then argues that "it is not . . . an unfettered
discretionary prerogative." PSEA adds: "And because such discretion is not
absolutely vested in the Attorney General's authority, it is mandatorily
negotiable, [and] PSEA urges the Agency to so find." (PSEA brief at 14.) PSEA
contends that, implied in Hemmen is the "rule of law that all mandatory subjects
may be grieved to final and binding arbitration." (PSEA brief at 14-15.)
The State disputes PSEA's arguments. It claims that the parties, "through the
collective bargaining process, expressly agreed to exclude certain disputes and
controversies from the grievance procedure. One mutually agreed to exclusion is
Article 36-Legal Indemnification." (State brief at 1.)
Regarding PSEA's argument that all negotiated mandatory subjects in an agreement
must provide for review through the grievance-arbitration process, the State
responds: "To suggest that as a matter of law all negotiated mandatory subjects
of bargaining in a contract be subject to the grievance-arbitration procedures
is contrary to the strong policy favoring enforcement of the agreement and thus
requiring the parties to honor their agreement." (State brief at 3.)
The State contends that the Board need not determine whether legal
indemnification is a mandatory subject of bargaining in this case, because "even
if legal indemnification is a mandatory subject, the parties negotiated it and
agreed to exclude decisions about it from the grievance-arbitration procedures."
(State brief at 5.) The State points out that the Alaska Supreme Court has found
that the Attorney General is "empowered to bring any action which he thinks
necessary to protect the public interest, and he possesses the corollary power
to make any disposition of the states' litigation which he thinks is best. This
discretionary control over the legal business of the state, both civil and
criminal, includes the initiation, prosecution and disposition of cases." (State
brief at 6, citing to State of Alaska v. First National Bank of Anchorage, 660
P.2d 406, 420-21 (Alaska 1982).
The State disagrees that Hemmen stands for the proposition that a collective
bargaining agreement cannot waive the right to grieve to arbitration any
mandatory subject of bargaining, and that the exclusion of legal indemnification
from the grievance-arbitration process is therefore illegal under PERA. The
State believes this is not the holding of Hemmen. "The present matter does not
involve a contract term that allows a grievance over legal indemnification.
Rather, the contract forecloses grievance and arbitration under Article 36 from
the grievance and arbitration procedure in its entirety. A grievance over the
Attorney General's decision under Article 36 is not allowed and is waived as a
matter of contract. Furthermore, there were no corollary Attorney General powers
to be considered by the Court in Hemmen." (State brief at 7.)
DISCUSSION.
1. Is legal indemnification, under Article 36 of the parties' collective
bargaining agreement, a mandatory subject of bargaining?
We agree with PSEA that legal indemnification is a mandatorily negotiable
subject of bargaining. Other states have so found. See, e.g., In the Matter of
Patrolmen's Benevolent Association of Newburgh, New York, Inc., 18 Off. Dec. of
N.Y. Pub. Employ. Rel. Bd., 18 NYPER 3065 (1985) (union's demand to negotiate
over indemnification -- legal insurance -- was deemed a demand to negotiate over
a form of compensation and was a mandatory subject of negotiation); and In the
Matter of Union County and Union County PBA Locals 199 and 199A, 25 New Jersey
Pub. Employee Rep. 30141 (“Both federal and state courts have held that an
agreement to provide officers with a defense, to reimburse them for the cost of
attorneys who successfully defend them, and to indemnify them against judgments
covers mandatorily negotiable terms and conditions of employment.”)
In Kenai Peninsula Borough School Dist. V. Kenai Peninsula Educ. Ass’n, 572 P.2d
416 (Alaska 1977), the Alaska Supreme Court applied a balancing test in
determining whether a subject of bargaining was mandatory or permissive. The
court stated that in general, “a matter is more susceptible to bargaining the
more it deals with the economic interests of employee and the less it concerns
professional goals and methods.” Id. at 422. See also Alaska Public Employees
Ass’n v. State, 831 P.2d, 1245, 1251 (Alaska 1992) (“a matter is more
susceptible to categorization as a mandatory subject of bargaining the more it
deals with the economic interests of employees and the less it concerns the
employer’s general policies”). We find that public employees would have strong
economic interests in legal representation from their public employer as a
result of getting sued for a work-related function. They should have the right
to bargain over such an issue.
2. Does AS 23.40.210 require that all mandatory subjects of bargaining must be
subject to the grievance-arbitration procedure in the parties' collective
bargaining agreement, or they are otherwise illegal? Alternatively, can a party
waive the right, during contract negotiations, to have the grievance-arbitration
procedure applicable to a mandatory subject?
