Indiana Law Review


XI. Labor Law

Edward P. Archer*

The Indiana Supreme Court took the period covered by this
year's survey off from labor law cases. However, significant discus-

sions from the courts of appeals abound.

A. Teacher Bargaining

In Anderson Federation of Teachers v. Alexander,^ the court of
appeals addressed the question of the legality of an agency shop

clause under the Indiana teacher bargaining statute. The collective
bargaining agreement between the American Federation of Teach-

ers (AFT) and the Anderson Community School Corporation pro-
vided that all "members of the bargaining unit who are not also
members of the AFT have an obligation, as a condition of employ-
ment, to pay a representation fee to the AFT, in an amount equal to
the membership dues of the AFT less the cost of benefit [sic] provid-
ed solely for AFT members."^

This action was filed by Edna Alexander and 114 other Ander-
son Community School teachers seeking a declaratory judgment that
the agency shop agreement was invalid and asking for an injunction
against its enforcement.^ The trial court held that this agency shop
agreement exceeded the Anderson schools' authority as it could find
no express statutory authority for the school corporation to enter

into an agency shop agreement/
The parties were in agreement that the Teacher Tenure Act^ es-

tablished the sole grounds for termination of a tenured Indiana

teacher. However, they and the amicus participants (Indiana State
Teachers Association (ISTA) and the Indiana School Boards Associa-

tion (ISBA)) differed as to whether under the agency shop agree-
ment, failure to pay the representation fee would constitute a basis
for termination of a tenured teacher. The AFT argued that such a
conclusion would be premature.^ The ISTA argued that failure to
pay the representation fee would constitute "good and just cause"

*Professor of Law, Indiana University School of Law — Indianapolis. B.M.E.,
Rensselaer Polytechnic Institute, 1958; J.D., Georgetown University, 1962; LL.M.,
1964. The author wishes to extend his appreciation to S. Andrew Bowman for his
assistance in the preparation of this Article.

'416 N.E.2d 1327 (Ind. Ct. App. 1981).

*/d. at 1329 (emphasis in original).

7d at 1328.
*I<L at 1329.

»IND. Code §§ 20-6.1-4-10 to -14 (1976).
•416 N.E.2d at 1330.

269



270 INDIANA LAWREVIEW [Vol. 15:269

for dismissal of a tenured teacher under the Tenure Act.^ Alexander

and the ISBA argued that the phrase "condition of employment"
could only mean that the failure to pay the representation fee would
constitute an additional ground for discharging teachers.®

The court of appeals first held that the phrase "as a condition of
employment" in this context was unambiguous and called for the
discharge of teachers not meeting this condition.^ To determine the
validity of the agency shop clause, the court of appeals turned to the

1973 Certified Educational Employee Bargaining Act (CEEBA)/° The
court found that the first section of CEEBA," which notes differ-
ences between school-teacher and private employer-employee rela-

tionships, coupled with the more concrete sections 3 through 6 of
the CEEBA, limited the range of collective bargaining between
teachers and school corporations/^ In particular, the court noted the

Ud. (referring to Ind. Code § 20-6.1-4-10(aK6) (1976)).
«416 N.E.2d at 1330.

'Id.

'"Ind. Code §§ 20-7.5-1-1 to -14 (1976).

"/d § 20-7.5-l-l(d). The first section of the CEEBA provides in part:
The relationship between school corporation employers and certificated

school employees is not comparable to the relation between private

employers and employees among others for the following reasons: (i) a
public school corporation is not operated for profit but to insure the citizens

of the State rights guaranteed them by the Indiana State Constitution;

(ii) the obligation to educate children and the methods by which such educa-

tion is effected will change rapidly with increasing technology, the needs of

an advancing civilization and requirements for substantial educational innova-

tion; (iii) the Indiana General Assembly has delegated the discretion to

carry out this changing and innovative educational function to the local

governing bodies of school corporations, composed of citizens elected or ap-

pointed under applicable law, a delegation which these bodies may not and
should not bargain away; and (iv) public school corporations have different

obligations with respect to certificated school employees under constitutional

and statutory requirements than private employers have to their employees.

'^Id. § 20-7.5-1-3 provides in part:

[Sjchool employers and school employees shall have the obligation and

the right to bargain collectively the items set forth in Section 4, the right

and obligation to discuss any item set forth in Section 5 and shall enter into

a contract embodying any of the matters on which they have bargained col-
lectively. No contract may include provisions in conflict with (a) any right or
benefit established by federal or state law, (b) school employee rights as

defined in Section 6(a) of this chapter, or (c) school employer rights as defined

in Section 6(b) of this chapter. It shall be unlawful for a school employer to

enter into any agreement that would place such employer in a position of

deficit financing as defined in this chapter, and any contract which provides

for deficit financing shall be void to that extent and any individual teacher's

contract executed in accordance with such contract shall be void to such ex-

tent.

Id. § 20-7.5-1-4 commands that:
A school employer shall bargain collectively with the exclusive repre-

sentative on the following: salary, wages, hours, and salary and wage related



1982] LABOR LAW 271

section 3 prohibition against the parties agreeing to any provision in
conflict with the parties' section 6 rights and held that the school
corporation's section 6(b) duties to "suspend or discharge its employ-

ees in accordance with applicable law" and to "relieve its employees
from duties because of lack of work or other legitimate reason" in
the sole discretion of the school corporation, may not be restricted
by a collective bargaining agreement.^^

In this regard the court concluded that:

The decision, then, of whether to retain or dismiss a
teacher has been designated by the legislature as being the

fringe benefits. A contract may also contain a grievance procedure
culminating in final and binding arbitration of unresolved grievances, but

such binding arbitration shall have no power to amend, add to, subtract from

or supplement provisions of the contract.

