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STATE OF MICHIGAN
COURT OF APPEALS


SEAN WERDLOW, CHIEF FINANCIAL OFFICER/FINANCE DIRECTOR; ROGER SHORT, BUDGET DIRECTOR; RUTH CARTER, CORPORATION COUNSEL; ROGER CHEEK, MAYOR'S DESIGNATED REPRESENTATIVE; and CITY OF DETROIT, Plaintiffs-Appellants, v CITY OF DETROIT POLICEMEN AND FIREMEN RETIREMENT SYSTEM BOARD OF TRUSTEES, DETROIT FIRE FIGHTERS ASSOCIATION LOCAL 344, I.A.F.F., and DETROIT POLICE COMMAND OFFICERS ASSOCIATION, Defendants-Appellees.

FOR PUBLICATION January 12, 2006 9:00 a.m.

No. 254516 Wayne Circuit Court LC No. 03-333681-CL

Official Reported Version

Before: Cooper, P.J., and Fort Hood and R.S. Gribbs*, JJ. FORT HOOD, J. A labor dispute between the city of Detroit and the Detroit Police Officers Association (DPOA) was submitted to binding arbitration pursuant to 1969 PA 312 (Act 312), MCL 423.231 et seq.1 The arbitration panel determined that the composition of the pension board would be

Act 312 provides for compulsory arbitration for police and fire departments because they are forbidden from striking. Police Officers Ass'n v Ottawa Co Sheriff (On Reconsideration), 264 Mich App 133, 138; 694 NW2d 757 (2004). To maintain the high morale of employees and efficient department operations, the act provides an alternate, binding procedure for resolution of disputes. Id.
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* Former Court of Appeals judge, sitting on the Court of Appeals by assignment. -1-


altered. Previously an eleven member board, it was concluded that two board members would be replaced and a twelfth member would be added. The same pension board acted on behalf of four different unions, and participation in the arbitration was limited to plaintiff city and the DPOA. Although the arbitration involved only one union, the contract governing the union for the Detroit Police Lieutenants and Sergeants Association (DPLSA) contained an express provision adopting the conditions of the DPOA agreement.2 However, the remaining two unions,3 whose members' retirement benefits were governed by the same pension board as the members of the DPOA, allegedly did not have the same language in their collective bargaining agreements. Nonetheless, plaintiffs alleged that the two remaining unions were bound by the Act 312 arbitration award involving the city and the DPOA through the labor principle of parity.4 Plaintiffs noted the fact that, in the past, the unions had filed suit to obtain wages and compensation that had been negotiated in other Act 312 proceedings. Plaintiffs attempted to seat the twelve-member pension board, but were rejected. Consequently, plaintiffs filed suit to seat the twelve-member board and allow it to govern the four unions regardless of the participants in the Act 312 arbitration ruling that altered the composition of the board. The trial court granted defendants' motion for summary disposition and denied plaintiffs' motion for summary disposition, concluding that violations of due process of law would occur by requiring defendant unions to be bound by an arbitration proceeding in which they did not participate. We affirm the trial court's decision regarding summary disposition, but remand for clarification of the order. I. PROCEDURAL HISTORY On October 9, 2003, plaintiffs filed a complaint for declaratory and injunctive relief.5 This complaint alleged that the Policemen and Firemen Retirement System (the system) was a tax qualified, defined benefit plan established to provide retirement allowances to police officers, fire fighters, and their beneficiaries. Pursuant to federal and state statutory requirements, the

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The application of the arbitration award to the DPLSA is not at issue in this appeal.

The remaining two unions are defendant Detroit Fire Fighters Association Local 344, I.A.F.F. (DFFA), and defendant Detroit Police Command Officers Association (DPCOA). Although the pension board (City of Detroit Policemen and Firemen Retirement System Board of Trustees) is named as a defendant, this entity is involved in order to determine whether the twelve-member board should be recognized.
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"Parity" is defined as "1. equality, as in amount, status or character. 2. equivalence; correspondence; similarity; analogy." Random House Webster's Unabridged Dictionary.

Plaintiffs submitted appendices with their appellate brief that indicated that an amended complaint was filed; however, it was not found in the lower court record. Additionally, it appeared that there were residual lawsuits filed as a result of the attempted enforcement of the Act 312 arbitration between plaintiff city and the DPOA. Defendant DFFA filed a lawsuit requesting injunctive relief to preclude the alteration of the pension board. Moreover, review of the appendices filed by plaintiffs indicated that the pension board also filed litigation because it did not know how to proceed in light of the Act 312 arbitration ruling between plaintiff city and the DPOA. However, there was no order of consolidation in the lower court record.

