UNION GAP, Wash. -- A municipal court judge lost an arbitrator's ruling in his dispute with Union Gap's union employees over employment rules, but the matter is likely to be appealed to Yakima County Superior Court.

The unprecedented legal battle began last fall, when the Union Gap City Council cut 5.5 staff positions to help balance the city budget.

The union contract for city employees enables those with seniority to "bump" other people from their positions -- provided the senior employees are qualified for the jobs.

Several employees were affected by the process. But the system came to an abrupt halt when Judge Kip Kendrick, a Yakima attorney who works part time as a municipal judge, obtained an order from Superior Court Judge Michael McCarthy that prevents Union Gap from laying off a deputy court clerk.

Kendrick maintained that state law separates executive and judicial powers and that he has the right to determine employment matters in his courtroom. Union officials disagreed, maintaining its "last hired, first fired" rule applies.

Arbitrator John Swanson ruled strongly in the union's favor. In his report, released Monday, he wrote that exhaustive research showed all labor agreements in the public sector are negotiated by the executive branch. Furthermore, he was unable to find information anywhere in Washington that showed part-time municipal judges involving themselves in the collective bargaining process.

Swanson wrote that the person slated to take the deputy court clerk's job is "qualified, credible and loyal," therefore "it's difficult to determine a rational explanation" for Kendrick's actions. Swan went on to say that Kendrick's interference with the union contract "seems contrary to any concept of justice."

The injunction against Union Gap interrupted the "bumping" process and resulted in one longtime city employee, Leanne Nichols, losing her job three months ago.

Swanson ruled that Nichols be reinstated and given back pay and benefits -- plus a 4 percent interest penalty. She has worked for the city for roughly nine years, while the existing deputy court clerk has worked there for one year.

If reinstated, Nichols would return to work as a utility billing clerk, and Kendrick's deputy court clerk would be laid off. Another city employee would be "bumped" into that slot.

"I hope the mayor goes with what the arbitrator is saying," Nichols said in an interview. "It's been so stressful. If the city would have done what was expected of it in the first place, I would have never gone through this."

But Gary Lofland, a Yakima attorney representing Kendrick, disagreed with the arbitrator's ruling. He said he's eager to have the case heard in Yakima County Superior Court, where he believes Kendrick will prevail.

Lofland called Swanson's ruling a "superficial, ill-considered decision."

"He doesn't understand separation of powers in our government system," Lofland said of the arbitrator.

Union Gap Mayor Jim Lemon said he, too, wants the Superior Court to have the final say on the matter. Until it decides on this issue -- and the injunction preventing the city from laying off Kendrick's staff -- nothing at City Hall will change.

Lemon said he thinks the city has been caught in the middle of the dispute, though he personally believes "the judge is the one with the authority to say who is qualified to bump."

Wayne Johnson, who represents the Teamsters union, said he isn't surprised by the positions taken by the city and Kendrick. However, he feels Nichols has been wronged and at the very least deserves back pay and benefits.

"This is new ground for everybody," he said. "I really don't know where it will fall out in the end."

The case before Superior Court has not yet been scheduled. No matter the ruling, each side has the right to appeal to the Washington State Court of Appeals.

* Erin Snelgrove can be reached at 509-577-7684 or esnelgrove@yakimaherald.com.