LOS ANGELES, CITY OF v. S.C. (ENGINEERS & ARCHITECTS ASSOCIATION)

Real Party in Interest, Engineers & Architects Association, Supplemental Brief

Cal.November 30, 2012

neneemenneoneinsnen at ER 2RESme eT SUPRENE COURT cory No. S192828 IN THE SUPREME COURTOF THE STATE OF CALIFORNIA CITY OF LOS ANGELESand Does1 through 50, inclusive Petitioner, Vv. THE SUPERIOR COURT OF LOS ANGELES COUNTY Respondents, ENGINEERS AND ARCHITECTS ASSOCIATION, SUPREME COURT Real Party in Interest. Fr | L E D NOV 3 02012 Court of Appeal of the State of California Second Appellate District, Division 3 Frank A. McGuire Clerk Case No. B228732 Deputy Appeal from Superior Court of Los Angeles Honorable Gregory Alarcon Civil Case No. BS126192 PETITIONER’S SUPPLEMENTAL BRIEF Gary M. Messing, No. 075363 Adam N.Stern, No. 134009 Gregg McLean Adam, No. 203436 MYERS LAW GROUP Jonathan Yank, No. 215495 9327 Fairway View Place, Suite 304 Gonzalo C. Martinez, No. 231724 Rancho Cucamonga, CA 91730 CARROLL, BURDICK Telephone: (213) 223-7676 & McDONOUGHLLP Email: laboradam@aol.com 44 Montgomery Street, Suite 400 San Francisco, CA 94104 Telephone: 415.989.5900 Fax: 415.989.0932 Email: gadam@cbmlaw.com Attorneysfor Petitioner and Real Party in Interest Engineers and Architects Association No. 8192828 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA CITY OF LOS ANGELESand Does1 through 50, inclusive Petitioner, Vv. THE SUPERIOR COURT OF LOS ANGELES COUNTY Respondents, ENGINEERS AND ARCHITECTS ASSOCIATION, Real Party in Interest. Court of Appeal of the State of California Second Appellate District, Division 3 Case No. B228732 Appeal from Superior Court of Los Angeles Honorable Gregory Alarcon Civil Case No. BS126192 PETITIONER’S SUPPLEMENTAL BRIEF Gary M. Messing, No. 075363 Adam N.Stern, No. 134009 Gregg McLean Adam, No. 203436 MYERS LAW GROUP Jonathan Yank, No. 215495 9327 Fairway View Place, Suite 304 Gonzalo C. Martinez, No. 231724 Rancho Cucamonga, CA 91730 CARROLL, BURDICK Telephone: (213) 223-7676 & McDONOUGHLLP Email: laboradam@aol.com 44 MontgomeryStreet, Suite 400 San Francisco, CA 94104 Telephone: 415.989.5900 Fax: Email: 415.989.0932 gadam@cbmlaw.com Attorneysfor Petitioner and Real Party in Interest Engineers andArchitects Association TABLE OF CONTENTS Page I INTRODUCTION.....::ccccccssssssccsssccceseessececcsssssecesesseeeeceescecsssocsscessaeeesaaaes 1 11 WHETHER THE PARTIES INTENDED THE MOUSTO REQUIRE FURLOUGHS ARBITRATIONIS A FACTUAL QUESTION REQUIRING REMAND... .scccsesesscecessessessesssecsessasensseesessssesseensceessesseessaaensesansenssecaseneas 2 III ALTERNATIVELY, THE MOUSAS A MATTER OF LAW MANDATE FURLOUGHS ARBITRATION BECAUSE THEY IMPACT THE MOUS’ CORE WAGE AND HOURSPROVISIONS........:csssssssscseesseecsecseesseeaeseeseees 4 A. This Court’s Precedents Recognize “ManagementRights” Language Preserves Management Prerogatives, But Does Not Trump MOU Provisions... ceeesseesceeeesssssseesseeseesseeeses 4 1. Management Rights Clauses Preserve Management PLETOQalIVES ...... se eeeeeeeeseeeneceeseseseeeesectseeeeeesessnsesrecsetsetees 4 2. Furloughs Are Not a Management Right and MOUs Determine Employers’ Authority to Impose Them........... 7 B. The Arbitration Clause in Article 3.1 Makes Furloughs Arbitrableeeeeeeseeseeeseeserseenersescesseenseeeseeseateesssesneesseensenseses 9 C. Article 1.9 Does Not Expressly Authorize Furloughs, Nor Can It Reasonably Be Interpreted To Negate the MOUs’ Wage and Hour Provisions... eeececscessecsesseeeeessesensesesenees 1] 1. Article 1.9’s First Sentence Preserves the City’s ManagementRights Not Otherwise Limited by the MOU0ceescenerseeeseescteesesesecstecsaeesaeeseeeenssesseseeeeenseneeats 12 2. The City’s Reserved Right to Relieve Employees Because of Lack of Funds and to Meet Emergencies Does Not Prevent Arbitration of Furlough Grievances... 16 CBM-SF\SF568942.6 TABLE OF CONTENTS (continued) Page 3. The Third Sentence of Article 1.9 Merely Recognizes the City’s Obligation to Engage in “Effects” Bargaining, and Is An Additional Source of Arbitration Rather Than A Limitation on Article 3.1 Arbitration oo... eee ecccsscssscssessessessessesescssssesscsccsccssesscessensens 19 TV CONCLUSION... sec sccecsecsessceseeseserseesaessssesacseesesecseneessesseessscsesscesueacensees 21 CBM-SF\SF568942.6 -ii- TABLE OF AUTHORITIES Page(s) State Cases Associationfor Los Angeles Deputy Sheriffs v. County ofLos Angeles (2007) 154 Cal.App.4th 1536.0... cccecsessessecssessssesssescssecsescsscessecanes 8 Balandran v. Labor Ready, Inc. (2004) 124 CalApp.4th 1522 ooo. cccscsssecsesssssseecesescseccssessseeensenas 11 California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231 oooccccescccssccsssccssseecsssesstseseeccessseeseenseensarens 13 Claremont Police Officers Assoc. v. City ofClaremont (2006) 39 Cal.4th 623 0...ccc ecccsssccccsssssccesenssesessssesecstsscsentnececsensace 5,19 EAA v. Community Development Dept. ofCity ofLos Angeles (1994) 30 