Opinion ID: 2086340
Heading Depth: 1
Heading Rank: 5

Heading: review of the arbitration panel's award

Text: Having ruled Act 312 constitutional, we turn our attention to the general question of whether the arbitration award should be enforced. In addressing this issue, we must be especially alert to follow the limited scope of judicial review expressly provided by § 12 of the act. That section, in relevant part, states: Orders of the arbitration panel shall be reviewable    only for reasons that the arbitration panel was without or exceeded its jurisdiction; the order is unsupported by competent, material and substantial evidence on the whole record; or the order was procured by fraud, collusion or other similar and unlawful means. MCL 423.242; MSA 17.455(42). As we have just noted, this section neither provides this Court with a license to consider the wisdom of an arbitration award nor to subject an award to de novo review. Dearborn, supra, 318. Rather, the Legislature having confined our scope of review in assessing compulsory, binding arbitration awards, we are statutorily bound to uphold an award if it meets the prescriptions of § 12. The city claims that the arbitration panel reversibly erred in only three particulars: the panel's ruling and award on wages, COLA, and the hardship exemption to the city's requirement that all Detroit police officers be residents of Detroit. The main thrust of the city's attack on the award as to these three items is twofold: (1) the award is violative of § 12 as unsupported by competent, material and substantial evidence on the whole record; and (2) the arbitration panel failed to comply with the requirements of §§ 8 and 9 in rendering its award. Except as to one facet of the panel's residency hardship exemption award which will be discussed infra, fn 73, the city does not assert that the panel was without or exceeded its jurisdiction or that the order was procured by fraud, collusion or other similar and unlawful means. However, before we may entertain these two central issues, we must dispose of two collateral issues.
Preliminary to our consideration of the contested items of the award, it is necessary to stake out the perimeters of judicial review under § 12 of the act. Close examination of the act, in light of the well-known rule of statutory construction that each section of an act is to be read with reference to every other section so as to produce a harmonious whole, see 2A Sutherland, Statutory Construction, § 46.05, p 56, leads us to conclude that §§ 8, 9 and 12 evidence a contextual interdependence that necessitates their joint consideration by a court sitting in review of an Act 312 arbitration panel's award. Section 12 specifically provides that an order of the arbitration panel shall be reviewable for the reason that it is unsupported by competent, material and substantial evidence on the whole record. To make such a review, however, we must of necessity have in mind the statutorily mandated requirements of such an order. Section 9 unequivocally directs that where wage rates or other conditions of employment    are in dispute, the arbitration panel shall base its findings, opinions and order upon the following [eight listed] factors, as applicable (emphasis supplied). Section 8 likewise directs the arbitration panel, in its determination of both economic and non-economic issues, to these same § 9 factors: As to each economic issue, the arbitration panel shall adopt the last offer of settlement which, in the opinion of the arbitration panel, more nearly complies with the applicable factors prescribed in section 9. The findings, opinions and order as to all other issues shall be based upon the applicable factors prescribed in section 9. It is patent therefore that these sections require the rendition of an ultimate award which is either based on the § 9 factors  in the case of non-economic issues  or more nearly complies with the § 9 factors  in the case of economic issues governed by the last offer prescription. In effect then, any finding, opinion or order of the panel on any issue must emanate from a consideration of the eight listed § 9 factors as applicable. In making an Act 312 disposition which must statutorily be based upon or in compliance with the § 9 factors as applicable, the Legislature has deemed such a disposition of the panel final and binding if supported by competent, material and substantial evidence on the whole record. MCL 423.240; MSA 17.455(40). Section 12 likewise provides that such final and binding determinations or [o]rders of the arbitration panel shall be reviewable by the courts only for reasons that    the order is unsupported by competent, material and substantial evidence on the whole record. Construing §§ 9 and 12 together then, our review must find that the arbitration panel did indeed base its findings, opinion or order upon competent, material and substantial evidence relating to the applicable § 9 factors. Cf. Caso v Coffey, 41 NY2d 153, 158; 359 NE2d 683, 686 (1976). In other words, the order of the panel must reflect the applicable factors and the evidence establishing those factors must be competent, material and substantial evidence on the whole record. It is only through this judicial inquiry into a panel's adherence to the applicable § 9 factors in fashioning its award that effectuation can be given to the legislative directive that such awards be substantiated by evidence of, and emanate from consideration of, the applicable § 9 factors. [65]
