City of San Jose (PERB 2341M)

STATE OF CALIFORNIA
DECISION OF THE
PUBLIC EMPLOYMENT RELATIONS BOARD
AMERICAN FEDERATION OF STATE,
COUNTY AND MUNICIPAL EMPLOYEES,
LOCAL 101,
Charging Party,
v.
CITY OF SAN JOSE,
Respondent.
Case No. SF-CE-837-M
PERB Decision No. 2341-M
December 6, 2013
Appearances: Beeson, Tayer & Bodine by Andrew H. Baker, Attorney, for American
Federation
of
State, County and Municipal Employees, Local 101; Renne, Sloan, Holtzman &
Sakai by Charles D. Sakai and Genevieve Ng, Attorneys, for City
of
San Jose.
Before Huguenin, Winslow and Banks, Members.
DECISION
BANKS, Member: This case comes before the Public Employment Relations Board
(PERB or Board), pursuant to PERB Regulation 32635, 1 on appeal by the American Federation
of
State, County and Municipal Employees, Local 101 (Local 101) from the PERB Office
of
the General Counsel's dismissal
of
Local 101
's
first amended unfair practice charge (FAC).
This dispute arose in early 2011 during negotiations for successor agreements between the City
of
San Jose (City) and Local 101, which represents two
of
the City's bargaining units, referred
to as the Municipal Employees Federation (MEF) and Confidential Employees Organization
(CEO) bargaining units. The FAC alleged that the City violated section 3505
of
the Meyers-
1 PERB Regulations are codified at California Code of Regulations, title 8,
section 31001 et seq.

2
Milias Brown Act (MMBA)2 and PERB Regulation 32603, subdivisions (c) and (e), by
bargaining in bad faith in negotiations and during the impasse resolution procedures authorized
by the City's local rules.3
The Board has reviewed the entire record in this matter, including Local 101
's
initial
charge and F AC, the City's responses thereto, the warning and dismissal letters issued by
PERB' s Office
of
the General Counsel, and Local 101
's
appeal
of
the dismissal and the City's
response thereto. We have also reviewed Local 101
's
request to take administrative notice of,
and to supplement the record
of
this appeal with, the May 10, 2013 decision and final order
of
the Superior Court
of
Santa Clara County in separate writ proceedings captioned Deisenroth
v.
City
of
San Jose (Case No. 1-12-CV-224197) (Deisenroth). Having received no objection
from the City, and for the reasons discussed below, we find good cause for granting
Local 101
's
request. On the supplemented record before us, we conclude that the F AC states a
prima facie case that the City failed to bargain in good faith, and we therefore reverse the
dismissal and remand the matter to the Office
of
the General Counsel for issuance
of
a
complaint.
2 The MMBA is codified at Government Code section 3500 et seq. Unless otherwise
indicated, all statutory references herein are to the Government Code.
3 Local 101
's
initial unfair practice charge, filed June 1, 2011, and its January 18, 2012
appeal
of
the Board agent's dismissal, both allege violations
of
section 3505
of
the MMBA and
"PERB Regulation 32604 (c) and (d)" (emphasis added). Because the cited regulations pertain
to unfair practices by employee organizations, the intended regulation and subdivisions are
presumably PERB Regulation 32603, subdivisions (c) and (d), which prohibit a public
employer subject to the MMBA from "[r]efus[ing] or fail[ing] to meet and confer in good faith
with an exclusive representative as required by Government Code section 3505 or any local
rule adopted pursuant to Government Code section 3507" and, from "[failing] to exercise good
faith while participating in any impasse procedure mutually agreed to pursuant to Government
Code section 3505 or 3505.2, or required by the MMBA or any local rule adopted pursuant to
(}ovemment Code section 3507;· respectively.

FACTUALBACKGROUND
4
The MEF and CEO are chapters affiliated with Local 101, which represents employees
in
two
of
the City's eleven bargaining units. As
of
Fiscal Year 2011-2012, the CEO unit
included approximately 177 employees, including Administrative Assistants and
Administrative Analysts. The MEF included approximately 1,602 employees, ranging from
relatively well-paid Senior and Supervising Public Safety Dispatchers to "the vast majority"
of
part-time employees, who, according to the City "might only work a few hours a week" and
therefore earn "significantly lower salaries" than those
of
the Public Safety Dispatchers.
As
of
early 2011, when the present dispute arose, MEF employees were covered by a
Memorandum
of
Agreement (MOA) set to expire on June 30, 2011.5 CEO unit employees
were covered by a separate MOA, which was set to expire on September 17. At the City's
request, the parties agreed to bargain simultaneously for successor MOAs covering both units.
Aside from
the
different expiration dates
of
the MOAs, all other factual allegations are the
same for the negotiations affecting both units, unless otherwise specified.
4 The following narrative recites the material factual allegations included in the FAC
and supporting materials, as supplemented by the City's responses where appropriate. Because
this matter comes before the Board following dismissal for failure to state a prima facie case,
we are not concerned here with making findings
of
fact or weighing the parties' conflicting
allegations. (San Juan Unified School District (1977) EERB Decision No. 12 [prior to January
1978, PERB was known as the Educational Employment Relations Board or EERB]; Golden
Plains Unified School District (2002) PERB Decision No. 1489 (Golden Plains).) PERB
regulations require that the respondent "shall be apprised
of
the [charging party's] allegations,
and may state in its position on the charge during the course
of
the [Office
of
the General
Counsel's] inquiries." (PERB Reg. 32620(c).) The Office
of
the General Counsel may
consider additional facts provided by a respondent when these additional facts are provided
under oath in compliance with PERB regulations, complement without contradicting the facts
alleged in the charge, and are undisputed by the charging party. (Service Employees
International Union #790 (Adza) (2004) PERB Decision No. 1632-M; Lake Tahoe Unified
School District (1993) PERB Decision No. 994; Riverside Unified School District (1986)
PERB Decision No. 562a.)
5 Unless otherwise indicated, all dates are for 201 1.
3

In the months before negotiations began, the San Jose City Council convened a
series
of
public meetings to discuss a significant shortfall in the City's budget for Fiscal Year
2011-2012. The stated purpose
of
these meetings was to obtain information from staff and to
give direction to the City's negotiators for obtaining economic concessions from the various
employee organizations representing City employees in an effort to close the budget shortfall.
On
November 18, 2010, the City Council approved a recommendation from City Manager
Debra Figone (Figone) that the City adopt a "direction" memo, setting forth the
City's
objectives in upcoming contract negotiations with all employee organizations representing the
City's
employees, including the MEF and CEO. The City's overriding goal was to achieve an
ongoing 10 percent reduction in "total employee compensation," which the City defined as the
total budgeted cost
of
employee pay and benefits, including salaries, healthcare costs and
retirement benefits. 6 As discussed in the direction memo and other correspondence provided
by the City, the City hoped to achieve this goal through the following measures:
• 	Ongoing Base Pay Reduction: A 12.16 percent reduction in base pay for all
employees in the MEF and CEO bargaining units, including a "roll back"
of
a 2 percent
general wage increase received by employees in these units in Fiscal Year 2010-2011 under the
existing MOAs.
• 	Pay Scale Restructuring: Reducing, by half, the amount
of
pay separating each
step in the salary scale, from approximately 5 percent to 2.5 percent and increasing the
corresponding number
of
steps at each level in the pay range.
6 In response to several information requests, the City provided Local 101
's
negotiators
with a document called "Understanding Changes to Total Compensation," which gave several
examples whereby the City could achieve its target
of
a 10 percent total compensation savings,
depending upon varying formulas for cutting each
of
the components making up "total
compensation," i.e., salaries, retirement benefits, and healthcare costs for employees and their
dependents.
4

5
• 	Healthcare "Cost Sharing": Decreasing the City's share and, correspondingly,
increasing the employee share
of
premiums for healthcare insurance for all employees and
their dependents from 90/10 to 85/15.
• 	Increased Co-Payments for Employee Healthcare: Redesigning the HMO plan
design to increase employee co-payments as follows: for office visits from $10 to $25, for
generic and brand name prescription drugs from $5/$10 to $10/$25.
• 	Reduced Healthcare and Dental Payments-in-Lieu: Reducing the amount
of
payments to employees who have other healthcare and/or dental coverage.
• 	Eliminating Healthcare Dual Coverage: Making any employee who receives
healthcare coverage as a dependent
of
another City employee or retiree ineligible for family
coverage under the City-paid healthcare coverage plan.
• 	Eliminating Disability Leave Coverage and Benefits: Under the parties'
existing MO As, employees were eligible for up to a maximum
of
nine months disability leave
benefits.
• 	Reducing Overtime Costs: No longer permitting paid time
off
to be considered
"time worked" for the purpose
of
calculating the 40-hour per week threshold for overtime.
• 	Eliminating Employer Subsidy for Public Transit: Cancelling the City's
practice
of
providing employees with the "ECO-Pass" used on public transportation.
• 	Eliminating Sick Leave Pay Out: Eliminating the practice
of
converting unused
sick leave to monetary payments for separating employees.
On this last point, Figone' s memo noted that, in previous negotiations, the issue
of
eliminating compensation for accrued sick leave had caused "very strong reactions among
employees," some of whom "consider this benefit to be 'vested' and not subject to change."

However, Figone noted that, "this program can be modified through the negotiations process"
(emphasis added).
The City also sought other, less specifically-defined measures for achieving additional
costs savings. The "direction" memo observed that "retirement reform" for current and future
employees should include, but not be limited to, creating a second tier
of
pension and retiree
healthcare benefits for new hires. The memo also proposed renegotiating the proportionate
"cost/risk" equation between the City and its employees in retirement benefits and creating
"[o]ptions to current employees" for changing the City's Supplemental Retiree Benefit Reserve
(SRBR) program, which redistributes any "excess" contributions paid into a plan to retirees.
On December 17, 2010, the City's Director
of
Employee Relations Alex Gurza (Gurza)
notified Local
101
that the City faced a projected budget shortfall
of
$115 million for the
Fiscal Year 2011-2012 General Fund operating budget
of
approximately $819 million.7 In
light
of
its budget shortfall, the City informed Local
101
that it would be seeking significant
economic concessions during the upcoming contract negotiations, including a 10 percent
reduction in total compensation for employees in each
of
the City's eleven bargaining units,
including MEF and CEO. By the City's own estimates, its package proposal, later identified as
Package A, would recover $16,813,574 in cost savings from the MEF unit, which would
include $14,743,346 in base pay reductions and $2,070,228 through redistributing healthcare
costs. The City projected that it would recover $2,225,218 in total cost savings from the CEO
unit, which would include $1,997,815 in savings from reductions in base pay and $227,403 in
healthcare costs reform.
7 These figures are significantly higher than the City's "2011-2012 Preliminary General
Fund Forecast," which was apparently relied on to prepare the November 10, 2010 "direction"
memo, which had projected a shortfall of less than $70 million.
6

