Lawsuit between Auburn, police union has high stakes

Parties make second attempt at reaching a settlement
By: Jon Schultz, Journal Staff Writer
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By the numbers

$830,496 – Amount the City’s sales tax receipts fell short of what was budgeted for in the fiscal year 2008-09

$190,988 – Amount the City’s sales tax receipts exceeded what was budgeted for in the fiscal year 2011-12

$180,000 – Total amount of additional wages members of the Auburn Police Officers Association would have received up to this point if the City had given them the disputed raise in 2009

$75,374 – Total amount of attorney fees the City has paid to two separate firms related to the APOA lawsuit and grievance

10 – Percent of the most common pay reduction that hit all City employees in 2009

3 – Percent of the disputed salary increase the APOA had been denied by the City in July 2009 


Source: City of Auburn


What is the APOA?

The Auburn Police Officers Association as a non-profit union that represents about a dozen of the city’s officers who aren’t in supervisor positions.

The supervisors, or sergeants, split off into their own union in recent years.

Membership in the APOA is strongly encouraged but there is a process through which officers can opt out.


Source: APOA attorney Sean Howell


As the City and the Auburn Police Officers Association continue negotiating a new contract, discussion over a possible settlement has been brought back to life in an ongoing court battle that has cost the City’s general fund $75,374 in attorney fees.

It is reopening a dialogue that failed to reach a common ground two years ago, leading to the APOA to file a lawsuit over a 3 percent raise it was scheduled to receive in July 2009 that the City denied on the grounds of economic hardship.

Now the case awaits an argument date at the California Third District Court of Appeals. Whether or not it gets there will depend on if a settlement can be reached. In any case, much is at stake for both sides.

If the City loses the appeal, it could allow an arbitrator to decide how much the City should pay its employees – taking that power away from the City Council members who are held accountable by voters, said City Attorney Michael Colantuono.

When the APOA petitioned the court, it also asked the City for backpay on the 3 percent raise it was denied. Currently, that amounts to a $180,000-and-growing total, City Manager Bob Richardson said.

Stan Hamelin, APOA president, said it’s not about the money.

“It was about a lack of due process,” Hamelin said. “It’s one of the fundamental principles of this country established by our founding fathers. We were denied that.”

The APOA filed a grievance because the City Council was allowed, in a closed session, to make its ruling on the contract dispute – without any input from the union or any findings to back its decision, he said.

On Feb. 7, 2011, Placer County Superior Court Commissioner Margaret E. Wells ruled that the City had denied the APOA due process and ordered that it afford the union an impartial hearing on the interpretation of the contract’s language.

The commissioner declined to rule on the issue of the backpay because that raise would be contingent on the outcome of the hearing she ordered, said Sean Howell, the attorney representing the APOA.

“If the court of appeal were to make the mistake Commissioner Wells made, it would be a very significant change in how the City of Auburn manages its finances,” Colantuono said. “But I think the likelihood of that is very small.”


Contract dispute

The labor agreement negotiated in 2007 between the APOA and the City provided for two separate pay raises in 2009: a 2 percent equity adjustment and a 3 percent salary increase.

The City denied both pay increases that year as it experienced financial hardships during the recession.

The APOA claims that the City did not have a right to withhold the 3 percent increase.

The discrepancy lies within the language of the contract as it reads: “Further, in the event sales tax receipts received are less than the amount set forth in the adopted budget, such event shall also result in the suspension of any salary increase referenced in this Memorandum of Understanding.”

The APOA claims a clerical error left in the above reference to “salary” where it should have said “equity,” while the City contends that was not an error, and that the contract allows the City to deny all salary increases based on certain financial factors, according to court documents.

“In the fiscal year 2009, the City’s budget continued to be substantially negatively affected due to the ongoing declining economy,” Richardson said in a court document. “The sales tax receipts for the fiscal year 2009 were substantially less than the amount set forth in the adopted budget.”

The City received $830,496 less than the $3,930,122 of sales tax in the adopted budget for the fiscal year starting July 1, 2008 to June 30, 2009, said Andy Heath, Auburn’s administrative services director. For comparison, the City budgeted $3,271,481 in sales tax for the 2011-12 fiscal year and collected $190,988 more than that.

“All City employees took essentially the same cuts,” during the time the APOA was denied its raises, Richardson said. The most common cuts were a 10 percent reduction in pay and 10 percent reduction in benefits, he said.

The APOA argued in its petition that the contract “clearly states the equity increase was the only increase/adjustment the City could withhold.” It alleged the word “salary” occurred seven times in a draft of the contract, and all but one had been changed for the final version in an attempt to clarify that use of a general word.

