IN RE ARBITRATION BETWEEN:
_______________________________________________________________________________
ELY EDUCATION ASSOCIATION
and
ISD 696, ELY SCHOOL DISTRICT #12
________________________________________________________________________________
DECISION AND AWARD OF ARBITRATOR
BMS 18-PA-0743
JEFFREY W. JACOBS
ARBITRATOR
7300 Metro Blvd. #300
Edina, MN 55439
Telephone 952-897-1707
E-mail: [email protected]
August 30, 2018
2
IN RE ARBITRATION BETWEEN:
__________________________________________________________________________________
Ely Education Association,
and DECISION AND AWARD OF ARBITRATOR
BMS 18-PA-0743
Ruth Lah Grievance
ISD 696 Ely School District
__________________________________________________________________________________
APPEARANCES:
FOR THE UNION: FOR THE DISTRICT
Deb Corhouse, Union Attorney Joe Roby, District Attorney
Ruth Lah, grievant Amanda Mangan, District Attorney
Tim Omerza, Local Union President Kevin Abrahamson, Superintendent of Schools
Greg Miller, Field Staff Representative Penny Jankowski, Superintendent’s Assistant
James Lah, Teacher, Past President of Local Connie Ojala, Payroll & Benefits Coordinator
PRELIMINARY STATEMENT
The matter was heard on July 23, 2018 at the Ely District Offices. The parties’ briefs were
served on August 23, 2018 at which point the record closed.
CONTRACTUAL JURISDICTION
The parties are signatories to a collective bargaining agreement, CBA, from July 1, 2017 to
June 30, 2019. The grievance procedure is contained at Article XIX. The parties stipulated that there
are no procedural arbitrability issues and that the matter was properly before the arbitrator. The
arbitrator was selected from a list provided by the State of Minnesota Bureau of Mediation Services.
ISSUES
The union stated the issue as follows:
Did the District violate the CBA when it declared it would no longer contribute to Ruth Lah’s
VEBA account?
3
The District raised a number of issues as follows: Has the District violated the CBA by
declining to make further contributions for Ruth [Lah]?1
Did the EAA offer strong proof that the practice [of making past VEBA contributions to the
grievant Ms. Lah] is now binding?
By following the CBA’s language is the District imposing a marriage penalty on Ruth [Lah]?2
The issue as determined by the arbitrator after reviewing the evidence, testimony and
documents as well as the arguments of counsel is as follows: Did the School District violate Article
VIII of the collective bargaining agreement when the District denied the grievant “VEBA”
contributions on these unique facts and circumstances? If so, what is the appropriate remedy?
RELEVANT CONTRACTUAL PROVISIONS FROM THE 2017-2019 CBA
ARTICLE VIII
GROUP INSURANCE
Subd. 1 ***
The District shall contribute the cost of the premium not to exceed $10,000.00 for single
coverage or the cost of the premium not to exceed $20,000.00 annually for family
coverage for all 0.7 F.T.E. to full time teachers employed by the School District who
qualify for and are enrolled in the School District’s group health and hospitalization
plan and who qualify for family coverage. Any additional cost shall be borne by the
employee and paid by payroll deduction.
The District shall also contribute $2,000 as the basis amount for 2017-2018 and 2018-
2019 to the Voluntary Employee Benefits Association (VEBA) health savings account
for each .7 to full-time teacher enrolled in the School District’s [group health and
hospitalization plan.]3
1 As discussed more below, the District argued that Ms. Lah is not “enrolled” in the District’s “group health and
hospitalization plan” as required by the terms of the operative language of Article VIII Section 1, see footnote 3 below.
2 The parties referred to “Ruth” or Jim” since both work for the District and are married to each other. First names were
used to avoid any confusion.
3 The actual language found in the CBA provides as follows: “The District shall also contribute $2,000 as the basis amount
for 2017-2018 and 2018-2019 to the Voluntary Employee Benefits Association (VEBA) health savings account for each .7
to full-time teacher enrolled in the School District’s VEBA plan.” The parties stipulated that the phrase “School District’s
VEBA plan” was a mutual mistake and that the true language as negotiated by the parties should read “School District’s
group health and hospitalization plan.”
4
POSITIONS OF THE PARTIES
UNION’S POSITION:
The union claimed that the District violated the clear terms of Article VIII set forth above and
that the grievant is “enrolled” within the meaning of that language and therefore entitled to the VEBA
contributions. In support of this the union made the following contentions:
1. The union noted that Jim and Ruth Lah are both employed as teachers in the School
District and are the only two licensed teachers covered by the CBA who are married to each other. Mr.
