BEFORE THE ARBITRATOR
In the Matter of the Arbitration of a Dispute Between
THE LABOR ASSOCIATION OF WISCONSIN,
VILLAGE OF GREENDALE
Mr. Patrick J. Coraggio, Labor Consultant, Labor Association
of Wisconsin, Inc., appearing on behalf of the Association.
Mr. Roger E. Walsh, Attorney at Law, Davis & Kuelthau,
S.C., appearing on behalf of the Village.
The Association and the Employer named above are parties to a 1996-1998 collective
bargaining agreement that provides for final and binding arbitration of certain disputes. The
jointly requested that the Wisconsin Employment Relations Commission appoint the
the arbitrator in a dispute regarding retirees' health insurance premiums. A hearing was held
August 12, 1999, in Greendale, Wisconsin, at which time the parties were given the
present their evidence and arguments. The parties completed filing briefs by November 4,
The parties ask:
Is the Village's application and interpretation of Article XVII
Insurance, Section 17.02, as
listed in Exhibit #6, consistent with the 1996-1998 collective bargaining agreement between
Village of Greendale and the Labor Association of Wisconsin, Inc.? If not, what is the
application and remedy?
Prior to the hearing, the parties entered into a number of stipulations and submitted
Joint Exhibit #13. Those stipulations are:
1. The most recent collective bargaining agreement between the
Village and the Association was
the 1996-1998 Agreement, which expired on December 31, 1998. A copy of this Agreement
attached as Exhibit 1. The successor to the 1996-1998 Agreement is the subject of a pending
2. On April 1, 1999, the Association, at the
request of the Local Association, filed a grievance,
#99-15, on behalf of Officer Bergeman, a retiree, and a former member of the Local
this grievance only, the Village has agreed to waive its right to object to the arbitration of it
basis that since December 31, 1998, there has been no collective bargaining agreement in
between the parties. However, the parties agree that the terms of the 1996-1998 collective
agreement will be used in the determination of this grievance. A copy of this grievance was
as Exhibit 2.
3. The Firefighters of the Village of
Greendale have a collective bargaining agreement covering
1999-2001, in full force and effect, the health insurance provisions of which were attached as
4. The Firefighters, in 1983, went to
interest arbitration and received an award from Arbitrator
Stanley Michelstetter, wherein they were given health insurance for retirees with 50% of the
paid by the Employer. A copy of said decision was attached as Exhibit 4.
5. Subsequently, the Firefighters, in 1986,
voluntarily entered into a collective bargaining
agreement with the Village that increased the 50% payout for health insurance for retirees to
6. The Village and the Greendale
Firefighters Association went to interest arbitration over the
Firefighters 1988-89 collective bargaining agreement and one of the issues pertained to a
the health insurance contributions made by the Village for retirees. The decision was
October 24, 1988, by Arbitrator Neil M. Gundermann. A copy of the decision was attached
7. Since 1983, the Village payments toward
the health insurance premiums for retired firefighters
have been a percentage of whatever premium was in effect, including any increases in
subsequent to the date of retirement.
8. The Local Association had a collective bargaining agreement in
full force and effect from 1990
through 1991 which provided in Section 17.02(A) that "the Village will pay 75% of the
premiums listed in Section 17.01."
9. The Village and the Local Association
proceeded to grievance arbitration to have the above
language in Section 17.02 interpreted by Arbitrator Amedeo Greco. A grievance arbitration
was issued by Arbitrator Amedeo Greco on the 9th day of April, 1992, and
a copy of said decision
was attached as part of Exhibit 2.
10. The language in Section 17.02(A) of the
1990-1991 collective bargaining agreement
remained the same in the 1992-1993 and 1994-1995 agreements with the Local Association.
of the health insurance provisions in the 1992-1993 agreement and in the 1994-1995
attached as Exhibits 5A and 5B.
11. The provisions in Section 17.02(A) of
the 1996-1998 collective bargaining agreement differ
from the provisions contained in Section 17.02(A) of the 1994-1995 collective bargaining
A copy of Section 17.02(A) of the 1996-1998 agreement was attached as part of Exhibit 1,
lines 12 through 23 and page 20, lines 1 through 2.
12. The 1996-1998 collective bargaining
agreement was the result of a voluntary agreement
ratified by both parties.
13. On March 30, 1999, Village Manager,
Joseph Murray, sent a letter to William Bergeman,
retired police officer for the Village, indicating that the health insurance to be paid by the
would be based on the health insurance premium in effect at the time of his retirement, and
payment would not fluctuate either up or down during his retirement. A copy of this letter
attached as Exhibit 6.
14. On April 2, 1999, Labor Consultant,
Robert E. Blumenberg, sent a letter attaching grievance
#99-15 to Chief David Leack contesting the letter sent to William Bergeman. A copy of this
was attached as Exhibit 7.
15. On April 8, 1999, Chief of Police
David Leack responded to grievance #99-15 in writing,
denying the grievance. A copy of said response was attached as Exhibit 8.
16. On April 12, 1999, Consultant
Blumenberg moved grievance #99-15 to Step 2 by letter to
Joseph Murray, Village Administrator. A copy of this letter was attached as Exhibit 9.
17. On May 4, 1999, Village Manager Joseph Murray responded
to grievance #99-15 denying
said grievance. A copy of this letter was attached as Exhibit 10.
18. The Association and the Village, on
May 14, 1999, requested that Arbitrator Karen
Mawhinney be appointed to resolve the dispute. A copy of said letter was attached as
19. By written confirmation dated June 2,
1999, Arbitrator Karen Mawhinney established a
hearing date of August 12, 1999, at 10:00 a.m. at the Police Department in Greendale,
A copy of said letter was attached as Exhibit 12.