We disagree with PSEA that mandatory subjects of bargaining cannot be excluded
from the grievance procedure by contract waiver or that it is illegal to waive a
mandatory subject of bargaining such as legal indemnification. We also disagree
with its assertion that AS 23.40.210 requires that all mandatory subjects of
bargaining be subject to a grievance-arbitration procedure. In other words, PSEA
suggests that either party may submit a dispute over a mandatory subject of
bargaining to arbitration whenever it decides to do so, regardless of any other
agreement of the parties.
We construe Hemmen differently than does PSEA. We agree that the Hemmen court
did hold that under AS 23.40.210, grievance procedures must include binding
arbitration as the final step. Clearly, that is what section 210 requires. But
the decision does not state anywhere that this law also requires binding
arbitration for all mandatory subjects of bargaining. The specific holding in
Hemmen states: "We conclude that the objective of AS 23.40.210 is to ensure that
all contracts subject to the statute contain such a [grievance] procedure, and
that binding arbitration be included as the final step of all grievance
procedures. Consequently, we hold that the agreement's exclusion of grievances
involving involuntary transfers from binding arbitration violates AS 23.40.210."
710 P.2d at 1000-01. In fact, nowhere did the Hemmen court use or refer to the
term "mandatory subject."
We construe Hemmen as follows: In contract disputes in which a grievance
procedure applies, AS 23.40.210 requires binding arbitration as the final step
of the procedure. (emphasis added). But Hemmen does not state that all mandatory
subjects of bargaining must have a grievance procedure; nor does it state that
any contract provision stating otherwise is illegal. The problem the court had
with the particular contract provision in Hemmen was--the agreement provided for
a grievance procedure for involuntary transfers of police officers--but the
agreement excluded binding arbitration from the final step of the transfer
procedure. In other words, the union could file a grievance over an involuntary
transfer, but the contract language prohibited it from taking the transfer
dispute to arbitration. The court essentially held that if a matter was subject
to the contract’s grievance procedure, arbitration must be the final step in
that matter’s resolution.
The dispute before us can be distinguished from Hemmen because in this case, the
State and PSEA agreed in negotiations to entirely exclude legal indemnification
decisions by the State (the decisions the State makes under Article 36) from the
grievance-arbitration procedure. In Hemmen, by contrast, involuntary transfer
disputes were included in the grievance steps prior to arbitration, but excluded
from the arbitration process. Further, the court did not address the mandatory
or permissive nature of involuntary transfers. However, we believe that although
a subject of bargaining may be mandatorily negotiable, it does not follow that
that subject must then be mandatorily arbitrable.
PSEA has not pointed to any case or law that prohibits a party from agreeing in
negotiations to waive the right to grieve a mandatory subject of bargaining, and
we could find none. However, in Capitol Steel and Iron Company, 89 F.3d 692, 152
L.R.R.M. (BNA) 2791 (1996), the United States Court of Appeals for the 10th
Circuit stated: “It is also well established that unions can waive their right
to bargain over wages or other mandatory bargaining subjects. Robert A. Gorman,
Basic Text on Labor Law, 466 (1976). Such a waiver is often expressed by means
of an explicit collective bargaining agreement provision like the present one.
Id. at 469.” Moreover, the waiver must be “clear and unmistakable.” Allison
Corporation, 330 N.L.R.B. No. 190, 2000 WL 559853 (2000). In this case, we find
that PSEA clearly waived its right to file grievances regarding matters related
to Article 36, legal indemnification.
We believe that if we were to find in PSEA's favor, one ramification would be
that all mandatory subjects of bargaining in collective bargaining agreements
must be subject to a grievance-arbitration procedure, and any exclusion or
waiver of a mandatory subject from the grievance-arbitration process would be
illegal. This would establish troublesome precedent for labor relations. For
example, Article 4, the parties' management rights clause, references some
mandatory subjects of bargaining, such as layoff. The parties contractually
agreed in the clause that the employer has the right to reduce its labor force.
While some aspects of layoff can be grieved, the decision whether to layoff or
not is currently at management's discretion. However, granting PSEA's petition
would mean that layoff (reduction in force) would be subject to binding
arbitration regardless of the rights granted management under Article 4, as
agreed by the parties. Rather than promoting the harmonious and cooperative
relations envisioned by the Alaska Legislature in its “Declaration of policy”, a
decision in PSEA’s favor would result in increased litigation because other
public employees and employers may have agreed to exclude mandatory subjects of
bargaining from the grievance-procedure.
Another ramification of finding in PSEA's favor would be the effect on the
Attorney General's discretionary control over state-related litigation. In this
case, the Attorney General's decision whether to indemnify, in lawsuits where
state employees are represented by a labor organization, would be subject to an
arbitrator's review and decision. In situations involving a bargaining unit
member whose contract contains a legal indemnification clause, the discretion
would ultimately lie with the arbitrator.
