UE Local 893/IUP v. State of Iowa
UE Local 893/IUP v. State of Iowa
Opinion
In this appeal, we must decide whether the district court correctly granted summary judgment enforcing a collective bargaining agreement between the State of Iowa and a public employee union. The union argues its negotiators accepted the State's pending offer and the union membership voted to ratify the terms, resulting in an enforceable collective bargaining agreement. The union filed this action in district court to enforce the agreement pursuant to Iowa Code section 20.17(5) (2017). The State moved to dismiss or stay the action in favor of administrative proceedings pending at the Public Employment Relations Board (PERB). The State argued that an Iowa Administrative Code rule requires the State to vote to ratify after the union vote and that without the State's vote, no contract was formed.
See
The district court granted the union's motion for summary judgment, noting in its ruling the State did not rely on rule 621-6.5(3) in resisting or moving for summary judgment. The State appealed without filing a motion to amend the judgment, and we retained the case. On appeal, the State renews its arguments relying on rule 621-6.5(3). The union argues the State failed to preserve error. We agree error was not preserved and decline to reach the State's rule 621-6.5(3) challenge to the agreement. We hold the district court had *57 subject matter jurisdiction and correctly ruled the State had not withdrawn its offer before the union's acceptance and ratification resulted in an enforceable collective bargaining agreement. We also affirm the district court's rulings rejecting the primary-jurisdiction and exhaustion doctrines, noting PERB's limited enforcement powers. Accordingly, we affirm the district court's judgment against the State.
I. Background Facts and Proceedings.
The facts are stipulated in the summary judgment record and are viewed in the light most favorable to the State. UE Local 893/IUP (UE) is a union representing two bargaining units comprised of State of Iowa employees: a science unit and a social services unit. The first collective bargaining agreement UE and the State negotiated for the social services unit went into effect on July 1, 1984, and the first agreement negotiated for the science unit went into effect on July 1, 1995. Thereafter, the parties negotiated successor two-year collective bargaining agreements for each bargaining unit. Most recently, UE and the State entered into collective bargaining agreements that were effective July 1, 2015, through June 30, 2017. 2
In May 2016, the parties agreed to a schedule for the upcoming negotiations for successor agreements to go into effect on July 1, 2017. UE presented its initial offer on December 6, and the State presented its initial offer on December 20. The cover page of the State's offer noted, "Throughout the course of these negotiations, the State reserves the right to add to, delete from and/or revise this proposal."
The parties met for a negotiation session on January 10, 2017. During this session, UE asked questions about the State's insurance proposal, but neither party deviated from its initial offer. The State claims it did not want to deviate from its offer because it was waiting to see whether the legislature would amend the Public Employment Relations Act (PERA), Iowa's collective bargaining statute, codified at Iowa Code chapter 20. The parties agreed to cancel bargaining sessions scheduled for January 11, 18, and 19.
On February 9, House File 291 was introduced in the Iowa House of Representatives. H.F. 291, 87th G.A., 1st Sess. (Iowa 2017). House File 291 made significant amendments to PERA by substantially limiting the number of mandatory bargaining topics for most public employees, including the employees in UE's bargaining units. The Governor signed House File 291 into law on February 17, and the amendments took effect immediately. 3 2017 Iowa Acts ch. 2 (codified in part at Iowa Code ch. 20 (2018)).
On February 10, one week before House File 291's amendments went into effect, UE sent a letter to the Iowa Department of Administrative Services disclosing that UE's negotiation committee had unanimously voted to accept the State's December 20, 2016 offer. The State did not respond. On February 14, UE's members voted to ratify the State's offer. UE notified the State of the ratification vote the following day. The State later stipulated that "[a]t no time prior to ratification by UE on February 14, 2017 of the State's *58 December 20, 2016 initial proposal did the State withdraw its December 20, 2016 initial proposal." Nevertheless, the State refused to acknowledge that an enforceable voluntary collective bargaining agreement had been formed.
