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Baltimore County v. Fraternal Order of Police

Court of Appeals of Maryland

August 25, 2016

Baltimore County, Maryland
v.
Fraternal Order of Police, Baltimore County Lodge No. 4

         Circuit Court for Baltimore County Case No. 03-C-08-008643 OC CA

          Barbera, C.J.[*] Battaglia Greene Adkins McDonald Watts Harrell, Glenn T., Jr. (Retired, Specially Assigned),

          OPINION

          McDonald, J

         As authorized under local law, Petitioner Baltimore County engages in collective bargaining with its employees. Respondent Fraternal Order of Police, Baltimore County Lodge No. 4 ("FOP") represents the County's eligible police officers. The County and FOP have entered into numerous collective bargaining agreements over the years. This case arose out of a dispute over the interpretation of a provision in some of those agreements that provided for a fixed subsidy of health insurance costs for officers who retired during certain years.

         The dispute proceeded, in accordance with the grievance process in the collective bargaining agreements, to binding arbitration. The FOP won the arbitration, but the County sought to overturn the arbitration award in the courts. Among other things, the County argued that the arbitration award was invalid because it was subject to the County's executive budget process. The Circuit Court for Baltimore County rejected the County's various challenges to the award - a decision ultimately upheld by this Court.

         When the case returned to the Circuit Court, the County balked at complying with the arbitration award arguing that the award, even if valid, was unenforceable because it was subject to the County's executive budget process. That argument was indistinguishable from one of the issues that the County had advanced on its prior trip up the appellate ladder and that this Court had rejected on that occasion.

         The repetition of the issue from the prior appeal allowed the lower courts to dispose of the issue under the law of the case doctrine. That doctrine expresses the principle, subject to some exceptions, that a court presented with the same issue decided by an appellate court at an earlier stage of the same case will rule the same way. It may have been with that concept in mind that a noted philosopher in another line of work once said: "it's like deja vu all over again."[1]

         We hold that the lower courts properly applied the law of the case doctrine here. Even if that doctrine did not control the outcome, the County would fare no better on the merits of its argument.

         I

         Background

         The underlying facts and procedural path of this case have been recounted well and at length in two prior reported appellate decisions. See Fraternal Order of Police Lodge No. 4 v. Baltimore County, 429 Md. 533, 538-41, 57 A.3d 425 (2012); Baltimore County v. Fraternal Order of Police Lodge No. 4, 220 Md.App. 596, 600-50, 104 A.3d 986 (2014). There is no need to reprise them in the same detail here. We reiterate briefly the main points.

         A. Facts

         Collective Bargaining with County Employees

         In accordance with the Baltimore County Charter and the Baltimore County Code ("BCC"), Baltimore County engages in collective bargaining with the exclusive representatives of various categories of its employees.[2] Among those categories of employees are police officers below a certain rank, who are represented by the FOP. The negotiations result in an agreement that is called a "memorandum of understanding" or "MOU." Under the County Charter, disputes with the representatives of certain public safety employees may be resolved through binding arbitration. Among the provisions that may appear in an MOU are those pertaining to health insurance benefits, including health insurance benefits for retirees.

         The OPEB Fund

         The County maintains a fund known as the Other Post-Employment Benefits Trust Fund ("OPEB Fund"). The OPEB Fund is the repository of funds appropriated for payment of health and life insurance benefits for County retirees and their beneficiaries. BCC §10-14-103(a). Each year, the County, through its budget process, appropriates an annual contribution to the OPEB Fund. BCC §10-14-104(a). The annual contribution is based on an estimate of future costs, based in part on an actuarial analysis of the County's potential liabilities for such costs. Id.

         The MOUs

         Two provisions that appear in the MOUs between the County and the FOP for the fiscal years from 1996 through 2007 are particularly pertinent to this case. Those MOUs provided that the County would furnish the same subsidy of health insurance benefits for officers who retired between February 1, 1992 and June 30, 2007 as for current employees - during that time, a subsidy of 85 per cent of the cost of the premium.[3] In addition, those MOUs also provided that the percentage subsidy at the time of retirement of an officer would remain in effect until the retiree (or the retiree's beneficiary) reached age 65. In later versions of the MOU during that period, the reference to age 65 was changed to eligibility for Medicare.

         The MOUs also contained a grievance process for resolving disputes concerning the application or interpretation of an MOU. Among other things, the grievance procedure provided for the filing of a "class grievance" on behalf of similarly situated employees. The grievance procedure also provided for binding grievance arbitration of the parties were unable to resolve a dispute at an earlier stage of the grievance process.[4]

         The Dispute

         After the 2007 fiscal year, the County reduced the health insurance subsidy for current employees.[5] Despite the language in the earlier MOUs that the health insurance subsidy at the time of retirement would remain in effect for a retiree until the retiree reached age 65 or was eligible for Medicare, the County also reduced the health insurance subsidy for existing retirees who had retired in years covered by those earlier MOUs.[6]

         Pursuant to the grievance procedure in the MOUs, in September 2007, the FOP filed a class grievance on behalf of police officers who had retired during the period that the MOUs included the provision that the health insurance subsidy at the time of retirement would remain in effect until age 65 or eligibility for Medicare - i.e., those who retired between February 1, 1992 and June 30, 2007. The County Labor Commissioner denied the grievance on the ground that the provisions of the earlier MOUs were no longer controlling.

