INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS v. PUBLIC EMPLOYMENT RELATIONS BOARD








Filed 1/24/11




IN THE SUPREME COURT OF CALIFORNIA



INTERNATIONAL ASSOCIATION OF )
FIRE FIGHTERS, LOCAL 188, AFL-CIO, )
)
Plaintiff and Appellant, )
) S172377
v. )
) Ct.App. 1/3 A114959
PUBLIC EMPLOYMENT RELATIONS )
BOARD, )
) Contra Costa County
Defendant and Respondent; ) Super. Ct. No. N05-0232
)
CITY OF RICHMOND, )
)
Real Party in Interest and )
Respondent. )
__________________________________ )

Facing a budget crisis, the City of Richmond decided to lay off 18 of its firefighter employees. The firefighters’ union tried to negotiate with the city to avert the layoffs, but the city refused to bargain over its layoff decision. The union turned to the Public Employment Relations Board (PERB), the state agency charged with enforcing state labor laws affecting local government employees. PERB would not issue a complaint, however, because it concluded that the city’s refusal to bargain had not violated state law. The union then brought an action in superior court, but that court agreed with PERB that no unfair labor practice had occurred. On the union’s appeal, the Court of Appeal affirmed the superior court’s judgment.

Here, we address two issues: (1) If, after receiving an unfair labor practice charge, PERB decides not to issue a complaint, is that decision ever subject to judicial review‌ (2) Is a city’s decision to lay off firefighters for fiscal reasons a matter that is subject to collective bargaining‌
On the first question, we agree with the Court of Appeal that although PERB’s refusal to issue a complaint is generally not subject to judicial review, this general rule has narrow exceptions. One of these exception applies when, as the union alleges here, PERB’s refusal is based on a clearly erroneous statutory construction.
On the second question, we conclude, as did the Court of Appeal, that when a city, faced with a budget deficit, decides that some firefighters must be laid off as a cost-saving measure, the city is not required to meet and confer with the firefighters’ authorized employee representative before making that initial decision. In this situation, the city’s duty to bargain with the employee representative extends only to the implementation and effects of the layoff decision, including the number and identity of the employees to be laid off, and the timing of the layoffs.

