Fratus v. Marion Community Schools Board of Trustees

ATTORNEY FOR APPELLANTS: ATTORNEYS FOR APPELLEES:

BRENDA FRANKLIN RODEHEFFER Marion Community Schools

Monday, Rodeheffer Jones & Albright Board of Trustees

Indianapolis, Indiana MICHAEL J. KILEY

CRAIG R. PERSINGER
Kiley, Kiley, Harker Michael
& Certain
Marion, Indiana

Marion Teachers Association
RICHARD J. DARKO

ERIC M. HYLTON

Lowe Gray Steele & Darko, LLP
Indianapolis, Indiana

ATTORNEYS FOR
AMICUS CURAIE
KAREN M. FREEMAN –WILSON
Attorney General of Indiana

JON LARAMORE
Deputy Attorney General
Indianapolis, Indiana

IN THE

SUPREME COURT OF INDIANA

TERESA FRATUS, SHARON A. WILSON, )
and WILMA B. HIGDON, )
) Supreme Court Cause Number
Appellants-Plaintiffs, ) 27S02-0005-CV-295
)
v. )
)
MARION COMMUNITY SCHOOLS )
BOARD OF TRUSTEES, and MARION ) Court of Appeals Cause Number
TEACHERS ASSOCIATION, ) 27A02-9901-CV-12
)
Appellees-Defendants. )

APPEAL FROM THE GRANT CIRCUIT COURT
The Honorable Thomas R. Hunt, Judge
Cause No. 27C01-9802-CP-59

ON PETITION TO TRANSFER

June 6, 2001

RUCKER, Justice

In a two-count complaint three former teachers sued their union and
their school board over a dispute concerning a reduction in retirement
benefits. The complaint alleged that the union breached its duty of fair
representation and that the school board breached the terms of a collective
bargaining agreement. On grounds that the teachers failed to exhaust their
administrative remedies, the trial court dismissed the complaint for lack
of subject matter jurisdiction. In a split decision, the Court of Appeals
reversed the trial court’s judgment concluding that exhaustion of remedies
was unnecessary. Fratus v. Marion Cmty. Schs. Bd., 721 N.E.2d. 280 (Ind.
Ct. App. 1999). We grant transfer and affirm in part and reverse in part
the judgment of the trial court.

Facts and Procedural History

Teresa Fratus, Sharon Wilson, and Wilma Higdon (“Teachers”) were
employed as classroom teachers in the Marion public school system. In
1997, Teachers gave formal notice to the Marion Community Schools Board of
Trustees (“School Board”) of their intent to accept early retirement the
following year. Teachers anticipated that their retirement benefits would
be calculated under the terms of a then existing collective bargaining
agreement known as the 1995-1997 Master Contract. Teachers were members of
the Marion Teachers Association (“Union”), the exclusive bargaining unit
for teachers in the Marion public school system. Shortly after Teachers
gave written notice of their intent, the Union and the School Board
renegotiated the agreement and produced a 1997-2000 Master Contract. When
Teachers retired, the School Board paid them benefits according to the new
agreement under which their early retirement benefits were dramatically
reduced.
Teachers filed a complaint alleging that the Union renegotiated the
collective bargaining agreement to reduce retirement benefits and thus
breached its duty of fair representation. The complaint also alleged that
the School Board breached its contract with Teachers by failing to pay
retirement benefits as outlined in the original Master Contract. On motion
by the School Board and the Union, the trial court dismissed Teachers’
complaint under Indiana Trial Rule 12(B)(1) for lack of subject matter
jurisdiction. On review, a divided Court of Appeals reversed the judgment
of the trial court.

Standard of Review

In ruling on a motion to dismiss for lack of subject matter
jurisdiction, the trial court may consider not only the complaint and
motion, but also any affidavits or evidence submitted in support. Perry v.
Stitzer Buick GMC, Inc., 637 N.E.2d 1282, 1287 (Ind. 1994). In addition,
the trial court may weigh the evidence to determine the existence of
requisite jurisdictional facts. Id. Our standard for reviewing the trial
court’s ruling on a motion to dismiss for lack of subject matter
jurisdiction is dependent upon whether the trial court resolved disputed
facts and if the trial court resolved disputed facts, whether it conducted
an evidentiary hearing or ruled on a paper record. GKN Co. v. Magness, 744
N.E.2d 397, 401
(Ind. 2001). Where as here, the facts before the trial court are
undisputed we review the trial court’s ruling de novo. Id.

