CASE NO. 97-635-CBA

ALASKA LABOR RELATIONS AGENCY
3301 EAGLE STREET, SUITE 208
P.O. BOX 107026
ANCHORAGE, ALASKA 99510-7026
(907) 269-4895
Fax (907) 269-4898

CASE NO. 97-635-CBA

DECISION AND ORDER NO. 215

Digest: The union did not justify reforming a written agreement settling a bargaining unit member’s claim against her employer.

DECISION

Statement of the Case

On September 17, 1996, the Alaska State Employees Association/AFSCME, Local 52, AFL-CIO, filed this petition to enforce the collective bargaining agreement on behalf of Toya Winton. In its petition ASEA claims that a settlement agreement contains a typographical error and that, as a consequence, Winton was not made whole, as agreed between the parties. The State in its answer denies that it violated the agreement and states that it has fully complied with the terms of the agreement it made with ASEA.

The case was heard on December 9, 1996, before a panel of the Alaska Labor Relations Agency. The record closed that same day.

Panel: Alfred L. Tamagni, Sr., chair, and board members Robert A. Doyle and Ray Smith, present and participating.

Appearances: Stan Hafferman, business agent, for petitioner Alaska State Employees Association/AFSCME Local 52, AFL-CIO; Kent Durand, labor relations specialist, for respondent State of Alaska.

Issues

Was the settlement agreement resolving Toya Winton’s claims against the State different than the terms set forth in paragraph 1 (e) of the settlement instrument and, if so, should the instrument be reformed to reflect that agreement?

Summary of the Evidence

A. Exhibits

Petitioner Alaska State Employees Association offered the following exhibits, which were admitted into the record:

3. Letter of Dispute resolution (Nov. 3, 1995); admitted over objection;

5. A. Reardon, letter to A. Chance (Oct. 14, 1995);

6. J. Marton, letter to A. Chance (Dec. 12, 1995);

7. B. Norris, letter to Governor Knowles (June 20, 1996);

8. A. Chance, letter to C. O’Connell (July 1, 1996).

Respondent State of Alaska offered the following exhibits, which were admitted into the record:

A. J. Ward, facsimile transmittal sheet to A. Reardon (Dec. 14, 1994) (2 pgs.);

B. A. Reardon, facsimile transmittal sheet to J. Ward & A. Chance (Feb. 6, 1995) (3 pgs.);

C. J. DeYoung, letter to A. Reardon & A. Chance (Feb. 24, 1995);

D. A. Reardon, letter to J. DeYoung (Mar. 20, 1995);

E. A. Chance, letter to J. Ward (Mar. 28, 1995);

F. Unsigned, letter of dispute resolution (May 24, 1995) (2 pgs.);

G. A. Chance, fax transmittal sheet to J. Olson & B. Bacolas (July 18, 1995);

H. D. Corso & A. Reardon, letter of dispute resolution (July 18, 1995);

I. Second version, D. Corso & A. Reardon, letter of dispute resolution (July 18, 1995) (2 pgs.);

J. J. Jerue, letter to J. Olson (Aug. 7, 1995);

K. A. Reardon, letter to A. Chance (Aug. 7, 1995) (2 pgs.);

L. M. Wanie, letter to Olson (Sept. 8, 1995);

M. A. Reardon, letter to A. Chance (Oct. 14, 1995) (3 pgs.);

N. A. Reardon, facsimile transmittal letter to A. Chance (Nov. 26, 1996) (4 pgs.).

B. Testimony

The Alaska State Employees Association presented the testimony of Toya Elaine Winton and former ASEA business agent Alison Reardon.

The State of Alaska presented the testimony of former labor relations analyst III Art Chance.

C. Agency case file. 8 AAC 97.410.

Findings of Fact

The panel, by a preponderance of the evidence, finds the facts as follows:

1. The Alaska State Employees Association/AFSCME Local 52, AFL-CIO, (ASEA) is the certified bargaining representative of the general government unit of State of Alaska employees.

2. Toya Elaine Winton is a member of the general government unit.

3. ASEA business agent Alison Reardon pursued claims arising from Winton’s lay-off in 1993 against the State.

4. In the course of representing Winton, Reardon made an offer of settlement to the State on February 6, 1995, which included in paragraph 1(d) a term requiring the State to pay Winton a salary differential:

Ms. Winton shall also be paid the difference in salary between her previous salary range 16, step K, and her current salary range 12, step D, less required deductions, from April 18, 1994, through the final execution of this agreement, see item #2 and 3, below.

Exh. B, at 1 & 2.

5. The State’s representative Art Chance rejected the offer. Exh. E.

6. On May 24, 1995, Reardon proposed another offer, which she typed herself. The offer changed the term addressing the salary differential from 12D to 12K:

Ms. Winton shall be paid the difference in salary between 16K and 12K, less deductions, from April 18, 1994 to June 30, 1995.