One other matter of statutory interpretation needs to be addressed preliminary to our examination of the panel's award. The city seems to argue that the act must be considered unconstitutional if the panel has the freedom to determine which of the § 9 factors are most applicable to a certain case. The apparent foundation for this argument is some perceived repugnance between the concept of assessing a statute's constitutionality on the sufficiency of its standards to guide delegated authority, while simultaneously allowing the recipient of this delegated authority the discretion to weight these standards within the context of a particular case. We disagree with the city's contention. The fact that an arbitral majority may not be persuaded by a party's evidence and argument as to certain items does not mean that those arbitrators failed to give the statutory factors that consideration required by law. The Legislature has neither expressly nor implicitly evinced any intention in Act 312 that each factor in § 9 be accorded equal weight. Instead, the Legislature has made their treatment, where applicable, mandatory on the panel through the use of the word shall in §§ 8 and 9. In effect then, the § 9 factors provide a compulsory checklist to ensure that the arbitrators render an award only after taking into consideration those factors deemed relevant by the Legislature and codified in § 9. Since the § 9 factors are not intrinsically weighted, they cannot of themselves provide the arbitrators with an answer. It is the panel which must make the difficult decision of determining which particular factors are more important in resolving a contested issue under the singular facts of a case, although, of course, all applicable factors must be considered. Our comment in Midland Twp v State Boundary Comm, 401 Mich 641, 676; 259 NW2d 326 (1977), is here apposite. Merely because some criteria were factually inapplicable or were found by the commission to be of less importance than other criteria does not mean that the commission `ignored' relevant criteria. The commission may regard a particular criterion to be of decisive importance outweighing all other criteria.
At this juncture, our initial observation respecting our limited scope of review deserves quick reiteration. If a panel's award is supported by competent, material and substantial evidence on the whole record, we are mandated to uphold it. As we noted in the analogous context of appellate review of a MERC finding: Such review must be undertaken with considerable sensitivity in order that the courts accord due deference to administrative expertise and not invade the province of exclusive administrative fact-finding by displacing an agency's choice between two reasonably differing views. Cognizant of these concerns, the courts must walk the tightrope of duty which requires judges to provide the prescribed meaningful review. Michigan Employment Relations Comm v Detroit Symphony Orchestra, Inc, 393 Mich 116, 124; 223 NW2d 283 (1974). After having made a painstaking examination of the voluminous arbitration hearing record as well as the opinions (original and supplemental) and orders of the arbitration panel, the trial court and the Court of Appeals, we are satisfied that the instant arbitration award on the economic issues of COLA and wages is supported by competent, material and substantial evidence on the whole record. The arbitration panel conducted some 15 hearings not including final arguments by the parties and wrote a 44-page opinion setting forth the basis of its award. In its original opinion on COLA and wages the panel carefully delineated specific evidence relating to each of the factors of § 9. Indeed, this opinion included a specific section devoted to an analysis of the § 9 factors with respect to the two contested economic items. As the trial court noted in its opinion pendente lite, which reasons were later adopted in its final order of enforcement, [t]he Panel's opinion is replete with specific findings related to the criteria of § 9 of the act and related, also, to the evidence in the case.
However, in recognition of the importance of this case, and at the risk of being considered tedious, we have decided to briefly summarize on these pages the weightier evidence pertaining to the § 9 factors which was heard by the panel and formed the basis of its award. It is this evidence which compels our conclusion that the arbitration award respecting the economic issues of COLA and wages must be upheld. As a framework to our consideration of the evidence in support of the panel's disputed economic awards, some general observations merit voicing. We stress again that § 8 of the act requires the panel to choose one of the parties' last offer of settlement. Thus while the panel is precluded from fashioning what it might consider a more equitable award or a compromise award, it is also prevented from independently shooting too high or too low. Further, it should be recognized that § 8 gives the arbitrators a not insignificant measure of discretion in adopting a particular last offer of settlement vis-a-vis the § 9 factors by providing that the last offer chosen by the panel shall be the one that in the opinion of the arbitration panel, more nearly complies with the applicable factors prescribed in § 9. We would also note that the economic issues of COLA and wages were inextricably related in this case, COLA being the item of paramount significance to both parties. Thus, because the city advocated the abolishment, or severe diminution, [66] of the COLA arrangement won by the DPOA in its previous contract, its wage proposal was understandably higher than that of the DPOA. Conversely, because the DPOA requested the maintenance of the previous COLA provision, its wage proposal was more modest than that of the city. In recognition of this nexus, the panel discussed together the relationship of the COLA and wage proposals to the § 9 factors. Finally, it must also be recognized that evidence relating to the eight factors of § 9 is not completely segregable; evidence relevant to one factor will often be relevant to others, causing some measure of interdependence among the factors. However, each factor, if applicable, must still be given separate consideration by the panel. Factor 1: The lawful authority of the employer. Evidence on this factor centered on the city's taxing powers. The panel acknowledged the city's uncontradicted evidence that it was at the legal limit of its taxing powers. Although the panel explicitly recognized these limits on the lawful authority of the employer to tax in rendering its economic award, this factor was not