NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557- 1030; [email protected]

SJC-11620

CITY OF SOMERVILLE & another1 vs. COMMONWEALTH EMPLOYMENT RELATIONS BOARD & others.2

Suffolk. November 3, 2014. - February 3, 2015.

Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.

School and School Committee, Retirement benefits, Group insurance, Collective bargaining. Municipal Corporations, Group insurance, Collective bargaining. Retirement. Public Employment, Retirement benefits, Collective bargaining. Insurance, Group.

Appeal from a decision of the Division of Labor Relations.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Matthew J. Buckley, Assistant City Solicitor, for the plaintiffs. T. Jane Gabriel for the defendant. Laurie R. Houle, Ira Fader, Colin R. Confoey, & Jason Powalisz for the interveners, submitted a brief.

1 School Committee of Somerville. 2 Somerville Teachers Association, Somerville Police Superior Officers Association, Somerville Administrators Association, and Somerville Municipal Employees Association, interveners. 2

SPINA, J. At issue in this case is whether the city of

Somerville (city) and the school committee of Somerville (school

committee) violated G. L. c. 150E, § 10 (a) (5), and,

derivatively, G. L. c. 150E, § 10 (a) (1), when the city

unilaterally reduced its percentage contribution to retired

employees' health insurance premiums without engaging in

collective bargaining over the matter with current employees.3

We conclude that the city and the school committee did not

violate these statutory provisions. Accordingly, we reverse the

decision of the Commonwealth Employment Relations Board (board),

which reached a contrary conclusion.

1. Statutory framework. Our resolution of the present

dispute is based on the interplay between G. L. c. 150E and

G. L. c. 32B. General Laws c. 150E, § 2, protects the rights of

public employees to self-organization and collective bargaining.

Pursuant to G. L. c. 150E, § 6, "[t]he employer and the

exclusive representative . . . shall negotiate in good faith

with respect to wages, hours, standards [of] productivity and

performance, and any other terms and conditions of employment

. . . ." General Laws c. 150E, § 10, states, in relevant part:

"(a) It shall be a prohibited practice for a public employer or its designated representative to:

3 A municipality and a school committee are a single entity for purposes of collective bargaining. See City of Malden, 23 M.L.C. 181, 183-184 (1997). 3

"(1) Interfere, restrain, or coerce any employee in the exercise of any right guaranteed under this chapter;

". . .

"(5) Refuse to bargain collectively in good faith with the exclusive representative as required in section six . . . ."

"Under the Home Rule Amendment, art. 89, § 6, of the

Amendments to the Massachusetts Constitution, municipalities of

the Commonwealth may choose to provide health insurance coverage

to their employees." Twomey v. Middleborough,

(2014). See Cioch v. Treasurer of Ludlow,

(2007). General Laws c. 32B is a so-called "local option"

statute that governs the provision of health insurance to active

and retired employees of a municipality once that entity has

voted to accept the terms of the statute.4 See Twomey v.

Yeretsky v. Attleboro,

(1997). See generally D.A. Randall & D.E. Franklin, Municipal

Law and Practice § 10.25 (5th ed. 2006 & Supp. 2014). When

enacted, see St. 1956, c. 730, § 1, G. L. c. 32B, §§ 1 and 3,

authorized municipalities to offer certain eligible persons and

their dependents group indemnity health insurance coverage.

Beginning in 1971, municipalities were given the option of

making available to such individuals the services of a health

4 For the sake of simplicity, we use the term "municipality" in this opinion to refer to the counties, cities, towns, and districts covered by G. L. c. 32B. 4

maintenance organization (HMO) by accepting G. L. c. 32B, § 16,

inserted by St. 1971, c. 946, § 5.