I

To reduce labor costs in response to a budget shortfall, the City of Richmond in late 2003 decided to lay off 18 of its 90 firefighters, effective December 31 of that year. The city sent layoff notices to the firefighters whose positions were being eliminated. During November and December 2003, the city on three occasions met with its firefighters’ authorized representative, International Association of Fire Fighters, Local 188, AFL-CIO, to discuss the effects of the layoffs on the remaining firefighters. Local 188 sought to avert the layoffs by arguing that other cost-saving measures were available that would make the layoffs unnecessary, but the city rejected that argument.
In January 2004, Local 188 filed an unfair labor practice charge with PERB, alleging that the city had violated California’s Meyers-Milias-Brown Act (Gov. Code, § 3500 et seq.; MMBA) by, among other things, failing to meet and confer with it over the city’s layoff decision. PERB’s agent, Regional Attorney Kristin L. Rosi, declined to issue a complaint, explaining her reasons in a “partial warning letter” to Local 188. The letter stated that Local 188’s unfair practice allegations failed to state a prima facie case for relief because a decision to lay off employees, including firefighters, is not subject to collective bargaining and because, although the effects of a layoff decision are subject to bargaining, Local 188 had made no proposals concerning the effects of the city’s decision to lay off firefighters and the city had not declined to bargain concerning them.
Local 188 filed an amended unfair practice claim that focused on the purported safety consequences of the layoffs, alleging that reducing the number of city-employed firefighters meant that at any given time fewer fire engines and fire trucks could be deployed for fire suppression work, and this in turn would increase the risk of injury to the remaining firefighters. The union admitted that it had made no specific proposals to the city regarding firefighter workload and safety issues under the newly reduced staffing levels.
In April 2004, PERB Regional Attorney Rosi declined to issue a complaint on behalf of Local 188 on the charge that the city had committed an unfair labor practice by failing to meet and confer over the layoff decision or its effects. Local 188 filed an administrative appeal of that ruling.
A panel of three PERB board members issued a decision affirming Regional Attorney Rosi’s ruling. The PERB panel concluded that a city’s decision to lay off some of its employees is not subject to collective bargaining and that Local 188, by repeatedly seeking to bargain over the layoff decision itself rather than its effects, had waived its rights to bargain over those effects.
In January 2005, Local 188 petitioned the Court of Appeal for a writ of mandate. The Court of Appeal denied the petition “ ‘without prejudice to its being refiled in the Contra Costa County Superior Court.’ ” Local 188 then filed a petition for writ of mandate in superior court, challenging PERB’s conclusion that a city’s decision to lay off firefighters is not subject to collective bargaining even though the effect of the decision is to increase the dangers faced by the remaining firefighters while engaged in fire suppression.
After receiving opposition from PERB, and from the city, and holding a hearing, the superior court denied Local 188’s mandate petition. The superior court concluded that it had jurisdiction to review PERB’s decision not to issue a complaint on Local 188’s unfair labor practice charge, but the court agreed with PERB that a city’s layoff decision is not within the scope of representation under the MMBA. Local 188 appealed the superior court’s judgment denying the mandate petition.
The Court of Appeal affirmed the trial court’s judgment denying Local 188’s writ petition. Regarding the availability of judicial review of a PERB decision not to issue an unfair labor practice complaint, the Court of Appeal agreed with PERB and the city that such decisions generally are not subject to judicial review. It also concluded, however, that this general rule is subject to three narrow exceptions under which judicial review is available, by petitioning the superior court for a writ of mandate, to determine whether PERB’s decision not to issue a complaint (1) violates a constitutional right, (2) exceeds a specific grant of authority, or (3) is based on an erroneous statutory construction. In reaching that conclusion, the Court of Appeal relied heavily on this court’s decision in Belridge Farms v. Agricultural Labor Relations Bd. (1978) 21 Cal.3d 551 (Belridge Farms). That decision construed the judicial review provisions of the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975 (Lab. Code, § 1140 et seq.; ALRA).
Regarding whether a city’s decision to lay off firefighters for fiscal reasons is subject to collective bargaining, the Court of Appeal concluded that this issue was subject to judicial review to determine whether PERB’s decision not to issue an unfair labor practice complaint was based on an erroneous statutory construction. On the merits, the Court of Appeal concluded that PERB had not erred in its construction of Government Code section 3504, the MMBA provision defining the scope of a local public entity’s duty to meet and confer with employee representatives. In reaching that conclusion, the Court of Appeal resolved a dispute between the parties regarding the meaning and effect of our decision in Fire Fighters Union v. City of Vallejo (1974) 12 Cal.3d 608 (Vallejo). The Court of Appeal read Vallejo as establishing or reaffirming a rule that under the MMBA, a “decision to lay off firefighters is not subject to negotiation,” although “the effects of that decision, including the workload and safety of the remaining employees, are properly the subject of collective bargaining.”

