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CITY PHILADELPHIA v. DISTRICT COUNCIL 33 AND EARL STOUT (12/18/87)

decided: December 18, 1987.

CITY OF PHILADELPHIA, ET AL., APPELLANTS
v.
DISTRICT COUNCIL 33 AND EARL STOUT, APPELLEES



Appeal from the Order of the Court of Common Pleas of Philadelphia County, in case of District Council 33, et al. v. City of Philadelphia, No. 2118, January Term, 1987.

COUNSEL

Ralph J. Teti, Chief Deputy City Solicitor, with him, Jesse Milan, Jr., for appellants.

Richard A. Sprague, with him, Philip I. Weinberg, Randi J. Vladimer, Leslie M. Thoman, Sprague, Higgins & Creamer, for appellees.

Judges Craig, MacPhail, Barry, Colins and Palladino. Opinion by Judge Craig.

Author: Craig

[ 112 Pa. Commw. Page 91]

The City of Philadelphia appeals an order of the Court of Common Pleas of Philadelphia County preliminarily enjoining the city from enforcing Philadelphia Ordinance 1107 of January 8, 1987. That ordinance

[ 112 Pa. Commw. Page 92]

    purported to establish a pension plan for city employees hired after January 1, 1987, different from the plan provided in the collective bargaining agreement in effect between the city and District Council 33 of the American Federation of State, County and Municipal Employees, AFL-CIO (union), the exclusive bargaining representative for most of the city's civil service employees.

District Council 33 and Earl Stout, its president, filed a verified complaint in equity seeking (1) preliminary and permanent injunctions against the enforcement of Ordinance 1107, and (2) a declaration that enforcement of the ordinance would constitute a breach of the collective bargaining agreement between the union and the city, and that the ordinance is unconstitutional in that it violates article I, § 17 of the Constitution of the Commonwealth of Pennsylvania, and article I, § 10 of the Constitution of the United States, the state and federal "Contracts Clauses," which forbid the enacting of laws impairing the obligations of contract.

The issues raised on this appeal are (1) whether jurisdiction over this dispute properly lay in the court of common pleas or in the Pennsylvania Labor Relations Board when the union alleged a breach of contract accomplished by means of an assertedly unconstitutional ordinance, and (2) if jurisdiction in the court was proper, whether the order granting the preliminary injunction was supportable by any apparently reasonable grounds in the light of the standards established in case law for the granting of such relief.*fn1

[ 112 Pa. Commw. Page 93]

    plans determined by the Public Employee Retirement Study Commission. Depending on the degree of financial distress, municipalities may participate in one of three levels of the recovery program established in Chapter 6, if they elect to do so.

The City of Philadelphia sought an evaluation of the financial condition of its pension plan. The Retirement Study Commission determined that the city's plan was "severely distressed" (the worst rating); the city therefore was entitled to participate in Level III of the recovery program, as provided in section 606*fn3 of the Act. The city elected to participate in Level III.

Participation by a municipality in the recovery program both affords financial and other benefits to the municipality and imposes obligations upon it that are designed to aid in restoring the actuarial health of the pension plan. Among the mandatory remedies required of Level III participants is "[t]he establishment of a revised benefit plan for newly hired municipal employees pursuant to section 607(e)." Section 606(b)(2).*fn4

Section 607(e)*fn5 provides in part:

( e) Establishment of a revised benefit plan for newly hired municipal employees. -- The municipality may establish a revised benefit plan of the pension plan applicable to any employee first hired on or after the effective date of the instrument establishing the revised benefit plan. . . . Member contributions with respect to the revised benefit plan of the pension plan shall at a minimum be equal to or exceed 30% and at a maximum not to exceed 50%, of the normal cost of the pension plan, expressed as a percentage of covered payroll, as reported in the most recent

[ 112 Pa. Commw. Page 95]

    actuarial valuation report of the pension plan. 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.

Section 607 also provides that, "[n]otwithstanding any provision of law, municipal charter, municipal ordinance, municipal resolution, or pension plan agreement, document or instrument to the contrary, the remedies specified in this section shall be available to the applicable municipalities." Section 607(a).*fn6

Ordinance 1107, passed on January 8, 1987, over the mayor's veto, was designed to meet the requirements of section 607(e) of Act 205. The new pension plan, commonly known as "Plan 87," incorporated many changes from the Plan J provisions in effect under the collective bargaining agreement. Among those changes were increased eligibility requirements, change in the benefit calculation formula resulting in a reduction of benefits, and elimination of service-connected disability benefits.

On January 14, 1987, District Council 33 filed its complaint in equity asserting, among other things, that Ordinance 1107 unilaterally changed and abrogated the pension provisions of the collective bargaining agreement and that it was a unilateral decision of the city impairing the obligations of contract in violation of the contracts clauses of the state and federal constitutions. The complaint sought the injunctive and declaratory relief outlined above. On the same date the union filed a motion for preliminary injunction.

[ 112 Pa. Commw. Page 96]

Subsequent to the hearing, Judge Maier of the Court of Common Pleas of Philadelphia County issued an order on March 6, 1987, (1) preliminarily enjoining the city from enforcing Ordinance 1107 as it pertained to the members of District Council 33 (the injunction to terminate at midnight on June 30, 1988 -- the time of the expiration of the collective bargaining agreement), (2) maintaining jurisdiction over the matter until June 30, 1988, or until a full hearing on the permanent injunction or other resolution of the underlying action, (3) stating that the injunction might be dissolved upon a showing by the city that the continued enforcement of the injunction would be more harmful than dissolution, and (4) requiring the union to post a bond of $15,000. The city timely appealed from that order.

2. Jurisdiction

As a threshold matter, we must examine the city's contention that jurisdiction over this dispute lay exclusively in the Pennsylvania Labor Relations Board (PLRB) and not in the court of common pleas. Section 1301 of the Public Employe Relations Act (PERA)*fn7 provides as follows:

The [PLRB] is empowered, as hereinafter provided, to prevent any unfair practice listed in Article XII of this act. This power shall be exclusive and shall not be affected by any other means of adjustment or prevention that have ...


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