Pursuant to G. L. c. 32B, § 9, retirees bear the full cost

of their health insurance premiums unless a municipality has

accepted the more generous provisions of G. L. c. 32B, § 9A or

§ 9E. If a municipality accepts G. L. c. 32B, § 9A, then it may

elect to pay fifty per cent of a retiree's premium for health

insurance coverage. If a municipality accepts G. L. c. 32B,

§ 9E, then it may elect to pay "a subsidiary or additional rate"

greater than fifty per cent of a retiree's health insurance

premium.

2. Factual and procedural background. We summarize the

relevant facts as stipulated by the parties in lieu of a hearing

before the board. The city is a public employer within the

meaning of G. L. c. 150E, § 1. The school committee is the

collective bargaining agent of the city for the purpose of

dealing with school employees. The Somerville Teachers

Association, Somerville Police Superior Officers Association,

Somerville Administrators Association, and Somerville Municipal

Employees Association (collectively, the unions) are employee

organizations within the meaning of G. L. c. 150E, § 1,5 and they

5 General Laws c. 150E, § 1, defines an "[e]mployee organization" as "any lawful association, organization, federation, council, or labor union, the membership of which includes public employees, and assists its members to improve their wages, hours, and conditions of employment." 5

are the exclusive bargaining representatives for various

individuals employed by the school committee and the city.

In 1979, the city accepted G. L. c. 32B, § 9E, by a vote of

the board of aldermen, thereby authorizing the city to pay more

than fifty per cent of a retired employee's monthly premium for

an indemnity health insurance plan. From that point forward

until August 1, 2009, the city contributed ninety-nine per cent

of the premium for a retired employee's health insurance

coverage under the indemnity plan offered by the city. Retired

employees contributed the remaining one per cent of the premium.

In addition, the city offered active and retired employees

health insurance coverage through several HMOs. The city paid

fixed percentages of the total premium costs, which varied

between eighty and ninety per cent, depending on the particular

plan. Employees and retirees paid the remainder of the premium

costs.

On or about July 1, 2009, the city had approximately 1,262

retirees who were participating in the city's group health

insurance plans. The majority of these individuals had retired

from positions in the unions' bargaining units. Effective

August 1, 2009, the city decreased the percentage of its

contribution for retired employees' health insurance coverage

under the indemnity plan from ninety-nine per cent to sixty per

cent, and it decreased the percentage of its contribution for 6

retired employees' health insurance coverage under all other

insurance plans to seventy-five per cent. These changes were

approved by the board of aldermen after a properly noticed

public hearing at which the new rates were proposed by the

mayor.6

Neither the city nor the school committee provided the

unions with notice of or an opportunity to bargain over the

decision to change contribution rates. None of the collective

bargaining agreements between the city and the various

bargaining units addressed the contribution rates for retired

employees' health insurance coverage, and such rates had never

been a subject of negotiation between the city and the

bargaining units. At all material times, the city has

maintained that the authority to set the contribution rates for

retirees' health insurance coverage is vested exclusively with

the board of aldermen and the mayor, and that such contribution

rates are not a mandatory subject of bargaining with current

employees.

On September 10, 2009, the Somerville Teachers Association

filed two prohibited practice charges with the division of labor

6 According to the city of Somerville (city), the board of aldermen voted to amend the city's 1979 acceptance of G. L. c. 32B, § 9E, thereby allowing the city to reduce its health insurance contribution rates for retirees. 7

