                                                                                                       E _ iLI- D
                                                                                                COURT OF APPEALS
                                                                                                    D111 113100 II

                                                                                               2013 DEC { 7    AM D: 50




   IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                                 DIVISION II

SNOHOMISH COUNTY PUBLIC                                                     No. 43783 -0 -II
TRANSPORTATION BENEFIT AREA d /b /a
COMMUNITY TRANSIT,


                                    Appellant,


          V.



STATE OF WASHINGTON PUBLIC                                            UNPUBLISHED OPINION
EMPLOYMENT RELATIONS
COMMISSION and AMALGAMATED
TRANSIT UNION, LOCAL 1576,




          QUINN- BRINTNALL, J. —           Snohomish County Public Transportation Benefit Area d /b /a

Community Transit appeals from the superior court' s order affirming an administrative order

issued   by    the Public Employment Relations Commission ( "PERC "). In the administrative order,



PERC ruled that Community Transit committed an unfair labor practice when it insisted to

bargaining      to impasse   a permissive subject of collective      bargaining. Community Transit argues

that PERC' s      order   is invalid for three   reasons: (   1) PERC misinterpreted, or misapplied the law,


 2) PERC exceeded its statutory authority, and ( 3) PERC' s order was arbitrary and capricious.

Based on PERC' s earlier, unchallenged conclusion that the provision at issue was a waiver

clause,    PERC properly       concluded   that the   provision was a permissive subject of     bargaining    and
No. 43783 -0 -II



Community Transit committed an unfair labor practice by insisting to impasse on a permissive

subject of bargaining. Accordingly, we affirm.

                                         FACTS AND LEGAL BACKGROUND


             Amalgamated Transit Union, Local 1576 ( Amalgamated), represents bus drivers and


other   transit   workers employed         by Community Transit.' From 1979 to 2007, Community Transit

and     Amalgamated         executed       a   series   of   collective   bargaining     agreements.      Among their

provisions, the parties' collective bargaining agreements have included ( 1) a management rights
       2(
clause ,       2) procedures for grievances filed either by the union or by an individual employee, and

 3)    a provision      known     as "   Section 18. 2."     Section 18. 2 applies when, during the life of the

collective bargaining agreement, Community Transit changes the employee rules, including

standard operating procedures and the performance code.

             In 1997, Amalgamated brought an unfair labor practices complaint against Community

Transit alleging that Community Transit unilaterally made changes to mandatory subjects of

bargaining. 3 Amalgamated Transit Union, Local 1576 v. Cmty. Transit, No. 13219 -U -97 -3216,

 1998 WL 1978452, at * I ( Wash. Pub. Emp' t Relations Comm' n July 23, 1998). In a 1998 order


dismissing the complaint, PERC ruled that under Section 18. 2, Amalgamated waived its right to

bargain Community Transit' s changes to the employee rules during the life of the contract.

      The                        includes the      following   job   classifications:    coach operators, dispatchers,
            bargaining    unit

 instructors,      customer       information       specialists,     sales   and   distribution     specialists,   facility
 maintenance leads, workers, journey workers, and internal security officers.
 2
     A management rights clause is generally a clause that allows management to maintain control
 over       decisions   with respect      to the   operation and management         of   the   organization.   See Pasco

 Police Officers' Ass' n v. City ofPasco, 132 Wn.2d 450, 455 -56, 938 P.2d 827 ( 1997).

 3 In the predecessor agreement considered by PERC in 1998, the Section 18. 2 language was
 found in Section 19. 2.         Otherwise, the language is exactly the same.

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No. 43783 -0 -II


Amalgamated, 1998 WL 1978452,                at *   6.   Therefore, the 1998 PERC decision defined Section


18. 2   as a waiver clause.      Neither party appealed PERC' s 1998 decision interpreting the identical

language at issue here.


            Years later, Community Transit and Amalgamated attempted to negotiate a successor to

the     collective   bargaining    agreement      that   expired        December 31,    2007.      During negotiations,

Amalgamated sought to revise Section 18. 2. For its part, Community Transit sought to retain the

Section 18. 2 language without amendments. A mediator ultimately found the parties reached an

impasse on Section 18. 2 and certified the issue to interest arbitration.


