December 28, 2011

Contractual Obligation Without Language

Justin Katz

The technical considerations of language and history are likely different, but this outcome in Woonsocket doesn't bode well for pension reforms, I'd say:

The city argued that language in one section of the contract mentions dental coverage and refers only to active employees, while other sections extend health-care coverage to retirees, but not dental care.

"The language of the 2002 and 1990 [collective-bargaining agreements] provides little guidance on the issue of dental benefits," Gallo wrote. So a review was warranted "of all the facts and circumstances surrounding the formation" of the two agreements "as well as the ongoing relationship" between the plaintiffs and the city. The judge found that "an agreement creating an obligation may nonetheless be inferred” from the sides' actions and that the city "had an ongoing practice of providing dental benefits to members of the Police Department" regardless of their age.

So the "i" that wasn't dotted was that the contract didn't explicitly say whether or not retirees received dental care, and politicians past were perfectly willing to provide it. It is mildly humorous that the judge would cite an "ongoing practice" that the city wishes to end as a reason that the practice must remain ongoing.

Part of the problem, it seems to me, is that unions and judges alike have an expectation that public officials will continue to handle their budgets as loose collections of expenditures. If savings on something like retiree dental benefits are blocked, they'll dig around for services on which to cut back or push for tax increases. They ought to make it clear that they have only so much money allocated for personnel, so the lost savings will have to be made up in other ways; salary reductions would make the clearest statement.

Of course, by that route, we run into arbitration, which is binding for public safety employees, which really emphasizes the tilted playing field created by public unionization. The union organizations invest resources to elect friendly public officials. They then negotiate with those same politicians with much more visibility and privilege in the process than is provided to other taxpayers and voters. When circumstances change — whether because of taxpayer reaction when the details are revealed or because hard times arrive — they go to court, where other public employees are apt to find inferred rights. Where the proposed changes are applied to new contracts, rather than existing benefits, the unions can dig in and wait for arbitration, whereby an unelected mediator with more incentive to please unions than taxpayers is hired to resolve the differences, in some cases issuing edicts that have the force of law.

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"an agreement creating an obligation may nonetheless be inferred"

This - the stated basis for the ruling - is so disturbing that I e-mailed an attorney about it, asking how common it was that a contract or an obligation be upheld because it was "inferred".

Like the benefits outlined explicitly in public employee contracts in this state aren't unsustainable enough, we have to go looking for inferred benefits???

Posted by: Monique at December 28, 2011 7:31 AM

The fundamental disagreement I have with most RI union members is that I believe voting for a politician, and especially contributing to a politician, solely out of your own financial interest is immoral and will eventually lead to a Lord of the Flies-like collapse of Western society when it becomes widespread practice, as exemplified in states like Rhode Island and countries like Greece specifically. Several union members on this very blog have indicated to me that they have no problem with the practice whatsoever. Rhode Islanders might be surprised to learn that this is not at all the norm in other parts of the country and voting for politicians isn't like picking out a car insurance policy.

Posted by: Dan at December 28, 2011 7:55 AM

I would like to add to my comment:
One of the most poisonous ideas in governance is that the democratic process magically removes all moral implications of an outcome, or somehow leads to the most reasonable solution through consensus. The 51% number is no less arbitrary than any other, and it becomes more philosophically and practically problematic with each added layer of bureaucracy. There are no easy solutions, but one would be to take certain corrupting prizes off the table from the beginning, much like our constitution does (or was supposed to) but on a larger and more explicit scale. Besides the lack of choices and impact, this is one reason why I don't vote - participating in an election implicitly consents to the process and the outcome.

Posted by: Dan at December 28, 2011 8:22 AM

You gotta' love the consistency of judges in this state. Here's almost the complete opposite ruling:

By the way, it's Smithfield not North Smithfield

Posted by: Max D at December 28, 2011 11:33 AM


I think you've got it backwards: Not voting (while remaining in the city/state/country) is tantamount to saying, "whatever you guys decide." If you vote against the failed politician/policy, then you're not implicated in the results.

Posted by: Justin Katz at December 28, 2011 7:37 PM

Justin - I've heard the argument and it's a valid perspective. It's certainly pragmatic in that voting against any given policy is the most you can do within your extremely limited power to defeat it. However, then I just get hit with the "we all voted and you lost fair and square" argument combined with a "you're just mad you lost" to add insult to injury. If you really object to something being on the table in the first place, as I frequently do, then I think the most philosophically consistent way to object to that is to refuse to vote. Many disagree with me.

Posted by: Dan at December 28, 2011 9:40 PM
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