title
Communications Workers of America, et al. v. City of Gainesville, First District Court of Appeal, Case No. 1D10-1616 (NB)
recommendation
The City Commission authorize the City Attorney to file an appeal to Invoke the Discretionary Jurisdiction of the Florida Supreme Court.
explanation
On July 1st, the First District Court of Appeal denied the City's request for rehearing, rehearing en banc or for certification of the panel's opinion finding that the City's method of providing health insurance benefits to its retirees was a past practice that the City must bargain before changing. The Court also denied the amici requests of the Cities of Cocoa, St. Petersburg, Kissimmee, West Palm Beach, and Jacksonville, the Counties of Alachua and St. Johns, and the Florida League of Cities to file briefs in support of the City's request.
As background information, in 1992 the City changed its payment of retirees' health insurance premiums from 100% of single coverage for the retirees to 80% of single coverage, in line with what it was paying for active employees. The retirees filed a class action lawsuit to stop the City from doing so, arguing that they had been told the City would pay 100% of the premium for their lifetime. After years of litigation, the Court declined to certify a class of retirees, and later held that the Plaintiff retirees had abandoned their claims and dismissed the case.
While the lawsuit was ongoing, the City commissioned an actuarial study to determine the long term cost of the City's contribution of 80% of retirees and current employees' premiums. The study estimated that the City's cost to provide this benefit from 1994 forward was 76 million dollars. As a result of this study, in 1995 the City Commission adopted an ordinance changing how it would contribute to current and future retirees health insurance benefits. The ordinance provided that the City would contribute a percentage of retirees' health insurance costs that was variable based on years of service, age at retirement and hire date. The result of these changes reduced the City's liability to 18 million dollars. The ordinance further provided that "the percentage or amount of which payment for either retirees or dependent coverage has varied over the years and may continue to do so in the future. .". No one challenged the ordinance.
By 2008, the City concluded that the percentage method of contributing to the retiree health plan had become financially unsustainable for the taxpayers and rate payers. The City desired to maintain the ability to contribute some level of premium subsidy for current and future employees, but could not do so under the 1995 formula and the escalating rise in health insurance premiums. Premiums that in 1994 were $103 for single coverage and $355 for family coverage, in 2008 had risen to $300 for single coverage and $837 for family coverage, thus raising the City's liability to 49 million dollars. Consequently, in 2008 the City adopted a plan where the City would contribute a specified dollar amount based on years of service and age rather than a percentage of the premium, thus reducing the liability to 41 million dollars.
Since at least the mid 1990's, the City has repeatedly notified its employees that the City reserves the right to unilaterally change its payments to retiree health benefits and that it might agree in the future to contribute "none, some, or all of the costs of retiree and/or dependent coverage". The City was conscientious about providing these notifications because of the lawsuit in 1992 wherein retirees maintained that they had been told they would get these benefits for life. So, in 2008 when the City unilaterally changed the benefits for retirees and refused to bargain the changes for current employees until the collective bargaining agreements opened, it was acting in accord with its prior actions.
After the 2008 change, four of the City's bargaining units filed an unfair labor practice arguing that the City could not make the changes without bargaining them with the Unions. As retiree health insurance benefits were not addressed in any of the collective bargaining agreements, the only way they could become a subject of bargaining for current employees was if the method of paying retiree health benefits had become a "past practice". The test for whether a past practice becomes the status quo for wages or other benefits is: 1) whether the practice was unequivocal; 2) existed substantially unvaried for a significant period of time prior to the change; and 3) could reasonably have been expected by the employees to remain unchanged. All three parts of the test are separate and must individually be met.
The Public Employees Relations Commission (PERC), the agency charged with the interpretation of Florida law relating to collective bargaining, found that the City's method of paying the retirees health insurance benefits from 1995 to 2008 was not a past practice because two parts of the test had not been met - that the City's practice of how it made the payments was not "unequivocal" and that the employees could not have objectively believed that the City's contribution would continue unchanged. PERC dismissed the unfair labor practice charge. The Unions appealed.
The First District Court panel by a vote of 2-1 overturned PERC's order, seeming to hold that the mere passage of time is sufficient to transform a unilaterally granted benefit into a past practice. In doing so, the panel ignored the expertise of the agency charged with interpreting law relating to collective bargaining and ignored long established precedent. The ruling greatly affects the ability of public employers to manage employees within the financial circumstances they face and creates a host of past practices which were never intended to be conferred. The panel noted that time as little as two years can establish a past practice. In order to have avoided the result reached by the panel, the City would have to regularly change the unilaterally conferred benefit, for no reason except to prevent the creation of a past practice, which the City said over and over again it was not creating.
This is an exceptionally important case which affects every public employer and employee in the state and which should be heard by the Florida Supreme Court. The Cities of Cocoa, St. Petersburg, Kissimmee, West Palm Beach, and Jacksonville, the Counties of Alachua and St. Johns, and the Florida League of Cities joined in asking the panel to rehear the case, either as the panel or en banc, or to certify the issue to the Florida Supreme Court as a question of great public importance. The appellate court declined to take such action.
On behalf of the City, the City Attorney's Office and co-counsel can now request the Florida Supreme Court to hear the matter by filing a Notice to invoke the discretionary jurisdiction of the Court based on conflict between this decision and other district court opinions, as well as the public importance to government entities around the State. If the Court grants jurisdiction the City will then file briefs in support of its position.