WILKES-BARRE TP. v. PLRA

878 A.2d 977

WILKES-BARRE TOWNSHIP, Petitioner v. PENNSYLVANIA LABOR RELATIONS BOARD, Respondent.

Commonwealth Court of Pennsylvania.

Argued June 6, 2005.

Decided July 13, 2005.

Bruce J. Phillips, Wilkes-Barre, for petitioner.

Warren R. Mowery, Jr., Harrisburg, for respondent.

Sean T. Welby, Harrisburg, for intervenor, Wilkes-Barre Twp. Police Benevolent Association.

BEFORE: SMITH-RIBNER, J., LEAVITT, J., and JIULIANTE, Senior Judge.

OPINION BY Judge LEAVITT.

Wilkes-Barre Township (Township) petitions for review of an order of the Pennsylvania Labor Relations Board (Board) dismissing its exceptions to, and making final, a proposed decision and order of the Board's hearing examiner. In doing so, the Board concluded that the Township had committed unfair labor practices in violation of Sections 6(1)(a) and (e) of the Pennsylvania Labor Relations Act (PLRA)¹ and Act 111 of 1968 (Act 111)² by enacting an ordinance that unilaterally altered the pension benefit program of the Township's police officers.

The Wilkes-Barre Township Police Benevolent Association (Association) is the exclusive recognized bargaining representative for the Township's police officers. The Association and the Township have been parties to a succession of collective bargaining agreements that govern, inter alia, the officers' pension benefit program. The pension program is further defined by ordinance.

Pennsylvania's Auditor General audited the pension program for the years 1999, 2000 and 2001 and issued a report dated July 19, 2001. The Auditor General's report advised the Township that the pension program failed to comply in several respects with the act commonly known as Act 600.³ Among the deficiencies identified by the Auditor General was the inclusion of payments made to officers for unused vacation time in the computation of their monthly retirement benefit. Auditor General Report, Finding No. 3. The Auditor General opined that this aspect of the pension program violated Section 5(c) of Act 600, which provides, in pertinent part, as follows:

Monthly pension or retirement benefits other than length of service increments shall be computed at one-half the monthly average salary of such member during not more than the last sixty nor less than the last thirty-six months of employment.

53 P.S. § 771(c). While acknowledging that Act 600 does not define "salary," the Auditor General concluded that "based on a line of court opinions ... the term does not encompass lump-sum payments for leave ... not earned during the pension computation period." Auditor General Report, Finding No. 3 (emphasis added). The Auditor General recommended that the Township eliminate this and other aspects of the pension program not authorized by Act 600. Id.⁴

In 2002 the Township and the Association began collective bargaining to replace the agreement set to expire on December 31, 2002. In March 2003, the new agreement (CBA), at issue in this case, was executed and became effective on January 1, 2003.⁵ Article 23 of the CBA governs pensions and provides, inter alia, that upon retirement, "[t]he monthly pension payment benefit shall be set at fifty-five (55) percent of the Officer's average monthly gross salary of the last twelve (12) months of full time service." Reproduced Record at 27a (R.R. ____) (emphasis added).⁶ The term "gross salary" is not defined in the CBA.

On December 1, 2003, the Township enacted Ordinance No.2003-12 entitled "Ordinance Amending Township of Wilkes-Barre Police Pension Plan Ordinance" (Ordinance). R.R. 1a. The Ordinance provides, inter alia, that, for police officers hired prior to January 1, 2003, "monthly pension or retirement benefits other than length of service increments shall be computed at fifty-five percent (55%) of the monthly average compensation of such member during the last twelve (12) months of employment...." Id. at 2a (emphasis added).⁷ The Ordinance defines "compensation" as follows:

For a policeman hired prior to January 1, 2003, compensation shall be defined as monies received by a participant in each and every month, including base pay, longevity pay, night differential, overtime, and any other increments. This shall be defined as salary for purposes of this Ordinance. Payments made for unused vacation time for the twelve (12) month period prior to retirement will be included in the calculation of compensation for pension calculation purposes. Payments made for accumulated, but unused sick leave shall not be included in the calculation of compensation for pension calculation purposes.

For a policeman hired on or after January 1, 2003, compensation shall be defined as monies received by a participant in each and every month, including base pay, longevity pay, night differential, overtime, and any other increments. This shall also be defined as salary for purposes of this Ordinance. Payments made for accumulated, but unused sick and vacation leave shall not be included in the calculation of compensation for pension calculation purposes.