considered conclusive in and of itself by the panel; rather it was simply a facet of the city's basic contention that its ability to pay was limited. Factor 2: Stipulations of the parties. To this point, the panel expressly acknowledged its appreciation to the parties for stipulations on economic and non-economic matters which helped simplify or dispose of issues. Factor 3: The interests and welfare of the public and the financial ability of the unit of government to meet those costs. Respecting its financial capabilities, although the city specifically failed to present its budget or other evidence as to how the city spent its money, the city introduced evidence of a limited ability to pay any arbitral award. The city also introduced considerable evidence concerning the various strains on the city's fiscal abilities due inter alia to a reduction in city population and the dependency of the city budget on state and federal revenues. While recognizing such limitations on the city's finances, the panel was acutely aware of the city's explicit statement that it did not have an inability to pay an award. As an attorney for the city stated, The city does not assert an inability to pay any additional sum as may be determined, but that its ability to pay has limits. The third factor juxtaposes the city's ability to pay and the interests and welfare of the public. Respecting the public interest and welfare, the panel considered of major consequence the fact that the Detroit Police Lieutenants and Sergeants Association (LSA) had recently been awarded, [67] in another Act 312 arbitration, a continuation of its previous COLA provision which was substantially the same as the DPOA's last COLA offer in the instant case. [68] In light of the fact that the DPOA and LSA enjoyed a strong historic relationship, a majority of the panel believed that a denial of COLA to the DPOA would imperil police morale and the effective performance of their services to the detriment of the public. Factor 4: Comparison of the wages, hours and conditions of employment of the employees involved in the arbitration proceeding with the wages, hours and conditions of employment of other employees performing similar services and with other employees generally:

With respect to this factor, the panel reviewed evidence comparing Detroit police officers' salaries and fringe benefits to those of Detroit metropolitan area communities, as well as to large, out-of-state cities. The panel found the former the more appropriate, since not only is there a lack of comparability of conditions in other major cities, but it is against these nearby communities that Detroit must compete for police officers. The panel also relied on the recent LSA award for comparison since the LSA was the only other group of Detroit employees performing services similar to those of the DPOA. In short, the panel found the more apt and persuasive comparisons for purposes of this factor to be with other city security personnel, and not with other city employees in general. The panel did not consider comparisons with private employment persuasive and therefore did not base any of its conclusions upon such comparisons. Factor 5: The average consumer prices for goods and services, commonly known as the cost of living. The panel regarded as of importance testimony concerning the need for and use of a COLA provision as a not unusual means, in the public sector, of providing some protection to the real wage position, as well as the standard of living, of both wage and salary workers during inflationary periods. Thus the panel determined that with an expected increase in the cost of living from 6% to 8% a year during the three years of the new contract, the COLA requested by the DPOA would only afford 50% to 80% protection. Factor 6: The overall compensation presently received by the employees, including direct wage compensation, vacations, holidays and other excused time, insurance and pensions, medical and hospitalization benefits, the continuity and stability of employment, and all other benefits received. It was very significant to the panel that the DPOA's last offer respecting COLA merely represented a continuation of the COLA provision that had been won by the DPOA in the collective bargaining agreement which expired at the end of June, 1977. In adopting the DPOA's COLA proposal, the panel simply opted for a maintenance of the status quo regarding that provision. Factor 7: Changes in any of the foregoing circumstances during the pendency of the arbitration proceedings. The development of primary importance to the panel was the award in the LSA arbitration case handed down October 18, 1978 by the Howlett panel. As noted earlier, in relevant part this award granted the LSA a COLA provision essentially the same as that put forth in the DPOA's last offer. The LSA award was of considerable importance to the instant panel in fashioning its own award since the panel was intent on maintaining the historic relationship between the compensation of police officers below the rank of sergeant and those above. Factor 8: Such other factors, not confined to the foregoing, which are normally or traditionally taken into consideration in the determination of wages, hours and conditions of employment through voluntary collective bargaining, mediation, fact-finding, arbitration or otherwise between the parties, in the public service or in private employment. The panel noted that the parties had not specifically delineated in their presentations any other factors. Therefore, the only other factor which the panel relied on was morale. As noted under our discussion of the third factor, the panel believed that the maintenance of high police morale was an important factor to be considered in rendering its award. Briefly summarizing the panel's application of § 9 in rendering its award on the economic issues in dispute, the panel determined that the interests of the public in high police morale could more effectively be insured by a preservation of the previous COLA arrangements. Since the panel had adopted the city's