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                  THE SUPREME COURT OF NEW HAMPSHIRE

                            ___________________________


Public Employee Labor Relations Board
No. 2013-690


APPEAL OF PROFESSIONAL FIRE FIGHTERS OF HUDSON, IAFF LOCAL 3154
        (New Hampshire Public Employee Labor Relations Board)

                             Argued: June 26, 2014
                        Opinion Issued: October 28, 2014

      Molan, Milner & Krupski, PLLC, of Concord (John S. Krupski on the brief
and orally), for the petitioner.


      Drummond Woodsum & MacMahon, PA, of Portsmouth (Mark T. Broth
and Laurel A.V. McClead on the brief, and Mr. Broth orally), for the
respondent.

      CONBOY, J. The petitioner, Professional Fire Fighters of Hudson, IAFF
Local 3154 (Union), appeals a decision of the New Hampshire Public Employee
Labor Relations Board (PELRB) finding that the respondent, the Town of
Hudson (Town), did not commit an unfair labor practice. We affirm.

I.    Background

      The following facts are drawn from the record, the PELRB decision, or are
otherwise undisputed. The Town is a public employer within the meaning of
RSA 273-A:1, X (2010). The Union is the certified exclusive bargaining
representative of certain members of the Town’s fire department, including
dispatchers, lieutenants, and firefighters. The Town and the Union have been
parties to five collective bargaining agreements (CBAs) dating back to 1991.
Under their most recent CBA, which covered the period of July 2006 through
June 2009 (“2006 CBA”), the Union employees were eligible for step increases
based upon their length of service, as outlined in a wage schedule appended to
the agreement. The 2006 CBA did not contain an automatic renewal clause
(“evergreen” clause) extending the terms of the agreement, in whole or in part,
past its expiration date.

       When each of the four earlier CBAs expired, but before the parties
entered into a successor agreement, the Town provided Union members with
step increases, despite the absence of an evergreen clause in the expired CBA.
After the 2006 CBA expired in 2009, the Town’s budget, which is approved by
the Town’s voters, included monies sufficient to fund step increases for eligible
Union members in each of the budget years 2010, 2011, and 2012. All Union
members received step increases between July 2009 and August 2011. In
August 2011, the Town informed the Union by letter that the Town would no
longer pay wage increases, including step increases. In response to the letter,
the Union filed a grievance pursuant to the procedures in the 2006 CBA. The
matter ultimately proceeded to arbitration.

      At the hearing before the arbitrator, the Town and the Union stipulated
that the issue in dispute was:

             Whether the Town of Hudson violated the Collective
      Bargaining Agreement or past practice between the parties when it
      failed to pay in accordance with the step schedule after August of
      2011? If so, what shall the remedy be?

The Town argued that it had a right not to pay the step increases because the
2006 CBA did not have an evergreen clause and, under the applicable state
law, a public employer is not required to pay step increases after a CBA has
expired. The Union contended that the Town was required to pay the step
increases because there was a binding past practice of paying such increases
during status quo periods.

      The arbitrator determined that a public employer may, but is not
required to, refrain from paying step increases during the status quo period,
and, “[t]herefore, if the employer chooses to fund and pay step increases it is
capable, in concert with the Union, of creating a binding past practice.” The
arbitrator found that the initiation of step increase payments following the
expiration of the parties’ most recent collective bargaining agreement was the
continuation of a past practice. Accordingly, the arbitrator concluded that the
Town violated the 2006 CBA and past practice between the parties when it



                                        2
failed to pay in accordance with the step schedule. The arbitrator ordered the
Town to pay the increases that had accrued since August 2011.

      The Town failed to comply with the arbitrator’s award. The Union filed a
complaint with the PELRB alleging that the Town’s failure to comply
constituted an unfair labor practice, see RSA 273-A:5, I(h), (i) (2010), and
asking, in part, that the PELRB “order the Town to comply with the arbitrator’s
award.” In response, the Town argued that the arbitration award violated the
requirements of RSA 273-A:3, II(b) (2010) (amended 2013) and was contrary to
public policy. The PELRB agreed with the Town, concluding that “[t]he
arbitrator’s award violates a strong and dominant policy, namely the need for
approval by the local legislative body of the expenditure of public monies to
fund benefits like step increases for bargaining unit employees both during a
contract’s express term and during any interval between collective bargaining
agreements.” Accordingly, the PELRB found that the Town did not commit an
unfair labor practice by failing to comply with the arbitrator’s award and,
therefore, dismissed the Union’s complaint. This appeal followed.

