August 10, 2010 – National Union of Hospital and Health Care Employees District No. 1199 New Mexico, AFL-CIO, CLC v. Board of Regents of the University of New Mexico, contracting with Plaintiff as University Hospital, No. 28,960

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: August 10, 2010
NO. 28,960

NATIONAL UNION OF HOSPITAL
AND HEALTH CARE EMPLOYEES
DISTRICT NO. 1199 NEW MEXICO,
AFL-CIO, CLC,

Plaintiff-A ppellant,
V.

THE BOARD OF REGENTS OF
THE UNIVERSITY OF NEW

MEXICO, contracting with
Plaintiff as University Hospital,

Defendant- Appellee.

APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Linda M. Vanzi, District J udge

Youtz & Valdez, P.C.
Shane Y outz

Albuquerque, NM

for Appellant

Rodey, Dickason, Sloan, Akin & Robb, P.A.
Thomas L. Stahl
Edward Ricco
Jocelyn Drennan
Albuquerque, NM
for Appellee

OPINION
SUTIN, Judge.
{1} 	This case arose from a public sector collective bargaining impasse arbitration
proceeding under the New Mexico Public Employee Bargaining Act (PEBA), NMSA
1978, §§ 10-7E-1 to -26 (2003, as amended through 2005), and a resolution called the
University of New Mexico Labor Management Relations Resolution, Section 15,
Negotiations and Impasse Resolution (the LMRR). The parties are National Union
of Hospital and Health Care Employees District No. 1199 New Mexico, AFL-CIO,
CLC (the Union) and the Board of Regents of the University of New Mexico (the
University) acting for its hospital (the Hospital).
{2} 	The arbitration award favored the Union, and the Union sued to confirm the
award under the New Mexico Uniform Arbitration Act, NMSA 1978, §§ 44-7A-1 to
-32 (2001). 	The Hospital sought to vacate the award claiming that the arbitrator
lacked jurisdiction to enter it and either engaged in misconduct or exceeded his
authority in conducting the impasse arbitration. The Hospital also claimed that an
employee bonus contained in the award would require the Hospital to violate public
policy. 	The district court vacated the award and denied the Union’s motion for
reconsideration, and the Union brought this appeal. 	We affirm the district court’s
order, judgment, and decree vacating the award and determining it to be of no further

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effect.
BACKGROUND
The Parties’ Negotiation and Mediation
{3} 	The parties engaged in negotiations to reach a new collective bargaining
agreement when their existing one neared expiration in April 2007. The negotiations
were conducted pursuant to the LMRR, which was a resolution promulgated by the
University consistent with the PEBA and governing labor relations between the
Hospital and its employees. 	See § 10-7E-26(B) (authorizing a public employer to
adopt a resolution to govern collective bargaining); LMRR § 15(A), (B). The parties
arrived at an impasse and, pursuant to the PEBA and the LMRR, they engaged in
mediation. Section 10-7E-18(B)(1); LMRR § 15(C)(1). The Union made its last offer
in mediation on October 18, 2007. The Hospital responded with a counterproposal
on October 25, 2007. When the Union did not respond, the Hospital on November 6,
2007, made what it apparently labeled its “last, best and final offer,” which was
substantively the same as its October 25, 2007, offer. The mediation ended without
the parties reaching agreement, which moved the parties to impasse arbitration.

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Final-Offer, Binding Arbitration Under the PEBA and the LMRR
{4} 	The PEBA requires final, binding arbitration as an impasse procedure for public
employers and employee representatives whose impasse in negotiations cannot be
successfully resolved through mediation. 	Section 10-7E-18(B)(2); Int’l Ass’n of
Firefighters, Local 1687 v. City of Carlsbad, 2009-NMCA-097, ¶ 1, 147 N.M. 6, 216
P.3d 256, cert. denied, 2009-NMCERT-007, 147 N.M. 363, 223 P.3d 360; City of
Deming v. Deming Firefighters Local 4521, 2007-NMCA-069, ¶ 22, 141 N.M. 686,
160 P.3d 595. The PEBA provides for arbitration “if the impasse continues after a
thirty-day mediation period.” Section 10-7E-18(B)(2). Similarly, the LMRR provides
for arbitration “if the impasse continues after thirty . . . calendar days.” 	LMRR
§ 15(C)(2).
{5} 	The PEBA and the LMRR require the arbitrator to render a final, binding,
written decision resolving unresolved issues no later than thirty days after notification
to the arbitrator of his selection by the parties. 	Section 10-7E-18(B)(2); LMRR
§ 15(C)(2). Arbitrator Paul Gerhart was notified by letter dated November 7, 2007,
of his selection. The PEBA and the LMRR state that “[t]he arbitrator’s decision shall
be limited to a selection of one of the two parties’ complete, last, best offer.” Section
10-7E-18(B)(2); LMRR § 15(C)(2).
{6} 	The foregoing impasse-arbitration procedure is known as final-offer package