            Amalgamated filed an unfair labor practice complaint, alleging that Section 18. 2 is a

permissive subject of bargaining and that Community Transit committed an unfair labor practice

because it insisted to impasse          on a permissive subject of            bargaining. After convening a hearing

on the complaint, a hearing examiner entered findings of fact and conclusions of law relying on

the     earlier   interpretation   of   Section     18. 2   and,      thus,   determining that Section 18. 2 was a

permissive        subject of   bargaining. Accordingly, the hearing examiner decided that Community

Transit committed an unfair labor practice by insisting to impasse on a permissive subject of

bargaining.

                          Transit                the   hearing       examiner' s   decision to PERC. PERC affirmed,
            Community               appealed




                     hearing                 findings       of   fact   and   conclusions   of   law.   In affirming and
 adopting the                  examiner' s




 adopting the hearing examiner' s order, PERC explained that Community Transit was bound by
 the previous interpretation of Section 18. 2 as a waiver provision and that it could not now argue

 it   was   a managerial rights provision.          Therefore, an earlier decision, Whatcom County Deputy

 Sheriff's Guild v. Whatcom County, No. 15383 -U -00 -3889, 2004 WL 725698 ( Wash. Pub. Emp' t
 Relations Comm' n Feb. 11,             2004),    controlled the outcome rather than the balancing test in

                                                                 3
No. 43783 -0 -II



International       4ss'   n       of Fire    Fighters, Local      Union      1052   v.   Public Employment Relations


Commission, 113 Wn.2d 197, 203, 778 P. 2d 32 ( 1989), which is used to determine whether a


hybrid provision is primarily concerned with mandatory or permissive subjects of bargaining.

Because waiver provisions are permissive subjects of bargaining under Whatcom County, PERC

concluded that the hearing examiner properly decided that Community Transit committed an

unfair labor practice by insisting to impasse on a permissive subject of bargaining.
                                                                                                              4
                               Transit then                    for judicial   review of    PERC'   s order.       The superior
          Community                              petitioned




court denied Community Transit' s petition and affirmed PERC' s order. Community Transit now
                               5
appeals   to this   court.



                                                             RNOVEIVAIA30k,


          Community            Transit       argues   that PERC' s     order   is invalid.    First, Community Transit

argues that PERC misapplied the law by ( 1) failing to engage in the balancing test set out in Fire

Fighters, 113 Wn.2d at 203; and ( 2) determining that Section 18. 2 is a permissive subject of

bargaining.     Second, Community Transit argues that PERC exceeded its statutory authority by

creating   a novel unfair            labor   practice. -   Third, Community Transit argues that PERC' s order was

arbitrary and capricious because it summarily determined that Section 18. 2 was a permissive

subject of bargaining. We disagree.

          The Administrative Procedure Act (APA), ch. 34. 05 RCW, governs this court' s review of


PERC'     s order   in   an unfair      labor    practice case.    RCW 41. 56. 165; Pasco Police Officers' Ass' n v.


 City   of Pasco, 132 Wn.2d 450, 458, 938 P. 2d 827 ( 1997).                     Under the APA, the party challenging




 4 PERC chose not to appear in the superior court or defend its order on judicial review.

 5 In support of Community Transit' s argument, the Washington State Association of Municipal
 Attorneys filed a brief as amicus curiae.
                                                                   4
No. 43783 -0 -II



the agency'         s   action      bears the burden         of    demonstrating its invalidity.                RCW 34. 05. 570( 1)( a).


There are nine circumstances under which we may grant relief from an agency order, including

 1)    the    order       is    outside     the    agency'   s    statutory authority, ( 2)            the agency has erroneously

interpreted         or     applied      the       law,    and (    3)   the    order     is    arbitrary      and    capricious.      RCW


34. 05. 570( 3)( b), ( d), ( i).            When reviewing agency action under the APA, we sit in the same

position as the superior court and apply. the APA standards to the record before the agency.

