Mayor of Baltimore v. Baltimore City Firefighters Local 734

ADKINS, Judge. Annually, the Mayor and City Council of Baltimore (“the City”) and its various employee units engage in collective bargaining regarding terms and conditions of employment. If the City and its fire officers and firefighters (collectively, “Firefighters”) cannot reach agreement through collective bargaining, they are required, under the Baltimore City Charter (“the Charter”), Art. II, section 55(b), to submit to binding arbitration “terms and conditions of employment.” In the most recent contract year, the City and unions representing the ifirefighters, i.e., Baltimore City Firefighters, Local 734, I.A.F.F. and Baltimore City Fire Officers, Local 964, I.A.F.F. (collectively “the Unions”), could not agree upon either a contract or the disputes to be submitted to arbitration.

We are asked to resolve the latter issue, which involves the arbitrability of two contract provisions sought by the Unions: (1) a “parity provision”—under which the Firefighters would receive pay and benefits equal to that of paid police officers; and (2) the “rule of one”—a method used to determine promotions for individual Firefighters based solely upon certain test scores. We hold that the parity provision is arbitrable. Because the record is not sufficiently developed with regard to the rule of one, however, we remand to the trial court for full resolution of that issue. FACTS AND LEGAL PROCEEDINGS Under the arbitration procedures, each party submits its final “best offer” to a three-member arbitration panel(“panel”). 1 After a hearing on the record, the panel chooses between the competing proposals.

The decision of the panel is ⁵¹⁶ final and binding, and “[n]o appeal therefrom shall be allowed.” Balt. City Charter, § 55(b)(7). The parties negotiated but failed to reach complete agreement on a memorandum of understanding (“MOU”) for the fiscal year beginning on July 1, 2000. Specifically, there were two issues on which the parties failed to reach complete agreement.

First, the Unions proposed, and the City rejected, a parity provision. Under the proposed parity provision, the City would be required to grant to Firefighters the same wage or benefit increases that it grants to police officers. According to an affidavit submitted by a former president of Local 734, parity provisions first appeared in an MOU negotiated between the City and the Unions in 1974. Between 1974 and 1992 a parity provision appeared in some, but not all, Firefighter MOU’s.

Since 1992, parity provisions have been included in every MOU negotiated between the City and the Unions. The second issue involved the rule of one. The City’s Civil Service Commission (“Commission”) announces vacancies in City employment and conducts competitive examinations to fill vacant positions. The rule of one requires the appointing authority, in this case the fire department, to promote the individual who is ranked first on the list of eligibles.

Thus, under the rule of one, the fire department’s discretion in promotion is limited. Under the Commission’s rules, however, the Commission submits to the fire department a list of at least five individuals to be interviewed, and the fire department fills vacancies from this finalist list, thereby preserving the discretion of the appointing authority. See Rules of the Baltimore City Department of Personnel and Civil Service Commission, Rule 29E. The parties’ dispute reached the Circuit Court for Baltimore City when the City, on March 3, 2000, filed a complaint for declaratory judgment and injunctive relief attempting to enjoin the arbitration.

The City contended that both the proposed parity provision and the rule of one violated the City Charter and the Municipal Employee Relations Ordinance, ⁵¹⁷ Baltimore City Code (1976, 1983 ed.), Art. I, sections 119-137 (“MERO”), and therefore, were “not subject to arbitration under Article II, section 55(b)(1) of the [City] Charter.... ” Specifically, the City asserted that the parity provision “impermissibly restricts] and interfere^] with the City’s ability to negotiate directly and in good faith with both the police and fire unions.” Likewise, the City argued that the rule of one would interfere with the authority of, and violate the rules and regulations established by, the City’s Department of Personnel (“Department”) and the Commission. On March 28, 2000, the Unions filed a motion to dismiss the City’s complaint. At a hearing three days later, the court held that the question of arbitrability was not for the court to decide, but rather, for the board of arbitrators and that “a court of competent jurisdiction does not have jurisdiction until the matter is adjudicated in the arbitration.” This appeal followed. In the time period between the circuit court’s dismissal and the instant appeal, the arbitration was completed.