20. Neither party has made any procedural
objections in respect to grievance #99-15, except for
the waiver of objection to arbitration referred to in Item 2 above.
ADDITIONAL BACKGROUND and
The issue centers around a dispute of whether the Association and the Village agreed
Village's contribution for health insurance premiums for retirees would escalate or float with
current rate, or whether the Village's level of contribution was fixed at the time of an
retirement. The contract language will be noted more fully in the Discussion section of this
In 1992, the parties asked Arbitrator Amedeo Greco whether the Village should pay
the premiums for retirees including any escalator costs, or whether there was a cap of 75%
the premiums in effect at the time of one's retirement. Arbitrator Greco denied the
that the contract language in effect at the time was unclear, that past practice favored the
Arbitrator Greco further noted that the firefighters' language differed from the police contract
language by pegging the Village's contribution to a percentage which automatically rises
a fixed dollar amount referred to in the police contract.
The Firefighters and the Village went to interest arbitration in 1983 when the sole
the health insurance for retirees. Arbitrator Stanley Michelstetter found in favor of the
Union (Jt. Ex.
#4). The parties returned to interest arbitration in 1988 before Arbitrator Neil Gundermann.
Village attempted to insert the specific dollar amount to health insurance premiums for
order to fix its cost at the time of their retirement. Arbitrator Gundermann rejected the
proposal on retirees' premiums and accepted the Union's final offer (Jt. Ex. #5).
The Association's contract for 1992-1993 (Jt. Ex. #5A) shows that the Village would
75% of the specific dollar premiums listed in Section 17.01 for retirees. The same language,
with different dollar amounts, appeared in the 1994-1995 labor contract (Jt. Ex. #5B).
Robert Blumenberg is a labor consultant with the Labor Association of Wisconsin,
was the chief negotiator for the Association at the bargaining table when the contract
dispute was being negotiated. Detectives Lee Kelm and Robert Malasuk were on the
committee. Malasuk was the president of the Association and Kelm was a Board member.
Village's negotiators were former Village Manager Frank Pascarella and former Chief of
Leack. Pascarella was the spokesman for the Village's bargaining team.
The Association proposed in bargaining for the 1996-1998 contract what the parties
referred to as the "escalator clause" a proposal to eliminate the Village's fixed
contribution at time
of retirement and allow the contribution to escalate (or fluctuate up or down) with changes in
premium after retirement. The parties met five times, and Blumenberg testified that wages
insurance for retirees were the two primary issues. Blumenberg said that the Association
to achieve parity with the firefighters' language and eliminate the language that referred to a
The Village's priority in that round of negotiations was for co-pays on health
premiums. On August 30, 1995, the Village proposed that employees pay 20% of the
which it later dropped to 12.5% on October 4, 1995. Blumenberg prepared a document
status of negotiations as of October 4, 1995, which indicates that the Association dropped its
proposal for an escalator clause.
Blumenberg testified that the Village initially balked at the proposal for the escalator
By November 1, 1995, when the parties had their third or fourth meeting, the Village
retirement insurance contribution that gave officers a sliding percentage scale based on the
of years on the job. It started with a 50% level after 10 years, up to 75% after 25 years.
Blumenberg's notes and recollection show that this was a proposal made by the Village. He
asking the Village's negotiators if the Association agreed with the proposal, would it take
care of the
escalator problem, and Pascarella said it would. The firefighters' contract had no such
and all get the 75% contribution. Blumenberg stated that the trade-off for the escalator
to take the sliding scale. His notes do not show the word "escalator" in them. The
counter-proposed an 80% and 100% payout with 28 and 30 years of service, respectively.
the November 1, 1995 bargaining session, the Village proposed a $25 co-pay on insurance
and then moved to a co-pay only for new employees.
Blumenberg prepared a status report on November 3, 1995, and sent it to Pascarella.
open issues included the Village's demand for a co-pay of premiums for new employees,
Association continued to reject, and the Village's proposal for a tier system for retirees'
insurance. Blumenberg testified that because the parties were agreeing to delete the language
regarding the specific dollar amount listed in Section 17.01, it was understood that the
were no longer frozen or fixed at the time of retirement.
The parties reached a voluntary agreement with the sliding scale proposed by the
all tentative agreements were concluded by December 12, 1995. Blumenberg was aware that
sliding scale on retirees' insurance could have an adverse effect on Officer Gerald Petushek,
could have retired with 75% of his insurance paid in the old language. Under the new
Petushek would not have enough years of service to hit the 75% level and would only have
the 60% level. Petushek was on the bargaining committee and supported the sliding scale
the Association believed the language included the escalator clause. The Association ratified
agreement near the end of December of 1995.
The parties signed the labor agreement on January 30, 1996. Village President
Schroedel and Frank Pascarella signed for the Village, and Robert Malasuk, Lee Kelm, and
Blumenberg signed for the Association.
Kelm testified that Blumenberg clearly told the Village that the language change
the Association would involve an escalator clause and it was discussed back and forth several
Kelm understood the Village's position to be that it was willing to go along with the escalator
the firefighters had in exchange for the sliding scale. Although the police officers did not
parity with the firefighters, Kelm said that they felt the only way to get the escalator clause
meet the Village half way by agreeing to the sliding scale.
As noted above, Pascarella was the Village Manager and chief spokesman in contract
for the contract language at issue here. At the time of the instant arbitration hearing, he was
County Administrator and Finance Director. He left the Village in October of 1996, without
completing his own contract and was asked to resign from the position as Village Manager.
