Fraternal Order of Police, Montgomery County Lodge 35 v. Montgomery County

HARRELL, J. “Proximity to power deludes some into thinking they wield it,” observed the character Francis Underwood, portrayed by Kevin Spacey, in the U.S.-version of the television series “House of Cards.” Petitioner here, the Fraternal Order of the Police, Montgomery County Lodge 35 (“FOP”), fell under such a spell in maintaining this litigation. The Police Labor Relations Act (“PLRA”) of the Montgomery County Code grants the FOP a proximity to power in requiring the County Executive to negotiate certain employee benefits with a representative of the FOP. Despite this proximity, the FOP lacks actual power under the PLRA because, as the well-known adage provides, “he who holds the purse strings rules the roost.” Under the PLRA, the County Council (the “Council”) in Montgomery County holds the purse strings (ie., the actual power) each fiscal year when it approves the budget. Thus, we hold that the Council acted in this case within its authority under the PLRA in deciding not to fund fully — and, thereby, to “change” — certain benefits in the pre-existing collectively-bargained agreement, at least where the “changes” are fiscal in nature and the County Executive and the FOP did not submit a re-negotiated agreement to the Council.

I. THE UNIVERSE OF DISCOURSE: THE PLRA This litigation centers on whether the Council (and, thereby, the County) violated the requirements of the PLRA, codified at §§ 33-75 to 33-85 of the Montgomery County Code (2004) (“MCC”). The PLRA was enacted to implement the mandate in § 510 of the Charter of Montgomery County, Maryland (“County Charter”) 1 and governs negotiations between Mont ⁶²¹ gomery County (the “County”) and members of its police force over collective bargaining agreements and amendments to those agreements. Specifically, it requires that a “certified employee organization.[ 2 ], and the employer.[ 3 ] ... bargain collectively” on a number of subjects, such as wages, employee benefits, and the process for settling grievances. MCC § 33-80(a). “[T]o bargain collectively” is defined as “to meet at reasonable times and places and to negotiate in good faith....” MCC § 33-76.

If the parties cannot reach an agreement, the PLRA requires the parties to submit to an “impasse procedure” in which a neutral arbitrator chooses one side’s proposed contract for submission to the Council for its consideration. MCC §§ 33-81(b); 33-80(g). Once an agreement is reached, regardless of whether the terms are achieved through negotiation or the “impasse procedure,” the County Executive submits the collectively-bargained agreement to the Council. MCC § 33-80(g).

Then, the Council must “indicate by resolution of its intention to appropriate funds for or otherwise implement the agreement or its intention not to do so, and shall state its reasons for any intent to reject any part of the agreement” on or before May 1 of each year. MCC § 33-80(h) (emphasis added). The May 1 deadline may be deferred to any date not later than May 15 by a majority vote of the Council taken on or before May 1. If the Council indicates by resolution its intention not to appropriate funds for or otherwise implement the agreement, certain procedures provided in MCC § 33-80(h) are engaged.

First, the Council must “designate a representative to meet ⁶²² with the parties [the County Executive and the representative of the FOP] and present the Council’s views in their further negotiations ... [and] in any ensuing impasse procedure.” MCC § 33-80(h). The parties are to “meet as promptly as possible and attempt to negotiate an agreement acceptable to the Council.” Id. (emphasis added). As part of this renegotiation process, “[e]ither of the parties may initiate the impasse procedure set forth in Section 33-81.” Id.

(emphasis added). The results of the re-negotiations or impasse procedure must be submitted to the Council on or before May 10 (or by the postponed deadline if the Council deferred the May 1 deadline for indicating its intent). Additionally, the PLRA contemplates procedures for not just single year agreements, but also multi-year agreements. First, the requirements for the Council’s review and indication of intent in subsection (h) apply also “to Council review of wage or benefits adjustments after the first year of any multi-year agreement.” MCC § 33-80(j).

The PLRA envisions also that the Council will refuse to fund certain provisions for adjustments from time to time and requires that “any agreement shall provide either for automatic reduction or elimination of conditional wage or benefit adjustments if ... sufficient funds are not appropriated for any fiscal year when the agreement is in effect.” MCC § 33-80(i).

II

THE PRESENT DISPUTE. In November 2010, the FOP and County Executive entered into negotiations over amendments to the pre-existing, two-year, collectively-bargained agreement covering fiscal years 2011 (“FY 11”) and 2012 (“FY 12”) (hereinafter, “CBA”). 4 ⁶²³ Article 31 of the CBA provided for a limited “reopener” on changes to cash compensation for FY 12, the second year of the CBA. The parties were unable to reach an agreement and proceeded to the impasse procedures in MCC § 33-81. The impasse neutral determined that the FOP’s offer proposing a 3.5% wage increase for service and longevity increments (conditioned upon funding by the Council) was more reasonable than the County’s offer.