relations (division).7 It alleged that the city and, separately,

the school committee had violated G. L. c. 150E, § 10 (a) (5),

and, derivatively, G. L. c. 150E, § 10 (a) (1), by "failing to

provide notice and an opportunity to bargain over the future

benefits [on retirement] of active employees when the City

announced at the meeting of the Board of Aldermen, on May 28,

2009 that effective August 1, 2009 the percentage contribution

rate for all retirees would be increased."8 Based on essentially

the same grounds, the Somerville Police Superior Officers

Association filed a prohibited practice charge with the division

on December 21, 2009; the Somerville Administrators Association

filed two prohibited practice charges with the division on

January 26, 2010;9 and the Somerville Municipal Employees

Association filed a prohibited practice charge with the division

on April 13, 2010. The division investigated the allegations

and found probable cause to believe that statutory violations

had occurred. The division issued complaints with respect to

all six matters, and, on July 30, 2010, they were consolidated

7 The division of labor relations is now the Department of Labor Relations. See St. 2011, c. 3, § 36. 8 In its prohibited practice charge against the city, the Somerville Teachers Association (association) also alleged that the city had failed to provide certain health insurance information that was reasonable and necessary for the association to fulfil its obligations under the law. It subsequently withdrew this claim on February 18, 2011. 9 One prohibited practice charge was against the city, and the other was against the school committee of Somerville. 8

for hearing. Pursuant to G. L. c. 150E, § 11 (f), the parties

petitioned to have the consolidated complaints heard by the

board in the first instance (rather than by a hearing officer),10

and the request was granted. The parties then stipulated to the

facts.

By decision dated October 19, 2011, the board concluded

that the city and the school committee had failed to satisfy

their statutory bargaining obligations before unilaterally

reducing contributions for retired employees' health insurance

premiums. In the board's view, health insurance contributions

for municipal retirees are a mandatory subject of bargaining.

The board rejected the city's claims that current employees have

no right to bargain over such contributions made on behalf of

retirees, and that, pursuant to G. L. c. 32B, health insurance

rates for retirees must be established through the local

governmental process, not the collective bargaining process.

The board ordered the city and the school committee to

cease and desist from failing and refusing to bargain

collectively in good faith with the unions over changes to

future retirees' health insurance contribution rates. Further,

the board ordered the city and the school committee to restore

the terms of the retirement health insurance benefit that was in

10 The Commonwealth Employment Relations Board (board) is the body within the division of labor relations that is charged with reviewing orders from investigators and issuing decisions. See G. L. c. 23, § 9R; G. L. c. 150E, § 11. 9

effect prior to August 1, 2009, for the unions' bargaining unit

members who were active employees before that date and retired

thereafter. In addition, the board ordered the city and the

school committee to make whole those bargaining unit members who

retired after August 1, 2009, for any losses they may have

suffered as a result of the unilateral change in retirement

health insurance contribution rates, plus interest. The city

and the school committee appealed the board's decision, the case

was entered in the Appeals Court, and we transferred it to this

court on our own motion.

3. Standard of review. We review the board's decision in

accordance with the standards set forth in G. L. c. 30A,

§ 14 (7), governing appeals from final administrative agency

decisions. See G. L. c. 150E, § 11 (i). See also Worcester v.

Labor Relations Comm'n,

(2002). The board's

decision will be set aside only if it is "[a]rbitrary or

capricious, an abuse of discretion, or otherwise not in

accordance with law." G. L. c. 30A, § 14 (7) (g). We defer to

the board's specialized knowledge and expertise. See Worcester

v. Labor Relations Comm'n, supra. However, the duty of

statutory interpretation rests ultimately with the courts. See

Commerce Ins. Co. v. Commissioner of Ins.,

(2006), citing Cleary v. Cardullo's, Inc.,

, 343-

344 (1964). 10

4. Discussion. The thrust of the arguments made by the

city and the school committee is that current public employees

do not have the right to bargain collectively over the issue of

health insurance contribution rates for retirees. They contend

that, pursuant to G. L. c. 32B, such contribution rates are to

be determined solely by the local government. In their view, a

contrary conclusion would give the unions veto power over

decisions made by a municipality acting in accordance with its

statutory authority. Therefore, they continue, neither the city

nor the school committee violated G. L. c. 150E, § 10 (a) (5),

and, derivatively, G. L. c. 150E, § 10 (a) (1), when the city

unilaterally reduced its percentage contributions to retirees'

health insurance premiums. We agree.