Id. § 20-7.5-1-5 provides as follows:

(a) A school employer shall discuss with the exclusive representative
of certificated employees, and may but shall not be required to bargain col-
lectively, negotiate or enter into a written contract concerning or be subject

to or enter into impasse procedures on the following matters: working condi-

tions, other than those provided in Section 4; curriculum development and

revision; textbook selection; teaching methods; selection, assignment or pro-

motion of personnel; student discipline; expulsion or supervision of students;

pupil-teacher ratio; class size or budget appropriations: Provided, however.

That any items included in the 1972-1973 agreements between any employer

school corporation and the employee organization shall continue to be

bargainable.

(b) Nothing shall prevent a superintendent or his designee from mak-

ing recommendations to the school employer.

Id. § 20-7.5-1-6 provides in part:

(a) School employees shall have the right to form, join or assist

employee organizations, to participate in collective bargaining with school

employers through representatives of their own choosing and to engage in
other activities, individually or in concert for the purpose of establishing,

maintaining, or improving salaries, wages, hours, salary and wage related
fringe benefits and other matters as defined in Sections 4 and 5.

(b) School employers shall have the responsibility and authority to

manage and direct in behalf of the public the operations and activities of the

school corporation to the full extent authorized by law. Such responsibility

and activity shall include but not be limited to the right of the school

employer to:

(1) direct the work of its employees;

(2) establish policy;

(3) hire, promote, demote, transfer, assign and retain employees;

(4) suspend or discharge its employees in accordance with appli-

cable law;

(5) maintain the efficiency of school operations;

(6) relieve its employees from duties because of lack of work or

other legitimate reason;

(7) take actions necessary to carry out the mission of the public

schools as provided by law.

"416 N.E.2d at 1332 (quoting Ind. Code § 20-7.5-l-6(b) (1976)).



272 INDIANA LAWREVIEW [Vol. 15:269

sole province of school corporations. School corporations are

forbidden to encumber their discretion in this area, and in
particular, they may not make collective bargaining agree-
ments in which they undertake to fire an entire class of
teachers.

Thus, section 3(c) and 6(b) of the CEEBA plainly remove
the firing of teachers from the scope of collective bargaining.

The legislative intent found in section 1(d) takes on the sub-
stance of unambiguous command in sections 3 and 6.^*

The court rejected the AFT's assertion that its intent was to
collect such fees by bringing suit and not by insisting upon dismissal

of non-paying teachers, reasoning that the essence of the agency

shop agreement required the Anderson schools to discharge non-
paying teachers and that this requirement could not be severed

from the clause without rendering the clause meaningless.^^

The court concluded its opinion by highlighting its limitations as
follows:

Our conclusion that the entire agency shop provision
must fail is not to be taken as a criticism of prior decisions
as to the validity of union security agreements outside of a

school context. Nor do we suggest that such agreements be-
tween schools and teachers are invalid per se. We say only
that construing the provisions of the CEEBA in toto, they
forbid school corporations to make any collective bargaining
agreement — for union security purposes or otherwise — in
which the schools undertake the mandatory discharge of a
given class of teachers.^*

The court thus sustained the trial court's grant of summary
judgment to Alexander. Judge Buchanan wrote the opinion, and
Judges Sullivan and Shields concurred in the result without any ex-

planatory comment.
This is an important case because it clearly holds that under the

CEEBA teacher unions cannot negotiate agency shop agreements in
which teachers must pay the equivalent of union dues under penalty
of discharge. The discharge penalty is obviously important to the ef-
ficient collection of such payments from recalcitrant teachers. The
decision in this case leaves open the possibility of a less efficient col-

lection system under which the union could use court actions to com-

pel recalcitrant teachers to make payments. Such an agency shop

^*416 N.E.2d at 1332.

''Id. at 1333.

'^Id. (emphasis in original).



1982] LABOR LAW 273

clause would not be barred under the Teacher Tenure Act but could
possibly be found to be illegal under sections 7(1) or 7(3) of the

CEEBA." These issues await future litigation.

B. Bargaining for Other Public Employees

The courts of appeals addressed two significant cases relating to
collective bargaining for non-teacher public employees in Indiana.

Since Indiana Education Employment Relations Board v. Benton
Community School,^^ in which the supreme court declared the Indi-
ana Public Employees Bargaining Act^^ unconstitutional, there has

been no statutory authorization for bargaining for Indiana public

employees other than teachers. If the courts of appeals cases for the

past survey term set the trend, the need for a public employees'

bargaining bill is great if any meaningful bargaining is to occur.

In County Department of Public Welfare v. AFSCME,^^ the
County Welfare Department and the AFSCME entered into a con-
sent election agreement on May 21, 1975, just prior to the effective
date of the Public Employees Bargaining Act, which stated that if
the union won the election the employer would recognize it as the
exclusive bargaining agent and would begin negotiations on a con-

tract within fifteen days.

The union won the election, and the parties began negotiating in
early August and continued to bargain until January, 1976, at which

time the employer refused to bargain further pursuant to a request

from the State Welfare Director and the Director of Labor Relations

for the State Personnel Division who maintained that the employees
were state rather than county employees. Thereafter, in Benton
Community School the Indiana Supreme Court declared the Public
Employees Bargaining Act unconstitutional,^^ and the employer
declined to negotiate further. The union instituted this action to
compel the employer to bargain under principles of general contract

law.^^

^iND. Code § 20-7.5-l-7(a) (1976) provides:

It shall be an unfair practice for a school employer to:

(1) interfere with, restrain or coerce school employees in the exer-

cise of the rights guaranteed in Section 6 of this chapter.

(3) encourage or discourage membership in any school employee

organization through discrimination in regard to hiring or tenure of

employment or any term or condition of employment;

'«266 Ind. 491, 365 N.E.2d 752 (1977).

