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Atkinson v. Anne Arundel County

Court of Special Appeals of Maryland

March 28, 2018


          Circuit Court for Anne Arundel County Case No. C-02-CV-15-000539

          Nazarian, Leahy, Beachley, JJ.


          Leahy, J.

         This is the second case in recent years in which public safety employees in Anne Arundel County have challenged the County Council's legislative restriction on collective bargaining. See Atkinson v. Anne Arundel Cty., 428 Md. 723 (2012) [hereinafter "Atkinson I"]. The Charter for Anne Arundel County ("Charter") grants public safety employees the right to bargain collectively and submit to binding arbitration any resulting labor disputes concerning the "terms and conditions of employment." In 2014, the Anne Arundel County Council ("County Council" or "Council") adopted Bill 85-13. Certain provisions of the Bill, enacted as § 6-1-308(b)(2)-(4) and (i)(4)-(6) of the Anne Arundel County Code ("Code"), [1] exclude employee health insurance benefit options and health insurance plans from collective bargaining and arbitration.

         After the County Administrator, relying on the new law, declined to negotiate employee health insurance benefit options and plans, aggrieved members of the public safety unions affected by Bill No. 85-13 ("Appellants")[2] filed a declaratory judgment action in the Circuit Court for Anne Arundel County against Anne Arundel County ("County" or "Appellee"). Appellants alleged that the County Council exceeded its legislative authority in enacting Bill 85-13. The County filed a counterclaim for declaratory judgment, asserting that the County Council's passage of Bill 85-13 was a lawful exercise of its legislative powers. The parties filed cross-motions for summary judgment. After a hearing, the circuit court denied Appellants' motion and granted summary judgment in favor of the County. Appellants noted a timely appeal to this Court on June 24, 2016, and shortly after, petitioned for certiorari in the Court of Appeals. By order dated September 29, 2016, the Court of Appeals denied Appellants' petition and the County's conditional cross-petition.

         Appellants ask us to consider whether laws enacted pursuant to Bill 85-13 that prohibit collective bargaining and arbitration over employee health insurance benefit options and plans violate the form and structure of the County's annual budget and appropriation process established under Charter Article VIII, §§ 811 and 812.[3] Appellants also ask whether the circuit court erred when, rather than apply the plain meaning of the phrase "terms and conditions of employment" contained in Charter § 812, it deferred to the County Council to define the scope of the law.

         According to the County, Charter § 812 does not actually require that it bargain over any terms and conditions of employment. Moreover, the County argues that Appellants' reading of Charter §§ 811 and 812 as limiting the County's authority to define the scope of terms and conditions of employment "would lead to an unconstitutional result" under Article XI-A, § 3 of the Maryland Constitution because it would impermissibly limit the County Council's legislative authority.

         We hold that under Charter §§ 811 and 812, the terms and conditions of employment are subject to the two-step process of collective bargaining and arbitration. We also hold that the circuit court erred when it decided that it was the County Council's legislative function, exclusively, to resolve any ambiguities in the phrase "terms and conditions of employment" contained in Charter § 812. We conclude that "terms and conditions of employment, " as employed in Charter § 812, is a term of art that includes healthcare insurance benefits. We hold, therefore, that the provisions of Bill 85-13 that effectively render meaningless Appellants' right to bargain collectively over the cost of their healthcare insurance benefits are invalid under Charter §§ 811 and 812. However, because this appeal is from the erroneous grant of summary judgment, the record is not developed sufficiently to define the scope of collective bargaining rights intended under Charter §§ 811 and 812. Accordingly, we remand the case for further proceedings.


         A. The Run Down: Collective Bargaining in the County

         The citizens of Anne Arundel County amended their Charter during the 1988 election to provide for collective bargaining between the County and certain county employees' union representatives. Section 811 of the Charter mandates that "[e]mployees in the classified service shall have the right to organize and bargain collectively through representative employee organizations of their own choosing as provided by ordinance of the County Council." Consistent with Charter § 811, County Code § 6-4-108(a) provides that "[a]n exclusive representative may negotiate collectively with the Administration in matters related to wages, hours, working conditions, and other terms of employment of employees[.]"

