U.S. Court of Appeals rebukes Rowland, rules that ’03 layoffs were punitive

In a decision with far-reaching political and legal implications, a federal appeals court has concluded that former Gov. John G. Rowland illegally discriminated against union employees when ordering 2,800 layoffs soon after his election to a third term in 2002.

The U.S. Court of Appeals for the Second Circuit faulted Rowland for exclusively eliminating union jobs when the Republican governor was confronting a budget deficit. The unions claimed that Rowland made cuts to coerce and punish, not balance the budget.

The unanimous decision by a three-judge panel in New York is a victory for public-employee unions at a time when union rights are under political attack, with consequences for Connecticut politics and more broadly for public-sector labor-management relations.

It reverses U.S. District Judge Alfred V. Covello’s dismissal of the case, finds for the unions as a matter of summary judgment and orders the U.S. District Court in Hartford to now determine damages. The decision was reached Friday and publicized Monday.

“This is a very important decision, given what’s going on with public-employee unions around the country,” said David Golub, a well-known plaintiffs’ attorney who is representing a coalition of state employee unions.

Golub said the decision reinforces the constitutional free-speech rights of unionized employees.

Management disarmed

But Marc S. Ryan, who oversaw labor and fiscal issues as Rowland’s secretary of policy and management, said the decision takes away management’s only weapon when seeking concessions -– the threat of layoffs.

“This decision really has far-reaching national implications. It really is something that every city and town and county and state are going to have to look at,” said Ryan, a defendant in the suit. “This decision essentially ties the hands of every mayor, county executive, commissioner or governor.”

The decision is binding on the Second Circuit, which covers Connecticut, New York and Vermont. It was issued by Judges Reena Raggi, Gerard E. Lynch and Denny Chin. Raggi was appointed by President George W. Bush, Lynch and Chin by President Obama.

On one level, the decision is a reprimand to Rowland, a governor forced to resign in the face of a corruption investigation and impeachment inquiry in 2004, and gives unions a chance to celebrate a victory over an old foe, who technically faces the prospect of paying personal damages.

“The Second Circuit Court’s opinion shows that Rowland’s treatment of public service workers as the enemy is costly and destructive –- to the workers and the vital public services they provide, and to every taxpayer,” said Daniel Livingston, the chief negotiator for the State Employees Bargaining Agent Coalition.

But it also poses an awkward situation for a Democratic successor, Gov. Dannel P. Malloy, who went through his own layoff and concession battle in 2011 and will need union support for re-election in 2014.

Will the governor, who never was shy about defending management rights in his 14 years as mayor of Stamford, see reason to appeal the case as an infringement on management prerogatives?

“The state will review the decision with our outside counsel and the Office of the Attorney General to determine what next steps the State may take in this matter. We are reserving further comment on this case until that deliberative process is completed,” said Andrew Doba, a spokesman for Malloy.

Daniel J. Klau, the state’s outside counsel, declined comment.

Rowland, who is now an afternoon drive-time talk show host on WTIC-AM, issued a written statement urging  Malloy, whom he regularly skewers on the air, to appeal in the defense of management rights.

“This appeal would be on behalf of future governors, mayors, first selectmen and most importantly the taxpayers of this state,” Rowland said.

In a teleconference with reporters, Malloy seemed amused at the advice from Rowland. He said he still assessing the decision, but he seemed not to see the same threat.

“There is a roadmap within the decision for that which is permissible and that which is not permissible. And quite clearly the governor crossed a line,” Malloy said.

Malloy said his own concession negotiations were proper.

“As you know, in my own dealings I chose negotiation as opposed to the method that was engaged by my predecessor,” Malloy said. “Some people thought I shouldn’t have done that, but being a lawyer — and having some basic understanding of labor law after 14 years of being mayor — I felt that that’s the course that I had to take.”

In an interview, Golub said the decision does not intrude on management rights to the degree claimed by Rowland and Ryan. He noted that Lowell P. Weicker Jr., who preceded Rowland, and Malloy each have threatened layoffs to seek concessions.

The difference, he said, is that Weicker and Malloy did not make public statements about a desire to punish unions, and both administrations ensured that the burden of cutbacks was shared.

Golub said Rowland displayed a “smack-you-in-your-face arrogance -– we can do whatever we want.”

“There was no inquiry as to state staffing needs. It was based upon what Rowland thought was necessary to pressure the unions.”

But doesn’t every negotiation for concessions involve trying to pressure the other side, with management’s key weapon the threat of layoffs?

Golub conceded it does, but the context in which that threat is made has significance and consequence.

“You can say, ‘I need concessions, and if you don’t I am going to do layoffs, and because unions represent 80 percent of the workforce, you can anticipate the union members will bear the brunt.’ You can say that. That’s perfectly legitimate,” Golub said.

In its decision, the court agreed.

“State officials may certainly bargain hard with state employees. Indeed…a state need not recognize or bargain collectively with employee unions at all,” the court said. “But for a state to fire union members – and union members alone – in the hope of ultimately achieving economic concessions is a little different from refusing to hire union members in the first place.”

Over the line

Golub said Rowland crossed a line by crafting a layoff plan designed to punish unions, many of which had opposed his re-election. In some cases, probationary employees for identical positions were selected for dismissal based solely on union status, he said.

The layoffs did nothing to help the state balance the budget in 2003, he said.

The court decision was based on facts stipulated on 2010 by the unions and the defendants, which then included the administration of Gov. M. Jodi Rell, who succeeded Rowland and preceded Malloy.

Ryan said the stipulated facts gave the court an incomplete picture of the fiscal challenges faced by Rowland. For one thing, he said, the layoffs were intended to save money over several years.

“What they did was essentially render a decision on a set of stipulated facts that clearly did not tell the whole story and did not have the context of what happens in Connecticut,” Ryan said.

Connecticut was facing a structural deficit projected to reach $2.7 billion by the 2004-2005 budget year, he said.

The Rowland administration issued 2,800 layoff notices in the beginning of 2003, but only 2,500 jobs were lost. The administration backed off from 300 layoffs in higher education after those employees agreed to other concessions.

By the end of 2003, more than 1,500 of the laid-off employees returned to state service, in part to fill a portion of the 4,650 vacancies created by an early-retirement program.

Ryan said that change showed that the administration was open to savings other than those obtained by layoffs.

He also disputed that Rowland did not impose concessions on management. He froze their wages.

“I think it was a very balanced approach,” Ryan said. “It was not some political resolve to break unions. It was not that at all.”