Court Opinion

ID: 2765975
Source: CourtListenerOpinion
Date Created: 2014-12-31 19:06:00.691678+00
Date Added: 2024-06-11T11:27:25.850344
License: Public Domain

130 Nev., Advance Opinion I DO
                         IN THE SUPREME COURT OF THE STATE OF NEVADA

                 CITY OF RENO,                                       No. 65934
                 Appellant,
                 vs.
                 INTERNATIONAL ASSOCIATION OF                             FILED
                 FIREFIGHTERS, LOCAL 731; JOHN
                 BECK; JOSHUA BELL; JAMES                                 DEC 31 2014
                 BIDDLE; MICHAEL BREWER; MATAE                      CLE
                                                                            I . LINDEMAN

                 CASTILLO; JASON EASTMAN;                           ay    DEPUTY CLERK
                 BENJAMIN ENGLAND; JORDAN
                 HARRIS; TACY KELLY; MATTHEW
                 LUJETIC; KENNETH MCLELLAN;
                 SHAWN PRICE; GEORGE SEARCY;
                 SONNY SNODGRASS; TRAVIS
                 BERTRAND; WESLEY BOATMAN;
                 RICHARD CANADAY; WALTER
                 CORDOVA; JUSTIN GALLI; JOHN
                 GERBATZ; NATHAN GOINS; TREVOR
                 HALL; SEAN O 'BRIEN; JESSE
                 WASHINGTON; JEREMY BERNINSKI;
                 MARSHALL BRIN; ALBERT COREA;
                 JACOB LIGHTFOOT; LEONARD
                 MUOZ; TEGG ORDUNO;
                 CHRISTOPHER PEARSON; AND
                 JAMES SCHMIDT, INDIVIDUALLY,
                 Respondents.

                             Appeal from a district court order granting a preliminary
                 injunction in a labor dispute. Second Judicial District Court, Washoe
                 County; Lidia Stiglich, Judge.
                             Reversed.

                 John J. Kadlic, City Attorney, and Mark W. Dunagan and William E.
                 Cooper, Jr., Deputy City Attorneys, Reno; Fisher & Phillips LLP and Mark
                 J. Ricciardi and Whitney J. Selert, Las Vegas,
                 for Appellant.
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                Dyer, Lawrence, Penrose, Flaherty, Donaldson & Prunty and Thomas J.
                Donaldson, Sandra G. Lawrence, and Sue S. Matuska, Carson City,
                for Respondents.

                Neil A. Rombardo, District Attorney, and Randal R. Munn, Chief Deputy
                District Attorney, Carson City,
                for Amicus Curiae City of Carson City.

                Steven B. Wolfson, District Attorney, and Mary Anne Miller, County
                Counsel, Clark County,
                for Amicus Curiae Clark County.

                Mark B. Jackson, District Attorney, and Douglas V. Ritchie, Chief Civil
                Deputy District Attorney, Douglas County,
                for Amicus Curiae Douglas County.

                Josh M. Reid, City Attorney, and F. Travis Buchanan, Assistant City
                Attorney, Henderson,
                for Amicus Curiae City of Henderson.

                Holley, Driggs, Walch, Puzey & Thompson and Clark V. Vellis, Las Vegas,
                for Amicus Curiae Nevada League of Cities and Municipalities.

                Bradford R. Jerbic, City Attorney, and Morgan Davis, Chief Deputy City
                Attorney, Las Vegas,
                for Amicus Curiae City of Las Vegas.

                McDonald Carano Wilson LLP and Jeff A. Silvestri and Seth T. Floyd, Las
                Vegas,
                for Amicus Curiae Nevada Taxpayers Association.

                Sandra Douglass-Morgan, City Attorney, and Claudia E. Aguayo, Senior
                Deputy City Attorney, North Las Vegas,
                for Amicus Curiae City of North Las Vegas.

                Brian T. Kunzi, District Attorney, Nye County,
                for Amicus Curiae Nye County.

                William A. Maddox, District Attorney, Storey County,
                for Amicus Curiae Storey County.