         In 2002, at the recommendation of the Charter Revision Commission, the County Council proposed a resolution to provide for binding arbitration to resolve disputes over police, fire, and other public safety contracts that may arise during labor negotiations pursuant to Charter § 811. Atkinson I, 428 Md. at 734-35. Voters adopted the 2002 amendment, enacting Charter § 812, which states:

(a) In addition to the right granted to County employees in Section 811 of this Article to organize and bargain collectively, the County Council shall provide by ordinance for binding arbitration with authorized representatives of the appropriate employee bargaining unit in order to resolve labor disputes with the County's law enforcement employees. The ordinance shall provide for the appointment of a neutral arbitrator by the parties to the arbitration who shall issue a binding decision to be implemented as part of the following year's budget process and which shall take into account the financial condition of the County and the reasonable interests of the law enforcement employees and the county relating to the terms and conditions of employment. . . .[4]

         The following year, the County Council adopted Bill 1-03, codified at County Code § 6-4-111, to implement § 812 of the Charter. The Court of Appeals explained the effect of Bill 1-03 in Atkinson I:

Under Bill 1-03, if an impasse exists on March 15 of any fiscal year, the parties may agree to a non-binding confidential mediation but must commence arranging for binding arbitration as well. Provision is made for selecting an arbitrator and an alternative arbitrator. The powers and duties of the neutral arbitrator are set forth, time limits are established, and a "baseball" type of award is to be rendered.[][5] Subsection (m) provides, in relevant part, as follows:
"The final written award issued by the neutral arbitrator . . . and the memorandum of agreed issues shall be final and binding upon the County and the Uniformed Public Safety Exclusive Representative and shall be implemented as part of the budget process for the appropriate fiscal years."
Either party may move to vacate the award by an action in the Circuit Court for Anne Arundel County.

428 Md. at 736.

         Then, in 2011, the County Council enacted Bill 4-11 to amend § 6-4-111 by removing language requiring that the arbitrator's decision "shall be implemented as part of the budget process for the appropriate fiscal years." The bill also provided that the County Council "shall not be required to appropriate funds or enact legislation necessary to implement a final written award." Id. at 739. In effect, Bill 4-11 created a system by which, if the arbitrator chose the employees' final offer, the County Council could then choose whether or not to fund the final award. Id. at 742.

         In Atkinson I, public safety employees challenged several features of the legislative enactment embodied in Bill 4-11, arguing that it offended § 812 of the Charter. Id. at 741. The County, on the other hand, contended that "Bill 4-11 simply construed Charter § 812 to retain the Council's power [under Charter § 709] to reduce or delete appropriations and that that construction [wa]s necessary to avoid rendering Charter § 812 unconstitutional." Id. at 742.

         The Court of Appeals addressed the constitutionality of Charter § 812 and observed that its provisions qualified as charter material.[6] The Court reasoned that "[w]hether some portion of the County Council's role in the budget process is to be transferred to a neutral arbitrator, in the event of an impasse in collective bargaining with public safety employees, affects the form and structure of government." Id. at 748. The Court held that "Charter § 812 did not unconstitutionally preclude the exercise of the County Council's law-making discretion[]" because the voters had made a policy decision and "left all of the detail of implementation to the Council for the exercise of its Art. XI-A, § 3 law-making power[.]" Id. at 749-50. As for the particular provisions of Bill 4-11, the Court held that § 2, which permitted the County Council to modify or abrogate a binding award, ran afoul of Charter § 812's requirement that the final award "be binding on the County, which includes the County Council." Id. at 743-44. The Court also struck down § 3 of Bill 4-11, which attempted to repeal all of Section 6-4-111 in the event that the Court found § 2 invalid, as violative of Charter § 812. Id. at 752-55.

