Valley City School District and West Valley Education Association
This arbitration arises pursuant to a collective bargaining agreement between the West Valley Education Association (hereinafter UNION or ASSOCIATION) and West Valley School District (hereinafter District or EMPLOYER), under which DAVID GABA was selected to serve as Arbitrator and under which his Award shall be final and binding among the parties.
A hearing was held before Arbitrator Gaba on October 11, 2004, in Yakima Washington. The parties had the opportunity to examine and cross-examine witnesses, introduce exhibits, and fully argue all of the issues in dispute. No transcript of the proceedings was provided. Briefs were received on November 23, 2004.
On behalf of the Union:
On behalf of the Employer:
Michael H. Rorick
The parties could not agree on the issue presented. The statement of the issue as framed by the Employer is:
the District violate section VIII.9.A of the collective bargaining agreement,
which requires contribution to the employee insurance pool of any "extra
per diem funds not utilized" from the prior year, when it contributed to
the insurance pool an amount equal to the budgeted-but unutilized Per Diem
funds from the prior contract year, where the amount budgeted, though
less than the maximum amount that could have been utilized, was specifically
know to both bargaining teams at the time of bargaining and specifically formed
the basis for the agreement reached? If
so, what shall the remedy be?”
The Union framed the issue as:
“Did the District violate the collective bargaining agreement when in November of 2003 and again in September of 2004 it failed to pay into the insurance pool the dollar value for the maximum number of unutilized per diem days and if so what shall the remedy be?”
I accept the issue as presented by the Union.
RELEVANT CONTRACT PROVISIONS
The most recent collective bargaining agreement between West Valley Education Association and West Valley School District the relevant contract language reads, in full, as follows:
SECTION 9. INSURANCE BENEFITS
The District shall provide state funded insurance benefits PLUS any Extra
Per Diem funds not utilized as of
July 1 each year, provided however, in the event of a double levy failure, this
extra funding will be suspended pending passage of a future
balance of the premiums after pooling, if any, shall be paid by each eligible
employee utilizing an individual monthly payroll deduction. The employee group
shall choose from among the appropriate plan(s) available to them, including
variations of a particular plan and notify the District in a timely manner. The
plan selected will be defined in the Appendix H.
During the course of negotiations for the 2003-05 collective bargaining agreement between the West Valley Education Association and the West Valley School District, the Union proposed and the District agreed that the District would roll over extra per diem funds not utilized the prior year into the current year’s health insurance pool. Both parties believed in the premise that the cost of this proposal had been previously “institutionalized” – that is, the money had been budgeted for employee pay the prior year but had not been spent, and so could be considered “extra” or surplus to the District’s budget needs in the current year. The District agreed to this rollover because it believed the proposal would cost approximately $34,800 for 2003-04, the existing balance remaining in its Per-Diem “fund.” The Union desired it’s proposal because they believed that it would require the employer to fully “fund” Per-Diem Days and that the remaining “funds,” in excess of $80,000, would flow through to help pay for insurance benefits.
Following the completion of bargaining and the ratification of the new collective bargaining agreement in the fall of 2003, the District implemented the rollover agreement by calculating its interpretation of the contractual language in question and then making a supplemental payment into the employees’ insurance pool for 2003-04. The District first calculated its aggregate expenditures for extra per diem days the prior contract year (02-03) by summing the number of days utilized by each employee multiplied by that employee’s individual per diem rate of pay, and it then subtracted that total from the total amount that it had “budgeted” for these days in its 02-03 budget. The remaining balance, $32,323.86, was deposited by the District into the employees’ supplemental insurance pool for 2003-04, which was used by the District to defray out-of-pocket expenses of employees for their health insurance premiums.
The Union disputed the District’s calculation of this rollover amount and contended that the District should be required to contribute the difference between the extra per diem funds actually utilized the prior year and the maximum cost for per diem days that could have been incurred by the District had every employee earned all of the per diem days provided by the contract. The amount calculated by the Union would result in a payment to the Supplemental Insurance Pool of more than twice the amount paid by the District. The difference between the parties calculations flows from the fact that, whereas in budgeting for extra per diem days the District calculates their cost on a pro-rated, FTE basis, its practice has been to allow its less than full FTE employees the opportunity to earn full rather than pro-rated days.