Lah was hired first and elected family coverage under the District’s health insurance plan. Ms. Lah,
Ruth, was hired later and, according to the union, became eligible for the health insurance coverage
and the VEBA contribution as well.
2. Ruth was hired in 2010 and was married to Jim at that time as well. At that time, the
then Superintendent of schools made a conscious decision, after being asked specifically what to do
with the VEBA contributions for Ruth by the Asst. Financial Payroll and Benefits Coordinator, Ms.
Ojala, to pay the VEBA contributions to both Ruth and Jim Lah. This continued until 2018 when the
District suddenly decided to deny the VEBA contributions for Ruth.
3. The union also argued that the District cannot hide behind the assertion that the school
Board was unaware of the decisions made by its superintendents for these 8 years. There was a CBA
negotiated and ratified by the Board and their superintendent was charged with administering it. The
Board would not have had to ratify the VEBA payments – nor did they for anyone else employed by
the District for those 8 years. The District cannot simply change negotiated language that has been
consistently applied in a certain way simply because others have been hired or elected who prefer
different results.
5
4. The union noted that there are two criteria set forth in Article VIII for eligibility for
VEBA contributions. First the teacher must be at least a 0.7 FTE – there was no dispute that Ms. Lah
met this criterion. The second is that the teacher be “enrolled” in the District’s group health and
hospitalization plan. The union asserted that the overwhelming evidence of how that term has been
used shows that Ms. Lah met that criterion as well.
5. The union noted that the District paid the VEBA contributions for Ruth Lah for 8 years
consistently. The union also argued that the decision was thus not a “mistake” as the District asserted
but was instead a conscious decision made by several superintendents during that time. The union also
noted that the current superintendent was also employed by the District for at least 2 of the years in
which Ms. Lah was paid the VEBA contribution. There was no mistake here as the District asserted.
6. The union also noted that the union and the District entered into two MOU’s, See
District exhibits 5 and 11, clarifying that Ms. Lah had earned a contribution toward health insurance as
well. Both of those MOU’s use the specific term “enrolled” and in both of the years covered by those
MOU’s the District also paid the VEBA contribution for Ms. Lah.
7. The District cannot now be allowed to suddenly assert that the term “enrolled” meant
something different than it did when the MOU’s were signed. The union acknowledged that the
MOU’s did not specifically cover the VEBA contributions – because there was not an issue regarding
those contributions at the time the MOU’s were signed – and that the term “enrolled” is consistent with
the union's interpretation of the disputed language of Article VIII. Ms. Lah was “enrolled” in the group
health and hospitalization plan for purposes of this dispute and the language set forth above.
8. The union also argued that it was curious that even though the District signed an MOU
on December 4, 2017 using the term “enrolled” as the basis for the contribution to health insurance, yet
only 14 days later, issued a memo denying Ms. Lah her VEBA contribution and asserted that she was
not enrolled in that very same group health and hospitalization plan.
6
9. The union focused on the Public Employees Insurance Program, PEIP, plan, now being
used by the District, and found the term “enrolled” was used in that document as well. That language
provides in relevant part as follows: “You must make written application to enroll a newly acquired
dependent” (p. 15); Enrollment Period: Special enrollment periods are when an eligible member or
dependent may enroll in the health plan …;” and “You may enroll Yourself and any eligible
dependents” Union exhibit 1 and pages 15, 16 and 17, (Emphasis added).
10. The union also focused on the term “enrolled” as it was used in the VEBA
administrator’s document, The operative language in that document, from the VEBA plan summary
provides as follows: “No contributions will be made to your account in the VEBA while you are
actively employed unless you are enrolled in employer-sponsored group health insurance” and “If you
are a member of the VEBA, you will be eligible to receive a contribution under the health
reimbursement arrangement if you enroll in the major medical plan sponsored by your Employer.” It is
undisputed that the VEBA Account Administrators have accepted contributions for Ms. Lah for eight
years; thus, they consider her “enrolled.” See, District Exhibit 8 at pages 1 and 7.