Discussion

I. Teachers’ claim against the Union

At the heart of the parties’ argument is the question of whether
Teachers were required to file their complaint with the Indiana Education
Employment Relations Board (“IEERB”) before they were entitled to judicial
review. As the Court of Appeals noted, “[i]f the Teachers were required
to file their claims with the IEERB, the trial court’s order was correct as
[a] party’s failure to exhaust its administrative remedies creates a
jurisdictional defect and makes a T.R. 12(B)(1) motion to dismiss for lack
of subject matter jurisdiction appropriate.” Fratus, 721 N.E.2d at 285
(quotation omitted).
The Certificated Educational Employee Bargaining Act (“Act”)
recognizes the right of school employees to organize and collectively
bargain through school employee associations. Ind. Code § 20-7.5-1-1(b).
The Act creates a method to resolve unfair practices by both school
employers and school employee organizations. To obtain relief from unfair
practices, a school employee may file a complaint with the IEERB,[1] which
then hears and decides the claim. I.C. § 20-7.5-1-11; Evansville-
Vanderburgh Sch. Corp. v. Roberts, 464 N.E.2d 1315, 1317 (Ind. Ct. App.
1984). Once the IEERB takes final action, a school employee may petition
for judicial review. I.C. § 4-21.5-5-4, 5. In sum, a person may file a
petition for judicial review only after exhausting all administrative
remedies available within the agency authorized to exercise judicial
review. I.C. § 4-21.5-5-4; Town Council of New Harmony v. Parker, 726
N.E.2d 1217, 1224 (Ind. 2000), amended on reh’g in part by 737 N.E.2d 719
(Ind. 2000); State Bd. of Tax Comm’rs v. Mixmill Mfg. Co., 702 N.E.2d 701,
704 (Ind. 1998) (“Administrative agencies have technical expertise in areas
that the courts do not. [I]n nearly all circumstances their rulings are
required before resort to a court is available.”).
Teachers contend they are not required to pursue this matter through
the IEERB because the agency has no authority to adjudicate claims of a
union’s breach of duty of fair representation. In support, Teachers point
out that the Act defines “unfair practice” and the definition does not
include the breach of duty of fair representation.
Teachers are correct that the Act does not specifically list the duty
of fair representation as an unfair practice. If this were the end of the
analysis, then we would be compelled to conclude that Teachers were not
required first to pursue administrative remedies through the IEERB.
However, the question of whether the breach of the duty of fair
representation is an unfair practice is a case of first impression in
Indiana. When interpreting an Indiana statute for the first time, it is
appropriate to look to the decisions of other jurisdictions that construe
identical statutory provisions. Bd. of Comm’rs of County of Knox v. Wyant,
672 N.E.2d 77, 79-80 (Ind. Ct. App. 1996). The National Labor Relations
Act (“NLRA”) is the federal counterpart to the Act. The two are nearly
identical with many parallel provisions and similar language.[2] We
therefore look to federal case law for guidance. See Indiana Civ. Rights
Comm’n v. County Line Park, 738 N.E.2d 1044, 1048 (Ind. 2000) (relying on
federal case authority interpreting the federal Fair Housing Act as a guide
to interpreting Indiana’s Fair Housing Act).
In 1935, Congress enacted the NLRA, which allows employees to bargain
collectively through representatives of their own choosing. 29 U.S.C.A. §
157 (1998). Through its enactment, Congress intended to exercise whatever
constitutional power given to it to regulate commerce by adopting measures
to prevent or control specified unfair labor practices that provoke or tend
to provoke strikes or labor disturbances affecting interstate commerce.
NLRB v. Fainblatt, 306 U.S. 601, 607 (1939). Congress defined what it
meant by unfair labor practices and gave the National Labor Relations Board
(“NLRB”) authority to hear and decide such claims. 29 U.S.C.A. §§ 158(b),
160 (1998). Any person aggrieved by the NLRB’s final order may seek
judicial review. 29 U.S.C.A. § 160(f) (1998).
Just as the Act does not include fair representation claims in its
catalog of “unfair practices” by school employee organizations, the NLRA
also does not specifically list it as an “unfair practice” by labor
organizations. See 29 U.S.C.A. § 158(b) (1998). Nonetheless, federal case
authority identifies such a breach by labor organizations as an “unfair
labor practice” under NLRA. See Vaca v. Sipes, 386 U.S. 171, 177 (1967)
(“It is now well established that, as the exclusive bargaining
representative of the employees in [complainant’s] bargaining unit, the
Union had a statutory duty fairly to represent all of those employees, both
in its collective bargaining with [employer] and in its enforcement of the
resulting bargaining agreement.” (citations omitted) (emphasis added)). As
one court explained:
This fiduciary duty of fair representation in the negotiation,
administration and enforcement of collective bargaining agreements has
been imposed upon unions by federal law as an obligation correlative
to the right of a union to represent all the employees in a bargaining
unit as their exclusive bargaining agent despite the contrary wishes
of a minority. . . . It has since been expanded as a principle of
general application to collective bargaining representatives, who are
required to “serve the interest of all members without hostility or
discrimination toward any, to exercise [their] discretion with
complete good faith and honesty, and to avoid arbitrary conduct.”