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                BEFORE THE COURT EN BANC.

                                                      OPINION

                By the Court, HARDESTY, J.:
                             Appellant laid off certain firefighters claiming that it lacked
                the money necessary to continue paying their salaries and benefits. The
                district court enjoined appellant from implementing its decision while
                respondents pursued arbitration of their grievance disputing that
                appellant lacked the money to support the positions. In this appeal, we
                must determine whether respondents' grievance is arbitrable where the
                parties recited in their collective bargaining agreement appellant's
                statutory right to lay off any employee due to a lack of funds. Because we
                conclude that the underlying grievance is not arbitrable under the parties'
                collective bargaining agreement and thus, there is no authority under
                NRS Chapter 38 for the district court's injunctive relief decision, we
                reverse the district court's order.
                                  FACTS AND PROCEDURAL HISTORY
                             In May 2014, the City of Reno decided to lay off 32 firefighters
                after the City learned that its application to renew a federal grant, which
                had funded those positions, had been denied. Pursuant to Article 2 of the
                collective bargaining agreement (CBA) between the City and the
                International Association of Firefighters, Local 731, the City based its
                decision on its budget shortfalls—a "lack of funds"—and the need to
                allocate money to other areas. Article 2 of the CBA provides that certain
                rights, including the right to lay off any employee due to lack of work or
                lack of funds, are not subject to mandatory bargaining and are reserved to
                the City without negotiation. Before the layoffs occurred, the

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                 International Association of Firefighters, Local 731, and the 32 firefighters
                 who would be laid off (collectively, IAFF) challenged the City's decision by
                 filing a grievance using the grievance procedure of the CBA, asserting that
                 there was no lack of funds to support the City's decision to lay off the
                 firefighters.' The grievance was denied, and the IAFF requested that the
                 matter be submitted to arbitration.
                             Recognizing that the layoffs were set to occur and that the
                 arbitrator lacked authority to enjoin the layoffs pending arbitration, the
                 IAFF filed the underlying complaint in the district court, alleging four
                 claims for relief: anticipatory breach of contract, breach of the implied
                 covenant of good faith and fair dealing, injunctive relief, and declaratory
                 relief The complaint asserted that the layoffs violate the CBA, which
                 governs the terms and conditions of the firefighters' employment, and that
                 the City had sufficient discretionary funds and revenue to continue the
                 firefighters' employment. The IAFF also filed a motion for preliminary
                 injunctive relief under NRS Chapter 38. The City moved to dismiss the
                 complaint for lack of jurisdiction due to the IAFF's failure to exhaust
                 contractual and administrative remedies.
                             The district court concluded that it was empowered to rule on
                 the request for injunctive relief to ensure that the arbitration of the IAFF's
                 grievance was not frustrated pursuant to its statutory authority under
                 NRS 38.222 and its authority to administer equity in civil actions under

                       'Although it is difficult to discern the specific nature of the grievance
                 because it generally alleges violations of numerous articles of the CBA,
                 NRS Chapter 288, "and other agreements and documents," the grievance
                 specifically states that the violations arose when the City "gave layoff
                 notices to Local 731 members when there is no lack of funds or lack of
                 work."

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                Article 6, Section 14 of the Nevada Constitution. Based on that
                conclusion, the district court granted the IAFF's request for a preliminary
                injunction and enjoined the City from proceeding with the layoffs while
                the IAFF exhausts its contractual grievance and administrative remedies.
                            The City filed this appeal from the district court's preliminary
                injunction order, and concurrently moved the district court to stay the
                preliminary injunction pending resolution of the appeal. The district court
                denied the City's request to stay the injunction while the City pursued this
                appeal, but granted without prejudice the City's motion to dismiss the
                IAFF's breach of contract and declaratory relief claims based on the
                IAFF's failure to exhaust its administrative remedies. The district court
                did not dismiss the injunctive relief claim, however, and the preliminary
                injunction remains in effect.
                                                DISCUSSION
                            To resolve this appeal, we must address whether the district
                court had jurisdiction to grant the injunctive relief requested by the TAFF.
                The City contends that the district court lacked jurisdiction to grant
                injunctive relief because the underlying dispute regarding the propriety of
                the layoffs is governed by NRS Chapter 288 and thus, falls within the
                exclusive jurisdiction of the Employee-Management Relations Board
                (EMRB). 2 The TAFF rejects this contention and instead defines its claim