1 See 	Charles W. Adams, 	Final Offer Arbitration: 	Time for Serious
Consideration by the Courts, 66 Neb. L. Rev. 213 (1987); Arvid Anderson & Loren
A. Krause, Interest Arbitration: The Alternative to the Strike, 56 Fordham L. Rev.
153 (1987); Charles B. Craver, Public Sector Impasse Resolution Procedures, 60 Chi.-
Kent L. Rev. 779 (1984); Charles B. Craver, The Judicial Enforcement of Public
Sector Interest Arbitration, 21 B.C. L. Rev. 557 (1980); Peter Feuille, Final Offer
Arbitration and Negotiating Incentives, 32 Arb. J. 203 (1977); Peter Feuille, Final
Offer Arbitration and the Chilling Effect, 14 Indus. Rel. 302 (Oct. 1975) [hereinafter
Feuille II]; Paul F. Gerhart & John E. Drotning, Do Uncertain Cost/Benefit Estimates
Prolong Public-Sector Disputes?, 103 Monthly Lab. Rev. 26 (1980); John E. Higgins,
Jr., The Developing Labor Law (5th ed. 2006); Ronald Hoh, Public Law: 	Interest
Arbitration: Its Effects on Collective Bargaining in Montana’s Protective Services,
32 Mont. Lawyer 8 (2007); Richard C. Kearney & David G. Carnevale, Labor
Relations in the Public Sector, 222 (3d ed. 2001); Gary Long & Peter Feuille, Final-
Offer Arbitration: 	“Sudden Death” in Eugene, 27 Indus. & Lab. Rel. Rev. 186
(1974); Harold Newman, Interest Arbitration: Impressions of a PERB Chairman, 37
Arb. J. 7 (Dec. 1982); S. Barry Paisner & Michelle R. Haubert-Barela, Correcting the
Imbalance: 	The New Mexico Public Employee Bargaining Act and the Statutory
Rights Provided to Public Employees, 37 N.M. L. Rev. 357 (2007); Steven B. Rynecki
& Thomas Gausden, Current Trends in Public Sector Impasse Resolution, 49 St.
Gov’t 273 (Autumn 1976); James L. Stern et al., Final-Offer Arbitration (1975); Carl
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arbitration, pursuant to which the arbitrator is required to select an offer in its entirety
and cannot decide particular matters on an issue-by-issue basis. We will refer to the
public-sector-interest impasse and final-offer, binding arbitration process described
in this part of the opinion as final-offer arbitration.
The Purpose of Final-Offer Arbitration
{7} 	The parties, the Hospital a good deal more than the Union, present discussion
from or otherwise reference articles written on the background and purpose of final-
offer arbitration.1 The public-sector-arbitration process is characterized as “interest

M. Stevens, Is Compulsory Arbitration Compatible with Bargaining?, 5 Indus. Rel.
38 (Feb. 1966); Joan Weitzman & John M. Stochaj, Attitudes of Arbitrators Toward
Final-Offer Arbitration in New Jersey, 35 Arb. J. 25 (March 1980); Arnold M. Zack,
Final Offer Selection—Panacea or Pandora’s Box?, 19 N.Y.L.F. 567 (1974).
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arbitration” in that it involves establishment of the terms and conditions that govern
the parties’ relationship during the life of their employment agreement. Anderson &
Krause, supra, at 153; Craver, The Judicial Enforcement of Public Sector Interest
Arbitration, supra, at 558, 571. Interest arbitration is the type of arbitration used “in
the resolution of a contract negotiations dispute,” as opposed to “rights’ arbitration,”
which is the type used for the resolution of grievances. W. Des Moines Educ. Ass’n
v. Pub. Employment Relations Bd., 266 N.W.2d 118, 119 (Iowa 1978). 	“Interest
arbitration itself is of two basic types. 	Final[-]offer arbitration or conventional
arbitration.” 	Id. 	(internal quotation marks and citation omitted). 	Final-offer
arbitration laws developed as an alternative to or substitute for strikes in the public
sector. Feuille II, supra, at 302-05; Hoh, supra, at 8. The parties submit their last,
best offer to an arbitrator who is charged with selecting either a package or certain
positions on an issue-by-issue basis. Feuille II, supra, at 304-05; Hoh, supra, at 9; see
W. Des Moines Educ. Ass’n, 266 N.W.2d at 119.
{8} 	Final-offer arbitration came about in order to foster negotiation between the
parties in a way that conventional arbitration did not. Feuille II, supra, 303-05; Hoh,

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supra, at 9-10, 40. It was a work-stoppage substitute in the public sector to provide
needed incentive and stimulus for the parties to negotiate their way to agreement.
Anderson & Krause, supra, at 156; Zack, supra, at 568-69. In final-offer arbitration,
the parties are to understand that it is in their best interest to seriously and
meaningfully negotiate in good faith and to narrow their differences to a point that
reflects their best and final offers before the arbitrator selects one offer over the other;
this process theoretically gives each party the best chance of winning the award and
helps alleviate the concern, if not fear, that the arbitrator will select the other side’s
last offer. Feuille II, supra, at 304-05; Hoh, supra, at 40; Weitzman & Stochaj, supra,
at 25. 	It was thought that conventional arbitration had a chilling effect on the
negotiation process in that, in conventional arbitration, arbitrators often engaged in
compromise, causing the parties to take extreme positions and avoid concessions.
Adams, supra, at 215; Feuille II, supra, at 304; Hoh, supra, at 40; see W. Des Moines
Educ. Ass’n, 266 N.W.2d at 119.
The Final-Offer Arbitration in This Case
{9} 	By mutual agreement of the parties, the final-offer arbitration hearing took
place on December 12-13, 2007. At the close of business on December 11, and at the
hearing on December 12, the Union made an offer dated December 10, 2007, that
revised its October 18, 2007, offer. The Hospital objected to this offer on the ground

