Sch. Dist. of Phila. v. Phila. Fed'n of Teachers

164 A.3d 546

SCHOOL DISTRICT OF PHILADELPHIA, Appellant

v.PHILADELPHIA FEDERATION OF TEACHERS, AFT, Local 3, AFL–CIO

No. 2301 C.D. 2015

Commonwealth Court of Pennsylvania.

Argued: October 17, 2016

Filed: June 8, 2017

A. Richard Feldman, Philadelphia, for appellant.

Ralph J. Teti, Philadelphia, for appellee.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE JOSEPH M. COSGROVE, Judge, HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION BY COSGROVE, JUDGE

The School District of Philadelphia (District) appeals from an order of the Court of Common Pleas of Philadelphia County (trial court) which denied the District's Motion to Vacate an Arbitration Award (Award) that sustained the grievance of the Philadelphia Federation of Teachers (Union). Upon review, we affirm.

I. BACKGROUND

Anticipating a funding deficit for the 2013–2014 academic year, the District laid off several thousand employees in June of 2013 and closed 31 schools. Every school counselor was laid off. During the summer of 2013, the District received additional funds which were enough to recall some, but not all, of the counselors laid off. Due to the District's financial constraints, it believed insufficient funds existed to place a full-time counselor in the smallest schools. By late fall of 2013, every school had a counselor assigned to it, with the smaller schools in the District sharing a counselor. The District recalled counselors without preference for seniority and placed them in the schools they served the prior academic year.

The Union filed a grievance alleging the collective bargaining agreement (CBA), which expired on August 31, 2013, required the recall of counselors in order of seniority and they be given their pick of school on the same basis. The Union grievance also alleged the CBA required the recall of counselors in sufficient numbers to place a counselor full-time in each school, regardless of school size. The matter went to arbitration, and hearings were held on September 10, 2014 and January 20, 2015. Arbitrator Ralph Colflesh, Jr. (Arbitrator) issued his Award on June 29, 2015, sustaining the Union's grievance in its entirety.

The District filed a timely Petition to Vacate or Modify the Award with the trial court, which the trial court denied on November 10, 2015. The District appealed to this Court.

II. ISSUES

As set forth in its brief, the District raises two questions on appeal:

(1) [w]hether the essence test and Section 7302(d)(2) of the Uniform Arbitration Act¹ [UAA] require[s] the [ ] Award to be vacated in its entirety because, once the parties' [A]greement expired, Act 46 [ ]² and decades of precedent gave the School District the right to recall and reassign counselors without regard to numerical quotas or seniority, such matters having become non-mandatory subjects of bargaining by virtue of Section 696(k)(2)³ of [Act 46]; and

(2) [w]hether the Award as to the two seniority-based grievances should be vacated under the essence test where the [A]greement was devoid of language creating any such seniority rights, no cognizable past practice existed, and the Arbitrator rewrote the [A]greement rather than interpreting it.

(Appellant's Br. at 1–2.)

III. DISCUSSION

A. Act 46

The District argues Section 696(k)(2) of Act 46, when viewed in light of prior decisions of our Supreme Court, mandates that this Court vacate the Award because once the CBA expired, the provisions of Act 46 controlled, thereby enabling the District to impose new non-mandatory terms unilaterally, without engaging in prior bargaining under the CBA. (Appellant's Br. at 21.)

Section 696(k)(2) of Act 46 provides in pertinent part:

(2) No distressed school district of the first class shall be required to engage in collective bargaining negotiations or enter into memoranda of understanding or other agreements regarding any of the following issues:

...

(ii) Decisions related to reductions in force.

(iii) Staffing patterns and assignments, class schedules, academic calendar, places of instruction, pupil assessment and teacher preparation time.

24 P.S. § 6–696(k)(2)(ii),(iii).

In support of its argument, the District cites City of Pittsburgh v. Pennsylvania Labor Relations Board , 539 Pa. 535, 653 A.2d 1210 (1995), which held that a public employer is entitled to act unilaterally after expiration of a collective bargaining agreement with respect to an issue that is a non-mandatory subject of bargaining.

In City of Pittsburgh , the city, a party to the collective bargaining agreement with the labor union, enacted an ordinance establishing a revised pension benefit plan. Such action was required for participation in the Municipal Pension Plan Funding Standard and Recovery Act (Act 205),⁴ which provided state financial assistance to municipalities whose pension systems were determined to be financially distressed. The union filed a charge alleging the city violated the Public Employe Relations Act (PERA)⁵ in implementing a revised pension benefit plan without first entering into mandatory negotiations with the union.