                      2Although   not dispositive of this appeal, to the extent that the
                IAFF's grievance can be read to seek relief under NRS Chapter 288, it
                does not provide a basis for the district court's preliminary injunction
                because the EMRB has exclusive jurisdiction over such matters and the
                district court would be required to dismiss the underlying claims as
                nonjusticiable for failure to exhaust administrative remedies. See City of
                Henderson v. Kilgore, 122 Nev. 331, 336-37 & n.10, 131 P.3d 11, 14-15 &
                n.10 (2006) (explaining that the failure to exhaust administrative
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                     as a breach of the CBA, asserting that arbitration of its grievance is
                     therefore the appropriate remedy and that the district court
                     correspondingly had authority to enter a preliminary injunction.
                                 In its order granting injunctive relief, the district court
                     focused on the contractual remedies sought by the TAFF and concluded
                     that it had authority under NRS 38.222 to grant a preliminary injunction
                     while the parties pursued arbitration of the dispute. That statute, part of
                     the Uniform Arbitration Act of 2000, provides that before an arbitrator is
                     authorized and able to act in a dispute, the district court "may enter an
                     order for provisional remedies to protect the effectiveness of the arbitral
                     proceeding to the same extent and under the same conditions as if the
                     controversy were the subject of a civil action." NRS 38.222(1). The TAFF
                     initiated arbitration under Article 24 of the CBA, which allows the TAFF
                     to submit a grievance to arbitration if that grievance is not settled with
                     the City Manager. 3 The TAFF contends that the arbitrator should
                     determine whether the City lacked the funds necessary to retain the
                     firefighters so as to properly lay off those employees pursuant to Article 2
                     of the CBA. Before that question can be addressed, however, we must first

                     ...continued
                     remedies renders the matter unripe for court review, and that the EMRB
                     must decide the complaint before any basis will exist for injunctive relief).

                           3 Subsection  (a) of Article 24 provides that "[a] grievance is a
                     disagreement between an individual, or the Union, and the City
                     concerning interpretation, application or enforcement of the terms of this
                     Agreement." And subsection (b) outlines the grievance process, which
                     begins with a discussion between the individual and his or her supervisor,
                     then continues with presenting a written grievance to the Fire Chief,
                     submitting the grievance to the City Manager, and finally, if still
                     unresolved, submitting the grievance to arbitration.

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                determine whether the City's budget-related layoff decision is actually
                subject to arbitration under the terms of the CBA. As discussed below, we
                conclude that by its language reserving the non-negotiable right, Article 2
                of the CBA exempts the City's layoff decision due to lack of funds from
                arbitration.
                               Arbitration is a favored means of resolving labor disputes.
                Port Huron Area Sch. Dist. v. Port Huron Educ. Ass'n, 393 N.W.2d 811,
                814 (Mich. 1986). In Nevada, disputes concerning the arbitrability of a
                subject matter are resolved under a presumption in favor of arbitration.
                Clark Cnty. Pub. Emps. Ass'n v. Pearson, 106 Nev. 587, 591, 798 P.2d 136,
                138 (1990). Courts should therefore "order arbitration of particular
                grievances 'unless it may be said with positive assurance that the
                arbitration clause is not susceptible of an interpretation that covers the
                asserted dispute." Id. (quoting Int'l Ass'n of Firefighters, Local # 1285 v.
                City of Las Vegas, 104 Nev. 615, 620, 764 P.2d 478, 481 (1988)). In cases
                involving broadly worded arbitration clauses, when there is no express
                provision excluding a particular grievance from arbitration, only the "most
                forceful evidence of a purpose to exclude the claim from arbitration can
                prevail." Id. (internal quotation omitted).
                               Nevertheless, "fliabor arbitration is a product of contract, and,
                therefore, its legal basis depends entirely upon the particular contracts of
                particular parties." Port Huron, 393 N.W.2d at 814. And as a matter of
                contract, "a party cannot be required to submit to arbitration any dispute
                which he has not agreed so to submit." AT&T Techs., Inc. v. Commc'ns
                Workers of Am., 475 U.S. 643, 648 (1986) (internal quotation omitted). An
                arbitrator's jurisdiction to resolve a dispute concerning the interpretation
                of a collective bargaining agreement derives from the parties' advance