Mader        v.   Health Care Auth., 149 Wn.2d 458, 470, 70 P. 3d 931 ( 2003).                                 Accordingly, we review

PERC' s order, not the decision of the superior court or the hearing examiner. City of Vancouver

v.    Pub.   Emp' t Relations          Comm'       n,    107 Wn.    App.      694, 703, 33 P. 3d 74 ( 2001), review denied, 145


Wn.2d 1021 ( 2002).


             We review PERC' s conclusions of law de novo and may substitute our interpretation of

the    law for that            of   PERC.     Pasco Police, 132 Wn.2d               at   458.     At the      same   time,   we   give "   due


deference" to            an administrative           agency       on matters     falling      within   its   area of expertise.     Port of

Seattle      v.   Pollution Control Hearings Bd., 151 Wn.2d 568, 595, 90 P. 3d 659 ( 2004).                                       PERC has


expertise         in labor relations.             Christensen v. Grant County Hosp. Dist. No. 1, 152 Wn.2d 299,

319, 96 P. 3d 957 ( 2004).                     Therefore, PERC' s expertise in labor relations deserves the due

deference          of a   reviewing         court.       See Pub. Emp' t Relations Comm' n v. City of Kennewick, 99

Wn.2d 832, 842, 664 P. 2d 1240 ( 1983).


             Community Transit argues that PERC erroneously interpreted or applied the law because

     1) PERC failed to conduct the balancing test adopted in Fire Fighters, and (2) PERC concluded

 that Section 18. 2             was a permissive subject of             bargaining.           We disagree. Here, the Fire Fighters


 balancing test would be necessary if Section 18. 2 were a management rights clause; however,

 because PERC already determined that Section 18. 2 is a waiver clause, PERC appropriately

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No. 43783 -0 -II



applied   its   earlier   decision in "              atcom County to conclude that Section 18. 2 is a permissive

subject of bargaining.

          Washington law distinguishes between mandatory and permissive subjects of collective

bargaining.      See,    e.   g.,   Yakima County v. Yakima County Law Enforcement Officers' Guild, 174

Wn.   App.      171,    181, 297 P. 3d 745,             review     denied, 178 Wn.2d 1012 ( 2013).                  On mandatory

subjects, the parties must bargain in good faith; if they reach an impasse on a mandatory subject,

their dispute     will    be    resolved        through    interest   arbitration.   Pasco Police, 132 Wn.2d at 460 -61.


In contrast, the parties may bargain on permissive subjects, but they are not required to do so.

Klauder v. San Juan County Deputy Sheriffs' Guild, 107 Wn.2d 338, 342, 728 P. 2d 1044 ( 1986).

Insisting to impasse on a provision addressing a permissive subject is an unfair labor practice.
Klauder, 107 Wn.2d                  at   342.      The distinction between mandatory and permissive subjects of

                                                    from           definition                           bargaining"       in    RCW
collective      bargaining derives                          the                    of "   collective




41. 56. 030( 4).    See Fire Fighters, 113 Wn.2d at 200. That definition imposes a mutual obligation

on a public employer and a union to execute a collective bargaining agreement that governs

 grievance       procedures              and ...      personnel       matters,     including   wages,        hours and working

conditions."       RCW 41. 56. 030( 4).


          Accordingly,          grievance procedures and " matters of                direct   concern   to   employees,"       such as




wages, hours, and working conditions, are categorized as mandatory subjects of collective

                   Fire Fighters, 113 Wn.2d                       200;    City   of Pasco, 119 Wn.2d         at   512.   In contrast,
bargaining.                                                  at




 other subjects are permissive subjects on which the parties are not required to bargain. Klauder,

 107 Wn.2d        at   341 -42;          see   RCW 41. 56. 030( 4).           Permissive subjects may include managerial

 decisions with attenuated effects on personnel matters; the exercise of managerial or union


 prerogatives; and the procedures used to establish contract terms on wages, hours, and working

                                                                         CI
No. 43783 -0 -II


conditions.      Fire Fighters, 113 Wn.2d               at     200; Klauder, 107 Wn.2d           at   341 -42.    Whether a


proposed contractual provision addresses a mandatory or permissive subject of bargaining

depends on the facts of each case. Fire Fighters, 113 Wn.2d at 203.