"IND. Code §§ 22-6-4-1 to -13 (1976).
^"416 N.E.2d 153 (Ind. Ct. App. 1981).
"266 Ind. at 507, 510, 365 N.E.2d at 760, 761.

2^16 N.E.2d at 154.



274 INDIANA LAWREVIEW [Vol. 15:269

The court of appeals distinguished Gary Teachers Union Local 4
V. School City of Gary^^ and East Chicago Teachers Union Local 511
V. Board of Trustees^^ in which the court had enforced a teacher col-
lective bargaining agreement, which predated CEEBA, by noting
that both of these teacher cases involved enforceability of collective

bargaining contracts as opposed to mere agreements to bargain and
that neither of these teacher cases presented a question as to the ef-

fect of the agreement upon employees who did not desire to have
the union as their agent.^^ Regarding this latter distinction, the

court stated that "[t]he common law of this state does not, of course,
grant to one group of individuals the right to impose their will upon
another group merely because the whole number work for the same
employer and the former group constitute something more than
50% of the total."^^

The court went on to assume, arguendo, that the board could
enter into an agreement for the employees who wanted the union to
speak for them. The court then questioned the effect of the election
agreement as an independent contract. The court's reasoning
becomes confusing at this point. First, the court noted that the con-
sent election agreement only required the parties to "begin negotia-
tions on a contract within 15 days" and concluded that the parties'

negotiations for several months fulfilled that requirement. The court
then stated that this conclusion was not altered by the consent
agreement language which called for recognition of the union as the
exclusive bargaining agent "in compliance with existing state and

federal laws" because "[w]ith the state statute declared unconstitu-

tional, there simply were no state or federal laws which applied to
permit the status referred to."^^

Judge Staton wrote a lengthy concurring opinion in which he re-

jected "[t]he majority's cursory (and perhaps inaccurate) contractual

analysis of the consent election agreement."^® Judge Staton viewed

the issue "as being whether county-level welfare employees may im-
pose a collective bargaining requirement upon an employment struc-
ture which is comprehensively regulated by an existing state merit

system."^^ Judge Staton noted that the State Personnel Act and the

merit system placed terms of employment essential to bargaining
within the control of the State Personnel Board and concluded that

'^52 Ind. App. 591, 284 N.E.2d 108 (1972).
=="153 Ind. App. 463, 287 N.E.2d 891 (1972).

'me N.E.2d at 155.
''Id.

'Ud. at 156.

'Ud. at 156-57 (Staton, J., concurring).

''Id. at 157.



1982] LABOR LAW 275

the county departments and the State Personnel Board functioned

as an integrated enterprise for purposes of negotiating a collective

bargaining agreement.^" Referring to Fort Wayne Patrolman*s Bene-
volent Association, Inc. v. City of Fort Wayne,^^ Judge Staton
pointed out that the county department lacked managerial authority

over the terms of employment which were the intended subjects of
union negotiations and concluded, based upon conflicts he found be-

tween union proposals and the state merit system, that the union

was not entitled to specific performance of the consent election
agreement.^^ Judge Staton went on to emphasize:

My interpretation of the legal issues in this case should
not be construed as precluding any future bargaining be-

tween the Lake County Welfare Department and its employ-

ees should they decide to voluntarily negotiate again without

state participation. The county welfare department may
negotiate terms of employment over which they exercise
managerial control, i.e., working conditions. However, if the

county welfare department and its employees enter into

such negotiations, then they must manifest an intent to com-
ply with the state merit system guidelines established by

statute and administrative regulation. This latter prere-

quisite did not occur in the present case.^^

According to Judge Staton, an agreement to make an agreement
is enforceable if all the conditions of the contemplated agreement

are specified:

If the employees of the Lake County Welfare Depart-
ment intend to seek a consent election agreement which con-
tains the specific requirements of an enforceable contract,

then they must identify the proper governmental entity with
which to negotiate. Without the proper party, any collective

bargaining agreement negotiated by the parties would be
rendered a nullity.^'*

The majority opinion is far more sweeping in its impact. The
court apparently concluded that absent statutory authority no union

can serve as an exclusive representative of public employees in Indi-

ana. Judge Staton dealt with this position in footnote two in which

''Id.

^'Fort Wayne Patrolman's Benevolent Ass'n, Inc. v. City of Fort Wayne, 408
N.E.2d 1295, reh. denied with addVl opinion, 411 N.E.2d 630 (Ind. Ct. App. 1980).

'M16 N.E.2d at 160.

""Id.

'*Id. at 161.



276 INDIANA LAWREVIEW [Vol. 15:269

he cited persuasive Indiana authority for the proposition that even

absent statutory authority a public employer may enter into a col-
lective bargaining agreement providing for exclusive representation

of all employees by their majority representative.^^

The majority opinion could simply have been that the consent
election agreement was in fact complied with because the agreement
required only that the board begin negotiations with the union. The
parties did in fact negotiate for several months, apparently without

agreement, before the board refused to bargain further. The court
recognized that "[w]hat is critical is that the agreement required no
more."^^

The court then, however, concluded that the language in the in-
strument was "at most an agreement to make an agreement."^^
Judge Staton, in his concurring opinion, accepted this analysis.^®
This analysis, however, is contrary to customary labor relations ex-

perience. The consent agreement in this case was an agreement to
bargain, not to agree. Even under the National Labor Relations
Act,^^ parties are only required to bargain in good faith, not to agree

to a proposal or to make a concession."*" Such is the common under-
standing in labor relations.

The Indiana Supreme Court acknowledged in Benton Commu-
nity Schools that the Indiana Public Employee Bargaining Act
(IPEBA) was largely patterned after the NLRA.''^ Because the con-
sent election agreement in this case was entered into with the ex-
pectation that the IPEBA would apply to the continuing relationship
between the parties, it is likely that the agreed intent of the parties
was that they bargain to seek to reach an agreement, not that they
agree to make an agreement. If this analysis is correct, this portion
of the reasoning of both the majority and concurring opinion fails.

