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Fraternal Order of Police v. City of Johnstown

February 22, 2012

FRATERNAL ORDER OF POLICE, FLOOD CITY LODGE NO. 86
v.
CITY OF JOHNSTOWN,
APPELLANT



The opinion of the court was delivered by: Robert Simpson, Judge

Argued: November 16, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge*fn1 HONORABLE BERNARD L. McGINLEY, Judge HONORABLE DAN PELLEGRINI, Judge

HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JOHNNY J. BUTLER, Judge*fn2

OPINION BY

JUDGE SIMPSON*fn3

The City of Johnstown (City) appeals from an order of the Court of Common Pleas of Cambria County (trial court) which vacated Section 4(a) of an interest arbitration award between the City and the Fraternal Order of Police, Flood City Lodge No. 86 (FOP), which involves healthcare benefits for certain police officers retiring after a given date. Many of the issues originally presented were resolved by our Supreme Court‟s recent decision in City of Scranton v. Firefighters

Local Union No. 60, of the International Association of Fire Fighters, ___ Pa. ___, 29 A.3d 773 (2011) (City of Scranton). Nevertheless, we must decide whether the trial court erred in determining that post-retirement benefits for current employees are part of a retirement system which, pursuant to Section 2962(c)(3) of the Home Rule Charter and Optional Plans Law (Home Rule Charter Law),*fn4 cannot be diminished. For the following reasons, we affirm the order of the trial court.

I. Background

A. Generally

The City is a home rule charter municipality within the meaning of the Home Rule Charter Law. Pursuant to the Policemen and Firemen Collective Bargaining Act (Act 111),*fn5 and the Pennsylvania Labor Relations Act (PLRA),*fn6 the City is the public employer of its police officers. The FOP is the exclusive collective bargaining representative for the City‟s police officers pursuant to Act 111 and the PLRA. The City and the FOP were parties to a January 1, 2007 through December 31, 2009 collective bargaining agreement (CBA), which set forth the wages, hours, and other terms and conditions of the police officers‟ employment.

The terms of an interest arbitration award provided that active police officers hired prior to October 11, 2007, were promised full post-retirement health insurance benefits for the officer and his/her spouse and dependents until the member became eligible for Medicare. In addition, it provided that police officers hired after October 11, 2007, were entitled to receive fully paid post-retirement health insurance for the officer only, until he/she was eligible for Medicare.

On June 15, 1992, the City requested the Pennsylvania Department of Community Affairs (now known as the Department of Community and Economic Development - DCED) to determine whether the City was eligible for distressed municipality status under the Municipalities Financial Recovery Act (Act 47).*fn7 That same year, the DCED found that the City was a distressed municipality and, pursuant to Act 47, a coordinator (Act 47 Coordinator) was appointed by DCED to prepare a plan addressing the City‟s financial problems. Thereafter, recovery plans were developed and adopted.

On December 12, 2007, the City adopted and implemented its fourth amended (and current) recovery plan (2007 Recovery Plan). A provision of the 2007 Recovery Plan stated: "Retiree Healthcare - Employees hired on or before October 11, 2007, the date of the Act 111 arbitration award, shall retain retiree healthcare but for such employees only and not for their dependents." Reproduced Record (R.R.) at 170a.

B. Award

In 2009, the FOP initiated collective bargaining over terms for a successor CBA; however, the parties were unable to reach an agreement. As a result, the FOP made a timely request for interest arbitration in accordance with Act 111. A panel was selected, and it took testimony and received other evidence. Thereafter, a divided panel issued the award on April 12, 2010. Consistent with the 2007 Recovery Plan, Section 4(a) of the award, entitled "Retiree Health Insurance" stated:

Effective January 1, 2011, employees of the bargaining unit hired on or before October 11, 2007 shall retain retiree healthcare for Employee Only coverage, and not for any coverage above Employee Only.

The 15% premium co-payment applicable to active officers shall not apply to these post January 1, 2011 retirees. It is recognized, however, in accordance with the Recovery Plan that retirees in this classification shall be required to pay the increases in healthcare premiums subsequent to the date of retirement.

R.R. at 7a-8a (emphasis added).

C. Trial Court

The FOP filed a petition with the trial court to partially vacate the award because it violated Section 2962(c)(3) of the Home Rule Charter Law, Article I, Section 10 of the United States Constitution, and Article I, Section 17 of the Pennsylvania Constitution. The FOP asserted Section 4(a) illegally diminished the post-retirement medical benefits of: (1) police officers hired before October 11, 2007 and retiring after January 1, 2011 (which it argues encompasses the majority of the FOP) by eliminating coverage for their spouses and dependents, and by requiring them to pay the increases in healthcare premiums for such coverage after retirement; and, (2) police officers hired after October 11, 2007 by requiring them to pay all increases in the premiums for such coverage. The City filed its answer to the FOP‟s petition denying its allegations.

Both parties submitted written and oral argument to the trial court. On August 24, 2010, the trial court issued an order vacating Section 4(a) of the award on the basis that the provision constituted an unlawful elimination of postretirement medical benefits in violation of the Home Rule Charter Law. The City filed a timely appeal to this Court seeking to reinstate Section 4(a) of the award.*fn8 Subsequently, DCED and the City‟s Act 47 Coordinator filed an application to intervene, they filed written argument as friends of the court principally aligned with the City, and they participated in oral argument.*fn9

D. City of Scranton

The majority of arguments raised by the City, DCED and the City‟s Act 47 Coordinator relate to the impact of Act 47 and the 2007 Recovery Plan on the award. In the interim, however, our Supreme Court decided City of Scranton. The Court determined that Section 252 of Act 47*fn10 "does not impinge on interest arbitration awards" under Act 111. City of Scranton, ___ ...


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