Baltimore County v. Fraternal Order of Police, Baltimore County Lodge No. 4

McDonald, j. As authorized under local law, Petitioner Baltimore County engages in collective bargaining with its employees. Respondent Fraternal Order of Police, Baltimore County Lodge No. 4 (“FOP”) represents the County’s eligible police officers. The County and FOP have entered into numerous collective bargaining agreements over the years.

This case arose out of a dispute over the interpretation of a provision in some of those agreements that provided for a fixed subsidy of health insurance costs for officers who retired during certain years. The dispute proceeded, in accordance with the grievance process in the collective bargaining agreements, to binding arbitration. The FOP won the arbitration, but the County sought to overturn the arbitration award in the courts. Among other things, the County argued that the arbitration award was invalid because it was subject to the County’s executive budget process.

The Circuit Court for Baltimore County rejected the County’s various challenges to the award — a decision ultimately upheld by this Court. ⁷¹⁸ When the case returned to the Circuit Court, the County balked at complying with the arbitration award arguing that the award, even if valid, was unenforceable because it was subject to the County’s executive budget process. That argument was indistinguishable from one of the issues that the County had advanced on its prior trip up the appellate ladder and that this Court had rejected on that occasion. The repetition of the issue from the prior appeal allowed the lower courts to dispose of the issue under the law of the case doctrine. That doctrine expresses the principle, subject to some exceptions, that a court presented with the same issue decided by an appellate court at an earlier stage of the same case will rule the same way.

It may have been with that concept in mind that a noted philosopher in another line of work once said: “it’s like deja vu all over again.” 1 We hold that the lower courts properly applied the law of the case doctrine here. Even if that doctrine did not control the outcome, the County would fare no better on the merits of its argument. I Background The underlying facts and procedural path of this case have been recounted well and at length in two prior reported appellate decisions. See Fraternal Order of Police Lodge No. 4 v. Baltimore County, 429 Md. 533, 538-41 , 57 A.3d 425 (2012); Baltimore County v. Fraternal Order of Police Lodge No. 4, 220 Md.App. 596, 600-50 , 104 A.3d 986 (2014).

There is no need to reprise them in the same detail here. We reiterate briefly the main points. ⁷¹⁹ A. Facts Collective Bargaining with County Employees In accordance with the Baltimore County Charter and the Baltimore County Code (“BCC”), Baltimore County engages in collective bargaining with the exclusive representatives of various categories of its employees. 2 Among those categories of employees are police officers below a certain rank, who are represented by the FOP. The negotiations result in an agreement that is called a “memorandum of understanding” or “MOU.” Under the County Charter, disputes with the representatives of certain public safety employees may be resolved through binding arbitration. Among the provisions that may appear in an MOU are those pertaining to health insurance benefits, including health insurance benefits for retirees.

The OPEB Fund The County maintains a fund known as the Other Post-Employment Benefits Trust Fund (“OPEB Fund”). The OPEB Fund is the repository of funds appropriated for payment of health and life insurance benefits for County retirees and their beneficiaries. BCC § 10-14-103(a). Each year, the County, through its budget process, appropriates an annual contribution to the OPEB Fund.

BCC § 10-14-104(a). The annual contribution is based on an estimate of future costs, based in part on an actuarial analysis of the County’s potential liabilities for such costs. Id. The MOUs Two provisions that appear in the MOUs between the County and the FOP for the fiscal years from 1996 through 2007 are particularly pertinent to this case.

Those MOUs provided that the County would furnish the same subsidy of health insurance benefits for officers who retired between February 1, 1992 and June 30, 2007 as for current employees — during that time, a subsidy of 85 per cent of the cost of ⁷²⁰ the premium. 3 In addition, those MOUs also provided that the percentage subsidy at the time of retirement of an officer would remain in effect until the retiree (or the retiree’s beneficiary) reached age 65. In later versions of the MOU during that period, the reference to age 65 was changed to eligibility for Medicare. The MOUs also contained a grievance process for resolving disputes concerning the application or interpretation of an MOU. Among other things, the grievance procedure provided for the filing of a “class grievance” on behalf of similarly situated employees.