Exh. F, at 1.

7. After reviewing the May offer, Toya Winton discovered that it proposed payment of the difference between 16K on the salary scale, her pay rate at layoff, and 12K. However, her actual placement on the salary scale was 12D, rather than 12K, and this proposal would not fully compensate her for the change in her rate of pay. While Winton contacted ASEA and advised of the mistake, she is unsure whether she spoke to Reardon directly.

8. When Chance received the May offer, he telecopied it to the department funding the agreement, Health and Social Services. Chance was unaware of any mistake in the offer. The department rejected the offer. This practice was consistent with Chance’s usual practice in settling claims for the State. Chance would transmit a monetary settlement offer to the department funding the settlement to work out the numbers. If the department agreed to the numbers, the State had a deal. The State rejected the May offer.

9. Reardon made the next offer on July 18, 1995. She did not change the salary rate from 12K to 12D, and it remained the same as it appeared in the May offer. Exh. H.

10. Reardon signed the July offer and telecopied it to the State at the same time she telecopied it to Winton. Winton noticed the salary term and immediately contacted ASEA. Reardon was not at ASEA’s office, and Winton asked that her copy of the offer pointing out the error, which she had telecopied to Reardon, be given to Reardon or placed where Reardon would see it when she returned to the office.

11. Reardon received the telecopy of the July offer with Winton’s comments after the State’s representative Dianne Corso had signed the settlement offer.

12. After the agreement was signed by both Reardon and Corso, Reardon did make a unilateral change to a date in the agreement. She handwrote a date--August 1, 1995-- over the typed date in paragraph four of the agreement. She did not make any change to the salary term in paragraph 1(e) of the agreement. Exh. I, at 1.

13. When Reardon first notified the State of the mistake in paragraph 1(e) cannot be determined from the record.

14. On or around August 7, 1995, Winton contacted Jan Jerue of the Department of Health and Social Services advising that the State’s payout under the agreement was short. Winton informed Jerue that she should have been paid the difference between 12D and 16K, rather than 12K and 16K. Exh. J. This is a difference of approximately $5,700.

15. On August 7, 1995, Reardon advised Chance in writing that Winton’s final payment should reflect the difference between Winton’s actual salary of 12D rather than the 12K rate the State had used to compute the lost wages. Exh. K.

16. Chance had not been aware of any mistake in the agreement and denied that a mistake had occurred.

17. The State has fully performed the agreement as it appears in Exh. I.

18. The State and its representatives were unaware that a mistake had been made in the amount of salary Winton wanted to settle her claim and never agreed to pay Winton the difference between salary at level 12K and her salary at level 12D.

Discussion

The business agent representing ASEA made a mistake in drafting a settlement instrument resolving a claim brought by general government unit member Toya Winton. The question is whether the instrument should be reformed to correct that mistake. We hold that, even if this Agency has the power to reform a written settlement agreement, the facts in this case do not justify reformation. ASEA’s unilateral mistake was not discovered by the State, and the State never agreed to pay the amount ASEA now seeks to recover for Toya Winton. Because the State never agreed to pay that amount, we cannot reform the agreement to require the payment.

This Agency under AS 23.40.210(a) can enforce collective bargaining agreements. All collective bargaining agreements must have grievance procedures. AS 23.40.210(a). Arguably, the authority to enforce collective bargaining agreements encompasses the authority to enforce a settlement agreement reached pursuant to the terms of the parties’ grievance procedure in the collective bargaining agreement. For this reason and the second reason that the parties have not questioned the Agency’s authority to enforce a grievance settlement agreement under AS 23.40.210(a), we address ASEA’s petition.

ASEA in its petition does not seek to enforce the settlement agreement as written. It seeks to reform the written agreement to correct a mistake in the drafting of the agreement. When ASEA’s business agent prepared the offer of settlement that was accepted, she described the salary differential as the difference between 12K and 16K, rather than 12D and 16K, on the salary scale. Toya Winton, however, was seeking the difference between her former position on the salary scale -- 16K -- and her position on the scale at the time of settlement -- 12D. Winton communicated this fact to agents of ASEA, but the record does not include any evidence that the fact was ever communicated to the State’s representatives.

The courts have the equitable authority to reform agreements. See e.g., Gablick v. Wolfe, 469 P.2d 391 (Alaska 1970). The State disputes whether this authority extends to administrative agencies; it argues that the source of all of the Agency’s powers is statutory and the Public Employment Relations Act does not expressly authorize the Agency to reform agreements. The State argues that the authority to enforce agreements in AS 23.40.210(a) means the authority to enforce written agreements because AS 23.40.070(2) requires employers to enter into written agreements. On the other hand, restricting the Agency’s authority in this manner would handicap the Agency’s ability to address issues that commonly arise in contract enforcement and thereby discourage the parties’ use of their administrative remedies and increase reliance on judicial proceedings. The question whether the Agency can reform a written agreement is a valid one; but the parties did not cite to any case law addressing it, and we did not discover any in a quick search. We can avoid deciding whether we have this authority, however, because the facts of this case would not justify its exercise if we did.