Negotiations (January 2011-April 18, 2011)
On January 19, the parties' representatives met briefly to discuss ground rules.
Approximately one week later, the City Council provided further "direction" to the City's
negotiators regarding "retirement reform" and some
of
the other issues identified in the
previous memo from the City Council, including further details on reducing the disability leave
supplement and eliminating the sick leave payout provisions
of
the existing MO As.
The parties met again on February 8 and 16, at which time Local
101
made several
requests for information, though neither side presented proposals at either
of
these meetings. 8
At the February 16 meeting, the City reiterated its plan to achieve the objectives listed in the
"direction" memo previously adopted by the City Council.
Between February 8 and April 18, Local
101
and the City met approximately
11
times
and exchanged information and various proposals and counterproposals. Over the course
of
several meetings, the City presented its initial bargaining proposals, which corresponded
exactly to the objectives outlined in the "direction" memo previously approved by the City
Council. Specifically, the City proposed: (1) a 10 percent total compensation reduction in
addition to rolling back the 2 percent general wage increase received by MEF and CEO unit
employees in 2010-2011; (2) doubling the number
of
steps in each salary range while cutting
in half, from 5 percent to 2.5 percent, the amount
of
increase between each step;
(3) elimination
of
the City's sick leave payout provision included in the then-current MOAs;
and (4) a proposed "Side Letter" that would defer discussion
of
"retirement reform" to mid-
term bargaining during the future MOAs. On March 21 and 28, the City also explained, with
8 Among its other allegations, the FAC alleged that the City failed to respond to
Local 101 's requests for various categories of information. Because the Office of the General
Counsel dismissed this allegation and it was not raised in Local 101 's appeal, we do not
address it below. (PERB Reg. 32635.)
7

the aid
of
a document it had prepared called "Understanding Changes to Total Compensation,"
that with additional proposed cuts to employee healthcare benefits, the City would achieve its
desired 10 percent reduction in "total compensation" for both the MEF and CEO units.
On April 4, Local 101 presented a package proposal responding to all
of
the City's
initial proposals. Local 101
's
counterproposal would accept the 10 percent reduction in wages
proposed by the City but rejected the City's proposal to shorten the duration
of
the MOA from
three to two years. 	Local 101 rejected the City's proposal to "roll back" the 2 percent wage
increase agreed to under the existing MOAs. Local 101 accepted some, rejected others and
proposed counters for some
of
the City's proposed cuts to employee healthcare benefits.
Local 101
's
counter would also accept, in principle, the City's proposal to eliminate sick leave
payout but would limit it to employees who had accrued 15 years
of
service as
of
July 9 at a
reduced payout rate. 	Local 101 rejected the City's proposed "Side Letter Agreement" to
revisit the subject
of
"retirement reform" during the term
of
the MOA.
After the City's negotiators caucused for approximately ten minutes, the City's Deputy
Director
of
Employee Relations Gina Donnelly (Donnelly) allegedly responded to Local 101
's
proposal as follows:
There are some things that are very, very important to the City
that are not in here, so ... we ... will probably [counter with a]
one-year [proposal]. The reason I raise that as an option is that in
a one year [agreement], some
of
the things on the must-have list
for the City are things you simply can't propose to us or that we
recognize you can't sell ... to your members
....
On April 11, the City responded with a revised proposal, which was identical in every
respect to its previous proposal, except that: ( 1) instead
of
eliminating disability leave entirely
it would reduce eligibility from nine to a maximum
of
three months; (2) it no longer included
language that would make Local 101 responsible for all costs
of
arbitration; and (3) it modified
language that would have eliminated all safety language from the parties' MOAs.
8

On April 18, Local 101 countered with its second "package" proposal. 9 Local
101
's
April 18 package proposal accepted the City's proposed 10 percent pay cut but
on
the
condition that wages would "snap back" to previous levels upon expiration
of
the
MO
As.
Local 101
's
proposal would also accept, in principle, the
City's
demand to eliminate sick leave
payouts but with the modification that payouts would continue at a reduced rate for employees
who had 15
or
more years
of
service as
of
July 9. Local 101
's
counterproposal would also
accept some
of
the
City's
proposed health maintenance organization (HMO) redesign to shift
healthcare and dental costs from the City to its employees.
At
the April 18 meeting, Local 101 also proposed changes to what it characterized as
"non-economic" subjects. The proposed changes included modifying the scope
of
the
arbitration clause to include disciplinary matters, modifying grievance procedure timelines,
permitting unit employees to use City email accounts for union communications, modifying
the vacation approval process, and modifying layoff procedures. Local 101 contends that the
City rejected each
of
these proposals without explanation. 10 In a declaration submitted with
the F AC, Local 101
's
chief negotiator Charles Allen (Allen) recounted one exchange in which
Donnelly allegedly stated that the City was "not in a financial position to give the Union
'sweeteners."' In response, Allen allegedly asserted that some
of
these proposals, including
9
At this point in negotiations, the parties had exchanged two rounds
of
comprehensive
or "package" proposals, which consisted largely
of
each party's previous proposals on
individual subjects bundled together into a "package."
10 In its response to the FAC, the City disputed Local 101
's
characterization
of
these
proposals as "non-economic," and asserted that some
of
the proposed changes would entail
substantial economic costs to the City. It is not clear from the documentation provided to the
investigating Board agent whether the City articulated this concern to Local 101 during
negotiations. In its response to Local 101
's
appeal, the City makes the additional argument
that it did, in fact, respond to all
of
Local 101
's
"non-economic" proposals. As discussed
below, the Office
of
the General Counsel generally accepted Local 101
's
allegation that the
City neither offered an explanation for its rejection of the union's "non-economic" proposals
nor presented counterproposals on these subjects.
9

proposed changes to the grievance and arbitration procedures, involved no additional costs to
the City. According to Allen's declaration, Donnelly ignored this remark and the City
"consistently rejected the Unions' proposals in this area" and similarly "refused to discuss in
detail any
of
the subjects addressed by the proposed Side Letters."
After reviewing Local
101
's
April
18
revised package proposal, Charles Sakai (Sakai),
counsel for the City, pointed out that Local
101
's
proposed "snap back" language was
inconsistent with the City's demand for an ongoing wage reduction
of
10
percent. The City
then declared impasse. Local
101
's
bargaining team caucused briefly and returned to offer
additional concessions in line with the City's demands, by modifying its previous proposal
from a three-year to a two-year term and eliminating the "snap back" language.
Local
101
alleges that, instead
of
responding to this concession, Donnelly asked about
the subject
of
"retirement reform," one
of
three subjects, along with employee compensation
and healthcare benefits, comprising "total employee compensation," and a subject the City had
previously identified as a source
of
major concessions. Local 101 alleges that its negotiators
stated that they were prepared to negotiate over this subject, and that they attempted to engage
the City in dialogue to determine what concerns had prompted the City's open-ended "Side
Letter" proposal. Local 101 further alleges that the City refused to discuss or offer a
"substantive" proposal on this subject. Instead, the City's negotiators stated that they were not
prepared to negotiate retirement reform, declared for a second time that day that negotiations
were at impasse, and invoked the mediation provisions included in the City's Employer-
Employee Relations Resolution (EERO). Allen allegedly asserted that negotiations were not at
impasse and objected to the presence of a mediator for future negotiations.

Impasse and Mediation (May 2-May 31, 2011)
Local
101
objected that negotiations were not deadlocked but eventually agreed, under
protest, to resume negotiations with a mediator present. The parties met again, with a
mediator, on May 2 and May 12, with additional meetings scheduled for May 16 and 17.
However, at the May 12 meeting, the City presented its last, best and final offer (LBFO) for
both the MEF and CEO units.
The City's LBFO consisted
of
two options, designated "Package A" and "Package B."
Local
101
alleges, and the City does not dispute, that the Package A option deviated in only a
few respects from the City's initial bargaining proposals or from the bargaining objectives
stated in the "direction" memo. It included a base pay reduction
of
approximately
12.16 percent beginning in the pay period in which the MEF and CEO agreements expired; a
"roll back"
of
the 2 percent general wage increase previously agreed to under the existing
agreements for the MEF and CEO units; a restructuring
of
the pay scale to double the number
of
steps and to reduce, by half, the size
of
pay increases received at each step in the range; a
reduction in the City's contribution for healthcare costs from 90 percent to 85 percent, and a
corresponding increase in employee contributions effective October
1;
redesign
of
the City's
HMO plan, including several co-payments, ranging in amount from $10 to $100 to take effect
October 1; elimination
of
dual healthcare and dental coverage for employees also covered as a
dependent
of
another City employee or retiree effective October 1; an end to calculating paid
time off towards weekly overtime eligibility; and, an end to City-provided mass transit passes
and vouchers, effective January 1, 2012. The "Package A" option included language that
would eliminate all sick leave payouts to separating MEF and CEO employees, effective
January 1, 2012.
11

The City's LBFO option designated "Package B" was identical to the Package A
option, except that it was for two years, instead
of
one year, and on the subject
of
sick leave
payouts, it proposed a "Side Letter" that would defer discussion
of
this subject to mid-term
modifications under the future MOAs. As with the City's other proposed side letters, the
language included in the Package B option would permit either party to reopen negotiations
over sick leave compensation at any time during the term
of
the future MOAs.
In a letter accompanying its LBFO, the City stated that
if
Local
101
failed to accept one
of
the two LBFO options by May 24, the City's negotiators would present the Package A
option to the City Council on May
31
and, pending approval, impose the terms included
therein for both the MEF and CEO units. 	On May 17, Gurza submitted a memorandum to the
Mayor and the City Council recommending approval
of
the terms included in the City's one-
year Package A option for the MEF and CEO units.
After receiving no response from Local
101
to the City's LBFO, on May
31
the City
Council approved imposition
of
the one-year LBFO option identified as Package A. The terms
included in Package A were imposed, effective June
1,
for the MEF unit and Local
101
filed
the present charge the same day. Because the City's MOA with the CEO unit was not set to
expire until September 17, imposition
of
the terms included in Package A for the CEO unit was
deferred until September 18.
Elimination
of
Sick Leave Payouts and the Deisenroth Litigation (January
1,
2011-Present)
As noted above, the City's one-year "Package A" LBFO included language whereby,
"[e]ffective January 1, 2012, no employee shall be eligible for a sick leave payout." Based on
its request for administrative notice and to supplement the record, Local 101 apparently alleges
that, in accordance with the terms included in Package A and imposed June 1 and
September 18, as of January 1, 2012, the City ceased paying MEF and CEO employees for
12

unused sick leave upon their separation from employment. On May 9, 2012, Lorie Deisenroth
(Deisenroth), a retiring member
of
the MEF unit, brought a petition for writ
of
mandate
in
the
Superior Court for Santa Clara County alleging that, as a 30-year employee
of
the City, her
right to compensation for unused sick leave at separation had vested, and that the City had
unlawfully interfered with this right
by
refusing to pay her for unused sick leave upon her
retirement
on
March 31, 2012.
After hearing the matter on November 27, 2012, on May 10, 2013, the Superior Court
issued its final statement
of
decision and order, in which it found that, as
of
January 1, 2012,
the City had ceased making payments for accrued sick leave to separating employees,
including Deisenroth, regardless
of
their accumulated years
of
service. The Superior Court
concluded that the City's refusal to pay sick leave to Deisenroth unlawfully impaired vested
rights and issued a peremptory writ
of
mandate directing the City and all persons acting
pursuant to its control and direction to provide Deisenroth with all sick leave compensation
that had accrued to her on or before December 31.
PROCEDURAL HISTORY
On June 1, 2011, Local 101 filed a charge which alleged that the City had failed to meet
and confer in good faith before declaring impasse, had failed to participate in good faith in
post-impasse mediation, and had adopted and/or imposed terms included in a "final offer,"
without first exhausting the good-faith meet-and-confer and impasse resolution process
included in the City's local rules. Specifically, Local 101 alleged that the City's surface
bargaining was evidenced by a "take-it-or-leave-it" approach to negotiations. It also alleged
that the City's declaration
of
impasse was made in bad faith, was premature and/or was
otherwise invalid, because the deadlock in negotiations was predicated on proposals that
unlawfully conditioned agreement over mandatory subjects on prior agreement to non-
13

