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Education Minnesota-Osseo v. Independent School District 279: EMPLOYMENT - no mandatory PELRA negotiations regarding selection of plan vendors

STATE OF MINNESOTA
IN COURT OF APPEALS
A06-1989
Education Minnesota-Osseo, et al.,
Appellants,
vs.
Independent School District 279, Osseo Area Schools,
Maple Grove, Minnesota, et al.,
Respondents.
Filed December 4, 2007
Affirmed
Lansing, Judge
Hennepin County District Court
File No. 27-CV-05-7743
Harley M. Ogata, Debra M. Corhouse, Education Minnesota, 41 Sherburne Avenue, St.
Paul, MN 55103 (for appellants)
Stephen M. Knutson, Michelle D. Kenney, Knutson, Flynn & Deans, P.A., 1155 Centre
Pointe Drive, Suite 10, Mendota Heights, MN 55120 (for respondents)
Considered and decided by Lansing, Presiding Judge; Dietzen, Judge; and
Huspeni, Judge.*
S Y L L A B U S
A school districts selection of supplemental-pension-plan or deferredcompensation-
plan vendors is not a subject of mandatory negotiation under the Public
Employment Labor Relations Act.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, 10.
2
O P I N I O N
LANSING, Judge
Following a court trial, the district court found that the Osseo Area Schools
Independent School District 279 did not commit an unfair labor practice under the Public
Employment Labor Relations Act when it refused to meet and negotiate about a unilateral
change in the selection of vendors for retirement plans that qualify under section 403(b)
of the Internal Revenue Code. Because the plain language of Minn. Stat. 179A.03,
subd. 19 (2006), does not provide mandatory negotiation for vendor selection, we affirm.
F A C T S
In 2005 the Osseo Area Schools Independent School District 279 unilaterally
replaced its twenty-four approved vendors for 403(b) retirement plans with a single
vendor. The school district stated that the change was made to improve accountability, to
improve plan quality, to seek competitive products, and to enable employees to make
sound financial decisions. Education Minnesota-Osseo, which represents the districts
teachers and educational paraprofessionals, demanded to meet and negotiate with the
school district about the number and selection of the vendors. The school district refused.
Education Minnesota-Osseo then filed a suit claiming that the school district
committed an unfair labor practice under the states Public Employment Labor Relations
Act and requested an injunction requiring the school district to meet and negotiate about
403(b) plan vendor selection.
The case proceeded to a court trial. Following the trial, the district court
concluded that 403(b) plans are for retirement and that retirement contributions and
3
benefits are not mandatory subjects of negotiation under the Public Employment Labor
Relations Act. Accordingly, the district court found no unfair labor practice and denied
the request for injunctive relief. Education Minnesota-Osseo now appeals.
I S S U E
Is the selection of 403(b) plan vendors subject to mandatory negotiation under the
Public Employment Labor Relations Act?
A N A L Y S I S
Education Minnesota-Osseo argues that 403(b) plan vendor selection is subject to
mandatory negotiation because it is within the definition of terms and conditions of
employment. Under the Public Employment Labor Relations Act (PELRA), the terms
and conditions of employment are the subject of mandatory negotiation between
covered employers and employees. Minn. Stat. 179A.07, subd. 2(a) (2006). An
employers refusal to meet and negotiate over the terms and conditions of employment
constitutes an unfair labor practice. Minn. Stat. 179A.13, subd. 2(5) (2006); Foley
Educ. Assn v. Indep. Sch. Dist. No. 51, 353 N.W.2d 917, 920 (Minn. 1984).
The definition of terms and conditions of employment includes the hours of
employment, compensation, and fringe benefits. Minn. Stat. 179A.03, subd. 19 (2006).
But the definition specifically excludes retirement contributions or benefits not related
to health-insurance coverage. Id. The application of this provision involves a question of
statutory interpretation, which we review de novo. Olmanson v. LeSueur County, 693
N.W.2d 876, 879 (Minn. 2005).
4
The legislature intended that the scope of mandatory bargaining under PELRA
should be broadly construed so that the purpose of resolving labor disputes through
negotiation could best be served. Intl Bhd. of Teamsters v. City of Minneapolis, 302
Minn. 410, 415, 225 N.W.2d 254, 257 (1975). But the first step in construing a statute is
to determine whether the statutes language is ambiguous. Hans Hagen Homes, Inc. v.
City of Minnetrista, 728 N.W.2d 536, 539 (Minn. 2007). If the plain meaning of the
statute is unambiguous, we must apply the plain meaning. Harrison ex rel. Harrison v.
Harrison, 733 N.W.2d 451, 453 (Minn. 2007). We will engage in statutory construction
only if the plain meaning of the statute is ambiguous. Id.
Education Minnesota-Osseo argues that 403(b) plan vendor selection is a fringe
benefit. Their argument is well grounded. See W. St. Paul Fedn of Teachers v. Indep.
Sch. Dist. No. 197, 713 N.W.2d 366, 375 (Minn. App. 2006) (reasoning that both amount
