Phila. Hous. Auth. v. Am. Fed'n of State, Cnty. & Municipal Emps., Dist. Council 33, Local 934

52 A.3d 1117

The PHILADELPHIA HOUSING AUTHORITY, Appellee

v.AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, DISTRICT COUNCIL 33, LOCAL 934, Appellant.

Supreme Court of Pennsylvania.

Argued Oct. 21, 2009.

Resubmitted Nov. 22, 2011.

Decided Aug. 21, 2012.

Angela Irene Heverling, Pennsylvania State Education Association, Lynne Lepore Wilson, PA State Education Association (PSEA), Harrisburg, for Amicus Curiae, Pennsylvania State Education Association.

Samuel L. Spear, Spear Wilderman, PC, Philadelphia, for American Federation of State, County and Municipal Employees, Dist. Council 33, Local 934.

Arlene J. Angelo, Kelly Theresa Kindig, Mary Theresa Metzler, Philadelphia, Ballard Spahr Andrews & Ingersoll, L.L.P., for Philadelphia Housing Authority.

Sean Ashley Fields, PA School Boards Association, Inc., for Appellee Amicus Curiae, Pennsylvania School Board Association.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Chief Justice CASTILLE.^*

We granted review to determine whether a labor arbitration award, issued pursuant to the Public Employe Relations Act (“PERA”),¹ and reinstating an employee discharged for acts constituting sexual harassment, violated well-defined and dominant public policy. Concluding that it did, we affirm the order of the Commonwealth Court, and vacate the award.

Appellant, American Federation of State, County and Municipal Employees, District Council 33, Local 934 (“appellant”), and appellee, the Philadelphia Housing Authority (“PHA”), are parties to a collective bargaining agreement (“CBA”) governing the wages, hours and working conditions of PHA's employees. The CBA includes a provision that an employee can be terminated only for just cause. Thomas Mitchell, a warehouseman employed by PHA, was accused of sexually harassing a co-worker, Stephanie Broadnax, and was fired following an internal PHA investigation. Thereafter, appellant filed a grievance on Mitchell's behalf. When the grievance procedures of the CBA were exhausted without a resolution satisfactory to appellant and Mitchell, appellant filed a demand for arbitration. Arbitration hearings were conducted on August 27, 2003 and February 17, 2004. The issue before the arbitrator was “whether [PHA] had just cause to terminate [Mitchell's] employment, and, if not, what would be the appropriate remedy.” Arbitration Award, dated July 12, 2004, at 27. The arbitrator made extensive factual findings. Id. at 3–27.

Broadnax testified about Mitchell's numerous sexually explicit comments and actions toward her, which began in 2001 and continued into 2002. Id. at 3–10. She described acts of inappropriate touching and sexual comments made by Mitchell, which caused her discomfort, particularly when she and Mitchell were alone. She described one particularly egregious incident where Mitchell grabbed Broadnax from behind while she was filing paperwork, “grinding” himself into her for approximately 15 seconds. Id. at 5, 9. Another incident involved Mitchell hiding under a desk to “take a nap” and then asking Broadnax if he could “eat her pussy” while she worked. Mitchell would hug Broadnax, throw his arms around her neck, and “play with himself” while speaking to her; he made her “upset and nervous.” Broadnax testified that she also witnessed Mitchell pinch the breasts of the other female warehouse employee, Linda Bradford.

Broadnax further testified that she was nervous in Mitchell's presence and described him as a bully and a source of persistent annoyance; she testified that his actions were disgusting and upsetting to her. Broadnax conceded that there were occasionally jokes of a sexual nature among the eight employees who worked in the warehouse, but she stated that very little of this behavior was engaged in by anyone other than Mitchell.²

When Broadnax learned that Mitchell was going to be reassigned to a desk next to hers, she advised her supervisor, Joseph Brunetti, about Mitchell's conduct, and that she did not want to work so close to Mitchell. Then, Broadnax and Mitchell engaged in a verbal altercation which was apparently prompted by Mitchell's anger that Broadnax had reported his behavior to Brunetti. Brunetti broke up the argument, and took Mitchell outside to discuss and criticize his behavior. Brunetti told Mitchell that he had to stop touching Broadnax and refrain from any more yelling.³ Shortly thereafter, Broadnax learned that the altercation had been reported to PHA's human relations department, and she met with PHA's Equal Employment Opportunity Officer, Rosanna Grdinich, to whom she described Mitchell's various acts and remarks.

