COURT OF APPEALS DECISION
DATED AND RELEASED March 2, 1995
STATE OF WISCONSIN
IN COURT OF APPEALS
MAYVILLE SCHOOL DISTRICT, AND THE BOARD OF EDUCATION OF THE
WISCONSIN EMPLOYMENT RELATIONS COMMISSION,
MAYVILLE EDUCATION ASSOCIATION, AND LOUISE MACIEJEWSKI,
MAYVILLE EDUCATION ASSOCIATION,
Dec. No. 25114-E
APPEAL from an order of the circuit court for Dodge County: JOSEPH E.
SCHULTZ, Judge. Affirmed.
Before Eich, C.J., Gartzke, P.J., and Dykman, J.
EICH, C.J. The Mayville School District appeals from an order affirming a decision
of the Wisconsin
Employment Relations Commission (WERC), which sustained a prohibited practice
against the district by the Mayville Education Association.
The district asks us to reverse the commission's decision, claiming: (1) by considering
an argument not
raised before its hearing examiner, the commission failed to follow its own rules governing
adjudication and review of prohibited practice complaints; and (2) the commission
that the district's action in unilaterally changing its health and dental benefits plan from
"outside" insurance to a self-insured plan during a collective bargaining contract hiatus
altered the parties'
status quo and thus constituted a prohibited labor practice. An ancillary issue is the scope of
of the commission's decision.
We conclude first that the commission could properly address a legal argument raised
for the first time
during its review of the examiner's decision. As to the scope of our review of the
we are satisfied that, while the dispositive issue is one of law--application of the prohibited
§ 111.70(3)(a) 1 and 4, Stats., to the found facts of the case--we will defer to the
conclusions, sustaining them if they are reasonable. On the merits, we conclude that the
reasonably determine that the district's unilateral action breached the parties' status quo with
hours, wages and conditions of employment and thus was a prohibited practice within the
meaning of the
statute. (1) We therefore affirm the order.
The facts are not in serious dispute. Prior to the expiration of the 1986-87 collective
between the district and the union, health and dental insurance for the district's employees
by private carriers. The parties had not negotiated a new agreement when the 1986-87
as a result, they were in a contract hiatus from July 1, 1987, to February 17, 1989, when
they agreed on
the terms of a new contract.
During this hiatus period, on August 11, 1987, the district announced that it was
switching the employees'
health and dental coverage from the private carriers to a self-insured, self-funded plan. The
announced on December 1, 1987, that the self-funded plan would go into effect on January
1, 1988. The
terms, provisions and benefits of the new plan would be identical to those contained in the
The union filed a prohibited-practice complaint with the commission, claiming that the
violated its duty to bargain under Sec. 111.70(3)(a), Stats., because its unilateral termination
existing health and dental plan had the effect of reducing employee benefits. (2) A WERC hearing
examiner dismissed the complaint, concluding, among other things, that the change from
to a self-funded plan did not alter the status quo.
The union petitioned the commission for review of the examiner's decision. In its
presentation to the
commission, the union argued, among other things, that the district's action altered the status
employees seeking redress for allegedly improper benefit denials "must now sue their
than proceed against a private outside corporation, and because the "employer" in this
an arm of municipal government, the notice-of-claim and damage-cap provisions of Sec.
apply. (3) As a result, according to the union,
the employees' remedies are more restrictive under the new
The commission agreed with the union, concluding as follows:
Turning to the ... last wage impact, when the District began to
self-fund health benefits, employe[e]s
who previously could, if necessary, seek redress for unpaid claims through civil actions
insurance company [a]re now confronted with the need to sue their employer and with access
desirable remedies due to the requirements and limitations of Sec. 893.80, Stats.
... [T]he status quo does not give the District the right to
eliminate this wage [benefit].
The circuit court affirmed the commission in all respects.
However, the district has appealed only what
it describes as the "sec. 893.80 issue."