The grievance procedure also provided for binding grievance arbitration if the parties were unable to resolve a dispute at an earlier stage of the grievance process. 4 The Dispute After the 2007 fiscal year, the County reduced the health insurance subsidy for current employees. 5 Despite the language in the earlier MOUs that the health insurance subsidy at the time of retirement would remain in effect for a retiree until the retiree reached age 65 or was eligible for Medicare, the County also reduced the health insurance subsidy for existing retirees who had retired in years covered by those earlier MOUs. 6 ⁷²¹ Pursuant to the grievance procedure in the MOUs, in September 2007, the FOP filed a class grievance on behalf of police officers who had retired during the period that the MOUs included the provision that the health insurance subsidy at the time of retirement would remain in effect until age 65 or eligibility for Medicare — i.e., those who retired between February 1, 1992 and June 30, 2007. The County Labor Commissioner denied the grievance on the ground that the provisions of the earlier MOUs were no longer controlling. The Arbitration Decision The grievance was not resolved at the initial steps of the grievance process. In accordance with that process, the matter proceeded to binding arbitration. 7 The arbitrator concluded that the dispute was arbitrable and ruled in favor of the FOP on the merits of the grievance.

In a decision issued in July 2008, the arbitrator concluded that the “unequivocal language” of the earlier MOUs — that “the health insurance subsidy in place at the time of retirement shall remain in effect until the retiree reaches age 65 [or “becomes eligible for Medicare”]”— was a binding promise that established a vested right for those retirees to whom it applied. He ordered the County to rescind its modification of the retirees’ health insurance subsidy, continue the previous subsidy in accordance with the MOUs, and reimburse the retirees for the excessive deductions taken by County in the interim. ⁷²² B. Procedural History Affirmance of the Arbitration Decision in the Circuit Court In August 2008, the County filed an action in the Circuit Court for Baltimore County to vacate the arbitration award, asserting numerous grounds. 8 Among the grounds advanced in that complaint, the County asserted that the award was “contrary to the very clear public policy, as stated in the Baltimore County Charter and Code, that the Baltimore County Council appropriates the funds needed to provide healthcare subsidies for retirees.” The Circuit Court, however, granted summary judgment in favor of the FOP and declined to vacate the arbitration award. The court concluded that the dispute was arbitrable despite the fact that the MOUs had expired prior to the filing of the grievance and that the arbitrator had not committed a “manifest error” or exceeded his authority in deciding that the retirees had a “vested right” to the maintenance of the health care subsidy for the period provided in those MOUs. With respect to the County’s argument that the arbitration award “usurped” the budget authority of the County Executive and County Council, the court noted that, in this grievance arbitration, the arbitrator was simply interpreting an existing contract, as opposed to setting the terms of a new contract, which might occur in interest arbitration resulting from an impasse in negotiations. ⁷²³ Reversal by the Court of Special Appeals Addressing One Issue The County appealed that decision, asserting that the Circuit Court had erred in upholding the arbitrator’s award for nine reasons — essentially, the same arguments it made before the Circuit Court.

In particular, the County again asserted that the arbitration award had “usurped” the budget powers of the County Executive and County Council. The Court of Special Appeals, in an unreported decision, did not address any of the alleged errors, including the County’s argument concerning its budget process, but reversed the arbitration award on the ground that the Circuit Court had failed to consider whether the arbitration clause of the fiscal year 2007 MOU — as well as the health insurance benefits — had survived the expiration of that MOU. Reversal by the Court of Appeals and Remand to Affirm the Circuit Court This Court granted the FOP’s petition for a writ of certiora-ri. The County did not file a cross-petition.

In its brief in that appeal, the County not only urged affirmance of the decision of the Court of Special Appeals on the issue whether the arbitration clause had expired but also listed the nine issues it had raised in its appeal and touched upon the merits of the arbitrator’s decision. This Court reversed the decision of the Court of Special Appeals. 429 Md. 533 , 57 A.3d 425 (2012). The Court held that the question of arbitrability was for the arbitrator to decide in the first instance. The Court observed that the fiscal year 2007 MOU contained a broad arbitration clause that was not necessarily abrogated by expiration of the MOU. 429 Md. at 555-56 , 57 A.3d 425 .