          As an initial matter, Community Transit argues that PERC misapplied the law because

Fire Fighters has created a balancing test that must be used whenever PERC determines whether

a provision is a mandatory or permissive subject of bargaining. However, Fire Fighters requires

that PERC engage in a case -by -case analysis to determine whether a proposed contractual

provision addresses a                            or permissive subject of       bargaining.     113 Wn. 2d       at   203.   But
                                 mandatory


PERC is not required to engage in the balancing test every time it is tasked with determining

whether    an    issue is    a   mandatory       or permissive     subject of     bargaining. See Pasco Police, 132

Wn.2d     at   459 -68 (    making no mention of the balancing test and deciding that a provision' s

subject was      mandatory,       not permissive).         Specifically, there are some issues that are mandatory

or permissive as a matter of law; for example, employee wages, hours, and working conditions

are   mandatory     subjects of      bargaining. PERC would not be required to apply the Fire Fighters

balancing test to a provision that deals exclusively with employee wages, hours, or working
 conditions     because that      provision must      be   a   mandatory    subject of   bargaining. The balancing test

 is meant to be used when a provision addresses both a mandatory subject of bargaining ( e. g.,

 wages,    hours,   and     working   conditions)       and permissive         subjects of   bargaining ( i.e.,       managerial




 prerogatives).        See Fire Fighters, 113 Wn.2d                at   203.    Section 18. 2 is exclusively a waiver

 provision and does not address both mandatory and permissive subjects, so there is nothing to

 balance   and   the   balancing     test   is   not appropriate.       Accordingly, PERC did not misapply the law

 when it did not conduct the Fire Fighters balancing test.



                                                                  7
No. 43783 -0 -II



          The parties also dispute whether Section 18. 2 addresses a mandatory or permissive

subject of   bargaining.      Section 18. 2 states,


          Community         Transit]      agrees   tonotify [ Amalgamated] of any changes in the
          Employee'    s   Rule     and     Regulations, including Standard Operating Procedures

           SDP' s) and Performance Code, affecting employees in the Bargaining Unit. The
          grievance    procedure [ established               in Article 14] shall not apply to any matters
          covered   by     this   section,   except      as    to [   Community Transit' s] administration of
          such provisions resulting in employee appeal of his /her discharge or suspension
          only as per Article 14 of this Labor Agreement.

Administrative Record at 132.


          As explained above, PERC had already characterized Section 18. 2 as a waiver provision.

Amalgamated, 1998 WL 1978452, at * 6. As PERC correctly noted in its decision here, its earlier

decision    governs    the    characterization          of    Section 18. 2      as   a waiver   provision.        PERC' s 1998


decision did not directly address whether Section 18. 2 was a mandatory or permissive subject of

bargaining. Therefore, here, PERC was required to determine whether the waiver provision in

Section 18. 2 was a mandatory or permissive subject of bargaining.

          No Washington court has decided whether a provision waiving a party' s statutory

                       is mandatory                               See Pasco Police, 132 Wn.2d          at   463. But in 2004,
bargaining    rights                      or permissive.




PERC concluded that " a broad waiver of statutory [ bargaining] rights" is a permissive subject of

bargaining.     Whatcom           County,    2004 WL 725698,              at *   7; accord Int' l Ass' n of Fire Fighters,

Local 1604     v.   City    of Bellevue, No. 23828 - - - 6082, 2013
                                                   U 11             WL 3784086,                             at *   6 ( Wash. Pub.


 Emp' t   Relations Comm' n          July    12, 2013) (       submitted as additional authority by Amalgamated).