The Panel adopted the Unions’ proposals, including the parity provision and the rule of one. Additional facts will be added as necessary to the following discussion. DISCUSSION I. Introduction: Public Employee Collective Bargaining And Arbitration In Baltimore City Collective bargaining for public employees began in Baltimore City in 1968 with the enactment of MERO. See 1968 Baltimore City Ord., No. 251.

In its Declaration of Policy and Findings of Fact, MERO provides: The City Council finds that unresolved disputes involving employees in the municipal service are injurious to the public, the municipality and municipal employees; therefore adequate means should be provided for preventing contro ⁵¹⁸ versies between the municipality and its employees and for resolving them when they occur.... [I]t is incumbent upon the municipality ... to provide orderly procedures for the participation by municipal employees and their representatives in the formulation of personnel policies and plans, to insure the fair and considerate treatment of municipal employees, to eliminate employment inequities, and to provide effective means of resolving questions and controversies with respect to terms and conditions of employment.... To that end it is necessary in the public interest that the municipal officials, municipal employees and their representatives, shall enter into negotiations with affirmative willingness to resolve grievances and differences. Municipal agencies and employees and their representatives shall have a mutual obligation to endeavor in good faith to resolve grievances and differences relating to terms and conditions of employment with due regard for and subject to the provisions of applicable laws relating to personnel policies, including hiring, promotion, suspension, discharge, position classification and fixing of compensation and any and all other laws, ordinances, and Charter provisions governing public employment and fiscal practices in the City of Baltimore. MERO, § 119.

MERO gives to City employees the right to organize into employee organizations, and protects the exercise of that right. Employees shall have, and shall be protected in the exercise of, the right of self-organization, to form, join, assist or participate in any employee organization, or to refrain from forming, joining, assisting or participating in any employee organization, freely and without fear of penalty or reprisal, to negotiate collectively through representatives of their own choosing on terms and conditions of employment subject to the limitations herein stated and the administration of grievances arising thereunder, subject to the applicable provisions of any law, ordinance or charter provisions relating thereto. ⁵¹⁹ MERO, § 122. MERO also reserves unto the City certain rights. [I]t is the exclusive right of the employer to determine the mission of each of its constituent agencies, set standards of services to be offered to the public, and exercise control and direction over its organization and operations. It is also the right of the employer to direct its employees, to hire, promote, transfer, assign or retain employees in positions within an agency and in that regard to establish reasonable work rules....

Any memorandum of understanding reached between the employer and employee organization shall be subject to the provisions of the Charter or applicable ordinance concerning salaries, hours of work, fringe benefits, pensions and other conditions of employment. Id. MERO provides for recognition and certification of employee organizations, and gives certified organizations “the exclusive right to represent all employees in the unit for the purpose of collective negotiations as described herein.... MERO § 124(b)”.

The employer and the certified employee organization have a duty “to negotiate collectively with respect to the terms and conditions of employment of employees in said unit.” MERO, § 127. “Terms and conditions of employment” is defined in MERO as “salaries, wages, hours and other matters relating to employee benefits and duties, such as, but not limited to, holidays, pensions and vacations.” MERO § 120(k). They are required to “reduce to a memorandum of understanding the matters agreed upon as the result of such negotiations in the event that all of the issues have been resolved.” Id. MERO also provides for the selection of an “Impasse Panel,” consisting of three persons who would make findings of fact and recommendations for the solution of a dispute when an impasse occurs in the parties’ negotiations. MERO, § 128.