The Court also held that the Circuit Court had applied the proper standard of review of the arbitration award, and after reviewing the arbitrator’s findings, found no reason to disturb the Circuit Court’s award of summary judgment in favor of the FOP on the merits. Id. at 557-64 , 57 A.3d 425 . Although the Court stated that the arbitration award was consistent with the MOU and agreed with the ⁷²⁴ Circuit Court that it did not demonstrate a “manifest disregard for the law,” the Court did not discuss in any detail the grounds that the County had originally advanced for overturning the arbitration award and that the Circuit Court had rejected. In its mandate, the Court directed the Court of Special Appeals to affirm the decision of the Circuit Court upholding the arbitration award.

Id. at 565 , 57 A.3d 425 . The County sought reconsideration of this Court’s decision. In its memorandum in support of that motion, the County argued, among other things, that instead of directing the intermediate appellate court to affirm the Circuit Court, this Court should have directed the Court of Special Appeals to address the various issues raised by the County but not discussed in the prior decision of the intermediate appellate court. The County also asserted that the award “will be unenforceable, since there have been no funds appropriated through the executive budget process to afford the relief .... ” This Court denied that motion on January 18, 2013.

County Failure to Comply with Arbitration Decision One might think that the matter would be concluded upon return of the file to the Circuit Court. To the contrary, it proved to be the starting point for another round of litigation. The County refused to comply with the arbitration award. It did not rescind its modification of the retired officers’ subsidy and reinstate the subsidy keyed to retirement date.

Nor did it refund to those retirees the excess deductions taken for health insurance premiums during the fiscal years from 2008 through 2012. Motion to Enforce Arbitration Award in Circuit Court The FOP promptly filed a motion to enforce the judgment in the Circuit Court. The County opposed that motion. As grounds for its opposition, the County conceded that the arbitrator’s award was valid but again asserted that it was unenforceable because the enforcement of the award without an appropriation would “usurp” the authority of the County Executive and the County Council under the County Charter. ⁷²⁵ As a shorthand, we will refer to the County’s contention in this regard as the “no-appropriation argument.” At a hearing on the motion and in subsequent filings, the County relied on the no-appropriation argument for its assertion that the arbitrator’s award was unenforceable as a matter of public policy.

On August 14, 2013, the Circuit Court issued a memorandum and order rejecting the County’s argument and granting the FOP’s motion to enforce the award. In that memorandum, the court noted that the County had raised the no-appropriation argument during the prior appeal and had spotlighted it in its motion for reconsideration before this Court without success. The Circuit Court concluded that the law of the case doctrine precluded the County from reprising the no-appropriation argument. The County filed a motion to alter or amend the judgment.

In response to that motion, the Circuit Court stayed part of its order, pending a damages hearing to determine the amounts owed to the retired police officers with respect to the excessive deductions taken during fiscal years 2008 through 2013. Damages Hearing in Circuit Court At the damages hearing, the County once again asserted that there was no source of appropriated funds from which it could comply with the Circuit Court’s order and reimburse the retirees for the excessive health insurance premiums that the retirees had paid (but that the County actually owed under the earlier MOUs pursuant to the arbitration award). The County resisted providing information concerning the excess premiums paid by the retirees during the period in question and attempted instead to re-argue the merits of the arbitration award. In April 2014, the Circuit Court ordered the County to make refunds to the retirees in amounts totaling more than $1.6 million, including pre-judgment and post-judgment interest. 9 The County promptly noted an appeal, but apparently did nothing to satisfy the judgment, which had not been stayed. ⁷²⁶ Contempt Proceedings and Payment of Judgment from OPEB Fund While the County’s appeal to the Court of Special Appeals was pending, the FOP initiated contempt proceedings in the Circuit Court for the County’s failure to satisfy the judgment.