When Congress enacted the National Labor Relations Act in

1935, it exempted public employers -- States and their political

subdivisions -- from the obligation to engage in collective

bargaining. See

(2) (2012). See also Brookfield

v. Labor Relations Comm'n,

, 326 n.5 (2005).

States and their political subdivisions were "free to regulate

their labor relationships with their public employees."

Davenport v. Washington Educ. Ass'n,

(2007).

However, as was the case in most States, public employees in the

Commonwealth "had virtually none of the rights that had been

widely guaranteed since the nineteen thirties to employees in 11

private business to organize and bargain collectively and to be

protected in the associated activities of asserting and

negotiating grievances." Dedham v. Labor Relations Comm'n,

(1974). "[T]raditional hostility to

organizational rights on the part of public employees gradually

diminished in the post-war period, and in 1958 Massachusetts was

among the first States . . . to afford a measure of recognition

to those rights."

. See St. 1958, c. 460, inserting

G. L. c. 149, § 178D. See also St. 1964, c. 637, inserting

G. L. c. 149, § 178F; St. 1965, c. 763, § 2, inserting G. L.

c. 149, §§ 178G-178N. In 1973, the public sector collective

bargaining law, G. L. c. 149, §§ 178D, 178F-178N, was repealed

and replaced with G. L. c. 150E, see St. 1973, c. 1078, §§ 1, 2,

as comprehensive legislation designed to provide organizational

and collective bargaining rights to public employees.11 See

11 Historically speaking, "the subjects of public sector collective bargaining are more restricted than those in private sector labor relations." School Comm. of Boston v. Boston Teachers Union, Local 66,

(1979). See, e.g., G. L. c. 150E, § 9A (a) (prohibiting public employees and their organizations from engaging in strikes). "'Public policy, whether derived from, and whether explicit or implicit in statute or decisional law, or in neither' may limit the ability of a public employer . . . to bind itself to a given contractual provision or to delegate to an arbitrator the power to bind it." School Comm. of Boston v. Boston Teachers Union, Local

quoting School Comm. of Hanover v. Curry,

(1976). "While this principle may be raised in varied contexts . . . the analysis to be utilized is essentially the same in all instances: whether the ingredient of public policy in the issue subject to dispute is so comparatively heavy that collective bargaining . . . on the subject is, as a matter of 12

Labor Relations Comm'n v. Boston Teachers Union, Local 66,

(1977); Gallagher v. Metropolitan Dist. Comm'n,

(1977). Thus, the scope of matters for

negotiation has been defined, albeit somewhat broadly, by the

Legislature.

General Laws c. 150E, § 6, provides that the public

employer and the employee organization "shall negotiate in good

faith with respect to wages, hours, standards [of] productivity

and performance, and any other terms and conditions of

employment." These matters, subject to limited exceptions, are

deemed to be mandatory subjects of bargaining.12 See Local 1652,

Int'l Ass'n of Firefighters v. Framingham,

(2004). See also Worcester v. Labor Relations Comm'n,

(certain types of managerial decisions must, as

matter of policy, be reserved for public employer's discretion).

The failure of a public employer to negotiate in good faith over

law, to be denied effect." Id. at 70-71. "Underlying this development is the belief that, unless the bargaining relationship is carefully regulated, giving public employees the collective power to negotiate labor contracts poses the substantial danger of distorting the normal political process for controlling public policy." Id. at 71. 12 It has been observed by appellate courts that "[a]ny attempt to define with precision and certainty the subjects about which bargaining is mandated by [c.] 150E is doomed to failure." Lynn v. Labor Relations Comm'n,

(1997), quoting Greenbaum, The Scope of Mandatory Bargaining Under Massachusetts Public Sector Labor Relations Law,

, 102 (1987). See Local 2071, Int'l Ass'n of Firefighters v. Bellingham,

(2006) (Mills, J., dissenting), S.C.,

(2007). 13

mandatory subjects of bargaining is a prohibited practice. See

G. L. c. 150E, § 10 (a) (5). See also Commonwealth v. Labor

Relations Comm'n,

(1989) ("A public employer

has a duty to bargain in good faith and, short of impasse, it

may not unilaterally implement changes to a mandatory subject of

bargaining without negotiation"); School Comm. of Newton v.

