We granted further appellate review to decide whether the arbitration award in this case should be vacated. In his award, the arbitrator ordered the city of Lynn to restore wages and other benefits voluntarily relinquished by the members
Background. The parties do not dispute the relevant facts. As noted by the Appeals Court, “[t]he dispute between the city and the union is rooted in a statute [the Bailout Act] enacted in 1985 when the city was on the verge of bankruptcy and unable to meet financial obligations, including wage obligations under its collective bargaining agreements.” Lynn v. Lynn Police Ass’n, supra at 489. To prevent a cessation of municipal services, the city requested a loan from the State. In response, the Legislature enacted the Bailout Act, “under which it loaned the city $3.5 million [interest-free] but required the city to comply with certain financial safeguards to prevent spending in excess of revenues, the practice that had created the city’s crisis.” Id. at 490.
The Appeals Court correctly summarized some of the safeguards of the Bailout Act:
“The [Bailout Act] amended the city’s charter to require,among other things, that each department head submit to the city’s chief financial officer quarterly spending schedules, or allotments, within ten days after the mayor and city council set the department’s annual appropriation. Under the amended charter, no department may overspend a quarterly allotment without the mayor’s approval. If the mayor approves excess spending within a quarter, the department head must adjust the remaining quarterly allotments to ensure that future spending does not exceed the department’s annual appropriation. See St. 1985, c. 8, § 3.
“Under the charter as amended by the [Bailout Act], any city official who intentionally causes his or her department to overspend an appropriation is personally liable to the city for the excess. [Id.]”
Lynn v. Lynn Police Ass’n, supra.
In addition, § 3 of the Bailout Act provides:
“On or before August first of each year ... the city officials in charge of departments or agencies including the superintendent of schools for the school department, shall submit to the chief financial officer, with a copy to the city clerk, in such form as the chief financial officer may prescribe, an allotment schedule of the appropriations of all personnel categories included in said budget, indicating the amounts to be expended by the department or agency for such purposes during each of the fiscal quarters of said fiscal year .... Whenever said chief financial officer determines that any department or agency, including the school department, will exhaust or has exhausted its quarterly . . . allotment and any amounts unexpended in previous periods, he shall give notice in writing to such effect to the department head, the mayor, the city solicitor, and to the city clerk who shall forthwith transmit the same to the city council. . . .
“The mayor within seven days after receiving such notice, shall determine whether to waive or enforce such allotment. If the allotment for such period is waived or is not enforced, as provided above, the department or agency head shall reduce the subsequent period allotments appropriately. If the allotment for such period is enforcedor not waived, thereafter the department shall terminate all personnel expenses for the remainder of such period. . . .
“No personnel expenses earned or accrued, within any department, shall be charged to or paid from such department’s . . . [quarterly] allotment of a subsequent period without approval by the mayor, except for subsequently determined retroactive compensation adjustments.[2 ] Approval of a payroll for payment of wages, or salaried or other personnel expenses which would result in an expenditure in excess of the allotment shall be a violation of this section by the department or agency head .... If the continued payment of wages, salaries or other personnel expenses is not approved in a period where a department has exhausted the period allotment or allotments as specified above, or, in any event, if a department has exceeded its appropriation for a fiscal year, the city shall have no obligation to pay such personnel cost or expense arising after such allotment or appropriation has been exhausted.”
Last, § 3 requires all collective bargaining agreements executed after the effective date of the Bailout Act “be subject to” and “expressly incorporate the provisions of this section.”
The city and union negotiated a collective bargaining agreement for the period July 1, 2001, through June 30, 2004 (CBA), that governed employment and compensation, and provided for binding arbitration of grievances.