Judge Staton's concern that the union was seeking to bargain
matters which were not within the control of the county board is
valid. Clearly, the county board would have no authority to nego-

tiate changes in the terms and conditions of employment dictated
under state statutory authority. However, Judge Staton concluded

^^Id. at 158 n.2. In addition to Gary Teachers and East Chicago Teachers, Judge
Staton cited Weest v. Board of School Commissioners, 162 Ind. App. 614, 320 N.E.2d
748 (1974) for the proposition that a public employee may enter into a collective
bargaining agreement providing for exclusive representation of all employees by their
majority-elected representative.

^M16 N.E.2d at 156.

'Ud.

^Ud, at 160 (Staton, J., concurring).

^^29 U.S.C. §§ 151-169 (1976 & Supp. Ill 1979).
''Id. at § 158(d) (1976).

"266 Ind. at 500, 365 N.E.2d at 756.



1982] LABOR LAW 277

that the county board could negotiate terms of employment over
which it had managerial control/^ If this is true, the agreement in

this case to bargain should have been enforced to compel bargaining

for a reasonable period of time with regard only to the terms and

conditions of employment within the managerial control of the county
board.

In Fort Wayne Patrolman's Benevolent Association, Inc. v. City
of Fort Wayne y^^ the city disavowed a bargaining agreement nego-
tiated and executed by the mayor. The Patrolman's Benevolent
Association (PBA) brought this action to enforce the agreement. In

this case, the mayor had entered into an agreement which recog-
nized the PBA as the bargaining representative of all city patrol-
men. Two months later, the Fort Wayne Common Council passed a
resolution approving the recognition agreement. Thereafter, in

November, 1975, the mayor and the PBA bargained to an agreement
which was executed by two city negotiators and approved by the
mayor. In January, 1976, a new mayor assumed office and disaffirm-
ed the collective bargaining agreement.'*'*

Both the PBA and the city sought summary judgment. The PBA
argued that governmental entities have implicit authority to recog-

nize exclusive bargaining representatives of public employees, to

bargain collectively, and to enter into binding collective bargaining

agreements with such representatives."^

The trial court held that the exclusion of police from the Public
Employee Bargaining Act evidenced the legislature's intent to pro-
hibit police collective bargaining.'*^ After the trial court had issued

its opinion, the Indiana Supreme Court declared this Act unconstitu-
tional."^ The court of appeals considered the effect of this supreme
court ruling over the city's objection but affirmed the trial court's

summary judgment for the city on the grounds that the mayor had
acted beyond the authority of his office when he approved this
agreement."*®

The court assumed arguendo that the police could select a
bargaining representative to enter into a valid and binding collec-

tive bargaining agreement but rejected the PBA's contention that
the mayor had the authority to bind the city and held that the
failure of the Common Council precisely to ratify the agreement and

"416 N.E.2d at 160.

"408 N.E.2d 1295.

"M at 1298-99.
*Vd at 1299.

"Indiana Educ. Employment Relations Bd. v. Benton Community School Corp.,
266 Ind. 491, 365 N.E.2d 752 (1977).



278 INDIANA LAWREVIEW [Vol. 15:269

appropriate funds for its implementation and the failure of the
Board of Safety to ratify the agreement were fatal to the agree-
ment. The court stated:

Municipal corporations are creatures of the state. As
such, every party dealing with a municipality is bound to
take notice of the limitations on its powers and the laws
governing the municipality in making contracts. In dealing
with a city, you cannot plead ignorance of the laws and

thereby make valid an otherwise invalid agreement.^49

The court construed Indiana law as vesting the mayor with the
power to fix salaries of all employees of the city except the police,
whose salaries were to be fixed by the Common Council.^" The court
also held that the Common Council resolution approved recognition
of the PBA but did not authorize the mayor to enter into a collec-
tive bargaining agreement. Thus, "[t]he Mayor had neither the
statutory authority to bind the City to this agreement nor the
authority of the Common Council to act in their behalf and enter in-
to such an agreement" and "[a]s a result, the collective bargaining

agreement was void.""
The PBA petitioned for a rehearing seeking a ruling from the

court on numerous issues which the court did not address in its deci-
sion, including (as itemized by the court):

(1) whether policemen have a right to (a) select a collective

bargaining representative, (b) enter into collective bargain-

ing with municipalities, and (c) enter into collective bargain-

ing agreements; (2) whether the trial court was correct when
it interpreted the Indiana Public Employee Labor Relations
Act ... as prohibiting policemen from engaging in collective

bargaining, and (3) whether the trial court committed rever-

*«408 N.E.2d at 1301.

*'Id.

"^Id. at 1301-02. The court relied on Ind. Code § 18-2-1-10(6) (1976) which provides
that:

The salaries of each and every appointive officer, employee, deputy,
assistant and departmental and institutional head shall be fixed by the mayor

subject to the approval of the common council: Provided, That the provisions
of this subsection shall not apply to the manner of fixing and the amount of
compensation paid by any city to the members of the police and fire depart-
ments.

The court also cited id. § 18-1-11-2 which provides in part: "The annual pay of all
policemen . . . shall be fixed by ordinance of the common council; and it shall be lawful
in such ordinance to grade the members of such forces and to regulate their pay, not
only by rank, but by their length of service."

"408 N.E.2d at 1302.



