Arbitration Panel Does Not Have Authority To Change Composition Of Multi-Union Pension Board

The pension system for Detroit’s police officers and firefighters is known as the Policemen and Firemen Retirement Systems Board of Trustees. The Board oversees the pension benefits for the members of several labor organizations, including the Detroit Fire Fighters Association, the Detroit Police Officers Association (POA), and the Detroit Police Command Officers Association.

Several years ago, the City and the POA were unable to agree upon a contract. One of the unresolved contract issues was the composition of the pension board.

An arbitration panel concluded that the composition of the pension board should be altered. Previously an 11-member board, the panel concluded that two board members should be replaced and a twelfth member should be added.
Although the arbitration involved only the POA, the contract governing the Police Lieutenants and Sergeants Association contained an express provision adopting the conditions of the POA agreement. However, the two remaining unions – the Fire Fighters Association and the Command Officers Association – did not have the same language in their own collective bargaining agreements.

The City contended that the firefighters and command officers unions should be bound by the POA’s arbitration award through the labor principle of “parity.” The City cited to the fact that, in the past, the unions had filed suit to obtain wages and compensation in parity with each other. The City then attempted to seat the newly-constructed 12-member pension board.

The firefighters and command officers unions balked at the City’s attempts, and the City brought a lawsuit against both the pension board and the unions. The Michigan Court of Appeals turned back the City’s lawsuit.
The Court found that the unions “were deprived of due process when the City attempted to enforce the 12-member pension board based on an arbitration award in which they were not given the opportunity to be heard and participate. Mere application of an arbitration award rendered with regard to different parties deprives defendant unions of the statutory right of arbitration that has been granted in exchange for the prohibition on labor stoppage.”

The City argued that even with the changed composition, the pension board would still be “slanted in favor of the unions.” The Court found the City’s contentions beside the point, concluding that the law simply did not allow one labor organization to be bound by an arbitration proceeding in which it did not participate.

Detroit Chief Financial Officer v. City of Detroit Policemen and Firemen Retirement System Board of Trustees, 2006 WL 74136 (Mich.App. 2006).

This article appears in the March 2006 issue