Glasgow Education Ass'n v. Board of Trustees

No. 89-460

IN THE SUPREME COURT OF THE STATE OF MONTANA
1990

GLASGOW EDUCATION ASSOCIATION, affiliated
with the Montana Education Association,
Plaintiff and Appellant,
-vs-
BOARD OF TRUSTEES, VALLEY COUNTY, SCHOOL
DISTRICTS 1 AND lA,
Defendant and Respondent. f-

r >
7

APPEAL FROM: District Court of the Seventeenth Judicial District,
In and for the County of Valley,
The Honorable Leonard Langen, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Emilie Loring argued; Hilley and Loring, Missoula,
Montana

For Respondent:
Catherine M. Swift argued, Montana School Boards
Assoc., Helena, Montana

submitted: Jan. 9 , 1990

Filed:
Justice John C. Sheehy delivered the Opinion of the Court.

At all times herein relations between School District No. 1
& 1A of Valley County, as employer, and Glasgow Education
Association (Association), for the District employees, were
governed by a written negotiated agreement. The agreement included
a provision for arbitration of grievances, with the decision of the
arbitrator to be binding and final. On receipt of an adverse
decision from an arbitrator, the School District informed the
Association that the District would not comply with the
arbitrator's award. The Association brought a complaint in the
District Court, Seventeenth Judicial District, Valley County,
against the District for breach of contract, and to enforce the
arbitration award. The School District filed its answer in the
District Court, denying the breach of contract, and affirmatively
defending that the award of the arbitrator sought to be enforced
was illegal because the arbitrator had exceeded his authority in
making the award. The School ~istrictalso counterclaimed for an
order vacating the arbitrator's award. There being no disputed
facts, the District Court, on motions from both parties for summary
judgment, entered its judgment vacating the arbitrator's award.
The Association appealed the judgment to this Court. We reverse
and order that the award of the arbitrator be reinstated.
The basis of our holding is that under the agreement between
the parties providing for final and binding arbitration, the
arbitratorlsaward draws its essence from the agreement, that is,
from the partiest intentions. We further determine that the
ttmakewholettremedy of the arbitrator is correct under the
agreement.
The agreement provided, as a fringe benefit, District payment
of a percentage of the employees1 health insurance premiums. The
provision follows:
 ARTICLE 10. FRINGE BENEFITS
10.1. The Board of School Trustees agrees to provide
payment of 90 percent of the premiums for HEALTH
insurance as detailed in the group insurance policy held
by School District No. 1 for the 1986-88 school year.
This payment shall include premiums for the full-time
teacher and his or her dependents. Board contribution
for the 1986-88 school year shall be:
90% if the next years increase is between 0-10.9%
88% if the next years increase is between 11-20.9%
87% if the next years increase is between 21-29.9%
85% if the next years increase is greater than 29.9%
At the time of the grievance, the contract required the
employer to pay 85% of the health insurance premiums. In fact, the
employer paid 100% of the premiums for three groups of employees,
(1) those whose premiums were completely paid by the employer prior

to 1969; (2) those performing some administrative functions; and,
(3) those employees married to other employees of the School

Districts. The arbitrator pinned his decision to the last group.
In August, 1987, a grievance was filed by Helen Hetrich, a
teacher who was not married to another employee of the District and
who requested that 100% of her insurance premiums be paid. Her
grievance was extended to include all members of the bargaining
unit for whom the District had not paid 100% of the insurance
premiums. In 1987, when the grievance was filed, 16 teachers out
of a total of 70-some had received 100% of premium payments.
When the School ~istrictdenied the grievance, an arbitrator
was called in in accordance with the agreement between the parties.
First off, in his written order, the arbitrator agreed with the
association that the contract provision for insurance premiums
clearly and unambiguously applied to all of the employees of the
District contained in the bargaining unit. The arbitrator found
that the contract provision prohibited the School District's
practice of paying 100% of the health insurance costs for some unit
members.
The Association argued before the arbitrator that the
appropriate remedy for the breach was that all unit members for
whom the employer paid less than 100% of the health insurance
premiums should be reimbursed for the amount they were required to
pay for the term of the contract plus interest. On the other
hand, the employer argued that the appropriate remedy was that the
employer cease making the 100% payments to the favored unit members
and that the employer be required to make all payments to all unit
members in accordance with the contract.
The arbitrator declined to require such payments by the
District, as urged by the Association, based purely on the breach
of contract. The arbitrator denied relief on that ground, saying:

While the Employer improperly paid more than it should
have for health insurance for some employees, it
indisputedly paid the proper amount for the class of unit
members for which the Association seeks the additional
compensation. The class seeking additional relief
received all that it was entitled under the contract.
To grant members of the class additional relief would
be inconsistent with the contract, their legitimate
expectation under the contract and constitute a windfall.
The fact that some employees received benefits in excess
of what they were entitled under the contract does not
justify a remedy that would require that all employees
receive benefits in excess of what they were entitled
under the contract (citing authority).
Arbitrator's decision and award at page 13.
 The arbitrator, however, found a different situation to exist
with respect to couples who were married and who worked for the
District, and who received a contribution of 100% of their
insurance premiums. The arbitrator found that the contract between
the parties prohibited discrimination based on marital status. He
determined that position from the following provisions in the
agreement:
6.1. The Board shall select employees as needed on the
basis of merit, training and experience. No
discrimination against any applicant or employee because
of race, creed, color, national origin, sex or age shall
exist. The Board shall take all necessary actions to
comply with the letter and the spirit of state and
federal laws prohibiting discrimination in employment.
Every announcement or listing of a position shall include
the statement that the District is an Equal Opportunity
Employer. (Emphasis in contract.)

The arbitrator determined that the foregoing Article 6.1
incorporated the prohibition discrimination through marital
status found in Montana state law, !
j 49-2-203(1)(a), MCA, into the
collective bargaining agreement.
The arbitrator held that the payment of 100% of the insurance
premiums to married couples who all worked for the District was
discrimination based on marital status. He said:

Here, the contract prohibits discrimination based on
marital status. The Employer's policy grants greater
benefits to married employees, both of whom work for the
District. The policy constitutes unlawful marital status
discrimination because non-married employees may not
obtain these benefits because of their marital status,
despite the fact that not all married persons receive the
benefit.
Arbitrator's decison and award at pages 16, 17.
 ~iscriminationbased on the identity and occupation of one's
spouse is unlawful marital status discrimination under state law.
Thompson v. School District (Mont. 1981), 627 P.2d 1229; Hulett v.
Bozeman School District No. 7 (1986), 228 Mont. 71, 740 P.2d 1132.
The School District does not actively dispute on appeal that the
payments made by the School District on behalf of married couples
working for the District constituted marital status discrimination
in this case.
The School District argues most strongly, however, that the
arbitrator's award in this case violates the contract because the
grieved employees will receive more than provided in Art. 10.1 of
the agreement, and because the School District contends that the
arbitrator went beyond his authority under the agreement to grant
the award.
We have noted above that the arbitrator had determined that
the violations of the contract with respect to those employees who
have been receiving 100% of the insurance premiums do not require
a remedy that the disfavored employees be brought up to the level
of the favored employees. The arbitrator took this position
because the contract established the level of entitlement at the
amounts paid for the disfavored employees. He found that a
different remedy was necessary where the contract specifically
incorporated the state and federal law of discrimination. He held
that the incorporation of the language "board shall take all
necessary actions to comply with the letter and spirit of state and
federal laws prohibiting discrimination in empl~yrnent~~ only
not
6
incorporated the state and federal protections against
discrimination but also the remedies provided to address such
violations. In stating the purpose of the grievance procedure, the
agreement provided:
23.2. The purpose of this procedure is to secure, at the
lowest possible level, equitable solutions to the
problems which may from time to time arise affecting the
welfare or terms and conditions of employment of teachers
...
The arbitrator determined that the proper remedy for
discriminating against an employee or class of employees is to
bring the disfavored employee or class to that level of the favored
employee or class. He, therefore, made an award ordering the
School District to pay the unit employees who did not receive a
100% employer health insurance contribution the difference between
the 100% and the amount actually paid, plus interest at the rate
of 10% for the term of the contract, at those amounts necessary to
bring the employees to the level of the favored employees.
The School District contends that the arbitrator, in making
the award, modified, changed, or rewrote the contract, and, in
incorporating the Ifmakewholev1
remedy in the contract, went outside
the bounds of the contractual provisions. The School District
contends that the case of Alexander v. Gardner-Denver Co. , 415 U.S .
36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974) is authority that an
arbitrator may not invoke public laws to fashion a remedy that
conflicts with the agreement between the parties, or which is based
upon the arbitrator's view of the requirements of legislation,
rather than on the interpretation of the collective bargaining
agreement. The arbitrator, the School District contends, has only
authority to resolve questions of contractual rights even though
the contractual rights may be duplicative of substantive rights
secured by a statute. Barrentine v. Arkansas-Best Freight System
(1981), 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641.
This and other cases cited by the School District are not
quite on point here. In the cases relied on by the School
District, the employees had lost before the arbitrator, and when
they later moved to enforce their statutory rights, the employers
argued, unsuccessfully, that the arbitration award precluded
subsequent judicial relief. The situation here is different. The
agreement itself is not in conflict with general law, and the
employerrspractice of paying 100% of the premiums based on marital
status violated both the contract between the parties and state
law. The actions of the School District violated particularly this
provision of the agreement,
24.5. The provisions of this agreement shall be applied
without regard to race, creed, religion, national origin,
age, sex or marital status.
It was not necessary for the arbitrator, in making his award
in this case, to resort to statutory law outside of the contract
to fashion a remedy. The contract itself contained anti-
discriminatory provisions requiring the Board to comply with state
and federal laws prohibiting discrimination. The "make wholert
remedy adopted by the arbitrator is a proper remedy in
discrimination cases. Albermarle Paper Co. v. Moody (1975), 422
U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280. The grievance procedure
itself recommended !!equitable solutions to grievances arising
between the parties." The "letter and the spiritftof state and
federal laws prohibiting discrimination includes a remedy which
brings the disfavored employees or class to the level of the
favored employees or class. We hold that the arbitrator was
working within the contractual provisions of the contract between
the parties, whose intention in agreeing to final and binding
arbitration within the contractual agreements was negotiated and
bargained for, and that the award made by the arbitrator in this
case drew its essence from the contractual provisions, that is,
from the intention of the parties. See, United Steelworkers v.
Enterprise Wheel and Car Corporation (1960), 363 U.S. 593, 597, 80
S.Ct. 1358, 1361, 4 L.Ed.2d 1424, 1428. When an arbitrator whose
decision is final and binding acts within his contractual authority
and not unlawfully, courts are without power to set aside his
decision.
As a second issue on appeal, the School District contends that
the award of the arbitrator, which was retroactive to the beginning
of the contract term was improper because of the provisions of 9
23.4 that the teacher should initiate the first level of
proceedings within 20 school days of the alleged occurrence of the
grievance. The School District contends that this provision limits
any award to adjustment for no more than 20 days prior to the
bringing of the grievance.
 This second issue was brought to the arbitrator during
arbitration on the employer's petition for clarification and
reconsideration, and the arbitrator stated:
The Employer also argues that the contract
provision setting a 20 day period for filing grievances
established the maximum time period that it is liable for
a contract violation remedial relief. This conclusion
is not supported by the contract or the other evidence.
The 20 day period has a function similar to a statute of
limitations; grievances filed beyond that period are not
timely and the employer need not process them. The 20
day period does not speak to limiting the appropriate
remedial relief of a meritorious and timely grievance.
Arbitrator's decision on employers petition on page 4.
The arbitrator was correct again in interpreting the contract.
No provision limits the remedy for grievances as contended for by
the School District. The award by the arbitrator was proper.
Accordingly, we reverse the judgment granted by the District
Court, and since the facts are undisputed, reinstate the award
ordered by the arbitrator in his decision of October 20, 1988.