mandatory subjects. The allegedly non-mandatory proposals identified by Local 101 included
several "Side Letter" proposals pertaining to employee retirement benefits, elimination
of
the
SRBR
program, and the parties' procedures for layoffs. The common feature
of
these "Side
Letter" proposals which Local 101 found objectionable was that, rather than containing
"substantive" terms, each proposed to defer discussion
of
that subject to reopener negotiations
after the future MOAs took effect.
On July 8, the City responded to Local 101
's
charge
by
generally denying all material
allegations, asserting various affirmative defenses, and providing the investigating Board agent
with several exhibits
of
documents purportedly refuting some
or
all
of
the allegations included
in
the charge. The City specifically denies that its imposition
of
terms included any
of
its
proposed side letters concerning retirement reform, changes to layoff procedures, elimination
of
sick leave payouts, and changes to SRBR benefits. The City maintains that, while "there is
not yet PERB case law on point," various private-sector authorities recognize "reopener"
proposals as mandatory subjects
of
bargaining, and that, as with other mandatory subjects
of
bargaining, parties are privileged to insist to impasse on their "reopener" proposals.
On July 27, the Office
of
the General Counsel issued a warning letter which identified
two distinct legal theories included in the charge: (1) surface bargaining; and (2) insisting to
impasse on non-mandatory subjects
of
bargaining, i.e., the City's "reopener" proposals. The
Office
of
the General Counsel found insufficient facts to support the surface bargaining
allegation because, as explained in the warning letter, the City's proposals concerned
mandatory subjects
of
bargaining and a party may lawfully engage in "hard bargaining" by
insisting, even to impasse, on its positions concerning mandatory subjects. The Office
of
the
General Counsel also observed that the City had made some concessions on non-economic
14

matters and, that Local
101
had failed to allege facts demonstrating that the City could achieve
its desired cost savings by agreeing to Local
101
's
economic proposals.
The Office
of
the General Counsel also rejected Local
101
's
second theory. It
essentially agreed with the City, that a proposal to defer negotiations
of
a mandatory subject to
mid-term modifications is itself a mandatory subject and that, even in the face
of
requests by
Local
101
for "substantive bargaining" on these subjects, the City was authorized to insist to
impasse on proposals to defer discussion
of
retirement benefits, SRBR, layoff procedures, and
sick leave payouts to separating employees.
On August 22, Local
101
filed the FAC. The FAC reiterated Local
101
's
allegation
that the City had adopted a "take-it-or-leave-it" approach to negotiations, which Local
101
argued was demonstrated by the identity or near identity between the terms included in its
publicly-announced bargaining objectives, its opening proposals, and the terms ultimately
imposed on the MEF and CEO units. The FAC also alleged that the City made proposals that
were "predictably unacceptable," as evidenced by a statement made by Donnelly to the effect
that the City recognized that some
of
its "must-have" items were things that Local 101 could
not "sell" to its members. As additional evidence
of
the City's bad faith, the FAC alleged that
the City both failed to explain its rejection
of
Local 101
's
non-economic proposals and refused
to make proposals or counter-proposals on other subjects, including retirement reform.
On September 23, the City filed and served its response to the F AC, in which it again
asserted a general denial and raised various affirmative defenses. The City denied that its
conduct amounted to complete inflexibility without explanation, since it had met with
Local 101 approximately eleven times and had allegedly provided explanations for its
bargaining demands. Although it did not file a counter-charge, the City also asserted that
Local 101 's negotiators' acted in bad faith by cancelling and showing up unprepared for
15

meetings and engaging in other dilatory tactics, by reneging on a prior agreement to proceed to
mediation after the City's April
18
declaration
of
impasse, and by failing to offer timely
responses or counterproposals. The City's response reiterated that its imposition
of
terms did
not include the proposed "Side Letters" on retirement reform or other subjects.
On December 29, the Office
of
the General Counsel dismissed the FAC. The dismissal
letter stated that existing case law would not support Local 101
's
allegation
of
"take-it-or-
leave-it" bargaining, because numerous authorities hold that a party may insist on its position
without giving concessions, "even
if
the reasons for insisting on a particular position or
contract term are questionable,
if
the belief is sincerely held." The Office
of
the General
Counsel also concluded that the statement attributed to Donnelly failed to demonstrate that the
City's demands were "predictably unreasonable," even
if
they were "predictably unacceptable"
to Local 101.
The dismissal letter acknowledged that Local 101 had sufficiently alleged that the City
had failed to offer explanations for rejecting certain proposals and that it had likewise failed to
offer counterproposals on other subjects. However, the Office
of
the General Counsel treated
these allegations as one indicator
of
bad faith and therefore insufficient to state a prima facie
case
of
surface bargaining which, according to the Office
of
the General Counsel, requires the
presence
of
more than one indicia
of
bad faith.
The dismissal letter did not specifically address Local 101
's
revised allegations that the
City's tactic
of
first raising the specter
of
sweeping changes to employee retirement benefits,
but then refusing to offer a substantive proposal on this subject, was either a per se refusal to
bargain or a separate indicator
of
bad faith. However, in its previous warning letter, the Office
of
the General Counsel had advised Local 101 that a reopener proposal concerning a
16

mandatory subject is itself a mandatory subject and in the Office
of
the General Counsel's
view, an employer may lawfully bargain to impasse and "implement" such a proposal.
Local
101
's
appeal followed on January 18, 2012. It recites four categories
of
factual
allegations to demonstrate that the FAC sufficiently stated a prima facie case
of
surface
bargaining: (1) from the beginning
of
negotiations and continuing through the impasse
resolution process, the City presented its key bargaining proposals on a "take-it-or-leave-it"
basis and, specifically, the City's delay
of
a few months in implementing its proposal to
eliminate sick leave payouts was "the only deviation" in key economic terms from the City's
initial proposals; (2) the City failed to provide any rationale for its peremptory rejection
of
Local
101
's
non-economic proposals or for its refusal to provide proposals or counterproposals
on these subjects and on the economic subject
of
retirement reform; (3) the City's negotiators
acknowledged that some
of
its "must have" bargaining demands were patently unacceptable
and that Local
101
could "never sell them to its members"; and (4) after announcing at the
outset that it would seek significant concessions relating to "retirement reform," the City
refused to offer a substantive proposal on that subject and instead insisted to impasse that this
subject be "continued" to reopener talks during the terms
of
the future MOAs. Local 101
argues that the City's refusal to engage in "substantive" discussion on these reopener or "Side
Letter" subjects deprived Local 101
of
the ability to engage in the full give-and-take
of
concessionary bargaining. The appeal also argues that the City's refusal to offer "substantive"
language on retirement reform constitutes dilatory tactics and/or demonstrates that its
negotiators lacked authority, either
of
which would supply an additional indicator
of
bad faith.
After obtaining an extension
of
time, the City filed and served its response to
Local 101 's appeal on February 21, 2012. The City's response asserts that its "hard
bargaining" tactics were lawful, that its negotiators provided explanations for the City's
17

rejection
of
Local 101
's
proposals, and that its negotiators had full authority to enter into
tentative agreements on all subjects. The City's response also reiterates that no "Side Letter"
proposals were imposed.
On May 13, 2013, Local 101 filed with PERB' s Office
of
Appeals a request to take
administrative notice and to supplement the record in this matter with the May 10, 2013, final
decision and order
of
the Superior Court for the County
of
Santa Clara in the writ proceedings
captioned Deisenroth
v.
City
of
San Jose. The City has raised no objection to this request.
DISCUSSION
Overview and Summary
of
Decision
Local 101
's
charge alleges that the City failed and refused to bargain in good faith
during negotiations for successor MOAs and during the impasse resolution procedures required
by the City's local rules. From its investigation, the Office
of
the General Counsel determined
that the facts alleged by Local 101 supported only one possible indicator
of
the City's bad
faith-its
alleged refusal to offer explanations and/or counterproposals when rejecting
Local 101
's
proposals. The Office
of
the General Counsel dismissed the charge for failure to
state a prima facie case, reasoning that PERB case law requires the charging party to allege
facts supporting "more than one indicia"
of
the respondent's bad faith in a surface bargaining
charge.
We reverse the dismissal on several grounds. First, the appropriate test for surface
bargaining is the "totality
of
circumstances" or "totality
of
conduct" test. Some authorities,
including some PERB decisions, have included language suggesting that factual allegations
supporting only one indicator
of
the respondent's bad faith are usually insufficient to state a
prima facie case. (Oakland Unified School District (1996) PERB Decision No. 1156, p. 2;
Kirsten L. Zerger, et al., eds., California Public Sector Labor Relations (Matthew Bender,
18

1012) § 10.04[2] ["Unless the conduct is egregious, the mere presence
of
one
of
these indicia
alone is insufficient to establish bad faith." Emphasis added.]; John
E.
Higgins, Jr., et al., eds.,
The Developing Labor Law, Sixth Edition (BNA, 2012) Vol.
I:
922-923, citing Archibald
Cox, The Duty to Bargain in Good Faith,
71
Harv.
L.
Rev. 1401, 1421 (1958) ["Any single
factor, standing alone, is usually insufficient to support [a finding
of
surface bargaining], but
its 'persuasiveness grows as the number
of
issues increases."' Emphasis added.].) In our
view, however, a rigid adherence to such a categorical rule is ultimately inconsistent with the
"totality
of
circumstances" test long used by PERB when assessing surface bargaining
allegations. It fails to account for the potentially detrimental effect that one indicator, by itself,
may have on the course
of
negotiations or the parties' bargaining relationship (State
of
California, Department
of
Personnel Administration (1989) PERB Decision No. 739-S) and its
formulaic nature detracts from the ultimate question raised in every surface bargaining case -
whether the respondent's conduct, when viewed in its totality, was sufficiently egregious to
frustrate negotiations. (State
of
California (Department
of
Personnel Administration) (2009)
PERB Decision No. 2078-S.).
Second, regardless
of
how many indicators are needed to state a prima facie case
of
surface bargaining, the Office
of
the General Counsel's investigation
of
this case failed to
consider all
of
the relevant factual allegations in the charge, including those that suggested
several indicators
of
bad faith other than the one identified in the warning and dismissal letters.
(Oakland Unified School District (1982) PERB Decision No. 275, p.
15
[requiring analysis
of
totality
of
facts and circumstances for surface bargaining allegation]; Seattle-First National Bank
v.
NLRB (9th Cir. 1981) 638 F.2d 1221, 1225, 1226-1227.) As explained below, the City's
alleged insistence to impasse on various "Side Letter" proposals, regardless of whether these
proposals were imposed, suggests a tactic of "piecemeal" or "fragmented" bargaining that
19

arbitrarily limited the range
of
possible compromises by declaring certain mandatory subjects
of
bargaining
off
limits for discussion until complete agreement has been reached on all other
subjects. (San Bernardino City Unified School District (1998) PERB Decision No. 1270
(San Bernardino), p. 80; Visiting Nurse Servs.
v.
NLRB (1st Cir. 1999) 177 F.3d 52, 59.) The
FAC clearly alleges that the City refused to discuss or propose language on the subject
of
"retirement reform," even after the City itself had identified this subject as a source
of
"significant" concessions necessary to achieve its goal
of
a 10 percent reduction in "total
employee compensation."
Third, PERB case law has expressly left open the possibility that, in addition to
serving as an indicator
of
bad faith, the kind
of
piecemeal bargaining tactics alleged here by
Local
101
may also constitute a per se violation
of
the duty to bargain. (Stockton Unified
School District (1980) PERB Decision No. 143 (Stockton), pp. 21-27, esp. 24.) The FAC
alleges that, over the objection
of
Local 101, the City insisted to impasse on various "Side
Letter" proposals, whereby discussion
of
"retirement reform" and other mandatory subjects
of
bargaining would be deferred until after the parties had reached complete agreement on all
other subjects. While Local 101 will have the burden
of
proving this allegation through
competent and credible evidence before an administrative law judge (ALJ), at this stage
of
the
proceedings, we find that it has alleged sufficient facts to state a viable theory that the City has
refused outright to meet and confer promptly regarding matters within scope, as required by
the MMBA. (§ 3505.)
Additionally, Local 101 has alleged sufficient facts to support an inference that the City
adopted a "rush to impasse" strategy as a way to obtain concessions from its employees,
without engaging in a sincere effort to reach agreement with their representative. (Regents
of
the University
of
California (1985) PERB Decision No. 520-H (UC Regents), pp. 14 and 25,
20

