Court of Appeal Affirms Constitutionality of Public-Sector Fact-Finding



Rains Lucia Stern, PC

In 2011, Governor Jerry Brown signed into law Assembly Bill 646, which extended the provisions in the Meyers-Milias-Brown Act (MMBA) for impasse resolution through advisory fact-finding to recognized public employee organizations. It left unanswered, however, the question of whether these fact-finding provisions applied to impasses over any bargainable matter or only to impasses arising during the negotiations of a successor or comprehensive memorandum of understanding (MOU). On March 30, 2016, the Court of Appeal (Fourth District) answered that question in San Diego Housing Commission v. Public Employment Relations Board (hereinafter “S.D. Housing,” March 30, 2016, D066237), holding that fact-finding applies to all bargainable matters, not just comprehensive MOU negotiations.
In a concomitantly decided companion case, County of Riverside v. Public Employment Relations Board (PERB) (hereinafter “Riverside,” March 30, 2016, 16 C.D.O.S 3395), the court also upheld the constitutionality of the fact-finding statute, which had been challenged on the basis that it violated Article XI, Section 11, of the California Constitution by delegating a city’s or county’s home rule powers to a private person or board. The court rejected that claim, finding that the advisory nature of the fact-finding process did not divest elected officials of their final decision-making authority and was therefore constitutional.
Riverside Decision
The County of Riverside implemented a new background check policy for information technology employees represented by a union. The union requested to meet and confer over the impacts and effects of the policy, but were unable to reach an agreement. The union declared an impasse and eventually submitted a request for fact-finding to the Public Employment Relations Board, which granted the union’s request over the County’s objection. The County filed a lawsuit, claiming that fact-finding violated its constitutional right to establish compensation for its employees. The trial court denied the County’s motions challenging the constitutionality of the MMBA’s fact-finding provisions, and the County appealed.
In affirming the trial court’s ruling that fact-finding did not violate Article IX of the California Constitution, the court looked to the purpose of the MMBA’s fact-finding provisions, which is to provide a public agency at an impasse in negotiations with additional information and recommendations before making a decision whether to impose its last, best and final offer. Article XI, Section 11, of the state constitution is a prohibition on the Legislature from delegating “to a private person or body power to make, control, appropriate … or interfere with county or municipal … money … or perform municipal functions.” The court reasoned that unlike the U.S. Constitution, which is a grant of power to Congress, the California Constitution is a limitation or restriction on the powers of the Legislature.
Here, the court held the “fact-finding provisions do not delegate to fact-finding panels any power to make any binding decisions affecting public agency operations. The public agency still retains the ultimate power to refuse an agreement and make its own decisions.” The court therefore held that in crafting the MMBA’s fact-finding provisions, the Legislature did not unconstitutionally interfere with a local public agency’s rights to discharge its home rule powers.
Interestingly, the County sought to analogize the present case to the decision that struck down the interest arbitration statutes created by SB 402 in County of Riverside v. Superior Court (2003), 30 Cal.4th 278. The court, however, easily distinguished the two matters, holding that SB 402 created a binding arbitration decision that fixed compensation of employees, whereas a fact-finding only empowers the panel to make a recommendation that elected officials are free to disregard.
S.D. Housing Decision
The San Diego Housing Commission decided to lay off two employees represented by a recognized employee organization. After the labor organization demanded to bargain over the impacts and effects of the decision to lay off its members, the parties reached an impasse. The labor organization then timely requested of PERB that the matter be submitted to fact-finding under Section 3505.4 of the California Government Code. PERB granted the union’s request over the commission’s objection, and the commission sued. The commission claimed that fact-finding provisions applied only to an impasse arising during the negotiation of a comprehensive MOU, not to an impasse arising during the negotiation of a discrete, bargainable issue. The trial court agreed with the commission’s interpretation of the act and ruled in its favor. PERB appealed.
The Court of Appeal noted that around the time the trial court entered its judgment, PERB issued a decision interpreting the MMBA’s fact-finding provisions (see County of Contra Costa [2014], PERB Dec. No. Ad-410-M). Therein, PERB held that the Legislature intended the act’s fact-finding procedures to apply to any and all bargaining impasses over negotiable terms and conditions of employment. Underlying PERB’s decision in that case were several factors: First, the act does not contain any language expressly limiting its fact-finding provisions to impasses occurring during the negotiation of a comprehensive MOU; second, the Board had consistently applied the analogous fact-finding provisions in the Educational Employment Relations Act (Government Code §§ 3548.1–3548.3) and Higher Education Employer–Employee Relations Act (Government Code §§ 3591–3593) to all types of bargaining disputes, not just disputes arising in the context of a negotiation for a comprehensive MOU; third, interpreting the act’s fact-finding provisions to apply to any bargaining disputes is consistent with the legislative history of AB 646; and finally, interpreting the act’s fact-finding provisions to apply to any bargaining dispute is consistent with the parties’ continuous duty to bargain on any bargainable issue and prepare an MOU after reaching an agreement.
Although statutory interpretation is ultimately a judicial function, the Court of Appeal gave deference to PERB’s interpretation, since it is vested with the authority to interpret the act. The commission attempted to convince the court that PERB’s interpretation ought not be followed, for a variety of reasons that were ultimately unpersuasive and disregarded. In the end, the court held that applying the fact-finding provisions only to impasses arising from MOU negotiations would frustrate its purpose by “depriving the parties of an orderly method for resolving disputes arising during the negotiation of supplemental matters. Such a result would also be anomalous since the act makes no other procedural or substantive distinction between the negotiation of comprehensive MOUs and the negotiation of supplemental matters.”
Combined, these decisions affirm what has long been the interpretation of the MMBA’s fact-finding provisions by those representing labor organizations in that process. The Court of Appeal’s decisions in these two cases preserve the balance AB 646 sought to establish. They ensure that elected officials must at least consider the additional information adduced during the fact-finding process and the recommendations of the fact-finding panel before deciding whether a public agency should implement its last, best and final offer.
About the Author
Robert M. Wexler is a partner with Rains Lucia Stern, PC, and heads its Southern California labor practice. He has spent over 20 years representing the interests of public safety employee organizations and their members. He can be reached at 1607-court-of-appeal-affirms-constitutionality-1