Id.⁸

On December 22, 2003, the Association filed a charge of unfair labor practices with the Board alleging that the Township had violated Act 111 and Section 6(1)(a) and (e) of the PLRA⁹ by unilaterally altering, and thereby repudiating, the pension terms agreed to in the CBA. Specifically, the Association challenged the Township's definition of the term "compensation" in the Ordinance, which the Association believed to ascribe a particular meaning to the undefined term "gross salary" that appeared in Article 23 of the CBA. The Association argued that "the parties agreed that the inclusion of pay for all accumulated, but unused, vacation, personal, and compensatory time in the calculation of final salary for pension purposes would not apply to any member hired after January 1, 2003, but would continue to apply to members hired before that date." R.R. 7a.¹⁰ In response, the Township claimed contractual privilege and defended the Ordinance as a legislative response to the recommendations in the Auditor General's report.

A hearing examiner conducted a hearing on the Association's charges and found them to be meritorious. In his proposed decision and order, the hearing examiner explained that the Township had violated its duty to bargain by (1) increasing the officers' contribution rate above the percentage established in the CBA and (2) eliminating the credit for prior military service set forth in Article 23, Section 6 of the CBA. The examiner rejected the Township's contractual privilege defense, finding the Ordinance was directly contrary to the clear language of the CBA. The examiner also rejected the Township's defense that it was simply responding to the Auditor General's report, citing this Court's decision in Upper Chichester Township v. Pennsylvania Labor Relations Board, 153 Pa.Cmwlth. 446, 621 A.2d 1134 (1993).¹¹ The examiner ordered the Township to rescind the Ordinance and restore the status quo ante. The Township filed exceptions with the Board.

On review, the Board found, inter alia, that the Ordinance unilaterally ascribed a certain meaning to "gross salary," a term undefined in the CBA.¹² The Board concluded that the Township had violated Act 111 and Section 6(1)(a) and (e) of the PLRA by unilaterally altering the contractual pension provisions with regard to officers hired before January 1, 2003, without first bargaining with the Association. Accordingly, the Board dismissed the Township's exceptions and made the examiner's proposed decision and order absolute and final. The Township now petitions for this Court's review and raises two issues, one pertaining to the Board's authority and the other challenging the Board's remedy.¹³

The Township first argues that the Association sought an "interpretation" of the CBA, which does not define "gross salary" and which contains no provisions for including unused compensatory, personal and/or vacation time in the calculation of final salary for pension purposes. The Township avers that the Board exceeded its authority by interpreting the CBA, and, moreover, that it had a "sound arguable basis" for enacting the Ordinance.

With respect to the proper role of the Board in labor disputes, this Court has explained that the Board "exists to remedy violations of statute, i.e., unfair labor practices, and not violations of contract." Pennsylvania State Troopers Association v. Pennsylvania Labor Relations Board, 761 A.2d 645, 649 (Pa.Cmwlth.2000). Where a breach of contract is alleged, it should be resolved by an arbitrator using the grievance procedure set forth in the parties' collective bargaining agreement. Id. However, the Board is empowered to review an agreement to determine whether the employer clearly has repudiated its provisions because such a repudiation may constitute both an unfair labor practice and a grievance. Id.

In this case, the Association alleged just such a repudiation of the terms of the CBA. Specification of Charges ¶ 7; R.R. 7a — 8a. It did not allege a breach of contract, nor did it seek an interpretation of the CBA. The Board properly reviewed the terms of the CBA to the extent necessary to resolve the Association's unfair labor practice charges.

Turning to the Township's "sound arguable basis" defense, it is beyond peradventure that pensions are a mandatory subject of collective bargaining. Section 1 of Act 111, 43 P.S. § 217.1. As such, an employer is barred from acting unilaterally in this area without satisfying the statutory resolution procedure. Plumstead Township v. Pennsylvania Labor Relations Board, 713 A.2d 730, 733 (Pa.Cmwlth.1998). The Board, and this Court, recognizes "contractual privilege" as an affirmative defense to an unfair labor practice charge of failure to bargain in good faith. State Troopers, 761 A.2d at 651. "The defense calls for the dismissal of such charges where the employer establishes a `sound arguable basis' in the language of the parties' collective...