APPEAL from a judgment of the Superior Court of Sacramento County, Kevin R. Culhane, Judge. (Super. Ct. No. 34200850000018CUPTGDS)
The opinion of the court was delivered by: Duarte , J.
CERTIFIED FOR PUBLICATION
Reversed with directions.
This appeal arises from the interplay of federal court orders, public employee labor agreements, legislative approval of those agreements, and purportedly binding labor arbitration.
The Department of Personnel Administration (DPA)*fn1 negotiated with the Service Employees International Union, Local 1000 (Union), representing certain medical employees of the California Department of Corrections and Rehabilitation (CDCR). This produced two similar memoranda of understanding (the MOUs) increasing the salary ranges for some Union employees by certain percentages, effective January 1, 2007. The Legislature and Governor approved these MOUs in September 2006.
In October 2006, the federal "Plata" court ordered an increase in those same salary ranges by a larger amount than the MOUs, effective retroactively to September 1, 2006.*fn2
The DPA declined to apply the MOU salary increases on top of the Plata increases, generally taking the view that they had been superseded by the larger Plata increases. The Union filed a grievance, contending that the MOU increases had to be applied to whatever salary ranges were extant on January 1, 2007, and therefore should be calculated on top of the previously-effective Plata increases. The dispute was submitted to a labor arbitrator, who sided with the Union, and the trial court confirmed the arbitration award.
DPA and CDCR (collectively, the State) timely filed this appeal. On appeal, the State generally contends the arbitration award violates public policy because its effect is to pay salaries above the levels approved by the Legislature.
Based on two decisions of this court--one decided after the judgment--we agree with the State: Even if the arbitrator correctly interpreted the MOUs, salary increases still must be approved by the Legislature to be effective. (See California Statewide Law Enforcement Assn. v. Department of Personnel Administration (2011) 192 Cal.App.4th 1 (CSLEA); Department of Personnel Administration v. California Correctional Peace Officers Assn. (2007) 152 Cal.App.4th 1193 (CCPOA).)
Although the Legislature was aware that the MOUs might be construed so that the MOU salary increases would be calculated on top of the Plata increases, the expense of such an interpretation was not explicitly presented to and approved by the Legislature. Accordingly, we must reverse with directions: To the extent it interpreted an ambiguity in the MOUs, the arbitrator's award must be confirmed; however, "to the extent that the arbitrator's award mandates the agreement be enforced without unequivocal legislative approval, it violates public policy" (CSLEA, supra, 192 Cal.App.4th at p. 16) and must be vacated.
Further, the portion of the arbitrator's award purporting to retain jurisdiction over this dispute must be vacated. As we shall explain, the Union's remedy, if any, is to obtain passage of a bill approving the higher salaries, a remedy squarely in the political realm. Neither the arbitrator nor the judiciary has the power to implement the arbitration award.
After protracted litigation, the Plata court found the State's prison medical care fell below federal constitutional norms. On December 9, 2005, the Plata court entered an interim order to increase compensation for some CDCR employees "through recruitment and retention pay differentials, equivalent to a compensation increase of 18 percent."
Effective April 17, 2006, the Plata court appointed a receiver to take over "delivery of medical services" to CDCR prisoners, and the receiver was granted power to "renegotiate existing contracts, including contracts with labor unions[.]" The Plata court ordered that, if a State law or contract impeded remedial efforts, the receiver "shall request the Court to waive the state or contractual requirement that is causing the impediment. Upon receipt of any such request, the Court shall determine the appropriate procedures for addressing such request on a case-by-case basis."
Meanwhile, DPA and the Union had been negotiating new MOUs regarding Bargaining Unit 20 Medical and Social Services (BU-20), and Bargaining Unit 17 Registered Nurse (BU-17), and ultimately agreed on MOUs effective July 1, 2005 through June 30, 2008. These MOUs provided for "equity" increases to be "added to the maximum salary rate" of various salary ranges by percentages ranging from 5 to 10 percent, effective January 1, 2007.*fn3 A separate 3.5 percent "general salary increase" (GSI) was also provided, effective July 1, 2006, for all Union classifications.