 In light of PERC' s prior decision that Section 18. 2 waived Amalgamated' s statutory right to

 bargain changes to the employee rules to impasse, it follows that Section 18. 2 is a broad waiver

 and   therefore a permissive subject of           bargaining. See          Whatcom      County,   2004 WL 725698,         at *   7.
No. 43783 -0 -II



          Attempting to distinguish Section 18. 2 from the broad waiver in Whatcom County,

Community            Transit    argues   on   two   grounds   that Section        18. 2 is   not   broad.   First, the scope of


Section 18. 2 is broad.            In Whatcom County, a broad waiver allowed the employer to adopt new

rules on any subject on which the parties' collective bargaining agreement was silent. 2004 WL

725698,       at *   10- 11.     Community Transit asserts that, in contrast, Section 18. 2 merely waives

Amalgamated'           s right   to bargain "    subjects   specifically listed in [ Section] 18. 2," i. e., changes to


the   employee rules,           standard    operating     procedures,    and performance code.              Br. of Appellant at


40.     But   Community          Transit'   s assertion   belies the   parties'    history    and   the   record.   In the course


of 123 pages, the standard operating procedures govern practically every aspect of working

conditions.          Section 18. 2 is unquestionably broad.

          Second,          Community Transit attempts to distinguish Section 18. 2 from the broad

 procedural"          waiver     in Whatcom     County.     This   contention      is   also unpersuasive.      Even the broad


waiver in Whatcom County preserved an opportunity for the union to contest the employer' s

changes to working conditions during the life of the contract by allowing the union to object to
                                                                                                          2004 WL 725698, at
the   changes        and   providing for      arbitration of    any    unresolved objections.




  10.    But Section 18. 2          excludes    Amalgamated from the              process     to   an even greater    degree:   it


eliminates any real opportunity for Amalgamated to contest Community Transit' s changes to the

employee rules. Like the waiver in Whatcom County, Section 18. 2 allows Community Transit to

make changes to rules and procedures without having to deal with the union.

          Although it undoubtedly has an indirect impact, a broad waiver of Amalgamated' s right

to bargain over changes to the employee rules is not a matter of direct concern to employees.

 Instead,     as     PERC      explained    in Whatcom      County,     this broad      waiver addresses "      the relationship


 between the employer and union, by enabling the employer to change work rules without having
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No. 43783 -0 -II



to deal      with    the   union."    2004 WL 725698,             at *   4. Because this broad waiver of Amalgamated' s


right       to    bargain does        not     directly    concern        working   conditions,    Section   18. 2   addresses   a


permissive, rather           than a mandatory,           subject of      bargaining. Whatcom County, 2004 WL 725698,

at *   4;    see    Fire Fighters, 113 Wn.2d                at   200.     Therefore, PERC' s order is not based on an


erroneous application of the law.


             Community Transit' s remaining arguments rest on assumptions which we have already

held    meritless.           Community Transit argues that PERC exceeded its statutory authority by

creating a new unfair labor practice; namely, insisting to impasse over a mandatory subject of

bargaining. See             RCW 41. 56. 140; Pasco Police, 132 Wn.2d                  at   460 -61.   However, for the reasons


explained above, PERC correctly determined that Section 18. 2 is a permissive subject of

bargaining. Accordingly, Community Transit' s argument must fail.

                 Community Transit also argues that PERC' s order was arbitrary and capricious because

PERC failed to apply the Fire Fighters balancing test. However, the Fire Fighters balancing test

was superfluous             in this   case.    PERC made a well reasoned decision to apply its earlier decision

dealing          with the   subject   matter.     Therefore, it also follows that PERC' s order is not arbitrary and

capricious. Port ofSeattle, 151 Wn.2d at 589 ( An agency order is not arbitrary and capricious if

the agency acted honestly and upon due consideration.)..




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No. 43783 -0 -II



        Community Transit has not met its burden to show that PERC misinterpreted or

misapplied the law, PERC acted outside its statutory authority, or PERC' s order was arbitrary

and capricious.    RCW 34. 05. 570( 1)(   a), (   3).   Accordingly, we affirm PERC' s order.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW

2. 06. 040, it is so ordered.




                                                             Q INN- BRINTNALL, J.




MAXA, J.




                                                            11