The Union based its rollover calculation on the fact that part-time staff earned full days of per-diem days rather than pro-rated days. Since the Union knew that the District paid extra per diem funds on a “headcount” rather than a “pro rata” basis, it assumed that its proposal was clear that the funds paid into the Supplemental Insurance Pool should be the difference between the Employers maximum liability for Per-Diem Days and what was actually paid to the teachers.
V. POSITION OF THE UNION
Union argues that the vast weight of evidence supports its interpretation of the
language in question and that the language is clear and unambiguous on its face.
if the language were ambiguous, the Union notes that it clearly communicated to
the employer “that the deal was to take the difference in the maximum number
of per diem days and subtract from it the days actually used and then transfer
that dollar amount into the insurance pool.”
notes that it proposed the disputed contract language and its meaning and
implications were fully explained at the bargaining table and that it was
repeatedly stated during bargaining that “since the District had already fully
budgeted for the maximum number of possible per diem days no additional money
would be needed to fulfill the District’s obligation,” and that it was only
after “the Union had fully explained the meaning of the language they had
proposed, that the parties agreed to go forward, sign the language and work out
statistical details at a later date.”
The Union also requests that
the Arbitrator maintain jurisdiction over this case until the damages have been
calculated and dispersed to the employees.
VI. POSITION OF THE EMPLOYER
Employer fist argues that the Grievant, (the Union) bears the burden of proof in
this matter and notes that the Union has the burden of demonstrating, by a
preponderance of the evidence, that in agreeing to roll over into the 03-04
insurance pool any extra per diem funds not utilized from 02-03, the District
agreed to pay the difference between the funds actually utilized and the maximum
amount of such funds that could have been utilized. Further the Employer notes
that the collective bargaining agreement must be interpreted in light of all the
surrounding circumstances and in accordance with recognized standards for
contract interpretation to determine the mutual intent of the parties.
Employer also believes that a review of the context of the parties’ agreement
will support their interpretation of the contract, and that the pre-contract
meetings of the parties’ further support their position.
The Employer believes that this will lead to a conclusion that the Union
is seeking to have the Arbitrator “reform” the contract in it’s favor and
that A unilateral mistake of fact on the
part of the Union about the way the District budgeted extra optional day funds
will not support reformation of the contract to reflect an intent the District
District also argues that: “in light of the Union’s admission that it was
aware of issues around the District’s budgeting of per diem day funds and the
calculation of unused per diem funds, the Union’s knowing failure to raise and
resolve these issues during bargaining dooms its position in this grievance,”
and that “because the Union admits it was aware of the FTE versus headcount
issue and consciously decided not to seek resolution of the issue, it has only
itself to blame for the problem that now has developed.”
The applicable standards for contract interpretation are well established. Where the language in a collective bargaining agreement is clear and unambiguous, the arbitrator must give effect to the plain meaning of the language. This is so even when one party finds the result unexpected or harsh. Words are to be given their ordinary and popularly accepted meaning, unless other evidence indicates that the parties intended some specialized meaning. As stated by Elkouri and Elkouri:
Arbitrators have often ruled that in the absence of a showing of mutual understanding of the parties to the contrary, the usual and ordinary definition of terms as defined by a reliable dictionary should govern. The use of dictionary definitions in arbital opinions provides a neutral interpretation of a word or phrase that carries the air of authority.
It is the goal of the arbitrator to interpret the language in the manner the parties intended. “Arbitrators must strive to determine what the parties were attempting to accomplish by the contract language used and to effectuate that intent.”
Unfortunately, as noted above, there is no showing that the parties ever had a common understanding of what the language meant. It is clear that the parties Collective Bargaining Agreement provides:
SECTION 9. INSURANCE BENEFITS (revised 03)
The District shall provide state funded insurance benefits PLUS any Extra
Per Diem funds not utilized as of July 1 each year, provided
however, in the event of a double levy failure, this extra funding will be
suspended pending passage of a future
is unclear is what the language requires. Both
the Union and Employer have vastly different interpretations of the language in
question and to what was intended in bargaining. Two words in the contract seem
to provide a key to the languages best reading, the words “extra” and
“funds.” Extra is defined as:
Main Entry: 1ex·tra
Main Entry: 2extra
Main Entry: 3extra
While the definition of extra funds does not at first appear to be helpful, it could be argued that if “Extra Per Diem” funds is used as a noun (a proper noun referring to a particular fund) that it would support the Employers position. If, however, “Extra” were being used as an adjective, it would tend to support the Union’s argument that the “Extra” “funds” need to be calculated. If the “Extra” needs to be calculated separately from the “fund” balance, this would support the Union’s position. Both approaches are reasonable and do little to clarify the ambiguity.