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that the Union could not substitute a new offer in place of its earlier, last, best offer.
The Hospital reasoned that impasse ended at the point the Union made its revised
offer on the eve of the arbitration hearing, and therefore the parties should be deemed
to have returned to the negotiating table and, as a corollary, that the arbitrator was
without jurisdiction to proceed; and that, alternatively, if the arbitration was to
proceed, the arbitrator was required to choose between the earlier offers of October
18, and November 6, 2007.
{10} 	The arbitrator ruled that the LMRR did not preclude the Union from submitting
a last, best offer at any time. He noted in his award that the Hospital “continued with
the hearing only ‘under protest.’” 	The arbitrator heard witnesses and received
evidence in support of the parties’ positions. In his award, the arbitrator addressed his
discussions with the parties concerning the proceedings as follows.
With respect to the substantive issues in dispute, both parties
examined witnesses and presented other evidence in support of their
respective positions. Witnesses were not sworn but were separated. At
the conclusion of the presentation of evidence on December 13, the
arbitrator met with counsel to discuss his preliminary view of the merits
of their positions on all of the dozen or so issues in dispute. He urged
the parties to reconsider their positions in light of his comments and to
meet and confer themselves, and with their clients, in an effort to narrow,
or completely resolve the issues. Subject to the [Hospital’s] continuing
objection to allow any modification of [the last, best offers], the parties
agreed to submit revised [last, best offers] to the arbitrator on January 4,
2008, if they had not reached agreement by that time, and to follow such
offers with their final post-hearing briefs on January 11. 	Briefs were
timely 	received 	from 	both 	parties 	electronically 	on 	January 	11.

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Although there were two subsequent conference calls (on January 15 and
17) involving counsel and the arbitrator regarding possible further
modifications to the [last, best offers], the parties subsequently agreed,
and informed the arbitrator on January 18, that their last[,] best offers of
January 4 should be the basis for the arbitrator’s decision, again, subject
to the [Hospital’s] continuing objection. Thus, the record was effectively
closed with the receipt of the parties’ January 11 briefs.
{11} 	In an affidavit of associate University counsel who represented the Hospital in
the impasse arbitration hearing, filed in the district court proceeding by the Hospital,
the Hospital describes the proceedings as follows.
14. 	Early in the hearing, the arbitrator asked that the parties
confer off the record in an effort to narrow the issues, i.e., to bridge the
gap between their respective offers (which at that time were the Union’s
December 10 offer and [the Hospital’s] November 10 offer).
15. 	The arbitrator permitted the Union to further modify its
offer several times during the hearing, including reducing its monetary
demands and eliminating items which [the Hospital] maintained were
illegal and rendered the Union’s package legally unacceptable.
16. 	Throughout 	the 	arbitration 	proceeding, 	[the 	Hospital]
preserved and renewed its objections to the arbitrator’s permitting any
modified offers, and made its objections part of the record. In light of
the arbitrator’s permitting modification, [the Hospital] did propose [a]
non-material change to the language of its own offer, but expressly noted
its objection to the arbitrator’s permitting same and indicated that it was
not waiving that objection.
17. 	Before concluding the hearing on December 12, the
arbitrator announced on the record that he was leaving the record open
for submission by each party of yet another modified offer.
18. 	Upon conclusion of the hearing on December 12, Arbitrator
Gerhart asked to meet with the parties’ counsel of record. That meeting

9
lasted for nearly an hour, during which time Mr. Gerhart announced his
impressions of the parties’ respective positions (as of the close of the
hearing) on each remaining disputed item. 	In addition to indicating
whose position he was inclined to adopt, and describing his reasoning,
on many of the disputed items, Mr. Gerhart advised the parties regarding
how he would view modified offers on some of those items. The items
on which he suggested modification that would be more to his liking
included economic demands as well as non-economic items. Mr. Gerhart
then directed the parties to simultaneously submit modified offers to him
(and to each other) on January 4, 2008, and set January 11, 2008[,] as the
date for submission of written closing arguments.
{12} 	According to the affidavit of the Hospital’s counsel, the arbitrator then directed
the parties to submit modified offers on January 4, 2008, and written final arguments
on January 11, 2008. The Hospital’s January 4 offer was submitted subject to and
without waiving its objection to new offers or offers that modified the offers of
October 18, 2007, and November 6, 2007.
{13} 	Also according to the Hospital’s counsel, after the written final arguments were
submitted to the arbitrator, the arbitrator again consulted with the parties’ attorneys,
advised the attorneys of his views on the merits of their client’s positions, made
specific recommendations as to reasonable modifications, and gave additional time for
the parties to make further modifications. Following that, the arbitrator apparently
again consulted with the attorneys and obtained further modifications, still under the
Hospital’s protest; the parties indicated that they could go no further to resolve
differences, and the arbitrator gave the parties a choice between their offers submitted