There was no procedure for binding interest arbitration with respect to impasses in negotiation of an MOU. 2 ⁵²⁰ At the time MERO was enacted, there was no public local law or Charter provision which authorized the City Council to enact MERO. Thus, the validity of MERO was subject to challenge on the grounds that Baltimore City acted outside its authority in binding itself “to exercise [its] discretionary legislative powers over compensation of public employees in a particular manner.... ” Maryland Classified Employees Ass’n v. Anderson, 281 Md. 496, 508 , 380 A.2d 1032 (1977). In 1976, however, the General Assembly, by public local law, enacted Baltimore City Charter section 55(a), and later, in 1985, enacted section 55(b). See 1976 Md. Laws, Chap. 924; 1985 Md. Laws, Chap. 704.

Since 1985, Charter section 55 of Article II has provided for collective bargaining and arbitration as follows: (a) .... [T]he Mayor and City Council of Baltimore are authorized, consistent with the provisions of the Charter of Baltimore City, to submit to binding arbitration any dispute arising from the interpretation of, or the application of, any collective bargaining agreement with an exclusive representative. Binding arbitration for firefighters and fire officers shall be conducted as provided in subsection (b).... Until amended by ordinance, the presently existing municipal employee relations ordinance shall remain in force and effect. (b) (1) If the [Union and the City] have not reached a written agreemént concerning terms and conditions of employment by March 1 of any year, either party may request arbitration by a Board of Arbitration, as herein provided, which request must be honored.

Charter, Art. II, § 55 (emphasis added). Section 55(b) also sets forth procedures for interest and grievance arbitration between the City and its employees. It is the scope of issues ⁵²¹ to be arbitrated under Charter section 55(b) that we must decide today.

II

This Court Will Exercise Its Discretion To Review The Arbitrability Of The Parity Provision And The Rule Of One Because the arbitration has already taken place, a portion of the City’s request for injunctive relief—the request to halt the arbitrations proceedings—is now moot. The parties assert, however, and we agree, that some of the relief requested in the complaint is still justiciable. “A court will vacate an arbitration award if it is not within the scope of the issues submitted to arbitration.” Bd. of Educ. of Prince George’s County v. Prince George’s County Educators’ Ass’n, 309 Md. 85, 100 , 522 A.2d 931 (1987). Thus, the justiciable issue presented for our decision is whether to vacate the arbitration award because the issues submitted to arbitration were not “terms and conditions of employment” within the meaning of Charter section 55(b). The trial court ruled that it had no jurisdiction to determine whether the two contested issues were arbitrable.

The City argues that it did have jurisdiction. The Unions respond that the arbitration had to occur first, but as it has now been completed, the arbitration award now is ripe for judicial review. Both agree that the question of arbitrability is before the court, to be decided as a matter of law. We agree with the parties that it is for the court to decide whether there exists an agreement to arbitrate on the subject matter of dispute.

See City of Baltimore v. Baltimore City Fire Fighters, Local 734, 49 Md.App. 60, 65-66 , 430 A.2d 99 , cert. denied, 291 Md. 771 (1981) (where the parties are in disagreement as to whether there exists an agreement to arbitrate, the resolution of that matter is for the courts). Although we are inclined to agree with the City that the arbitration was not required before the court could determine ⁵²² arbitrability of these issues, we do not reach that issue since arbitration has now been completed. The Unions contend that the trial court was correct in dismissing the City’s complaint because the Charter calls for arbitration on all terms and conditions of employment, and the parity provision and rule of one are terms and conditions of employment. The City counters that both the parity provision and the rule of one are excluded from arbitration because all arbitration called for under the charter is subject to the terms of other Charter provisions and MERO, and both contain provisions which show a clear intent to exclude parity and the rule of one from arbitration.

The City further argues that a parity provision is contrary to public policy. These questions were not ruled on by the trial court. Ordinarily, we would apply Maryland Rule 8-131, which directs us not to rule on any issue not ruled upon by the trial court. Rule 8-131, however, permits us to decide questions presented to, but not ruled upon, by the trial court, “in order to provide guidance to [the lower court] or to avoid the expense and delay of another appeal.” Jolly v. First Union Sav. & Loan, 235 Md. 161, 165 , 201 A.2d 4 (1964).