CalApp.4th 644 ooo ceccssesssscsssesssessessseeeesssesssrecsseesacenas 17 International Assoc. ofFire Fighters v. City of Vallejo (1974) 12 Cal.3d 6080.cccceccccsessscsseecessssceseeeesssesessasecs 5, 6, 7, 14, 15 International Assoc. ofFire Fighters v. Public Employment Relations Board (“Richmond”) (2011) S51 Cal.4th 259ooeccssccsssecsssecscsesecsteceesrsscsssseseesers 5,7, 19 O’Malley v. Wilshire Oil Co. (1963) 59 Cal.2d 482 ooo. ceccccccsssscessccccsseessseecesseeecsssescssasessrsesnseenes 14 Professional Engineers v. Schwarzenegger (2010) 50 Cal.4th 989, 1040...eeccesseeeseee 7, 8, 10, 13, 14, 16, 17 Retired Employees Assn. ofOrange County, Inc. v. County of Orange (2011) 52 Cal.4th 171oceeccsssnssccessneeseeseecevessescssereaeesaes 14, 16 CBM-SF\SF568942.6 -iii- TABLE OF AUTHORITIES (continued) Page(s) Sonoma County Organization ofPublic Employees v. County ofSonoma (1979) 23 Cal.3d 296 oo. cecccscscccssssssssssssesscssscsssssssssssssecesssssessecsesseesss 18 State Statutes Civil Code SECTION 1LO4] oo. eeccesssesseecesstesssecssscsessssscessesstaseesassescetececsessesenness 11, 13 Government Code | SECTIONS 3500-3510ececsseesscsssessessesseseesssssssssesssesecsecescasssscersesens 5, 14 SECTION 3504 0... cescssecssessccssecsessssesssscsssussessessorsuecensvssceeasasessseuseceseess 5,8 SECTION 3516... ececcssssssssessesseessesscsscsssssssessssssccseccsesssvsavsaecessesssesesessaseases 8 PERB Decisions N. Sacramento Sch, Dist. (1981) PERB Dec. No. 193, 6 PERC § 13026 .....ececcceccsccssesscsecssseeees 9 San Ysidro Sch. Dist. (1997) PERB Dec. No. 1198, 21 PERC § 28095 wooo cccesessccscesecesees 9 Other State Cases Opinion ofthe Justices (Furlough) (1992) 135 N.H. 625 vo. cccccsscsssessceecssccsecessscsescsssssssssecseccrsscacceasersesenens 9 CBM-SF\SF568942.6 -iV- I INTRODUCTION This Court requested supplemental briefing on whether the parties’ memorandaofunderstanding (“MOUs”) “including but not limited to their managementrights clauses . . . render the decision whether to impose employee furloughsinarbitrable.” The answerto that questionis no. The MOUs’arbitration clause determinesarbitrability, not the managementrights clause. Properly understood,the latter clause merely reserves the City’s right to exercise its management prerogative over matters not covered by the MOU.' The court of appeal asked for supplemental briefing on this issue and decided remand wasappropriate because extrinsic evidence can resolve ambiguities regarding the managementrights clause and arbitrability. (Slip Op.at 9-10.) EAA agrees with that conclusion, but not with that court’s underlying rationale or interpretation of the MOUs. To the extent the Court believes remandis inappropriate and arbitrability can be determined as a matter of law, there are numerous ' At the outset, EAA’s challenge is not to the City Council’s decision to impose furloughs citywide;rather, it is to the City’s attempt to apply furloughs to a group of employees who have conflicting wage and hour provisionsestablished in their previously-ratified MOUs. (See EAA’s Opening Brief (“OB”) at p. 3; Reply at pp. 7.) And that question need not be resolved to determine the unlawful delegation question on whichthis Court granted review. CBM-SF\SF568942.6 reasons whyfurloughsarbitration is mandated by the MOUs.First, under this Court’s precedents, furloughs are not a managementright because they impact wage and hourprotectionsat the heart of collective bargaining. (See Part ITI.A, infra.) Second, the MOUs’arbitration clause is broad and encompassesthe parties’ underlying dispute regarding enforcementof the MOUs’ wageand hourprovisions. (See Part III.B, infra.) Third, this managementrights clause does not expressly create a managementright to furlough employees,and instead functions as such clauses typically do by preserving the City’s managementprerogativesthat are not superseded by the MOU.(See Part, III.C, infra.) It does not render unenforceable any of the MOUsprovisions,andis not a limitation on the arbitration clause. I WHETHER THE PARTIES INTENDED THE MOUS To REQUIRE FURLOUGHS ARBITRATIONIS A FACTUAL QUESTION. REQUIRING REMAND The trial court and court of appeal both found that they could not determine whether the MOUs proscribed furloughs arbitration. Thetrial court determined that was a merits issue to be decided by thearbitrator. CBM-SF\SF568942.6 (Slip Op. at 9-10.) The court of appeal disagreed and requested supplemental briefing on this issue. (Id.)