proposal that the contract run for three years, as opposed to the DPOA's proposal of a two-year contract, the panel was persuaded of the necessity of such a COLA provision to maintain some partial shield against the unforeseeable erosion of an officer's wage position by inflation that could occur over such an extended period. Also of concern to the panel in the maintenance of the COLA provision was the recognition of the DPOA's relationship to the LSA. Central to this award was the city's failure to plead or establish a position of inability to pay or to introduce its budget [69] indicating what curtailment of services would be necessitated by the DPOA's last COLA offer. Given the fact that the wage issue was inextricably related to that of COLA, the panel, having opted for the COLA proposal of the DPOA, then chose the lower of the two wage proposals; it chose the DPOA's proposed 4-1/2%, 4% and 3-1/2% wage increase in each of the three years of the contract as compared to the city's proposed 4.8%, 4% and 4% [70] wage increase in each of those same three years. While we recognize that the city's wage proposal was higher than that of the DPOA due to the city's lack of (or, in the case of its Plan II, a minor) COLA proposal, the fact remains that having accepted the DPOA COLA proposal, the panel then awarded the lower of the two wage proposals. In light of the foregoing analysis, we find the panel's award of the DPOA's last offers on the contested economic items to have been supported by competent, material and substantial evidence on the whole record. One final argument of the city remains to be discussed with respect to the arbitration panel's economic award. The city asserts that the panel's award should be vacated due to the panel's refusal to admit into evidence City's Exhibit 30. This exhibit was intended to show the cost impact of any award made by the instant panel on COLA and wages, relative to the DFFA and the LSA. In short, the city argued that such an award would affect the DFFA since the city had already agreed in another Act 312 arbitration proceeding to a parity agreement, respecting certain economic benefits, between the police officer and the fire fighter, the police sergeant and the fire lieutenant, and the police lieutenant and the fire captain. The effect on the lieutenant's and sergeant's bargaining unit inhered in the fact that the previous contract between the city and the LSA, as well as the proposed one before an Act 312 arbitration panel at the time Exhibit 30 was offered, provided that the lieutenant's and sergeant's pay would be a percentage of that of a police officer. The city's argument, then, was that Exhibit 30 was relevant, as one piece of evidence under the third factor of § 9, to the extent that it illustrated the ramification of any COLA or wage award of the instant panel on total cost to the city on the total budget, and the ability of the city to pay. At the time Exhibit 30 was offered, the chairman of the panel, per the parties' pre-hearing statement, exercised his responsibility for ruling on evidentiary and procedural matters and declined to receive the exhibit. He did so on the grounds that its admission was premature since the Act 312 arbitration proceedings involving the fire fighters and the lieutenants and sergeants had not then been concluded. Preliminarily, we stress that this Court is not constituted some super-arbitrator to oversee and redirect the arbitral process when our opinion may differ with a panel's on such an evidentiary/procedural matter as this. Section 6 of the act explicitly accords a wide degree of latitude to the panel in the introduction of evidence. It is true that the [t]echnical rules of evidence do not apply to the hearings; however, the panel may receive into evidence any oral or documentary evidence and other data deemed relevant by it. In view of such discretion reposed in the panel on this matter, our review is limited to the determination of whether, in this instance, the exclusion of City's Exhibit 30 was so egregious as to cause the award of the panel on the contested economic issues to be unsupported by competent, material and substantial evidence on the whole record. The arbitration panel was well-informed on the cost of its award to the city. In making the disputed evidentiary ruling, the panel chairman observed: [Y]our panel is composed of persons who are knowledgeable and sophisticated as far as public affairs generally, and indeed about labor relations matters. And, what everybody else knows, we are charged with knowing. I know the cost, and everyone on the panel, everyone sitting out there is very conscious of the fact cost is of consideration. We're not naive, and we're not unmindful of costs. More specifically, we find the following in the majority panel's decision: The panel cannot escape the history of the city in its relations with its unions, not only as evidenced by contractual undertakings but by actions of the electorate from time to time. For years there has been a correlation between benefits of police and fire personnel, commonly referred to as security personnel.    After years of debate, both the general electorate and in collective bargaining, the principle of parity was established between police and fire. Even more interestingly, there is a correlation to a degree between certain positions in the Fire Department and positions among the Lieutenants and Sergeants. As indicated earlier, the chairman is of the opinion that this panel cannot remake or change history nor can it escape the history the parties themselves have made, that is, of certain internal relationships in comparisons between and among Lieutenants and Sergeants and DPOA members as well as between and among these groups or bargaining units and the fire fighters. In light of the foregoing, the exclusion of City's Exhibit 30 from evidence cannot be said to have caused the economic award to be unsupported by competent, material and substantial evidence on the whole record. Accordingly, we reaffirm our holding as to the validity of the economic award.