I. The Commission's Failure to Follow Its Own Rules
The district's first argument is based on its assertion that the union did not raise any
"issue" of the
application of Sec. 893.80, Stats., in its complaint to the commission or during the course of
proceedings before the hearing examiner, but argued the point for the first time in the
proceedings. The district argues that the commission could not properly base its decision on
application of Sec. 893.80 to the facts of the case because to do so would violate its own
governing appeals from hearing examiners' decisions. Those rules provide, among other
examiners' decisions are to be made on "all ... issues of fact and law presented on the
record." Wis. Adm.
Code Sec. ERC 12.06(2).
The commission concedes that the union did not argue before the hearing examiner the
effect of Sec.
893.80, Stats., on the issue of whether the district's unilateral self-funding decision violated
the status quo
but presented the Sec. 893.80 issue for the first time as part of its argument to the
unilateral implementation of the new health plan was a prohibited practice. The commission
however, that what the district persists in labeling a "new issue" was simply a legal argument
the union in support of the position it was advocating in the case.
The district offers no authority for the proposition that the commission's rules so limit
the scope of its
review of its examiners' nonfinal decisions, and we are satisfied that there is none. There is
however, for the proposition that the agency, not the examiner, is the sole and primary
decision maker in
such proceedings. In Transamerica Ins. Co. v. DILHR, 54 Wis.2d 272, 281
n.11, 195 N.W.2d 656, 662
(1972), for example, the supreme court recognized that the Department of Industry, Labor
Relations (DILHR), like its predecessor, the Industrial Commission, "`does not act as an
when reviewing orders of its hearing examiners, but hears and considers the case "`in an
proceeding'" in which it "`make[s] its own determination'" on the facts and law. (Quoted
Such a conclusion follows, said the court, from the fact that DILHR--like WERC--is
authorized by statute
to affirm, reverse, set aside or modify its examiners' findings and legal conclusions under
Stats. Transamerica, 54 Wis.2d at 281, 195 N.W.2d at 661-62. (4)
We are thus satisfied that until the internal review or appeal process is completed, a
decision is recommendatory only, for it is the agency, not the hearing officer, that is the
finder in a case. Burton v. DILHR, 43 Wis.2d 218, 222, 168 N.W.2d 196, 197
(1969), modified on other
grounds, 170 N.W.2d 695 (1969). (5)
We reject the district's argument that the commission's decision
must be reversed for violation of its own procedural rules. (6)
II. The Prohibited Practice Determination
A. Scope of Review
In Jefferson County v. WERC, 187 Wis.2d 646, 650-54, 523 N.W.2d
172, 174-76 (Ct. App. 1994), we
held that our review of a WERC status quo determination under Secs. 111.70(3)(a)1 and 4,
deferential in light of the commission's experience in making such determinations. (7) Relying on two
earlier cases, Glendale Professional Policemen's Ass'n v. City of Glendale, 83
Wis.2d 90, 264 N.W.2d
594 (1978), and City of Brookfield v. WERC, 87 Wis.2d 819, 275 N.W.2d 723
(1979), the district argues
that we should employ a de novo standard of review.
In Glendale, WERC was faced not with applying a labor statute, but with
"the Commission's [own] power
to enforce [the statute] in the first instance in ... light of [a nonlabor] statute."
Glendale, 83 Wis.2d at
100, 264 N.W.2d at 600. Such an issue, said the court, concerns "the relationship between
statutes, [and thus] is within the special competence of the courts rather than the
therefore this court need not give great weight to the [agency's] determination of the issue."
Id. at 100-01,
264 N.W.2d at 600. In City of Brookfield, the issue concerned the relationship
between a provision of
Sec. 111.70, Stats., and its impact on the exercise of various municipal powers enumerated
in ch. 62,
Stats. The court concluded that it would not accord "persuasive or substantial weight" to the
"statutory interpretations beyond the field of labor law." City of Brookfield, 87
Wis.2d at 828, 275
N.W.2d at 727. We think both cases are distinguishable.