11. The union asserted that these documents provide direct and convincing guidance as to
how the parties have used the term “enrolled.” This, coupled with the clear evidence that the District
paid the VEBA contribution for 8 years provides clear evidence of the parties’ intent with respect to the
term “enrolled” as used in Article VIII. Ms. Lah was thus “enrolled” even though she is a dependent
on Jim’s health insurance and is thus entitled to the VEBA contribution. The union asserted that any
change must come at the bargaining table and not by arbitration in this context.
12. The union cited two prior awards that it argued dealt with similar situations and
supported its position here. In Education MN and Wrenshall Schools, ISD 100, BMS 08-PN-0752 (Ver
Ploeg 2014), the arbitrator ruled that the District violated the CBA when it denied a teacher a
contribution toward health insurance. There too, two teachers were married to each other and worked
for the District. They were also the only two teachers who were married to each other in that District.
7
13. Arbitrator Ver Ploeg rejected the District’s argument, similar to that which is being
offered here, that the grievant’s family gets “only one contribution.” She further ruled as follows on
the specific question of how to properly interpret the term ”enrolled” as follows: “Moreover, despite
the District’s attempt to limit the definition of “enrolled” to only the person who actually filled out the
paperwork (in this case the Grievant’s husband), it is more reasonable to adopt the insurance industry’s
standard terminology by which any person covered under a policy is characterized as ‘enrolled.’” Slip
op at page 10.
14. Arbitrator Lundberg followed the reasoning in Wrenshall in his decision in ISD #544,
Fergus Falls and Education MN, BMS 16-PA-0754 (Lundberg 2016) and adopted the same rationale
and further granted a grievance over a very similar issue.
15. Finally, the union argued that the language is clear, and the appurtenant documents
regarding the health insurance plan and the VEBA show that the grievant is enrolled for purposes of
the VEBA contribution and that the consistent practice of paying the grievant her VEBA contributions
from 2010 to 2018 shows what the parties intended. Further, the past payments were relevant, in the
union's argument, to show what the parties intended and that there is thus no repudiation of a past
practice as the District asserted. The language is clear but if the arbitrator finds any ambiguity, such
ambiguity is rendered clear by the practice of paying the VEBA contribution, including for 2 years
under the current superintendent.
16. To the extent that the District were to argue that the practice of paying the VEBA was
repudiated somehow, the union argued that the District t undertook no such repudiation during
bargaining and it cannot do so midterm. As noted above, any change in the contract must come at the
bargaining table and not here.
The union seeks an award sustaining the grievance and awarding the grievant her contribution
for the 2018-2019 school year pursuant to Article VIII.
8
DISTRICT’S POSITION
The District took the position that the that there was no contractual violation since the grievant
did not met the stated criteria for the VEBA contribution pursuant to Article VIII. In support of this
the District made the following contentions:
1. The District also relied on the language of Article VIII set forth above and noted that
there are two required criteria which must be met for a teacher to be eligible for a VEBA contribution.
First, the teacher must be a 0.7 FTE teacher – and the District acknowledged that Jim and Ruth Lah
both meet this criterion.
2. The second though is that the teacher must be “enrolled in the School District’s health
and hospitalization plan.” The District acknowledged that Jim Lah is enrolled in the health insurance
plan, so he meets that eligibility requirement. The District though argued that as a dependent, Ruth
Lah does not meet that criterion and is thus not eligible for the separate VEBA contribution.
3. The District further asserted that the mere fact that she has been receiving those
contributions, including for the 2017-2018 school year, does not mean that she is entitled to it in the
future. Those payments were obviously made by mistake, were not approved by the School Board and
do not constitute a binding practice of any kind.
4. Ms. Lah did not separately “enroll” in the health insurance plan. When she was hired,
she simply became covered under her husband’s family insurance plan – as she had apparently already
been even though she worked for a different employer until she was hired by the District. As such, she
did not “enroll” but was merely covered by the health insurance plan.
5. The District also noted that there were two separate MOU’s covering the health
insurance contributions but did not cover the VEBA contributions. It was only upon researching the
contract language that the error was discovered and the VEBA contributions were denied.
9
6. The District cited Elkouri for the proposition that a term in the contract should be given
its plain and ordinary meaning. See, Elkouri and Elkouri, How Arbitration Works, 8th Ed. BNA books
2016 at section 9-8, 9-13 and 9-22. Here, the ordinary and generally accepted meaning of the term
“enroll” implies that a person must make an affirmative step to “insert, register or enter” the Plan. Ms.
Lah did none of those things.
