Firefighters v. City of Cranston

CRANSTON FIREFIGHTERS, IAFF LOCAL 1363, AFL-CIO, Petitioners, v. CITY OF CRANSTON, Respondent.

C.A. No. PM-2016-4919

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS PROVIDENCE, SC. SUPERIOR COURT

August 15, 2017

DECISION

MONTALBANO, J. Before this Court is a petition by the Cranston Fire Fighters, IAFF Local 1363, AFL-CIO (the Union) to vacate an arbitrator's award in a dispute with the City of Cranston (the City), concerning pension contributions contained in the parties' Collective Bargaining Agreement (CBA). The City moves to confirm the arbitrator's award. Jurisdiction is pursuant to G.L. 1956 § 28-9-18.

IFacts and Travel

The Union and the City have had a long-standing collective bargaining relationship. During the 1990s, the City became concerned about the financial feasibility of its pension system. Specifically, at that time the City's financial advisors warned that the costs of paying out pensions were considerably more than what was being funded by the employees' contributions. As a result, Cranston's then-Mayor, Michael Traficante, approached the Union seeking to make changes to the fire fighters' pension plan. According to Mayor Traficante, the City wanted the police and fire fighters to change from the private pension system that was in place to the retirement plan that was being offered by the State, the Municipal Employees' Retirement System (MERS). (Award 4.) Under MERS, the City and the Union learned that the employees' contribution rate would be ten percent. Id. at 5.

Once agreements between the parties were reached, the CBA codified the contribution rate of ten percent for those employees who were part of the new MERS system. Id. at 5. Paul Valletta, the President of the Union, testified that in negotiating the CBA, the Union sought to lock-in the employee pension contribution rates for employees entering the MERS system. Id. Therefore, Section 24.2 was included in the CBA, which sought to require the City to cover any increase in the MERS employees' contributions. Specifically, Section 24.2 provided in pertinent part:

"In the event contributions by members of the Fire Department to the present pension system are more than . . . ten (10%) percent for the State of Rhode Island 'Optional Twenty (20) Year Service Pension' R.I.G.L. 45-21-2-22¹ [sic], with modifications at the effective date of this Agreement are increased during the term hereof, the City of Cranston agrees to pay the difference between the said . . . ten (10%) percent then required to be contributed, retroactively to the date of such increase over . . . ten (10%) percent."

In 2011, the State changed the MERS retirement program by enacting the Rhode Island Retirement Security Act of 2011. (Award 18.) The Rhode Island Retirement Security Act of 2011 became effective July 1, 2012 and created a new defined contribution plan for municipal Police and Fire in the State of Rhode Island, which increased the fire fighters' total contribution rate to eleven percent. Id. at 7, 18. However, the Union did not file a grievance at that time.According to Mr. Valletta, the Union did not file a grievance because prior to this increase, the fire fighters were actually contributing a total of 11.5% on their own accord—with 10% going to the state pension and 1.5% going to the City to aid the City during a time of financial uncertainty.² (Tr. 43). Therefore, the fire fighters' deductions actually went down by .5% as a result of the modification, and the Union elected not to file a grievance. Id. However, the Union noted in its memorandum that in July 2015, "the State increased the [firefighters'] contribution rate to thirteen percent" with ten percent going to the defined benefit plan and three percent going to the defined contribution plan (Union's Mem. 5). See Award, 7-9. It was pursuant to this increase that the Union filed the present grievance. (Award 7; Tr. 30.)

Subsequently, with respect to this increase, the City informed the Union that it intended to deduct three percent from the fire fighters' paychecks, both retroactively and prospectively, in order to pay the three percent mandatory contribution under the new defined contribution plan. However, the Union argued that the City was obligated by the terms of the CBA—specifically, Section 24.2—to pay the increased pension contributions owed by the fire fighters. As a result, the Union filed a grievance with the City on August 29, 2015. The grievance was not resolved by the parties, and pursuant to the terms of the CBA, the Union submitted the grievance to arbitration.

The parties had a hearing before Arbitrator Gary Altman (the Arbitrator) on April 7, 2016. During the arbitration hearing, the parties stipulated that the issue to be decided was thedisposition of the grievance, and if the grievance was sustained, what the remedy should be. (Award 2.)