The argument in this case--which the commission found persuasive--was that the
district's unilateral change
in its employee health plan violated the status quo because: (1) employees would now have to
directly against the district--their employer--rather than an "outside" party to seek redress for
improper benefit denials; and (2) under Sec. 893.80, Stats., a notice of claim must be filed
with the district
within 120 days of the event in order to proceed and, further, the district is not liable in tort
amount in excess of $50,000. From those facts--gleaned from the plain and unambiguous
language of the
statute (8) -- the commission reasoned that the
status quo had been violated.
We do not believe that the commission was construing or interpreting Sec. 893.80,
Stats., in reaching that
decision. It simply noted the effect of the unambiguous and unchallenged requirements and
statute places on union members wishing to challenge benefit denials in court (9) -- and that no such
requirements or limitations existed under the prior plan. This is thus not a case, like
Glendale or City of
Brookfield, where the merits of the commission's decision depended on its
harmonization of labor and nonlabor statutes. There was nothing to interpret, construe or
the commission's reference to Sec. 893.80 in this case; the unambiguous provisions of the
simply noted as potential limitations on the employees' enforcement of their legal remedies.
We see no reason not to accord the commission's status quo determination any less
deference in this case
than in any other simply because, as part of the legal justification of that determination, it
referred to a
nonlabor statute. The commission's decision is a proper subject for deference under
and Jefferson County, and we do not see Glendale or City of
Brookfield as compelling a different result.
B. Prohibited Practice Claim
The district argues first that we should reverse the commission because it improperly
893.80, Stats., in its analysis. The argument appears to proceed as follows: (1) the test for
whether a particular matter is a mandatory subject of bargaining is whether it is "primarily
related" to the
wages, hours and conditions of employment of the employees of the Mayville School
District; and (2)
because Sec. 893.80 is a statewide legislative declaration primarily related to "government
and public policy," it cannot possibly be primarily related to the Mayville employees' wages
First, we agree with the commission's characterization of this and several of the
district's other arguments
as "variations of a single theme, namely, that [Sec. 893.80, Stats.,] does not affect [wages
We also agree that the district's argument is largely misplaced because the scope of our
review of the
commission's decision is limited to whether it has a rational basis, whether it is reasonable.
County, 187 Wis.2d at 652, 523 N.W.2d at 174-75. We do not examine the issue
Second, we note that the impact of public policy decisions on employee wages has
always been recognized
as a mandatory subject of bargaining. See, e.g., City of
Brookfield, 87 Wis.2d at 830, 833, 275 N.W.2d
at 728, 730, where the supreme court held that while a city's decision to lay
off employees for budgetary
reasons was "primarily related to the exercise of municipal powers and responsibilities and
of the political processes of municipal government," and thus not a mandatory subject of
was a primary relation between the impact of the layoffs and the remaining
employees' working conditions,
with the result that the issue of the impact of the layoffs was ruled to be a mandatory subject
The district next urges us to reverse on grounds that one of the assertions in the
commission's analysis--that, under the prior plan, employees had always been able to file
civil suits seeking redress for unpaid
claims without having to sue the district and without being subject to the requirements and
Sec. 893.80, Stats.--is untrue.
The district has not referred us to any evidence in the record to support that assertion,
however. It relies
solely on a remark by the commission early in its decision to the effect that the former
Wisconsin Education Association Trust, was regulated by the federal government (ERISA),
not the state,
from 1975 to 1985, and that such federal regulation is preemptive. As a result, the district
under the prior plan, the employees may have had a federal action, but could not sue in state
enforce their rights.
We are uncertain of the point the district attempts to make with such assertions. Prior
to the changeover--whether in state or federal court--an employee could prosecute a challenge
without suing his or her
employer. Moreover, there is no question that, regardless of ERISA regulations, the
insurer's bad faith
in honoring a claim could be redressed in a state court action. See
Anderson v. Continental Ins. Co., 85
Wis.2d 675, 271 N.W.2d 368 (1978) (recognizing a state court cause of action for an
refusal to honor a claim). Additionally, as the union points out, the employees' former
Blue Cross, was never subject to ERISA regulation and could be sued in state court all
We agree with the commission that, historically, the district's employees had remedies
available in state
court to ensure that the health and dental care benefits that were due them were provided by
in a timely and good-faith manner, and we reject the district's argument.