In December, 2003, the Lynn police department received a “community policing” grant in the amount of $277,815 from the Massachusetts Executive Office of Public Safety (EOPS) for FY 2004. Under the program, grant funds were to supplement, and not supplant, local police department budgets. While grant funds could only be used for “community policing,” the funds could be used, at the discretion of the chief of police, to defray personnel costs; to defray costs of training law enforcement and civilian personnel; for overtime; for supplies, operating expenses, and equipment; and to defray other reasonable costs intended to facilitate or enhance community policing. In light of these permitted uses of the grant funds, the arbitrator concluded, and the city does not challenge this conclusion, that the grant “was for all intents and purposes unrestricted.” Taking note of the fact that the FY 2004 budget was in place when the grant was received, and that there was no change in the budget as a result of the grant, the arbitrator further concluded (and, again, the city does not challenge this conclusion) that the grant funds were used to supplement the department’s budget for FY 2004. The city did not use the grant funds to repay the union members for the
The union became aware of the grant funds in February, 2004, and requested termination of the MOA and use of the grant funds to repay the MOA concessions. The city refused, and the union filed a grievance that led to the underlying arbitration proceeding.* *****
The arbitrator found that, by failing to restore the concessions to the union members after receiving the grant funds, the city had violated the MOA. He rejected the city’s claim that restoring the concessions would violate the Bailout Act, noting that it would be up to the city to decide how to comply with the MOA without violating the Bailout Act. He ordered that the city “must comply with the [MOA] by repaying the bargaining unit employees up to the amount of the grant,” and retained temporary jurisdiction to resolve any questions concerning the remedy.
The city, as noted, sought relief in the Superior Court, which was denied. The Superior Court judge entered a judgment confirming the arbitrator’s award. Because the Superior Court judgment did not contain declaratory relief as sought by the city, the Appeals Court ordered “that the judgment be modified to declare that the arbitrator’s award does not require the city to violate any law, and payment of that award will not violate [the Bailout Act] because that statute does not prohibit payment of awards for breach of contract.” Lynn v. Lynn Police Ass’n,
Standard of review. The familiar standard of review of arbitration awards is set forth in Superadio Ltd. Partnership v. Winstar Radio Prods., LLC,
“Consistent with policy strongly favoring arbitration ... an arbitration award is subject to a narrow scope of review. . . . The bases for review are set forth in G. L. c. 231, § 12. Judicial intervention is permitted where an award ‘was procured by corruption, fraud or other undue means,’ § 12 (a) (1), or where the ‘arbitrators exceeded their powers,’ § 12 {a) (3). ‘An arbitrator exceeds his authority by granting relief beyond the scope of the arbitration agreement ... by awarding relief beyond that to which the parties bound themselves ... or by awarding relief prohibited by law.’ . . . ‘Arbitration, it is clear, may not “award relief of a nature which offends public policy or which directs or requires a result contrary to express statutory provision” ... or otherwise transcends the limits of the contract of which the agreement to arbitrate is but a part.’ ” (Citations omitted).
Discussion. Some preliminary observations are in order. The city contends that this dispute arose, in part, out of disagreement concerning the confines of the grant funds. Understanding that our review is very narrow, the city conceded during oral argument that it is bound by the arbitrator’s determinations that the grant funds were unrestricted and that use of the funds to satisfy the MOA obligation would have “supplemented” and not “supplanted” the police department’s budget. Accordingly, because the city received unrestricted grant funds from the State that were unforeseen, that were not included in its FY 2004 budget, and that improved its financial condition by $277,815, the repayment obligation in the MOA was triggered. That the repayment obligation in the MOA was triggered is not in dispute. Also not in dispute is the fact that the city breached the repayment obligation under the MOA, and that in fulfilling its repayment obligation, the terms of the Bailout Act cannot be violated. It is this latter issue, whether the city must necessarily violate the Bailout Act in complying with the arbitration award, that is before us.
a. Violation of the Bailout Act. The city’s principal argument is that it cannot comply with the arbitration award because pay
We have not had occasion to construe the provisions of the Bailout Act on which the city relies. We conclude that, as relevant here, § 3 of the Bailout Act does not apply because it does not pertain to a potential expenditure of a city department that is contractually conditioned on being financed from funds received separate from and in excess of that department’s budget. Several considerations compel our conclusion.
“Where the language of a statute is plain, it must be interpreted in accordance with the usual and natural meaning of the words.” Gurley v. Commonwealth,
Here, the MOA obligation could only be satisfied from the police department’s budget if the department had unspent funds at the end of the fiscal year, see notes 5 and 7, supra. As noted, the police department’s unspent funds only partially satisfied the MOA obligation, and thus, this circumstance has no further bearing in this case.