Pascarella recalled that the Association wanted to change the language in Section
get some type of equality with the firefighters for retirees' health insurance. The firefighters
paying 25% of the premium, and the escalator clause meant it could change every year.
testified that the Association considered parity with firefighters to be a high priority in
He agreed with Blumenberg that the Village initially objected to the proposal for an escalator
and he also agreed that he proposed the sliding scale on November 1, 1995.
Pascarella testified that the proposal with the sliding scale contained an escalator
that after an officer retired, he or she would receive the same escalation in contributions as
in the firefighters' contract. The fact that the Village's proposal contained an escalator
clearly communicated to the Association.
After the officers ratified the tentative agreements, Pascarella recommended that the
Board pass it. In a closed session, Pascarella discussed with Board members the issues of
retirement issues and the inability of the Village to get cooperation from the Association
co-pay on premiums. Pascarella presumed he told Board members that they had reached a
agreement with sliding scale which included an escalator clause. He thought he told Board
in an executive session that the police officers would be consistent with the firefighters, but
not have used the word "escalator" or "tiered." Pascarella testified that it was his intent that
language negotiated in the 1996-1998 contract with the Association contain an escalator
David Leack retired as Chief of Police from the Village in 1999, having been Chief
years and an employee of the Village for 35 years. He attended all of the negotiation
sessions for the
1996-1998 contract. Leack analyzed the Association's proposals and recommended that the
reject the Association's proposal for retirees' insurance. Leack noted in his written
that the language had been upheld in an arbitration award (the Greco Award). Pascarella
that initially, the Village Board members were opposed to changing the basis that had been
retirees' insurance contributions. There were lots of discussions about trade-offs with both
wanting changes in insurance benefits. While the Village moved from a 20% co-pay to a
12.5% co-pay to a $25 co-pay and then for new employees only, the Association was
adamant in refusing to
accept any co-pay.
Leack did not recall Pascarella granting the escalator clause by using those words.
aware of the sliding scale or tier system but did not understand it to be coupled with the
clause. He testified that Pascarella told him the tier system would save the Village some
early retirees, but he was unclear at the hearing about how it would save money. Leack did
clearly remember whether it was discussed in negotiations that additional premiums would be
up by the Village. Leack knew that Officer Petushek who was on the bargaining
would have been entitled to 75% of a fixed dollar amount with ten years of service under the
contract. Under the proposal made by the Village, Petushek would have been entitled to
60% of his
premium paid. Leack testified that he did not think Petushek would have agreed to a
reduced his benefit by 15%, and that Petushek might have voiced that concern at the
Leack did not recall whether Pascarella answered his concern by stating that if the
the sliding scale, it would get the escalator clause. He admitted it was possible that
Pascarella stated that he had conversations with Attorney Walsh in preparation for
hearing, and during those conversations, he indicated to Walsh that the Village had not given
up any type of an escalator clause. He also told Walsh that it would take him awhile
of what transpired four years ago. Three days before the hearing, Pascarella told
Walsh that he did
not believe the Village had given up an escalator clause. However, he explained that in the
hours before the hearing, he thought about what transpired in the negotiations and reviewed
documents sent by the parties in this dispute. He recalled that when it became apparent that
Village was not going to get any kind of co-pay on the premium, the Village
negotiators reached a comfort level restructuring the retiree benefit package for
Pascarella did not recall whether he presented a written document to the Board during a
executive session on January 2, 1996, when discussing the settlement.
Dianne Robertson was Clerk-Treasurer while Pascarella was the Village Manager,
became the acting Village Manager from October of 1996 through May of 1998. She was
Administrator of Thiensville at the time of the hearing in this matter. She understood that
firefighters' contract always had a provision whereby the Village paid 75% of the premium
charged to the Village, and this amount would escalate after one's retirement. Her
the other Union contracts was that the Village paid 75% of the premium at the time of
and this amount stayed the same until the retiree was eligible for Medicare.
During the first part of 1996, Robertson took copies of the health insurance portion
contract with the various Unions and asked Pascarella how to implement them. She was
looking at a change in the calculation of retirement before 25 years of service in the
contract, and she asked Pascarella whether there were any other changes, and he told her
not. Her testimony was that Pascarella told her there were no other changes for all of the
including the police contract. She testified that she asked him whether any of the other
the same level of benefit that firefighters had, and he replied no, other than the sliding scale
Pascarella recalled talking with Robertson about an employee who was working under
AFSCME contract and getting near retirement, and he told her there was no change in the
contract. He did not recall whether Robertson talked with him about the change in the police
officers' contract, and he presumed that if he talked to her, he would have told her that there
changes in it.
The Trustees' Testimony
George Vranes has been a trustee of the Village for 16 years and is familiar with
some of the
history of this case, including the decision by Arbitrator Greco and the escalator clause that
the firefighters' contract. Vranes testified that for the last ten years, the Board wanted to get
a co-pay on premiums from current employees. The Board was against giving an escalator
retirees. Vranes attended one bargaining session but did not recall when it was and believed
issue of retirees' insurance did not come up at that meeting.
Vranes had only a general recollection of the police contract settlement being
discussed in an
executive session in January of 1996. He recalled Pascarella mentioning the inability of the
to get a co-pay in insurance premiums. He testified that Pascarella did not indicate that there
change regarding retirees' insurance, but did not recall anything about the tier system. He
positive that Pascarella did not mention that the Village gave an escalator clause because he
have reacted strongly to it if it had been brought up. Vranes testified that he would not have
approved the contract if the Village gave up an escalator clause. Pascarella did not give the
a written document with the proposed settlement. Vranes stated that whether the matter
contracts or other Village business, they received presentations on an oral basis rather than
with written documents. Vranes did not ask Pascarella about why the term "specific dollar"
deleted from the contract, why the sliding scale was put into the contract or what impact the
had on the Village.