fn. 13.) Local
101
has alleged, among other things, that the parties exchanged only two rounds
of
comprehensive or "package" proposals before declaring impasse; that even as the City was
declaring impasse, Local
101
was offering additional concessions in line with the City's
bargaining demands but that the City flatly refused to explore the possibility
of
compromise;
and, that the terms included in the City's LBFO differed in only insignificant respects from its
well-publicized bargaining demands and opening proposals. While we emphasize that we do not
rule on the merits
of
these allegations, we believe they sufficiently state a viable "rush to
impasse" theory that should have been considered as a separate indicator
of
bad faith in support
of
Local
101
's
surface bargaining allegation. (Golden Plains, supra, PERB Decision No. 1489;
City
of
Pinole (2012) PERB Decision No. 2288-M (Pinole), pp. 11-12.)
Finally, the FAC alleges that, as part
of
its LBFO Package A option, the City insisted
on and imposed a proposal to eliminate all sick leave payouts to employees separating from the
MEF and CEO units, effective January 1, 2012. On the basis
of
this allegation and the facts
included in the Deisenroth decision, we conclude that Local 101 has alleged sufficient facts to
state a prima facie case that the City has violated its duty to bargain in good faith by insisting
to impasse and imposing an arguably illegal subject
of
bargaining. 	In accordance with the
"totality
of
circumstances" analysis required by our case law, these allegations
of
separate,
contemporaneous unfair labor practices, and their potential impact on negotiations, must be
analyzed as additional indicators
of
the City's alleged bad faith. (Beaumont Unified School
District (1984) PERB Decision No. 429 (Beaumont), p. 9.)
Legal Standard for Alleged Violations
of
the Duty to Bargain in Good Faith.
Section 3505
of
the MMBA requires the governing body of a public agency or its
designated representative to '"meet and conft
::
r in good faith regarding wages~ hours, and other
terms and conditions of employment with representatives of
...
recognized employee
21

organizations," and to "consider fully such presentations as are made by the employee
organization
on behalf
of
its members prior to arriving at a detem1ination
of
policy
or
course
of
.	action .
'~
(MMBA
§ 3505.) That same section defines the
term
"[m]eet and
confef
'1
as a
mutual obligation personally to meet and confer promptly upon
request
by
either party and continue :for a reasonable period
of
time
in
order to exchange freely information, opinions~ and proposais,
and to endeavor to reach agreement on matters within the scope
of
representation prior to the adoption by the public agency
of
its
final budget for the ensuing year. The process should include
adequate time for the resolution
of
impasses where specific
procedures for such resolution are contained in local
rule~
reguiation,
or
ordinancej
or
\\/hen such procedures are utilized by
mutual consent.
The test generally used to determine whether good faith bargaining has occurred is the
"totality
of
circumstances" or "totality
of
conduct" analysis, which looks to the entire course
of
negotiations, including the parties' conduct at and away from the bargaining table, to determine
whether they have negotiated with the requisite intention
of
reaching an agreement. (Pajaro
Valley Unified School District (1978) PERB Decision No.
51
(Pajaro Valley), pp. 4-5; In re
Atlas Mills, Inc. (1937) 3 NLRB 10.) Because ascertaining compliance with the duty to bargain
in good faith requires an inquiry into the respondent's motive during the bargaining process, a
matter which is generally not susceptible to direct evidence, surface bargaining allegations must
be determined from an examination
of
the "totality
of
circumstances" or "entire course
of
conduct" in which the negotiations took place. (NLRB
v.
Reed & Prince Mfg. Co. (1st Cir. 1953)
205 F.2d 131, 134, cert. denied (1953) 346 U.S. 887 (1953); see also Seattle-First National Bank
v.
NLRB, supra, 638 F.2d 1221, 1225, 1226-1227.)
However, certain forms
of
conduct have such potential to frustrate negotiations or
undermine the authority
of
the bargaining representative that they are deemed unlawful without
any determination
of
the respondent's subjective intent. (Pajaro Valley, supra, PERB Decision
No. 51.) Examples
of per se violations include an employer's refusal to provide the exclusive
22

representative with necessary and relevant information upon request (Stockton, supra, PERB
Decision No. 143, pp. 18-19), an outright refusal to bargain over a mandatory subject
(Dublin Professional Fire Fighters, Local 1885
v.
Valley Community Services District (1975)
45 Cal.App.3d 116, 118; Sierra Joint Community College District (1981) PERB Decision
No. 179 (Sierra)), a pre-impasse unilateral change to terms and conditions
of
employment
(Stockton, supra, PERB Decision No. 143, pp. 19-21), by-passing the representative and dealing
directly with employees over negotiable matters (City
of
San Diego (Office
of
City Attorney)
(2010) PERB Decision No. 2103-M, p. 7), and insisting to impasse on non-mandatory subjects
of
bargaining. (Chula Vista City School District (1990) PERB Decision No. 834 (Chula Vista),
pp. 19-23.)
The "totality
of
circumstances" analysis used for surface bargaining allegations requires
an examination
of
all the evidence relevant to the respondent's subjective intent, including its
conduct constituting separate, contemporaneous unfair labor practices, whether committed at
or away from the bargaining table. PERB thus follows private-sector authority in considering
any separate per se violations as additional factors in support
of
an allegation that the respondent
also engaged in an overall course
of
conduct amounting to bad-faith bargaining. (Stockton,
supra, PERB Decision No. 143, pp. 23-24; Atlanta Hilton & Tower (1984) 271 NLRB 1600;
Radisson Plaza Minneapolis (1992) 307 NLRB 94, 95, 109.)
Once a party has requested bargaining over a matter within the scope
of
representation,
the "mutual obligation" set forth in the MMBA requires the other party to "meet and confer
promptly," and to continue doing so "for a reasonable period
of
time in order to exchange freely
information, opinions, and proposals, and to endeavor to reach agreement." (MMBA, § 3505.)
This obligation to "meet and confer promptly" is absolute. (Dublin Professional Fire Fighters,
Local 1885, supra, 45 Cal.App.3d 116, 118.) An unreasonable delay in responding to a request
23

to bargain over a particular subject is treated as an outright refusal to bargain, a per se violation
requiring no finding
of
subjective bad faith. (Stockton, supra, PERB Decision No. 143; Sierra,
supra, PERB Decision No. 179.) PERB has also found a per se refusal
to
bargain when one
party fails to provide an explanation for its bargaining position. (San Mateo County Community
College District (1993) PERB Decision No. 1030 (San Mateo).) Because such conduct involves
a refusal to negotiate, rather than the absence
of
good faith, it is not a defense to point to other,
ostensibly "mitigating" facts, such as whether agreement was reached on other subjects
of
bargaining. (Sierra, supra, at pp. 6-7.)
With this framework in mind, we now
tum
to Local
101
's
factual allegations and the
Office
of
the General Counsel's dismissal
of
the charge.
Allegations that the City's "Side Letter" Proposals Constituted "Piecemeal" Bargaining.
Local 101 alleges that, after the City announced that it would seek significant
concessions in employee retirement benefits and other terms
of
employment, it then steadfastly
refused to make substantive proposals on these subjects and instead insisted to impasse on
proposed "Side Letters" that would defer discussion
of
these subjects to reopener talks under
the agreements then being negotiated. Local 101 argues that the City's insistence on these
reopener proposals, and its alleged refusal to engage in substantive discussion
of
these subjects
until agreement had been reached on all others, would require Local
101
to negotiate the "Side
Letter" subjects "in isolation" from all others and at a time when the range
of
possible
compromises would be severely limited.
The Office
of
the General Counsel rejected this allegation, although it offered various
reasons for doing so, as the legal theories asserted and authorities cited by Local 101 evolved
during the investigation of the charge. In response to Local 101 's initial charge, which argued
that the City's "Side Letter" proposals included permissive subjects of bargaining, the Office
24

of
the General Counsel observed that, "There does not appear to be any PERB authority that
stands for the proposition that
...
re-opener clauses are permissive subjects
of
bargaining."
11
The warning letter also cited decisions by the National Labor Relations Board (NLRB) and the
federal courts which, according to the Office
of
the General Counsel, had found reopener
proposals to be within the scope
of
mandatory subjects. As explained in the warning letter, the
Office
of
the General Counsel further reasoned that, because the City's "Side Letter" proposals
affected retirement benefits, sick leave compensation, and the notice and selection procedures
for
layoffs-all of
which are unquestionably mandatory subjects
of
bargaining-proposals to
reopen negotiations on these same subjects must likewise be mandatory subjects. Moreover,
because mandatory subjects are part
of
the routine "give-and-take" or "horse trading"
of
collective bargaining, the City therefore acted lawfully when it insisted on proposals to defer
discussion
of
these matters to reopener negotiations. 12
The FAC did not reiterate Local 101
's
previous argument that the City's "Side Letter"
proposals involved permissive subjects
of
bargaining and it was therefore unnecessary for the
Office
of
the General Counsel to retrace each step
of
its previous analysis. However, it
appears from the dismissal letter that the Office
of
the General Counsel relied on the same
reasoning to reach the same conclusion. In response to Local 101
's
allegations that, "the City
failed to make any substantive proposals on [retirement benefits]" and instead "insisted to
11
Alternatively, the warning letter asserted that, even
if
reopener proposals are
permissive subjects
of
bargaining, the initial charge failed to allege facts demonstrating that
Local 101 had sufficiently objected to the "re-opener" nature
of
the City's proposals.
12 Similarly, the City's response to the initial charge argued, by way
of
analogy, that a
proposal to defer negotiations until a comprehensive agreement is in place is but "the flip side"
of
a proposal for a waiver or zipper clause that would foreclose the duty to bargain during the life
of the agreement. The City reasons that, because it is well-settled that zipper clauses are
mandatory subjects of bargaining, reopener proposals affecting mandatory subjects must also be
within the scope of negotiable subjects.
25

impasse on a reopener side letter proposal" on this subject, the Office
of
the General Counsel's
dismissal letter states:
Facts in the record show that on April 11, 2011, the City provided
the Union with a "Side Letter Agreement" proposal, which
addresses negotiations over pensions and retiree healthcare
benefits for current and future employees. The parties had an
opportunity to discuss this proposal during the April 11, 2011
bargaining session and there are no facts to show that the City
refused to discuss such proposal. While the Charging Party
subsequently solicited a proposal on "Retirement Reform," the
facts show that a City proposal was already made in the form
of
a
reopener prov1s10n.
The dismissal letter thus treats the City's proposals to defer discussion
of
"Retirement
Reform" and other subjects as mandatory subjects
of
bargaining, which the City was authorized
to insist on, even to the point
of
impasse.
13
Although not explicitly stated, the reasoning
of
the
warning and dismissal letters seems to rest on the premise that conditional bargaining over
mandatory subjects is not, nor ever can be, a violation
of
the duty to bargain. We disagree with
this premise both as a general statement
of
the law and as applied to the facts and
circumstances alleged in the present dispute.
Parties to negotiations may propose, and mutually agree to, ground rules or other
arrangements governing the time and place
of
their negotiations, including proposals whereby
some topics will be discussed before others. (Southwestern Community College District
(1998) PERB Decision No. 1282; Compton Community College District (1989) PERB
Decision No. 728.) Additionally, we assume, for the purposes
of
this appeal, that parties
may lawfully propose reopener clauses and include such provisions in their agreements.
13
Because we adopt the reasoning of private-sector authorities prohibiting "piecemeal"
bargaining tactics, we need not decide the broader issue of whether "reopener" proposals are
appropriately characterized as mandatory subjects of bargaining nor whether the City's "Side
Letter" proposals in this case should be so classified.
26

