City of Erie v. Pennsylvania Labor Relations Bd.

161 Lab.Cas. P 61,205

192 L.R.R.M. (BNA) 2699

32 A.3d 625

CITY OF ERIE, Appellee

v.PENNSYLVANIA LABOR RELATIONS BOARD, Appellant.

Supreme Court of Pennsylvania.

Argued Oct. 20, 2010.Decided Nov. 23, 2011.

John B. Neurohr, Harrisburg, Warren R. Mowery Jr., for Pennsylvania Labor Relations Board.

Amy Louise Rosenberger, Willig Williams & Davidson, Philadelphia, for Appellant Amicus Curiae, Council 13, DC 83 through 90, AFSCME, AFL–CIO.

John R. Bielski, Willig Williams & Davidson, Philadelphia, for Appellant Amicus Curiae, International Association of Firefighters, Local 293, AFL–CIO.Stephen C. Richman, Thomas Herman Kohn, Markowitz & Richman, Philadelphia, for Amicus Curiae, PA Professional Firefighters Assoc. & PA State Lodge, Frat. Order of Police.Gregory Alan Karle, Erie, for City of Erie.BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice TODD.

In this appeal by allowance, we consider, inter alia, whether a public employer committed an unfair labor practice when it unilaterally eliminated firefighter pension benefits, which were found to be legal, without first collectively bargaining with the firefighters' representative. The Collective Bargaining by Policemen and Firemen Act, commonly known as Act 111 (“Act 111”), ¹ by its express terms, requires negotiation over the modification or elimination of pension benefits, and we find no applicable exception to this statutory mandate. Thus, for the reasons stated more fully below, we reverse the order of the Commonwealth Court.

The International Association of Firefighters, Local 293, AFL–CIO (the “Union”) is the exclusive bargaining representative of a unit of firefighters and other personnel employed by the City of Erie (the “City”). While the City and the Union negotiated several previous collective bargaining agreements, the agreement at issue in this appeal was for the period from January 1, 2005 to December 31, 2007 (the “Agreement”). Article XI, Section 1 of the Agreement provided that the firefighters' pension fund “shall be governed in accordance with statutes of the Commonwealth of Pennsylvania and City of Erie ordinances or regulations now presently in effect and promulgated.” Agreement at Article XI, Section 1.² This provision also included a mid-contract increase in the “line-of-duty” disability pension.

On May 9, 2002, an Act 111 interest arbitration panel ³ issued an award that required the City to provide a Deferred Retirement Option Plan (“DROP”). The DROP provided a mechanism by which retiring firefighters could elect to receive a lump-sum payout at retirement in exchange for a lower monthly pension benefit. Thereafter, the City filed a petition to vacate the DROP provision from the award. The City reasoned that the DROP provision would prove too costly because, for DROP participants, it would result in a reduction in state aid to the firefighter pension under the Municipal Pension Plan Funding Standard and Recovery Act (“Act 205”).⁴ On March 28, 2003, the Erie County Court of Common Pleas granted the City's petition to vacate the DROP provision, and, on appeal, the Commonwealth Court affirmed the trial court's order. City of Erie v. Int'l Ass'n of Firefighters Local 293, 836 A.2d 1047 (Pa.Cmwlth.2003).

Prior to ratification of the Agreement, on May 15, 2004, the City enacted an amendment to Article 149.09 of the City's ordinances to provide a Partial Lump Sum Distribution Option (“PLSDO”) pension benefit. While not a DROP, the PLSDO provided a similar benefit, in that it permitted firefighters to receive a lump sum payment for a reduced monthly pension benefit.⁵ Unlike the DROP, however, the PLSDO was structured so that the City would not forfeit state funding for PLSDO participants. The Auditor General, however, on November 27, 2006, issued a finding in conjunction with an audit of the City's pension funds criticizing and describing as illegal certain aspects of the PLSDO that pertained to the City's election of state aid for PLSDO participants.

In response to the Auditor General's finding, on December 20, 2006, the City modified the existing firefighter's pension plan by enacting Ordinance 75–2006, which repealed in its entirety the PLSDO benefit contained in Article 149.09. The City did not bargain with the Union over its elimination of the PLSDO from the firefighters' pension plan, taking the position it was not required to do so.