10
on January 4 or their offers as modified up to the date of this last consult, which was
January 17, 2008. 	We do not see where the Union challenges the Hospital’s
characterization of the proceedings.
{14} 	Based on the responses of the parties, the arbitrator made his decision from the
parties’ January 4, 2008, offers. The arbitrator issued a fifty-page opinion and award
on February 1, 2008. The arbitrator set out his legal analyses supporting his view of
how the final-offer arbitration was properly conducted. He also set out his analyses
underlying his resolution of unresolved issues. The arbitrator interpreted the LMRR
to require him to select “from the two last, best offers that are before him at the time
he makes a decision.” He selected the Union’s January 4, 2008, offer as the more
reasonable successor to the expiring labor agreement. His award stated, “[h]aving
carefully considered all evidence submitted . . . as well as all relevant statutory
criteria[,] . . . the arbitrator adopts the last[-]best offer total package of the Union.”
The Hospital attacked the arbitrator’s opinion and award in the district court.
{15} 	Among the unresolved issues in the Union’s offered package was a wage-
related bonus for members of the bargaining unit that read as follows: 	“Upon
ratification of the contract all bargaining unit members shall receive a ratification
bonus in the amount of $500 to be paid by the first pay period after the ratification has
taken place.” The arbitrator construed this bonus provision as providing for “a lump

11
sum to members of the bargaining unit effectively on the date of the arbitrator’s
award.” 	The Hospital also attacked this determination in the district court on the
grounds it would require the Hospital to violate the New Mexico Constitution as well
as a criminal statute, and thereby violate public policy.
{16} 	The arbitrator described the Union’s purpose of the bonus to be “to reinforce
its commitment to making sure that low wage earners receive an increase to raise them
out of the near poverty wages currently being paid by the University.” The arbitrator
boiled the issue down to one of fairness, asking, “Is it fair to deny employees a small
bonus who have been denied wage increases for more than seven months?” 	The
arbitrator noted that, in connection with the expected new agreement, the Union had
appropriated funds for the bonus and that it would be inequitable and punitive to deny
the bonus because of the “mutual inability of the parties to reach an agreement
earlier.”
The District Court’s Determinations and the Points on Appeal
{17} 	The district court held that “the arbitrator lacked jurisdiction to hear the matter
because the parties were not at impasse at the time of the arbitration.” The court also
determined that “the arbitrator engaged in misconduct that prejudiced the rights of [the
Hospital] and exceeded his authority by acting as a coercive mediator during the
arbitration.” 	The court further determined that the arbitration award was void as

12
against public policy because the bonus payment would violate Article IV, Section 27
and Article IX, Section 14 of the New Mexico Constitution. On appeal, the Union
asserts that the district court’s denial of confirmation of the arbitrator’s award
misinterpreted and is inconsistent with the PEBA and the LMRR, and the court’s
determinations are contrary to the authority granted to an impasse arbitrator by the
PEBA. The Union also asserts that the district court’s determination relating to the
ratification bonus was erroneous because the bonus does not violate public policy.
DISCUSSION
I. 	The Arbitrator’s Authority and His Conduct of Impasse Arbitration
Standard of Review
{18} 	No facts are in dispute; the issues raised by the Union are issues of law. We
review the issues de novo. Cooper v. Chevron U.S.A., Inc., 2002-NMSC-020, ¶ 16,
132 N.M. 382, 49 P.3d 61; State v. Ogden, 118 N.M. 234, 240, 880 P.2d 845, 851
(1994); Town of Silver City v. Garcia, 115 N.M. 628, 632, 857 P.2d 28, 32 (1993).
The Parties’ Arguments
{19} 	The Union agrees with the arbitrator’s view that LMRR Section 15(C) does not
state or require that each party’s last, best offer is frozen at the mediation phase of
impasse resolution. The Union points out that some states do not permit a change in
final offers made before arbitration, while others do, and that the New Mexico

13
Legislature in the PEBA did not specify which system it preferred. The Union argues
that the Legislature did not intend to set specific limitations on the timing of written,
final offers because, had it intended to do so, it would have modeled the PEBA on
other state statutes that contained a specific limitation. Although in its reply brief, the
Union seems to relegate policy to a position second to its arguments on the language
of the PEBA and the LMRR and on statutory construction (arguing plain language and
ordinary meaning), the Union also argues that the arbitrator must be able to “express
his opinion on various aspects of the offers and thus encourage parties to narrow the
scope of disputed issues and insure that their respective last, best offers contain as few
objectionable or offensive provisions as possible.” Further, the Union argues that the
arbitrator is to “force[] parties to critically evaluate their own last, best offers based
upon the testimony actually offered in the arbitration and encourage[] modifications
by both parties to increase the likelihood of a settlement short of an arbitrator’s
decision and to avoid the sometimes anomalous results of final-offer package
arbitration.”
{20} 	In the Union’s view, the more reasonable interpretation of the LMRR is that
“once thirty days have passed and mediation has not resolved the impasse . . . the
arbitration process begins and the timing of the . . . ‘last, best offers’ is left to the
discretion of the arbitrator.” 	The Union discusses several rules of statutory