Labor Relations Comm'n,

(1983). The

commission of a prohibited practice is remediable through the

enforcement procedures set forth in G. L. c. 150E, § 11.

The issue here is whether the city's contribution rate for

retired employees' health insurance coverage is a mandatory

subject of bargaining such that its unilateral reduction

constitutes a prohibited practice in violation of G. L. c. 150E,

§ 10 (a) (5). As a general proposition, health insurance

coverage for public employees is "an unearned benefit, no

different in concept from holidays, future sick leave, or other

similar benefits." Larson v. School Comm. of Plymouth,

(2000). "As an unearned benefit, health

insurance, like 'wages, hours . . . and . . . other terms and

conditions of employment' is subject to mandatory collective

bargaining between public employers and public employees."

Massachusetts Nurses Ass'n v. Cambridge Pub. Health Comm'n,

(2012), quoting School Comm. of Medford

v. Labor Relations Comm'n,

(1979),

Mass. 932 (1980). See Anderson v. Selectmen of

Wrentham,

(1990) (municipality's contribution

to unionized employees' group health insurance premiums is

mandatory subject of collective bargaining). The language of

G. L. c. 150E, § 6, governs the terms and conditions of the

public employee's existing employment. It goes without saying

that a retiree cannot bargain over the percentage contributions

made by a municipality to the retiree's health insurance

premiums, given that the retiree is no longer employed. With

respect to current employees, a municipality's contributions to

the health insurance premiums of retirees is not a term or

condition of employment that is subject to mandatory collective

bargaining where the Legislature expressly has conferred

authority over the provision of such a benefit on the

municipality.

The Legislature, by way of G. L. c. 32B, § 9, has stated

that retirees "shall pay the full premium cost" of their health

insurance, subject to the provisions of either G. L. c. 32B,

§ 9A, or G. L. c. 32B, § 9E, which, if accepted by a

municipality, permits the municipality to pay a portion of the

retirees' premiums. The authority conferred on a municipality

to decide whether and how much to contribute to the monthly

health insurance premiums of retired employees (within defined

statutory percentages) would be wholly undermined by an 15

obligation to collectively bargain the matter. See, e.g.,

Somerville v. Somerville Mun. Employees Ass'n,

(2008) (explicit legislative directive of G. L. c. 115,

§ 10, that city's director of veterans' services "shall be

appointed . . . by the mayor, with the approval of the city

council," precluded challenged appointment from being proper

subject of collective bargaining); National Ass'n of Gov't

Employees v. Commonwealth,

, cert. denied,

(1995) (where Legislature reserved for itself in G. L.

c. 32A, § 8, power to change percentage of Commonwealth's

agreed-to contribution to employees' health insurance premiums,

such reserved power could not be overridden by collective

bargaining); Watertown Firefighters, Local 1347, I.A.F.F. v.

Watertown,

(1978) (characterization of matter

as term or condition of employment does not require its

submission to collective bargaining if to do so will "defeat[] a

declared legislative purpose"). See generally Energy Reserves

Group, Inc. v. Kansas Power & Light Co.,

(1983), quoting Hudson Water Co. v. McCarter,

(1908) ("One whose rights . . . are subject to [S]tate

restriction, cannot remove them from the power of the State by

making a contract about them").

Except as provided in G. L. c. 150E, § 7 (d), which we

shall discuss next, "[t]here is no obligation to engage in 16

collective bargaining as to matters controlled entirely by

statute." Lynn v. Labor Relations Comm'n,

(1997).13 See Commonwealth v. Labor Relations Comm'n,

; National Ass'n of Gov't Employees, Local R1-

162 v. Labor Relations Comm'n,

(1984). Here, current public employees cannot bargain over how

the city should exercise the authority conferred on it by G. L.

c. 32B, § 9E, because such bargaining effectively would negate

the Legislature's purpose in entrusting the matter to the city.

