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City of Philadelphia v. American Federation of State

Supreme Court of Pennsylvania

June 7, 2013

CITY OF PHILADELPHIA, Petitioner
v.
AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO, DISTRICT 33, Respondent

Application for Extraordinary Relief

ORDER

PER CURIAM

AND NOW, this 7th day of June, 2013, the Motion for Leave to File Brief of Amici Curiae in Support of the Petitioner City of Philadelphia and the Motion for Leave to File a Reply Memorandum are GRANTED, and the Application for Extraordinary Relief is DENIED.

DISSENTING STATEMENT

MR. CASTILLE CHIEF JUSTICE

The Court has declined to grant the City's Application for Extraordinary Relief. For the reasons that follow, I dissent.

This case involves a protracted labor dispute with respect to non-professional, non-uniformed civil service employees of the City of Philadelphia ("City"). In April of 2008, the City and the American Federation of State, County and Municipal Employees, AFL-CIO, District 33 ("District Council 33") entered into negotiations for a successor agreement to a collective bargaining agreement that was due to expire on June 30, 2008. The parties were able to reach an agreement. On July 24, 2008, the parties signed a memorandum of agreement ("2008 MOA") which covered the period from July 1, 2008 through June 30, 2009. There has been no agreement in the nearly four years since then.

The parties first met on April 30, 2009 to negotiate a successor agreement to the 2008 MOA. This negotiation was unsuccessful. Following that negotiation session, the parties have met to negotiate on more than a dozen occasions over more than four years of bargaining; they have not come to an agreement. On January 16, 2013, the City presented what it deemed its final offer ("the Final Offer") to District Council 33. This Final Offer proposed wage increases: a 2.5% increase that was to take effect shortly after ratification and another 2% effective January 1, 2014. The Final Offer also proposed that employee contributions to the pension fund for existing employees should be increased so the employee contributions would be no less than 50% of the normal cost of the plan. The Final Offer also proposed placing new employees in a different pension plan, which limited the City's contribution to no more than 1.5% of a new employee's eligible compensation. District Council 33 rejected the Final Offer, and presented a counteroffer.

On February 4, 2013, the City filed a complaint in the Court of Common Pleas of Philadelphia County, seeking declaratory and equitable relief. See City of Philadelphia v. American Federation of State, County and Municipal Employees, AFL-CIO, District Council 33, Case ID No. 130200040. The City asserted that the parties have bargained to impasse as more than a reasonable amount of time had passed in negotiations and the parties have not come to agreement.

In its complaint, the City asserted that effective negotiations were stymied by the decision of the Commonwealth Court in Philadelphia Housing Authority v. PLRB, 620 A.2d 594 (Pa.Cmwlth. 1993) ("PHA"). In its filing in our Court, as well as its complaint in the trial court, the City refers to the PHA court's decision as a "holding." See, e.g., Petition for Extraordinary Relief at 16; Complaint at ¶ 163. District Council 33's answer in our Court also refers to the PHA decision as a holding. See, e.g., Answer at 4. This is consistent with lower court references. See, e.g., Burrell Educ. Ass'n v. Burrell School Dist., 674 A.2d 348, 350 (Pa. Cmwlth. 1996); Central Dauphin Educ. Ass'n v. Central Dauphin School Dist., 2001 WL 34121852, *319 (CCP of Dauphin County 2001). What the parties do not realize is that PHA was a plurality decision. PHA was decided by a seven-judge panel. Two judges dissented; two concurred in the result only. Thus, PHA did not establish binding precedent for the Commonwealth Court or the lower courts. See Commonwealth v. Bethea, 828 A.2d 1066, 1073 (Pa. 2003).

In any event, the City asserted that per PHA, when a public-sector employment negotiation that is covered under the Public Employe Relations Act ("PERA"), see 43 P.S. § 1101.101 et seq., is at an impasse, the public employer may not unilaterally impose contract terms unless the public employees first strike. The City asserted that PHA essentially allows District Council 33 to hold the City to the terms of the expired agreement in perpetuity. The City claimed that this standstill has had a deleterious effect on its finances and ability to plan for the future.

On February 5, 2013, the City filed the instant Application for Extraordinary Relief in this Court, setting forth the above background information, and requesting that we exercise our extraordinary jurisdiction and take this case immediately. It asserts that the PHA decision is flawed in that it improperly shifted the balance of power sharply in favor of unions, allowing unions to decide unilaterally whether to freeze the parties' duties and rights in time. The City reasons that if a union believes that a previous collective bargaining agreement is more advantageous than anything the union could achieve through present-day good faith bargaining, PHA improperly allows the union to retain those advantages, even if the financial landscape of the municipality has radically shifted.

District Council 33 counters by arguing, inter alia, that the parties are not in fact at an impasse, and thus PHA is not at issue. Additionally, it asserts that PHA properly strikes a balance between employers and employees in the public sector. It contends that if the PHA rule were discarded, and the City were allowed to impose unilaterally its Final Offer, it is likely that a strike - and the concomitant significant disruption that would negatively affect public interests - would ensue. District Council 33 asserts that continued adherence to the PHA rule encourages the parties to resolve their differences through peaceful collective bargaining.

I would grant this Application. An effective four-year stalemate in contract negotiations between a major employees' union and a municipality, turning in crucial part upon a plurality decision establishing a rule this Court has never passed upon, presents a legal issue of obvious importance. The PHA three-judge plurality concluded that even where an impasse has occurred, a public employer cannot engage in unilateral action unless its employees had actually elected to go on strike. The City makes a colorable claim that this interpretation fosters a state of stalemate, which is ultimately disadvantageous to both sides in municipal labor negotiations.

It is notable that this predictable difficulty was anticipated by the Honorable James G. Colins in his dissent in PHA. Judge Colins explained that the plurality's decision in PHA:

compels municipal corporations or authorities to continue to operate indefinitely under expired labor agreements regardless of the financial impossibility of doing so. To compel any municipality to maintain financial commitments in perpetuity in the face of a declining population or a shrinking tax base or any other adverse circumstance, creates a precedent in this Commonwealth which is most dangerous and is contrary to the public interest.

PHA, 620 A.2d at 601-02 (Colins, J., dissenting, joined by Kelly, J.). Judge Colins presciently stated that the plurality's decision "threaten[ed] the delicate balance of bargaining power between employer and employee in the public sector." Id. at 602.

Twenty years ago, the Pennsylvania Supreme Court opted not to review the Commonwealth Court's PHA plurality decision. See Pennsylvania Labor Relations Board v. Philadelphia Housing Authority, 637 A.2d 294 (Pa. 1993) (denying allocatur). No current member of the Court was sitting on the Court then. Although the issue could have been reviewed by the Court at that time, it should not be ignored now. The issue of the propriety of the PHA plurality is an important one, not simply to this particular dispute in Philadelphia, but also to public sector labor matters across our Commonwealth. This is particularly so in the current economic circumstances. Although it is true that the case could slowly percolate through the court system, and that the Commonwealth Court could consider the PHA non-majority decision anew, it is apparent that this Court will ultimately need to weigh in on this issue. In my view, it is prudent to do so now rather than forestall review, as if this were just another case. Neither a public employer nor its employees should have to negotiate under the existing uncertainty regarding this Court's ultimate resolution of the purely legal PHA issue.

I believe that this Court should exercise its extraordinary jurisdiction over this important, purely legal issue. Accordingly, I respectfully dissent.


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