14
construction to support this position in order to derive an intent to “allow for an
evolving identification of issues.” 	The Union reduces the Hospital’s positions as
solely policy-based, as opposed to intent-based.
{21} 	The Hospital argues that legislative history, the language of the PEBA and the
LMRR, the intent of the Legislature, and the rationale underlying final-offer
arbitration, all support the district court’s decision to vacate the award on grounds of
misconduct and lack of authority. 	In the Hospital’s view, to encourage and allow
modification of pre-arbitration final offers after mediation fails and during arbitration
violates the essential purpose of final-offer arbitration.
The Scope of the Final-Offer Arbitration in the PEBA and the LMRR
{22} 	We confine our analysis and discussion in this case to whether the arbitrator
exceeded his authority under the PEBA and the LMRR in his conduct of the final-
offer arbitration or whether the arbitrator engaged in misconduct under Section 44-
7A-24(a)(4) of the Uniform Arbitration Act. 	Because we hold that the arbitrator
exceeded his authority and engaged in misconduct, we see no need to address whether
the arbitrator acted without jurisdiction.
{23} 	We endeavor to interpret the PEBA and the LMRR using established principles
of statutory construction. 	We are to determine and effectuate the intent of the
Legislature. 	Key v. Chrysler Motors Corp., 121 N.M. 764, 768-69, 918 P.2d 350,

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354-55 (1996). We read a legislative act in its entirety toward reaching a harmonious
and consistent enactment as a whole. Id. at 769, 918 P.2d at 355. Thus, all provisions
of the act will be considered in relation to one another, with the attempt to render no
part surplusage or superfluous. Regents of Univ. of N.M. v. N.M. Fed’n of Teachers,
1998-NMSC-020, ¶ 28, 125 N.M. 401, 962 P.2d 1236. 	We attempt “to determine
legislative intent primarily from the legislation itself,” and “[w]e will not depart from
the plain wording of a statute, unless it is necessary to resolve an ambiguity, correct
a mistake or an absurdity that the Legislature could not have intended, or to deal with
an irreconcilable conflict among statutory provisions.” 	Id. ¶¶ 28, 30. Further, “we
exercise caution in applying the plain meaning rule,” for it “must yield on occasion
to an intention otherwise discerned in terms of equity, legislative history, or other
sources.” State v. Smith, 2004-NMSC-032, ¶ 9, 136 N.M. 372, 98 P.3d 1022 (internal
quotation marks and citation omitted). When the policy of the Legislature is unclear
or a statute is ambiguous in that regard, “we may . . . consider the policy implications
of the various constructions of the statute.” State v. Rivera, 2004-NMSC-001, ¶ 14,
134 N.M. 768, 82 P.3d 939 (filed 2003). 	“Legislative silence is at best a tenuous
guide to determining legislative intent.” Swink v. Fingado, 115 N.M. 275, 283, 850
P.2d 978, 986 (1993). Confronted with legislative silence on a particular issue, we
resort to other statutory construction aids, keeping in mind that our goal is to facilitate

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the operation of the act and any specified goals of the Legislature. 	N.M. Dep’t of
Health v. Compton, 2001-NMSC-032, ¶ 18, 131 N.M. 204, 34 P.3d 593.
{24} 	In the PEBA, the Legislature defined “collective bargaining” as meaning “the
act of negotiating between a public employer and an exclusive representative for the
purpose of entering into a written agreement.” 	Section 10-7E-4(F). 	The public
employer and the exclusive representative must “bargain in good faith,” but “neither
. . . shall be required to agree to a proposal or to make a concession[.]” Section 10-7E-
17(A)(1). In discussing the act of negotiating, Section 10-7E-18(A)(1) to (3) refers
to when negotiations are to begin and what occurs “if an impasse occurs during
negotiations.” The PEBA defines “impasse” as a failure of the parties, “after good-
faith bargaining, to reach agreement in the course of negotiating a collective
bargaining agreement[.]” Section 10-7E-4(K). Mediation occurs upon impasse “to
assist in negotiations.” Section 10-7E-18(A)(3). “‘[M]ediation’ means assistance by
an impartial third party to resolve an impasse . . . through interpretation, suggestion
and advice[.]” Section 10-7E-4(P). If impasse continues after a certain date by which
the mediation must end, an arbitrator is to be selected. Section 10-7E-18(A)(5). The
authority granted the arbitrator is to “render a final, binding, written decision resolving
unresolved issues,” which decision “shall be limited to a selection of one of the two
parties’ complete, last, best offer.” Section 10-7E-18(B)(2). The provisions of the