II.    Standard of Review

       RSA chapter 541 governs our review of PELRB decisions. Appeal of
Hillsborough County Nursing Home, 166 N.H. ___, ___ (decided Sept. 12, 2014);
see RSA 273-A:14 (2010); RSA 541:2 (2007). Pursuant to RSA 541:13 (2007),
we will not set aside the PELRB’s order except for errors of law, unless we are
satisfied, by a clear preponderance of the evidence, that it is unjust or
unreasonable. The PELRB’s findings of fact are presumed prima facie lawful
and reasonable. RSA 541:13. In reviewing the PELRB’s findings, our task is
not to determine whether we would have found differently or to reweigh the
evidence, but, rather, to determine whether the findings are supported by
competent evidence in the record. Hillsborough County Nursing Home, 166
N.H. at ___. We review the PELRB’s rulings on issues of law de novo. Id.

III.   Analysis

       The Union argues that the PELRB erred in determining that the payment
of step increases during the status quo period violated a strong and dominant
public policy and that the PELRB exceeded its authority by divesting the
arbitrator of the powers that the parties granted to him in their CBA and
stipulated issue. The Union further asserts that the PELRB erred by failing to
address the Union’s equitable arguments and by admitting evidence not
presented at the arbitration hearing. We address each argument in turn.

       A.   Payment of Step Increases

     The Union first argues that the PELRB incorrectly concluded that the
payment of step increases during the status quo period violated a “strong and


                                        3
dominant” public policy. The Union contends that the payment of step
increases during the status quo period did not constitute a “cost item” and was
not prohibited by law; therefore, the Town could and did “bind itself, through a
past practice, to pay step increases during the status quo period.” We
disagree.

       “Administrative agencies are granted only limited and special subject
matter jurisdiction.” Appeal of Amalgamated Transit Union, 144 N.H. 325, 327
(1999) (quotation, brackets, and ellipsis omitted). “Because administrative
agencies act in a quasi-judicial capacity, agencies inherently have limited
jurisdiction to apply strong and dominant public policy as expressed in
controlling statutes, regulations, common law, and other applicable authority,
to address matters necessary to resolve questions arising within the scope of
their jurisdiction.” Id. at 327-28 (citation omitted). “Just as this court will not
enforce a contract or contract term that contravenes public policy, agencies
may, within the confines outlined above, do the same” and may overrule an
arbitrator’s award. Id. at 328 (quotation and citation omitted).

       We begin with an overview of the current state of the law. A CBA is a
contract between a public employer and a union concerning the terms and
conditions of employment. Appeal of Alton School Dist., 140 N.H. 303, 306
(1995). “[A]ny benefit acquired through collective bargaining whose
implementation requires an appropriation by the legislative body of the public
employer” is considered a “[c]ost item.” RSA 273-A:1, IV (2010). Thus, “cost
items” are limited by statute to benefits acquired through collective bargaining;
they do not include financial payments made by the employer in its discretion.
See id. The parties to a CBA are not bound by its cost items unless the
legislative body ratifies them, which occurs only if the legislative body approves
them with “full knowledge of their terms.” Alton School Dist., 140 N.H. at 307
(quotation omitted); see also Appeal of Sanborn Regional School Bd., 133 N.H.
513, 520 (1990) (“[W]hether express or implied, ratification . . . requires full
knowledge of the financial terms of the collective bargaining agreement.”).
“Only cost items shall be submitted to the legislative body of the public
employer for approval . . . .” RSA 273-A:3, II(b) (emphasis added); see Appeal of
Laconia Patrolman Assoc., 164 N.H. 552, 557 (2013). When a CBA ends, so do
the benefits, including cost items, that were acquired through collective
bargaining. See Alton School Dist., 140 N.H. at 311.

      Here, when the 2006 CBA expired, the benefits that the parties had
acquired through collective bargaining also expired. See id. In the absence of
a current CBA, the parties’ “obligations to one another [we]re governed by the
doctrine of maintaining the status quo.” Id. at 307. “The principle of
maintaining the status quo demands that all terms and conditions of
employment remain the same during collective bargaining after a CBA has
expired.” Id. (quotation and brackets omitted). “This does not mean that the
expired CBA continues in effect; rather, it means that the conditions under


                                         4
which the [Union employees] worked endure throughout the collective
bargaining process.” Id. (quotation omitted).