Scott Leonard has been on the Village Board for nine years and currently serves as
president. His testimony was similar to that of Vranes, recalling the Greco arbitration
agreeing that the Board wanted a co-pay for insurance. Leonard's recollection of the January
executive session is that Pascarella told the trustees that he was disappointed that they could
a co-pay. Pascarella listed the different things he tried to do but that the police would not
$5 a month. Leonard testified that they agreed to go with the three-year contract with a
escalator in wages for the second year to get some parity with other communities in the
there was no discussion of any other concessions or tier increases on health. He testified that
Pascarella did not tell them that there was a change in the retiree's insurance or that there
escalator clause. Leonard said he would not have voted for the contract if he had been told
Pascarella told them about the cost of arbitration versus the cost of increased wages for the
and they decided it would not be worth the cost of arbitration. Leonard did not review the
before it was signed. He did not ask Pascarella why the term "specific dollar amount" was
from the contract or why the sliding scale was included. He was not aware that a sliding
put into the contract. He had never read the complete contract and did not sit in on any of
negotiations that produced it. Leonard testified that he was not aware of any specific
the police contract.
Bernie Schroedel was the Village Board President for 14 years, ending his term in
a trustee between 1980 and 1984 before that. He signed the 1996-1998 contract between the
Association and the Village, along with Pascarella, although he did not remember specifically
the contract. Schroedel was aware that the firefighters had an escalator clause for retirees'
and that the Village tried to eliminate it but was unsuccessful. He was aware that the police
unsuccessful in getting the escalator clause in grievance arbitration. The Board was adamant
not giving away an escalator clause for retirees' insurance.
Schroedel did not attend any negotiations with the police. He had a general
the January 1996 executive session in which Pascarella stated that he was not going to be
able to get
a co-pay on insurance premiums. Schroedel testified that Pascarella did not talk
about insurance at all, at least about putting an escalator clause in, or he would have
the contract. He did not recall any mention about the sliding scale and was not aware of it.
not read the contract before he signed it.
The trustees all agreed that Pascarella had the authority of the Village Board to enter
negotiations with the Police Association for a collective bargaining agreement, and that he
chief spokesperson on behalf of the Village. He had the authority to enter into a tentative
subject to the Board's approval. The trustees speculated that if they had obtained a co-pay
employees for the insurance premiums, they might have been receptive to an escalator clause
When the 1996-1998 contract was about to expire, the Wisconsin Professional Police
Association (WPPA) sought to represent the officers in the Village. On October 28, 1998,
WERC conducted an election in which the vote was split and neither Union received a
the ballots cast. The parties delayed their negotiations until the election was held.
the successor agreement started in November of 1998. The Association team consisted of
Blumenberg, Kelm and Pat O'Neill. Attorney Roger Walsh represented the Village, and the
Village Manager Joseph Murray was also present at the negotiation sessions. The Village
to change Section 17.02(A) to fix the Village's contribution for retirees' health insurance
at the specific dollar premium in effect at the time of retirement. Walsh told the Association
Village did not agree that the language in place included an escalator and it just wanted to
up. The Association rejected the Village's language, stating that it had just achieved the
language and did not want to go backwards. The parties had not resolved the contract
dispute by the
time of the hearing in the instant case, and final offers had been certified for interest
Village did not put its proposal on retirees' insurance in its final offer for interest arbitration.
On May 13, 1999, Murray sent Blumenberg a letter stating that the Village's
its proposal on Section 17.02 was not to be construed as an unsuccessful attempt to get the
and that the proposal was to clarify an ambiguity. Murray noted that the Village consistently
interpreted the contract language to fix the contribution at the time of retirement. The
the instant case had been filed on April 1, 1999.
THE PARTIES' POSITIONS
The Association argues that the Village is asking the Arbitrator to render a decision
outdated language found in the expired labor contracts while ignoring the recent bargaining
which led to the clear and unambiguous language in the 1996-1998 collective bargaining
The Village is asking the Arbitrator to excuse it from honoring the terms and conditions on
contract simply because the trustees were ignorant of
the fact that their designated representative, Frank Pascarella, negotiated an escalator
clause into the
agreement in return for the sliding percentage scale. The Association's position is supported
by its chief negotiator, Robert Blumenberg, but also by Pascarella.
There can be no doubt that Pascarella was the Village's proxy for negotiating with
Association over the 1996-1998 collective bargaining agreement. The Association asserts
parol evidence rule dictates that the testimony offered by the trustees should be given little, if
consideration. While the three trustees testified they were unaware of the fact that the parties
incorporated an escalator clause into the contract, that testimony is irrelevant. The Arbitrator
asked whether or not the Village is abiding by the terms of the collective bargaining
according to the issue. The Arbitrator is precluded from re-writing mutually agreed upon
language simply because a party to the agreement failed to read and understand the contents
before signing it. The Association finds it hard to believe that the three elected officials with
combined 39 years of Board experience would take their fiduciary duties so lightly as to sign
collective bargaining agreement without reading and understanding it. The fact that the
not like the outcome is irrelevant to the case at hand.
The Association negotiated in good faith with the Village Board's representative.
testimony of the trustees would indicate that the Village wants the Arbitrator to believe that
Association gained the escalator clause through chicanery and the Arbitrator should wipe it
if it were merely a typographical error. Nothing could be further from the truth. The
presented its proposals in writing to the Village through its designated chief spokesperson,
Blumenberg and Kelm gave unrefuted testimony that the escalator clause was discussed in
the very beginning of the negotiation process. The Association should not be forced to
negative consequences due to the Village's inability to effectively communicate with its
The Association points out that the Village demanded and got a
quid pro quofor the
escalator clause. The Association accepted the sliding scale as proposed by the Village in
the escalator clause now found in Section 17.02 of the agreement. Officer Petushek, a
the bargaining team, agreed to the sliding scale, despite a reduction in the percentage of
paid. The only logical reason the Association accepted the sliding scale would be to obtain
escalator clause now codified in Section 17.02.