17
LMRR are not significantly different than those in the PEBA. See LMRR §§ 4(D),
(L), (P), 15(A), (B), (C).
{25} 	Nothing in the PEBA or the LMRR mentions collective bargaining negotiations
or the act of collective bargaining or negotiation during the arbitration process.
Nothing mentions a role of the arbitrator as being similar in any respect to that of a
mediator. 	Nothing indicates that collective bargaining negotiations may continue
during arbitration or that the arbitrator has authority or is expected to assist in
negotiations. Nothing expressly or impliedly grants the arbitrator authority to act in
any manner other than as an arbitrator with the mandatory responsibility of selecting
one package offer over another.
{26} 	The Union essentially argues that the silence in the PEBA and the LMRR as to
an arbitrator’s role up to the point of the arbitrator’s selection of one party’s offer
indicates that the arbitrator has authority to act in the nature of a mediator until a final
selection of various further offers made during the arbitration. The Union also points
out that the failure in the PEBA and the LMRR to explicitly state that the final, last,
best offers from which the arbitrator is to make his selection must be those made
before his selection as arbitrator.
{27} 	We are not persuaded by the Union’s arguments. We think it is reasonable to
assume that the Legislature intended the processes of negotiation and mediation, and

18
the process of arbitration, to be different. 	The PEBA and the LMRR give no
indication of any intent that collective bargaining negotiations, including assistance
in those negotiations by a third-party neutral mediator, are to take place as a part of
the arbitration process. That the arbitrator is to resolve unresolved issues does not
indicate anything to the contrary. As we read the PEBA and the LMRR, the resolution
of unresolved issues is to be done in a “decision” and that decision is to be a final,
binding, and written decision selecting one party’s offered collective bargaining
agreement—necessarily resolving unresolved issues. We do not see how the taking
of testimony and other evidence, which is an inherent aspect of arbitration, see, e.g.,
§ 44-7A-16 (setting out the arbitration process), means that the arbitrator is to act as
a mediator or is to seek or obtain modified offers. We must assume that the purpose
of taking testimony and other evidence is to assist the arbitrator in deciding which is
the best of the two final, best offers made by the parties before the arbitrator was
selected.
{28} 	Further, the PEBA and the LMRR set out a sixty-day time restraint—a thirty-
day mediation period and a thirty-day period for the arbitrator to render a decision.
Section 10-7E-18(B)(1), (2); LMRR § 15(C)(2). 	Presumably, this restraint is
considered purposeful and important in public sector collective bargaining and
constitutes an attempt to assure that expiring collective bargaining agreements are

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quickly replaced with new ones. Presumably, the Legislature and the LMRR defined
“impasse” as it did in order to set the stage for finality within a particular time frame
through final-offer arbitration. The sense we get from the PEBA and the LMRR is
that if mediation fails in its attempt within the time frame allotted to assist the parties
in negotiations to overcome impasse and to arrive at an agreement, the job of the
arbitrator is to bring impasse to a close within the time frame allotted by making a
final, binding, written decision after considering whatever testimony and other
evidence is needed for the determination of which of the parties’ last, best, prior-to-
impasse offer to select.
{29} 	The governing provisions give no indication of any intent to relax the rationale
underlying a final-offer arbitration, which is to push and require the parties to
negotiate in good faith and to arrive at their final, best offers during the negotiation
and bargaining process before having to face the stark reality and finality of impasse
arbitration. Under the process employed by the arbitrator and supported by the Union,
the arbitration process becomes but an extension of the bargaining, negotiation, and
mediation processes. This is the antithesis of final-offer arbitration, in that what is
likely to occur is that parties will withhold good faith movement to last, best offers
during negotiations and mediation in order to change and enhance their bargaining
position at arbitration, a tactic that “derogates the obligation to bargaining in good

20
faith,” Hoh, supra, at 41, and seems to effectively read “impasse” out of the PEBA
and the LMRR.
{30} 	We interpret the express requirement that the parties “bargain in good faith” to
mean negotiate to a point, before an arbitrator is selected, at which time each side has
made its last, best offer. 	At oral argument, the Union’s counsel agreed with this
interpretation. We fail to see how a party can bargain in good faith if that party does
not intend its last offer before the arbitrator is selected to be its last, best offer, but
instead intends after the arbitrator is selected to make modified offers that the
arbitrator would have discretion to select as that party’s last, best offer. The Union
conceded in oral argument that it intended at the time the arbitrator was selected to
make such a modified offer.
{31} 	An arbitrator’s award may be vacated under the Uniform Arbitration Act if the
arbitrator exceeded his powers. Section 44-7A-24(a)(4). To be confirmed, an award
must be “within the scope of the submission.” Fernandez v. Farmers Ins. Co. of Ariz.,
115 N.M. 622, 625-26, 857 P.2d 22, 25-26 (1993). In the present case, we hold that
the arbitrator exceeded his authority and powers under the PEBA and the LMRR by
his conduct during the arbitration and his failure to select the last, best offer of one of
the two parties made before he was selected as arbitrator. In our view, the process
chosen by the arbitrator in this case was a much different process than that intended