° The appellate court concluded arbitrability was a factual issue requiring remand because “the MOUis ambiguousas to whether furloughs are arbitrable.” (/d. at 13 [capitalization omitted], 17-18 & fn.17.) EAA agrees with the appellate court on this point’, particularly because “[t]here is some reason to believe . . . extrinsic evidence may exist” to resolve the ambiguity. (Slip Op. at 17.) Thus, EAA respectfully submits this Court cannot answer the question posed without necessary factual development 4 on remand. Specifically, the court of appeal “requested additional briefing on what appearedto be the relevant language of section 1.9 of the MOU:(1) the provision allowing the City to relieve employees from duty due to lack of funds; and (2) the provision reserving to employees and the Uniontheir right to grieve the practical consequencesof such actions.” (Slip Op. at 10- 12.) EAA disagrees with muchofthe court of appeal’s interpretation of Article 1.9, particularly its interpretation about the interaction of that section with the rest of the MOU. (See Part III.B-C,infra.) 4 Bycontrast, remandis unnecessary to decide the unlawful delegation question on whichit granted review. Therefore, the Court should decide that issue, but remandtothe trial court to determine arbitrability. CBM-SF\SF568942.6 Ill ALTERNATIVELY, THE MOUSAS A MATTER OF LAW MANDATE FURLOUGHS ARBITRATION BECAUSE THEY IMPACT THE MOUS’ CorRE WAGE AND HOURSPROVISIONS The City’s decision to impose furloughs on EAA membersis subject to grievancearbitration because the parties have pre-existing MOUs governing employees’ wages and hours. (See Part III.B, infra.) This Court specifically asked whether Article 1.9, the MOUs’ managementrights clause, makesthat decision “inarbitrable.” The answeris no. Twothreshold principles should guide this Court. First, the function of managementrights clauses is not to permit managementto override its MOU obligations. Second, furloughs directly impact public employees’ wages and hours—mattersat the heart of collective _ bargaining—andare not a managementright. Article 1.9 does not change these core principles, and thus furloughs are subject to grievance arbitration underthe circumstancesofthis case. A. This Court’s Precedents Recognize “Management Rights” Language Preserves Management Prerogatives, But Does Not Trump MOUProvisions 1. Management Rights Clauses Preserve Management Prerogatives Before the advent ofpublic sector collective bargaining, a government employerhad largely unfettered discretion over the terms of employmentaffecting its employees. Collective bargaining, however, CBM-SF\SF568942.6 imposed a statutory duty on government employers to bargain over wages, hours and working conditions. (Gov. Code §§ 3500-3510; Gov. Code § 3504 [scope of bargaining includes “wages, hours and other terms and conditions of employment’); see also OB at 23-27.) Resulting collective bargaining agreements thusactas limits on management’srights as to those agreed-upon subjects contained within them. (See International Assoc. of Fire Fighters v. City of Vallejo (1974) 12 Cal.3d 608, 616-618 (“Vallejo”).) Employers, however,retained their traditional management prerogatives as to those matters outside the collective bargaining agreement, including discretion over general managerial policies. (/bid.) Recognized managementrights include layoffs, ceasing operations, implementing a non-discrimination policy, changing the policy on use of deadly force and police review commission meetings. (See, e.g., id. at pp. 621-622; ~ International Assoc. ofFire Fighters v. Public Employment Relations Board (“Richmond”) (2011) 51 Cal.4th 259, 276; Claremont Police Officers Assoc. v. City ofClaremont (“Claremont”) (2006) 39 Cal.4th 623, 632.) Accordingly, this Court has recognized that managementrights language does not “restrict [arbitration or] bargaining on matters directly affecting employees’ legitimate interests in wages, hours and working conditions,” but ratheris intended merely to “forestall any expansion of” the scope of bargainingso it does not “include more general managerial CBM-SF\SF568942.6 -5- policy decisions.” (See Vallejo, supra, 12 Cal.3d at p. 616.) Thatis, managementrights language prevents the scope of bargaining from “expand[ing] beyond reasonable boundaries to deprive an employerofhis legitimate managementprerogatives.” (Id.) It does not take matters that are already within the scope of bargaining (and reduced to an MOU) and convert them into managementprerogatives. Otherwise such an expansive interpretation of managementrights language would “swallow the whole provision for collective negotiation and relegate determinationofall labor issues to the city’s discretion.” (Id. at 615.)° Applying these principles, in Vallejo this Court sent to grievance arbitration those matters it found were within the scope of bargaining and the parties’ MOU,over the City of Vallejo’s objections that some of these included managementprerogatives. (/d. at pp. 617-624.) In doingso, this Court cautioned that courts “must be careful notto restrict unduly the scope of... arbitration by an overbroad definition of [management rights].” ° Vallejo construed managementrights language in a city charter rather than an MOU,butthere is no reason its analysis should not apply here. (Jd. at p. 611.) CBM-SF\SF568942.6 (/d., at p. 615.) These principles were recently affirmed in Richmond, supra, 51 Cal.4th at pp. 271-277.