II

When an employee or employee representative complains to PERB that a local government employer has refused to meet and confer over a mandatory subject of bargaining, PERB processes the complaint as an unfair labor practice charge. (Gov. Code, § 3509, subd. (b).) The charge is assigned for processing to a “Board agent.” (Cal. Code Regs., tit. 8, § 32620, subd. (a).) If the agent “concludes that the charge or the evidence is insufficient to establish a prima facie case,” the agent refuses to issue a complaint, an action that constitutes a dismissal of the charge. (Id., § 32630.) The complaining party may appeal such a dismissal to PERB’s five-member board. (Id., § 32635, subd. (a).)
The MMBA provides for judicial review of PERB decisions in subdivision (a) of Government Code section 3509.5, which states: “Any charging party, respondent, or intervenor aggrieved by a final decision or order of the board in an unfair practice case, except a decision of the board not to issue a complaint in such a case, . . . may petition for a writ of extraordinary relief from that decision or order.”[1] (Italics added.) Subdivision (b) of that section states that the “petition for a writ of extraordinary relief shall be filed in the district court of appeal having jurisdiction over the county where the events giving rise to the decision or order occurred.”
The Court of Appeal here agreed with PERB and the city that the plain language of section 3509.5 establishes that a PERB decision not to issue a complaint is not reviewable under that statute. But the Court of Appeal did not agree that the Legislature, through this provision, has precluded superior courts from exercising traditional mandate jurisdiction to consider challenges to such decisions.
The Court of Appeal observed that many other labor relations statutes, including the federal National Labor Relations Act (29 U.S.C. § 151 et seq.; NLRA) and the state ALRA, contain provisions that are similar to section 3509.5 in that they specify a procedural mechanism for judicial review of agency decisions but exclude from the decisions reviewable in that manner a decision not to issue an unfair labor practice complaint. Because both the MMBA and the ALRA were patterned after the federal NLRA, California courts seeking guidance for interpreting these state labor relations laws have consulted decisions interpreting parallel provisions of the NLRA. (See Vallejo, supra, 12 Cal.3d 608, 616-617; City of El Cajon v. El Cajon Police Officers’ Assn. (1996) 49 Cal.App.4th 64, 72, fn. 3.)
In Belridge Farms, supra, 21 Cal.3d 551, this court, after considering decisions under the federal NLRA, held that a refusal to issue a complaint under the state ALRA is judicially reviewable only in limited circumstances. (Belridge Farms, at p. 557.) Because the ALRA was derived from the NLRA and contains a judicial review provision (Lab. Code, § 1160.8) that is, with one exception not relevant here, “identical” (Belridge Farms, at p. 556) to the NLRA’s judicial review provision (29 U.S.C. § 160(f)), this court in Belridge Farms considered federal court decisions under the NLRA. Federal courts have held that a refusal to issue a complaint under the NLRA is generally not judicially reviewable, but also that federal courts will exercise equitable powers to review such refusals “when the complaining party raises a colorable claim that the decision violates [a] constitutional right [citations] or exceeds a specific grant of authority [citation]” or is “based on an erroneous construction of an applicable statute.” (Belridge Farms, supra, at pp. 556-557; see Annot. (1984) 69 A.L.R.Fed. 870 [collecting NLRA cases].) This court concluded that our state Legislature “intended to adopt the federal rule limiting review” to these situations. (Belridge Farms, at p. 557.)
As PERB and the city strenuously insist, and as the Court of Appeal acknowledged, the MMBA’s judicial review provision uses language that differs from the language in the judicial review provisions of the federal NLRA and the state ALRA. Unlike the MMBA, neither the NLRA nor the ALRA expressly excludes from its judicial review provision an agency decision not to issue a complaint. Instead, those federal and state labor relations laws both limit the judicial review provision to final decisions of the administrative agency’s governing board. (29 U.S.C. § 160(f); Lab. Code, § 1160.8.) Under those laws, the agency’s general counsel has authority to refuse to issue a complaint, and such a refusal is not appealable to the agency’s governing board. (29 U.S.C. § 153(d); Lab. Code, § 1149.) Because a refusal to issue a complaint is never a final decision of the governing board, it does not fall within the judicial review provisions of the NLRA and the ALRA. (Belridge Farms, supra, 21 Cal.3d 551, 556-557; see Associated Builders, etc. v. Irving (4th Cir. 1979) 610 F.2d 1221, 1224-1226.)
We agree with the Court of Appeal, however, that the difference in wording between, on the one hand, the judicial review provisions of the federal NLRA and the state ALRA and, on the other hand, the judicial review provision of California’s MMBA, is not significant on the issue we consider here. The MMBA’s judicial review provision is worded differently because under the MMBA the governing board, and not the agency’s general counsel, has final agency authority to decide whether to issue an unfair labor practice complaint. (Cal. Code Regs., tit. 8, § 32635.) Had the Legislature made the MMBA’s judicial review provision similar in language to the judicial review provisions of the federal NLRA and the state ALRA by permitting judicial review of any final decision of the board, therefore, all board decisions refusing to issue complaints would have been subject to full judicial review. To ensure that a decision by PERB under the MMBA refusing to issue a complaint, like similar decisions under the NLRA and the ALRA, would not routinely be subjected to full judicial review, the state Legislature needed to use language making that intent clear, as it did in section 3509.5, subdivision (a). That provision does not, however, expressly bar superior courts from exercising their traditional mandate jurisdiction to determine whether PERB’s refusal to issue a complaint is invalid on one or more of the narrow grounds under which similar decisions may be challenged under the NLRA and the ALRA, as recognized by this court in Belridge Farms, supra, 21 Cal.3d 551, 556-557.