         The Arbitration Decision

         The grievance was not resolved at the initial steps of the grievance process. In accordance with that process, the matter proceeded to binding arbitration.[7] The arbitrator concluded that the dispute was arbitrable and ruled in favor of the FOP on the merits of the grievance. In a decision issued in July 2008, the arbitrator concluded that the "unequivocal language" of the earlier MOUs - that "the health insurance subsidy in place at the time of retirement shall remain in effect until the retiree reaches age 65 [or "becomes eligible for Medicare"]" - was a binding promise that established a vested right for those retirees to whom it applied. He ordered the County to rescind its modification of the retirees' health insurance subsidy, continue the previous subsidy in accordance with the MOUs, and reimburse the retirees for the excessive deductions taken by County in the interim.

         B. Procedural History

         Affirmance of the Arbitration Decision in the Circuit Court

         In August 2008, the County filed an action in the Circuit Court for Baltimore County to vacate the arbitration award, asserting numerous grounds.[8] Among the grounds advanced in that complaint, the County asserted that the award was "contrary to the very clear public policy, as stated in the Baltimore County Charter and Code, that the Baltimore County Council appropriates the funds needed to provide healthcare subsidies for retirees."

         The Circuit Court, however, granted summary judgment in favor of the FOP and declined to vacate the arbitration award. The court concluded that the dispute was arbitrable despite the fact that the MOUs had expired prior to the filing of the grievance and that the arbitrator had not committed a "manifest error" or exceeded his authority in deciding that the retirees had a "vested right" to the maintenance of the health care subsidy for the period provided in those MOUs. With respect to the County's argument that the arbitration award "usurped" the budget authority of the County Executive and County Council, the court noted that, in this grievance arbitration, the arbitrator was simply interpreting an existing contract, as opposed to setting the terms of a new contract, which might occur in interest arbitration resulting from an impasse in negotiations.

         Reversal by the Court of Special Appeals Addressing One Issue

         The County appealed that decision, asserting that the Circuit Court had erred in upholding the arbitrator's award for nine reasons - essentially, the same arguments it made before the Circuit Court. In particular, the County again asserted that the arbitration award had "usurped" the budget powers of the County Executive and County Council. The Court of Special Appeals, in an unreported decision, did not address any of the alleged errors, including the County's argument concerning its budget process, but reversed the arbitration award on the ground that the Circuit Court had failed to consider whether the arbitration clause of the fiscal year 2007 MOU - as well as the health insurance benefits - had survived the expiration of that MOU.

         Reversal by the Court of Appeals and Remand to Affirm the Circuit Court

         This Court granted the FOP's petition for a writ of certiorari. The County did not file a cross-petition. In its brief in that appeal, the County not only urged affirmance of the decision of the Court of Special Appeals on the issue whether the arbitration clause had expired but also listed the nine issues it had raised in its appeal and touched upon the merits of the arbitrator's decision.

         This Court reversed the decision of the Court of Special Appeals. 429 Md. 533, 57 A.3d 425 (2012). The Court held that the question of arbitrability was for the arbitrator to decide in the first instance. The Court observed that the fiscal year 2007 MOU contained a broad arbitration clause that was not necessarily abrogated by expiration of the MOU. 429 Md. at 555-56. The Court also held that the Circuit Court had applied the proper standard of review of the arbitration award, and after reviewing the arbitrator's findings, found no reason to disturb the Circuit Court's award of summary judgment in favor of the FOP on the merits. Id. at 557-64. Although the Court stated that the arbitration award was consistent with the MOU and agreed with the Circuit Court that it did not demonstrate a "manifest disregard for the law, " the Court did not discuss in any detail the grounds that the County had originally advanced for overturning the arbitration award and that the Circuit Court had rejected. In its mandate, the Court directed the Court of Special Appeals to affirm the decision of the Circuit Court upholding the arbitration award. Id. at 565.

         The County sought reconsideration of this Court's decision. In its memorandum in support of that motion, the County argued, among other things, that instead of directing the intermediate appellate court to affirm the Circuit Court, this Court should have directed the Court of Special Appeals to address the various issues raised by the County but not discussed in the prior decision of the intermediate appellate court. The County also asserted that the award "will be unenforceable, since there have been no funds appropriated through the executive budget process to afford the relief ...." This Court denied that motion on January 18, 2013.

         County Failure to Comply with Arbitration Decision

         One might think that the matter would be concluded upon return of the file to the Circuit Court. To the contrary, it proved to be the starting point for another round of litigation.

         The County refused to comply with the arbitration award. It did not rescind its modification of the retired officers' subsidy and reinstate the subsidy keyed to retirement date. Nor did it refund to those retirees the excess deductions taken ...


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