° 2. Furloughs Are Not a Management Right and MOUsDetermine Employers’ Authority to Impose Them Furloughs are not a managementright because they impact employee wages and hours—mattersat the “heart” of collective bargaining. (Professional Engineers v. Schwarzenegger (2010) 50 Cal.4th 989, 1040- 1041; OB at p. 40 fn.19; Reply at pp. 5-6.) In Professional Engineers, this Court recognized that “a [government] employer's unilateral authority to impose .. . furlough[s] on represented employees. . . is governed by the terms of the applicable MOU ....” (50 Cal.4th at pp. 1040-1041; ibid. [“the issue whether an employee's wages may be reduced bythe implementation of a mandatory furlough . . lies at the heart of the matter of ‘wages, hours, and other terms and conditions of employment’ that are the subject of an MOU”].) The reason for that is because “the principal ° Vallejo and Richmond applied a balancing test to decide if layoffs were a managementright. That is unnecessary in this case because this Court has already determined that furloughs are subjects within the mandatory subjects of bargaining, as has the City’s Employee Relations Board. (See Part II.B.2, infra). CBM-SF\SF568942.6 effect of an involuntary unpaid furlough” on public employeesis a “reduction in [their] salaries.” (Jd. at p. 1036 [italics added].)’ Applying that reasoning, Professional Engineers criticized the trial court’s reliance on an MOU’s managementrights clause to “override” specific contractual wage and hour obligations. (d. at p. 1041 fn.35.) These principles should govern here. First, the scope of bargaining underthe Dills Act (at issue in Professional Engineers) is exactly the same as that under the MMBA(at issue here). (See Gov. Code §§ 3504 and 3516.) Second, this Court affirmed that public employee salaries remain matters covered by an MOUand are not a management prerogative even in times of severe fiscal distress. (See 50 Cal.4th at p. 1003 [noting “unprecedented statewidefiscal crisis”].) Third,it accords with the views of the City’s Employee Relations Board, the California Public EmploymentRelations Board andofat least one sister state holding that furloughs are not a managementright and are within the scope of bargaining and the parties’ MOU. (See, e.g., Reply at 23-24 & City’s MIN 7 An MOUcould expressly permit an employer to furlough employees notwithstanding contrary provisions in the MOU. (See, e.g Associationfor Los Angeles Deputy Sheriffs v. County ofLos Angeles (2007) 154 Cal.App.4th 1536, 1540-1541 [managementrights clause allowing employerto “relieve its employees from duty, effect work furloughs or any other alternatives because of lack of work or for other legitimate reasons”].) These MOUsdonot expressly allow furloughs, nor has the City ever so argued. CBM-SF\SF568942.6 Ex. 3; N. Sacramento Sch. Dist. (1981) PERB Dec. No. 193, 6 PERC § 13026, pp. 60-61; San Ysidro Sch. Dist. (1997) PERB Dec. No. 1198, 21 PERC § 28095, pp. 320-321; Opinion ofthe Justices (Furlough) (1992) 135 N.H.625, 631-633.) B. The Arbitration Clause in Article 3.1 Makes Furloughs Arbitrable The text of the MOUs, andthe principles above, confirm furloughsare arbitrable in this case. The MOUs’arbitration clause is broad and encompassesthe parties’ underlying dispute. (See OBat 8-9; Pet. for Rev. at 5-6.) That clause, set forth in Section I of Article 3.1 of the MOUs, provides: A grievanceis defined as any dispute concerning the interpretation or application ofthis written MOU or departmental rules and regulations governing personnel practices or working conditions applicable to employees covered by this MOU. (See, e.g., AA 1:103 [emphases added].) EAA’s membersfiled grievances to enforce their MOUs’ wageand hour provisions—that is, they requested arbitration to resolve whether“interpretation or application” of their MOUs allowed the City to violate their pre-existing contract.® As in Professionaly p g ® The grievances expressedthat in various ways(see Slip Op.at 16-17 fn.13), but distilled to their core the court of appeal understood “[t]he Union wants a determination madethat the City violated the salary and workweekprovisions of the MOUbyinstituting furloughs... .” (/d. at 25 [italics original].) CBM-SF\SF568942.6 Engineers, the MOUsherecontain specific provisions that exhaustively detail the agreed-upon wagerates and hours for employees. (See, e.g., AA 1:112-114 [Article 5 (Work Schedules [mandating a fixed work weekthat “may be changed only if the change is intended to be permanent and not designed to evade overtime requirements of the FLSA”); Article 6 (Compensation)].) EAA’sright to arbitration for these contractual issues was expressly bargained for in order to provide quick and efficient resolution of such disputes. (See OB at 19-30.) The MOUsthus have a comprehensive grievance procedure to resolve disputes