       We have consistently held that “[t]he status quo doctrine does not require
payment of step increases after a CBA expires,” Laconia Patrolman Assoc., 164
N.H. at 557 (quotation and brackets omitted), because, during the status quo
period, the employer must maintain salary levels at the expiration of the CBA
but not schedules of projected salary increases contained within the CBA, see
Milton School Dist., 137 N.H. 240, 245 (1993). See Alton School Dist., 140
N.H. at 307. Thus, “a public employer retains the discretion, but not the
obligation, to grant step increases during the status quo period.” Laconia
Patrolman Assoc., 164 N.H. at 557. Step increases granted at the employer’s
discretion during the status quo period are discretionary payments, not cost
items within the meaning of RSA 273-A:1, IV, because they are not the product
of collective bargaining. See id. However, a public employer may be required
to pay step increases following the expiration of a CBA if the increases are
mandated in an evergreen clause and such cost items have been ratified by the
legislative body. See Alton School Dist., 140 N.H. at 312 (concluding that
evergreen clause was cost item that required ratification to be enforceable).

      The step increases at issue here were granted during the status quo
period, in the absence of an approved evergreen clause; thus, because the
increases were not acquired through collective bargaining, they were not cost
items under the statute. See Laconia Patrolman Assoc., 164 N.H. at 557.
Consequently, because the step increases were discretionary payments, the
Town was not obligated to continue paying them. See id. The Union “does not
contest the fact that the Town had the right not to pay [the] step increases.” It
argues, instead, that, under the facts of this case, the Town’s past practice of
paying step increases “created an obligation that was . . . tantamount to a
waiver of that right.” We are not convinced by the Union’s argument; rather,
we agree with the Town that the payment of step increases, even if a “past
practice,” remains a discretionary matter and does not subject the Town to a
binding obligation. See Appeal of N.H. Dep’t of Corrections, 164 N.H. 307, 309
(2012) (defining past practice).

      Given our well-established rule that the status quo doctrine does not
require payment of step increases after a CBA expires, Laconia Patrolman
Assoc., 164 N.H. at 557, we hold that a “past practice” of granting step
increases during the status quo period cannot, as a matter of law, render such
increases a binding term and condition of public employees’ employment, cf.
N.H. Dep’t of Corrections, 164 N.H. at 309. Here, “[b]ecause the decision to
grant the step increases was discretionary, the [Town] remained free to rescind
them.” Laconia Patrolman Assoc., 164 N.H. at 557.

       To conclude otherwise would allow the parties to a CBA to create — by
their actions — a binding obligation to an expenditure of funds that otherwise


                                        5
would require approval by the Town’s legislative body. Cf. Appeal of City of
Franklin, 137 N.H. 723, 727 (1993) (concluding that monetary provisions in
CBA were “cost items because, in the literal sense, implementation of the
provisions ‘require[d] an appropriation’” (quotation omitted)). The Union
acknowledges as much, recognizing that “a finding of a past practice would
require [funding of the step increases] as a matter of law.” The law does not
support this result.

       We conclude that, in accordance with the “strong and dominant public
policy” expressed in RSA chapter 273-A and our case law, the status quo
doctrine did not require the Town to continue paying step increases after the
2006 CBA expired, even though it had previously provided such increases
during the status quo period. Accordingly, because the arbitrator’s award
violates this policy, the PELRB correctly concluded that the award is not
enforceable.

       We disagree with the Union to the extent that it argues that the Town
was obligated to pay the increases in this case because the voters funded them.
It is undisputed that the Town published an approved operating budget for
2012 — after it had ceased paying the step increases — that included monies
sufficient to fund the step increases for bargaining unit members. The Town
asserts that the Board correctly concluded that there was insufficient evidence
to conclude that the Town properly warned the voters about the cost of the
status quo step increases. Regardless of the voters’ knowledge of the costs,
however, their funding of the step increases is not dispositive. As we have
previously held, Town votes approving funding for step increases during a
status quo period do not obligate a public employer to pay the increases. See
Alton School Dist., 140 N.H. at 311. This is so because it is the public
employer, not the legislative body, that has the authority to negotiate and enter
into collective bargaining agreements, and “[t]he vote of the legislative body is
binding only with respect to cost items.” Id. Allowing the voters to determine
in the first instance — outside the collective bargaining process — which
benefits the public employees will enjoy, “would frustrate the entire collective
bargaining process set forth in RSA chapter 273-A.” Id. Here, as discussed
above, the step increases that the voters arguably funded were not benefits
acquired through collective bargaining and, thus, were not cost items. See id.

       We, therefore, conclude that, even assuming that the voters funded the
step increases with full knowledge of their financial terms, such action did not
mandate that the Town make the payments during the status quo period. We
are also unconvinced by the Union’s argument that the Town’s “failure to pay
[the] agreed upon and funded increases destroys the level playing field
necessary for full and fair negotiations between a public employer and a public
employee.”