(Clovis Unified School District (2002) PERB Decision No. 1504, p. 5; Speedtrack, Inc. (1989)
293 NLRB 1054, 1054-1055 (Speedtrack); CJC Holdings, Inc. (1994) 315 NLRB 813, 816
(CJC Holdings),
enfd.
(5th Cir. 1996) 97 F.3d 114.) Parties may not, however, refuse to
discuss a mandatory subject, once the other party has demanded bargaining on that subject.
(MMBA, § 3505.) This prohibition extends to conduct that unreasonably delays discussion
of
a mandatory subject, once the other party has submitted a proposal and solicited a response.
(Stockton, supra, PERB Decision No. 143; San Bernardino, supra, PERB Decision No. 1270,
pp. 80-83; Gonzales Union High School District (1985) PERB Decision No. 480 (Gonzales);
San Mateo, supra, PERB Decision No. 1030.)
The question presented here is whether insisting on a proposal to defer discussion
of
a
particular subject to future reopener negotiations constitutes an unreasonable delay, and thus a
refusal to bargain, over that subject. A related question is whether a party may insist on
proposals that condition, not only agreement, but even a willingness to engage in substantive
discussion, over a particular subject on prior agreement over other mandatory subjects. We
hold that a party may not refuse to discuss a mandatory subject by insisting on a "proposal" that
postpones negotiations on certain mandatory subjects until agreement on all others is secured.
Although parties may generally condition their agreement on one or more subjects
of
bargaining on prior agreement over others, it is another matter when one party refuses even to
discuss a particular subject
of
bargaining until agreement has been reached on others. In several
cases, PERB has rejected the assertion that a party may refuse to discuss other subjects until the
parties have agreed on grounds rules, which we regard as a mandatory subject of bargaining.
(Stockton, supra, PERB Decision No. 143; San Bernardino, supra, PERB Decision No. 1270.)
In each of these cases, the respondent's refusal to discuss other subjects served either as evidence
of bad faith in support of a surface bargaining allegation, or of a per se refusal to bargain. The
27

reasoning
of
these cases is controlling for the allegations included in Local
101
's
charge. If a
party may not delay negotiations, by refusing to discuss other subjects until agreement is first
reached on one particular subject, a party may not achieve the same result simply by casting its
refusal as a "proposal" to defer discussion over a particular subject to an indefinite, future date
when negotiations over all, or nearly all, other subjects have been concluded.
The Office
of
the General Counsel's dismissal letter stated that the City's "Side Letter
Agreement" proposal
of
April 11, 2011 "addresses negotiations over pensions and retiree
healthcare benefits for current and future employees" and thus did not, as alleged by Local 101,
"fail[] to make any substantive proposals on the subject." We see the matter differently.
	Of
critical importance here is the exclusively reopener nature
of
the City's "Side Letter" proposals.
Unlike, for example, a proposal to adjust employee compensation by a definite amount or
percentage during the first year
of
an agreement followed by reopener wage negotiations in
subsequent years (CJC Holdings, supra 315 NLRB 813, 816-817; Speedtrack, supra, 293 NLRB
1054, 1054-1055), the City's "Side Letter" proposals would not fix any term or condition
of
employment. They are also unlike a management rights or similar discretionary proposal, in
that, rather than authorizing one party to act unilaterally with respect to a particular subject
of
bargaining (NLRB
v.
American Nat 'l Ins. Co. (1952) 343 U.S. 395), they defer any meaningful
negotiations on the subject
of
the "Side Letter" to a later date.
14
Although they purport to
address retirement benefits or other subjects
of
bargaining, their only "substantive" provision is
the reopener language itself.
14
The facts, as alleged here, are distinguishable from those in our recent decision in
Los Angeles Unified School District (2013) PERB Decision No. 2326, which is under judicial
review. There, we held that an employer may insist to impasse on a proposal to retain
complete discretion over a particular subject
of
bargaining, but may not impose such a
proposal at impasse. Here, by contrast, Local 101 alleges that the City's side letter proposals
on retirement reform and other subjects would neither fix any substantive terms nor retain
discretion over the "Side Letter" subjects.
28

While PERB may not sit in judgment
of
the substantive terms included in a proposal,
nor require parties to make concessions on any particular subject (Placentia Fire Fighters
v.
City
of
Placentia (1976) 57 Cal.App.3d 9, 25 (Placentia); Herman Sausage Co. (5th Cir. 1960)
275 F.2d 229), we cannot agree with the view stated in the dismissal letter that, as a matter
of
law, the City has satisfied its duty to bargain by simply presenting proposals which would fix no
terms
of
employment, nor retain discretion over a particular subject, and which, in fact, would do
nothing more than defer discussion
of
the subjects concerned to an unspecified future date after
all other subjects have been settled by the parties' MO As. While we do not decide the merits
of
Local
101
's
allegation here, we hold that, by alleging that the City has insisted to impasse on
language that would do nothing more than reopen subjects
of
bargaining after all others have
been agreed to, Local 101 has raised a viable theory that the City has refused or unreasonably
delayed negotiations on mandatory subjects, including employee retirement benefits.
In addition to the delay on substantive negotiations resulting from the City's refusal to
budge from its "Side Letter" proposals, Local 101 has alleged that, by making discussion
of
certain subjects dependent on the agreement over all, or nearly all, other subjects being
negotiated, Local 101 would be forced to negotiate the "Side Letter' subjects "at a time
of
the
City's unilateral choosing" and "in isolation" from all other subjects which might otherwise form
the basis
of
a compromise. As alleged here, the City's "Side Letter" proposals suggest
"piecemeal" or "fragmented" bargaining tactics.
In the private sector, the NLRB has developed an extensive body
of
decisional law on so-
called "piecemeal" or "fragmented" bargaining tactics, whereby one party insists on negotiating
certain subjects in isolation from others, or seeks to impose arbitrary limits on the range
of
possible compromises it will consider. (Whitesell Corp. (2011) 357 NLRB No. 97 [employer's
refusal to discuss "core" issues until "noncore" issues were resolved "contravenes [the] duty to
29

bargain in good faith because it excludes the opportunity for the 'horse trading' that
characterizes good-faith bargaining"]; Trumbull Memorial Hospital (1988) 288 NLRB 1429,
14 70 [refusal to discuss economic matters until non-economic matters resolved]; Sartorius,
Inc. (1997) 323 NLRB 1275, 1286 [insistence
on
negotiating and implementing production
incentive bonus proposal separate from contract negotiations].) The NLRB' s prohibition
against "piecemeal" or "fragmented" bargaining tactics is a corollary
of
the well-settled .rule
against unilateral changes in the absence
of
overall impasse in negotiations. (NLRB
v.
Katz
(1962) 369 U.S. 736.) As explained by the First Circuit Court
of
Appeal, because "[c]ollective
bargaining involves give and take on a number
of
issues. [T]o permit the employer to remove,
one by one, issues from the table [would] impair the ability to reach an overall agreement
through compromise on particular items [and] would undercut the role
of
the Union as the
collective bargaining representative." (Visiting Nurse Services (1998) 325 NLRB 1125, 1130-
1131, enforced by Visiting Nurse Services
v.
NLRB (1st Cir. 1999) 177 F.3d 52, 59.)
Similarly, in
E.
I Du Pont de Nemours & Co. (1991) 304 NLRB 792
(E.
I Du Pont),
the employer proposed establishing a new "site service operator" classification with various
changes to the pay scale, schedules, duties, cross-training requirements, job bidding and
promotion track procedures, and seniority rules
of
the bargaining unit. The employer admitted
that its site service operator proposal affected mandatory subjects
of
bargaining, but
characterized it as a "non-contractual" proposal to be negotiated separately from other
"contractual" subjects then under negotiation for the parties' agreement. The employer
expressed its desire to fill the new classification promptly and stated that, while it was willing
to consider any input or counterproposals offered by the union, implementation could not await
full resolution of all subjects under negotiation for the parties' successor agreement. The
employer refused to consider any compromises that involved changes to "contractual" subjects
30

and, after concluding that the union had nothing further to offer, it filled the site service
operator position while the parties were still bargaining over their successor agreement. The
NLRB found that, by refusing even to consider the union's proposed "horse trade," the
employer had "unreasonably reduced the flexibility
of
collective bargaining and narrowed the
range
of
possible compromises" in violation
of
its duty to bargain. (Id. at p. 802.) The rule
that emerges from the private sector cases is that a party may not condition its willingness even
to discuss a particular mandatory subject on prior agreement over other subjects.
In City
of
Santa Rosa (2013) PERB Decision No. 2308-M, PERB took notice
of
the
NLRB' s decisional law explaining why piecemeal bargaining, or any negotiating conduct that
'"reduces the flexibility
of
collective bargaining and narrows the range
of
possible
compromises by rigidly and unreasonably fragmenting negotiations' violates the duty to
bargain in good faith." (Id. at p. 5.) Because
of
the limited factual record before us in City
of
Santa Rosa, we did not determine whether the employer had engaged in improper piecemeal
bargaining by "refusing to discuss economic issues until non-economic issues are settled, or
unilaterally changing one term while engaged in negotiations on other terms." However, we
expressed general agreement with the reasoning
of
the private-sector decisions cited there and
we find that same reasoning persuasive for the issues raised by the present appeal.
By its own account, the City sought to obtain "significant" economic concessions from
Local 101, including a 10 percent reduction in "total compensation" for all employees in the
MEF and CEO bargaining units. The City defined "total compensation" as the sum
of
employee salaries, retirement benefits and healthcare costs. Moreover, a document provided to
Local 101 by the City's negotiators acknowledged that the amount in cost savings sought by
the City could be achieved through various combinations of concessions, depending upon the
relative value of each of these three sources making up "total compensation." Yet, by
31

allegedly insisting on its proposal to defer discussion
of
"retirement reform," and thereby
making discussion
of
this subject conditional upon agreement over all, or nearly all, other
subjects, the City allegedly removed one-third
of
the "total employee compensation" formula
from discussion and significantly reduced the range
of
possible compromises that Local
101
could propose to meet the costs-savings demanded by the City.
Such a scenario is inimical to collective bargaining.
If
the employer may refuse to
engage in meaningful discussion
of
one or more matters within scope simply by characterizing
its refusal as a "reopener proposal," then it controls not only the substantive terms
of
its own
proposals, but also what subjects the union may propose as part
of
a possible compromise. Such
conduct disregards the statutory requirement that the duty to bargain involves a mutual
obligation to meet and confer at reasonable times, and eliminates any meaningful role for the
bargaining representative. (FirstEnergy Generation Corp. (2012) 358 NLRB No. 96
(FirstEnergy); Whitesell Corp., supra, 357 NLRB No. 97.) Although Local
101
will bear the
burden
of
proving its allegations before an ALJ, we find that the facts and circumstances, as
alleged by Local 101, support an inference that the City has engaged in "piecemeal bargaining"
tactics whose intended or actual effect was to limit the range
of
possible compromises.
Accordingly, even
if
we were to endorse the "more than one indicia" rule, we would still reject
its application here because Local 101
's
allegation that the City engaged in "piecemeal
bargaining" tactics clearly implicates a separate indicator
of
bad faith, i.e., in addition to the
one indicator identified in the warning and dismissal letters.
Moreover on the facts, as alleged by Local 101, the subject
of
retirement reform was
arguably
of
such significance to the parties' negotiations that the City's alleged refusal even to
discuss or offer a substantive proposal on this subject until all other terms had been settled
would so frustrate negotiations or so limit the range of possible compromises that, even
32