1982] LABOR LAW 279

sible error when it entered summary judgment in favor of
the City of Fort Wayne based upon its interpretation of the
Public Employee Labor Relations Act.^^

The court refused to address these issues because a determination
of these issues would have no effect upon this litigation.^^

The PBA also contended that even if the mayor had no authori-
ty to agree to police wages, the remainder of the agreement should

be enforced. The court rejected this contention, holding that the
mayor had no authority to manage the police because the Common
Council had authority over police salaries and the Board of Public

Safety had the power to manage other affairs of the police.^* Finally,
the PBA argued that the city should be estopped from denying the
validity of the agreement because "the PBA should be able to rely
upon the City's authority to enter into a collective bargaining agree-

ment under these circumstances . . . ."^^ The court disposed of this
argument, noting that "it was not the City who we held had no
authority to enter into this agreement; it was the Mayor''^^

This case illustrates the very substantial difficulties incurred in

public sector bargaining without the benefit of an authorizing

statute. The court held that the city could enter into a collective
bargaining agreement regarding the terms and conditions of employ-
ment for police but that the mayor could not." If the court is cor-
rect, to enter into a bargaining agreement covering both wage
benefits and other terms and conditions of employment for police,
the PBA would have to negotiate with the Common Council regar-
ding wages and with the Board of Public Works regarding other
conditions of employment. Clearly, bargaining for police could not

take place directly with the Common Council or with the Board of
Public Works. Each of these entities would have to authorize a
representative to bargain on its behalf. Such authorization would ap-
parently be permissible because the court's opinion is based upon its
conclusion that the Common Council had not authorized the mayor
to enter into a collective bargaining agreement. The Board of Public
Works could also authorize the mayor to be its bargaining represen-
tative, or both the Common Council and the Board could designate
some other individual to bargain as their representative.

'Mil N.E.2d at 631 (citations omitted).

"M at 631-32.
^/d at 632.

^Hd. (emphasis in original).

"The court distinguished police from other city employees and noted that the

mayor has the authority to negotiate wages for city employees other than police. Id.



280 INDIANA LAWREVIEW [Vol. 15:269

The court makes clear that a resolution merely extending recog-
nition and endorsing a mayor's extension of recognition to a union

will not be construed as authorization to negotiate a collective

bargaining agreement. This holding of the court is strained, at least

insofar as it relates to the Common Council. The Common Council
resolution both extended recognition to the PBA and approved the
mayor's recognition of the PBA. Recognition could only lead to bar-
gaining. The Common Council must have been aware that the mayor
was bargaining on behalf of the city, yet it neither moved to reject
the mayor as its bargaining agent nor to appoint another agent to
represent it in bargaining. There is merit to the PBA's position that
implicit in the actions of the mayor and the Common Council in this
case was the authority to enter into a collective bargaining agree-
ment. Finally, the court's very restrictive interpretation of the

authority of public employers to bargain leads to the further ques-

tion of whether the court would require the Common Council to ap-
propriate funds to meet collective bargaining agreement commit-
ments if the agreement was negotiated by the proper city represen-
tatives.

The Public Welfare and City of Fort Wayne decisions both
reflect a retrenchment from prior decisions which permitted public

employee bargaining even absent statutory authorization.^® Clearly,

if bargaining is to take place under these decisions, the parties must
be extremely careful to obtain approval of any agreement reached

from all governmental bodies which control the public employees

covered by the agreement: executive, administrative, and perhaps

even legislative. An omission of approval from any of these sources
of governmental control could be fatal to any agreement reached,

particularly in public sector labor relations where agreements are
vulnerable to changes in political administrations.

C. Arbitration Appeals

While public sector bargaining ran into judicial head winds dur-

ing the survey period, the enforceability of arbitration awards
received strong judicial endorsement. The courts of appeal decided
numerous appeals from arbitration awards. The decisions generally
supported the parties' agreement to have arbitration serve as a
viable, relatively inexpensive means for final and binding resolution
of employee-management disputes.

^See, e.g., Weest v. Board of School Comm'rs, 162 Ind. App. 614, 320 N.E.2d 748

(1974); East Chicago Teachers Union Local 511 v. Board of Trustees, 153 Ind. App. 463,

287 N.E.2d 891 (1972); Gary Teachers Union Local 4 v. School City of Gary, 152 Ind.

App. 591, 284 N.E.2d 108 (1972).



1982] LABOR LAW 281

1. Public Employee Arbitration Cases. — Public employee cases
should be considered as a separate category from private employee

cases because the vast body of case law which has evolved over the

years construing section 301 of the Labor Management Relations
Act^* has no direct application to public employee cases.

Wagner v. KendaW^ involved a statutory state employee griev-
ance procedure^^ which authorized the employee to elect to appeal

the State Employee Appeal Board decision to arbitrate and provided
that ''[t]he arbitrator's findings and recommendations shall be bind-

ing on both parties and shall immediately be instituted by the com-

mission."®^

In Wagner, the arbitrator ruled for the employee, and the state

filed this action under the Indiana Uniform Arbitration Act (UAAP
to set aside the arbitrator's award as having been in excess of his
authority. The employee contended that review of an arbitrator's
decision under the statutory procedure would be under the Adminis-

trative Adjudication Act (AAA).®^ The court recognized that the
statutory grievance procedure was in the nature of an administra-
tive adjudication and that all steps of the procedure up to arbitra-

tion were clearly reviewable under the AAA.®^ Relying upon Illinois
case authority ,®® the court concluded first that arbitral resolution of

public employee grievances did not involve an illegal delegation of
administrative duties.®^ While the court acknowledged that judicial
review of such arbitration proceedings could fall under the literal

language of either the UAA or the AAA, the court held that the
more specific UAA statute should prevail.®^

^^29 U.S.C. § 185 (1976).

«"413 N.E.2d 302 (Ind. Ct. App. 1980).