The Association asserts that the language in question is clear and unequivocal. In
make the language even more unequivocal, the parties agreed to eliminate the following
previously found in Section 17.02 of the 1994-1995 bargaining agreement: "The Village will
seventy-five percent (75%) of the specific dollar premiums listed in Section 17.01."
That phrase was
voluntarily eliminated from the 1996-1998 contract, supporting the Association's contention
escalator clause was contemplated by the parties who negotiated the contract. Murray, who
present for those negotiations, has an untenable interpretation of Section 17.02. The
language in the
contains an escalator, and it is the same language now found in Section 17.02 of the
agreement. If the Village is unhappy with the current language, it should seek a modification
bargaining table and not through a grievance arbitration award.
The Village asserts that the Association did not obtain the identical language to that
in the firefighter agreement. The firefighters' agreement states: "The Village will pay
percent (75%) toward the cost of the premium." The police agreement for 1996-1998 merely
to the "amount of payment" and "50% payment," etc., but there is no specific language that
what the word "payment" refers to. There is no specific language which states that the
payment is based on whatever the health insurance premium happened to be. The revised
17.02(A) is ambiguous as to what the payment is.
The Village argues that the bargaining history shows that the Association withdrew its
proposal to obtain the escalator provision. Blumenberg's status report on October 4, 1995,
that the Association dropped its proposal relating to retirees' insurance. While Blumenberg
that the Village nevertheless offered the escalator clause at the November 1, 1995
meeting, his notes
are devoid of any mention of an escalator provision being offered by the Village. One would
that such an important proposal would have been noted. The Village argues that the sliding
tiered proposal was an attempt to get some relief in the area of health insurance, since its
issue of co-pays was being rejected totally by the Association. There was no connection
proposal for a tiered system and an escalator provision.
The Village states there is no merit in the Association's claim that the tier system was
pro quofor an escalator clause. While the Association claims that the
tier system amounts to a
reduced benefit to some retirees, a 50% payment on an escalator basis will amount to a
than a 75% payment frozen at time of retirement, computing premiums under the State
and using an 8% increase in premium for each year. The Village views the 8% increase as a
conservative estimate, given current trends. Using an 11 year period (until an employee is
for Medicare), the Village calculates that under the Humana HMO, the retiree frozen at 75%
family plan receives $52,607, while the retiree with a 50% escalator receives $53,071.
Family Health HMO, the retiree with 75% frozen receives $47,983 and the retiree with a
escalator receives $48,407. The Village notes that the Humana HMO plan actually increased
for the year 2000, and the Family Health HMO increased between 11.9-13.8%, depending
or family premiums.
The Village further calculated that Petushek if he retired on March 4, 2000,
at age 57
would be eligible for eight years of coverage with a 60% payment of the Family Health
would get $42,060 under a 60% escalator provision, using an 8% increase per year, while
$39,542 under the 75% frozen system. Thus, he and every other employee
would gain under an escalator clause, even those who were employed by the Village
for only ten
years. It was a win/win arrangement for the Association and a lose/lose arrangement for the
Therefore, the Association made no concession by agreeing to a tier system and gave no
quo. The Village believes that the tier system was what the
Association was willing to make to get
the Village to drop its co-pay proposal.
The Village further contends that Pascarella is a totally incredible witness. His
contradicted by Board members, the former Clerk-Treasurer, the former Police Chief, and
Village's Labor Attorney. Chief Leack testified that Pascarella never made any proposal that
contained an escalator clause. Robertson testified that she asked Pascarella about the police
and he said there was no change in the premium although there was a sliding scale. Village
members Vranes, Leonard and Schroedel all testified that Pascarella never told the Board that
settlement agreement included granting an escalator clause. On two occasions before the
while the Village's Labor Attorney Walsh was investigating the grievance, Pascarella told
he had not proposed to give an escalator clause to the Association during negotiations for the
1996-1998 bargaining agreement. The Village concludes that Pascarella lacks credibility and
must be dismissed.
Further, the Village asserts, even if Pascarella proposed an escalator clause, there
meeting of the minds on this issue between the parties to the agreement the
Association and the
Village Board. The contract is between those two parties. The Village Board is the body
approves contracts on behalf of the Village and must consider the final ratification or
approval of the
collective bargaining agreement at a meeting open to the public, pursuant to State law.
had no authority on his own to bind the Village. It appears that he attempted to hide the
provision from the Village officials. Vranes said he was "positive" that he was not told that
an escalator clause included in the agreement. Leonard and Schroedel testified similarly.
One of Pascarella's job duties as Village Manager was to prepare agenda for Village
meetings. Village records indicate that there was no open meeting in December of 1995, or
January or February of 1996, at which the Board took a vote to approve the 1996-1998
contract. There was no vote in open session to approve it. If Pascarella made an offer of an
clause, he had no authority to make it and he failed to convey that offer to the Village Board
as to other Village officials.