Bazarte v. United Transp. Union, 429 F.2d 868, 871 (3d Cir. 1970) (emphasis
added). We agree with the rationale of the federal courts and conclude
that a breach of the duty of fair representation by a school employee
organization is an unfair labor practice under the Act. [3] Accordingly,
Teachers’ claim against the Union is a matter for exclusive IEERB
determination. However, this does not mean that the trial court lacks
jurisdiction over the entire case. Because another of Teachers’ claims is
within the trial court’s jurisdiction, as
explained in greater detail below, although the trial court must refer to
the IEERB that portion of Teachers’ complaint asserting claims against the
Union, the trial court nonetheless retains jurisdiction over the entire
case until the IEERB reaches a final decision. Thereafter the trial court
may address all claims properly before it.
II. Teachers’ claim against the School Board
Asserting that the School Board failed to pay them according to the
terms of the collective bargaining agreement in place at the time the
retirement notices were given, Teachers complain the School Board breached
its contract. As such, according to Teachers, “[t]his case is and was a
proper matter of jurisdiction for the trial court.” Br. of Appellant at
15. The construction of contracts and actions for their breach are matters
of judicial determination. Austin Lakes Joint Venture v. Avon Utils.,
Inc., 648 N.E.2d 641, 649 (Ind. 1995); Suyemasa v. Myers, 420 N.E.2d 1334,
1339 (Ind. Ct. App. 1981). This is not a matter over which administrative
bodies generally assume jurisdiction, at least with respect to a
freestanding claim. See Austin Lakes, 648 N.E.2d at 650 (finding no legal
or factual questions reserved for agency decision making in a breach of
contract claim). By dismissing Teachers’ complaint in total, the trial
court effectively denied Teachers the only forum before which their breach
of contract claim against the School Board could be heard and decided.
Indeed, sometime after the trial court entered its judgment, Teachers
presented their claim to the IEERB, which dismissed it asserting “the
Complainants have alleged a purely contractual issue – that is, pursuant to
which contract is the School Corporation obligated to pay retirement
benefits to Complainants – over which IEERB has no jurisdiction.” App. to
Reply Br. of Appellant at 6 (quoting Order of IEERB Hearing Examiner). We
conclude therefore that the trial court erred in dismissing Teachers’ claim
against the School Board. Rather, this is a claim over which the trial
court has jurisdiction.
Having determined that Teachers’ claim against the Union is a matter
for the exclusive jurisdiction of the IEERB, we are confronted here with a
case where one of the issues is a matter for administrative determination
while the other is a matter for the court to decide. In that instance we
invoke the doctrine of primary jurisdiction which:
comes into play when a claim is cognizable in a court but adjudication
of the claim “requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of
[an] administrative body; in such a case, the judicial process is
suspended pending referral of such issues to the administrative body
for its views.”