7. The District also asserted that even if a more technical definition is to be used to give
meaning to the term “enroll,” the grievant still is not enrolled in the group health plan. The District
introduced documents that show a difference between an “enrollee” in a health plan and someone who
is “covered” in one. Here Jim Lah is the enrollee in the plan, while Ruth is merely covered by it. See,
Blue Cross Blue Shield and National Association of Insurance Commissioner website referenced at
page 7 of the District’s brief. Both of these well-respected insurance companies define an enrollee as
something very different from that of a “covered life.” Both indicate that only one enrollee is possible.
The District asserted that the union is simply mistakenly conflating the two terms and asserted further
that the use of the specific term “enrolled” in Article VIII must be given the meaning that the insurance
industry gives it.
8. The District countered the claim by the union that its Exhibit 1 supports the union's
position. The District pointed to the distinction even in that document between enrolling “yourself”
and enrolling a dependent and enrolling a newly acquired dependent through marriage.
9. The District also relied on the MOU’s executed between the parties regarding the health
insurance premiums and asserted that the word “teacher” is singular, not plural, and that argued that
only one person can therefore be “enrolled” in the Plan.
10. The form entitled “Employee Enrollment “also draws the distinction between someone
who is covered and the enrollee. See District Exhibit 7. There is only one place for a person to sign
that form and demonstrates an intent that only one teacher is enrolled in the Plan. Only Jim Lah filled
this form out; Ruth did not.
10
11. The District also acknowledged that the VEBA Plan Summary provides that “you and
your dependents are automatically enrolled in the VEBA Plan if you meet the eligibility requirements
above.” See District Exhibit 8 at page 7. The District argued that merely being eligible for the VEBA
plan is not to be equated with being enrolled in the group health insurance plan. The CBA requires the
latter and the union is simply mistakenly confused about what enrolled means in that context. Simply
being enrolled in the VEBA plan does not require the District to make the contributions under the
CBA. The union seems to also confuse a benefit with an entitlement. Entitlement requires that the
person be eligible for such benefit and meet all requirements to get it. Here that is lacking.
12. The District also asserted that there is no binding past practice here since not all of the
necessary elements to establish a past practice have been met. First, the District argued that the clear
language would trump any claim of past practice anyway. Here the contract clearly states that to be
eligible one must be enrolled in the group health plan and Ruth Lah is not.
13. Second, the payments made to her VEBA in the past were done by mistake. Such errors
cannot be the basis of a binding precedent equal to negotiated contract language. Moreover, Ruth and
Jim Lah are the only two teachers in these circumstances such that there is no consistency as required
by the well-established elements of past practice. No other teachers are in this situation.
14. There has never been a payment to any other teacher who was not enrolled in the health
and hospitalization plan and never has there been more than one such VEBA contribution to anyone
other than Ruth. One plan equals one VEBA contribution; not two.
15. There was no mutuality here since the School Board never approved these payments
and was never even aware of them until 2018. The union had the burden of proof on this question and
failed to provide any compelling or strong evidence necessary to establish a past practice of any kind.
11
16. Finally, the District argued that there is no “marriage penalty” at play here. Jim and
Ruth can share the VEBA and transfer funds from it to cover each other’s or their family’s expenses,
which is exactly wat the VEBA is for. Further, they could if they so choose, elect single coverage for
themselves and receive the VEBA. While this might mean that their children might not be covered, it
is an option for them consistent with the dictates of the CBA.
17. The essence of the District’s case is thus that the contract clause is clear and requires
that Ruth Lah be enrolled in the group health and hospitalization plan and that she was not. Therefore,
she failed to meet the required criteria for eligibility for the VEBA contribution. The mere fact that
she received it in error for 8 years does not obviate the clear language of the CBA nor did it establish a
binding practice of any kind.
The District seeks an award denying the grievance in its entirety.4
MEMORANDUM AND DISCUSSION
There were very few factual disputes regarding the operative facts of this matter. Ruth Lah was
hired as a full-time Kindergarten teacher for Ely Public Schools in 2010. Her husband, Jim Lah was
already working as a teacher for the District and he was enrolled in the District’s health insurance and
hospitalization plan. Ruth became covered on the plan as well upon her hire.
It was undisputed that for the next 8 years Ruth received a VEBA contribution pursuant to the
CBA. Contrary to the District’s assertion though, this was not the result of an inadvertent mistake or
some clerical error. Ms. Ojala, Asst. Financial Payroll and Benefits Coordinator, testified credibly that
she asked the superintendent of school at the time if she should make a VEBA contribution to Ms.