                                       6
      Finally, given our holding, we reject the Union’s argument that the
PELRB erred in allowing the “discontinuance of step increase[s] retroactive to
August of 2011, although [its] decision was not rendered until July 11, 2013.”
Requiring the Town to retroactively pay step increases for the period before the
PELRB’s decision would contravene our determination that the Town was not
obligated to pay the increases at all.

      B.   Right to Contest Arbitrator’s Award

       The Union next advances several arguments challenging the Town’s
ability to contest the arbitrator’s award. The Union first argues that the
“PELRB erred when it contravened the stipulated power of the arbitrator to
determine if a past practice existed and to fashion a remedy.” It asserts that
the Town authorized the arbitrator to bind the parties, and, therefore, waived
its ability to contest the arbitrator’s decision. We disagree. Simply because the
Town agreed to submit a stipulated issue to arbitration does not mean that it
agreed to be bound by a decision that violates public policy. As we explained
above, the PELRB has the authority to decline to enforce an arbitrator’s award
that violates a strong and dominant public policy. See Amalgamated Transit
Union, 144 N.H. at 327-30 (finding without merit Union’s argument that public
employer committed unfair labor practice by rejecting the arbitrator’s decision
and affirming PELRB’s finding that arbitrator’s award violated public policy);
Appeal of Merrimack County, 156 N.H. 35, 47 (2007) (affirming PELRB decision
ordering county to comply with arbitrator’s award because it did not violate
public policy). Therefore, the PELRB did not err in deciding the issue.

      Next, the Union raises three arguments asserting that the Town was
time-barred from contesting the enforceability of the arbitrator’s award. The
Union first argues that the Town alleged that the Union made a wrongful
demand to arbitrate but failed to oppose the arbitration within the necessary
timeframe. In the alternative, the Union asserts that the Town did not timely
challenge the substantive arbitrability of the dispute. Finally, the Union
contends that the Town did not timely challenge the enforceability of the
arbitrator’s award. The Union argues that, under each of these theories, the
Town did not contest the arbitration within the statutory time limits
established in RSA chapter 273-A, and, therefore, the PELRB was without
jurisdiction to decide whether the arbitrator’s award violated a strong and
dominant public policy.

      The Union mischaracterizes the assertions that the Town made to the
arbitrator. The Town did not allege that the Union made a wrongful demand to
arbitrate. Rather, it alleged that it had the discretion to stop paying the step
increases during the status quo period. Also, as the arbitrator noted, the Town
did not argue that the dispute was not substantively arbitrable, and nothing in
the Town’s filings before the PELRB can be read to challenge the substantive
arbitrability of the Union’s complaint. Because the Town did not contend that


                                       7
the Union made a wrongful demand to arbitrate and did not challenge
substantive arbitrability, it was not restricted by the statutory time frames.
Instead, as the PELRB noted, the Town challenged the validity of the
arbitrator’s decision on public policy grounds. Because such a challenge
necessarily could not arise until after the arbitrator issued his decision, the
Town was not time-barred from contesting the enforceability of the decision.

       We recognize that the Town’s answer to the Union’s PELRB complaint
asserted a “counterclaim” that “[i]t is an unfair labor practice for the Union to
seek enforcement of an arbitration award that is unlawful” or “contrary to
public policy.” The PELRB, however, noting that its rules “do not allow for the
filing of a counterclaim,” treated these allegations “as part of the Town’s answer
and defense . . . and not an unfair labor practice charge.” Even if we were to
assume that the Town’s allegation constituted an unfair labor practice charge,
it would not have been time-barred because the claim arose only upon the
Union’s attempt to enforce the arbitrator’s award. See RSA 273-A:6, VII (2010)
(requiring PELRB to dismiss complaints regarding alleged violations that
occurred more than six months before complaint was filed). Thus, we conclude
that the Town did not waive its right to challenge the award on public policy
grounds by not raising the issue earlier.

      C.    Laches

      The Union further argues that the PELRB erred by failing to address its
argument based upon laches. The Union is correct that the PELRB did not
address its laches argument. Because neither party argues otherwise, we
assume, without deciding, that the PELRB would have had jurisdiction to
decide such an equitable claim. But see Appeal of Somersworth School Dist.,
142 N.H. 837, 841 (1998) (recognizing that the PELRB’s broad jurisdiction
applies only to those matters specifically encompassed by the pertinent
statutes, and that those statutes do not give the PELRB the ability to grant all
equitable remedies). We recognize that the application of laches, as an
equitable doctrine, is a question of fact for the trier of fact to decide in the first
instance. See Appeal of Belair, 158 N.H. 273, 279 (2009). However, we
conclude that, on the facts of this case, the issue can be decided as a matter of
law.