         B. On Deck: Bill 85-13

         In September 2011, as litigation was ongoing in Atkinson I, the County created a Collaborative Study Group ("Study Group") to address the increasing costs of employee benefits, concerns about the continued funding of retiree healthcare benefits and pensions, as well as uncertainty surrounding healthcare generally following the passage of the Patient Protection and Affordable Care Act. The Council charged the group, in part, with "determin[ing] fair and equitable priorities in the reduction of the benefit costs, ensuring that such benefits are fair to employees, retirees, and taxpayers of Anne Arundel County and can be funded on a fiscally sustainable basis[.]" The Study Group issued its final report on February 14, 2012. Its analysis focused heavily on the costs to the County of providing healthcare benefits to employees and retirees and recommended several alternatives, including "establish[ing] a trust to insulate health benefit prefunded assets." After receiving the Study Group's report and recommendations, the County Council proposed two new Charter Amendments, both passed by the voters later in 2012: Charter § 718, which required the County to create a reserve fund for retirees' healthcare benefits, and Charter § 815, [7] which granted the Council authority to establish the reserve fund by ordinance.

         The next year, on October 7, 2013, the Council introduced Bill 85-13, the passage of which gave rise to the underlying lawsuit. Ms. Amy Burdick, the County's Acting Personnel Officer, spoke at the public hearing in support of the bill. She stated that the County's position has been "that they will negotiate with the unions only over the cost share for the various health plans[, ]" and that the County "do[es] not and will not negotiate over things such as deductible or other types of plan design issues."[8] If the unions had a problem with a plan design, Ms. Burdick explained that the County "would meet with them and explain [its] position and listen to [the unions'] concerns and incorporate changes if it was appropriate[, ]" but that there was no legal recourse for the unions if the County did not want to incorporate their changes. Mr. David Plymyer, the County Attorney, told the Council that if the unions were dissatisfied with things like "co-pays, deductibles, or out-of-pocket costs, " then "the employer would have the right to have an arbitrator ultimately decide." He stated, however, that he believed Bill 85-13 "perfectly embodies past practice and clarifies that the County does not negotiate post-employment, such as retiree benefits." Testifying to the contrary, Mr. Joel Smith, a labor and employment law attorney, said that he was surprised that the County's answers at the hearing "did not include any reference to contracts and the elements of contracts that are routinely entered into between the County and its bargaining representatives."[9] He stated that "healthcare, wages, and pensions" are the three cardinal rules of bargaining.

         The Council passed Bill 85-13 on January 6, 2014, and it took effect on March 1, 2014. The new law established a more comprehensive County public safety employee and retiree health benefits program by repealing and replacing § 6-1-308 of the Code.[10] The law also added a new provision to Article 4, Title 11 that requires the County Executive to submit a five-year plan to the County Council to fund the retiree health benefits reserve fund. § 4-11-117.

         Additionally, Bill 85-13 imposed new limitations on public safety employees' collective bargaining rights. The amendment to § 6-1-308(b)(1) established that "[t]here is a County Employee and Retiree Health Benefits Program administered by the Personnel Officer that shall include insurance for medical care and prescription drugs and may include insurance for dental and vision care as provided in this section."[11] Through Bill 85-13, the County Council granted to the County's Personnel Officer the duty and authority "to establish the health insurance benefit options and design the health insurance plans made available to participants[.]" § 6-1-308(n)(1). Collective bargaining is delimited in § 6-1-308(b)(3):

The health insurance benefit options, health insurance plans, and employer subsidies for retirees and survivors are not subject to collective bargaining. Employer subsidies for employees are subject to collective bargaining in accordance with subsection (i)(5). The health insurance benefit options and health insurance plans offered to employees are not subject to collective bargaining. However, before beginning collective bargaining over employer subsidies in accordance with subsection (i)(5) the Personnel Officer shall consult with and consider the comments by exclusive representatives on the health insurance benefit options and health insurance plan or plans that the Personnel Officer proposes to offer to employees.