Next, while agreeing with the proposition that "the means and ease by which an
employee acquires access
to the underlying insurance benefits has a wage impact," the district argues that Sec. 893.80,
have no effect on employee actions to recover benefits because such actions will necessarily
be in contract,
and the statute is applicable only to actions in tort. Thus, says the district, the commission
concluding that becoming subject to the statute would make any changes in the employees'
In DNR v. City of Waukesha, 184 Wis.2d 178, 190, 191, 515 N.W.2d
888, 892, 893 (1994), the supreme
court, overruling language in past cases suggesting the contrary, held that the "plain language
893.80(1), Stats.,] clearly does not limit the application of the notice of claim requirements
to tort claims,"
or to "claims for money damages." Rather, said the court, the notice-of-claim provisions
"appl[y] to all
causes of action." We reject the district's argument.
We conclude that the commission could reasonably decide that, in certain situations at
least, the necessity
of suing one's employer to recoup wrongfully withheld benefits, coupled with the statutory
restrictions on such actions under Secs. 893.80(1)(a) and (3), Stats., represented a change in
the status quo
during the contract hiatus (10) because those
factors were not present under the former health insurance
By the Court. Order affirmed.
Recommended for publication in the official reports.
GARTZKE, P.J. (concurring). The commission concluded on the facts of this case
that the district's
unilateral change in its employee health plan violated the status quo because employees must
now sue their
employers for redress of allegedly improper benefit denials. I do not read the commission's
turn on the effect of Sec. 893.80, Stats.
For us to pursue an unnecessary examination of § 893.80, Stats., permits a
non-municipal employer in a
future case otherwise on all fours to argue that the majority decision applies only to
reason exists for us to license that potential argument.
1. Section 111.70(3)(a)4, Stats., imposes on
employers a duty to bargain collectively over hours,
wages and conditions of employment, and declares the failure to do so a prohibited labor
where, as here, the parties are in a contract hiatus, the employer has a duty to maintain the
status quo with
respect to wages, hours and conditions of employment; to effect any unilateral change in
conditions or wages during negotiations for a new contract breaches the duty to bargain
Jefferson County v. WERC, 187 Wis.2d 646, 653, 523 N.W.2d 172, 175 (Ct.
2. The union asserted other violations of the act as
well. This appeal, however, concerns only the
commission's determination that the health and dental plan changes violated the parties'
3. In its argument to the commission, the union
stressed two provisions of Sec. 893.80, Stats.: one
requires, as a condition precedent to commencement of legal action, the filing of a notice of
the district within 120 days of the event giving rise to the claim; the other limits damages
tort actions against the district to $50,000.
4. State ex rel. Meeks v. Gagnon, 95
Wis.2d 115, 289 N.W.2d 357 (Ct. App. 1980), the principal
case cited for the district's argument on this issue, is inapposite, for that case dealt solely
with the rules
governing the conduct of an agency's hearings. The issue in this case,
however, is not the manner in
which the hearings were conducted before the examiner, but whether the commission is
considering legal arguments that were not first presented to the examiner. As indicated, we
question in the negative.
Nor is there here, as there was in Gagnon, any showing that the district
was prejudiced by the
commission's consideration of the union's argument. As the commission points out in its
brief, the district
did not object to such consideration, nor did it identify or suggest any factual issues which
necessitate a reopening of the record for the taking of further testimony with respect to the
failing that, would place it at a disadvantage.