In response, the County at first reiterated the no-appropriation argument and asked the Circuit Court to quash the show cause order. Shortly after the Circuit Court denied that motion, the County filed a certificate of compliance documenting that it had paid the judgment and obviating the need for further contempt proceedings. 10 In a certificate of compliance that the County filed to document its compliance with the court order, it advised that it paid the judgment with funds from the OPEB Fund allegedly “without the required appropriation.” At oral argument in this appeal, the County conceded that the OPEB Fund consisted of funds appropriated for retiree health insurance benefits. Appeal of the Circuit Court’s Enforcement Decision The Court of Special Appeals affirmed the Circuit Court in a comprehensive opinion. 220 Md.App. 596 , 104 A.3d 986 (2014). In the course of that opinion, the court noted that the Circuit Court had specifically addressed and rejected the County’s no-appropriation argument prior to the first appeal in the case. 220 Md.App. at 617-19 , 104 A.3d 986 .

The intermediate appellate court observed that this Court had necessarily considered the no-appropriation argument when we determined in the prior appeal that the Circuit Court had properly granted summary judgment and also when we denied the County’s motion for reconsideration of that decision. Accord ⁷²⁷ ingly, the intermediate appellate court reasoned, the law of the case doctrine was fatal to this challenge. Id. at 656-62 , 104 A.3d 986 . The Court of Special Appeals also rejected numerous other challenges raised by the County to enforcement of the arbitration award. 11 The County then filed a petition for a writ of certiorari, which we granted.

In its petition, the County focused on whether its no-appropriation argument supported a public policy exception to enforcement of the arbitration award. 12 II Discussion As this Court recently reiterated, judicial review of an arbitration decision is “very narrowly limited.” Prince George’s County Police Civilian Employees Ass’n v. Prince George’s County, 447 Md. 180, 192 , 135 A.3d 347 (2016) (interior quotation marks and citation omitted). Among the limited grounds for vacating an arbitration award is when the award is contrary to an explicit, dominant, and well-defined ⁷²⁸ public policy. 447 Md. at 194 n. 11, 135 A.3d 347 . The same exception may apply when a party to a collective bargaining agreement fails to comply with an arbitration award and the prevailing party seeks enforcement of that award in the courts. See Amalgamated Transit Union v. Mass Transit Administration, 305 Md. 380, 389 , 504 A.2d 1132 (1986).

The County argues that the arbitrator’s decision should not be enforced because it is contrary to such a public policy. It states that the public policy at issue is the County’s executive budget process and the County Charter’s requirement that the County government expend only funds that have been appropriated in accordance with that process. The County argues that the arbitrator’s decision cannot be enforced because it is at odds with that process, allegedly because funds were not appropriated for this purpose. The County made this same no-appropriation argument in its prior appeal when it asked the courts to vacate the arbitration award.

In the prior appeal, this Court ordered affirmance of the Circuit Court’s decision, although we did not explicitly address in detail all of the various arguments advanced by the County. When the County sought reconsideration of our decision and highlighted its no-appropriation argument, the Court declined to change its decision. Unsurprisingly, the Circuit Court and Court of Special Appeals later concluded that the issue has already been decided in this case and is the “law of the case.” See 220 Md.App. at 650-62 , 104 A.3d 986 . In our view, the lower courts were correct.

The law of the case doctrine precludes the County from re-litigating its no-appropriation argument in the context of the enforcement of the arbitration decision as it lost that argument earlier when the courts considered the validity of the arbitration award. Moreover, even if the law of the case doctrine did not dictate the outcome, the result would be the same, as the County’s no-appropriation arguments lacks merit in this context. ⁷²⁹ A. Whether the County’s Argument is Precluded by The Law of the Case The Law of the Case Doctrine The law of the case doctrine is a “rule of practice, based upon sound policy that when an issue is once litigated and decided, that should be the end of the matter.” United States v. United States Smelting Refining & Mining Co., 339 U.S. 186, 198 , 70 S.Ct. 537 , 94 L.Ed. 750 (1950). 13 Under that doctrine, “once an appellate court rules upon a question presented on appeal, litigants and lower courts become bound by the ruling, which is considered to be the law of the case.” Scott v. State, 379 Md. 170, 183 , 840 A.2d 715 (2004); see also Garner v. Archers Glen Partners, Inc., 405 Md. 43, 55 , 949 A.2d 639 (2008). It is the country cousin to the more ornately named doctrines of res judicata, collateral estoppel and stare decisis. 14 A prior statement of a court that is not part of the court’s ruling in the case — i.e., dicta — is not law of the case that is necessarily binding on a lower court. Gamer, 405 Md. ⁷³⁰ at 57-59, 949 A.2d 639 .