The courts can consider evidence outside of the written agreement to show the parties’ intent in entering the agreement and whether a mistake was made. Stephenson v. Ketchikan Spruce Mills, Inc., 412 P.2d 496, 500 (Alaska 1966). The remedy when the parties’ written agreement is inconsistent with their intent is reformation of the instrument. The Alaska Supreme Court has said,

Reformation of a writing is justified when the parties have come to a complete mutual understanding of all the essential terms of their bargain, but by reason of mutual mistake . . . the written agreement is not in conformity with such understanding . . . .

Groff v. Kohler, 1996 WL 432314 (Alaska 1996); see also AMFAC Hotels v. State, Dep't of Transp., 659 P.2d 1189, 1192 (Alaska 1983), overruled on other grounds Atlantic Richfield Co. v. State, 723 P.2d 1249, 1252 (Alaska 1986). The evidence in this case, however, shows that the State did not intend anything other than the terms set forth in the written settlement agreement. The mistake in this case was not mutual. Reformation can be available in some cases of a unilateral mistake. If the evidence shows fraud or a mistake by one party that the other party knew about, the courts can reform the written agreement. Gablick v. Wolfe, 469 P.2d 391.

The requirements for reforming a contract in which there is a mistake by one of the parties to the agreement are set out in § 153 of the Restatement (Second) Contracts:

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in section 154, and

(a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or

(b) the other party had reason to know of the mistake or his fault caused the mistake.

Applying this rule we note that ASEA’s mistake is not so significant as to make the agreement appear unbalanced or unfair. The agreement as written resulted in a substantial financial recovery to Winton, provided her with continued employment, increased her salary range from 12D to 12K, allowed an opportunity for her to compete for other State positions, and waived offset of unemployment benefits. The mistake is not of such a magnitude that it should have been obvious to the State’s representatives, and the evidence supports the conclusion that they were not aware of the mistake until they were told about it. The State accepted the offer with the mistaken term without any knowledge of the mistake. These facts do not support reformation under the rule set forth in section 153.

We therefore conclude that, if we have the authority to reform an agreement, we would not exercise that authority to reform the Winton settlement agreement.

Conclusions of Law

1. The State of Alaska is a public employer under AS 23.40.250(7), and the Alaska State Employees Association/AFSCME Local 52, AFL-CIO, is an organization under AS 23.40.250(5). This Agency has jurisdiction under AS 23.40.210(a) to consider this matter.

2. The ASEA, as the petitioner, has the burden to prove each element of its case by a preponderance of the evidence. 8 AAC 97.350(f).

3. This Agency has the authority to enforce settlement agreements under its authority to enforce collective bargaining agreements in AS 23.40.210(a).

4. Assuming that the authority to enforce settlement agreements extends to the authority to reform them, this Agency addresses whether the ASEA/State agreement made on behalf of Toya Winton should be reformed.

5. Because we find (1) the mistake was not a mutual mistake, (2) the mistake did not have a material effect on the agreement, (3) enforcement of the agreement as written is not unconscionable, (4) the State did not have any reason to know of the mistake, and (5) the State did not cause the mistake, we conclude that reformation of the written settlement agreement is not appropriate.

ORDER

1. Because the Alaska State Employees Association/AFSCME, Local 52, did not show facts that would justify reforming the agreement between ASEA and the State of Alaska settling Toya Winton’s claims, we DISMISS the petition; and

2. Order the State of Alaska to post a notice of this decision and order at all work sites where members of the bargaining unit affected by the decision and order are employed or, alternatively, serve each employee affected personally. 8 AAC 97.460.

ALASKA LABOR RELATIONS AGENCY

Alfred L. Tamagni Sr., Chair

Robert A. Doyle, Board Member

Raymond P. Smith, Board Member

APPEAL PROCEDURES

An Agency decision and order may be appealed through proceedings in superior court as provided in the Alaska Rules of Appellate Procedure and the Administrative Procedures Act.

The decision and order becomes effective when filed in the office of the Agency, and unless proceedings to appeal it are instituted, it becomes final on the 31st day after it is filed.

CERTIFICATION

I hereby certify that the foregoing is a full, true and correct copy of the Decision and Order in the matter of Alaska State Employees Association/AFSCME, Local 52, AFL-CIO v. State of Alaska, dated and filed in the office of the Alaska Labor Relations Agency in Anchorage, Alaska, this 9th day of January, 1997.

Victoria D. Scates

Administrative Clerk III

This is to certify that on the 9th day of January, 1997, a true and correct copy of the foregoing was mailed, postage prepaid to

Stan Hafferman, ASEA

Kent Durand, State

Signature

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