A

The Arbitration Award

In his decision, the Arbitrator first concluded that the grievance was procedurally arbitrable, although the grievance was filed more than thirty days after the event that triggered the grievance.³ (Award 16.) The Arbitrator determined that "even if there is no actual written agreement to waive time limits[] a party, by its conduct, can be held to have waived its right to raise timeliness of the grievance at arbitration." Id. According to the Arbitrator, the City waived its right to challenge the timeliness of the Union's grievance by failing to raise the issue at the hearing. Id.; see also, Elkouri & Elkouri, How Arbitration Works 5-23 (Kenneth May ed.) (8th ed. 2016) ("An employer can be deemed to have waived objections to the union's failure to follow a contract's procedural requirements, particularly when the employer cannot prove that it had been prejudiced thereby."). As the grievance was procedurally arbitrable, the Arbitrator then addressed the merits of the matter.

According to the Arbitrator, Section 24.2 referred specifically to employee contributions "to the State of Rhode Island 'Optional Twenty (20) Year Service Pension' R.I.G.L. 45-21-2-22." (Award 18.) The Arbitrator found that the '"Optional Twenty (20) Year Service Pension"' cited in Section 24.2 was a defined benefit pension plan, which provided "employees an annual pension in which the amount of the pension is based on years of service, and age." Id. at 18. In contrast, the Arbitrator found the additional three percent contribution required by the State didnot come into existence until the Rhode Island Retirement Security Act of 2011. Id. Such an increase, the Arbitrator believed, was a result of the Act's creation of a new mandatory defined contribution plan. Id. The Arbitrator concluded that this newly-created defined contribution plan was a statutorily separate and distinct pension plan from the plan articulated in § 45-21.2-22—the statutory section referenced in Section 24.2 of the CBA. Id. at 19. Additionally, in his decision, the Arbitrator further concluded as follows:

"Since this additional defined contribution plan was not in existence when the parties first negotiated the language of Section 24.2, it certainly cannot be concluded that this defined contribution plan was in the minds of the negotiators when they first agreed to the 10% cap that appears in Section 24.2." Id.

As such, the Arbitrator concluded that Section 24.2 of the CBA had not been violated by the City's failure to cover the new three percent contribution owed by the fire fighters, and therefore, he denied the grievance. Id. at 19-20.

Following the Arbitrator's decision, the Union filed the present petition with this Court. The Union seeks to have the Arbitrator's Award vacated. In support of its position, the Union argues that the Arbitrator disregarded Section 24.2 of the CBA, which the Union believes required the City to pay for the additional three percent contribution. The Union further argues that the Arbitrator disregarded the parties' intent in drafting Section 24.2, and therefore, his decision failed to draw its essence from the contract. Finally, the Union contends the Arbitrator exceeded his powers by interpreting and applying a long-expired CBA between the parties from the 1990s instead of the CBA in effect when the grievance was filed.⁴

IIStandard of Review

The judicial authority to vacate arbitration awards is statutorily prescribed in § 28-9-18. Pursuant to § 28-9-18, this Court may vacate an arbitrator's award only under three circumstances:

"(1) When the award was procured by fraud.

"(2) Where the arbitrator or arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final, and definite award upon the subject matter submitted was not made.

"(3) If there was no valid submission or contract, and the objection has been raised under the conditions set forth in § 28-9-13." Sec. 28-9-18(a)(1)-(3).

Our Supreme Court has held that "[a]s long as the award 'draws its essence' from the contract and is based upon a 'passably plausible' interpretation of the contract, it is within the arbitrator's authority and [the Court's] review must end." Jacinto v. Egan, 120 R.I. 907, 911-12, 391 A.2d 1173, 1175-76 (1978). Indeed, '"[a] judicial reversal of an arbitration award based solely on the reviewing court's disagreement with the [arbitrator's] interpretation of the contract would not only nullify the bargain made by the parties but also threaten the strong public policy that favors private settlement of grievance disputes arising from collective bargaining agreements."' Id. (quoting Belanger v. Matteson, 115 R.I. 332, 355, 346 A.2d 124, 137-38 (1975)). Therefore, '"[a]bsent a manifest disregard of a contractual provision or a completely irrational result, the [arbitration] award will be upheld."' North Providence v. Local 2334 Int'lAss'n of Fire Fighters, AFL-CIO, 763 A.2d 604, 606 (R.I. 2000) (quoting Rhode Island Bhd. of Corr. Officers v. State Dep't of Corrections, 707 A.2d 1229, 1234 (R.I. 1998)). Such "insulation of arbitration awards has been justified on...