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assets for the system were held in a trust fund separate and distinct from city assets with administration of the system and the fund by the board of trustees. Plaintiffs asserted that the composition of this pension board was a mandatory subject of bargaining. On June 15, 2001, the DPOA filed with the Michigan Employment Relations Commission (MERC) a petition to initiate Act 312 binding arbitration proceedings involving employment condition disputes, including wages and hours, for a collective bargaining agreement to cover the period from July 1, 2001, to June 30, 2004. The prior collective bargaining agreement had a provision, article 46, that set forth the composition of the board of trustees. These 11 members were: (1) the mayor or his representative; (2) the president of the city council or other council member; (3) the city treasurer or deputy treasurer; (4) the chief of police or designated representative; (5) the fire commissioner or designated representative; and (6-8) three fire fighters who were members of the system and elected by their peers and (9-11) three police officers who were members of the system and elected by their peers (Union Board Members). In the complaint, plaintiffs asserted that the function of the pension board was to render decisions for the benefit of the long-term operation of the retirement system. The board was to act on recommendations of the actuary and could not modify, expand, or increase pension benefits. During the collective bargaining process before the submission to arbitration, plaintiff city proposed amendments of article 46 that would have altered the board composition to provide for equal representation of the employer and the employees "to provide a method of resolving actuarial and non-actuarial issues in the event of a Board deadlock." Because six of the 11 trustees on the board were Union Board Members and union officers, it was asserted that the unions utilized the majority status of the existing article 46 to obtain city benefits that could not be gained through collective bargaining or Act 312 arbitration. It was further alleged that the Union Board Members majority also utilized its status to obtain member benefits not authorized by the system, and that the DPOA opposed this proposal and included the issue in the arbitration. Hearings were held between October 10, 2002, and April 11, 2003, before the arbitration panel issued an award on August 28, 2003. Plaintiffs asserted that the DPOA arbitration panel identified clear and convincing evidence that the unequal representation on the board had affected the city's budget and member benefits. Therefore, the arbitration panel altered the composition of the board and determined that it would consist of: (1) the mayor or his representative; (2) city council president or other council representative; (3) city treasurer or deputy treasurer; (4) finance director or designated representative; (5) budget director or designated representative; (6) corporation counsel or designated representative; (7-9) three member fire fighters elected by peers; and (10-12) three member police officers elected by their peers. Plaintiffs alleged that the DPOA award incorporated the change of the composition of the board into the DPLSA agreement. Plaintiff city was also a party to the collective bargaining agreement with the Detroit Fire Fighters Association, I.A.F.F., Local 344 (DFFA). That agreement expired on June 30, 2001, but continued to be in effect by mutual agreement. Despite the fact that plaintiff city and defendant DFFA were involved in Act 312 arbitration, plaintiffs did not wait to determine the outcome of the proceeding and any effect on the pension board. Rather, plaintiffs alleged that the DFFA agreement provided that its members were the beneficiaries of the same system as the members of the DPOA. Specifically, plaintiffs alleged that the DFFA agreement provided for

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the same board and the same benefits. Therefore, the DPOA agreement addressing board composition was subject to parity and had to be incorporated into the DFFA agreement. On the basis of the contractual principle of "parity," the wages and benefits, including pension benefits, automatically passed to members of the DFFA and were incorporated into the DFFA agreement. Plaintiffs further asserted that these benefits were not separately negotiated by plaintiff city and the DFFA and were not submitted to Act 312 proceedings. Thus, plaintiffs concluded that the DFFA agreement had to be amended to incorporate the DPOA award addressing board composition. Plaintiffs also contended that the Union Board Members majority on the pension board constituted a "cash benefit" to DFFA members. A proposal submitted to the arbitration panel under Act 312 had to be defined as "economic" or "non-economic." Economic proposals involved payment of compensation or benefits to union members, and the panel was required to adopt one party's economic proposal as submitted without modification. Plaintiffs alleged that "[t]he Board composition proposal is clearly one effecting 'compensation' or 'cash benefits' as the Arbitrator in the DPOA Award shows that the Unions majority status has, in fact been a 'cash benefit' to Union members." Plaintiffs further alleged that, based on the Union Board Members majority status, over $230 million of benefits had been obtained in excess of those provided by the system for active employees and retirees. Although plaintiffs alleged that they sought to enforce the Act 312 arbitration award against the DFFA and alleged that the contractual benefits or changes were granted through parity of the agreements, the complaint filed by plaintiffs did not raise traditional claims, but contained the following counts: COUNT I Plaintiffs are entitled to Declaratory Relief that the Composition of the Board is a Benefit Subject to Parity. Union Board Members, Between January 1998 and January 2001, Consistently Rejected the Contribution Rate Computed By The Plan's Actuary For A Higher One To Force the City To Give Union Member Benefits[.] * * * COUNT II [Plaintiffs are entitled] to Declaratory Relief that the Composition of the Board is a Benefit Subject to Parity. [Along With Using Its Majority Status On The Board To Extract Benefits From The City It Cannot Gain Through Collective Bargaining Or Arbitration Pursuant To Act 312, The Union Dominated Board Just "Gives" Its Members Benefits Not Authorized By the Plan(.)] * * * COUNT III

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Plaintiff 's [sic] are entitled to Declaratory Relief that the Compensation [sic, Composition] of the Board is a Benefit Subject to Parity as the DPOA Award Establishes That Board Composition Is An Economic Benefit to Firefighters[.] * * * COUNT IV Pending Resolution of Proper Identity of Trustees, this Court should appoint Special Fiduciaries to assure Ongoing Administration of the Plan and Trust that Protects the Rights of Members and Provides for Orderly Administration[.] * * * COUNT V This Court has Jurisdiction and Authority, Pursuant to

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