Lah’s account. She was directed to do so not as the result of a mistake but rather a conscious decision
in this regard.
4 The parties agreed that this award is in the nature of a declaratory judgment/award on the issue set forth above since the
grievant was paid the VEBA contribution for the 2017-2018 school year. The parties also requested that the award be
issued as expeditiously as possible since the 2018-2019 school year will begin very shortly and the contributions for
eligible teachers will be made in September 2018.
12
There was clear evidence as well that these VEBA contributions were made under the current
superintendent’s tenure as well. There was no evidence that there was any mistake here at all. It was
clear that the District knew the two were married and that the applicable language did not change in a
way that would have altered the requirements for eligibility for the VEBA contributions. There was
evidence that the current language of the 2017-2019 school years was different but the prior CBA’s
contained the same “enrolled” language in the prior versions of Article VIII. These facts figured
significantly in the question of how these parties have interpreted and understood that language – and
that specific term to mean over the course of time.
There was also MOU’s negotiated between the parties regarding the health insurance premiums
for the Lahs as well. See District Exhibits 5 and 11. These did not specifically cover the VEBA
contributions but as noted herein, they used the term “enroll” in a manner consistent with the union's
position in this matter.
The latest of these MOU’s was signed on December 4, 2017. Some two weeks later, the
District’s superintendent sent a memo to Ms. Lah and the union indicating that it would no longer
make the VEBA contributions for her. See District Exhibit 12. That memo referenced the MOU from
December 4, 2017 but a review of that MOU shows no material difference between that and the one
executed the year before, on May 10, 2016 other than date of its execution. Both MOU’s referenced
that the teacher must be enrolled in the District health and hospitalization plan. Significantly, in 2016
and 2017 the District made the VEBA contributions to Ms. Lah’s account though the word “enrolled”
was used there as well.
Based on the December 18, 2017 memo from the superintendent, the union filed a timely
grievance claiming a violation of the terms of Article VIII. There was no assertion of any procedural
arbitrability issues and the parties agreed that the matter was properly before the arbitrator. It is
against that general factual backdrop that the analysis of the matter proceeds.
13
THE CONTRACTUAL LANGUAGE
As noted above, the parties stipulated at the outset that the actual language in Article VIII as it
appears in the CBA was wrong and that the last clause of the first sentence of that provision, that had
read “…for each .7 to full-time teacher enrolled in the School District’s VEBA plan” was intended by
both parties to read as follows: “…for each .7 to full-time teacher enrolled in the School District’s
group health and hospitalization plan.”
There was also agreement that Ms. Lah is a full-time teacher and thus met the 0.7 FTE
requirement of that language. The crux of the case was whether she met the requirement that she be
“enrolled in the School District’s health and hospitalization plan.”
There was no question that she is covered under that plan as a dependent and that Mr. Lah had
family coverage as a teacher before Ruth Lah was hired there. When Ruth Lah was hired she became
covered under the health and hospitalization plan. The ultimate question is whether under those unique
circumstances she is also entitled to the VEBA contribution. On these unique facts the evidence was
clear that the parties use of the term “enrolled’ both by practice and through the use of other pertinent
documents demonstrated a contractual intent that she is entitled to that VEBA contribution
CONTRACT NEGOTIATIONS HISTORY
There was some evidence of the negotiations history, but very little that showed that the parties
specifically discussed the term “enroll” as that appears in Article VIII. Having said that though, the
District offered no evidence of the negotiations between the parties. The uncontroverted evidence
from union negotiators was that there was never any intent to deprive a married employee from
receiving the VEBA contribution. To be fair that testimony came from Mr. Lah himself, who was one
of the negotiators of the CBA but the District could well have introduced contrary evidence, but did
not do so on this record.
14
As noted, the history of how this provision has been applied, whether it raises to the level of a
binding past practice or not, was that the parties made conscious choices to pay the VEBA even though
the language was similar if not identical in the material aspects of this case and that there have been
several contract negotiations over that time period. On this record, the bargaining history, while
meagre showed that there was no intent to deprive a teacher from the VEBA contribution in these
unique circumstances.
The District introduced a document from the union in negotiations, District Exhibit 9, that it
claimed was a proposal for the Lah’s that was later withdrawn. This was not controlling on this issue
and was apparently for only those employees who do not take District insurance. That would not have
applied to the grievant’s situation and did not provide evidence of contractual intent to deprive Ms.