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                agreement to submit the disputed matter to arbitration. Id. at 648-49; see
                also Port Huron, 393 N.W.2d at 814-15 (explaining that an arbitrator
                possesses no general jurisdiction to resolve disputes concerning the
                interpretation of a collective bargaining agreement independent of the
                terms of the contract itself). Thus, despite the presumption of
                arbitrability, the arbitrator's jurisdiction derives from contract and the
                arbitrator is limited to resolving disputes over the terms of that contract.
                We must, therefore, look to the language of the CBA between the City and
                the TAFF to determine whether the dispute here is subject to arbitration.
                See Port Huron, 393 N.W.2d at 815 ("Parties consenting to arbitration
                pursuant to written agreements consent to arbitrate within the framework
                of the terms and conditions of such agreements.").
                            Article 24 sets forth the grievance procedure by which an
                individual or the union may seek resolution of a dispute "concerning [the]
                interpretation, application, or enforcement of the terms of this
                Agreement." By its very language, the grievance procedure only applies to
                the terms of the CBA, and therefore it cannot apply to matters outside the
                CBA's scope. Arbitration, as the last step of the grievance process in the
                CBA, is similarly limited to disputes that fall within the scope of the CBA.
                See City of Reno v. Reno Police Protective Ass'n, 118 Nev. 889, 894, 59 P.3d
                1212, 1216 (2002) (noting that when a collective bargaining agreement is
                at issue, the arbitrator's award must be based on that agreement); see also
                United Steelworkers of Am. v. Warrior & Gulf Navigation Co.,        363 U.S.
                574, 584 (1960) (explaining that if an act is specifically excluded from the
                grievance procedure in the collective bargaining agreement or from
                arbitration in any other agreement, then a grievance based solely on that
                subject matter would not be arbitrable).

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                               The IAFF's grievance asserts that the City violated the CBA
                   when it "gave layoff notices to Local 731 members when there is no lack of
                   funds or lack of work." That action is discussed in Article 2 of the CBA.
                   Article 2 concerns "Management Rights" that "are not within the scope of
                   mandatory bargaining and which are reserved to the local government
                   employer without negotiation." Included in these rights is the local
                   government employer's "right to reduce in force or lay off any employee
                   because of lack of work or lack of funds, subject to paragraph (v) of
                   subsection 2, of NRS 288.150." The fact that the parties expressly agreed
                   in Article 2 to reserve that right to the City without negotiation is the most
                   forceful evidence that layoffs for lack of funds is not a decision subject to
                   mandatory bargaining and therefore falls outside the scope of the CBA,
                   which encompasses the bargained-for terms between the parties. To
                   interpret Article 2 otherwise and require arbitration over the City's
                   decision to lay off employees based on a lack of funds would be
                   inconsistent with the language of the provision, and would render
                   meaningless the City's agreed upon reservation of that right. The
                   language of Article 2 itself provides the requisite evidence of the parties'
                   intent to exclude from arbitration the IAFF's grievance challenging the
                   City's layoff decision. Pearson, 106 Nev. at 590, 798 P.2d at 137 ("Whether
                   a dispute is arbitrable is essentially a question of construction of a
                   contract."); State v. Second Judicial Dist. Court, 125 Nev. 37, 44, 199 P.3d
                   828, 832 (2009) (explaining that "[fin interpreting a contract, we construe
                   a contract that is clear on its face from the written language, and it should
                   be enforced as written").
                               We further note that the reduction in force due to lack of funds
                   is excluded from mandatory bargaining and reserved to the local