regarding “interpretation or application” of the MOUs. (See AA 1:103-108 [Article 3].) That procedure is designed to resolve disputes at the lowest level possible, but after the internal grievance process is exhausted, it directs theparties to arbitration. (AA 1:107 [“[flailure of management to respond.. . shall entitle the grievant to process the grievance at Step 5 (Mediation) and/or Step 6 (Arbitration)”].) EAA soughtarbitration pursuant to this section, and thetrial court compelled it. (AA 2:340 — 7:1648; AA 9:1957-67; Slip Op.at pp. 5-6, 8.) In sum, because the City’s imposition of furloughs implicates the most fundamental termsofthe parties’ MOUs,andthe parties expressly agreed in Article 3.1 that “any dispute concerning the interpretation or CBM-SF\SF568942.6 -10- application ofthis written MOU”is arbitrable, furloughs are subjects of grievancearbitration. C. Article 1.9 Does Not Expressly Authorize Furloughs, Nor Can It Reasonably Be Interpreted To Negate the MOUs’ Wageand HourProvisions Article 1.9, the MOUs’ managementrights clause, does not expressly give the City authority to impose furloughs. Nor doesit expressly exclude furloughs from arbitration. More fundamentally,it cannotbe construedto grant the City open-ended authority to avoid the MOUs’contractual obligations. In short, the management rights clause cannotbereadin isolation and mustberead in light of the parties’ entire agreement. (Civ. Code § 1641 [“The whole of a contract is to be taken together, so as to give effect to every part”}; Balandran v. Labor Ready, Inc. (2004) 124 Cal.App.4th 1522, 1529 [“in interpreting the scope ofan arbitration (or any) agreement, we do not consider an individual phrase out of context’’].) Article 1.9 is fully set out below, divided into three subsections to elucidate its intended purposes, with italics to designate those portions the City has argued trumpArticle 3.1. Article 1.9 is structured as follows: Thefirst sentence providesthat the City retains its pre-MOU management rights, in effect, as to matters outside the scope of bargaining. The second sentence then catalogs those managementrightsin its initial clause. CBM-SF\SF568942.6 -11- Finally, for matters that are true managementrights, it allowsthe filing of “grievances” to preserve effects bargainingin its final clause. 1. Article 1.9’s First Sentence Preserves the City’s Management Rights Not Otherwise Limited by the MOU The first sentence provides that the City retains its pre-MOU managementrights, in effect, as to matters outside the scope of bargaining: Asthe responsibility for the managementofthe City and direction of its work force is vested exclusively in its City officials and department heads whose powersandduties are specified by law,it is mutually understood that except as specifically setforth herein no provisions in this MOUshall be deemedto limit or curtail the City officials and department heads in any wayin the exercise ofthe rights, powers and authority which they hadpriorto the effective date of this MOU. The key clauseis “except as specifically setforth herein no provisions in this MOUshall be deemedto limit or curtail the City ....” Both parties agree that the word “herein” is shorthand for “in this MOU.” (See Slip Op. at 15 fn.12; City’s Answer Brief at 27 and Mar. 4, 2011 Suppl. Letter Brief in 2nd DCA.) The clause thus means “except as specifically setforth [in CBM-SF\SF568942.6 -12- this MOU] no provisions in this MOUshall be deemedto limit or curtail the City[‘s managementrights].”° The City argued in the Answerbrief that this language preserves all its pre-MOU managementprerogatives, includingthe right to abrogate its contractual obligations—seemingly without any limit. That readingis untenable. State law makes MOUsbinding and enforceable on local governments. (OBat 17-30.) Article 1.9 must be harmonized with the other parts of the MOUs,including its more specific wage and hour provisions. (Professional Engineers, supra, 50 Cal.4th at p. 1041 fn.35; Civ. Code § 1641.) Further, managementrights clauses are intended merely to preserve managementrights rather than to give management authority to trump the whole ofthe parties’ agreement. (Part IIJ.A.1, supra.) ” The court of appeal opined such a reading is “a nonsensicalinterpretation which reads the entire section out of existence.” (Slip Op.at 14 fn.12.) That is incorrect, because such a reading accords with the general managementrights principles outlined above,i.e., that managementrights clauses merely preserve managementrights but do not trump specific MOU provisions. Thus understood the phrasing may be redundant, butit is not “nonsensical.” More fundamentally, this reading accords withthe parties’ mutual intent. (Cf. California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 269 [“the rules of grammar. . . are but tools, guides to help courts determine likely legislative intent. Andthatintent is critical. Those