without additional indicators
of
bad faith, this allegation alone states a prima facie case
of
surface bargaining. (State
of
California, Department
of
Personnel Administration, supra,
PERB Decision No. 739-S.) Although we emphasize that we do not decide the merits at this
stage
of
the proceedings, Local
101
's
factual allegations clearly implicate the sort
of
"piecemeal bargaining" scenarios expressly condemned by the NLRB and by PERB' s own
decisional law, albeit with a different terminology. (Stockton, supra, PERB Decision No. 143;
San Bernardino, supra, PERB Decision No. 1270.)
Although the dismissal letter also cites various private-sector cases for the proposition
that a reopener clause is a mandatory subject
of
bargaining, and, presumably, that parties may
therefore insist to impasse on reopener proposals, the authorities relied on are inapposite. In
McAllister Bros. Inc. (1993) 312 NLRB 1121, the NLRB considered whether, at impasse, an
employer may impose terms
of
employment consistent with its last, best offer, even when those
terms are significantly less favorable to the union and employees than those included in the
parties' previous collective bargaining agreement. However, McAllister Bros. recites no facts to
indicate that either
of
the parties had proposed that certain subjects
of
bargaining be deferred to
reopener negotiations, or, assuming that such a proposal had been presented, that it remained an
outstanding issue
of
dispute at the time impasse was declared.
Similarly, in United States Pipe & Foundry Co.
v.
NLRB (5th Cir. 1962) 298 F.2d 873
(U.S.
Pipe & Foundry) the NLRB considered whether three unions representing separate
bargaining units
of
the same employer may lawfully demand that their respective agreements
terminate on the same date in order to maximize their bargaining power in future negotiations.
The NLRB dismissed the employer's charges that the unions had insisted on an improper subject
of bargaining and a split panel of the Fifth Circuit Court
of
Appeal affirmed the NLRB' s
33

decision. The case generally stands for the proposition that the duration
of
a collective
bargaining agreement is a mandatory subject and that, like other mandatory subjects, a party may
insist to impasse on a proposal for the contract to terminate on a particular date. The case is thus
unremarkable and, in fact, in accord with the law governing California public sector labor
relations. (Placentia, supra, 57 Cal.App.3d 9, 24 [employer's demand for three-year contract
not evidence
of
bad faith even where it had agreed to one-year contract with representative
of
another bargaining unit].) However, lawful "hard bargaining" over the duration
of
a contract is
not the same as demanding that substantive negotiations on a mandatory subject be postponed
altogether until after the contract takes effect and all other terms have been fixed. Nor does US.
Pipe & Foundry hold that one party may announce that it wishes to make significant changes to
particular subjects
of
bargaining, only then to refuse to discuss those subjects until negotiations
on all other matters have concluded.
Similarly inapposite is Lion Oil Co. (1957) 352 U.S. 282, in which the U.S. Supreme
Court interpreted the terms "termination," "modification," and "expiration" within the context
of
section 8(d)
of
the National Labor Relations Act to conclude that, even when a collective
bargaining agreement remains in effect, unless otherwise expressly and voluntarily waived, a
union retains the right to strike over "reopener" subjects
of
bargaining. (Id. at pp. 293-294.) In
reaching this result, the Court observed that, "Unions would be wary
of
entering into long-term
contracts with machinery for reopening them for modification from time to time,
if
they thought
the right to strike would be denied them for the entire term
of
such contract, though they imposed
no such limitations on themselves." (Id. at p. 289.) The Court further explained that, in
"recogniz[ing] a duty to bargain over modifications when the [parties'] contract itself
34

contemplates such bargaining,
...
[i]t would be anomalous
...
at the same time [to] deprive the
union
of
the strike threat which, together with the occasional strike itself, is the force depended
upon to facilitate arriving at satisfactory settlements." (Id. at pp. 289, 290-91, internal quotations
omitted.) Lion Oil thus demonstrates judicial recognition
of
a federal policy
of
promoting stable
labor relations through collective bargaining agreements that permit modification
of
certain
subjects during the course
of
such agreements. However, the Court's opinion says nothing about
how the reopener provisions under consideration in that case made their way into the parties'
agreement, much less whether the employer had bargained to impasse to avoid any substantive
discussion
of
those subjects until some future date after the contract would take effect.
Assuming, for the sake
of
argument, that reopener proposals affecting mandatory
subjects
of
bargaining are themselves mandatory subjects
of
bargaining (Speedtrack, supra, 293
NLRB 1054, 1054-1055), this conclusion does not dispose
of
the issues presented by this
appeal. Regardless
of
whether the City's "Side Letter" proposals are characterized as
mandatory or permissive subjects, Local
101
's
allegation is that the practical effect
of
these
proposals was to forestall meaningful discussion
of
what are unquestionably mandatory
subjects, including employee retirement benefits. (County
of
Sacramento (2009) PERB
Decision No. 2044-M.) The NLRB has considered this issue and likewise determined that the
mandatory nature
of
a proposal to reopen negotiations does not authorize a party to insist on
that proposal, when the result is to obstruct or arbitrarily limit the range
of
possible
compromises. As explained in FirstEnergy, supra, 358 NLRB No. 96, the statutory duty to
bargain is not fulfilled by insisting on an offer to discuss a mandatory subject after the
collective bargaining agreement has taken effect and the bargaining representative has lost its
35

leverage to propose alternatives or, where applicable, to exercise its right to strike.
(Speedtrack, supra, 293 NLRB 1054, 1055; Lion
Oil,
supra, 352 U.S. 282, 290-91.)1 5
The policy concerns raised by Local
101
and discussed in the private sector decisional
law are more consistent with our own case law than the position adopted in the dismissal letter,
particularly where, as here, the "proposal" is to defer discussion
of
major economic subjects,
while the union is engaged in concessionary bargaining in an attempt to meet a predetermined
amount in cost savings to avoid layoffs and service cuts. We agree with the NLRB that,
"postponing or removing from the area
of
bargaining-to
the very end
of
negotiations-[the]
most fundamental terms and conditions
of
employment" necessarily "reduce[s] the flexibility
of
collective bargaining, narrow[s] the range
of
possible compromises, and
...
rigidly and
unreasonably fragment[s] negotiations." (Patent Trader, Inc. (1967) 167 NLRB 842, 853,
enforced by NLRB
v.
Patent Trader,
Inc.
(2d Cir. 1969) 415 F .2d 190, modified on other
grounds (2d Cir. 1970) 426 F.2d
791.,
internal quotations and citations omitted.)
We conclude that Local 101 has stated a viable theory that, by proposing and insisting
on its "Side Letter" proposals, the City has engaged in improper fragmented or piecemeal
bargaining tactics in violation
of
its duty to bargain. (Golden Plains, supra, PERB Decision
No. 1489.) We therefore reverse the dismissal, and remand the matter for issuance
of
a
complaint regarding the City's alleged refusal to discuss certain mandatory subjects
of
bargaining, including employee retirement benefits, layoff procedures and sick leave
compensation, except as mid-term modifications to the parties' future collective bargaining
15
Although we are concerned here with how insisting on a reopener clause may
improperly restrict the scope
of
negotiations, rather than with the union's right to strike upon
reaching impasse on reopener subjects, we agree with the general sentiment expressed by the
NLRB in Speedtrackthat "[i]n determining what freedom of action the parties may have
...
during
...
reopener periods, we must avoid imposing conditions that would tum reopener
bargaining into little more than a charade that would barely differentiate it from the kinds of
discussion that may lawfully occur even in the absence of a reopener." (Id. at p. 1055.)
36

agreements. We now turn to whether this allegation should be analyzed as an indicator
of
bad
faith or as a separate per se violation.
Piecemeal Bargaining as Indicator
of
Bad Faith and as Per Se Allegation
Although PERB has generally analyzed "piecemeal bargaining" and factually-similar
scenarios under a "totality
of
circumstances" analysis (see, e.g., San Bernardino, supra, PERB
Decision No. 1270, p. 80), both the private-sector authority on which we rely and our own
cases have recognized that, under appropriate circumstances, such tactics may constitute a
separate per se violation
of
the duty to bargain. In Stockton, supra, PERB Decision No. 143,
the Board considered whether a school district had violated its duty to bargain by refusing to
discuss any "substantive" subjects
of
bargaining until the parties' previously-agreed upon ground
rules had been re-negotiated to accommodate the concerns
of
the district's newly-selected chief
negotiator. In affirming the ALJ's conclusion that the district had violated its duty to bargain,
the Board analyzed the employer's refusal to discuss other subjects
of
bargaining as an indicator
of
bad faith under the "totality
of
conduct" test. However, the Board also suggested, without
deciding, that the unreasonable delay in negotiations that resulted from the employer's position
may also constitute a per se violation
of
the duty to bargain. (Stockton; see also San Mateo,
supra, PERB Decision No. 1030.)
Since Stockton was decided, no Board decision has held that such conditional
bargaining tactics may only appropriately be analyzed under the totality
of
circumstances test
used for surface bargaining allegations. In Gonzales, supra, PERB Decision No. 480, the
Board found Stockton factually distinguishable, but did not disagree with the view expressed
there that insisting on negotiating or re-negotiating one subject in a manner that "prevent[ s]
discussion
of
the substantive issues of wages, hours, and terms and conditions
of
employment"
37

may constitute a per se violation
of
the duty to bargain. (Gonzales, supra, adopting
ALJ'
s
proposed dee. at pp. 2, 47-49.)
Meanwhile, the NLRB and the federal courts have expressly adopted the view that a
refusal to discuss a mandatory subject
of
bargaining until other terms have been negotiated and
included in a collective bargaining agreement may constitute both an indicator
of
bad faith in
support
of
a surface bargaining allegation
and
an independent per se violation
of
the duty to
bargain. In Radisson Plaza Minneapolis (1992) 307 NLRB 94, while the parties were in
negotiations for a first contract, the union learned
of
several changes to employee
job
assignments and contacted the employer's labor relations official to discuss the matter. The
employer's spokesperson responded that "as long as there is no collective-bargaining
agreement in effect, I
won't
meet with the Union to bargain over these items." The union took
no further action on the matter, either to object to the employer's refusal to meet or to reiterate
or clarify its demand to bargain. The ALJ concluded, however, that "in the face
of
such a clear
and unequivocal refusal" to negotiate over one subject
of
bargaining until agreement had been
reached on all others, no further action by the union was necessary except the filing
of
a
charge. The ALJ explained that the employer's position was both an independent per se
violation
of
the duty to bargain and one, among several other, indicators
of
the employer's bad
faith in support
of
a separate surface bargaining allegation. (Radisson Plaza Minneapolis,
supra, 307 NLRB 94, 109.) The NLRB affirmed the decision and expressly agreed with the
ALJ's reasoning that, in the face
of
the union's request, the employer's refusal to meet and
confer about certain employee working conditions until agreement was reached on all others
was both an indicator
of
the employer's lack
of
good faith under the "totality
of
circumstances"
test, and an independent, per se violation of the duty to bargain. (Id. at p. 95.) On review, the
Eighth Circuit Court of Appeal affirmed the NLRB's view that the respondent's commission of
38