Lah of the VEBA contribution.
Moreover, while the term “enroll” may be somewhat ambiguous taken in isolation, the clear
evidence of how it has been applied, along with the uncontroverted evidence of the negotiation history
supported the union's claim here. Perhaps one of the strongest measures of what the parties think their
contract means is how they have applied it. Here, that evidence clearly supported the union’s claim.
Simply stated, the District paid the grievant’s VEBA contributions for 8 years and literally nothing
material changed in her circumstances in all that time. Further, these payments were made knowingly
and with a full understanding that she and Jim Lah were married and what the terms of his health
insurance plan were. To say that this was done in error was unsupported by the facts.
EXTRINSIC EVIDENCE OF CONTRACTUAL INTENT
One other manner in which disputed language can be determined is to look at the CBA as a
whole and to other pertinent documents between the parties to see if the disputed term has been used in
a consistent or inconsistent manner with what those parties claim now. In other words, are there
documents that might show how these parties have used a disputed term in the past that impacts the
interpretation of that term in this instance. The answer on this record was clearly yes.
15
Both the VEBA plan summary itself and the health insurance plan as well as the two relevant
MOU’s in the case supported the union's interpretation of the term “enroll.”
VEBA PLAN SUMMARY
As the union noted, the VEBA plan itself uses the term enroll interchangeably with dependent
coverage and did not support the interpretation the District asserted here. The VEBA Plan specifically
provides that “no contributions will be made to your account in the VEBA while you are actively
employed unless you are enrolled in employer-sponsored group health insurance.” As noted, the
District made these contributions and the VEBA account accepted those payments on Ms. Lah’s behalf
for 8 years. See, also page 7 of that document, where eligibility is discussed as follows: “you will be
eligible to receive a contribution under the health reimbursement arrangement if you enroll in the
major medical plan sponsored by your Employer.” Again, the use of the term “enroll” in this context
fully supported the union's claim that the application of the VEBA language in this instance shows that
the parties interpreted and applied the language as if Ms. Lah was enrolled under Article VIII.
THE PEIP PLAN
The union offered portions the PEIP plan chosen by the parties as well. There too there was
additional use of the term “enroll” or variations of it that supported the union's position. On page 15
there is reference to “initial enrollment” and specifically references enrollment of “yourself and any
eligible dependent.” This too implies that a dependent can be enrolled” for purposes of Article VIII
and the VEBA contributions. It certainly does not exclude a dependent from eligibility from the
VEBA as the District asserted.
On page 16 the PEIP discusses “Enrollment Period” and further clarifies that a dependent “may
“enroll” in the health plan.” That language likewise supported the union’s claim that a dependent can
be “enrolled” in coverage even if such coverage is due to marriage. See Section 4 on page 16. See
also page 17, where the PEIP also specifically allows enrollment of “yourself and any eligible
dependents.” This document shows that the term “enroll” is not limited as the District asserted.
16
INSURANCE DOCUMENTS AND GENERALLY ACCEPTED DEFINITIONS OF TERMS
The District offered documents from the insurance industry that it claimed showed a general
definition of “enroll” requiring an affirmative step to be taken and that only one person can be
“enrolled” in a health insurance plan, even though others in that person’s family can be “covered” by
that same plan
While that may be true as a general proposition within some insurance industry circles, that is
not the operative standard by which disputed language in a collective bargaining agreement is to be
interpreted. The question is how these parties administering their contract and have interpreted and
applied it over time.
Further, as the union pointed out, both the VEBA plan and the health insurance plan themselves
use the term enrollment or enrolled virtually interchangeably with coverage or dependent coverage
under this health and hospitalization plan. It is well established that the use of a term in other portions
of a CBA or in other documents between the parties can and should be used to determine the meaning
of a disputed term.
The District argued that there was a distinction between enrolling oneself and enrolling a
dependent through marriage in the document introduced as Union Exhibit 1. A review of the
document shows that it fully supported the union's claim that the term “enroll” is used interchangeably
when one enrolls oneself – as Jim Lah has done – and “enrolling” a depend through marriage – as Ruth
Lah did. See, Union exhibit 1 at page 16. Further, page 15 of that document specifically refers to
“enrolling” a newly acquired dependent – such as Ruth Lah. Moreover, the documents at Page 16
discusses “gaining or becoming a dependent due to marriage.” That entire section though is prefaced
with the paragraph at the top of the page, which is entitled specifically “Enrollment Period” and
discusses “when an eligible member or dependent may enroll in the health plan.” (emphasis added).
