COURT OF CHANCERY
OF THE
SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE
VICE CHANCELLOR 34 THE CIRCLE
GEORGETOWN, DELAWARE 19947
Date Submitted: March 11, 2015
Date Decided: March 12, 2015
David H. Williams, Esquire Jeffrey Weiner, Esquire
Morris James LLP Law Office of Jeffrey M. Weiner PA
500 Delaware Avenue, Suite 1500 1332 King Street
Wilmington, DE 19899 Wilmington, DE 19801
Re: City of Wilmington v. Fraternal Order of Police Lodge 1
Civil Action No. 10329-VCG
Dear Counsel:
Before me is the appeal of the City of Wilmington (the “City”) from a
decision of the Public Employment Relations Board (the “PERB”), itself affirming
on appeal an arbitrator’s decision resolving a collective bargaining dispute between
the Fraternal Order of Police Lodge 1 (the “FOP”) and the City in favor of the
FOP. Pursuant to the Police Officers’ and Firefighters’ Employment Relations Act
(the “Act”),1 arbitration on collective bargaining disputes between a public
employer and its employee police officers and firefighters are done “baseball
style,” in which after an unsuccessful negotiation mediation process, each side
presents to the arbitrator its last, best, final offer.2 The arbitrator is then required,
1
See 19 Del. C. §§ 1601–1618.
2
See id. §§ 1614–1615.
based on an evaluation of the factors set out in 19 Del. C. § 1615(d), to choose
either the final offer of the government or the union; the arbitrator may not pick
and choose between provisions of those two offers.3 Among the factors which the
arbitrator must consider is
the financial ability of the public employer, based on existing
revenues, to meet the costs of any proposed settlement; provided that
any enhancement to such financial ability derived from savings
experienced by such public employer as a result of a strike shall not
be considered by the binding interest arbitrator.4
According to the City, subsection (d)(6) serves as a disqualifier for the union’s
offer: If the public employer cannot pay the costs of the union’s proposal from
“existing revenues,” by default the arbitrator must select the public employer’s
offer instead.
Here, the arbitrator (and, on appeal, the PERB) determined that the City had
the ability to meet the cost of the FOP’s proposal in light of existing revenues. The
arbitrator examined the other factors called for in Section 1615(d) and determined
that the FOP’s offer was superior in light of those factors.5 On appeal, the City
argues that the arbitrator and the PERB defined “existing revenues” improperly.
3
See id. § 1615(d) (“The binding interest arbitrator shall make written findings of facts and a
decision for the resolution of the dispute; provided however, that the decision shall be limited to
a determination of which of the parties’ last, best, final offers shall be accepted in its entirety.”).
4
Id. § 1615(d)(6).
5
The other factors for the arbitrator to consider include the interest and welfare of the public,
comparison of pay to similarly situated employees, the overall compensation presently received
by the employees, stipulations of the parties, the lawful authority of the public employer and
2
It is clear to me from a reading of the Act that it was meant to be applied to
negotiations of public employees’ prospective wages. That is, the Act anticipated,
reasonably, that employers and employees would be negotiating for wages to be
paid for hours worked in the future. Placed in that context, the phrase “existing
revenue” must mean revenue projected to exist during the contractual period to
which the contract was intended to apply. Here, however, the dispute involves the
FOP’s four-year contract proposal that is entirely retrospective: the proposal
applies to hours already worked by employees in fiscal years 201l, 2012, 2013 and
2014. The question becomes, what does “existing revenues” mean in such a
context? The FOP notes that, net of this four-year period, there were ample
surplus revenues to pay the modest increase in wages sought here. The City points
out that in one of those years, fiscal 2014, the City ran an actual deficit, and
therefore there were not “existing revenues” in that year to pay wages under the
contract consistent with the FOP’s proposal. According to the City, the PERB
should have determined that the FOP’s proposal was thus disqualified under
Section 1615(d)(6). In addition, the City argues that “existing revenues” should be
examined as the Legislature intended—prospectively—so that the arbitrator must
take into account the City’s ability to continue to pay wages at the contract rate,
which will necessarily hold over after the conclusion of fiscal year 2014 and
“such other factors not confined to the foregoing which are normally or traditionally taken into
consideration” in setting public employee wages. See id. §1615(d).
3
continue until the resolution of another dilatory negotiation (and perhaps
arbitration) of a new labor contract. In order to prevail in this appeal, the City
must demonstrate that the arbitrator’s finding (adopted by the PERB) that the City
is financially able to meet the costs of the FOP’s last, best, final offer is wrong as a
matter of law.
The Act does not define “existing revenues.”6 Because the statutory
language, in the context of the negotiation of an entirely retroactive contractual
period, is unclear, the parties are entitled to submit extrinsic evidence on this point.
The parties came before me in oral argument after briefing on the City’s appeal
from the decision of the PERB. Within five business days of the issuance of this
Letter Opinion, the parties should inform me whether they wish to supplement the
record with extrinsic evidence on the meaning of “existing revenue” as the term
appears in the Act, or whether they consider the matter submitted on cross-motions
for a judgment on the record.7
6
See id. § 1602 (“Definitions”).
7
Nothing in this Letter Opinion relieves the parties of their obligation to supplement the record
with information regarding annual surplus revenues for the contractual period, as discussed at
oral argument.
4
To the extent the foregoing requires an Order to take effect, IT IS SO
ORDERED.
Sincerely,
/s/ Sam Glasscock III
Sam Glasscock III
5