whowrite statutes seek to solve humanproblems.Fidelity to their aims requires us to approach aninterpretive problem notas if it were a purely logical game, like a Rubik's Cube, but as an effort to divine the human intent that underlies the statute”’].) CBM-SF\SF568942.6 -13- For example, this Court understood in Professional Engineers that the MOU managementrights clause there did not “override all of the other, more specific provisions of the MOU governing wages, hours, and other terms and conditions of employment.” (50 Cal.4th at p. 1041 fn.35.) That analysis makes great sense because managementrights clauses do not ipsofacto “override” bargained-for provisions. (See id.; Vallejo, supra, 12 Cal.3d at p. 615 [managementrights clauses should not be construed to “swallow the whole provision for collective negotiation and relegate determination ofall labor issuesto the city’s discretion”]; Gov. Code § 3500.) The City’s interpretation is unreasonable. “When a public employer choosesinstead to enter into a written contract with its employee (assuming the contract is not contrary to public policy), it cannot later deny the employee the meansto enforce that agreement.” (Retired Employees Assn. ofOrange County, Inc. v. County ofOrange (“REAOC’”) (2011) 52 Cal.4th 1171, 1182.) Yet, the City asks this Court to determine as a matter of law thatthe City has carte blanche authority to violate the MOU,and the Union no recourseto arbitration. (O'Malley v. Wilshire Oil Co. (1963) 59 Cal.2d 482, 491 [“only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail”); Vallejo, supra, 12 Cal.3d at p.615 [courts “must be careful not to restrict unduly the scope of... . arbitration by an overbroad definition of [managementrights]”].) If, as the City CBM-SF\SF568942.6 -14- argues,it retains all of its pre-MOU powers withoutlimitation, it may simply change wages, hours, or other bargained-for rights, without EAA being able to enforce the MOU. The court of appeal rejected the parties’ shared reading (incorrectly attributing it to EAA only), and opined that Article 1.9’s first sentence “can only be read to mean ‘except asspecifically set forth [in this section] no provisions in this MOU shall be deemedto limit or curtail the City.’” (Slip Op. at 14-15 fn.12.) That reading is unreasonable. It would read the MOUtopresent no limitation on the City's management prerogative other than the managementrights clause itself. This dubious reading would also permit the City unilaterally to override bargained-for MOUrights. The more reasonable reading consistent with the purpose of the parties’ intent and labor policy in the MMBA,is that Article 1.9 preserves the City’s managementprerogatives, limited by the other provisions of the MOUs. Otherwise, that language would “swallow the whole provision for collective negotiation and relegate determination of all labor issues to the city’s discretion.” (Vallejo, supra, 12 Cal.3d at p. 615.) CBM-SF\SF568942.6 -15- rights: 2. The City’s Reserved Right to Relieve Employees Because of Lack of Funds and to Meet Emergencies Does Not Prevent Arbitration of Furlough Grievances Article 1.9’s second sentence catalogs specific management The Association recognizes that these rights, powers, and authority include but are not limited to, the right to determine the mission of its constituent departments, offices and boards, set standards of services to be offered to the public, exercise control and discretion over the City’s organization and operations, take disciplinary action for proper cause, relieve City employeesfrom duty because oflack of work, lack offunds or other legitimate reasons, determine the methods, meansand personnel by which the City’s operations are to be conducted, take all necessary actions to maintain uninterrupted service to the community and carry outits mission in emergencies|[.| ‘The City argued the “lack of funds” and “emergenc[y]” language makes furloughs inarbitrable. That is not so. First, the City argues that Article 1.9’s reservation ofthe City’s right to relieve employeesfor “lack of funds” also authorizes furloughs, (i.e., reductions in work schedules and wages), notwithstanding contrary provisions elsewhere in the MOU. (Answerat p. 28.) That is incorrect. In Professional Engineers this Court determined that similar MOU language “reasonably can beinterpretedto refer only to [layoffs].” (50 Cal. at p. 1042 fn.35 [italics added]; accord REAOC, supra, 52 Cal.4th at p. 1182.) The MOUanalyzed there gave the state the managementrightto “relieve CBM-SF\SF568942.6 -16- its employees from duty because of lack of work, lack of funds, or other legitimate reason” (50 Cal.4th at p. 1042, fn. 35)—which is materially identical to Article 1.9. (See Article 1.9 [“relieve City employees from duty because of lack of work,lack of funds or other legitimate reasons”].) Consistent with that approach, in EAA v. Community Development Dept. of City