On February 15, UE filed a prohibited-practice complaint against the State with PERB. The following day, the State filed its own prohibited-practice complaint with PERB. PERB has stayed these prohibited-practice complaints pending resolution of this court action.
On February 21, UE filed a petition in district court to enforce the terms of the collective bargaining agreement pursuant to Iowa Code section 20.17(5) (2017). The State filed a preanswer motion to dismiss UE's petition. The State argued the district court lacked primary jurisdiction and UE had failed to exhaust its administrative remedies. The State argued that Iowa Administrative Code rule 621-6.5(3) governed whether a collective bargaining agreement had been formed and the interpretation and application of that rule was central to the resolution of that issue. The State argued that those issues were pending before PERB in the two prohibited-practices complaints. For that reason, the State argued PERB should have primary jurisdiction to resolve these issues. The State also argued that because the prohibited-practice complaints remained pending with PERB, UE had failed to exhaust its administrative remedies.
The district court denied the State's motion to dismiss. The court declined to grant PERB primary jurisdiction to determine whether the collective bargaining agreement was enforceable. The court decided that the prohibited-practices complaints pending before PERB did not invoke the doctrine of primary jurisdiction because both the court and PERB could exercise their authority concurrently. The court concluded, "The ability of the defendant to challenge the existence of an enforceable collective bargaining agreement based on rule [621-6.5(3) ] will be for the court to decide[.]" The court, however, did not decide the validity or effect of that rule in its dismissal order.
Both parties filed motions for summary judgment. The parties filed a stipulation of facts. The State again argued that PERB had primary jurisdiction and asked the district court to stay its proceedings pending PERB's resolution of the prohibited-practice complaints. The State also asked the court to apply traditional contract principles and find that UE had rejected the State's initial offer and made a counteroffer by suggesting different terms. Alternatively, the State argued that even under the standard set out in
Pepsi-Cola Bottling Co. of Mason City v. NLRB
, the circumstances were such that UE should reasonably have believed the State's offer was withdrawn.
UE argued in its motion for summary judgment that, applying ordinary contract principles, there was a valid offer and acceptance of the State's December 20 offer. UE argued it did not reject the State's proposal by merely inquiring about additional or alternative terms.
The district court granted summary judgment in favor of UE. The court declined to stay the proceedings under the doctrine of primary jurisdiction. The district court expressly noted, "Unlike in its motion to dismiss, the [State] makes no argument on summary judgment regarding the impact of regulations promulgated by PERB requiring the public employer to *59 approve the ratified agreement before it is effective."
The district court adopted the
Pepsi-Cola
standard for evaluating the formation of a collective bargaining agreement. Under this standard, "an offer, once made, will remain on the table unless explicitly withdrawn by the offeror or unless circumstances arise which would lead the parties to reasonably believe that the offer had been withdrawn."
Pepsi-Cola
,
II. Standard of Review.
"We review a district court's ruling on a motion to dismiss for the correction of errors at law."
Mueller v. Wellmark, Inc.
,
"A 'court has inherent power to determine whether it has jurisdiction over the subject matter of the proceedings before it.' "
Segura v. State
,
III. Preservation of Error as to the State's Challenge Based on Iowa Administrative Code Rule 621-6.5(3).
We first decide whether Iowa Administrative Code rule 621-6.5(3) is at issue in this appeal. UE argues the State failed to preserve error because the State never raised the rule in the summary judgment proceedings. The State argues on appeal that no collective bargaining agreement exists because the State never voted to ratify the agreement as required by the rule, which provides,
6.5(3) Acceptance or rejection by public employer. The public employer shall, within ten days of the tentative agreement, likewise meet to accept or reject the agreement, and shall within 24 hours of the acceptance or rejection serve notice on the employee organization of its acceptance or rejection of the proposed agreement; however, the public employer shall not be required to either accept or reject the tentative agreement if it has been rejected by the employee organization.