17
The distinction argued by the District is just not there and it was clear from this record that the
technical usage of the term “enroll” encompasses both the enrollee as well as dependents that may be
acquired by marriage. This is the exact scenario presented here.
It was also significant that the VEBA plan document at page 7 provides for automatic
enrollment in the VEBA plan. While the District is correct in that the requirement for contributions
derives from the CBA, the use of the term enrollment in this document, is yet another example of how
the term is best interpreted in this matter. The documents are peppered with references to dependents
being “enrolled” in various things and that their status is gained by being a dependent and does not
require the sort of affirmative steps the District asserted is required.
Further, and more importantly, there is nothing in the CBA that clearly states that only one
teacher who is married to another District teacher is eligible for the VEBA contributions. If the teacher
meets the criteria set forth in Article VIII, they get the VEBA contribution. Here the far greater weight
of the evidence supported the union's claim that Ruth Lah was enrolled for purposes of a VEBA
contribution and is entitled to it under these facts.
PRIOR AWARDS IN WRENSHALL AND FERGUS FALLS
The union relied on the awards of Arbitrator Ver Ploeg and Lundberg in the above cases.
These were reviewed and provided some support for the union's claims here. They were not directly
on point. Wrenshall dealt with payment of the health and hospitalization insurance premium. There
was also some confusion in that award over the precise issue to be determined but the language also
used the term “enrolled” in the disputed contractual language. There, the District argued that a family
should only get one contribution toward health insurance premiums. The arbitrator rejected that
argument that only one teacher could be “enrolled’ in the health and hospitalization plan – similar to
the District’s argument here. Thus, while the issue was somewhat different, Arbitrator Ver Ploeg’s
analysis remains sound.
18
Likewise, Arbitrator Lundberg adopted the same rationale and came to a similar conclusion in
the Fergus Falls matter. There too, two teachers were married and worked for the same District. There
the dispute centered over the term “elected” as used in that contract but was a similar type of argument
as is being raised here.
Arbitrator Lundberg cited the Wrenshall decision with approval and ruled that even though the
teacher at issue did not fill out the paperwork to elect certain coverage, she was still entitled to the
District’s contribution toward her health insurance premium.
These cases were helpful even though not directly on point. The operative facts of this case
however are what govern this result.
PAST PRACTICE
While it may be somewhat superfluous to engage in this discussion given the findings on the
clarity of the language discussed above, it is worth noting that all the elements of a past practice were
present here. First, the language is somewhat ambiguous on its face. The term enrollment is not
defined in any formal sense in the CBA. Thus, resort to custom and usage is appropriate.
Much ink has been spilled discussing past practice and how it is to be applied. Past practice
has been defined as a ‘prior course of conduct which is consistently made in response to a recurring
situation and regarded as a correct and required response under the circumstances.’ See Richard
Mittenthal, Past Practice and the Administration of Collective Bargaining Agreements, in Arbitration
and Public Policy 30 (S. Pollard ed. 1961). A past practice is thus nothing more, or less, than a custom
or an accepted way of doing things as between two parties to a labor agreement that can provide either
assistance in interpreting contract language where that language is ambiguous or to actually provide a
binding set of terms for matters not included in the labor agreement. Clearly, as the commentators
have discussed, the mere fact that something happens once or even multiple times does NOT mean that
a binding past practice has occurred.
19
Having done something in the past, is that course of conduct binding in the future? The
question is whether something is a binding past practice as opposed to a happenstance event that has
no particular evidentiary or contractual significance and therefore does not bind the parties to doing it
that way in the future. Here the facts showed that there was a conscious decision made early on to pay
the VEBA contributions for Ruth Lah and that it continued for 8 years.
Further, the mere fact that only these two employees are in the circumstances of being married
and working for the same District actually supports the finding of a binding past practice rather than
the other way around. This is a unique situation, just as the District points out, but it is that very
uniqueness that supports the claim. This was the accepted way of dealing with this unique situation,
i.e. where two teachers were married to each other and where both had the health insurance. That
course of conduct applied to their unique circumstances and, as discussed below, met the necessary
elements of a binding practice. Stated another way, when faced with this singular situation, how has
the District responded to it? As noted above – it paid the VEBA contributions on a longstanding,
consistent and conscious basis for 8 years. On these facts that was strong evidence of an intent to
continue to do so unless and until the contract language is changed by negotiation.