Both MOUs reference the Plata litigation, albeit in less than crystalline language as follows: "Classifications receiving the [Plata] differentials . . . shall have their differential adjusted downward by a dollar amount that will result in the incumbents receiving the same gross monthly salary as was received prior to the general salary increase." The
BU-20 MOU also states: "It is clearly understood that as the GSI of July 1, 2006 and the above step adjustments are implemented, the [Plata] differentials shall be reduced accordingly to achieve parity in base salary, and a [Plata] differential of ten percent (10%) above base salary. [¶] Should the Court order any additional adjustments, the parties shall meet and confer over the appropriate adjustments, if necessary, for non-Plata classes."
Costing Summary and Appropriation
On June 26, 2006, DPA gave the Legislature a "costing summary" stating: "As these step increases and the 2006 COLA are implemented, the [Plata] differentials will be adjusted so that the base salaries for [Plata] classes remain 10% higher than [non-Plata] classes. If the Court orders any additional adjustments, the parties shall meet and confer over the appropriate adjustments, if necessary, for non-Plata classes." DPA's cost estimates were relied on by the Legislative Analyst's Office (LAO), which itself prepared an analysis for the Legislature, dated July 6, 2006, estimating the fiscal year 2006-2007 cost of the MOUs (and certain other agreements not here relevant) of about $344 million, although the Union did not see DPA's estimates until the arbitration.*fn4 A Department of Finance (DOF) "enrolled bill report" for the Legislature also describes a $344 million cost for the first fiscal year. The LAO analysis mentioned the possibility of "court orders" in general, and in particular mentioned the Plata case in part as follows: "Effective January 1, 2007, registered nurse classifications would have their top salaries increased by 7.5 percent. These and other increases would be administered so that correctional and mental health nurses that received 18 percent pay increases this spring (as a result of court orders in the [Plata] case) would have pay levels 10 percent over those of nurses in other departments."
The MOUs were approved by the Legislature and Governor, and became effective on September 6, 2006, in a bill the parties refer to as "AB 1369."*fn5 (Stats. 2006, ch. 209, § 6.) AB 1369 also appropriated approximately $344 million to pay for the various MOUs.
On September 12, 2006, the week after the MOUs were approved, the receiver moved for an order waiving state law. On October 17, 2006, the Plata court granted the receiver's unopposed motion, stating in part:
"[T]he Receiver developed adjusted salary ranges for CDCR clinicians that are more consistent with those paid by the State . . . at hospitals operated by the University of California health care system. [Citation.] The Receiver and his staff then spent several weeks discussing this matter with Defendants and the relevant state agencies. Defendants did not dispute either the reasonableness of the recommended salary ranges or the necessity of implementing them promptly. They declined, however, to unilaterally implement them because of questions regarding constraints imposed upon them by state law. . . .
"Although Defendants . . . could not implement the recommended salary adjustments promptly on their own, they invited the Receiver to request a waiver of those state laws that posed obstacles to making the recommended salary adjustments in a timely fashion, and offered to assist the Receiver in their implementation."
The Plata order lists specific laws to be waived "to permit the Receiver to 'direct the implementation, adjustment and administration of the proposed salaries and structural changes to the pay system' attached to his motion as Exhibit 6" and states the State reaffirmed "support for the proposed salary adjustments and the need for a waiver given the requirements of California law." The order states the Plata court could not "permit the State to attempt to address the issue of inadequate salaries through normal collective bargaining channels" because "it has already had this opportunity and failed." The order also provides:
"The following state law requirements shall be waived for the sole and limited purpose of enabling the Receiver to direct the implementation, adjustment, and administration of the proposed salaries and structural changes to the pay ...