If we were to find in PSEA’s favor, based on its arguments, we would be
concluding that Article 36(f) does not mean what it says: in effect we would be
telling the parties that despite agreeing to exclude legal indemnification and
all its aspects from the grievance-arbitration process, they must nevertheless
utilize that process when the labor organization decides to dispute the State’s
decision regarding legal indemnification. Further, we find we would be unduly
interfering with the parties' contractual agreement they hammered out through
the collective bargaining negotiation process. Such interference would run
contrary to the Alaska Legislature’s declaration of policy, that “it is the
public policy of the state to promote harmonious and cooperative relations
between government and its employees and to protect the public by assuring
effective and orderly operations of government.” AS 23.40.070. In Corporacion De
Servicios Legales De Puerto Rico, 289 N.L.R.B. 612, 1988 WL 213791 (1988), the
National Labor Relations Board noted it often strikes an accommodation among
three competing interests: “the freedom of an employer and a union to enter into
a collective-bargaining relationship, the stability of bargaining relations once
established, and employee freedom of choice—all of which underlie the Act’s
ultimate goal of fostering industrial peace.” In this case, we find the parties
freely entered into an agreement that excluded legal indemnification from the
grievance-arbitration process. We believe we should let that agreement stand.
We conclude that Article 36 of the parties' collective bargaining agreement
excludes legal indemnification from the grievance-arbitration process. Further,
AS 23.40.210 does not prohibit parties from negotiating and agreeing to waive or
exclude specified mandatory subjects or aspects of those subjects from that
process. It does require that all collective bargaining agreements contain a
grievance procedure that "shall have binding arbitration as its final step,"
nothing more and nothing less. In other words, if a grievance procedure applies
in a dispute, that procedure must culminate in binding arbitration.
For these reasons, we conclude that PSEA's petition to enforce its collective
bargaining agreement with the State of Alaska, to find Article 36 illegal, is
denied and dismissed.
CONCLUSIONS OF LAW
1. The State of Alaska is a public employer under AS 23.40.250(7), and the
Public Safety Employees Association is an organization under AS 23.40.250(5).
2. This Agency has jurisdiction under AS 23.40.210 to consider this dispute over
enforcement of the parties' grievance/arbitration provisions in their collective
bargaining agreement, and to consider whether Article 36F is illegal.
3. As petitioner, PSEA has the burden to prove each element of its case by a
preponderance of the evidence.
4. PSEA has failed to prove by a preponderance of the evidence Article 36F is
illegal.
5. AS 23.40.210 requires that all collective bargaining agreements include a
grievance procedure that culminates in binding arbitration. AS 23.40.210 does
not require that all mandatory subjects of bargaining must be subject to the
parties' grievance-arbitration procedure. Hemmen v. State, 710 P.2d 1001 (Alaska
1985), holds that if the parties have agreed to submit a contract dispute to
their grievance procedure, then binding arbitration must be included as the
final step of that procedure.
6. Legal indemnification is a mandatory subject of bargaining.
ORDER
1. The petition by the Public Safety Employees Association is denied and
dismissed.
2. The State of Alaska shall post a notice of this decision and order at all
work sites where members of the bargaining unit affected by the decision and
order are employed or, alternatively, serve each employee affected personally. 8
AAC 97.460.
ALASKA LABOR RELATIONS AGENCY
______________________________________
Aaron Isaacs, Jr., Acting Chair
______________________________________
Robert A. Doyle, Board Member
CONCURRING OPINION OF MEMBER KAREN MAHURIN
After considerable review of the issue in this matter, I agree with the result
of the majority. I do believe, however, that an employer should indemnify its
employees against lawsuits related to their performance on the job. However, the
employer is not required to indemnify, or may limit its indemnification
responsibility, when the parties agree to waive it under their collective
bargaining agreement. Here, PSEA clearly waived indemnification protections in
those situations outlined in Article 36 of the parties’ agreement.
______________________________________
Karen Mahurin, Board Member
APPEAL PROCEDURES
This order is the final decision of this Agency. Judicial review may be obtained
by filing an appeal under Appellate Rule 602(a)(2). Any appeal must be taken
within 30 days from the date of filing or distribution of this decision.
CERTIFICATION
I hereby certify that the foregoing is a full, true and correct copy of the
order in the matter of PUBLIC SAFETY EMPLOYEES ASSOCIATION vs. STATE OF ALASKA,
Case No. 00-1029-CBA, dated and filed in the office of the Alaska Labor
Relations Agency in Anchorage, Alaska, this 25th day of July, 2001.
________________________
Earl Gibson, Jr.
Administrative Clerk III
This is to certify that on the 25th day of July, 2001, a
true and correct copy of the foregoing was mailed,
postage prepaid, to
James Gasper, PSEA
Kent Durand, State of Alaska
Signature