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Fraternal Order of Police, Lodge 5 v. New Castle County

Court of Chancery of Delaware

January 29, 2014

FRATERNAL ORDER OF POLICE, LODGE 5, Appellant-Below, Appellant,
v.
NEW CASTLE COUNTY, DELAWARE, DELAWARE PUBLIC EMPLOYMENT RELATIONS BOARD, Appellees-Below, Appellees.

Submitted: October 9, 2013

Citation On Appeal From The Decision Of The Public Employment Relations Board Dated June 22, 2012 (BIA No. 11-10-826)

Ronald Stoner, Esq., RONALD STONER, P.A., Wilmington, Delaware; Attorney for Appellant.

William W. Bowser, Esq., Scott A. Holt, Esq., YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Attorneys for Appellee, New Castle County.

MEMORANDUM OPINION

PARSONS, Vice Chancellor.

This action is an appeal from a decision of the Public Employee Relations Board ("PERB") upholding the findings of a binding interest arbitrator in a statutorily mandated arbitration proceeding between the Appellant, Fraternal Order of Police, Lodge 5 ("FOP 5"), and Appellee New Castle County (the "County").[1]After failing to reach a collective bargaining agreement, both FOP 5 and the County submitted their last, best, final offers ("LBFO") to a binding interest arbitrator pursuant to the Police Officers' and Firefighters' Employment Relations Act (the "POFERA").[2] Based on the POFERA's specified criteria, the binding interest arbitrator found the County's LBFO to be the more reasonable proposal. PERB upheld that conclusion after an initial appeal by FOP 5.

FOP 5 contends that both the binding interest arbitrator and PERB committed legal and factual errors in their decisions. According to FOP 5, those errors provide this Court sufficient grounds to reverse those holdings, or alternatively, to remand this action for further proceedings. The County responds that both the binding interest arbitrator and PERB applied correctly the provisions of the POFERA, and that this Court should affirm their respective findings.

Having considered the evidentiary record presented to the binding interest arbitrator and PERB and the parties' briefs and oral arguments in this appeal, I conclude that the decision of PERB should be affirmed.

I. BACKGROUND

A. Facts[3]

1. Failed negotiations

FOP 5 is an employee organization within the meaning of 19 Del. C. § 1602(k) and is the certified exclusive bargaining representative of New Castle County Police Officers of the rank of Patrol Officer, Corporal, Senior Corporal, Sergeant, Senior Sergeant, Lieutenant, and Senior Lieutenant. FOP 5 and the County, a public employer within the meaning of Section 1602(l) of the POFERA, were parties to a collective bargaining agreement with a term of April 1, 2008 through June 30, 2011. As a result of deterioration in the County's finances precipitated by the 2008 financial crisis, in June 2009, the parties entered into a Memorandum of Understanding in which FOP 5 agreed to concessions that equated to a 5% reduction in wages. The parties further agreed that FOP 5's concessions would remain in effect during the entirety of the County's 2010 and 2011 fiscal years[4] and would expire on June 30, 2011.

On May 5, 2011, the parties began negotiating a successor collective bargaining agreement. The successor agreement was to cover the period from July 1, 2011 to June 30, 2013, i.e., fiscal years 2012 and 2013. After failing to reach an agreement, on July 8, 2011, the County requested that the parties engage in mediation. PERB appointed a mediator, and on September 6, 2011, the parties participated in mediation. Nine days later, on September 15, the mediator recommended that the parties resolve their dispute through binding interest arbitration pursuant to 19 Del. C. § 1615. On request from PERB, each party submitted its LBFO for consideration.

2. Binding interest arbitration

The parties' LBFOs differed in only one respect material to this appeal. FOP 5 proposed a 0% increase in compensation, whereas the County proposed a 2.5% reduction in FOP 5's compensation. Stated differently, FOP 5 proposed essentially to continue the parties' prior collective bargaining agreement, with its previous 5% concession eliminated completely based on its June 30, 2011 expiration, and the County proposed essentially to continue the parties' prior collective bargaining agreement, with only 2.5% of FOP 5's 5% concession restored.