We cannot find that the hardship exemption to the residency requirement is supported by competent, material and substantial evidence on the whole record. The panel, in its August 8, 1979 opinion on remand on the residency issues, did not consider all the applicable § 9 factors in making its award, as Act 312 mandates. As we emphasized under Part V, B, supra, the Legislature, through the language of §§ 8 and 9, has unequivocally directed that the panel, in making an award, treat the § 9 factors where applicable. Such language is not precatory and therefore the panel does not have the discretion to ignore any applicable § 9 factors. Moreover, this legislative directive is no less obligatory on the panel when the parties themselves have failed to introduce evidence on an applicable factor. In such a case the panel, in order to comply with the intention of Act 312 that arbitral decisions be substantiated by evidence of, and emanate from consideration of, the applicable § 9 factors, must direct the parties to introduce evidence relating to the applicable factors. [71] By so doing, the panel will be able, per the dictates of §§ 8 and 9, to make findings based upon the applicable factors enumerated in § 9 from the evidence of record before it. In rendering the present award on the non-economic issue of a hardship exemption to the residency requirement, the panel did not consider all applicable factors. The panel only considered the first, third and last factors of § 9 in its August 8, 1979 opinion on remand from the trial court. As to the other factors, the panel merely stated: So far as the other § 9 criteria, neither party offered comparisons and except in the enforcement sense, as noted, money factors are not in issue. Such pro forma deference to the requirements of §§ 8 and 9 of the act will not do. These sections, by their terms, require rigid adherence. Thus, for example, it was error for the panel, in making an award of a residency hardship exemption, to refuse to consider, however convincing the evidence on other factors, the applicable fourth factor involving a comparison of the residency requirement for DPOA members (a condition of employment) with the residency requirements for other employees performing similar services and for other employees generally in both public and private employment in comparable communities, as well as any other factors if applicable. The parties' omission of evidence on this factor did not excuse the panel's inattention to the factor. [72] We note that the residency requirement requested by the city and affirmed in the earlier Platt panel award was left intact and unchanged by the panel's award except for the hardship exemption. Since we find the hardship exemption award by the panel to have been unsupported by competent, material and substantial evidence on the whole record, the residency requirement, in its entirety, must be reaffirmed. It is now up to the parties to either introduce evidence on the applicable factors before a reconvened panel or to return to collective bargaining. [73] The rationale of this holding provides the resolution of the city's last argument. The city asserts that it was error for the trial court as well as the arbitration panel to ignore its request to amend the residency portion of the present collective bargaining agreement so that the word resident would be defined in terms of a 1978 City of Detroit ordinance which provides that residence is to be construed as the actual domicile of the individual, with an individual being capable of having only one domicile. Detroit City Code, § 2-1-1.2; Detroit Ordinance No. 245-H. The predecessor 1968 ordinance had defined residency in terms of where an individual normally ate, slept and maintained his normal personal and household effects. Detroit Ordinance No. 327-G. This former ordinance, the city contends, created difficulties in enforcement. Initially, we disagree with the city's complaint that the arbitration panel ignored the city's requested amendment. In its opinion on remand on the residency issue, the following appears: In the interest of completeness, it must be stated that the unanimous action of the panel as noted above, under its December 20, 1978, opinion, when it was reduced to formal award, brought a dissent from the city delegate, who asserted that it had been his understanding that the panel was adopting the definition change proposed by the city. The majority of the panel, the chairman with the labor delegate concurring, however, made clear that no changes were contemplated by the panel except a change that would provide a hardship exemption, and the award so provided. More importantly, however, we, as a reviewing court, cannot amend the language of the contract to include the new Detroit ordinance. The panel has not made specific findings of fact and an award relating such a non-economic issue to the applicable § 9 factors and the evidence of record. It is not our job to fill this void by acting as de novo arbitrators in this matter. The proper course is for the parties to seek a resolution of this issue via collective bargaining, and failing that, through the invocation of Act 312.