Impossibility of performance no defense to breach of contract

Arbitrator Paul Glendon has issued an award finding that the City of Taylor, Michigan breached its labor agreement with the Taylor Professional Firefighters Association, Local 1252. The agreement between the City and the Union contained a minimum staffing guarantee. The contract was scheduled to expire on June 30, 2011 but, pursuant to its terms, was continued in effect during negotiations for a successor agreement. On July 1, 2011 the City implemented layoffs of firefighters, reducing the staffing below the guaranteed minimum. The City justified its actions based on seriously declining economic conditions. The City contended that “the present financial crisis ….results in a legal justification for breach of the collective bargaining agreement.”

Arbitrator Glendon rejected the City’s position. In doing so he noted that the contract did anticipate layoffs in certain situations, but no exception was made to the minimum staffing guarantee. He also rejected the City’s claim that any breach was justified by the financial impossibility of performance, writing that “it would be an abuse of arbitral authority to countenance the City’s unilateral attempt to alter or modify the contract … notwithstanding any dicta by the Ohio Court of Appeals concerning the applicability of general contractual defenses to arbitration of disputes arising under a collective bargaining agreement.”

Finally, Glendon observed that, in any case,the City’s evidence failed to establish that the layoffs were a matter of unavoidable necessity.