The question now becomes
one of whether the other operative language in the Collective Bargaining
Agreement provides guidance. The
contract states: “PLUS any
Extra Per Diem funds,” and
the question now becomes one of the meaning to the term “fund.”
Again the dictionary proves less than helpful as it states:
Main Entry: 1fund
Main Entry: 2fund
if the term “Extra Per Diem” funds are used as a noun it would support the
Employers position that it is only obligated to pay out the money remaining in
the “fund,” while if it were used as a transitive verb it would support the
Union’s assertion that the Employer has failed to “fund” their agreement.
It has long been held that an agreement is ambiguous “if plausible contentions may be made for conflicting interpretations thereof.” Section VIII.9 of the parties’ collective bargaining agreement is plainly ambiguous, as the very existence of the instant dispute amply demonstrates. The Union contends that “Extra Per Diem funds not utilized” commits the District to roll over the difference between funds actually used and the maximum funds that could have been used. Under the Employer’s interpretation, the language agreed to by District was based on the understanding that it referred to the difference between funds actually used and the District’s “budget” amount for such funds.
of the Parties
standards of contract interpretation provide a host of accepted rules that
usefully guide an arbitrator in discerning the parties’ mutual intent and/or,
barring that, resolving the situation where a mutual meeting of the minds cannot
Of these many different standards, one plainly is controlling here: the
language should be interpreted consistent with the contract negotiations of the
parties. It is widely
recognized and accepted that the pre-contract negotiations of the parties can
offer a valuable aid in the interpretation of ambiguous provisions.
A commonly applied corollary to this rule holds that an undisclosed
intent cannot prevail in the face of language whose intent was manifested in
some way at the bargaining table.
Washington courts have also followed this “objective” theory of
contracts by focusing on objective evidence of intent that was manifested during
negotiations as opposed to subjective intent that one party may have had but not
If either party in this case could show that the clear intent of their
proposal were communicated to the other side they would prevail.
what did happen at negotiations? We
do know that contract negotiations began in May of
2003 and continued through August of that year.
Final agreement was reached on August 22, 2003, however the parties at
that time were not in agreement as to the cost of the proposal at issue here.
know that on August 17th, the District’s business manager Dave
Curry faxed a document
to the Union and it became an object of discussion during the last bargaining
sessions on August 18th and August 22nd.
This document indicated how the Employer viewed the cost of the Union’s
proposal. Mike Horner testified
that during the meeting on the 22nd he challenged the accuracy
of the document and cited his hand-written Post-It notes on page three of the
exhibit as being illustrative of his concern at the time.
It is clear that on the last bargaining session on August 22nd,
the Union did not agree with the cost the Employer had placed on its proposal. What appears to have happened is that both parties believed
that they had a dispute over the cost of the Union’s proposal when in fact
they had a dispute as to the meaning of the proposal.
While the facts in this case are in dispute, I believe that the most likely explanation of what happened is, that like ships passing in the night, both the Union and Employer misunderstood the position of the other. To the Employer, its position was clear; they had given their costing information to the Union showing their methodology. The Union also believed that all was well, and that they only had a dispute as to how much money would be allocated. Neither party was helped by the fact that Union Exhibit 1 was clearly incorrect on its face and that some recalculation would be in order. The Employer was truly sincere when they stated that they fully funded per-diem days, they did (using their definition of “fully funded”), and in the past the amount allocated was enough to pay for all the per-diem days without supplementing the “fund.” Likewise the Union’s view of “fully-funded” was rational and on the whole would seem to be a more logical way to budget; however, the parties were using undefined terms in a manner that was sure to lead to misunderstanding, a misunderstanding that could not come to light until the details of the funding (or as the Employer would phrase it, the “Fund,”) were discussed, an event that did not happen until after the contract was ratified.