Thereafter, on January 5, 2007, the Union filed a charge of unfair labor practices with the Pennsylvania Labor Relations Board (the “Board” or the “PLRB”), in which it alleged, as discussed more fully below, that the City's unilateral elimination of the PLSDO violated the City's duty to collectively bargain, as mandated by Section 6(1)(a), (c), and (e) of the Pennsylvania Labor Relations Act (“PLRA”),⁶ see 43 P.S. § 211.6(1)(a), (c), and (e), and Act 111.⁷ On March 9, 2007, the Secretary of the Board issued a Complaint and Notice of Hearing. In lieu of a hearing, the parties agreed to submit a Joint Stipulation of Facts, along with briefs.

Hearing Examiner Thomas Leonard issued a Proposed Decision and Order on January 4, 2008, in which he concluded that pensions are a mandatory subject of bargaining under Act 111, and the City's unilateral elimination of the PLSDO violated the City's statutory duty to bargain with the Union in violation of Section 6(1)(a) and (e) of the PLRA.⁸ The Hearing Examiner ordered, inter alia, that the City rescind the repeal of the PLSDO ordinance and cease and desist from refusing to collectively bargain with the Union. The City filed exceptions on January 22, 2008. On March 18, 2008, the Board issued a Final Order which dismissed the exceptions and affirmed the Proposed Decision and Order. Thereafter, the City filed a Petition for Review with the Commonwealth Court.

On appeal, a three-judge panel of the Commonwealth Court reversed the Board's order denying the City's exceptions. In doing so, the court found that, although Act 111 mandated bargaining over pension benefits, the City did not violate its bargaining obligations by unilaterally rescinding the PLSDO for the firefighters because the Agreement was not sufficiently clear as to the intention of the parties regarding this benefit. City of Erie v. PLRB, 652 C.D.2008 (Pa.Cmwlth. filed March 5, 2009).⁹

Specifically, in an unpublished opinion authored by Judge Mary Hannah Leavitt, the court initially considered the issue of whether the PLSDO was incorporated into the Agreement. The court examined the terms of the Agreement and concluded that the language in Article XI, Section 1—that the pension fund “shall be governed” in accordance with state statutes and the City's ordinances—was general and unclear as to whether the PLSDO was a part of the Agreement. Further, the court noted that the negotiated substantive improvement to the pension plan contained in the Agreement—that “the Firefighters' Pension Plan will be amended to increase the line-of-duty disability pension from 50% to 75%”—was presented in bold. This was not done so for the PLSDO. According to the court, it was inconsistent and illogical that the parties did not pursue a similar drafting style for the PLSDO had it been a negotiated improvement to the pension plan under the Agreement. Second, the court found informative that Article XI, Section 1 was a carryover sentence that appeared in a prior collective bargaining agreement. Section 5 of the Agreement was reserved for a DROP, but was left blank. The Commonwealth Court opined that, if the parties had negotiated for the PLSDO, “they should have included it in Article XI, Section 5; or in Article I, Section 1 in bold; or in both places in the [Agreement].” City of Erie v. PLRB, at 12. Moreover, the court pointed out that the stipulation of facts was silent over whether the parties bargained over the PLSDO.

Having found the PLSDO was not incorporated into the Agreement, the court determined that an exception to the general duty to bargain expressed in its prior decision in Plainfield Twp. Policemen's Ass'n v. PLRB, 695 A.2d 984 (Pa.Cmwlth.1997), was controlling. As discussed in greater detail below, in Plainfield Twp., the Commonwealth Court held an employer did not engage in an unfair labor practice by failing to bargain over an elimination of a pre-contract ordinance providing a pension benefit that was found to be illegal. The court opined that the elimination of the benefit did not constitute an unfair labor practice because the parties had not specifically addressed the subject of pensions in their negotiations, and their collective bargaining agreement made no mention of the benefit, and, thus, the employer gained no bargaining advantage by eliminating the benefit. While recognizing the Agreement in the matter sub judice was not silent regarding pension benefits, the Commonwealth Court herein nevertheless reasoned that, based upon the language in the Agreement and the silence of the parties regarding any explicit negotiations, the matter was governed by Plainfield Twp., and the City was free to unilaterally repeal the pension benefits accorded by Article 149.09 without bargaining with the Union. Important to the Commonwealth Court's determination was the illegality of the benefit: “Absent evidence that the illegal pension benefit in the ordinance was actually negotiated and then specifically incorporated into the [collective bargaining agreement], the municipality may rescind the ordinance without negotiating with the Union. Without evidence that the terms of the illegal benefit in the ordinance was negotiated, the municipality cannot be said to have gained a benefit from the inclusion of an illegal provision into a [collective bargaining agreement].” City of Erie v. PLRB, at 11. Accordingly, the Commonwealth Court held the Board erred in dismissing the City's exceptions and reversed the Board's order.

The Board sought this Court's discretionary review,...