We begin our analysis with basic principles of error preservation. "It is a fundamental doctrine of appellate review that issues must ordinarily be both raised and decided by the district court before we will decide them on appeal."
Meier v. Senecaut
,
Our doctrine of error preservation "requires a party seeking to appeal an issue presented to, but not considered by, the district court to call to the attention of the district court its failure to decide the issue."
The claim or issue raised does not actually need to be used as the basis for the decision to be preserved, but the record must at least reveal the court was aware of the claim or issue and litigated it.
[E]ven if a rule 179(b) [now rule 1.904(2) ] motion [to reconsider, enlarge, or amend] is not available to a party to challenge a district court ruling ... that party must still request a ruling from the district court to preserve error for appeal on an issue presented but not decided.
In this case, we lack a district court ruling deciding the validity of Iowa Administrative Code rule 621-6.5(3) or the rule's effect on contract formation. "A supreme court is 'a court of review, not of first view.' "
Plowman v. Fort Madison Cmty. Hosp.
,
In its ruling denying the State's motion to dismiss, the district court noted, "The ability of the defendant to challenge the existence of an enforceable collective bargaining agreement based on rule [621-6.5(3) ] will be for the court to decide[.]" The court, however, rejected the State's primary-jurisdiction and exhaustion arguments without making any definitive, unequivocal ruling on rule 621-6.5(3). Rather, the district court's order denying the motion to dismiss essentially reserved ruling on the validity of rule 621-6.5(3) and its impact on contract formation in this case. This order was insufficient to preserve error.
See
Meier
,
In other contexts, we have emphasized that a party receiving a preliminary ruling that does not unequivocally decide an issue must do more to preserve the issue for appellate review.
See
Quad City Bank & Tr. v. Jim Kircher & Assocs., P.C.
,
Nevertheless, the State, in its subsequent motion for summary judgment, failed to cite rule 621-6.5(3) and did not argue that the contract was invalid because the State did not vote to ratify it. In a footnote in the summary judgment ruling, the district court observed, "Unlike in its motion to dismiss, the [State] makes no argument on summary judgment regarding the impact of regulations promulgated by PERB requiring the public employer to approve the ratified agreement before it is effective." This was a red flag that the court had not decided the issue. Yet the State failed to file a second or supplemental motion for summary judgment raising that agency rule. Nor did the State file a motion to amend or enlarge under Iowa Rule of Civil Procedure 1.904(2) or otherwise ask the district court to decide whether there was a valid collective bargaining agreement in light of rule 621-6.5(3). We conclude that the State failed to preserve error on its rule 621-6.5(3) challenge to contract formation.
See
Meier
,
We decline to reach the rule 621-6.5(3) challenge in the guise of a subject matter jurisdiction analysis. The State is correct that "[a] party can raise subject matter jurisdiction at any time in the proceeding."
In re Estate of Falck
,
*62
The State argues that because no valid contract was formed without the State's ratification vote required under rule 621-6.5(3), there was no contract to "enforce" as required for subject matter jurisdiction under Iowa Code section 20.17(5). Under the State's theory, every defense to formation of a public collective bargaining agreement becomes a question of subject matter jurisdiction that could be raised for the first time on appeal. We disagree. In our view, the court's statutory power to enforce the terms of a collective bargaining agreement necessarily subsumes the power to adjudicate the opposing party's challenges to the contract's validity. The party seeking enforcement must prove the existence and terms of the contract. If there is a failure of proof, or if the opposing party prevails on a contract defense, the resulting adjudication is on the merits, not for lack of subject matter jurisdiction.
See
Simon Seeding & Sod, Inc. v. Dubuque Human Rights Comm'n
,
The legislature expressly conferred subject matter jurisdiction on the district court for contract enforcement in section 20.17(5) and conferred PERB with rulemaking authority "to carry out the purposes" of chapter 20.