Thus, the resulting CBA provided for the conditioned wage increase. See MCC § 33-81(b)(7) (“The offer selected by the impasse neutral, integrated with the previously agreed upon items, shall be deemed to represent the final agreement between the employer, and the certified representative.... ”). The other terms in the preexisting CBA, including the employment benefits at issue in this case, were not affected by the impasse neutral’s decision and were to continue to apply in FY 12. On 1 April 2011, the County Executive submitted the details of the “reopener” agreement (i.e., the conditioned wage increase) to the Council and, pursuant to MCC § 33-80(g), 5 included the 3.5% wage increase as part of its proposed operating budget for FY 12. ⁶²⁴ In preparing for the FY 12 budget, the County’s Office of Management and Budget (OMB) provided the Council with a “Fiscal Impact Statement,” which, inter alia, compared the cost of funding the employment benefits as described in the CBA for FY 12 with that of funding a less generous level of benefits as proposed by the County Executive in his FY 12 recommended operating budget. 6 The Fiscal Impact Statement concluded that funding employment benefits as described in the CBA would cost $3,960,090 more in FY 12 than funding benefits at the level recommended by the County Executive.

On 9 May 2011, the Council adopted Resolution No. 17-119, stating its intent to reject funding the arbitration award and ⁶²⁵ three other contract provisions in the pre-existing CBA. The Resolution provided specifically, as follows: The County Council intends to reject full funding and disapprove the following contract provisions: 1. 3.5% service and longevity increments for bargaining unit members. 2. Retirement benefits for bargaining unit members. 3. Health, dental, vision, and prescription drug benefits for bargaining unit members. 4.

Life and long-term disability insurance benefits for bargaining unit. Pursuant to the time deadlines set forth in MCC § 33-80(h), when the Council did not indicate by resolution its intent not to appropriate funds until May 9 (eight days after the May 1 deadline), the deadline for the FOP and the County Executive to submit a renegotiated agreement was extended automatically to May 18. Pursuant to MCC § 33-80(h), after the issuance of the resolution, the parties (the County Executive as employer and the FOP representative) met with the Council’s representatives (Council President Valerie Ervin and Council Vice-President Roger Berliner) to attempt to re-negotiate an agreement acceptable to the Council. Thereafter, on May 16, the Council e-mailed the FOP representative, stating: We appreciate the FOP’s willingness to work with the Council to help produce a balanced budget.

As you know, the Council’s role in collective bargaining negotiations is limited to meeting with the parties to explain our reasons for not accepting or funding certain provisions of your collective bargaining agreement. In our meetings over the last week, we explained our position and presented you with the Council’s proposed plan for employee compensation and benefits, which significantly lessens the burden on all County employees and moves further toward achieving equity with employees of all County-funded agencies. Because of our deadline to adopt the annual budget, the Council will vote on these compensation and benefits proposals ⁶²⁶ tomorrow [Tuesday, May 17], and we will take our overall votes on the operating budget on Thursday [May 19]. As you know, the Executive, as the employer, must negotiate with the FOP over terms and conditions of employment.

Your counter-proposals are interesting, and to the extent they involve mandatory topics of bargaining the Executive should be ready to address them during future negotiating sessions after this budget is completed. The Council will look forward to seeing the result of those negotiations. In the short-term, the Council’s Government Operations and Fiscal Policy Committee expects to consider possible changes to the retirement plans for new employees in June. We would greatly appreciate your input during this legislative process.

(Emphasis added.) Two days later, on the May 18 deadline, the Director of the County’s Office of Human Resources, Joseph Adler, sent an e-mail to the Council’s representatives informing them that the negotiating parties had not reached a re-negotiated agreement. On 26 May 2011, the Council adopted Resolution No. 17-149, an Operating Budget for FY 12 for the CBA. The changes to the CBA were summarized in Paragraph 17 and detailed in Paragraph 66 of Resolution No. 17-149. Of relevance in this case, Resolution No. 17-149 “changed” three contract provisions for FY 12 in the pre-existing CBA (specifically, the retirement benefits; health, dental, vision, and prescription drug benefits; and life and long-term disability insurance benefits). 7 The FOP summarized the relevant changes (in an undisputed manner) as follows: Term Life Insurance and Accidental Death and Dismemberment Benefits ⁶²⁷ Existing collective bargaining agreement: Collectively-bargained terms for Term Life Insurance coverage and Accidental Death and Dismemberment benefits by which an officer received a life insurance benefit equal to two times his/her annual salary.