Limiting judicial review of an agency decision not to issue an unfair labor practice to the three grounds articulated in Belridge Farms, supra, 21 Cal.3d 551, strikes an appropriate balance between the Legislature’s interest in giving such agencies broad discretionary authority and the courts’ obligation to discharge their constitutional powers and responsibilities. The first of these grounds — that the agency decision violates a constitutional right — merely respects and protects the state Constitution’s hierarchical authority over statutory law, while the second ground — that the agency has exceeded its statutory powers — is necessary to ensure that administrative agencies do not purport to exercise powers beyond those actually delegated to them by the Legislature. The third ground — that the agency action is based on an erroneous statutory construction — allows courts to correct a clearly erroneous construction of the MMBA by PERB when that erroneous construction potentially affects a large class of cases and threatens to frustrate an important policy that the MMBA was enacted to further. Judicial review under this ground furthers the Legislature’s purpose in creating the agency and defining the scope of its authority.
As both this court and the United States Supreme Court have explained, eliminating all forms of judicial review of an administrative agency’s decisions could raise serious constitutional issues. In particular, when a federal administrative action is challenged on the ground that it violates a constitutional right, “the availability of judicial review is presumed,” and statutory provisions will not be construed as foreclosing such review “unless Congress’ intent to do so is manifested by ‘ “clear and convincing” ’ evidence.” (Califano v. Sanders (1977) 430 U.S. 99, 109; see also INS v. St. Cyr (2001) 533 U.S. 289, 298 [“strong presumption in favor of judicial review of administrative action”]; Bowen v. Mich. Academy of Family Physicians (1986) 476 U.S. 667, 670 [“strong presumption that Congress intends judicial review of administrative action”].) A similar presumption operates when it is claimed that a federal administrative agency’s action is in excess of its delegated powers and contrary to a specific statutory prohibition. (Leedom v. Kyne (1958) 358 U.S. 184, 188; see also Staacke v. U.S. Secretary of Labor (9th Cir. 1988) 841 F.2d 278, 281.)
The California Constitution gives rise to a presumption in favor of at least limited judicial review of state administrative agency actions. It does so through section 10 of article VI, which, as relevant here, gives superior courts “original jurisdiction in proceedings for extraordinary relief in the nature of mandamus, certiorari, and prohibition.” Traditional mandamus review is available “to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station.” (Code Civ. Proc., § 1085, subd. (a).) Recognizing that “[t]he power of superior courts to perform mandamus review of administrative decisions derives in part” from this constitutional provision, this court has said that “ ‘[t]he jurisdiction thus vested may not lightly be deemed to have been destroyed.’ ” (County of San Diego v. State of California (1997) 15 Cal.4th 68, 87; see also In re Jessup (1889) 81 Cal. 408, 470 [the Legislature may not “ ‘substantially impair the constitutional powers of the courts, or practically defeat their exercise’ ” (italics omitted)].) This court will not infer a legislative intent to entirely deprive the superior courts of judicial authority in a particular area; the Legislature must have expressly so provided or otherwise clearly indicated such an intent. (Garrison v. Rourke (1948) 32 Cal.2d 430, 435-436; accord, County of San Diego v. State of California, supra, at p. 87.)
In section 3509.5, the Legislature has not expressly provided or otherwise clearly indicated that under California’s MMBA superior courts are prohibited in all circumstances from exercising traditional mandamus jurisdiction to review a PERB decision refusing to issue a complaint. In particular, the Legislature has not explicitly barred superior court traditional mandamus review in the limited circumstances in which such review is available for similar agency decisions under the federal NLRA and the state ALRA. Accordingly, we agree with the Court of Appeal here that when PERB refuses to issue a complaint under the MMBA, a superior court may exercise mandamus jurisdiction to determine whether PERB’s decision violates a constitutional right, exceeds a specific grant of authority, or is based on an erroneous statutory construction. We stress, however, that it remains true that a refusal by PERB to issue a complaint under the MMBA is not subject to judicial review for ordinary error, including insufficiency of the evidence to support the agency’s factual findings and misapplication of the law to the facts, or for abuse of discretion. Also, to avoid undue interference with the discretion that the Legislature has intended PERB to exercise, courts must narrowly construe and cautiously apply the exceptions we here recognize. (See Thomas S. Castle Farms, Inc. v. Agricultural Labor Relations Bd. (1983) 140 Cal.App.3d 668, 675 [narrow construction of exceptions to judicial review limitation under the state ALRA]; Cadiz v. Agricultural Labor Relations Bd. (1979) 92 Cal.App.3d 365, 381-383 [same]; Nishikawa Farms, Inc. v. Mahony (1977) 66 Cal.App.3d 781, 789-790 [same]; Baker v. Intern. Alliance of Theatrical Stage Emp. (9th Cir. 1982) 691 F.2d 1291, 1294-1297 [narrow construction of exceptions to judicial review limitation under the federal NLRA].)