In this instance, it is desirable to rule on both issues to avoid the delay and expense of another appeal, and to guide the lower court upon remand, and we will therefore consider both issues.

III

The Parity Provision Was Arbitrable The City contends that the parity provision is excluded from arbitration by the terms of MERO because the parity provision would have a chilling effect on the negotiations and affect the final agreement reached with the police union ... [and] any such interference is prohibited by MERO ... which give[s] employees the right to free, collective and good faith bargaining through exclusive representatives ... [and] pro ⁵²³ tects the employer and the employee representative from interference in the exercise of their rights. It also relies upon the Charter, arguing that [t]he Charter requires that the City provide for the manner of establishing units appropriate for collective bargaining and designating or selecting exclusive bargaining representatives. The Charter also mandates that employee organizations be designated as the exclusive representatives for each unit. The City contends that a parity provision prevents it from negotiating exclusively and in good faith with the police union, because the police union would essentially be negotiating wages for both itself and the Firefighters.

It argues that it would be prevented from bargaining in good faith with the police union because of its obligations to the Firefighters. As a result, it argues, “the wage and benefit parity provisions would tend to create an upper limit above which the police union cannot go without facing the consequences of the parity provisions.” It contends that courts will not enforce a collective bargaining agreement that is contrary to public policy, and argues that public policy is a question for the courts, “which ascertain what is public policy by reference to laws and legal precedents.” The Unions respond that Charter section 55(b) is clear and unambiguous. They contend that it vests in the Board of Arbitration the authority to resolve collective bargaining disputes over “terms and conditions of employment,” and that a parity provision is a term and condition of employment because it directly relates to wages. They emphasize that MERO explicitly defines “terms and conditions of employment” to include wages.

The Unions = further argue that MERO is consistent with parity, and that parity has been included in prior MOU’s for many years without adverse effect. In support of its position, the City cites cases from other jurisdictions that have struck down parity provisions. In Local 1219, I.A.F.F. v. Connecticut Labor Relations Bd., 171 ⁵²⁴ Conn. 342, 370 A.2d 952 (1976), a firefighter union and a municipal employer entered into a three-year collective bargaining agreement. The agreement provided that “[i]t is understood and agreed that if the borough grants to the police department any additional [benefits] over and above this contract and during its term, the employees in this bargaining unit will be granted the same additional benefits....” Id. at 955 .

After the municipality refused to give the same additional benefits to the firefighters that it gave police officers, the union initiated a grievance procedure before the board of mediation and arbitration. The board ultimately refused to enforce the parity provision, and this decision was affirmed by the trial court. The Connecticut Supreme Court agreed, and held that the parity provision was unenforceable. In reaching its decision, the Court relied on Conn.

General Statute § 7-468(a), which provided that employees have the right “to bargain collectively ... on questions of wages ... free from ... interference, restraint or coercion,” and Conn. General Statute § 7-471(3), which required employees of municipal fire and police departments to be in separate collective bargaining groups. The Court reasoned that the police union’s right to bargain has been completely taken from it. By voiding parity clauses in circumstances similar to those found in the present case, the defendant board preserves the wall of separation mandated by the statute.

The [board’s] action will also ensure that the units will be allowed to tie themselves to a rule of equality only if each unit agrees with the other that their interests are the same. Id. at 957. A similar result was reached in Lewistown Firefighters Ass’n, Local 785, I.A.F.F. v. City of Lewistown, 354 A.2d 154 (Me.1976). In Lewiston, the city charter contained a parity provision and the firefighters’ union entered into a series of contracts that contained a parity provision.

After being refused a wage increase based on the parity provision, the police ⁵²⁵ union brought suit challenging both the city charter and contract provision. In support of its position, the police union contended that the city charter wage parity provision had been implicitly repealed by the subsequent passage of the Municipal Public Employees Labor Relations Law (“MPELRL”) by the Maine legislature. The Court agreed, and explained: We ... believe that the two fundamental purposes of the MPELRL—freedom of employee self-organization and voluntary adjustment of the terms of employment—are best effectuated through the creation of coherent bargaining units composed of employees who have ‘an identifiable community of interest’ in the subjects controlled by the collective bargaining agreement. .... The effect of the parity pay provision is to place the bargaining representative of the [police union] in the position of negotiating wages not only for those whom he was chosen to represent but, indirectly, for the [firefighters union] as well.