On the other hand, if an issue is clearly-presented to the court and, in rendering a decision, the court necessarily decides that issue, that ruling is law of the case, regardless of the extent to which the court elaborates its reasoning. Indeed, the doctrine extends to questions that “could have been raised and argued” in the prior appeal, but were not, so long as the ruling resolves them. See Fidelity-Baltimore Nat’l Bank & Trust Co. v. John Hancock Mutual Life Ins. Co., 217 Md. 367, 372 , 142 A.2d 796 (1958).

The law of the case doctrine is not a fixed, immutable doctrine, but more a matter of “appellate procedure and convenience.” Hawes v. Liberty Homes, Inc., 100 Md.App. 222, 230 , 640 A.2d 743 (1994) (Wilner, J.). In the words of Justice Holmes, it “expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power.” 100 Md.App. at 231 , 640 A.2d 743 (quoting Messenger v. Anderson, 225 U.S. 436, 444 , 32 S.Ct. 739 , 56 L.Ed. 1152 (1912)). The purpose of this doctrine is to avoid piecemeal litigation — that is, to prevent litigants from prosecuting successive appeals in a case that raises the same questions that were decided in a prior appeal. Fidelity-Baltimore Nat’l Bank & Trust Co., 217 Md. at 371-72 , 142 A.2d 796 .

Courts have identified three sets of circumstances in which the law of the case doctrine is not applied: (1) the evidence in a subsequent trial is substantially different from what was before the court in the initial appeal; (2) a controlling authority has made a contrary decision in the interim on the law applicable to the particular issue; or (3) the original decision was clearly erroneous and adherence to it would work a manifest injustice. Garner, 405 Md. at 56 , 949 A.2d 639 ; Turner v. Housing Authority of Baltimore City, 364 Md. 24, 34 , 770 A.2d 671 (2001). 15 ⁷³¹ Whether the law of the case doctrine should be applied in particular circumstances is a legal question; accordingly, we review a lower court’s invocation of that doctrine without any special deference. See Scott, 379 Md. at 184-85 , 840 A.2d 715 (reviewing whether the “law of the case” doctrine applied to judges on the same trial court under a de novo standard); Goldstein & Baron Chartered v. Chesley, 375 Md. 244, 260-61 , 825 A.2d 985 (2003) (same). The Law of this Case The County argues that the law of the case doctrine does not apply primarily because our earlier decision addressed the validity of the arbitration award, as opposed to its enforceability.

We disagree. As the Court of Special Appeals observed, our prior decision was a “final determination that FOP was entitled, as a matter of law, to the judgment to enforce the arbitration award. That decision necessarily embraced and resolved all of the issues that the County raised, as well as any other issues that were then available to raise, challenging the validity of the arbitration award.” 220 Md.App. at 653 , 104 A.3d 986 . The County had argued from the outset of the proceedings in the Circuit Court that the arbitration award was defective and unenforceable for public policy reasons because it somehow interfered with the County’s executive budget process.

See 220 Md.App. at 650-62 , 104 A.3d 986 . The Circuit Court rejected that argument as part of its award of summary judgment in favor of the FOP, and the County raised the no-appropriation argument again on appeal. In issuing a mandate that directed the Court of Special Appeals to affirm the Circuit Court, this Court implicitly rejected that argument on its merits. When the County sought reconsideration of that decision, explicitly on the ground that it would be unenforcea ⁷³² ble on the basis of its no-appropriation argument, this Court denied that request.

The County then attempted to raise the same argument to avoid enforcement of the arbitration award. In rejecting the same argument, the lower courts properly applied the law of the case doctrine. Whether An Exception to the Law of the Case Doctrine Applies Here The County argues we should revisit the no-appropriation argument because exceptions to the law of the case doctrine preclude its application here. First, the County argues that evidence presented at the damages hearing on remand was “substantially different” than at the earlier hearings