Austin Lakes, 648 N.E.2d at 645 (quoting Hansen v. Norfolk & W. Ry. Co.,
689 F.2d 707, 710 (7th Cir. 1982)). In Austin Lakes, we set forth the
analysis the trial court should undertake when confronted with cases in
which its subject matter jurisdiction is contested on grounds of primary
jurisdiction or exhaustion of remedies. Id. at 646-49. We also identified
various fact patterns under which the issue might arise. Id. For example,
under one scheme, where an issue in the case is one that can be decided by
either the trial court or by an administrative agency, the decision to
invoke the doctrine of primary jurisdiction is within the trial court’s
discretion. Id. at 647. However, “a trial court must invoke the doctrine
of primary jurisdiction where one (but less than all) of the issues in the
case requires exhaustion of remedies before judicial review can occur.”
Id. That is precisely the set of facts we have before us. The trial court
in this case must determine one of the issues while the other must first be
presented to an administrative agency before judicial review may occur.
Thus, while the trial court retains jurisdiction over Teachers’ contract
claim against the School Board, applying the doctrine of primary
jurisdiction requires the trial court to suspend any action on the merits
until the IEERB renders a final decision on Teachers’ claim against the
Union.

Conclusion

We affirm that portion of the trial court’s judgment dismissing
Teachers’ complaint against the Union. In all other respects, the judgment
of the trial court is reversed. We remand this cause to the trial court
for further proceedings consistent with this opinion.

SHEPARD, C.J., and DICKSON, SULLIVAN and BOEHM, JJ., concur.

-----------------------
[1] The IEERB is the administrative agency created to administer the
provisions of the Act. I.C. § 20-7.5-1-9.
[2] For example, compare Indiana Code section 20-7.5-1-7(b) that
reads: “It shall be an unfair practice for a school employee organization
or its agents to: (1) interfere with, restrain or coerce (a) school
employees in the exercise of the rights guaranteed by this chapter . . . .”
with 29 U.S.C.A. § 158(b) (1998) that states: “It shall be

an unfair labor practice for a labor organization or its agents—(1) to
restrain or coerce (A) employees in the exercise of the rights guaranteed
in section 157 of this title . . . .”
Also compare Indiana Code section 20-7.5-1-6(a) that reads: “School
employees shall have the right to form, join, or assist employee
organizations, to participate in collective bargaining with school
employers through representatives of their own choosing . . . .” with 29
U.S.C.A. § 157 (1998) that states: “Employees shall have the right to self-
organization, to form, join, or assist labor organizations, to bargain
collectively through representatives of their own choosing . . . .”
[3] This conclusion is supported also by the doctrine of legislative
acquiescence. Although not binding, “[a] long adhered to administrative
interpretation dating from the legislative enactment, with no subsequent
change having been made in the statute involved, raises a presumption of
legislative acquiescence which is strongly persuasive upon the courts.”
Ind. Bell Tel. Co., Inc. v. Indiana Utility Reg. Comm’n, 715 N.E.2d 351,
358 (Ind. 1999). The Certificated Educational Employee Act was first
enacted in 1973. For at least a quarter of a century the IEERB has
interpreted the Act as including the duty of fair representation as an
unfair practice and has routinely adjudicated such clams. See, e.g., Ruth
Ann Teague, U-76-5-4690, 1976-77 IEERB Ann. Rep. 593 (1976-77); Independent
Educators of Fort Wayne, Inc., U-83-3-0235, 1983 IEERB Ann. Rep. 103
(1983); Sondra G. Estep, U-92-06-4710, 1994 IEERB Ann. Rep. 111 (1994);
Margaret M. Bunce, U-95-26-0235, 1996 IEERB Ann. Rep. 70 (1996); Linda C.
Sharp, U-98-11-2940, 1998 IEEB Ann. Rep. 26 (1998); Carolyn Ursey, U-98-13-
5705, 1999 IEERB Ann Rep. (1999). If the General Assembly were
dissatisfied with IEERB’s long-standing interpretation, we presume it would
have amended the Act accordingly.