^'Ind. Code § 4-15-2-35 (1976) provides in relevant part that:
If the recommendation of the commission is not agreeable to the

employee, the employee, within fifteen (15) calendar days from receipt of the

commission recommendation, may elect to submit the complaint to arbitra-
tion. The cost of arbitration shall be shared equally by the employee and the
state of Indiana. The commissioner of labor shall prepare a list of three (3)
impartial individuals trained in labor relations, and from this list each party

shall strike one (1) name. The remaining arbitrator shall consider the issues
which were presented to the commission and shall afford the parties a public

hearing with the right to be represented and to present evidence. The ar-
bitrator's findings and recommendations shall be binding on both parties and

shall immediately be instituted by the commission.

''Id. §§ 34-4-2-1 to -19.

""Id. §§ 4-22-1-1 to -30.

«^413 N.E.2d at 304.

^Board of Educ. v. Johnson, 21 111. App. 3d 482, 315 N.E.2d 634 (1974).

«M13 N.E.2d at 304.

«Vd. at 304-05 (citing County Council v. Department of Pub. Welfare, 400 N.E.2d

1187, 1190 (Ind. Ct. App. 1980)).



282 INDIANA LAWREVIEW [Vol. 15:269

State Department of Administration v. Sightes^^ involved an ar-
bitration award issued under the same state employee statutory
grievance procedure^" as was involved in Wagner. The grievants in
Sightes were teachers employed at the Indiana State Prison. By
statute, the prison was required to provide a salary schedule for
teachers "equal to that of the largest school system in the county of
location."^^ The arbitrator ruled that this statute required the state
to compute teacher income on the basis of public school teachers'
hourly rates rather than annual salaries and awarded back pay in ac-
cordance with this decision.^^

Under the UAA, an action to vacate an arbitrator's award must
be filed within ninety days after the award is mailed/^ and an action
to confirm an arbitrator's award can not be filed until after expira-
tion of that ninety-day period/^ After the state had waited longer

than ninety days without complying with the award, the teachers

brought this action to confirm and enforce the award. Moreover,

after the ninety-day period had expired, two other arbitrators
issued decisions addressing other grievances, the first involving

teachers in the same prison who had not been parties to the Sightes
arbitration and the second involving teachers in different systems.

Both these arbitrators declined to follow the Sightes arbitration

award, reasoning in the former case that the state's interpretation

of the statute calling for equal daily salary was permissible and, in
the latter, that "salary" was not synonymous with "hourly rate of
pay."^^

The state argued that: (1) the court had to consider these two
arbitration decisions which were in conflict with the award in this
case, and (2) enforcement of the award in this case would require the
state to violate the statutory requirement that teachers be paid

equally .^^

The court ruled that:

The role of an appellate court in reviewing an arbitra-
tion award is limited to determining whether the defendant
has established any of the grounds for challenge permitted

by the Uniform Arbitration Act — in this case, the grounds
for vacating an award provided in IC 34-4-2-13 .... Further-

«^416 N.E.2d 445 (Ind. Ct. App. 1981).

^"IND. Code § 4-15-2-35 (1976).
"M § 11-1-1.1-30 (repealed effective Oct. 1, 1980).
^'416 N.E.2d at 447.

'^IND. Code § 34-4-2-13 (1976).
'*Id. § 34-4-2-12.

^^416 N.E.2d at 447.

''Id. at 449.



1982] LABOR LAW 283

more, a defendant who has a valid ground for challenging an
award but who fails to raise that challenge within the 90 day
time limit should not be permitted to raise that challenge

when the plaintiff applies for confirmation of his award ....
The state did not avail itself of its statutory remedies prior
to the teachers' application for confirmation of the [ar-

bitrator's] award."

The court also held that the lower court was correct in not tak-
ing into account the later conflicting arbitration awards and that the

state had failed to timely raise its defense of illegality in being

bound by an arbitrator to pay the teachers in this case differently

from other teachers. The court enforced the arbitrator's award.^®
In short, the Wagner and Sightes cases establish the applicability

of the UAA to public employer-employee disputes under statutory
grievance procedures. Wagner holds that such statutory arbitration
is not an unconstitutional delegation of legislative authority.'^

Sightes establishes that defenses to enforcement of such arbitration

awards must be raised in court within ninety days after the mailing

of the award or they can not be considered by the court.*" Interest-
ingly, in Sightes the court applied this rule even to defenses which

could not have been raised within the ninety-day period because the

conflicting arbitration awards did not issue until that period had ex-

pired. These two cases solidly establish the UAA as the sole source
of appeal from an enforcement of such arbitrators' awards.

2. Private Employer Arbitration Cases. — Chauffeurs, Team-
sters, Warehousemen and Helpers Local 135 v. Jefferson Trucking
Co.^^ involved an action under section 301 of the LMRA to enforce
an arbitration award under a collective bargaining agreement. The
Seventh Circuit held, as did the Sightes court, that under the Indi-

ana Uniform Arbitration Act, an unsuccessful party in arbitration

must file a motion to vacate within the ninety-day period or be barred
from prosecuting its claim to invalidate the award.*^ The court of ap-
peals also held that the UAA statute of limitations was enforceable
in derogation of the common law rule that statutes of limitations do
not run against pure defenses.®^ In this regard the court reasoned

that section 301 actions are statutory actions and because "the

"M at 450 (citations omitted).
''Id.

'M13 N.E.2d at 304.
«°416 N.E.2d at 450.
«^628 F.2d 1023 (7th Cir. 1980), cert denied, 101 S. Ct. 942 (1981).

'^Id. at 1026-27 (citing Ind. Code §§ 34-4-2-12 to -13 (1976)).
%28 F.2d at 1027.