The APOA filed a grievance and after it failed to reach an agreement with the City during mediation, the matter went to City Council where it determined in a closed session that, indeed, the 3 percent raise could be withheld.

“The only parties that were allowed to attend were the City Council, the city manager and its legal counsel. So the APOA was not allowed to present testimony or evidence to support its side of the argument,” Hamelin said. “There is no record of what was presented, and that’s what initiated the lawsuit.”

If the trial court’s ruling is upheld, it could affect the contracts of all the City’s employee unions, Howell said.

“It would require the City of Auburn to do what every other public employer understands, acknowledges and accepts that it has to do, which is provide due process to the union members when there is a dispute between parties,” he said.

The current grievance process includes a step for mediation, where both parties pay about $1,000 to have their sides of the argument heard and the mediator attempts to work it out, Howell said. In the APOA’s case, that step preceded the City Council’s closed session ruling on the matter, he said.

“This is the part that is really frustrating,” Howell said. “There’s not a reason why we can’t forgo the mediation process and just have the mediator be the hearing officer. … It would not cost the City any more money, and that’s where we’re having the problem.”


Power struggle

On March 18, 2010, the APOA filed a lawsuit seeking to have the City’s decision set aside, to be afforded an impartial hearing and to receive the pay denied to them because the raise had been denied.

In her ruling, Wells did not address whether the City’s denial of the police officer’s raise was allowed by the contract. Instead, she ruled the “APOA was denied its due process rights in that the grievance procedure provided” for in the contract because it did not afford an impartial hearing.

Colantuono said Wells erred fundamentally because the type of judicial remedy sought by the APOA, a “writ of administrative mandamus,” should not have been available to them.

It requests that the Superior Court review and reverse the final decision or order of an administrative agency, in this case, the City.

The writ didn’t apply to this circumstance because that legal solution is only available for courts to review the outcome of a hearing at which evidence is gathered, he said.

“But there was no hearing at which evidence was gathered because the parties didn’t contract for that kind of a process,” he said. “The trial court was a commissioner very close to retirement, who I think just wanted this case out of her courtroom.”

Wells announced her retirement Aug. 31, 2011, about 6 1/2 months after making her decision on the case. She declined to comment on her ruling when contacted by the Journal this week.

“The City never agreed to surrender its right to decide what it could afford to pay its employees to an arbitrator, and Commissioner Wells ordered the City to go let an arbitrator decide how much we could afford to pay our employees,” he said. “And on that principle, the City Council was resolute. They have never agreed to surrender control of their budget to anybody, and they’re never going to.”

The City appealed the decision, and the parties are awaiting an argument date when a three-judge panel will hear their case and then have 90 days to reach a decision, Colantuono said. In the meantime, the panel is likely making a tentative ruling based on the appeal briefings and trial court record, he said.

Colantuono expects an argument date to be set for early 2013.

He could easily see the City winning the appeal and the case going back to “square one” in trial court; but what he hopes is that the appeals court goes further and says the City construed the contract properly and therefore there’s no point in starting over, he said.

“(The courts) have no right to compel the City Council to transfer its budget responsibility to somebody who is not accountable to the voters, and that is one of the questions the court of appeal will have to decide, so technically we’re having this argument about the size of the table,” he said. “We’re arguing about the process by which this dispute could be resolved.”


Settlement looming?

The City and the APOA are in the process of negotiating a new contract, as its last two-year agreement expired this summer, Hamelin said. Though the lawsuit and the contract negotiations are separate issues, discussions about a settlement happened to crop up around the same time.

“I’m hopeful one will come soon,” Hamelin said.

“It seems to me that since we’ve been talking that, as of this summer, they’ve decided that they wanted to go ahead and try to resolve it,” he said. “So we went ahead and agreed to try to resolve it once again.”

The sides said they last met to discuss a settlement in October.

Asked whether back pay on the 3 percent raise would be required to reach a settlement, Hamelin said “I wouldn’t say that,” but he declined to elaborate further on negotiations. City officials also declined to comment on ongoing settlement and contract talks.

Colantuono said during contract negotiations in 2010, the two sides discussed a settlement on the grievance before the matter went to court, but the “economic concessions” sought by the APOA at that time did not justify the value of a settlement.

“This wasn’t something that we sought to do,” Hamelin said. “This was the last resort – let’s put it that way. We tried on numerous occasions to resolve the grievance prior to being embroiled in such a suit.”


Jon Schultz can be reached at Follow him on Twitter @Jon_AJNews