5. There are, as the commission points out,
situations where rejection of an examiner's proposed
findings and conclusions might well deny procedural due process, as in cases where the
findings are based on determinations of witness credibility. In such situations, however, the
court has required that the agency make a record of its consultation with the examiner to
gather his or her
impressions of the credibility of the witnesses and, in addition, "include in a memorandum
explanation for its disagreement with the examiner." Carley Ford, Lincoln, Mercury,
Inc. v. Bosquette,
72 Wis.2d 569, 575, 241 N.W.2d 596, 599 (1976).
6. The district also argues that the commission's
consideration of the "Sec. 893.80[, Stats.,] issue"
violates the provisions of Sec. 227.57(6), Stats., one of the statutes governing judicial review
decisions, which provides in part that a court is to set aside or remand an agency's decision
if the decision
"depends on any finding of fact that is not supported by substantial evidence in the record."
of Sec. 893.80 need not be "proved" or otherwise established by evidence before its
application to, or
effect on, a case may be argued to an agency. We do not see Sec. 227.57(6) as in any way
legal arguments that can be made to the commission in its review of an examiner's decision.
7. In so holding, we quoted at length from
Carrion Corp. v. DOR, 179 Wis.2d 254, 264-65, 507
N.W.2d 356, 359 (Ct. App. 1993), where we recognized that, while we generally review an
interpretation and application of a statute de novo, where the agency is charged by the
administration and enforcement of the statute, or where its interpretation is of long standing
application of its special experience or expertise--or where the legal question is "intertwined"
determinations or value or policy judgments--we should defer to the agency, affirming the
interpretation if it is reasonable.
The rule is not absolute, for--as we also said in Carrion--no such
deference will be accorded where: (1)
the agency's interpretation is contrary to the language of the statute or its legislative intent,
or to the
constitution or judicial authority; or (2) the case is one of first impression and there is no
the agency has any special expertise or experience on the subject matter of the statute being
Carrion, 179 Wis.2d at 265-66 n.3, 507 N.W.2d at 359-60. It is true, of
course--as the supreme court has
recognized--that WERC has had considerable experience in determining subjects of
under Sec. 111.70(3)(a), Stats. School Dist. of Drummond v. WERC, 121
Wis.2d 126, 133, 358 N.W.2d
285, 289 (1984).
8. Section 893.80, Stats., provides, in pertinent part:
(1) [N]o action may be brought or maintained against any [school district] ... unless:
(a) Within 120 days after the happening of the event giving rise to the claim, written
notice of the
circumstances of the claim ... is served on the [district] ....
(3) The amount recoverable by any person for any damages ... in
any action founded on tort against any
[school district] ... shall not exceed $50,000 ....
(4) No suit may be brought against any [school district] for the intentional torts of its
... agents or
employe[e]s [or] for acts done in the exercise of legislative, quasi-legislative, judicial or
9. The district does not challenge the fact that Sec.
893.80, Stats., requires the filing of a notice of
claim within 120 days, and that the statute caps a district's tort liability at $50,000.
10. It is easy to forget in the flurry of arguments that,
as the commission reminds us in its brief, its
"is concerned only with the District's conduct during the contract hiatus. Arguably the
... decision does
not specifically require the District to bargain concerning its decision to self insure; rather, in
only the impact that such a decision has during the contract hiatus on access to benefits
subject to bargaining."
11. It may be, as the concurring opinion suggests,
that the fact that the district's employees may in
some circumstances be required to proceed against their employer rather than a private
insurer in order
to challenge benefit denials, would be enough, by itself, to support a determination that the
status quo had
been altered. The commission's decision in this case, however, is grounded on the combined
effect of the
two factors, and the parties' arguments on appeal have proceeded on that basis. The factors
have not been
argued separately and we have not been provided any factual basis on which to conclude that
"employer suit," standing alone, is sufficient--other than the union's assertion at one point in
its brief that
its members are reluctant to sue "the very hand that feeds them."
Whatever the case, the commission considered the evidence and arguments presented
by the parties on the
point and grounded its decision on the combined effect of the two factors, namely, the
necessity of suing
one's own employer who, by reason of its status as an arm of municipal government, is
subject to Sec.
893.80, Stats. We affirm it on that basis. We do not decide whether, in some future case,
we would or
would not base a similar decision on the first ground alone.