We conclude that Iowa Administrative Code rule 621-6.5(3) provides a merits-based defense to contract formation, which the State waived by failing to raise the rule in the summary judgment proceedings.
See
Meier
,
The State relies in part on federal labor law, which actually supports UE. In
Sergeant Bluff-Luton Education Ass'n v. Sergeant Bluff-Luton Community School District
, we observed that Iowa Code section 20.17(5) is similar to section 301 of the Federal Labor Management Relations Act (LMRA).
Thus if, in the course of deciding whether a plaintiff is entitled to relief for the defendant's alleged violation of a contract, *63 the defendant interposes the affirmative defense that the contract was invalid, the court may, consistent with section 301(a), adjudicate that defense.
Federal courts continue to recognize that cases like UE's fall within the subject matter jurisdiction conferred by § 301(a). A lawsuit alleging breach of a collective bargaining agreement and stating colorable claims is sufficient to establish subject matter jurisdiction under § 301(a).
ABF Freight Sys., Inc. v. Int'l Bhd. of Teamsters
,
UE's petition filed in district court is in part a suit for violation of a collective bargaining agreement. UE sued to enforce the terms of the alleged collective bargaining agreement. UE's petition specifically alleged "[t]hat the State ... has notified UE that it will neither accept nor abide by the terms of the collective bargaining agreement." UE's petition prayed for "an order directing the State to comply with the terms and conditions of the collective bargaining agreement ... and to make the public employees ... whole for any losses suffered by Defendant's refusal to accept and abide by the collective bargaining agreement...." We need not decide whether federal jurisdictional requirements were satisfied for this Iowa action. The petition satisfied Iowa's notice pleading requirements.
In our view, the Iowa jurisdictional statute is broader than the LMRA. PERA was enacted after the LMRA, and our legislature could have used the federal template allowing "suits for violation" of collective bargaining agreements. Instead, section 20.17(5) has broader language allowing suits to enforce the terms-thereby allowing adjudication of the existence of a contract and a judicial declaration of the contract terms without requiring allegations of a specific violation. For these reasons, the State's reliance on federal authorities is unpersuasive.
IV. Whether the District Court Erred by Not Dismissing or Staying This Case in Favor of the PERB Agency Proceedings.
The State argues that the district court erred by failing to dismiss or stay this action in favor of the PERB agency proceedings. The State argues that PERB is better suited to decide contract-formation issues for public collective bargaining agreements and that challenges to the validity of an agency rule should be addressed first by the agency in administrative proceedings. The State relies on the doctrine of primary jurisdiction and on the duty to exhaust administrative remedies. We address each argument in turn.
A. Primary Jurisdiction. The district court declined to dismiss or stay this action in favor of the PERB administrative proceedings under the doctrine of primary jurisdiction. Under the doctrine of primary jurisdiction,
courts will not determine a controversy involving a question which is within the *64 jurisdiction of an administrative tribunal or agency prior to the solution of that question by the administrative tribunal (1) where the question demands the exercise of administrative discretion requiring the special knowledge, experience and services of the administrative tribunal, (2) to determine technical and intricate matters of fact, and (3) where a uniformity of ruling is essential to comply with the purposes of the regulatory statute administered.
State ex rel. Miller v. DeCoster
,
Ordinarily, a challenge to the validity of an agency rule should be heard first by the agency that promulgated the rule, with judicial review governed by Iowa Code chapter 17A.
Hollinrake v. Monroe County
,
PERB's expertise in public collective bargaining did not require the district court to dismiss or stay this action. Iowa courts routinely adjudicate contract-formation and contract-enforcement issues.
See, e.g.
,
City of Akron v. Akron Westfield Cmty. Sch. Dist.
,
We acknowledge PERB's expertise in the negotiation of collective bargaining agreements between public employers and unions. The leading federal case adjudicating formation of a collective bargaining agreement was decided on judicial review of a ruling of the National Labor Relations Board (NLRB).