ofLos Angeles (1994) 30 Cal.App.4th 644, 652-653, the court construed the “lack of funds” languageto find that layoffs were an inarbitrable managementright. The “lack of funds” languagein Article 1.9 is too generalized to “override” the MOUs’ morespecific wage provisions. (See AA 1:112-114 [list those provisions].)"” Second, the City argues that Article 1.9’s “take all action necessary to meet an emergency” language authorizes furloughs. (See Answerat 28 [arguing Article 1.9 allows City to use reserved charter and ordinance powers].) That too is incorrect for a number of reasons EAA has already outlined. (OB at pp. 47-55 [emergency exception to MOUs '’ The court of appeal determinedthat Article 1.9’s “lack of funds” language is “ambiguous” and required remand for factual development. (See Slip Op.at p. 18.) Specifically, it surmised that because ERO 4.859 did not contain the “lack of funds” language, “there was somereasonthat this language was added to the MOUs—although whetherit was intended to refer to layoffs only, or layoffs and furloughsis not clear.” (Slip Op.at 19.) EAA submits this Court can, as it did in Professional Engineers, determine the “lack of funds” language does notrefer to furloughs as a matter of contract interpretation, especially given the MOUs’other more CBM-SF\SF568942.6 -17- unsupported by MMBA,City charter and ordinances, and would violate — constitutional contracts clause]; Reply at pp. 20-22 [similar].) Specifically, Article 1.9 cannot reasonably be construed as a vehicle to give the City an “emergency” exception to violate the terms of the MOUs’ wage and hours provisions because an emergency declaration aloneis insufficient to absolve governmentfrom the consequencesofbreaching its contractual obligations. (Sonoma County Organization ofPublic Employees v. County ofSonoma(1979) 23 Cal.3d 296, 308 [mere declaration offiscal emergency insufficient; contract impairment must be constitutionally “reasonable” and “necessary”’].) Moreover, interpreting that clause in such a manner would undermineall public sector collective bargaining agreements because it would authorize government employers to bypass MOUobligations by merely declaring a fiscal emergency.'! specific provisions on wages and hours. Alternatively, to the extent the Court believes that ambiguity cannot be resolved, remand is appropriate. '! The court of appeal also discerned an ambiguity in Article 1.9 regarding whetherthe parties intended “emergencies”to apply to “fiscal emergencies.” (Slip Op. at 19 fn. 17.) EAA submits this question too can be answered as a matter of law underthe principles outlined above, but to the extent the Court finds an ambiguity requiring factual development,it submits remandis appropriate. CBM-SF\SF568942.6 -18- 3. The Third Sentence of Article 1.9 Merely Recognizes the City’s Obligation to Engage in “Effects” Bargaining, and Is An Additional Source of Arbitration Rather Than A Limitation on Article 3.1 Arbitration For matters that are true managementrights, Article 1.9 gives the union the right to engage in impactoreffects bargaining: [P]rovided, however, that the exercise of these rights does not preclude employeesandtheir representatives from consulting or raising grievances about the practical consequencesthat decisions on these matters may have on wages, hours, and other terms and conditions of employment. (See AA 1:93 [italics added].) This clause merely recognizes the City’s effects bargaining obligation whenit exercises managementrights. This Court has consistently affirmed a union’s right to such bargaining. (E.g., Richmond, supra, 51 Cal.4th at p. 852-853 [an “employer is normally required to bargain aboutthe results or effects of [management] decisions”]; id. at p. 855 [“a public employer must, however,give its employees an opportunity to bargain over the implementation ofthe [management] decision, including the numberof employees[affected], and the timing . . ., as well as the effects of the [action] on the workload and safety of the remaining employees”); accord Claremont, supra, 39 Cal.4th at pp. 635-639 [similar].) It is true that Article 1.9 refers to “consulting or raising grievances”in describing the effects bargaining process, but that merely CBM-SF\SF568942.6 -19- meansthat the parties intended to adopt the same grievance proceduresin Article 3.1 to resolve such bargaining disputes. It does not meanthe parties intended that Article 1.9 would be a limitation on Article 3.1. An Article 1.9 “grievance” on effects bargaining(notat issue here) is fundamentally different from an Article 3.1 “grievance” on contract or MOU-based disputes (at issue here). That is, Article 1.9’s reference to “consulting or raising grievances”directly refers to the impacts bargaining processitself that applies only when the City exercises recognized managementrights;it simply does not apply to the union’s ability to seek enforcement ofMOU- based