The Village says something is wrong with this picture. Whatever Pascarella
did or did not
do cannot be binding on the Village. There was no meeting of the minds between the
and the Village that the 1996-1998 police contract contained an escalator provision for
the amount of the Village payment toward retirees' health insurance premiums. The Village
did not ratify such an agreement, and the escalator provisions cannot be imposed upon the
The escalator provision did not make economic sense to the Village, because an
with 25 years of service would get about 58% more under the escalator clause than under a
frozen provision. Over 11 years and under the Humana HMO Plan, the dollar
amount is $26,999 more for a family plan, and $24,727 under the Family Health HMO
Plan. One of
the main objects of the Village was to get some type of co-pay on premiums. There is no
the Village to have agreed to an escalator clause for retirees, especially since the Association
already dropped its request for that benefit at the October 3, 1995 meeting.
Finally, the Village submits that the contract provision at issue does not specifically
there is an escalator in the premium to be used to determine the amount of the Village's
toward a retirees' premium. The new language merely uses the word "payment" and does
what that payment is. It is ambiguous and unclear. It is inconceivable that the trustees
been able to realize that an escalator clause was contained in the new contract language
Pascarella had specifically informed them of that escalator clause. This he did not do.
The Association points out that the proper issue was stipulated prior to the hearing,
substantial portion of the Village's brief addresses concerns which are irrelevant to the
and were not put forth during the hearing. For instance, the Village, on page 11 of its brief,
an expense argument and then devoted an entire section in its brief bemoaning the fact that
escalator provision did not make economic sense. The Arbitrator is to interpret and apply
language found in Section 17.02, and arguments regarding increases in premiums as well as
economic sense of the agreement are inappropriate and should not be considered. Case law
addressed the issue, the Association notes, and an arbitrator is not empowered to relieve a
a bad bargain or to improve an existing contract. The grievance procedure precludes the
from considering extraneous factors, such as the cost of the escalator in Section 17.02, when
rendering a decision. The arguments regarding cost and economic sense are proper in an
The Association also takes issue with the Village's argument that the language is
on page seven of its brief. The former Chief of Police, in direct testimony, understood that
Association was looking for an escalator clause. The deletion of the phrase "listed in Section
from the 1996-1998 agreement, coupled with Leack's testimony, renders the Village's
argument null and void. The Village then provided a fatal blow to this argument wherein it
the intent of proposal Number 10 and notes that the effect of the proposed change would
to have Section 17.02(A) read: "The Village will pay seventy-five percent (75%) of the
premiums." Clearly, this was the Association's attempt to get identical language to the
contract, as suggested by Arbitrator Greco in his award.
The Association notes that the Village spent an inordinate amount of time trying to
the testimony of Pascarella nearly 50% of its brief lambasted Pascarella. When all
is said and done, the fact remains that the issue before the Arbitrator is not whether
the Village communicated effectively with each other. The issue is whether or not the
in Section 17.02 includes an escalator clause.
Further, Pascarella's testimony is consistent with Blumenberg's and Kelm's testimony
an escalator clause was put into effect when the parties agreed to eliminate the phrase "listed
Section 17.01" from Section 17.02 in return for the sliding scale. The Village ratified and
1996-1998 collective bargaining agreement and must now abide by the terms and conditions
therein. The Village stipulated that it ratified the agreement in the Statement of Fact offered
Exhibit #13. The Association has no moral or legal obligation to see that the Village
business in a fashion consistent with the open meeting laws of the State. The Association
duty to bargain in good faith with the Village's designated spokesperson in order to obtain
escalator clause. The Village's current dissatisfaction should not result in the Association
penalized through the loss of its escalator clause.
The Association also takes issue with the cases cited by the Village to support its
there was no meeting of the minds between the parties to this agreement and thus no
The Kimberly case states that ". . . such an agreement would not be an
bargaining agreement until it has been ratified by all parties to the agreement." The
difference is that
in this case, the Village and the Association ratified and signed the 1996-1998 collective
agreement. Village Board President Schroedel legally bound the Village to the terms and
found in the 1996-1998 agreement when he signed the agreement. The Board cannot be
from the terms because they failed to read and understand the contents of the document
signing it. An Arbitrator may not excuse the Board from honoring the terms and conditions
the Board members have made an unfounded allegation that they were bamboozled by their
The Association acknowledges that it withdrew proposal Number 10 in October of
regarding retirees' health insurance. Nothing precludes either side from adding to, deleting
modifying their proposals. This includes re-introducing proposals which have been
The Village states that the Association makes two erroneous assumptions in its initial
First is that the language at issue is clear and unambiguous. The second erroneous
assumption is that
Pascarella can bind the Village without the formal approval of the Board. The Village has
the issue of ambiguity previously but some repetition is needed, it feels. Under the old
language stated: "The Village will pay seventy-five percent (75%) of the specific dollar
listed in Section 17.01." The firefighters' contract said: "The Village will pay seventy-five
(75%) towards the cost of the premium." Arbitrator Greco previously held that the
to get identical language to the firefighters.
The Association's initial proposal would have read: "The Village will pay
percent (75%) of the specific dollar premiums." Although that language would not be
the firefighters' contract, the Association negotiators told the Village that the proposal would
an escalator provision. All of the testimony cited by the Association to support its position
Association was seeking an escalator provision referred only to the Association's initial
Number 10. However, the Association dropped proposal Number 10 at the October 3, 1995
Thus, the proposal to revise Section 17.02 to include an escalator was no longer on the table.
The resulting provision does not specifically make any reference as to what the
the Village reiterates. The firefighters' contract provides that the payment will be 75%
cost of the premium. There is no reference to the cost of the premium in the police contract.
payment referred to could just as easily be the payment that the Village made in the past, a
based on the premium in effect at the time of retirement. Therefore, the new provisions are
unclear and ambiguous.