See Lynn v. Labor Relations Comm'n, supra at 184. Cf. Twomey v.

Middleborough,

(board of selectmen has

statutory authority to establish percentage of total monthly

premium for HMO coverage that is to be paid by town's retired

employees); Yeretsky v. Attleboro,

(municipal contribution rate for HMO premiums for retired

nonunionized employees determined at local government level).

In our view, the Legislature conferred authority on

municipalities to decide whether and how much to contribute to

13 In Lynn v. Labor Relations Comm'n,

, the Appeals Court cogently explained: "In the range of cases where the governmental employer acts pursuant to broad, general management powers, the danger is presented, as pointed out in School Comm. of Newton v. Labor Relations Comm'n, 388 Mass. [557,] 564-566 [(1983)], that to recognize the statutory authority as exclusive would substantially undermine the purpose of G. L. c. 150E, § 6, to provide for meaningful collective bargaining as a general rule with respect to compensation and other terms and conditions of employment. That danger simply is not present when the governmental employer acts pursuant to a specific, narrow statutory mandate." 17

retirees' health insurance premiums in recognition of the fact

that, as public employers, they must balance the needs of their

retired workers with the burdens of safeguarding their own

fiscal health, thereby ensuring their ability to provide

services for all of their citizens.

If we were to conclude that the city's percentage

contribution to retirees' health insurance premiums is a

mandatory subject of bargaining, we would have to confront the

import of the so-called "conflicts" statute, G. L. c. 150E,

§ 7 (d). See Adams v. Boston,

(2012).

General Laws c. 150E, § 7 (d), provides that, with respect to

matters within the scope of negotiations under G. L. c. 150E,

§ 6, the terms of a collective bargaining agreement prevail over

contrary terms in certain enumerated statutes. See Adams v.

Boston, supra; Chief Justice for Admin. & Mgt. of the Trial

Court v. Office & Professional Employees Int'l Union, Local 6,

(2004). Generally speaking, those

enumerated statutes "contain specific mandates regarding terms

and conditions of employment of public employees." Adams v.

Boston, supra at 607 n.11. See G. L. c. 150E, § 7 (d); School

Comm. of Newton v. Labor Relations Comm'n,

.

General Laws c. 32B, § 9E, is not among the enumerated statutes.

It is well established that "statutes not specifically

enumerated in § 7 (d) will prevail over contrary terms in 18

collective bargaining agreements." Commonwealth v. Labor

Relations Comm'n,

. See Chief Justice for

Admin. & Mgt. of the Trial Court v. Office & Professional

Employees Int'l Union, Local 6, supra; School Comm. of Natick v.

Education Ass'n of Natick,

(1996). "There is

no duty to bargain over the specific requirements of such

statutes." Commonwealth v. Labor Relations Comm'n, supra. As

pertinent to the present case, even if the city's contribution

to retirees' health insurance premiums was deemed to be a

mandatory subject of collective bargaining, the provisions of

G. L. c. 32B, § 9E, would prevail, and the city could

unilaterally change the percentage of its contribution in

accordance with the statute. See National Ass'n of Gov't

Employees, Local R1-162 v. Labor Relations Comm'n,

(where statute not listed in G. L. c. 150E, § 7 [d],

public employer and union cannot amend statute's requirements

through collective bargaining).

5. Conclusion. The city and the school committee did not

violate G. L. c. 150E, § 10 (a) (5), or, derivatively, G. L.

c. 150E, § 10 (a) (1), when the city unilaterally reduced its

percentage contribution to retired employees' health insurance

premiums without engaging in collective bargaining over the

matter with current employees. Accordingly, the decision of the

board is reversed. 19

So ordered.