Resolution No. 17-149: The terms for the collectively-bargained Term Life Insurance coverage and Accidental Death and Dismemberment benefits for the affected Montgomery County police officers were changed in that an officer will now receive a life insurance benefit equal to only one year of his/her annual salary with the right, at the officer’s expense, to add an additional amount equal to his/her annual salary. Group Insurance Benefits Existing collective bargaining agreement: Collectively-bargained terms for Group Insurance Premiums by which the County contributed 80% of the insurance premiums for a Point-of-Service (POS) medical plan, a Stand-alone prescription drug plan (Standard Option plan), a Dental Plan, a Vision Plan, Basic Life insurance, Dependent Life insurance $2,000/$l,000/$100 tier, and Long-term disability insurance with the remaining 20% of the premium paid by the affected police officers. Resolution No. 17-149: The terms of the collectively-bargained health benefits for the affected Montgomery County police officers were changed by reducing the County’s contribution for Group Insurance Premiums for a Point-of-Service (POS) medical plan, a Stand-alone prescription drug plan (Standard Option plan), a Dental plan, a Vision plan, Basie Life insurance, Dependent Life insurance $2,000/ $1,000/$100 tier, and Long-term disability insurance to 75% of the insurance premiums, and increasing the amount of the contributions to be paid by the affected police officers to 25%. Prescription Drug Benefits ⁶²⁸ Existing collective bargaining agreement: Collectively-bargained terms for Prescription Drug Benefits by which the affected police officers and their dependents were able to purchase brand name prescription drugs and unrestricted dosages of certain other drugs.

Resolution No. 17-149: The terms of the collectively-bargained Prescription Drug Benefits were changed to require affected police officers to receive generic prescription drugs, if available, instead of brand name drugs and limiting the dosage of certain drugs available to the affected police officers. Retirement Benefits Existing collective bargaining agreement: Collectively bargained [sic] terms for Retirement Benefits for the affected police officers by which each officer contributes a set percentage of regular earnings to his/her retirement and the County contributes an additional amount depending on actuarial assumptions and analysis to fund the officer’s retirement benefit. In addition, the Retirement Benefits include an annual cost of living adjustment (“COLA”) for inflation which is 100% of the Consumer Price Index (“CPI”) up to 3% plus 60% of the CPI over 3%. Resolution No. 17-149: The terms of Retirement Benefits for the affected police officers were changed in that the amount of each officer’s contribution to his/her pension benefit was increased by 1.0% for FY12 and 2.0%, total, for FY13.

Additionally, the annual COLA was changed to be no more than 2.5% of the CPI. The net effect of these changes was a reduction in the County’s contribution to each officer’s retirement benefit. (Emphases added in the original.) On 24 June 2011, the FOP filed suit against the County and the Council in the Circuit Court for Montgomery County challenging the legality of the Council’s actions in adopting Resolution No. 17-149 and the actions of the Council and the County in implementing the changes in the Resolution. The ⁶²⁹ Amended Complaint, filed on 3 October 2011, contained six counts seeking/asserting: (1) a declaratory judgment that the County is obligated to comply with the CBA, that the Council’s adopting Resolution No. 17-149 violated the rights of the affected police officers and the PLRA, and that the County’s and Council’s implementation of the Resolution violated the rights of the police officers; (2) an injunction directing the County to comply with the CBA and enjoining the implementation of the Resolution as to the changes in employment benefits; (3) breach of contract for altering the employment benefits in the CBA; (4) mandamus for judicial review of the Council’s decision in Resolution No. 17-149; (5) violation of the PLRA in adopting the Resolution; and (6) violation of State constitutional rights, “including, inter alia, Articles 19 and 24 of the Maryland Declaration of Rights,” in adopting the Resolution.

The County and the Council filed, collectively, a Motion to Dismiss or, in the alternative, Summary Judgment. In response, the FOP filed a motion opposing the defendants’ Motion to Dismiss or, Alternatively, Summary Judgment, as well as a Cross-Motion for Summary Judgment. On 1 March 2012, the Circuit Court issued a memorandum opinion and declaratory judgment, declaring that the Council’s actions were permissible under the PLRA, the Maryland Declaration of Rights, and the existing collectively-bargained agreement. The FOP filed a motion to reconsider, which the Circuit Court denied.

The FOP appealed to the Court of Special Appeals, which affirmed the decision of the trial court in Fraternal Order of Police, Montgomery County Lodge 35 v. Montgomery County, Maryland, 212 Md.App. 230 , 66 A.3d 1183 (2013). We granted the FOP’s Petition for Certiorari to consider the following question: “May the County Council unilaterally change the terms of a pre-existing negotiated collective bargaining agreement?” 432 Md. 466 , 69 A.3d 474 (2013). The County frames the question(s) presented a bit differently: (1) Did the County Council properly exercise its discretion under the police collective bargaining law when it decided, in the FY 12 Annual Operating Budgeting Resolu ⁶³⁰ tion, not to fully fund the employment benefits described in the police collective bargaining agreement for FY 12? (2) Did Petitioners state a claim under Articles 19 or 24 of the Maryland Declaration of Rights?

III

STANDARD OF REVIEW “Deciding an appeal is not a matter of approaching the problem as if for the first time. It is determining whether another, earlier, carefully structured decision should be upheld.” Frank M. Coffin, The Ways of a Judge: Reflections from the Federal Appellate Bench 52 (Houghton Mifflin 1980); see also id. at 58-54 (characterizing this limitation as a “source of strength” because the “raw materials for appellate deliberation are already fixed, assembled, and focused”). The appellate court is not an advocate tasked with searching for each party’s winning argument. Rather, the appellate court is limited ordinarily to the arguments raised by the parties and the issues decided by the lower courts.

This case, as laid before us, is seen through the small window that the parties have opened for our view. The