Pepsi-Cola
,
Iowa Code chapter 20 and PERB's regulations do not equip the agency to adjudicate contract-formation and contract-enforcement issues. "The doctrine of primary jurisdiction presupposes an ability of the administrative agency to adjudicate the issues of law or fact which are alleged to be appropriate for administrative resolution."
Rowen v. LeMars Mut. Ins.
,
B. Exhaustion of Administrative Remedies. The State next argues that UE failed to exhaust its administrative remedies because PERB has not yet resolved the parties' prohibited-practice complaints. As noted, PERB has stayed these complaints pending resolution of this court action. We conclude that the district court correctly rejected the State's exhaustion argument because the PERB proceedings did not provide an adequate remedy for breach of a collective bargaining agreement.
We begin our analysis with the basic principles of the exhaustion requirement, which is codified in Iowa Code section 17A.19. "The exhaustion requirement ... 'has several purposes, including honoring agency expertise, handling matters within an agency and not in the courts, and preserving precious judicial resources.' "
Christiansen v. Iowa Bd. of Educ. Exam'rs
,
PERB has jurisdiction to hear prohibited-practice complaints.
1. It shall be a prohibited practice for any public employer ... to refuse to negotiate in good faith with respect to the scope of negotiations as defined in section 20.9.
2. It shall be a prohibited practice for a public employer or the employer's designated representative to:
a . Interfere with, restrain, or coerce public employees in the exercise of rights granted by this chapter.
....
e . Refuse to negotiate collectively with representatives of certified employee organizations as required in this chapter.
f . Deny the rights accompanying certification granted in this chapter.
There is no prohibited practice based on breach of a collective bargaining agreement, nor do any of the prohibited practices relate to contract enforcement.
See generally
PERB's powers are more limited than the NLRB's. If, upon investigation, PERB determines a party
has committed a prohibited practice, the board may, within thirty days of its decision, enter into a consent order with the party to discontinue the practice, or after the thirty days following the decision may petition the district court for injunctive relief pursuant to rules of civil procedure 1.1501 to 1.1511.
PERB cannot order the relief UE seeks here. We affirm the district court's ruling that UE was not required to exhaust its administrative remedies with PERB before filing its petition in district court.
V. Whether the District Court Correctly Granted Summary Judgment to Enforce the Collective Bargaining Agreement.
We now turn to the fighting issue on the merits: whether an enforceable collective bargaining agreement was formed, as the district court ruled on summary judgment. The parties stipulated that "[a]t no time prior to ratification by UE on *67 February 14, 2017 of the State's December 20, 2016 initial proposal did the State withdraw its December 20, 2016 initial proposal." The State failed to preserve error on its defense to contract formation based on Iowa Administrative Code rule 621-6.5(3) requiring the public employer to vote to ratify the agreement after the union vote. The State nevertheless argues no contract was formed.
We begin with the governing law. "[O]rdinary contract principles do not necessarily apply to [collective bargaining agreements.]"
Local Lodge No. 1426, Int'l Ass'n of Machinists & Aerospace Workers v. Wilson Trailer Co.
,
The "essence" of a collective bargaining agreement is an extremely broad concept. It requires a casting aside of traditional views of contract law in favor of a multitude of other considerations, including not only the written and unwritten agreements, themselves, but also the practices of the parties or the industry in general.
Sergeant Bluff-Luton Educ. Ass'n
,
In a private commercial setting, the parties voluntarily contract with each other. Traditional contract law therefore provides that an offer terminates if rejected by the offeree, thus allowing the offering party free to strike a bargain elsewhere, with no danger of being bound to more than one contract. In contrast, the National Labor Relations Act compels the employer and the duly certified union to deal with each other and to bargain in good faith. Upon rejection of an offer, the offeror may not seek another contracting party. As explained by the Supreme Court, "The choice is generally not between entering or refusing to enter into a relationship, for that in all probability preexists the negotiations."
The Eighth Circuit acknowledged that the "technical rules of contract do not control whether a collective bargaining agreement has been reached."