       The Union asserts that “the Town had knowledge of their right not to pay
step increases absent a contractual obligation as early as 1993.” The Union
contends that the Town, by ultimately deciding not to grant step increases “in
the face of tumultuous collective bargaining negotiations,” “alter[ed] the level
playing field” and “gained an economic advantage over the members of [the
Union].” Because of these actions, the Union argues that its members were
prejudiced by “forever be[ing] artificially retarded in their economic and wage
growth.”



                                          8
       “Laches is an equitable doctrine that bars litigation when a potential
plaintiff has slept on his rights.” In the Matter of LaRocque & LaRocque, 164
N.H. 148, 151 (2012) (quotation omitted). “Laches, unlike limitation, is not a
mere matter of time, but is principally a question of the inequity of permitting
the claim to be enforced — an inequity founded on some change in the
conditions or relations of the . . . parties involved.” Appeal of Plantier, 126 N.H.
500, 505 (1985) (quotations omitted). “Because it is an equitable doctrine,
laches will constitute a bar to suit only if the delay was unreasonable and
prejudicial.” Prof. Fire Fighters of Wolfeboro v. Town of Wolfeboro, 164 N.H.
18, 24 (2012). The Union, as the party asserting laches, “bears the burden of
proving both that the delay was unreasonable and that prejudice resulted from
the delay.” Id.

       Based upon our holding that the Town was under no obligation to
continue paying step increases, we conclude that the Town did not engage in
an unreasonable delay in its actions. The Union asserts prejudice in that its
members’ future wage growth will be restricted by the Town’s cessation of the
status quo step increases. However, this is not the type of prejudice that
laches contemplates. The laches doctrine requires that the prejudice stem
from the alleged delay. See Miner v. A & C Tire Co., 146 N.H. 631, 634 (2001)
(affirming trial court conclusion that laches did not bar relief, in part, because
plaintiff’s delay in filing suit did not further prejudice defendants and
defendants benefited from delay). Here, assuming that the Union’s argument is
that the Town unreasonably delayed by not declining to give the step increases
in 1993 when it first had knowledge of its ability to do so, the Union has failed
to articulate how it was injured by this delay. Rather, it would appear that the
Union benefited from receiving the status quo step increases, granted at the
Town’s discretion, throughout the intervening status quo periods. Thus, we
conclude, as a matter of law, that the PELRB could not have found that laches
barred the Town from denying the step increases.

      D.    Disparate Treatment

       In its brief to this court, the Union also asserts that the PELRB erred by
failing “to address the properly raised equitable doctrine[] of . . . disparate
treatment” but provides no developed argument on this issue. See Appeal of
Northern New England Tele. Operations, LLC, 165 N.H. 267, 275 (2013). More
importantly, the Union did not raise the issue of disparate treatment in its
complaint, did not address it in the hearing before the PELRB, and gave it only
cursory, undeveloped treatment in the closing brief that it submitted to the
PELRB. Consequently, we decline to hold that the PELRB acted unjustly or
unreasonably in failing to address the Union’s disparate treatment argument,
see Hillsborough County Nursing Home, 166 N.H. at ___.




                                         9
      E.   Admission of Evidence by PELRB

       Finally, the Union argues that the PELRB exceeded its authority by
allowing the Town to present evidence that was not presented to the arbitrator.
At the hearing before the PELRB, the Union objected to the Town’s submission
of the Town’s financial records that were made available to voters prior to
voting each year. The Town argued that the exhibits were necessary to
establish the public policy consideration underlying its objections to the
arbitrator’s award because, from the Town’s perspective, the issue was not
whether the Town had budgeted for the increases, but rather whether the
public had been adequately warned and had given its approval to fund those
increases.

      We need not address this issue because even if it was error for the
PELRB to admit the additional evidence, reversal is not warranted inasmuch as
the Union was not prejudiced by the error. Our holding that the Town was not
required to pay the status quo step increases is not dependent upon whether
the voters approved them with the full knowledge of their terms. Rather,
because the status quo step increases were not the result of collective
bargaining, the Town had no obligation to continue paying them, regardless of
whether the voters had approved their funding. See Alton School Dist., 140
N.H. at 310-11; see also Laconia Patrolman Assoc., 164 N.H. at 557.
Therefore, the additional evidence was irrelevant to the outcome of this case.

                                                 Affirmed.

      DALIANIS, C.J., and HICKS, LYNN, and BASSETT, JJ., concurred.




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