Contrary to the Association's allegations that the trustees' testimony is irrelevant, the
argues that it is very relevant and critical to the issue of whether the Village Board approved
escalator provision. Under Wisconsin Statutes, it is the Village Board in which shall be
vested all the
powers of the Village. The Board, not Pascarella, can bind the Village. Pascarella never
escalator clause to the Association in negotiations, and his testimony that he did should be
because of lack of credibility. Even if he had included an escalator clause, he had no
make that proposal and he never disclosed it to the Board. It is not binding on the Board
the Board did not approve it. There was no meeting of the minds for an inclusion of an
The contract language at issue in this dispute is the following language from the
collective bargaining agreement:
SECTION 17.01 HEALTH
INSURANCE: Employees shall be provided with medical and
hospitalization insurance provided by the Employer for full-time employees. Health
coverage will remain as under the Village HMO and non-HMO contracts in effect on January
or their equivalent. The Employer shall pay up to Five hundred fourteen dollars and fifteen
($514.15) per month toward the cost of the family premium and up to One hundred ninety
seventy-five cents ($190.75) per month toward the cost of the single premium. If an
to be covered under the Village's non-HMO coverage, the difference in premium cost
non-HMO coverage and the above premium amounts, if any, will be deducted from the
paycheck. In the event during the contract term
the premium cost for any of the Village's HMO contracts exceeds
the premium listed above, the
Village will pay the increased cost and the above dollar amounts will be automatically
reflect the new amounts. The Village will send written notification to the Association of
amounts when they become available. A retired employee may continue to participate in the
group health insurance program for active employees until the retired employee becomes
Medicare, provided the insurance carrier agrees to permit the retired employee to continue in
group program and provided that the retired employee pays the full premium for such
unless Section 17.02 applies. Such payment is to be made monthly on or before the
15th of each
month. If applicable, this payment can be made from an employee's health insurance
account pursuant to Section 10.07.
17.02: The Village agrees that employees who retire under the Wisconsin
Retirement System as per guidelines set by the Wisconsin Retirement System, or older,
life of this contract shall be continued for the balance of their lives as members of the group
insurance plan applicable to the collective bargaining unit under the following conditions:
A. The amount of payment made by the
Village will be based on the number of years creditable
service with the Village using the following formula:
With ten (10) years of service:
With fifteen (15) years of service:
With twenty (20) years of service:
With twenty-five (25) years of
service: 75% payment
Employees who retired under a disability
Chapter 40 of the Wisconsin State
Statutes: 75% payment
B. The coverage will be for retired
employees and family. Family is defined in health plan in
effect at time of retirement.
C. Coverage would be in effect until retired
employee qualifies for Medicare.
D. Coverage would not include a retiree's
spouse or family after his death.
E. Coverage would not include a retiree
while he is covered by another health plan of equal or
better benefit at no additional cost to him.
F. The Employee will issue a check to an
insurance company of the retiree's choice if the
employer has no policy or plan for which retiree is eligible. The retiree shall pay the Village
dollar ($3.00) per month administrative fee for this service.
The above language replaced some of the language in the 1992-1993 and 1994-1995
The most relevant portion of the prior contracts was Section 17.02, which stated:
The Village agrees that employees with ten or more years of
service who retire under the
Wisconsin Retirement System at age 53 (with twenty-five (25) years of creditable service) or
during the life of this contract and employees who retire during the life of this contract,
retirement under Chapter 40, Wisconsin Statutes, shall be
continued for the balance of their lives
as members of the group health insurance plan applicable to the collective bargaining unit
A. The Village will pay seventy-five
percent (75%) of the specific dollar premiums listed in
The specific dollar premiums referred to in Section 17.02 of the 1992-1993 agreement
for the monthly family premium and $149.40 for the monthly single premium. The specific
premiums in the 1994-1995 agreement were $464.35 for the family premium and $172.25 for
While the Village argued that the Firefighters' labor contracts were not relevant, the
particularly the interest arbitration in 1988 (Jt. Ex. #5) shows that the
Village knew it had to
obtain certain language to fix its contribution at the time of retirement. It knew that it had
previously done so with the Firefighters' Association and it attempted to do so in the
contract but failed in interest arbitration. Joint Exhibit #3, the 1999-2001 agreement between
Village and the Firefighters, has the following language regarding retirees' insurance:
17.02 The Village agrees
that employees with ten (10) or more years of service who retire
under the Wisconsin Retirement System at age fifty-three (53) with twenty-five (25) years of
creditable service (as provided by Chapter 40, Wisconsin Statutes), or at age fifty-four (54),
during the life of this Contract, and employees who retire during the life of this Contract
disability retirement under Chapter 40, Wisconsin Statutes, shall be continued for the balance
lives as members of the group health insurance plan applicable to the collective bargaining
the following conditions:
a) The Village will pay seventy-five (75%)
toward the cost of the premium.
. . .
The language in the Association's contract for 1996-1998 is
nearly the same as in the
firefighters' contract. The parties deleted the phrase in the old contract in Section 17.02(A)
stated: "The Village will pay seventy-five percent (75%) of the specific dollar premiums
Section 17.01." The language in the 1996-1998 contract has only the percentages listed, just
firefighters' contract lists a percentage.
Although the language in dispute does not say that the Village's contribution levels
any increases after the date of retirement, the parties deleted the language that froze the
contribution at the date of retirement. The parties deleted the phrase "of the specific dollar
listed in Section 17.01," and in doing so, they knew that the Village's contributions would
escalate with the premium in effect, not at the time of retirement, but at the time of the
the premium. Moreover, the parties agreed to a percentage, and the firefighters have a
While the Village argued that the police contract does
not state what the word "payment" refers to, the firefighters' contract likewise does not
premium is to be used. In the firefighters' contract, the percentage of 75% means that the
pays 75% of the premium, period, not just 75% of the premium in effect at the time of an
retirement. The same is now true in the Association's contract the
Village must pay from 50% to 75% of the premium, with the only difference being the
service of employees. It must pay the percentage on whatever the premium is, not the
effect at the time of retirement.