One method commonly used by arbitrators in situations analogous to the one at hand is to construe any ambiguity against the drafter of the language. Elkouri and Elkouri address this issue as follows:
It is incumbent upon the proponent of a contract provision either to explain what is contemplated or to use language which does not leave the matter in doubt. Where doubt exists, any ambiguity not removed by any other rule of interpretation may be removed by construing the ambiguous language against the party who proposed it. It is reasoned that the draftsman, by exactness of expression, can more easily prevent doubts as to meaning.
controlling in this case, the evidence supports a finding that the Union drafted
the language in question, language with two possible meanings, and the burden is
now on the Union to prove by a preponderance of the evidence that they
adequately explained the proposal to the Employer.
it’s opening statement the Union equated the Employer’s action in this case
to a “bait and switch.” However,
the facts seem to indicate otherwise; I can think of no scenario where it would
have been in the Employer’s interest to try to deceive the Union. The results
of such an attempt would approximate what is happening now, an expensive
arbitration in which neither party will really win due to the level of mistrust
it generates and the damage that it will do to the labor-management relationship
for years to come. I believe that
the Union has overestimated the Employer, both in their potential for deception,
as well as their technical sophistication when dealing with the Union’s
As originally stated by Clare Boothe Luce, “no good deed goes unpunished.” So it is in this case. The Union realizing that it had an issue with the calculation of per-diem days choose to act in a high minded manner and allow the issue to be resolved after negotiations when both parties could be called upon to seek consensus in a collaborative spirit. By acting in a forthright and trusting manner the West Valley Education Association exposed its self to the bane of unions in every contract dispute; the burden of proof. The standard of proof for contractual disputes is preponderance of the evidence. Preponderance of the evidence can be defined as:
the standard of proof in most civil cases in which the party bearing the burden of proof must present evidence which is more credible and convincing than that presented by the other party or which shows that the fact to be proven is more probable than not.
the instant case it is likely that both parties were in blissful ignorance of
the intent of the other and both believed that the language in question was
clear on its face. Both parties
were wrong and there was clearly no meeting of the minds as required for
contract formation. This is not a
case of mutual mistake, the parties have agreed on language that is open to two
possible interpretations and to which the rules of contractual construction
provide little help in clarifying. In
relying on the burden of proof to decide this issue it is axiomatic that the
Employer must prevail.
The burden is on the Union to establish that the Employer violated the parties’ Collective Bargaining Agreement. While this was truly a close case, the Union has not demonstrated by a preponderance of the evidence that the Employer violated the agreement.
The grievance is denied. All fees and expenses charged by the Arbitrator shall be shared equally by the Union and the Company, as provided for in Article 9, Section 4, of the Collective Bargaining Agreement,
David Gaba, Arbitrator
December 5, 2004
 Joint Exhibit 1.
 This same process was subsequently followed for 2004-05, using data from 03-04, resulting in a payment into the insurance pool of $50,148.85 for year two of the agreement.
 Seattle School District, 119 LA 481 (2004).
 Elkouri and Elkouri, How Arbitration Works 490-91 (5th ed. 1997).
 City of Davenport, 91 LA 855 (Hoh, 1988).
 Joint Exhibit 1 (emphasis added).
Merriam-Webster Online Dictionary (2004).
 Merriam-Webster Online Dictionary (2004).
 Elkouri, supra at 434, quoting Armstrong Rubber Co., 17 LA 741, 744 (Gorder, 1952).
 See, generally, Elkouri & Elkouri, supra, at 428-484.
 Elkouri & Elkouri, How Arbitration Works (6th Ed., 2003), 453
 Elkouri & Elkouri, supra, at 456-58; Kahn’s and Company, 83 LA 1225, 1230 (Murphy, 1984); Tri-County Metro, 68 LA 1369, 1370 (Tilbury, 1977).
 Retail Clerks v. Shopland Supermarket, 96 Wn. 2d 939, 944, 640 P.2d 1051 (1982); Sherman v. Lunsford, 44 Wn. App. 858, 861, 723 P.2d 1175 (1986).
 Union Exhibit 1.
 Elkouri & Elkouri, How Arbitration Works (6th Ed., 2003).
 Merriam-Webster’s Dictionary of Law, 1996.