21
by the Legislature under the PEBA and that contemplated under the LMRR. 	It
appears that the present case embodies a tug-of-war between what some arbitrators
and perhaps parties to labor contracts prefer and what final-offer arbitration is meant
to encompass.
The choice in final offer selection should be between total
packages rather than issue by issue. 	Although it is true that a more
equitable resolution might be achieved if the decisions were made on an
issue by issue basis, and certainly the arbitrators would be more
comfortable with this arrangement, it must be borne in mind that the
sense of reasonableness on the part of the arbitrator and the achievement
of the most equitable or desirable agreement, are not the primary
purposes of final offer selection. Rather, the objective is independent
settlement by the parties. The greater the risk to each party of submitting
a final offer, the greater the likelihood of settlement. Each party must
run the risk of its whole package being thrown out because of the
unreasonableness or unacceptability of even one element therein. Only
in that way can the greatest pressure be exerted on the parties for direct
settlement. Indeed, to the extent that a whole package may be thrown
out because of one element which is deemed objectionable by the
arbitrator, . . . the prospect is improved for future voluntary settlements.
W. Des Moines Educ. Ass’n, 266 N.W.2d at 126 (internal quotation marks omitted)
(quoting Zack, supra, at 578-79).
{32} 	By selecting a modified offer made during the arbitration process, the arbitrator
undermined the purpose of final-offer arbitration. See La Crosse Prof’l Police Ass’n
v. City of La Crosse, 568 N.W.2d 20, 24-25 (Wis. Ct. App. 1997) (determining that
the arbitrator’s modifications to a final offer undermined the purpose of final-offer
arbitration, which was “to induce the parties to bargain in good faith to reach an

22
agreement or at least to narrow the differences between the parties to the greatest
extent possible” (internal quotation marks and citation omitted)). 	The manner in
which the arbitrator conducted the arbitration was legally erroneous in that he
misconstrued the essential final-offer arbitration process set out in the PEBA and the
LMRR. 	That misapprehension of the law and process related directly to, directly
affected, and manifestly exceeded the scope of the arbitrator’s statutory and resolution
authority. 	We hold that the arbitrator’s unauthorized conduct of the final-offer
arbitration required the award to be vacated under Section 44-7A-24(a)(4). We further
hold that based on the same conduct, the award was properly vacated on the ground
of misconduct under Section 44-7A-24(a)(2)(C).
{33} 	If our Legislature had wanted the sort of continued “last, best” offer process that
the Union advances, surely after the various state laws on the books, cases decided,
and scholarly articles written as of 2003, the Legislature would have placed different
language in its final-offer arbitration provisions. We think it is noteworthy that in
enacting the present form of Section 10-7E-18(B) the Legislature changed from a
mediation process with advisory fact finding to a process of first involving mediation
to assist negotiations, then moving to binding, final-offer package arbitration. 	See
NMSA 1978, § 10-7D-18(B) (repealed 1999); § 10-7E-18(B). We will assume that
the Legislature was dissatisfied with the former process and thought it necessary to

23
replace it with one that required the parties to understand the risks and consequences
of not going the distance in negotiating seriously and in good faith, and one that
intentionally cut off true impasse with rigid final-offer arbitration finality. See State
v. Shay, 2004-NMCA-077, ¶ 7, 136 N.M. 8, 94 P.3d 8 (“By deliberately changing the
statute . . . , the [L]egislature indicated its dissatisfaction with the old scheme and an
intent to depart from that scheme.”).
II. 	The Ratification Bonus
{34} 	Although we affirm the district court’s vacation of the award based on the
arbitrator’s having exceeded his authority under the PEBA and the LMRR, we think
it necessary to also address whether the $500 bonus payable to each member of the
bargaining unit violated public policy set out in Article IV, Section 27 and Article IX,
Section 14 of the New Mexico Constitution. The district court held that the arbitration
award was void because the bonus payment would violate public policy in that it
would violate Article IV, Section 27 and Article IX, Section 14.
{35} 	Article IV, Section 27 provides:
No law shall be enacted giving any extra compensation to any
public officer, servant, agent or contractor after services are rendered or
contract made; nor shall the compensation of any officer be increased or
diminished during his term of office, except as otherwise provided in this
constitution.
Article IX, Section 14 referred to as the “anti-donation provision” provides:

24
Neither the state nor any county, school district or municipality,
except as otherwise provided in this constitution, shall directly or
indirectly lend or pledge its credit or make any donation to or in aid of
any person, association or public or private corporation, or in aid of any
private enterprise for the construction of any railroad except as provided
in Subsections A through F of this section.
The bonus issue is one of law, which we review de novo. See State v. Isaac M., 2001-
NMCA-088, ¶ 4, 131 N.M. 235, 34 P.3d 624; Gabaldon v. Erisa Mortgage Co., 1997-
NMCA-120, ¶ 7, 124 N.M. 296, 949 P.2d 1193, aff’d in part, rev’d in part on other
grounds, 1999-NMSC-039, 128 N.M. 84, 990 P.2d 197.
{36} 	The Union argues that Article IV, Section 27 does not apply to the Hospital’s
employees because the constitutional provision applies to public officials who hold
office for a term and does not apply to public employees who do not hold terms of
office. See Whitely v. N.M. State Pers. Bd., 115 N.M 308, 313, 850 P.2d 1011, 1016
(1993) (recognizing that the Court “held that the constitutional prohibition against
diminishing an officer’s compensation during his term in office does not apply to
public employees who do not hold terms of office” (internal quotation marks and
citation omitted)); State ex rel. Gilbert v. Bd. of Comm’rs of Sierra County, 29 N.M.
209, 214, 222 P. 654, 655 (1924) (“It has been many times held that [the anti-
donation] provision does not apply to . . . employees . . . and others similarly situated.
This is due to the fact that such persons have no ‘term of office’ within the intendment

