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The Delaware Court of Chancery has ruled that the city of Wilmington cannot interpret a bargaining agreement solely to work in its favor. The city’s narrow interpretation of a parity agreement is not applicable because the terms would not have been reasonable, and had they been verbalized during negotiations, would not have been agreed to by the Wilmington Firefighters Association, Local 1590. Vice Chancellor Leo Strine reversed an earlier decision in favor of the city made by the Public Employees Relations Board. In September 1998, WFFA began bargaining with the city for a new three-year collective bargaining agreement. The WFFA, which had historically been the last association to negotiate its CBA, pushed the city for a parity agreement in an attempt to ensure that it would receive the same pay increases as other public service associations. In a June 24, 1999, letter, the parties stated their intent of a “parity provision” for the WFFA. The letter states: “If any other Union receives wages or benefits greater than what[] Local 1590 bargained for[,] Local 1590 will receive those gr[e]ater wages, and benefits.(Parity with other locals).” On July 6, 1999, a draft of the “Summary of Tentative Agreement” was forwarded to the WFFA without parity language, but the association assumed the parity letter was to be a “side letter” to the final agreement. On July 20, 1999, the WFFA approved the CBA and assumed it was ratifying the June 24 letter. However, the actual CBA for the WWFA contained no parity language and provided for only a 3 percent salary increase for each year of the contract, similar to other unions. In May 2000, the Fraternal Order of Police renegotiated its collective bargaining agreement, and no officer received less than a 4.1 percent raise, rather than the specified 3 percent increase. Those additional raises ranged from 1 to 3 percent, depending on the officers’ classifications within the Salary Matrix, according to the opinion. The raises seemed to be done in two different manners: an across the board 3 percent increase and raises within each matrix. Specifically, the city said upper level managers received a larger increase due to additional responsibility. The WFFA asked the city to return to the bargaining table in light of the parity agreement. The city refused, denying the existence of any such agreement. The WFFA filed an unfair labor practice with the PERB. In May 2001, PERB’s executive director found that the June 24 letter was a parity agreement. He also ruled that the term “wages” was ambiguous and limited to “general across-the-board salary increase[s].” The increases, he said, were “economic adjustments … unique to the FOP,” and were thus not subject to the parity provision.” Under 19 Del. C SSS 1607 (a)(5), PERB’s executive director found that the city had not committed unfair labor practices. The decision was affirmed by the full PERB board. The PERB based its decision to support the city’s interpretation on the ambiguity of the term”wages.” This was a false step, according to the opinion, because not only did both parties agree on the meaning of wages, but the excutive director had a duty to find a common meaning for the word. Strine found that the meaning of the term “wages,” which was labeled ambiguous by the PERB, was agreed upon by both the city and the WFFA. Wages refers to compensation or salary provided to a worker for the normal duties of their job. The PERB executive director, Strine found, misapplied the doctrine of contra proferentem against the agreement drafter the WFFA, and subsequently rendered an unsupported decision. Citing E.I. DuPont de Nemours & Co. and 11 Samuel Williston & Richard A. Lord’s “A Treatise on the Law of Contracts,” Strine wrote, “But that doctrine, sometimes called a rule of ‘last resort,’ applies only where other secondary rules of interpretation have failed to elucidate the contract’s meaning. Therefore, it is not a mechanistic device to be deployed whenever ambiguity arises.” According to the opinion, the doctrine has less force when one party is particularly knowledgeable, as was the case for the city, which had a solicitor present at the negotiations and more opportunity to amend the terms. “In these circumstances, therefore, the meaning of the parity provision should not turn on who drafted its words, but rest on the interpretation of the words that is most reasonable in view of all circumstances,” Strine wrote. The city, he said, never argued what a wage is but rather that how a wage is increased determines whether the parity agreement kicks in. The issue, Strine wrote, “is whether the parity provision somehow contained some implicit carve-out that gave the City the right to give other unions higher wage increases by styling them as something other than a ‘general, across the board increase,’ a ‘cost of living adjustment,’ or the like.” This interpretation was not reasonable, Strine said. Because the parties both agreed on the basic language in the contract, its plain meaning had to be enforced, under Northwestern Nat. Ins. Co. v. Esmark, Inc., a 1996 Delaware Supreme Court case. The contract provides the firefighters protection against receiving lower wages than other unions. It did not supply the city the tools to circumvent giving the WFFA the same increases as other unions. The city’s method of providing an increase to the FOP through the Salary Matrix, Strine said, is what the WFFA “reasonably fears will be granted to another union and not to it… . If this type of increase does not trigger the parity provision, what does?” The main consideration of a contract, according to the 1995 Chancery Court decision Bell Atl. Meridian Sys. v. Octel Comm’ns Corp., is to “fulfill, to the extent possible, the reasonable expectations of the parties at the time they contracted.” Had the city expressed this interpretation, which is the question Restatement (Second) of Contracts purports, at the time the agreement was negotiated, Strine theorized, the WFFA would not have signed it. Thus the PERB’s finding was in error. ” … [T]he parity provision is clear on its face, and that the only reasonable interpretation of its scope is that advanced by the WFFA,” Strine wrote. “Simply by labeling wage increase for other units as something other than what they typically would be called, the City (the PERB held) could avoid its obligations under the parity provision. That interpretation makes the parity provision toothless.” Strine reversed PERB’s decision and ordered the parties to create a “workable method of allocation for themselves.” The minimum result, he said, should be a 4.1 percent annual raise for WFFA members, but should also consider the “lumpy” manner in which the increases were given to the FOP.

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