284 INDIANA LAWREVIEW [Vol. 15:269

statute giving the right fixes the time period within which the right

may be enforced, the time so fixed becomes a limitation on such
right;'«^

In Indianapolis Public Transit Corp, v. Transit Local 1070,^^ the

court of appeals enforced an arbitrator's award and rejected the
employer's defense that the neutral arbitrator of a tripartite arbitra-

tion board had refused to grant it a continuance and had proceeded

with the hearing in the absence of the employer's arbitrator over

the employer's objection.

The UAA provides as one ground for vacating an arbitrator's
award the arbitrator's refusal to postpone the hearing upon suffi-
cient cause being shown.®* Despite this language of the UAA, the
court found that the central issue in this case was whether the em-
ployer was prejudiced substantially by the arbitrator's decision to
proceed with the hearing in the absence of the employer's arbitra-

tor.®^ The court noted that only the employer presented evidence
during the employer arbitrator's absence, that the employer's arbi-

trator was present for the presentation of critical evidence with
which he was unfamiliar, that counsel represented the employer in
presenting the case, and that the employer arbitrator had the tran-

script of the hearing and participated in all the subsequent negotia-

tions and executive sessions. Under these facts the court stated it
could not see how the employer had been substantially prejudiced
by the neutral arbitrator's actions and thus upheld the trial court's

decision granting summary judgment in favor of the union.®®
Under this series of cases, it is clear that the UAA will establish

the procedural rules for judicial review for both public and private

employee arbitration cases. Defenses to arbitration awards under
the UAA must be raised within ninety days of the mailing of the
award or they will be barred.®^ Under Indianapolis Public Transit,
procedural defenses which are within the stated grounds for vacat-

ing an arbitrator's award under the Act which are timely raised will
serve as the basis to set aside the award only if the arbitrator's pro-

*Vd. (citing Textile Workers Union of America v. Lincoln Mills of Alabama, 353
U.S. 448, 466 (1957) (Frankfurter, J., dissenting)).

«^414 N.E.2d 966 (Ind. Ct. App. 1981).

««IND. Code § 34-4-2-13(a)(4) (1976).
'^414 N.E.2d at 969. The court noted that "the issue is not whether Chairman

Loretz could have granted a continuance, nor simply whether he erred in failing to do
so, but rather whether such error, if any, prejudiced substantially Transit's rights." Id.

''Id.

^Thauffeurs, Teamsters, Warehousemen, and Helpers Local 135 v. Jefferson
Trucking Co., 628 F.2d 1023 (7th Cir. 1980), cert, denied, 101 S. Ct. 942 (1981); Depart-
ment of Admin, v. Sightes, 416 N.E.2d 445 (Ind. Ct. App. 1981); Wagner v. Kendall, 413
N.E.2d 302 (Ind. Ct. App. 1980).



1982] LABOR LAW 285

cedural error substantially prejudiced the party seeking to set aside

the award.^"

D. Unemployment Compensation

In Thomas v. Review Board,^^ the United States Supreme Court
overturned the Indiana Supreme Court's interpretation and applica-
tion of the disqualifying provisions of the Indiana Employment
Security Act.^^ The Court held that the Act could not constitutional-
ly be construed to deny unemployment benefits to an employee who
quits his employment because of his religious beliefs.^^

The facts underlying this case are important to an understand-
ing of its significance. Thomas was initially hired to work in a roll
foundry fabricating steel for general industrial use. When the foun-
dry closed, he was transferred to a department which fabricated tur-
rets for tanks. Thomas, a Jehovah's Witness, was concerned about
whether working on weapons was contrary to his religious beliefs.
Despite a fellow employee Jehovah's Witness' opinion that working

on weapons was not ''unscriptural", Thomas concluded that he could
not work on weapons without violating his religious beliefs and vol-
untarily terminated his employment. At the unemployment compen-
sation hearing, Thomas explained that he could, in good conscience,
engage indirectly in the production of materials that might be used

ultimately to fabricate arms as he had in the roll foundry.^"*
The Indiana Supreme Court upheld the Security Division's

denial of unemployment benefits to Thomas and concluded first that
Thomas' belief was more a philosophical choice than a religious
belief and, alternatively, that even if Thomas quit for religious
reasons, he would not be entitled to benefits under the Indiana Act

because a termination motivated by religion is not for **good cause"

objectively related to the work.^^

The Supreme Court based its reversal of the Indiana court's
decision on Sherbert v. Verner,^^ noting that "religious beliefs need

not be acceptable, logical, consistent, or comprehensible to others to

merit First Amendment protection."^' The court noted that Thomas
had drawn a line between direct and indirect production of weapons
and that it was not for the courts to say what was a reasonable

»°414 N.E.2d at 969.

"49 U.S.L.W. 4341 (April 6, 1981).

»^ND. Code § 24-4-15-1 (1976).
»«49 U.S.L.W. at 4345.

"/d at 4342.

•Thomas v. Review Bd., 391 N.E.2d 1127, 1131 (Ind. 1979).
••374 U.S. 398 (1963).
•^49 U.S.L.W. at 4343.



286 INDIANA LAWREVIEW [Vol. 15:269

line.^® The court also found the contrary opinion of the other
employee Jehovah's Witness not to be controlling, noting that "the
guarantee of free exercise is not limited to beliefs which are shared

by all members of a religious sect."^^ The court defined the "narrow
function of a reviewing court in this context" as being "to determine

whether there was an appropriate finding that the [employee] ter-
minated his work because of an honest conviction that such work
was forbidden by his religion."^"" On this record the court concluded
that Thomas had terminated his employment for religious reasons/"^

Relying upon Sherbert, the court concluded that a person could

not be denied unemployment compensation for quitting work
because his work became religiously objectionable. ^°^ The court
noted that:

Where the state conditions receipt of an important
benefit upon conduct proscribed by a religious faith, or

where it denies such a benefit because of conduct mandated
by a religious belief, thereby putting substantial pressure on

an adherent to modify his behavior and to violate his beliefs,

a burden upon religion exists. While the compulsion may be
indirect, the infringement upon free exercise is nonetheless

substantial.^"^

Another significant unemployment compensation case during the
survey period was Warner Press, Inc. v. Review Board,^^* in which
the court of appeals upheld established precedent permitting strik-

ing claimants to recover unemployment benefits for periods after
their employer has hired replacements to restore or continue its

operations. In this case the employer hired replacements for the

strikers and contined its operations virtually unaffected by the

strike. The Employment Security Act provides in pertinent part as
follows: "An individual shall be ineligible for waiting period or
benefit rights: for any week with respect to which . . . his . . .
unemployment is due to a stoppage of work which exists because of
a labor dispute . . . ."^°^

The court in Warner Press focused on the meaning of "stoppage
of work." The court followed ample Indiana and out-of-state prece-

'''Id. at 4344.