Apart from the occurrence of unspent funds, the sole manner of satisfying the MOA obligation depended on the police department’s receipt of “additional assistance,” here the grant funds. Significantly, these funds would be and were separate
Our conclusion does not contravene the clear intent of the Legislature in enacting the Bailout Act. See Commonwealth v. Rahim,
The city’s argument concerning a prohibition under § 3 of the Bailout Act to fund retroactive personnel costs similarly fails. The language on which the city relies, see note 8, supra, does not pertain to conditional contractual expenditures to be financed by funds outside of, and not part of, the police department’s budget.
b. Remedy. It should first be noted that the city erroneously contends that the arbitrator directly awarded it “to appropriate money.” The award does not require an appropriation; it instead orders compliance with the MOA obligation “by repaying the bargaining unit employees up to the amount of the grant.” We reject the city’s contention that the arbitrator exceeded his authority in entering this order on the ground that the order violates § 3 of the Bailout Act. As previously discussed, § 3 of the Bailout Act does not speak to or concern conditional contractual expenditures to be made from funds received by a city depart
c. Declaratory relief In its complaint filed in the Superior Court, the city sought two declarations: (1) “that the payment of any funds, in the absence of an appropriation in the [p]olice [department for FY 04 sufficient to fund the [a]ward violates [the Bailout Act],” and (2) “that the [arbitration award] requires the [c]ity to violate the law, and is void.” The union does .not contend that the city’s request for declaratory relief was improperly brought. In a properly brought action for declaratory relief, there must be a declaration of the rights of the parties even though relief is denied to a plaintiff. Cherkes v. Westport,
So ordered.
Notes
The union represents all employees of the police department of Lynn save its chief and deputy chief.
The city does not rely on this exception in seeking to vacate the arbitration award. In view of our conclusions, we need not interpret this provision.
As required by the Bailout Act, § 3 of the Bailout Act essentially is set forth and incorporated into the collective bargaining agreement.
Specifically, the union agreed to reduce wages for eight hours in one week,
The MOA provided as follows:
“In the event of the following occurrences, the modifications made in this Agreement will immediately terminate and all terms, conditions and practices will return to those in existence prior to entering into this Agreement;
“If at any time during [FY] 2004 the [c]ity lays off any bargaining unit employee(s) or;
“If the [c]ity otherwise violates the terms and conditions of this Agreement.
“In the event that the [c]ity receives additional assistance from the State or Federal governments during FY 04 that improves the [c]ity’s current financial situation the concessions of this Agreement shall be reconfigured proportionately to repay the officers up to the amount of these concessions. For example, if the concessions of this Agreement equal $300,000 and the [c]ity receives an additional $100,000 from the Commonwealth of Massachusetts, the concessions will be reconfigured to be reduced by Vs.
“At the end of FY 2004, if the police department has unspent funds, those funds will be paid to the bargaining unit employees by equally dividing the funds to all bargaining unit employees . . . .”
The department spent the grant funds as follows: $240,515 was used to match funds for two Federal community policing grants, $24,304 for overtime, $4,120 to replace personnel, $7,276 for cellular telephone charges, $1,000 for membership in the Massachusetts Chiefs of Police Association, $300 for the “Police Executive Research Forum,” and $300 for the “International Association of Chiefs of Police.”
At the end of FY 2004, $7,000 remained in the police department’s budget account. The city distributed these funds to union members in accordance with the MOA. See note 5, supra (pertaining to use of unspent funds in budget). This distribution only partially satisfied the MOA obligation.
The city relies on the following language in § 3 of the Bailout Act: “[I]f a department has exceeded its appropriation for a fiscal year, the city shall have no obligation to pay such personnel cost or expense arising after such allotment or appropriation has been exhausted.”
Section 3 of the Bailout Act first limits its application to expenses, allotments, and appropriations. The MOA obligation was not an expense included in the police department’s FY 2004 allotment schedules, and there was no appropriation made for it. The MOA obligation was a conditional contractual undertaking.
Indeed, the city conceded during oral argument that the mayor is not prohibited from asking the city council for the money to satisfy the MOA obligation.