contemporaneous unfair practices is part
of
the totality
of
circumstances to consider in a
surface bargaining case. (Radisson Plaza Minneapolis
v.
NLRB (8th Cir. 1993) 987 F.2d 1376,
1380-1381.)
The factual allegations
of
the present charge fall squarely within the holding
of
Radisson Plaza Minneapolis, supra, 307 NLRB 94, and similar private sector cases. (See
FirstEnergy, supra, 358 NLRB No. 96; Whitesell Corp., supra, 357 NLRB No. 97.) The City's
"proposals" for "Side Letters" would have the same practical effect as the employer's outright
refusal in Radisson Plaza Minneapolis to discuss employee job assignments "as long as there
is no collective-bargaining agreement in effect." (Radisson Plaza Minneapolis, supra, at
p. 109.) We conclude that Local
101
has stated both a surface bargaining allegation which
rests, in part, on the City's alleged refusal to discuss mandatory subjects
of
bargaining until
negotiations for the parties' agreement were concluded, and a separate allegation that the City
has committed a per se violation
of
its duty to bargain relative to those same facts.
Allegations that the City has "Rushed to Impasse" to Evade its Bargaining Obligations
Impasse is the point in negotiations at which the parties have considered each other's
proposals and counterproposals and genuinely attempted to narrow the gap
of
disagreement,
but have, nonetheless, exhausted the prospects for concluding an agreement, so that, absent a
change in circumstances, further discussion would be fruitless. (Mt. San Antonio Community
College District (1981) PERB Order No. Ad-124, p. 5; Modesto City Schools (1983) PERB
Decision No. 291 (Modesto).)	
If
impasse resolution procedures are exhausted but negotiations
remain deadlocked, the same rules as are applicable in private-sector impasses apply. Either
party may decline requests for further bargaining, the employer may implement terms and
conditions reasonably contemplated in its last, best and final offer, and the union may exercise
its right to strike. (Modesto, supra, at p. 39 [upon reaching "second impasse" a "NLRA-type
39

impasse exists"]; Atlas Tack Corp. (1976) 226 NLRB 222, 227; County Sanitation District
No. 2
of
Los Angeles
v.
Los Angeles County Employees' Assn. (1985) 38 Cal.3d 564; see also
Charter Oak Unified School District (1991) PERB Decision No. 873 (Charter Oak).)
However, a bona fide impasse exists only
if
the employer's conduct is free
of
unfair labor
practices; its right to impose terms and conditions at impasse is therefore dependent
on
prior
good-faith negotiations.from their inception through exhaustion
of
statutory or other
applicable impasse resolution procedures. (Temple City Unified School District (1990) PERB
Decision No. 841, overruled on other grounds by Charter Oak.) A premature, unfounded, or
insincere declaration
of
impasse may serve as evidence
of
bad-faith bargaining. (UC Regents,
supra, PERB Decision No. 520-H, pp. 14 and 25, fn. 13.) The Board applies the same legal
standard to determine whether a party has failed to negotiate in good faith before impasse and
while engaged in the statutory or any other applicable impasse resolution procedures. (Ventura
County Community College District (1998) PERB Decision No. 1264; Moreno Valley Unified
School Dist.
v.
Public Employment Relations Bd. (1983) 142 Cal.App.3d 191, 200.)
We understand the F AC to allege that, while the City employed dilatory tactics with
respect to those subjects included in its "Side Letter" proposals, its overall strategy was to move
negotiations as rapidly as possible to impasse and the imposition
of
terms as a way to obtain
concessions without first bargaining in good faith to bona fide impasse or agreement. In support
of
this allegation, Local 101 alleges the following: (1) that the parties had exchanged only two
rounds
of
comprehensive or "package" proposals when the City declared impasse on April 18;
(2) that the City's declaration
of
impasse came immediately after Local 101
's
request for a
substantive proposal on retirement benefits as opposed to a rejection
of
a particular proposal;
(3) that, after the City declared impasse, Local 101 made additional concessions in line with the
City's demands, including offers to eliminate the "snap back" language from Local 101 's wages
40

proposal and to reduce the term
of
the MOAs from three to two years, but that the City refused to
explore the possibility
of
compromise; and (4) that the City's LBFO, most
of
whose terms were
imposed on the MEF and CEO units, effective June
1,
differed in only minor respects from the
City's publicly-announced bargaining demands and its opening proposal.
Because the pace
of
negotiations is influenced by many factors, including the conduct
of
both parties to the negotiations (University
of
California, Lawrence Livermore National
Laboratory (1995) PERB Decision No. 1119-H), the totality
of
circumstances to consider in
determining whether a party has rushed to impasse may include the number
of
times the parties
met and the number
of
proposals exchanged, the number
of
matters agreed to both before the
first declaration
of
impasse and during any mediated negotiations, as well as any significant
concessions offered or agreed to before the respondent's "final" or "second" declaration
of
impasse. (Ventura, supra, PERB Decision No. 1264; Seattle-First National Bank
v.
NLRB,
supra, 638 F.2d 1221, 1226-1227.) Here, the City presented proposals on various subjects at
meetings in February and early March, which were then collected and re-presented as a
comprehensive or "package" proposal on March 21. On April 4, Local 101 responded with its
own package proposal consisting
of
its previously-presented language. One week later, the City
presented a second package proposal, which Local
101
characterizes as "nearly identical" to the
City's initial package proposal. Local 101 then responded with its second package proposal on
April 18, which, it alleges, met most
of
the City's demands for concessions in employee
compensation and healthcare costs, and which was modified to make additional concessions,
including elimination
of
the "snap back" language on wages and a shorter duration
of
the MOAs.
At this point, the City declared impasse, after each side had offered two package proposals, and
without responding to concessions included in Local 101
's
modified second package proposal.
41

As with other factors, the ultimate determination
of
good or bad faith turns, not on a
formula for the number
of
meetings that must occur or the number
of
proposals that must be
exchanged before a bona fide impasse exists, but on the effect
of
a party's conduct on the
course
of
negotiations. (UC Regents, supra, PERB Decision No. 520-H.) The Office
of
the
General Counsel's dismissal letter correctly observes that the duty to bargain does not require a
party to make concessions and that a party need not explore the possibility
of
compromise
when the concessions offered are not sufficiently "significant" to justify further discussion.
The problem here, however, is determining whether the last-minute concessions
Local
101
offered at the April
18
meeting were sufficiently "significant" to compel a response
by the City or at least an attempt to explore the possibility
of
compromise. Although the City
offered detailed explanations
of
its formula for "total employee compensation," which was
ostensibly used to determine the amount
of
cost savings behind the City's bargaining demands,
its refusal to discuss or offer a substantive proposal on retirement benefits, which comprised
one third
of
the formula, makes it difficult to add up the constituent parts and thus evaluate the
significance
of
Local
101
's
concessions on wages and healthcare costs. Local
101
's
allegation
that the City refused to respond to last-minute concessions on wages and instead insisted that
negotiations had reached impasse, when coupled with the allegation that the City adamantly
refused to discuss, in "substantive" monetary figures, its need for concessions in retirement
benefits, raises an inference that the City was intent on reaching impasse and imposing
concessionary terms, without explaining its opposition "in sufficient detail to permit the
negotiating process to proceed on the basis
of
mutual understanding." (Jefferson School
District (1980) PERB Decision No. 133, p. 11.) While Local 101 will bear the burden of
proving its allegations at trial, it has stated a prima facie case of surface bargaining based on a
42

"rush to impasse" theory. (Golden Plains, supra, PERB Decision No. 1489; Pinole, supra,
PERB Decision No. 2288-M, pp. 11-12.)
The City's Alleged Insistence on a "Prohibited" Subject
of
Bargaining
Allegations that the respondent has committed separate, contemporaneous unfair labor
practices at or away from the bargaining table are part
of
the totality
of
circumstances
considered when determining the respondent's subjective good or bad faith for a surface
bargaining charge. (Beaumont, supra, PERB Decision No. 429, p. 9; State
of
California
(Department
of
Personnel Administration) (2003) PERB Decision No. 1516-S, pp. 4-6.) Here,
we consider the allegation that the City's elimination
of
sick leave payouts to separating
employees is a "prohibited" or "illegal" subject
of
bargaining and that, by including this
proposal in its LBFO, and then imposing it on the MEF and CEO units, the City committed a
per se violation
of
its duty to bargain. We first review the legal standard for allegations
involving prohibited subjects
of
bargaining, before turning to the allegations included in the
FAC and points raised by Local 101
's
appeal, as supplemented by the Deisenroth litigation.
It is a per se violation
of
the duty to bargain to insist to impasse on a proposal and/or to
impose terms that include non-mandatory subjects
of
bargaining. (Chula Vista, supra, PERB
Decision No. 834; San Mateo, supra, PERB Decision No. 1030; Lake Elsinore School District
(1986) PERB Decision No. 603.) The category "non-mandatory" subjects includes both
"permissive" subjects and "illegal" or "prohibited" subjects. Although not required to do so,
parties may, by mutual agreement, bargain over and include in their agreements proposals
involving permissive subjects. However, an employer may not insist on acceptance
of
a
proposal containing a permissive subject
of
bargaining over a "clear and express refusal by the
union to bargain" over the matter. (Lake Elsinore.) To state a prima face case of insistence to
impasse on a permissive subject, the charging party must therefore allege facts demonstrating
43

that it objected to bargaining over the permissive matter. (Travis Unified School District
(1992) PERB Decision No. 917.)
By contrast, illegal subjects involve matters prohibited by external law or public policy
and may not be negotiated or included in a collective bargaining agreement, even
if
the parties
were to agree to do so. Generally, where a proposal would deviate from an inflexible standard
set by external law, it may be characterized as a prohibited, "illegal" or nonnegotiable subject
of
bargaining. (San Mateo City School Dist.
v.
Public Employment Relations Bd. (1983)
33 Cal.3d 850, 864-865.) Because they cannot be included in a collective bargaining
agreement, prohibited subjects may not serve as the lawful basis for a declaration
of
impasse
nor be imposed by the employer upon reaching a deadlock in negotiations, even assuming
good-faith bargaining and exhaustion
of
any applicable impasse resolution procedures.
(Berkeley Unified School District (2012) PERB Decision No. 2268 (Berkeley), pp. 3-9, esp.
fn. 3.) Unlike permissive subjects, there is no parallel requirement that a party object to
bargaining over a prohibited subject. (Id. at pp. 3-9.) While parties are obliged to discuss
whether a subject is mandatory or permissive (Healdsburg Union High School District and
Healdsburg Union School District/San Mateo City School District (1984) PERB Decision
No. 375), a negotiating party does not waive its right to refuse to negotiate over a prohibited
subject by failing to object that a matter might be prohibited. (Berkeley, supra, at p. 3, fn. 3.)
A charging party who alleges that a proposal contains an illegal subject
of
bargaining
need not establish with certainty that the matter is prohibited by external law to state a prima
facie case and thus avoid dismissal at the investigative stage. (Golden Plains, supra, PERB
Decision No. 1489; Chula Vista Elementary School District (2003) PERB Decision No. 1557;
Eastside Union School District (1984) PERB Decision No. 466 (Eastside).) Because an
investigating Board agent is not empowered to rule on the ultimate merits (PERB Regs. 32620
44