Pepsi-Cola
,
We adopt the Pepsi-Cola standard as consistent with the statutory obligation of the public employer and union to continue negotiating in good faith until impasse. The State stipulated that its December 20 offer had not been withdrawn at the time UE accepted it. The State argues, however, the circumstances were such that a reasonable person would have believed the offer had been withdrawn because (1) UE rejected the State's December 20 offer by standing on its own initial position (until February 10) and (2) the State's offer was contingent on legislative action. We find neither argument persuasive.
The district court ruled that UE had not rejected the State's offer. The district court reasoned,
To hold that a party's reluctance to deviate from an initial position until more information is obtained regarding the other's position constitutes a rejection of the other's position is squarely at odds with the policy that an offer can remain on the table to be considered at a later time.
See
Auciello Iron Works, Inc.
,
Similarly, the district court concluded that the State's "reluctance to deviate from its initial position until it could determine what legislative action was forthcoming in the area of collective bargaining does not translate to that position being 'contingent upon and subject to legislative action.' " We agree.
Other circumstances support the conclusion that a reasonable person would believe the State's December 20 offer remained on the table when accepted and ratified by UE in February. The State made no response when informed by letter dated February 10 that UE's negotiation committee unanimously voted to accept the State's December 20 offer. One would reasonably expect some pushback at that crucial moment, such as an assertion that there was no deal, before the union membership voted to ratify the agreement. The State's silence is at odds with its position that a reasonable person would have considered its December 20 offer withdrawn by February 10. By contrast, in another case in which the State contends its final offer had been withdrawn, the State's negotiator was told the union had just accepted the last offer and was putting the agreement to a vote. The State's negotiator did not remain silent, but rather gave the expected response to the union, stating "there was not an agreement to be ratified and that the parties need[ed] to continue to bargain."
Serv. Emps. Int'l Union, Local 199 v. State
,
The district court, relying on undisputed facts, correctly determined that no reasonable person would have believed on February 10-14 that the State's offer had been withdrawn. The State is bound by its stipulation that its offer had not been withdrawn before UE's members voted to ratify its terms on February 14. We affirm the district court's ruling that an enforceable collective bargaining agreement was formed upon the union's ratification vote.
*69 VI. Disposition.
For these reasons, we affirm the district court's summary judgment in favor of UE enforcing the collective bargaining agreement.
AFFIRMED.
This rule was renumbered in August 2017 prior to the district court's summary judgment and was formerly Iowa Administrative Code rule 621-6.4(3). We will refer to the rule by its current number throughout this opinion.
The record does not indicate whether the State voted to ratify any of the prior collective bargaining agreements.
The amendments invalidated collective bargaining agreements still under negotiation. H.F. 291, 87th G.A., 1st Sess. § 25 (Iowa 2017) (providing that collective bargaining agreements not completed by that date "shall not become effective").
We adjudicated the validity of Iowa Administrative Code rule 621-6.5(3) in
Service Employees International Union, Local 199 v. State
,
Relatedly,
[w]e have "consistently" held an error in overruling a motion to dismiss [in a bench trial] or for directed verdict [in a jury trial] made at the close of claimant's evidence and not renewed at the end of the trial is deemed waived.
Mueller v. St. Ansgar State Bank
,
See, e.g.
,
State v. AFSCME/Iowa Council 61
, 91 PERB 4474,
Iowa State Bar Ass'n, Iowa Civil Jury Instruction 2400.3 (2018) (" Existence Of A Contract. The existence of a contract requires a meeting of the minds on the material terms. This means the parties must agree upon the same things in the same sense. You are to determine if a contract existed from the words and acts of the parties, together with all reasonable inferences you may draw from the surrounding circumstances.").
Reference
- Full Case Name
- UE LOCAL 893/IUP, Appellee, v. STATE of Iowa, Appellant.
- Cited By
- 20 cases
- Status
- Published