'''Id.

"'Id.

"Ud.

^"^13 N.E.2d 1003 (Ind. Ct. App. 1980).

^"^IND. Code § 22-4-15-3 (1976 & Supp. 1981).



1982] LABOR LAW 287

dent^°^ in concluding that "stoppage of work" meant a cessation or
substantial curtailment of the employer's business rather than the

cessation of an individual employee's labor/"^ As the employer's
operations were not substantially curtailed by the strike because of
its success in hiring replacements, the court held that there was no
"stoppage of work" within the meaning of the Act and that the
claimants were not barred from obtaining benefits by this portion of
the Act.^°® Judge Hoffman concurred, relying upon Jackson v.
Review Board^^^ which he found to be directly on point."" Judge Gar-
rard dissented, recognizing that Jackson was on point, but contend-
ing that it had been wrongly decided/"

E. Strike Injunction Enforcement

Bottoms V. B <& M Coal Corp.^^^ involved a contempt action for
violations of a restraining order issued during a period of intense

and occasionally violent labor strife in southern Indiana. B & M Coal
was a non-union coal loading facility which operated during a United
Mine Workers' strike. When its drivers were harassed by union
members, B & M sought a temporary restraining order (TRO) and
injunction from the trial court. The trial court issued a TRO forbid-
ding members of the UMW to harass or impede B & M drivers. An
amended TRO was issued which limited the union to three pickets
per site. Copies of the TRO were served on the UMW district head-
quarters and its attorney. The TRO was read to striking miners at
various coal mines by the local sheriff, and copies were passed out
to strikers.

A month later, 400-500 strikers "raided" the B & M coal-loading
facility. The raid occurred at night, and the strikers were heavily
armed. Before the police arrived, over $173,000 in damages had been
inflicted upon B & M equipment and vehicles. The sheriff and a
deputy observed the entire incident from a nearby unmarked car.
State police were called in and roadblocks were set up to stop the
raiders. One hundred and ninety-one men were thus arrested and
were named individual defendants together with the union in this
contempt action."^

"""See, e.g., Jackson v. Review Bd., 138 Ind. App. 528, 215 N.E.2d 355 (1966);
Carnegie-Illinois Steel Corp. v. Review Bd., 117 Ind. App. 379, 72 N.E.2d 662 (1947);
Annot., 61 A.L.R.3d 693 (1975).

'''US N.E.2d at 1005-06.

'''Id.

''"138 Ind. App. 528. 215 N.E.2d 355 (1966).
""413 N.E.2d at 1006 (Hoffman, J., concurring).

"7d at 1007 (Garrard, J., dissenting).
"=^405 N.E.2d 82 (Ind. Ct. App. 1980).

"7d at 86-87.



288 INDIANA LAWREVIEW [Vol. 15:269

The trial court held both the union and the 191 men in contempt
of the TRO and ordered them to pay B & M damages, stating that if
they failed to pay the damage^ within ten days, each defendant
would be sent to jail until the damages were paid in full."^

The court of appeals deleted the incarceration order in the event
that damages were not paid within ten days as an unlawful "prede-
termination of a penalty for noncompliance.""^ It upheld service of

the TRO on the 191 individual defendants, recognizing the general
rule that a TRO must be served on the person or persons restrained
but finding that the instant individual defendants fell under an ex-

ception to that rule as there was ample proof that they had actual
knowledge of the restraining order."^

The court dismissed the union as a defendant because there was
no evidence that it, as a separate entity, was a participant in the
raid. No union officers or employees were among those arrested or
shown to be present at the raid. The court followed the rule that a
union may be held liable only under the traditional doctrines of
agency."^ In contrast, however, the court found ample evidence that

the 191 individual defendants were organized and acted jointly in
conducting the raid and that their actions caused the damages B & M
incurred from the raid."^ Finally, the court remanded the case for
reconsideration of some of the damages assessed by the trial court
against the defendants which it found unsupported by the record."®

Bottoms establishes the civil contempt action as a viable means
for collecting damages from violent strikers. Success in such an ac-
tion will hinge upon care in assuring that potential defendants are

served notice of the provisions of the restraining order or at least

that all those who may violate the order can be established as hav-
ing had actual knowledge of the order.

"*/d at 87.

"^M at 88 (citing Thomas v. Woollen, 255 Ind. 612, 266 N.E.2d 20 (1971); Caito v.
Indianapolis Produce Terminal, 162 Ind. App. 590, 320 N.E.2d 821 (1974)).

""405 N.E.2d at 89 (citing Shaughnessey v. Jordan, 184 Ind. 499, 111 N.E. 622
(1916); iND. R. Tr. p. 65(D)).

"M05 N.E.2d at 90 (citing United Mine Workers of America v. Gibbs, 383 U.S. 715
(1966); Mason-Rust v. Laborers Int'l Union Local 42, 435 F.2d 939 (8th Cir. 1970)).

"«405 N.E.2d at 91.

"«M at 96.