and 32640), "where the investigation results in receipt
of
conflicting allegations
of
fact or
contrary theories
of
law, fair proceedings,
if
not due process, demand that a complaint be issued
and the matter be sent to formal hearing." (Eastside, supra, at p. 7.) 	A complaint sho~ld
therefore issue to test a novel theory or competing theories
of
law, so long as the theory
advanced is "viable," i.e. non-frivolous. (Pinole, supra, PERB Decision No. 2288-M, pp. 11-12;
see also County
of
San Joaquin (2003) PERB Decision No. 1570-M, p. 6 [where a local rule is
reasonably susceptible
of
the interpretation offered by the charging party, a complaint should
issue].)16
The FAC alleged that the City's April
11
package proposal included language that
would eliminate sick leave payouts to all separating MEF and CEO employees, regardless
of
circumstances, effective July
1.
17
It further alleged that the "Package A" option
of
the City's
LBFO "was identical to the City's April
11
package proposal, except that the proposal to
eliminate the sick leave payout provisions was moved from an effective date
of
July 1, 2011, to
January 1, 2012
....
" While the effective date
of
this change in policy thus occurred after
December 29, when the charge was dismissed, the FAC alleged that the City's firm decision to
impose this term on the MEF and CEO units occurred on June
1.
Where an employer's change
in policy is alleged to be an unfair labor practice, the operative date for the alleged violation
16
Because allegations that a proposal contains an illegal subject require interpreting
statutory, decisional, regulatory, or other authority outside PERB's jurisdiction and special
expertise in labor relations, the Board is necessarily cautious about rejecting such claims,
particularly when the area
of
external law is itself unsettled. (Pinole, supra, PERB Decision
No. 2288-M.)
17
The City's May 12 LBFO also offered, as part
of
the two-year "Package B" option, a
"Side Letter" proposal on sick leave compensation that included no substantive terms other
than a provision to revisit this subject as a mid-term modification to the future MOAs.
However, Local 101 alleges, and the City does not dispute, that the one-year "Package A"
option, which was adopted by the City Council and imposed on the MEF and CEO units,
included the more definite language to eliminate all sick leave payouts to separating
employees, effective January 1, 2012.
45

and for statute
of
limitations purposes is generally the date the employer made a firm decision
to change the policy, even
if
the change itself is not scheduled to take effect until a later date.
(Anaheim Union High School District (1982) PERB Decision No. 201; Eureka City School
District (1992) PERB Decision No. 955; Clovis Unified School District (2002) PERB Decision
No. 1504.) The FAC thus includes sufficient facts to allege that, on or about May 31, 2011,
the City made a firm decision to impose terms on the MEF and CEO units.
In separate proceedings, the Superior Court
of
Santa Clara County concluded that the
City's refusal to pay Deisenroth, a retiring member
of
the MEF bargaining unit, sick leave
compensation that had accrued to her on or before December 31, 2011, was unlawful because
it retroactively interfered with a vested employee right. Although the necessary factual
allegations pertaining to the City's proposal to eliminate sick leave compensation were
therefore included in the FAC, the legal theory underlying this allegation-that the City's
proposal to eliminate sick leave compensation was an illegal or prohibited subject
of
bargaining-was
not set forth in the FAC nor considered by the Office
of
the General Counsel.
In fact, the legal theory was only clearly articulated to PERB after the charge was dismissed
and as part
of
the present appeal.
However, under PERB's "fact pleading" standard, the charging party's duty is to
provide a clear and concise statement
of
facts relevant to the charge. (National Union
of
Healthcare Workers (2012) PERB Decision No. 2249-M, pp. 14-15.) The charging party need
not include all
of
its evidence, nor spell out the legal theories
of
the charge. (County
of
Inyo
(2005) PERB Decision No. 1783-M, p. 2.) Thus, the only additional "facts" necessary for this
allegation that were, even arguably, omitted from the FAC were "facts" pertaining to whether the
City's proposal to eliminate sick leave compensation violates an immutable standard set by
external law. In this regard, Local 101 has requested that we take notice of, and supplement
46

the record
of
this appeal with the Court's decision in the Deisenroth litigation, a request we
now consider.
The Board's authority includes the power and duty to investigate unfair practice charges
and to take any action and make any determinations as the Board deems necessary to effectuate
the policies
of
the MMBA. (MMBA, § 3509; PERB Reg. 32320(a)(2).) When deciding appeals,
the Board reviews the entire record de novo and is free to reach different factual and legal
conclusions from those in the decision being reviewed. (Woodland Joint Unified School District
(1990) PERB Decision No. 808a; Santa Clara Unified School District (1979) PERB Decision
No. 104.) Although the Board's review
of
a dismissal is generally confined to the factual
allegations and legal contentions identified in the appeal (PERB Reg. 32635(a); South
San Francisco Unified School District (1990) PERB Decision No. 830),
as
part
of
its review,
the Board may supply the appropriate legal theories for the factual allegations included in a
charge (Los Banos Unified School District (2007) PERB Decision No. 1935; Los Angeles
Community College District (1994) PERB Decision No. 1060, p. 9), or even consider legal issues
not raised by the parties, when necessary to correct or prevent a mistake
of
law. (Apple Valley
Unified School District (1990) PERB Order No. Ad-209a; Mt. Diablo Unified School District
(1983) PERB Decision No. 373; State Employees Trades Council United (Ventura, et al.) (2009)
PERB Decision No. 2069-H, pp. 6-7.)
Additionally, the Board may, upon a showing
of
"good cause," consider "new"
supporting evidence or previously unalleged theories, as permitted by the Board's regulations
and decisional law, and as may be consistent with standards
of
due process. (PERB
Reg. 32636(b).) The Board has generally found "good cause" when the new information or
allegations presented on appeal were not available to the charging party through the exercise of
reasonable diligence before the charge was dismissed. (Sacramento City Teachers Association
47

(Ferreira) (2002) PERB Decision No. 1503, p. 2; see also PERB Reg. 32410; San Mateo
Community College District (1985) PERB Decision No. 543, pp. 2-3.) Finding good cause to
consider new evidence on appeal is particularly appropriate where facts have emerged that were
not available to the charging party when the charge was dismissed, because, under PERB' s
regulations, a charging party has no opportunity to amend a dismissed charge unless and until the
decision is reversed and the matter remanded for further proceedings. (PERB Regs. 32621 and
32647; Pittsburg Unified School District (1984) PERB Decision No. 318a.)
The Superior Court's opinion in Deisenroth was issued after the dismissal
of
the FAC
and arguably establishes new law or clarifies existing law for the issues raised in the present
appeal, which constitutes good cause for considering new charge allegations or new supporting
evidence. (PERB Reg. 32635(b).) Because the underlying facts prompting the Deisenroth
litigation-the
effective date
of
the City's proposal to eliminate all accrued sick leave
compensation did not occur until after December 29, 2011, when Local 101
's
charge was
dismissed, the "evidence" included in the Deisenroth opinion was not previously available to
Local 101 through the exercise
of
reasonable diligence. At the same time, because Local 101
's
F AC already included the essential facts for alleging that the City had imposed its proposal to
eliminate sick leave payouts, and because the City has not objected to Local 101
's
request to
supplement the record before us, we see no reason now to ignore the legal significance
of
the
Deisenroth opinion for the issues
of
external law raised by this appeal.
18
The City will not be
prejudiced by our consideration
of
the Deisenroth litigation for this appeal because it will have
18
While we do not fault the Office
of
the General Counsel for failing to consider a legal
theory that was not articulated, neither do we think the Board should ignore that theory now
that it has become apparent through the Deisenroth litigation, particularly when it bears on the
central issue
of
this charge-whether the City acted in bad faith in negotiations and impasse
resolution proceedings. (Beaumont, supra, PERB Decision No. 429, p. 9; State
of
California
(Department
of
Personnel Administration), supra, PERB Decision No. 1516-S, pp. 4-6.)
48

full opportunity to respond to this allegation and to be heard on any other matters related to this
charge at the hearing. Accordingly, we find that Local
101
's
request to take notice
of
the
Deisenroth opinion is supported by good cause and we consider the Deisenroth opinion part
of
the record
of
the present appeal.
On the supplemented record before us, we understand Local
101
's
allegation to be that
the City has insisted to impasse and/or imposed a proposal in its Package A LBFO that
interfered with vested employee rights to accrued sick leave compensation and therefore
contains an "illegal" or prohibited subject
of
bargaining. Because our regulations prohibit a
determination on the merits without a hearing, and because the legal issues raised by the
Deisenroth proceedings lie outside the Board's expertise and jurisdiction, we do not attempt
here to resolve the contending legal theories raised by the Deisenroth litigation, nor determine
for ourselves whether the Superior Court's decision was correctly decided. (Eastside, supra,
PERB Decision No. 466; Pinole, supra, PERB Decision No. 2288-M, pp. 12-13.)
Accordingly, we do not decide whether the City's proposal interferes with vested
employee rights to accrued sick leave compensation, nor whether the City could have lawfully
implemented this proposal through agreement with the employees' representative. Rather, for
the purposes
of
this appeal, we regard the Deisenroth opinion as supporting a viable legal
theory that the City has insisted to impasse on and/or imposed its proposal to eliminate sick
leave compensation for all separating MEF and CEO employees, regardless
of
circumstances,
and that, because the terms
of
this proposal allegedly violate an immutable standard under
external law, the City's conduct violated its duty to bargain. (Pinole, supra, PERB Decision
No. 2288-M, pp. 11-12; Berkeley, supra, PERB Decision No. 2268, pp. 3-9, fn. 3.) On
remand, the complaint shall include Local 101 's allegation that the City insisted on and/or
imposed an illegal subject of bargaining when it imposed, as part of its Package A LBFO,
49

language to eliminate sick leave payouts to separating employees. As with Local 101
's
"piecemeal bargaining" allegation, this allegation may also serve as evidence in support
of
Local 101
's
allegation
of
surface bargaining.
Conclusion
The dismissal
of
the F AC is reversed and the matter remanded for issuance
of
a
complaint. The complaint shall include allegations that the City has engaged
in surface
bargaining by identifying retirement benefits as a source
of
significant economic concessions
and then insisting to impasse on a proposal to defer all substantive discussion
of
that issue to
reopener negotiations; by failing and refusing to offer a "substantive" proposal
on
retirement
benefits or an explanation
of
its position, when specifically requested to do so; by rejecting,
without explanation, Local 101
's
non-economic proposals pertaining to grievance procedures,
layoff notice and selection procedures, vacation approval procedures, and union access to and
employee use
of
the City's email system; by insisting that negotiations are deadlocked and
refusing to explore the possibility
of
compromise, even as Local 101 was offering additional
concessions on wages and other terms and conditions
of
employment; and, by insisting to
impasse and/or imposing, as part
of
its LBFO, language to eliminate all sick leave payouts to
separating employees regardless
of
circumstances, an allegedly prohibited subject
of
bargaining. The above allegations that the City refused to
off
er a substantive proposal on
retirement benefits, and that it insisted on and/or imposed a prohibited subject
of
bargaining
shall also be considered as allegations
of
separate, per se violations
of
the City's duty to
bargain.
50

ORDER
It is hereby ORDERED that the dismissal
of
the First Amended Charge in Case
No. SF-CE-837-M is REVERSED and the matter REMANDED to the Office
of
the General
Counsel for issuance
of
a complaint in accordance with this decision.
Members Huguenin and Winslow joined in this Decision.
51