25
of such constitutional provision.”). The Court in Whitely relied, and the Union relies,
on the following language from Gilbert:
[Article IV, Section 27] was designed to protect the individual officer
against legislative oppression which might flow from party rancor,
personal spleen, enmity, or grudge. These could well harass and cripple
the officer by reducing his compensation during his service; while, on
the other hand, party feeling, blood, or business relations might be
combined in such pernicious activity in the form of strong and powerful
lobbying as to sway the members of the Legislature and cause the
bestowal of an unmerited increase. To obviate these conditions is the
purpose of this wise constitutional provision.
Gilbert, 29 N.M. at 214, 222 P. at 655. We reject the Union’s argument. The plain
language of Article IV, Section 27 refers not only to public “officer,” but also to
public “servant,” “agent,” and “contractor.” 	Further, we do not read the cases the
Union cites as holding that the statute exclusively applies only to public officials who
hold office for a term. 	Other cases in fact indicate the contrary. 	See Whitely, 115
N.M. at 309-10, 850 P.2d at 1012-13 (addressing accrual of annual vacation leave for
juvenile probation officers and their staffs); State ex rel. Sena v. Trujillo, 46 N.M. 361,
363, 129 P.2d 329, 329-30 (1942) (addressing payment of a pension to the clerk of the
Supreme Court).
{37} 	The Union also faults the district court’s determination relating to Article IV,
Section 27 on the ground that the bonus is a lump-sum amount that constitutes a part
of contemplated compensation for services to be performed as part of the employee’s

26
total compensation package yet to be agreed upon. Thus, according to the Union, the
bonus cannot be considered either extra compensation after a contract is already made
or a retroactive pay increase for work already performed, which are the types of
payments the Union argues are meant to be prohibited under the constitutional
mandates. The Union points out that the existing agreement contains several forms
of permissible bonuses to employees. Turning to Article IX, Section 14, the Union
disputes the court’s determination that the bonus would constitute a gift in violation
of Article IX, Section 14, arguing that it is nonsensical to conclude that “the payment
of wages for work performed” is a gift.
{38} 	The Union cites no authority in its brief in chief for its arguments. In its reply
brief, the Union asserts that the Hospital’s argument that the bonus is illegal because
it violates the Article IX, Section 14 anti-donation provision is an argument similar
to one rejected in Treloar v. County of Chaves, 2001-NMCA-074, 130 N.M. 794, 32
P.3d 803. In Treloar, this Court disagreed with the argument that a severance pay
package contracted by a physician with a county-created hospital violated the anti-
donation provision, stating that “severance pay is deemed to be in the nature of wages
that have been earned. 	Thus, consideration had been given for the severance
obligation, and there was no gift.” Id. ¶ 32. The Union argues that “[b]onuses, like
severance pay, are in the nature of wages that have been earned.” 	The Union’s

27
primary defense to the Hospital’s argument, however, is to dispute the application of
the authorities relied on by the Hospital in the district court, which include opinions
of the New Mexico Attorney General and two decisions of our Supreme Court. See
Vill. of Deming v. Hosdreg Co., 62 N.M. 18, 303 P.2d 920 (1956); Sena, 46 N.M. 361,
129 P.2d 329; N.M. Att’y Gen. Op. 88-66 (1988); N.M. Att’y Gen. Op. 72-44 (1972);
N.M. Att’y Gen. Op. 71-07 (1971); N.M. Att’y Gen. Op. 57-17 (1957).
{39} 	The Hospital argues that the bonus would be a payment that the recipients
would receive based on nothing more than simply being members of the bargaining
unit when the new contract went into effect. According to the Hospital, the bonus did
not represent compensation for any past or expected work, for any enhanced job
qualification, or for any quality or longevity standard, and it therefore constituted
forbidden extra and retroactive pay in violation of the public policy behind the
constitutional provisions.
{40} 	The bonus provision in the arbitrator’s award is completely silent as to what it
is specifically for, but there appears to be little controversy over the actual purpose for
the bonus. The arbitrator’s award unmistakenly indicates that the bonus would be to
compensate bargaining unit members for the delay in implementing wage increases
under a new agreement. As such, the bonus becomes a retroactive wage. We hold
that Article IV, Section 27 and Article IX, Section 14 require the conclusion that

28
payment of the bonus will violate public policy. The Union provides no authority to
the contrary. We fail to see how work performed under the terms and conditions of
the extension of the existing agreement can be properly compensated pursuant to the
terms and conditions of the new agreement.
CONCLUSION
{41} 	We affirm the district court. We hold that the arbitrator exceeded his authority
and also engaged in misconduct in the manner in which he conducted the arbitration.
We further hold that the $500 bonus provision in the selected offer required the
Hospital to violate public policy and it was therefore impermissible, invalidating the
entire package.
{42} 	IT IS SO ORDERED.
__________________________________
JONATHAN B. SUTIN, Judge

WE CONCUR:

JAMES J. WECHSLER, Judge

MICHAEL E. VIGIL, Judge

29