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                    government employer without negotiation by law. See NRS 288.150(3)(b)
                    (reserving to the local government employer "[Ole right to reduce in force
                    or lay off any employee because of lack of work or lack of money" subject to
                    mandatory bargaining over the procedures for reduction in workforce as
                    delineated in NRS 288.150(2)(v)); see also Grievance Arbitration Between
                    Haw. Org. of Police Officers v. Haw. Cnty. Police Dep't, 61 P.3d 522, 529-31
                    (Haw. Ct. App. 2002). The TAFF argues that by merely incorporating
                    language almost identical to NRS 288.150(3) in Article 2 of the CBA, the
                    parties subjected the City's decision to lay off employees due to a lack of
                    funds to arbitration. We do not agree. Because the arbitration clause does
                    not encompass the matters listed in Article 2, it would exceed the
                    arbitrator's powers under the CBA to assume arbitral jurisdiction over the
                    IAFF's grievance challenging the City's determination that a lack of funds
                    required the reduction in force, which the parties agreed was a reserved
                    management right not subject to negotiation.              See Inel Ass'n of
                    Firefighters, Local 1285 v. City of Las Vegas, 107 Nev. 906, 910, 823 P.2d
                    877, 879 (1991) (recognizing that if an arbitrator's award relies on an
                    interpretation that contradicts the express language of the collective
                    bargaining agreement, the arbitrator's action exceeds his or her
                    authority); see also Port Huron, 393 N.W.2d at 814-15 (noting that an
                    arbitrator's jurisdiction to resolve a dispute over a collective bargaining
                    agreement is derived exclusively from the agreement itself). Thus, the
                    IAFF's grievance is not subject to arbitration under Article 24 and the
                    reduction in force due to lack of funds instead remains within the City's
                    sole discretion in the first instance. 4

                          4 The   IAFF's grievance did not allege that the City's layoff decision
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                                Here, the district court erroneously rejected the City's
                  contractual non-negotiable right to make budget-related reduction in force
                  decisions by concluding that such an interpretation of Article 2 "would
                  essentially mean public employees subject to NRS 288.150 have no ability
                  to bargain over the procedures for reduction in the workforce" because any
                  such bargaining over procedures "would be trumped by the City's
                  exclusive ability to determine a lack of work or funds exists." The district
                  court appears to conflate the right to reduce the workforce with the
                  procedures for carrying out such a reduction. NRS 288.150(2)(v) requires
                  mandatory bargaining over the "[p]rocedures for reduction in workforce
                  consistent with the provisions of [NRS Chapter 2881." The parties'
                  bargained-for terms of personnel reduction are contained in Article 35,
                  and require only that "reductions in force shall be in accordance with
                  departmental seniority" and "[n]o new employee shall be hired until all
                  laid off employees have been given a reasonable opportunity to be
                  rehired." Based on the record before us, the IAFF did not specifically
                  allege that the City violated these bargained-for procedures, which, if
                  grieved, would be subject to arbitration under the CBA as a violation of its
                  terms. Furthermore, even the district court recognized that aside from
                  bargaining over the procedure for reducing the workforce, "[n]o greater
                  limitation on the City's ability to lay off [the firefighters] could have been
                  agreed upon due to the statutory restriction" under NRS 288.150(3). 5 See

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                  was made in bad faith, and thus, this opinion does not address any other
                  possible challenges to the City's decision.

                        5 The district court's order also concludes that "fflirefighter safety is
                  subject to collective bargaining pursuant to NRS 288.150(2)(r)," and that
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             ,
                City of Phila. v. Int'l Ass'n of Firefighters, Local 22, 999 A.2d 555, 571 (Pa.
                2010) (explaining that the exercise of nonbargainable managerial
                prerogatives of a public employer lies beyond the scope of collective
                bargaining and cannot be infringed upon).
                            Having concluded that the IAFF's grievance alleging a
                violation of Article 2 is not a dispute that the parties agreed to submit to
                arbitration pursuant to the terms of the CBA, see AT&T, 475 U.S. at 651
                (noting that if an arbitrator was free to impose obligations outside the
                collective bargaining agreement, the result would be "antithetical to the
                function of a collective-bargaining agreement as setting out the rights and
                duties of the parties"), we now address the IAFF's argument that the
                question of arbitrability should be left to the arbitrator to decide, subject
                to judicial review. 6 It is well established that the question of whether a