An arbitrator, Deborah L. Murray-Sheppard (the "Arbitrator"), Executive Director of PERB, was appointed by PERB pursuant to 19 Del. C. § 1615(b) and charged with choosing either FOP 5's or the County's LBFO. The Arbitrator conducted a two-day evidentiary hearing on January 4 and 9, 2012, to determine which party's LBFO was most consistent with the statutory factors contained in 19 Del. C. § 1615(d).[5] During the hearing, the County argued that even with the 2.5% concession, FOP 5 members still were well compensated relative to comparable police officers in Delaware, and that the County could not afford to restore fully FOP 5's initial concessions based on existing revenues. FOP 5 challenged as speculative the County's assertions that it would experience a budget deficit in fiscal years 2012 and 2013, noting that the County had experienced budget surpluses in recent years and was projecting a budget surplus for fiscal year 2012. In addition, FOP 5 averred that the County had other sources of funds sufficient to finance its proposal, such as the savings the County enjoyed because of unfilled vacancies in the County police force and the County's large financial reserves, which at approximately $80 million, amounted to nearly half of the County's $164 million operating budget.

Ultimately, the Arbitrator, charged with the task of picking either the County's or FOP 5's LBFO in its entirety and without modification, [6] chose the County's LBFO. In her written findings of fact, the Arbitrator stated that: (1) FOP 5 members remained well compensated relative to their peers even with a 2.5% concession; (2) the fact that all of the County's other unionized employees had agreed to a 2.5% concession weighed against FOP 5's proposal; and (3) the County could not afford FOP 5's proposal based on "existing revenues" because, under the statute, that term does not include financial reserves, and any savings created by vacancies in the police department had been eliminated by unbudgeted severance obligations.

3. PERB's decision

On March 8, 2012, three days after the Arbitrator issued her decision, FOP 5 appealed that decision to PERB under 19 Del. C. § 1615, arguing that the Arbitrator failed to apply properly the factors listed in Section 1615(d) of the POFERA. Specifically, FOP 5 asserted that its proposal was more reasonable, per se, under Section 1615(d) because it sought only to maintain the status quo established by a predecessor collective bargaining agreement. FOP 5 also asserted that the evidentiary record did not support the Arbitrator's finding that the County could not afford to pay for FOP 5's LBFO.

On June 22, 2012, PERB unanimously affirmed the Arbitrator's decision. First, PERB rejected FOP 5's argument that its proposal to have its original 5% concession restored fully was a maintenance of the status quo, and instead found that it was tantamount to a 5% increase in compensation. Next, PERB rejected FOP 5's contention that the Arbitrator was obligated statutorily to determine first which proposal was more reasonable, and only then examine the County's ability to pay for FOP 5's proposal. Rather, PERB found that the Arbitrator acted properly in considering the factors in Section 1615(d) simultaneously. Finally, PERB concluded that the Arbitrator correctly analyzed whether the County could afford FOP 5's proposal. That analysis included the Arbitrator's reliance on the binding interest arbitration decision in City of Seaford v. FOP Lodge[7] to support her refusal to consider the County's financial reserves. Therefore, PERB determined that the Arbitrator had executed her responsibilities in conformance with the statutory mandate.

B. Procedural History

On July 6, 2012, FOP 5 filed its initial notice of appeal from PERB's decision seeking review in this Court pursuant to 19 Del. C. ยง 1609(a). FOP 5 filed an Amended Complaint on Appeal on April 10, 2013. The grounds for appeal stated in FOP 5's Amended Complaint were that: (1) PERB erred as a matter of law; (2) PERB erred in matters of fact; (3) PERB acted in an arbitrary and capricious manner; and (4) PERB decisions are not supported by substantial evidence. After full briefing, I heard argument on ...


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