III

We now consider whether layoffs are a mandatory subject of collective bargaining under California’s MMBA. Under that law, “[t]he duty to meet and confer in good faith is limited to matters within the ‘scope of representation’: the public employer and recognized employee organization have a ‘mutual obligation personally to meet and confer promptly upon request by either party . . . and to endeavor to reach agreement on matters within the scope of representation prior to the adoption by the public agency of its final budget for the ensuing year.’ ” (Claremont Police Officers Assn. v. City of Claremont (2006) 39 Cal.4th 623, 630 (Claremont Police), quoting § 3505.) The obligation to bargain “in good faith” means that the parties must genuinely seek to reach agreement, but the MMBA does not require that an agreement actually result in every instance, and it recognizes that a public employer has the ultimate power to reject employee proposals on any particular issue. (Claremont Police, at p. 630.)
Under the MMBA, the scope of representation covers “all matters relating to employment conditions and employer-employee relations, including, but not limited to, wages, hours, and other terms and conditions of employment, except, however, that the scope of representation shall not include consideration of the merits, necessity, or organization of any service or activity provided by law or executive order.” (§ 3504.) This court has remarked that this definition of the scope of representation employs “two vague, seemingly overlapping phrases.” (Vallejo, supra, 12 Cal.3d 608, 615; accord, Claremont Police, supra, 39 Cal.4th 623, 631.) The first phrase — “wages, hours, and other terms and conditions of employment” — if broadly read “could encompass practically any conceivable bargaining proposal,” while the second phrase — “merits, necessity, or organization of any service” — could, if expansively interpreted, “swallow the whole provision for collective negotiation and relegate determination of all labor issues to the city’s discretion.” (Vallejo, supra, at p. 615.)
To resolve ambiguities and uncertainties inherent in the MMBA’s definition of the scope of representation, this court has looked to federal precedents. This court has noted that the first key phrase in the MMBA’s definition of the scope of representation — “wages, hours, and other terms and conditions of employment” (§ 3504) — was copied verbatim from the federal NLRA (see 29 U.S.C. § 158(d)), while the other key phrase — “merits, necessity, or organization of any service” (§ 3504) — was intended to incorporate the “ ‘general managerial policy’ ” exception developed by federal courts to determine the scope of representation under the NLRA. (Building Material & Construction Teamsters’ Union v. Farrell (1986) 41 Cal.3d 651, 658, 663 (Building Material); Vallejo, supra, 12 Cal.3d 608, 616-617.)
In relation to mandatory subjects of bargaining under the federal NLRA, the United States Supreme Court has identified three categories of management decisions. (First National Maintenance Corp. v. NLRB (1981) 452 U.S. 666, 676-680.) In the first category are decisions that “have only an indirect and attenuated impact on the employment relationship” and thus are not mandatory subjects of bargaining. (Id. at p. 677.) Examples of decisions in this category are “choice of advertising and promotion, product type and design, and financing arrangements.” (Id. at pp. 676-677.)
In the second category are decisions directly defining the employment relationship, such as wages, workplace rules, and the order of succession of layoffs and recalls. Decisions in this second category are always mandatory subjects of bargaining. (First National Maintenance Corp. v. NLRB, supra, 452 U.S. 666, 677.)
In the third category are management decisions that directly affect employment, such as eliminating jobs, but nonetheless may not be mandatory subjects of bargaining because they involve “a change in the scope and direction of the enterprise” or, in other words, the employer’s “retained freedom to manage its affairs unrelated to employment.” (First National Maintenance Corp. v. NLRB, supra, 452 U.S. 666, 677, fn. omitted.) Bargaining is not required for decisions in this category if they do not raise an issue that is “amenable to resolution through the bargaining process” (id. at p. 678), although the employer is normally required to bargain about the results or effects of such decisions (id. at p. 677, fn. 15). To determine whether a particular decision in this third category is within the scope of representation, the high court prescribed a balancing test, under which “in view of an employer’s need for unencumbered decisionmaking, bargaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of the business.” (Id. at p. 679.)