The Village does not explain why the parties deleted the phrase "of the specific dollar
premiums listed in Section 17.01," a phrase that clearly differed from the firefighters'
language is clear and unambiguous, particularly to these parties, who have argued over this
through grievance arbitration, as well as the Village having gone to interest arbitration twice
firefighters. The Village knew how to get the contribution frozen at the time of retirement.
the language regarding a specific dollar amount, and left a percentage in the contract, which
Village knew would allow the contribution to escalate or float up or down with the premium
not at the time of retirement, but at the time the Village is paying for it. It agreed to
figure without further limiting the percentage figure to anything.
If there were any doubt in this case, all the negotiators confirm that they meant the
to include the escalator clause.
Therefore, even if the language were ambiguous (which it is not in this case), the
history would clearly render a decision in favor of the Association. While the Village has
objected to the testimony of its own former spokesman, Frank Pascarella, his testimony is
corroborated by that of Blumenberg and Kelm, and to some extent, Leack. Leack's testimony
to support both sides to this dispute he admits that it's possible that Pascarella told
that it would have the escalator if it took the sliding scale, while he denies ever hearing
directly that the escalator was being granted. At any rate, the negotiators all knew that the
was going into the contract by the deletion of the limiting language in Section 17.02, and the
spokesman admitted that it was the intent of the parties to put the escalator clause into the
The Village also claimed that the trustees would not have been able to realize that an
clause was contained in the new contract language unless Pascarella had specifically informed
of that escalator clause. The testimony from the trustees shows that they were all well aware
prior interest arbitration awards involving the firefighters and the grievance arbitration award
involving the police officers. Pascarella told them that the police contract would be
the firefighters' contract. The Association made no secret of the fact that it obtained an
clause and went to a ratification vote on it. Even if the trustees were not aware of the
insurance language, what of it? Parties are held to the contracts that they sign. Otherwise, a
could always claim that he or she had not read the contract and should not have to abide by
Arbitrators will not reform a contract without a showing that there has been a mutual
just a unilateral mistake. As stated in
Elkouri & Elkouri, How Arbitration Works (5th
Edition), "An arbitrator will not set aside the terms
of an agreement simply because, at the time of the signing of the agreement, one of the
to realize the full ramifications of the provision signed."
The same argument holds true for the "meeting of the minds" parties in
arbitration are held
to the language in a written collective bargaining agreement. If they do not agree on the
language, they obviously do not have a full meeting of the minds. If the parties always had
meeting of the minds in a contract, they would never be in grievance arbitration. However,
case, there was a meeting of the minds the negotiators at the table agreed on an
escalator clause in
conjunction with a sliding scale for years of service. The contract deleted language that
Village's contribution at the date of retirement and left percentages in the contract. The new
language was agreed upon, ratified and the 1996-1998 collective bargaining agreement was
by both sides authorized to sign contracts. The lack of a meeting of the minds occurred
apparently, between the trustees and their own manager. Pascarella told the trustees that the
contract would be consistent with the firefighters' contract, and if the trustees did not realize
ramifications of that statement, the Association should not be denied the benefit of the
the benefit of the contract language.
The Association is correct that arguments regarding cost or economic sense or
quid pro quosare all fodder for interest arbitration settings but have no relevance in this grievance
makes for interesting reading but is ultimately rejected. The parties will be held to the
struck, not the bargain they should have or could have struck.
The fact that the Association dropped its proposal on retirees' insurance once during
bargaining process has no effect in this case. The parties had no tentative agreement on
1995, and the Village proposed the sliding scale in November of 1995. It was at the
bargaining session that the escalator clause was put back in play. This is confirmed by all
negotiators at the table, including the Village's negotiators (albeit somewhat reluctantly by
Also, the Arbitrator takes no notice of the Village's proposal for the successor
bargaining agreement. Whether or not the Village believed it needed a change or a
no impact in this decision. The decision in this matter rests on the language of Article XVII,
importance of the change in the language, the deletion of language that limited the Village's
contributions on retirees' premiums, the percentages without limitation similar to the
contract, as well as the fact that negotiators agreed on their intentions to include the escalator
The fact that the language is not identical to the firefighters only favors the Village
the police did
not get full parity by getting the 75% for all retirees, but got the sliding scale based on
Finally, the Arbitrator has nothing to say regarding open meetings laws. The
signed, a Village Board President signed it, he had the authority to bind the Board to the
and the Arbitrator is limited to interpreting a section under that contract. The parties have
Is the Village's application and interpretation of Article XVII
Insurance, Section 17.02, as
listed in Exhibit #6, consistent with the 1996-1998 collective bargaining agreement between
Village of Greendale and the Labor Association of Wisconsin, Inc.?
I find it is not. The Village has incorrectly relied on the old language and not taken
into account the
fact that the new language allows the insurance contribution for retirees to fluctuate or float
down. It is no longer frozen at the time of retirement. That is what the change in the
means, that is what the parties agreed to in negotiations and that is how the parties are to
The grievance is granted.
The Village is ordered to make whole retirees who were affected
by the Village's incorrect
interpretation of the 1996-1998 collective bargaining agreement's provision for the Village's
contribution to health insurance for such retirees.
The Arbitrator will retain jurisdiction until March 31, 2000, for
the sole purpose of resolving any
disputes over the scope and the application of the remedy ordered.
Dated at Elkhorn, Wisconsin, this 26th day of January, 2000.
Karen J. Mawhinney, Arbitrator