provisions through Article 3.1 grievances. Specifically, Article 3.1 MOU-based grievancesare not expressly defined or otherwise limited to the ‘practical consequences’ of managementdecisions. By contrast, Article 1.9 grievances are expressly limited to the “practical effects” flowing from managementdecisions,i.e., effects bargaining. Interpreting Article 1.9 as limiting Article 3.1 would nonsensically limit union members’ legitimate MOU-basedgrievancesto the practical consequences of management’s decision to violate core MOU wage and hour provisions—even though managementhasno suchright. That interpretation would also unreasonably make Article 1.9 the sole source ofMOU enforcementrights for the union. In sum,the most reasonable reading of the MOUsis that Article 1.9 is not a limitation on Article 3.1 arbitration, but is instead an additional CBM-SF\SF568942.6 -20- source of grievancearbitration that allows effects bargaining regarding managementprerogatives. That makes Article 1.9 inapplicable here because furloughs are not a managementprerogative. IV CONCLUSION To the extent the Court is compelled to reach the subject of arbitrability, it should remandto havethe trial court determine whetherthe parties intended to have the MOUscoverfurloughs. Alternatively, as a matter of law, for all the reasons above, the MOUsdo notprohibit furloughs arbitration. Dated: November 30, 2012 CBM-SF\SF568942.6 Respectfully submitted, CARROLL, BURDICK & McDONOUGHLLP — Gary M.Messing Gregg McLean Adam Jonathan D. Yank Gonzalo C. Martinez Attorneys for Petitioner and Real Party in Interest Engineers and Architects Association -2]- WORD COUNT CERTIFICATION Pursuant to Rule 8.520(c) of the California Rules of Court, I certify that the attached brief contains 4891 words, as determined by the computer program used to preparethebrief. Dated: November30, 2012 \ Jonath4y’Yank CBM-SF\SF568942.6 PROOF OF SERVICE BY UNITED PARCEL SERVICE (UPS) — NEXT DAY I declare that 1 am employed in the County of San Francisco, California. I am over the age of eighteen years and not a party to the within cause; my business addressis 44 Montgomery Street, Suite 400, San Francisco, CA 94104. On November 30, 2012, I served the enclosed: PETITIONER’S SUPPLEMENTAL BRIEF on the parties in said cause(listed below) by enclosing a true copy thereof in a prepaid sealed package, addressed with appropriate United Parcel Service shipmentlabel and, following ordinary business practices, said package wasplaced for collection (in the offices of Carroll, Burdick & McDonough LLP)in the appropriate place for items to be collected and delivered to a facility regularly maintained|by United Parcel Service. I am readily familiar with the Firm's practice for collection and processing ofitems for overnight delivery with United Parcel Service and that said package was delivered to United Parcel Service in the ordinary course of business on the same day. Janis Levart Barquist, Esq. Counselfor Petitioner City ofLos Angeles Jennifer Maria Handzlik, Esq. Carmen A. Trutanich Office of the Los Angeles City Attorney | 200 North Main Street, Room 800 Los Angeles, CA 90012 Frederick Bennett Counselfor Respondent Superior Court of Superior Court of Los Angeles Los Angeles 111 North Hill Street, Room 546 Los Angeles, CA 90012 Hon. Gregory Alarcon Trial Judge Superior Court of Los Angeles 111 North Hill Street, Dept. 36 Los Angeles, CA 90012 Superior Court of Los Angeles 111 North Hill Street Los Angeles, CA 90012 California Court of Appeal Second District, Division 3 Ronald Reagan State Building 300 So. Spring Street, 2"° Floor Los Angeles, CA 90013 CBM-SF\SF568942.6 AnthonySegall, Esq. Ellen Greenstone, Esq. Jonathan Cohen, Esq. Anthony P. Resnick Rothner, Segall & Greenstone 510 South Marengo Avenue Pasadena, CA 91101-3115 Arthur Krantz, Esq. Leonard Carder, LLP 1330 Broadway, Suite 1450 Oakland, CA 94612 Rex S. Heinke, Esq. Jessica Michael Weisel, Esq. Amit Arun Kurlekar, Esq. Akin Gump Strauss Hauer & Feld 633 W.Fifth Street, Suite 5000 Los Angeles, CA 90071-2081 David W.Tyra, Esq. Kronick Moskovitz Tiedemann & Girard 400 Capitol Mall, 27" Floor Sacramento, CA 95814 Marcia Haber Kamine Kamine Phelps PC 523 W. 6" Street, Suite 546 Los Angeles, Ca 90014 Stephen H.Silver, Esq. Silver, Hadden, Silver, Wexler & Levine 1428 Second Street Santa Monica, CA 90401 Attorneysfor Amicus Curiae AFSCME, District Council 36, etal. Counselfor Amicu Curiae IFPTE,etal. Counselfor Amicus Curiae Los Angeles Chamber afCommerce Counselfor Amici Curiae League of California Cities and California State Association ofCounties Counselfor Amicus Curiae Engineering Contractors’ Association Counselfor Amici Curiae Los Angeles Police Protective League, et al. I declare underpenalty of perjury that the foregoing is true and correct, and that this declaration was executed on November30, 2012, at San Francisco, California. CAQ Monadyea CBM-SF\SF568942.6 Gonsalves