The essential issue raised by City of Pittsburgh was whether the provisions of Act 205 conflicted with PERA and, if a conflict existed, how must it be resolved. City of Pittsburgh, 653 A.2d at 1212. Section 607(e) of Act 205 explicitly provides that "[a] revised benefit plan for newly hired municipal employees shall be developed with consultation with representatives of the collective bargaining unit applicable to the affected type of municipal employee, if any, and shall be within the scope of collective bargaining pursuant to the applicable law subsequent to the establishment of the revised benefit plan." 53 P.S. § 895.607(e).

Section 701 of PERA mandates bargaining "with respect to wages, hours, and other terms and conditions of employment." 43 P.S. § 1101.701. The parties did not disagree that pensions were included within this mandated bargaining. City of Pittsburgh, 653 A.2d at 1212. Section 702 of PERA provides that public employers need not bargain over matters of inherent managerial policy. 43 P.S. § 1101.702. Participation in the Act 205 recovery program is not mandatory. City of Pittsburgh, 653 A.2d at 1214.

The Supreme Court read Section 607(e) of Act 205 together with Section 702 of PERA and concluded the city's decision to avail itself of the assistance provided by Act 205 constituted an inherently managerial decision. Id. at 1213–1214. Because Section 607(e) of Act 205 allowed the city to establish a revised plan without mandating labor negotiations, the legislature effectively brought that activity within the ambit of Section 702 (inherent managerial activity). Id. at 1214. The legislative creation of the opportunity to participate gave the city authority to participate fully, even when doing so expanded the scope of inherently managerial activity. Id.

Here, the District argues City of Pittsburgh is analogous because that decision similarly concerned a financially-distressed entity and a specialized financial distress statute. (Appellant's Br. at 29.) The labor contract at issue in City of Pittsburgh was set to expire December 31, 1987.

Similarly, the District here reasons that its CBA with the Union likewise expired and the decision to recall counselors out of seniority order, assign them to schools without regard to seniority, and require smaller schools share a single counselor constituted non-mandatory subjects of bargaining within the District's inherent managerial authority. (Appellant's Br. at 25–26.)

City of Pittsburgh is distinguishable from the present matter. The provisions of Section 696 of Act 46 become operative upon the declaration that a school district of the first class is distressed.⁶ The District has no ability to opt in or out once it has been declared distressed. The District was so declared in 2001. The city of Pittsburgh's decision to "avail itself of the assistance offered by Act 205 [was] an inherently managerial decision." City of Pittsburgh, 653 A.2d at 1213. By acting within the mandatory constraints of Section 696 of Act 46, the District cannot be said to have made an inherently managerial decision.

More compelling than City of Pittsburgh is this Court's decision in Philadelphia Federation of Teachers v. School District of Philadelphia, 109 A.3d 298 (Pa. Cmwlth. 2015) ( PFT ),⁷ which addressed the very argument presented by the District here.

In PFT , this Court noted that "there is no language in section 693(a)(1)⁸ or [section] 696 empowering the [School Reform Commission] to unilaterally impose new economic terms and conditions of employment on a bargaining unit." PFT, 109 A.3d at 319. PERA was only repealed to the extent it was inconsistent with the Act 46 provisions, otherwise, it remains intact. Id. at 320. "To effectuate its desired means, the [District] must look to the General Assembly to enact legislation providing it with the authority to proceed with unilateral modifications that alter an expired CBA (or the status quo ) in the absence of an impasse." Id .

Here, the District attempts to distinguish the current matter from PFT by stating that the terms at issue are not economic terms or conditions of employment. We disagree. The Arbitrator found there could be no argument that the requirement to employ one counselor on a full-time basis in each school was an economic provision. (R.R. at 178a.)

Both Naomi Wyatt (Wyatt), the District's chief talent officer, and Matthew Stanski, the District's chief financial officer, testified extensively about the District's dire financial condition and the resultant need to layoff all counselors in the District. (R.R. at 145a–150a.) According to Wyatt, the District lacked sufficient funding to call back all the counselors previously employed and the "decision was made to make sure that the schools had counseling service that would be the most effective in a limited staffing environment." (R.R. at 148a.) Wyatt testified that principals were permitted to select from those counselors...