Justices
Justice Fred J. Weber specially concurs as follows:

I concur in the result reached in the majority opinion which
concludes that the arbitrator's award was appropriate because of
the contract provision which required that the Board shall take
all necessary actions to comply with the letter and the spirit of
state and federal laws prohibiting discrimination. My concern is
our inability to address the resulting contradiction.
The analysis by the arbitrator demonstrates my position. With
his background experience in labor law, the arbitrator concluded
that he could not require payments to the teachers under the terms
of the contract. He stated:
The class seeking additional relief received all that it
was entitled under the contract. To grant members of the
class additional relief would be inconsistent with the
contract, their legitimate expectation under the contract
and constitute a windfall. The fact that some employees
received benefits in excess of what they were entitled
under the contract does not justify a remedy that would
require that all employees receive benefits in excess of
what they were entitled under the contract.

Under the specific limitations of the contract, the arbitrator
concluded that he could not order benefits for the employees in
excess of that to which they were entitled under the contract.
Then he effectively disregarded the contract limitations by
applying the federal Civil Rights Act. I am not able to explain
our ability to enforce a general provision while disregarding
express contractual limitations.
The result of our opinion is that it gives clear notice to
employers to avoid any reference to discrimination laws in employee
contracts. That is not a worthwhile objective.
My second concern is that our interpretation with regard to
the Civil Rights Act may result in the elimination of the finality
of arbitration as to the employee but not the employer. The
contract here provides It[t]he decision of the arbitrator will be
submitted to the Board and the Association and will be final and
binding upon the parties.'' The aim is that the arbitrator's
decision should be final and binding upon both parties.
Unfortunately, that result might not occur if the arbitrator's
decision had been favorable in this case to the employer Board.
Employees asserting violations of the Civil Rights Act are
able to bring suit through an administrative agency or district
court without regard to their rights under the collective
bargaining agreement. This could result in the employee's ability
to proceed in the court system even though the employee had lost
to arbitration. See Meltzer, B. "Labor Arbitration and Overlapping
and Conflicting Remedies for Employment Di~crimination,~~39
U.Chicago L.Rev., 30 (1971); Alexander v. Gardner-Denver Co.
(1974), 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147.
The result is that the contract has been further emasculated
by rendering the arbitration provision ineffective. This reaffirms
the previous conclusion that employers somehow must eliminate any
reference to discrimination laws in labor agreements. I am
disturbed by the effect of our opinion.
 Justice Diane G. Barz concurs in the foregoing special
concurrence. r
Justice John C. Sheehy, concurring specially:

The special concurrence of two Justices suggests that
employers I1musteliminate any reference to discrimination laws in
labor agreements.I1 I must point out that an employee who is the
victim of illegal discrimination has a right to sue independent of
the employment contract. In the cited case of Alexander v.
Gardner-Denver Co. (1974), 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d
147, the United States Supreme Court held that civil rights cannot
be prospectively waived by contract, and indeed form no part of the
collective-bargaining process. When an employee sues, the Supreme
Court held, for a Title VII violation, even after losing at
arbitration, he is asserting a right given to the employee by
statute independent of the arbitration process, the employee being
the only possible victim of discriminatory employment practices.
Thus, eliminating any reference in labor agreements to anti-
discrimination laws will not change the right of employees to
enforce such laws regardless of the collective-bargaining
agreement.

4 8 % &. &L
Justice