         Accordingly, the employer subsidy is the only aspect of the healthcare program subject to collective bargaining under the new law. See § 6-1-308(b)(4). Section 6-1-308(i)(5) provides that "[t]he employer subsidy used to determine the rates for employees represented by an exclusive representative selected in accordance with Title 4 and any monetary credits for opting out of coverages shall be determined through collective bargaining and, if applicable, binding arbitration." Pursuant to § 6-1-308(k)(2), however, "[t]he amount of the subsidy or allowance shall be proposed by the Personnel Officer and approved by resolution of the County Council." For current employees, § 6-1-308(i)(4) specifies:

Effective January 1, 2016, employer subsidies for optional plans available to participants for the same type of coverages established in accordance with this subsection shall be applied to the estimated annual costs for the plan with the lowest estimated annual costs approved by resolution of the County Council under subsection (h) in order to determine the rates paid by participants in health insurance plans. Participants who select plans other than the plan with the lowest estimated annual costs shall pay all costs for the plans in excess of the amount of the employer subsidy as applied to the plan with the lowest estimated annual cost.

         In other words, Subsection (i)(4) sets a flat-rate employer subsidy based on the amount the employer contributes to the lowest-cost plan option and requires employees who choose a more expensive plan to cover all additional costs in excess of that flat-rate subsidy. For instance, if the lowest-cost plan is $100 per month and the County agrees to pay 85% of the cost of the lowest-cost plan, the County's contribution will remain $85 per month regardless of whether an employee chooses the lowest-cost plan or a more expensive plan. The flat rate established under Subsection (i) is also the rate of Medicare subsidy, cash subsidy, or allowance available to retirees under Subsections (j) and (k).

         The County and union representatives began collective bargaining sessions in January 2015 in advance of the County's fiscal year 2016 budget and the expiration of the two-year Memorandum of Agreement between the County and public safety employee unions. These negotiations took place following passage of Bill 85-13 and, according to Appellants, in at least two of those sessions, "the County Administrator announced that it intend[ed] to rely on Bill 85-13, codified as Code § 6-1-308, to refuse to bargain over essential 'terms and conditions of employment' with respect to employee health insurance plans."

         C. The Challenge

         On February 13, 2015, Appellants filed a complaint in the circuit court for declaratory and injunctive relief under the Maryland Uniform Declaratory Judgments Act, Maryland Code (1973, 2013 Repl. Vol.), Courts and Judicial Proceedings Article ("CJP"), § 3-401 et seq., seeking a judgment declaring that Bill 85-13 and § 6-1-308 of the Code are contrary to Charter § 812. Appellants also sought to enjoin the County from enforcing the new law.

         Appellants challenged the provisions of § 6-1-308 exempting health insurance options and plans offered to employees and retirees from collective bargaining. According to Appellants, prior to the enactment of this bill, health insurance benefit options and plans were subject to collective bargaining between the County and Appellants. Appellants asserted that "Bill 85-13 will interfere with and impair [their] enjoyment of the rights secured and guaranteed to them under County Charter VIII, §§ 811 and 812, " which is prohibited by the Court of Appeals' holding in Atkinson I, 428 Md. 723. They complained that during negotiations, the County Administrator proposed, in writing, an employer subsidy of 85% of the health insurance premium for the plan with the lowest estimated annual cost to the Fraternal Order of the Police ("FOP 70") for police department employees, IAFF 1563, and other public safety employee unions. Appellants aver that, at that point, the Personnel Officer had not selected which health insurance plans would be available for the 2016 Calendar Year. Because the dollar value of the employer subsidy depends on the insurance premium of the plan with the lowest estimated annual cost, Appellants believed that their right to bargain was "meaningless." The County disagreed and asserted, as they maintain on appeal, that collective bargaining need extend only to the cost allocation of the health insurance benefits between the County and employees.