The facts of this case clearly show how the parity pay provision has ... affected the public employer’s perception of its freedom to negotiate this aspect of the employment relationship.... [T]he procedures established by the MPELRL for determining the configuration of the unit whose wages will be determined by collective bargaining between its elected representative and the employer are evaded by the parity pay provision which . .. necessarily interjects the interests of the [firefighters] into the unit created to represent the [police]. Id. at 161 . Utilizing the same rationale, the Court held that the contract parity provisions were void as “contrary to public policy.” Id. at 163 . 3 ⁵²⁶ Unlike the Connecticut and Maine courts, courts in other jurisdictions have held that parity provisions may be enforceable. In Banning Teachers Ass’n. v. Public Employment Relations Bd., 44 Cal.3d 799 , 244 Cal.Rptr. 671 , 750 P.2d 313 (1988), a teachers’ union contended that an administrative board erred when upholding a parity provision between teachers and “classified employees.” The teachers alleged that the parity provision violated Cal.

Government Code section 3545(b)(3), which required that classified and certified employees not be in the same bargaining unit, and section 3543.5(c), which required the employer to negotiate in good faith. The California Supreme Court held that the parity provision was not “per se illegal.” 4 In so doing, the court held that the parity provision did not violate the separate unit requirement. The parity agreement did not require the Teachers Association to negotiate on behalf of the classified unit. The salary increase for which the Teachers Association bargained ... may ‘incidentally’ benefit the classified unit, even though the Teachers Association did not in fact bargain on behalf of the classified unit to obtain the bargained-for item.

However, such incidental benefit does not violate the section 3545 mandate to maintain separate negotiating units. Id. at 316-17. Likewise, the court held that the parity provision did not violate the duty to negotiate in good faith, because “[pjarity agreements no more restrict the District’s bargaining position than do the confines of a limited budget which exist absent such agreement. Each employee bargaining unit necessarily has an impact on the negotiations of every other unit....” Id. at 317.

The Banning court also found that parity pro-visions were beneficial to the bargaining process. To hold parity agreements per se illegal would place a burdensome limitation on public school employers to negotiate effectively in an already cumbersome environment of multi-unit collective bargaining. It would obstruct employ ⁵²⁷ ment relations, thus defeating the stated purpose of section 3512 “to foster peaceful employer-employee relations....” Id. at 318. A New York court reached the same conclusion in City of Schenectady v. City Fire Fighters Union, Local 28, I.A.F.F., 85 A.D.2d 116 , 448 N.Y.S.2d 806 (1982).

In City of Schenectady , both the police and firefighters contracts contained parity provisions providing that “there will be no disparity in remuneration between employees covered by” the police and firefighters collective bargaining agreements. After the police union was granted certain overtime benefits not given to firefighters, the firefighters sued to uphold the parity provision. The court held that such provisions were not per se illegal. Rather, the court held that parity provisions require a case-by-case examination of the specific provision.

See id. at 808. In upholding the particular provision in question, the court explained: The award is reasonably limited in time, for the balance of the three-year contract. The actual resolution of the dispute with the [police union] concerning overtime refutes any conclusion that the provision had impaired the city’s ability to negotiate that dispute. There is nothing in the record to show that during the balance of the term of the agreement significant overtime work assignments will be required of the city’s fire fighters or even if so, that remuneration therefor at the additional rate will imperil the city’s finances.

Apparently, for some 12 years, the city has found it to be productive of harmonious public employee relations and consistent with financial prudence ... to include within the agreements thereby achieved a provision for equality of remuneration. Id. at 809. We agree with the New York and California courts that have held that parity provisions are not per se illegal and