Howard County Board of Education v. Howard County Education Ass'n

⁶³⁴ ALPERT, Judge. In the instant appeal we are called upon to decide whether a grievance by a Howard County teacher over a classroom observation is subject to arbitration. FACTS The appellee, Howard County Education Association (“HCEA”) is the certified collective bargaining agent for Howard County teachers. Appellant, Howard County Board of Education (“Board”), is empowered by statute 1 to negotiate an employment contract on behalf of the Howard County teachers with the HCEA.

In 1983 a Master Agreement, which represented the negotiated contract, took effect July 1 and continued in effect until June 30, 1984. On October 17, 1983, Wilbert McIntyre, a tenured teacher at Talbott Spring Elementary School and member of HCEA, was the subject of a classroom observation by Jacqueline Shulik, Supervisor of Elementary Education. On the observation form Shulik assessed the lesson as being “unsatisfactory.” On October 24, 1983, McIntyre, through HCEA, filed a grievance with Shulik requesting “that the written observation ... be expunged from any and all files and not be considered in his year end evaluation or in any way impact upon his employment in the Howard County Public School System.” The grievance was filed according to Step 1 of the grievance procedure set forth in Article III of the Master Agreement. A decision to affirm the observation report as filed was then appealed by HCEA pursuant to Step 2 of the grievance procedure also set forth in Article III of the Master Agreement.

Step 2 culminated in a letter from Dr. M. Thomas Goedecke, the then Superintendent of Schools for Howard County, which stated: “I have reached the decision that the observation by Ms. Jacqueline Shulik of the teaching of Mr. Wilbert McIntyre was not in violation of ⁶³⁵ the Articles of the Master Agreement with the Howard County Education Association.” HCEA then requested arbitration, also pursuant to the Master Agreement. The Board, in response to this request, filed suit in the Circuit Court for Howard County seeking to enjoin the arbitration because the alleged grievance was not subject to the arbitration provision of the Master Agreement. After a full hearing on the merits, the trial court denied the requested relief, holding that “a valid arbitration agreement exists between the parties and that the specific grievance at issue falls within the scope” of the agreement. The Board now seeks our review of the matter and contends that “the lower court erred in determining that the subject matter of McIntyre’s grievance was subject to binding arbitration under the agreement and in denying the Board’s request for a permanent stay of arbitration.” THE MASTER AGREEMENT Article III of the Master Agreement is entitled “Grievance Procedure.” Section A, entitled “General Principles” provides: The Association and the Board recognize their responsibility for the prompt and orderly disposition of a grievance that arise (sic) out of the interpretation, application or alleged breach of any of the provisions of this Agreement.

To this end, the parties agree that the provisions of this Article shall provide the means of settlement of all such grievances, provided however that nothing herein will be construed as limiting the right of any teacher to have a complaint adjusted without the intervention of the Association so long as the adjustment is not inconsistent with the terms of this Agreement. • In any event, a copy of all decisions rendered above the level of immediate supervisor shall be forwarded to the Association. A “grievant” is a teacher or teachers filing a grievance. Section C of that same Article provides that the grievance: ⁶³⁶ may be submitted by the Association ... to binding arbitration under the Voluntary Labor Arbitration Rules of the American Arbitration Association. The parties further agree to accept the arbitrator’s award as final and binding upon them.

It is Section A that establishes the basis for the arbitration of Mr. McIntyre’s grievance. HCEA’s position during the course of these proceedings has been that the “unsatisfactory” classroom observation of October 17, 1983, was without cause. This is alleged to be a breach of Article V, § M of the Master Agreement, which provides: “No teacher will be disciplined, reprimanded or reduced in rank or compensation without cause.” It contends that this alleged breach is subject to arbitration pursuant to Section A of Article III. The Board, on the other hand, contends: (1) that the executory arbitration agreement is unenforceable inasmuch as these actions were disfavored at common law; (2) that the unsatisfactory observation was not tantamount to being disciplined or reprimanded and, consequently, HCEA’s reliance on a breach of section M to invoke arbitration is misplaced; and (3) that the arbitration provision is unenforceable with respect to disputes of its statutorily mandated powers of supervision and control over the Howard County public schools.

THE LAW I. Enforceability of the Arbitration Provision Disputes concerning the enforcement of executory arbitration agreements are not new to this court. See Stauffer Const. Co. v. Bd. of Educ. of Montgomery County, 54 Md.App. 658 , 460 A.2d 609 , cert. denied, 297 Md. 108 (1983); Bd. of Educ. of Carroll Co. v. Carroll Co. Educ. Ass’n, 53 Md.App. 355 , 452 A.2d 1316 (1982); Mayor & City Council of Balto. v. Balto.

City Fire Fighters, 49 Md.App. 60 , 430 A.2d 99 , cert. denied, 291 Md. 771 (1981); Bel Pre Medical Center v. Frederick Constr. Co., 21 Md.App. 307 , 320 A.2d ⁶³⁷ 558 (1974), rev’d on other grounds, 274 Md. 307 , 334 A.2d 526 (1975). In Bel Pre we traced the common law of arbitration and noted that it was the general rule that, in the absence of legislative direction to the contrary, an executory agreement for arbitration of the ultimate rights of the parties, such as an agreement to arbitrate all future disputes that might thereafter arise, even though resort to arbitration was specified to be a condition precedent to court action, was not enforceable. 21 Md.App. at 316-17 , 320 A.2d 558 . The Board maintains that the executory arbitration provision of the Master Agreement is unenforceable because in this instance the common law applies.