         D. Stay Delay

         Appellants filed a motion for summary judgment on February 25, 2015, asserting that Bill 85-13 conflicts with Charter §§ 811 and 812. They contended that Bill 85-13 limited public safety employees' collective-bargaining rights by "prohibit[ing] negotiation over health insurance benefit options;" "confin[ing] County support for its health insurance plans to the employer subsidy;" and "restrict[ing] collective bargaining and binding arbitration to the amount of the employer subsidy of undetermined plans and any credits for opting out of coverage." Further, Appellants asserted that any right to bargain over the employer subsidy under the new law "is meaningless" because the subsidy is tied to the lowest-cost health insurance plan, which the County Administrator chooses. Appellants maintained that neither Charter § 811 nor § 812 exempt health insurance plans, benefit options, and employer subsidies from collective bargaining. According to Appellants, "terms and conditions of employment" in Charter § 812 is a term of art that includes health insurance benefits, which are "bedrock elements of employee compensation."

         Appellants then filed a motion for a temporary restraining order and preliminary injunction on March 9, 2015. On March 13, 2015, the circuit court granted Appellants' motion and issued a preliminary injunction. The court ordered the County to

retain in place the existing health insurance plans, health insurance benefit options, and cost allocations (including premium share and co-pay formulae) without change through December 31, 2015. The Defendant County shall use its best efforts to maintain similar health insurance plan options (i.e. HMO, non-HMO) for the plan year commencing January 1, 2016 and the premium share cost allocation currently being paid by County employees represented by the union Plaintiffs shall remain the same for similar plans[.]

         Additionally, the court enjoined the County from enforcing §§ 6-1-308(b)(2)-(4) and 6-1-308(i)(4)-(6) of the Code. This preliminary injunction remains in effect until the court orders otherwise.

         E. The Shutout

         On March 30, 2015, the County filed its answer and a counterclaim for declaratory judgment. In its counterclaim, the County asserted that Bill 85-13 was valid because the former version of § 6-1-308 limited collective bargaining on health benefits to the cost-share arrangement and because plan options and deductibles have never been subject to collective bargaining or binding arbitration.

         That same day, the County also filed a cross-motion for summary judgment and an opposition to Appellants' motion for summary judgment. In its motion, the County argued that Appellants' "case rests on an excessively broad-and fundamentally incorrect- reading of the Court's opinion in Atkinson I[.] . . . Nothing in Atkinson I, or in Charter §§ 811 or 812, precludes the Council from delineating the scope of collective bargaining with respect to health insurance benefits for County employees."

         The County asserted that the prior version of § 6-1-308 (enacted in 1989), see supra note 10, "clearly reflected the Council's limit on collective bargaining about health benefits to only the cost-sharing arrangement." The County maintained that the current version of § 6-1-308 kept the status quo: the cost-sharing is still subject to collective bargaining and plan design and options were never part of collective bargaining. Additionally, the County contended that Appellants were wrong to read §§ 811 and 812 of the Charter together to mean that "the County must engage in collective bargaining over all terms and conditions of employment, including all aspects of health care benefits." The County asserted that the County Council, by implication, "retains the power to 'flesh out' the scope of those terms and conditions [subject to binding arbitration]." Lastly, the County argued that Appellants' interpretation of §§ 811 and 812 of the Charter limit the County Council's legislative power impermissibly under Article XI-A § 3 of the Maryland Constitution.

         Following a hearing held on June 29, 2015, the court entered an order dated July 15, 2015, in which it denied the parties' cross-motions for summary judgment to allow the parties to develop the record. And, approximately six months later, following discovery, the parties renewed their cross-motions for summary judgment on January 6, 2016. The court addressed the cross-motions during a hearing on May 16, 2016, at which the parties stipulated that there were no genuine disputes of material fact.[12] The parties largely reiterated the same arguments.

         The circuit court granted the County's motion for summary judgment and denied Appellants' motion for summary judgment in an order and memorandum opinion entered on June 9, 2016. In its written memorandum, the court stated:

The question [] for this Court, is whether the usage of "terms and conditions of employment" in Charter Section 812 includes the selection and types of health insurance coverage[, ] which would then require collective bargaining and[, ] if necessary[, ] the submittal to a neutral arbitrator on the issue. The Court believes that the scope of those terms and conditions is controlled by ...

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