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Pennsylvania Turnpike Commission v. Teamsters Local Union No. 77

April 11, 2012


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

Argued: February 14, 2012




The Pennsylvania Turnpike Commission (Commission) appeals from an arbitration award denying its grievance against Teamsters Local Union Number 77 (Union) as untimely pursuant to their collective bargaining agreement (CBA).*fn1

In the arbitration, the Commission sought indemnification for attorney fees it incurred in defending litigation filed by non-union employees challenging "fair share" deductions. Rather than decide the merits, the arbitrator found the Commission‟s claim procedurally defective. For the reasons that follow, we vacate and remand.


With respect to terms and conditions of employment, the Union is an exclusive representative for employees of the Commission under the CBA. Review of the unique circumstances leading to arbitration is crucial in this case.

In 2007, non-union Commission employees sued the Union and the Commission in the United States District Court for the Middle District of Pennsylvania challenging the collection of union dues for non-union members (Federal Court Action). In particular, the employees filed a civil rights action protesting the collection of fair share fees under Article 4 of the CBA.

Pursuant to the CBA, the Commission must deduct a fair share fee monthly from all employees who are not Union members. The CBA contains an indemnification clause in Article 4, Section 3, which provides:

the Union shall indemnify and save the Commission harmless from any and all claims, suits, orders or judgments brought or issued against the Commission as a result of any action arising out of or resulting from implementing [the fair share provision].

Reproduced Record (R.R.) at 8a. The "fair share" provision of the CBA in Article 4 incorporates the Commission‟s duty as a public employer to deduct fair share fees from non-Union members. R.R. at 7a. This duty of collection is imposed on public employers by the Public Employee Fair Share Fee Law*fn2 (Fair Share Law).

The Commission filed a cross-claim against the Union seeking indemnification and attorney fees related to the Federal Court Action. The part of the cross-claim involving attorney fees is central to the current controversy.

The parties executed a settlement agreement resolving the Federal Court Action on May 9, 2008 (Settlement Agreement). The Settlement Agreement required the Union to pay plaintiffs for their claims. The Commission was not required to make any payments to plaintiffs under the Settlement Agreement.

Paragraph 8 of the Settlement Agreement provides:

Defendants [Commission and the Union] agree to resolve the issues raised in the [Commission‟s] Cross-claim against [the Union] by submitting the issue to arbitration pursuant to the collective bargaining agreement in force between the parties.

R.R. at 155a-156a (emphasis supplied). The Commission thus agreed to submit its cross-claim for attorney fees to arbitration "pursuant to" the CBA. Id.

On September 19, 2009, the Commission sought arbitration with the American Association for Arbitration (AAA). The Union objected, alleging the AAA lacked jurisdiction over the matter. The Union argued that such jurisdiction rested solely with the arbitrator designated by the CBA. In response, the AAA advised the parties it did not have jurisdiction, and it closed its file.

By letter dated January 5, 2010, the Commission filed a "Request for Grievance Arbitration Panel" with Pennsylvania‟s Bureau of Mediation in the Department of Labor and Industry. The Commission submitted its claim directly to arbitration, protesting the failure of the Union to indemnify the Commission for attorney fees incurred in the Federal Court Action. Pursuant to the CBA, the parties selected an arbitrator, John Skonier (Arbitrator), to decide the cross-claim.

The Arbitrator held a hearing on October 8, 2010, at which the parties submitted testimony and documentary evidence in support of their respective positions. The parties also submitted post-hearing briefs.

Procedurally, the Union contended that the matter was not arbitrable because the Commission, as the employer, could not file a "grievance" under the CBA. The Union argued a "grievance" may only be filed by an employee. Substantively, the Union asserted the Commission was not entitled to recover attorney fees because the indemnification clause of the CBA did not specify such fees or a duty to defend. In addition, the Union argued that since the Settlement Agreement did not require the Commission to make any payments, its duty to indemnify was not triggered.

On August 14, 2011, the Arbitrator determined that the Commission‟s claim was "procedurally defective." Arbitrator‟s Op. at 16. The Arbitrator analyzed whether the Commission submitted the grievance "pursuant to the CBA" based on the procedural history of the case. The Arbitrator interpreted Article 26 of the CBA regarding the timeframe for filing grievances as ...

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