of health coverage and choice of providers constitute fringe benefits). But our
conclusion that vendor selection is a fringe benefit is the beginningnot the endof the
analysis. Because the statute that provides for mandatory negotiations over the terms and
conditions of employment expressly excludes certain fringe benefits, the specific issue
we must address is whether 403(b) plan vendor selection falls under the exception for
retirement contributions or benefits. See Minn. Stat. 179A.03, subd. 19 (excluding
retirement contributions or benefits not related to health insurance from definition of
terms and conditions of employment).
We conclude that the exception for retirement contributions or benefits
unambiguously includes the selection of vendors for the provision of 403(b) plans. There
5
is no question that the primaryif not exclusivepurpose of a 403(b) plan is to save for
retirement. Under certain circumstances, the funds can be accessed before retirement.
I.R.C. 403(b)(11) (2000). But an employer provides 403(b) plans for the purpose of
helping employees save for retirement. Because the plain meaning of the statute is
unambiguous, we are obligated to give effect to the legislatures will as it is expressed in
that language. Harrison, 733 N.W.2d at 453.
Therefore, based on the plain meaning of retirement contributions or benefits,
the selection of 403(b) plan vendors is excluded by the definition of terms and conditions
of employment and is not a subject of mandatory negotiation. Accordingly, the school
district did not engage in an unfair labor practice under PELRA.
Because the plain meaning controls, we do not engage in a statutory interpretation
that would examine the circumstances of enactment, the consequences of a particular
interpretation, or the laws legislative history. Id. Thus, we do not address Education
Minnesota-Osseos arguments that would apply only if the statute were ambiguous. We
note, however, that vendor selection remains a permissive but not mandatory subject of
negotiation under PELRA. See Minn. Stat. 356.24, subd. 1(5) (2006) (permitting
403(b) plans to be included in collective-bargaining agreements); Minn. Arrowhead Dist.
Council 96 of AFSCME v. St. Louis County, 290 N.W.2d 608, 611 (Minn. 1980)
(permitting bargaining about nonmandatory subjects).
Although we affirm, we recognize that Education Minnesota-Osseo may have a
compelling argument to make to the legislature for a change in the statute. The express
exclusion of retirement contributions or benefits removes all pension issues from the
6
scope of mandatory subjects for collective bargaining under PELRA. AFSCME Council
6 v. Sundquist, 338 N.W.2d 560, 576 (Minn. 1983). In Sundquist, the supreme court
adopted three policy justifications for the exception:
(1) [T]o permit employers to contain the rising cost of pension benefits; (2)
to permit the legislature to participate in the making of significant
government policy; and (3) to promote uniformity and to prevent the
existence of disparate benefits between different funds based upon the skill
and success of employees bargaining representative.
Id. These policy justifications may have less application in the context of 403(b) plans.
Traditional pension plans are defined-benefit plans. See 29 U.S.C. 1002(35)
(2000) (defining defined-benefit plan for purposes of the federal Employee Retirement
Income Security Program). Under a defined-benefit plan, the employee is entitled to a
specific benefit at retirement. As a result, the employer or the pension plan takes on a
long-term obligation and must guard against investment losses. Hughes Aircraft Co. v.
Jacobson, 525 U.S. 432, 440, 119 S. Ct. 755, 761 (1999). A 403(b) plan, in contrast, is
generally a defined-contribution plan, and the employee is not entitled to a specific
benefit at retirement. See 29 U.S.C. 1002(34) (2000) (defining defined-contribution
plan).
Unlike traditional pension plans, the employer does not bear the risk of loss when
employees save for retirement with 403(b) plans. The employee typically invests his or
her own money and has a strong interest in selecting 403(b) plan vendors. The employer,
in contrast, has little interest in 403(b) plan selection other than limiting administrative
costs. But the legislatures plain language does not require negotiation on this subject.
7
We are required to enforce this statutory language. As a result, Education Minnesota-
Osseos arguments are best addressed to the legislature and not to this court.
Finally, we note that the school district has raised a variety of nondispositive
procedural arguments in favor of affirmance. Because the school district prevails on the
merits, we do not address its subsidiary procedural arguments.
D E C I S I O N
Based on the plain meaning of retirement contributions or benefits, the school
district did not commit an unfair labor practice when it refused to meet and negotiate over
the selection of a single vendor to provide 403(b) plans. Accordingly, the district courts
judgment is affirmed.
Affirmed.
 

 
 
 

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