                ...continued
                the IAFF's evidence that firefighter safety would be jeopardized by the
                layoffs demonstrated a "reasonable probability of success on the merits."
                Article 12 of the CBA sets forth the bargained-for provisions for firefighter
                safety and health, but the IAFF's grievance itself does not list Article 12
                as one of the provisions it alleged the City violated. Furthermore, by
                challenging the layoff decision itself, the IAFF has not alleged a violation
                of any of the terms of Article 12, which includes the process for
                determining safety hazards and sets forth the protective equipment the
                City is required to provide.

                      sAppellate courts generally do not construe collective bargaining
                agreements and arbitration clauses in the first instance; an initial
                determination of arbitrability is usually made by the district court. See
                AT&T, 475 U.S. at 651-52 (remanding for the trial court to determine
                whether a particular grievance was subject to arbitration). As a practical
                matter, however, the district court referred the case to the arbitrator to
                determine whether the City actually lacked the funds so as to properly lay
                off the firefighters. Because the district court impliedly reached the
                question of arbitrability, we review that determination on appeal.

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                collective bargaining agreement creates a duty for the parties to arbitrate
                a particular grievance is generally an issue for judicial determination,
                except when the parties clearly and unmistakably provide otherwise. See
                AT&T, 475 U.S. at 649. Although this court in International Ass'n of
                Firefighters, Local # 1285 v. City of Las Vegas determined that a general
                collective bargaining agreement provision directing the arbitrator to
                determine the issue of arbitrability—similar to the broadly worded
                arbitration clause in Article 24(h)—is clear and unmistakable evidence
                that arbitrability is not to be decided by the court absent forceful evidence
                otherwise, 112 Nev. 1319, 1324, 929 P.2d 954, 957 (1996), the very
                language of the CBA here contains forceful evidence that the matter of
                budget-related layoffs is excluded from bargaining and is therefore not
                subject to arbitration. See IBEW Local 396 v. Cent. Tel. Co., 94 Nev. 491,
                493, 581 P.2d 865, 867 (1978) (explaining that on judicial review of an
                arbitration award, the reviewing court determines whether "the party
                seeking arbitration is making a claim which on its face is governed by the
                contract" (internal quotation omitted)). Consequently, we do not defer to
                the arbitrator to determine arbitrability. Additionally, resolving the
                question of arbitrability at this stage of the dispute furthers judicial
                economy and the need to provide guidance to the parties on the important
                and time-sensitive budgetary issues concerning the City and other local
                government employers who may be affected by the decision set forth
                herein. 7

                       7 The
                           cities of Henderson, Las Vegas, and North Las Vegas, Clark
                County, and Nye County filed an amicus curiae brief in support of the City
                of Reno's position, expressing their concerns about the effect that the
                disposition of this appeal may have on all local government employers in
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                              Accordingly, we conclude that the district court lacked
                •authority to rule on the request for injunctive relief and the preliminary
                injunction was thus entered in error. We therefore reverse the district
                court's order. 8

                                                          Hardesty

                                              C.J.                                        J.
                                                          Pickering
                Gibbs
                  -V41
                  --                           J.                       IA3               J.
                Parraguirre                               Douglas—

                                                                                          J.

                ...continued
                Nevada. Douglas County, Storey County, Carson City, the Nevada
                Taxpayer's Association, and Nevada League of Cities and Municipalities
                also joined in the amicus curiae brief.

                       8 In
                          light of this opinion and given the district court's order
                dismissing all of the IAFF's other claims, the district court's alternate
                ground for granting injunctive relief based on its authority under the
                Nevada Constitution to administer equity has no foundation and we need
                not address it further here. This court's decision necessarily renders moot
                the City's motion to stay the district court's preliminary injunction
                pending resolution of this appeal.

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