Perhaps the best-known case discussing the notion of past practice in Minnesota was Ramsey
County v AFSCME, 309 N.W.2d 785 (Minn. 1981). There the arbitrator found that the parties’
practice with respect to vacation accrual rates differed from the clear language of the contract. The
matter arose when it was discovered that employees had for years been receiving vacation accruals and
payments upon their departure from the County that were very different from what the clear language
of the contract indicated. The County had argued that the clear language of the contract, and it was,
governed the result and that paying the incorrect accrual rates for years was simply a clerical error that
had no binding effect. The County argued that the language of the contract, where clear, must always
govern lest the whole process of negotiations be threatened with too liberal a use of past practice.
20
Despite that, the arbitrator ruled in favor of the union because the practice, even though
different from the clear language in the agreement, met all the tests for a binding past practice. The
Supreme Court upheld the arbitrator’s award and held as follows:
“past practice has been defined as a ‘prior course of conduct which is consistently made
in response to a recurring situation and regarded as a correct and required response
under the circumstances.’ Certain qualities distinguish a binding past practice from a
course of conduct that has no particular evidentiary significance: (1) clarity and
consistency; (2) longevity and repetition; (3) acceptability; (4) a consideration of the
underlying circumstances; (5) mutuality. 709 N.W.2d at 788, n. 3 (Citing from
Mittenthal, Past Practice and the Administration of Collective Bargaining Agreements,
in Arbitration and Public Policy 30 (S. Pollard ed. 1961).
Thus, the essential feature of any award, whether it is derived from reliance on past practice or
not, is whether it “draws its essence from the labor agreement.” See, 709 N.W.2d at 790-91. It
appears thus pretty clear that in Minnesota at least, it is well settled that custom and practice of the
parties may be used to provide interpretation of existing language or it may be used to establish that the
practice is binding even in the face of contrary and clear contract language, as in Ramsey County.
Here, all of the necessary elements of a past practice were met. The practice of paying Ms. Lah
the VEBA contribution was longstanding and repeated – the practice went on for some 8 years and was
paid each year without exception in that time. It was consistent – there was no evidence that the
District ever did not pay the VEBA contribution in all that time until 2018. It was clear and
unequivocal. The practice did not change and was done every year. Finally, it was shown to be
mutual. The evidence showed that the District knew that the grievant was married and was a
dependent on her husband’s health insurance. It was not, as in Ramsey County, the result of some sort
of oversight or administrative error. It was also clear that the District’s superintendent authorized the
initial payment and that subsequent superintendents both knew of the practice and did nothing to end
it, despite having had several rounds of bargaining in the interim.
On these facts it was also clear that the practice was also not an act of discretion and was based
on the contractual language in Article VIII. The eminent arbitrator Harry Shulman has also observed
the need for caution as well in using past practice for more than it was intended.
21
“There are other practices which are not the result of joint determination at all. They
may be mere happenstance, that is, methods that developed without design or
deliberation. Or they may be choices by Management in the exercise of managerial
discretion as to the convenient methods at the time. In such cases there is no thought of
obligation or commitment to the future. Such practices are merely present ways, not
prescribed ways, of doing things. Being the product of managerial determination in its
permitted discretion such practices are, in the absence of contractual provision to the
contrary, subject to change in the same discretion.” Elkouri 6th Ed. at p. 636 citing Ford
Motor Co., 19 LA 237, 241 (1952).
The language on which this practice was based is stated in terms of a requirement and is not
within the discretion of the District to grant or not. The language of Article VIII set forth above uses
the term “Shall” and on that point, there is little doubt as to what that term means.
CONCLUSION
On this record, the evidence supported the union's claim that the grievant, Ms. Lah has
“enrolled” in the District’s group health and hospitalization plan within the meaning as that term has
been interpreted and applied and, as set forth above, as other extrinsic documents used by these parties.
Accordingly, the grievance is sustained and the District is ordered to make the VEBA contribution to
Ms. Lah for the 2018-2019 school year.
AWARD
The grievance is SUSTAINED as set forth above.
Dated: August 30, 2018 _________________________________
Jeffrey W. Jacobs, arbitrator
Ely Education Association and ISD 696 Ely Schools Award.doc