In 1965 Maryland adopted the Maryland Arbitration Act, Md.Ct. & Jud.Pro.Code Ann. § 3-201 et seq. (1974, 1984 Repl.Vol.). This act, where applicable, abrogates the common law and favors the validity and, consequently, the enforcement of even executory arbitration agreements. As stated in Bel Pre, “the General Assembly established a policy in favor of the settlement of disputes through the arbitration process and ended the ambivalence of courts under the common law[;] ... suits to compel arbitration and suits to stay court action pending arbitration are now to be viewed as ‘favored’ actions.” 21 Md.App. at 320 , 320 A.2d 558 .

There is a provision in the Maryland Arbitration Act, however, which limits its applicability. Section 3~206(b) provides that: “This subtitle does not apply to an arbitration agreement between employers and employees or between their respective representatives unless it is expressly provided in the agreement that this subtitle shall apply.” A review of the Master Agreement between the parties indicates that an express provision stating the applicability of the Maryland Arbitration Act is conspicuously absent. ⁶³⁸ In Wilson v. McGrow, Pridgeon & Co., P.A., 298 Md. 66 , 467 A.2d 1025 (1983), the Court of Appeals addressed the application of this provision to a contract between a single employer and single employee. The trial court and this Court, on appeal, refused to enforce the arbitration agreement, holding that the common law rule was applicable because the contract did not provide that the Maryland Arbitration Act governed. The Court of Appeals reversed because it found that the statutory exclusion of § 3-206(b) applied only to collective bargaining agreements between multiple employers and employees. 298 Md. at 70 , 467 A.2d 1025 .

There, in an individual contract, the Act was applicable and the statutory favoring of arbitration compelled the Court to mandate it. In the case sub judice the Master Agreement is not an individual contract between an individual employer and employee; ; all parties concede that it represents the Collective Bargaining Agreement between the Board and HCEA. At first blush, it would appear, therefore, according to Wilson , that in the absence of a provision stating that the Arbitration Act applies, common law controls. At common law executory agreements to arbitrate would not be enforceable.

This is indeed the very argument of the Board, which further contends that Section 3-208 of the Arbitration Act 2 only applies as a procedural vehicle for the resolution of this dispute, pursuant to Maryland Rule E4, and conveys no substantive rights to the parties by virtue of its own provision in Section 3-206(b). HCEA, on the other hand, views the Board’s position as an attempt to revoke its agreement to arbitrate disputes under their collective bargaining contract. Acknowledging that “there is no dispute that the agreement invovled in this action does not expressly adopt ⁶³⁹ the Maryland Uniform Arbitration Act,” HCEA argues that “it is equally clear that the parties’ agreement to arbitrate is not revocable at will.” We agree that, in the context of this case, merely because the agreement did not expressly indicate the applicability of the Act, does not mean that an agreement to arbitrate is unenforceable. We observe that the legislature in enacting the Uniform Arbitration Act did not bar its applicability to collective bargaining agreements, but rather provided that the Act would not apply unless expressly so provided in the agreement.

The Act itself and contemporary trends in litigation indicate a strong preference for arbitration. As noted in Corbin on Contracts, § 1431 at 596 (1984 Supp.): Even though a particular statute does not directly apply, it may show that the legislative branch, which has the power to make policy for a state, has changed the common law policies as to the validity and effect of arbitration---- If the state statute has changed its public policy, then the policy of the arbitration act, by which it is possible to agree to arbitrate all questions, fact and law, should be applicable to common law arbitration as well. From a historical perspective, common law notions of abhorrence to arbitration, which originated out of a sense of fear or the jealous protection of formal legal proceedings, originated in a time when labor relations and negotiations were unknown. See Bel Pre, 21 Md.App. at 316-17 , 320 A.2d 558 .

Labor relations and negotiations today, however, are accepted and encouraged as a policy in American commerce and industry. Recognizing the importance of labor negotiations and arbitration in the public education sphere, the General Assembly, in 1971, enacted a statute now codified in Section 6-408(a)(2) of the Education Article, expressly authorizing the negotiation of binding arbitration provisions and collective bargaining agreements between local boards of education and teachers associations. Section 6-408(a)(2), like the Arbitration Act, indicates a recognition ⁶⁴⁰ by the General Assembly that arbitration, if contracted for, is the desired method for settling disputes between local school boards and teachers. Thus, it is clear that at least with respect to a public education collective bargaining agreement, which is statutorily authorized, antiquated common law notions abhorrent to arbitration are inapplicable.

We agree with the Supreme Court of California which, while holding that a statutorily authorized public contract was enforceable, stated: [W]hy negotiate an agreement if either party can disregard its provisions? What point would there be in reducing it to writing, if the terms of the contract were of no legal consequence? Why submit the agreement to the governing body for determination, if its approval were without significance? What integrity would be left in government if government could attack the integrity of its own agreement?

The procedure established by the act would be meaningless if the end-product, a labor-management agreement ... were a document that was itself meaningless. The Legislature designed the act ... for the purpose of resolving labor disputes____ But a statute which encouraged the negotiation of agreements, yet permitted the parties to retract the concessions and repudiate their promises whenever they choose, would impede effective bargaining____ Successful bargaining rests upon the sanctity and legal viability of the given word. Glendale City Employee’s Association, Inc. v. City of Glendale, 15 Cal.3d 328 , 124 Cal.Rptr. 513, 518-19 , 540 P.2d 609, 614-15 (1975).

II

Substantive Arbitrability The Board contends that even if the agreement, albeit executory, is enforceable, the dispute, i.e., teacher observation, is not covered by Section A of Article III, the arbitration clause. In Bel Pre , Judge" Davidson noted that in a suit where the arbitration clause is enforceable, the sole ⁶⁴¹ issue to be resolved is whether there is “an agreement to arbitrate the subject matter of the dispute.” 21 Md.App. at 320 , 320 A.2d 558 . This is a determination to be made by the courts. Id.

In so doing, however, the general rule is: Where the language of the arbitration provisions is