Decision 2858M – City and County of San Francisco

The City’s unlawful interpretation of its Charter caused it to refuse for more than three months to consider, much less bargain about, the union’s retroactive pay proposal, a per se failure to bargain in good faith. (City of Glendale (2020) PERB Decision No. 2694-M, pp. 64-65; County of Sacramento (2020) PERB Decision No. 2745-M, pp. 24-25.) (p. 12.)

After three months, the City eventually stopped unlawfully interpreting its Charter and bargained over the union’s proposal for a retroactive payment. But retraction is not available as a defense to having applied a local rule unlawfully and engaged in per se bad faith bargaining, and even when a retraction defense is available against a bad faith bargaining claim, retraction after three months of bad faith conduct does not immunize a party against liability. (p. 13.)

Under the MMBA, a local agency may adopt reasonable rules and regulations about resolution of collective bargaining disputes. (MMBA, § 3507, subd. (a)(5).) To be lawful, such rules and regulations may not undercut or frustrate the MMBA’s policies and purposes. Therefore, whether a local agency has adopted its rules, regulations, or charter provisions via a vote of its electorate, a vote of its governing board, or through any other means, the resulting policies must be consistent with the MMBA. The burden of proof is on the party challenging such a rule. (City and County of San Francisco (2020) PERB Decision No. 2691-M, pp. 20-21.) (pp. 7-8.)

The home rule doctrine does not alter the fact that a city’s charter must be consistent with the MMBA. (Boling v. Public Employment Relations Board (2018) 5 Cal.5th 898, 913, citing People ex rel. Seal Beach Police Officers Assn. v. City of Seal Beach (1984) 36 Cal.3d 591, 600 [“[G]eneral law prevails over local enactments of a chartered city, even in regard to matters which would otherwise be deemed to be strictly municipal affairs, where the subject matter of the general law is of statewide concern”].) (p. 8.)

A facial challenge is based only on the text of the rule. A facial challenge is an appropriate means to challenge an employer rule or policy that is alleged to have a chilling effect on employees or a union, or otherwise to interfere with or impinge on protected rights, even before being applied. In City and County of San Francisco (2020) PERB Decision No. 2691-M, PERB determined that Charter sections survived a facial challenge if but only if they are interpreted to avoid tilting the playing field in the City’s favor and to allow adequate time for good faith negotiations and good faith impasse resolution. To save the challenged Charter provisions from facial invalidity, PERB necessarily interpreted the provisions as follows: (1) the section’s submission deadline must be interpreted as the time by which the City and its union negotiating partners should submit those substantive terms of their next MOU that are fully agreed-upon or which an arbitrator has ordered by that date, together with any agreed-upon or ordered contract provisions requiring the parties to engage in further, mid-contract negotiation and/or interest arbitration on any issues meriting such further processes; and (2) the section must be interpreted as allowing such mid-contract negotiation or interest arbitration procedures to establish enhancements that take effect mid-year or retroactive to any date. Because Charter section A8.409-4(k) can be interpreted lawfully and is not facially invalid, the Board held that any future cases involving the provision should be litigated on an as-applied basis. (pp. 9-12.)

City violated the MMBA by unlawfully interpreting its Charter and thereby refusing to bargain over retroactivity for more than three months. The City is not immune from liability for new unlawful conduct vis-à-vis a different union merely because it had interpreted its Charter unlawfully in an earlier instance involving a different union and had a pending appeal regarding PERB’s decision in that case. Indeed, if anything, the earlier decision against the City put it on notice that it was acting at its peril if it continued to engage in the same conduct in negotiations with a different union. (pp. 12-13.)

A party seeking an award of attorney fees or other litigation expenses based on legal work performed in that case normally must meet a standard akin to that under Rule 11 of the Federal Rules of Civil Procedure, showing that its opponent pursued a frivolous argument in bad faith. (Sacramento City Unified School District (2020) PERB Decision No. 2749, p. 11 (Sacramento City USD).) In contrast, for a charging party to obtain an award based on some or all of the cost of bargaining or otherwise representing employees, it need only show by a preponderance of the evidence that the offending party’s conduct caused a harm and that it is reasonably feasible to estimate the financial impact. (City of Palo Alto (2019) PERB Decision No. 2664-M, p. 8, fn. 6; see also Alliance Judy Ivie Burton Technology Academy High et al. (2022) PERB Decision No. 2809, pp. 14, 31-32 [judicial appeal pending]; Oxnard Union High School District (2022) PERB Decision No. 2803, p. 3; County of Santa Clara (2021) PERB Decision No. 2799-M, p. 28, fn. 14; Sacramento City USD, supra, p. 2749, p. 15; City and County of San Francisco (2020) PERB Decision No. 2691-M, p. 51, fn. 32.) (p. 15.)

City of Palo Alto (2019) PERB Decision No. 2664-M, p. 8, fn. 6 (Palo Alto) noted federal private sector labor law precedent that distinguishes between recovery of litigation costs and bargaining costs. (Id. at p. 8, fn. 6 [the “American Rule”—under which parties bear their own litigation costs absent egregious litigation conduct by the opposing party—is inapplicable to bargaining costs].) To the extent federal precedent requires a prevailing party seeking negotiation costs to show that its counterpart’s violations were particularly egregious, such a rule improvidently imposes a version of the American Rule for recovering negotiation costs. Adopting this approach would contravene the dual make-whole and deterrent functions of PERB remedies. Instead, under the statutes PERB administers, the severity of a respondent’s bargaining violations is relevant in assessing causation and the extent of damages. For instance, an egregious violation is more likely than a minor one to make bargaining unproductive for a longer time, thereby increasing the amount of bargaining costs attributable to the violation. (p. 16, fn. 9.)

Just as an award of attorney fees and costs should not lose significant value because of extended litigation over the precise amount owed under the award (Bellflower Unified School District (2022) PERB Decision No. 2544a, pp. 56-57), the same is true for an award of bargaining costs. Therefore, after PERB awards bargaining costs, if subsequent disputes over the award’s value extend to such a degree that counsel for the prevailing party must perform work beyond drafting a first set of declarations and supporting briefing, then any further, reasonable time spent effectuating the award of fees and costs may be compensable irrespective of whether the opposing party acts frivolously in litigating the award’s value. (See Sacramento City Unified School District (2020) PERB Decision No. 2749, pp. 19-20.)

Bargaining costs were proper make-whole relief where a preponderance of the evidence showed that the City’s MMBA violations illegally frustrated negotiations for more than three months, thereby imposing extra bargaining costs on the union. That portion of union negotiator’s salary attributable to time spent on the negotiations during that period may be compensable, as determined in compliance proceedings. Indeed, in City and County of San Francisco (2020) PERB Decision No. 2691-M, when the Board rejected the charging party’s claim that Charter section A8.409-4(k) is facially invalid, the Board noted that if the City did not interpret its Charter lawfully in the future, a charging party could obtain “reimbursement of costs, including but not limited to costs of bargaining, mediation, or interest arbitration.” (Id. at p. 51, fn. 32.) Accordingly, PERB ordered reimbursement of the union’s bargaining costs. (p. 17.)