Applying this balancing test to layoff decisions, federal courts have held that bargaining is required when the layoffs result from an employer’s decision to reassign bargaining unit work to independent contractors or to managers. (First National Maintenance Corp. v. NLRB, supra, 452 U.S. 666, 679-680; Regal Cinemas, Inc. v. N.L.R.B (D.C. Cir. 2003) 317 F.3d 300, 310-312.) On the other hand, federal courts do not require bargaining when layoffs result from profitability considerations that are independent of labor costs (First National Maintenance Corp. v. NLRB, at pp. 682-686), or from a management decision to shut down all or part of a business (N.L.R.B. v. 1199, Nat. U. of Hosp. & Health Care Emp. (4th Cir. 1987) 824 F.2d 318, 321-322). When layoffs are motivated primarily by a desire to reduce labor cost, but are not the result of a decision to change the nature or scope of the enterprise, and do not involve reassigning bargaining unit work to non-bargaining-unit workers, federal courts require bargaining over the timing of the layoffs and the number and identity of the affected employees, but not necessarily over the layoff decision itself. (See Pan American Grain Co., Inc. v. N.L.R.B. (1st Cir. 2009) 558 F.3d 22, 27 [employees must be given the “opportunity to negotiate concessions that reduce overall costs and thus spare jobs”]; N.L.R.B. v. 1199, Nat. U. of Hosp. & Health Care Emp., supra, at p. 321 [stating that “a reduction of labor costs must be pursued through the collective bargaining process”].) The United States Supreme Court has said that a conflict resulting from an employer’s desire to reduce labor costs is “peculiarly suitable for resolution within the collective bargaining framework” under the NLRA. (Fibreboard Corp. v. Labor Board (1964) 379 U.S. 203, 214.)
These federal decisions interpreting the federal NLRA have generally been followed by California courts construing California’s MMBA. (See Vallejo, supra, 12 Cal.3d 608, 616-617.) Under the MMBA, the scope of a public employer’s duty to bargain in regard to a layoff decision is generally determined by application of a balancing test that requires a local public entity employer to meet and confer “only if the employer’s need for unencumbered decisionmaking in managing its operations is outweighed by the benefit to employer-employee relations of bargaining about the action in question.” (Building Material, supra, 41 Cal.3d 651, 660.) Applying that test, California courts have determined that, under California’s MMBA as under the federal NLRA, an employer’s decision to eliminate bargaining unit jobs by reassigning the work to nonunit employees is a matter within the scope of representation and thus a mandatory subject of bargaining. (Building Material, supra, at p. 668; Rialto Police Benefit Assn. v. City of Rialto (2007) 155 Cal.App.4th 1295, 1309.)
Here, the parties disagree generally about the proper result under the MMBA when the balancing test is applied to a layoff decision that does not involve transferring work outside the bargaining unit but is primarily motivated by a desire or need to reduce labor costs. More particularly, they disagree as to the significance of this court’s decision in Vallejo, supra, 12 Cal.3d 608. Accordingly, we examine Vallejo in some detail.
In Vallejo, a city negotiated with the union representing its firefighter employees over the terms of a new contract, but the parties failed to agree on 28 issues. (Vallejo, supra, 12 Cal.3d 608, 611.) The city regarded four of those issues as being outside the scope of representation, and on that basis it refused to submit them to binding arbitration, while agreeing to arbitrate the other 24 issues.[2] (Vallejo, at p. 611.) Among the four disputed issues was one labeled “Constant Manning Procedure” and another labeled “Personnel Reduction.” (Ibid.)










TO BE CONTINUED AS PART II….


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