Grdinich interviewed Broadnax and Mitchell at the warehouse, finding Broadnax credible and Mitchell not credible. Grdinich testified that PHA had a zero tolerance policy on sexual harassment, and because of this policy, she recommended that PHA take immediate administrative action against Mitchell, although she did not recommend a specific discipline. Susan Stefencavage, PHA's human resources assistant general manager, explained that the decision to terminate Mitchell was based on: 1) his pattern of sexual harassment; 2) his unwanted touching of Broadnax; 3) his touching himself; 4) “the policy which provides for termination” ⁴; and 5) the fact that there was no way to accommodate Mitchell without placing others in jeopardy or “at risk” for sexual harassment. Id. at 19. Mitchell denied the allegations made against him.

The arbitrator concluded that Mitchell was not credible, and that Broadnax's testimony regarding Mitchell's inappropriate conduct was credible. The arbitrator specifically found that Mitchell had been adequately informed about PHA's prohibition against sexual harassment, and that his behavior toward Broadnax was “lewd, lascivious and extraordinarily perverse.” Id. at 33. Although he found that Mitchell's misconduct was “unacceptable,” the arbitrator also found that after the “verbal warning” given to Mitchell by Brunetti, Mitchell engaged in no further inappropriate sexual harassment of Broadnax. The arbitrator then concluded that PHA did not have just cause to terminate Mitchell's employment. PHA was directed to reinstate Mitchell and make him whole. Id. at 36–37.

PHA filed a petition to vacate the arbitrator's award, which the trial court denied. On PHA's further appeal, the Commonwealth Court reversed, holding that PHA's legal obligation to protect its employees constituted a “core function” of the agency that PHA could not bargain away and, therefore, the arbitrator's award requiring Mitchell's reinstatement was not rationally derived from the CBA and could not be enforced. Philadelphia Housing Authority v. American Fed. of State, County & Mun. Employees, 900 A.2d 1043 (Pa.Cmwlth.2006), vacated,596 Pa. 207, 941 A.2d 1257 (2008). Appellant petitioned for allowance of appeal, and by order dated January 2, 2008, this Court granted the petition, vacated the Commonwealth Court's order, and remanded with instructions to reconsider PHA's petition to vacate in light of Westmoreland Intermed. Unit No. 7 v. Westmoreland Intermed. Unit No. 7 Classroom Assistants Educ. Support Personnel Ass'n, 595 Pa. 648, 939 A.2d 855 (2007) ( “Westmoreland ”). Our remand order essentially directed the Commonwealth Court to consider PHA's petition under Westmoreland 's newly adopted “public policy exception” to the “essence test,” rather than the disapproved “core functions exception” the court had applied in the earlier appeal.⁵

Upon further briefing and reargument, the Commonwealth Court again reversed the trial court and vacated the arbitration award which reinstated Mitchell. Philadelphia Housing Authority v. American Fed. of State, County & Mun. Employees, 956 A.2d 477, 487 (Pa.Cmwlth.2008) ( en banc ). Applying the public policy exception to the essence test, the court determined that the arbitrator's award reinstating Mitchell violated two related public policies, a policy arising from Title VII of the Civil Rights Act of 1964, and federal Equal Employment Opportunity Commission (“EEOC”) regulations, as well as the policy embodied in the Pennsylvania Human Relations Act (“PHRA”): a public policy against sexual harassment, and a separate public policy favoring voluntary employer actions to prevent sexual harassment, including the imposition of sanctions against harassers. Id. at 483. The court determined that Mitchell's reinstatement, without any sanction whatsoever, undermined the public policies against sexual harassment, and thus could not be upheld. “If forced to honor the arbitration award, PHA will not be complying with Title VII and the PHRA, each of which requires that an employer impose appropriate discipline for proven cases of sexual harassment in order to ensure a safe work environment free of sexual harassment.” Id. at 487.⁶

Appellant filed a petition for allowance of appeal in this Court, and we granted review on the following rephrased issues:

(1) Whether the Arbitrator's award violates a clearly articulated public policy, as defined by the public policy exception to the essence test, established by this Court in Westmoreland?

(2) Whether the Commonwealth Court misapplied the public policy exception by holding that public policy requires severe discipline by an employer in response to sexual harassment, notwithstanding that (a) the employee was disciplined in the form of a verbal warning; (b) the employee abided by the warning and committed no further harassment warranting discipline following the warning; and (c) federal and state regulations, cases, and policies, and the employer's own policy, do not require that an offending employee be punished, and contemplate that a warning may be a sufficient response to sexual harassment?

Philadelphia Housing Authority v. American Fed. of State, County & Mun. Employees, 601 Pa. 313, 972 A.2d 482 (2009).

As stated, our review of this appeal from a PERA arbitration award is governed...