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Southeastern Pennsylvania Transportation Authority v. City of Philadelphia

Supreme Court of Pennsylvania

September 24, 2014


Argued September 11, 2013

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Appeal from the Order of Commonwealth Court entered on April 13, 2011 at No. 2445 CD 2009, reversing the Order entered on November 10, 2009, in the Court of Common Pleas, Philadelphia County, Civil Division at No. 3055 July Term, 2009. Trial Court Judge: Gary F. Di Vito, Judge. Intermediate Ct. Judges: Bonnie Brigance Leadbetter, President Judge, Dan Pellegrini, Judge, Renee Cohn Jubelirer, Judge, Mary Hannah Leavitt, Judge, P. Kevin Brobson, Judge, Patricia A. McCullough, Judge, Johnny J. Butler, Judge.

For City of Philadelphia, Appellant, Philadelphia Commission on Human Relations, Appellant: Eleanor N. Ewing, Esq., City of Philadelphia Law Department.

For American Civil Liberties Union of PA, Appellant Amicus Curiae, Mazzoni Center, Appellant Amicus Curiae: Andrew A. Chirls, Esq., Mary Catherine Roper, Esq., David Michael Rosenblum, Esq.

For Pennsylvania Human Relations Commission, Appellant Amicus Curiae: Ryan Allen Hancock, Esq., Kathy Weaver Morrison, Esq., PA Human Relations Commission.

For Southeastern Pennsylvania Transportation Authority, Appellee: Michael Patrick Gallagher, Esq., Gino J. Benedetti, Esq., Southeastern Pennsylvania Transportation Authority, Katharine Virginia Hartman, Esq., Patrick Michael Northen, Esq., Holly Rebecca Rogers, Esq., Dilworth Paxson LLP.

MR. JUSTICE McCAFFERY. CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, STEVENS, JJ. Mr. Justice Baer, Madame Justice Todd and Mr. Justice Stevens join the opinion. Mr. Chief Justice Castille files a concurring and dissenting opinion. Mr. Justice Eakin files a concurring and dissenting opinion. Mr. Justice Saylor files a dissenting opinion.


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We granted review in this case principally to clarify the standard for determining whether a municipal ordinance applies to an agency or instrumentality of the Commonwealth. The Commonwealth Court concluded here that the Southeastern Pennsylvania Transportation Authority (" SEPTA" ) is a Commonwealth agency and therefore not subject to either the provisions of the Philadelphia Fair Practices Ordinance (" FPO" ),[1] or the jurisdiction of the Philadelphia Commission on Human Relations (" the Philadelphia Commission" ). The Commonwealth Court also concluded that, because SEPTA was not

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amenable to the Philadelphia Commission's jurisdiction, it had no duty to exhaust its administrative remedies before that agency. For the reasons that follow, we vacate the order of the Commonwealth Court and remand for reconsideration under the proper standard.

This case has its origins in seven administrative proceedings against SEPTA that individuals instituted with the Philadelphia Commission from July 2007 through April 2009, alleging violations of the FPO.[2] At least two of the administrative complaints included claims of types of discrimination against which the FPO offers protection, but that the Pennsylvania Human Relations Act (" PHRA" )[3] does not cover. See Stipulated Facts, ¶ 6-7; R.R. 258a-259a (listing administrative cases). SEPTA filed a motion to dismiss each of the administrative cases for lack of jurisdiction, and the Philadelphia Commission denied the motions. Id.

While all seven administrative proceedings were still pending,[4] SEPTA instituted this civil action against Appellants seeking both declaratory and injunctive relief. SEPTA maintained in its complaint[5] that because it is a Commonwealth agency, and Appellants are a political subdivision and a municipal agency, respectively, the FPO does not apply to it, and the Pennsylvania Constitution barred Appellants from exercising jurisdiction over it.[6]

Appellants filed preliminary objections demurring to SEPTA's complaint. Appellants argued that because Philadelphia's powers under the First Class City Home Rule Act[7] extend to enacting and enforcing anti-discrimination laws, the FPO applied to SEPTA and the Philadelphia Commission had jurisdiction over it. Appellants further contended that an original action for declaratory and injunctive relief was inappropriate because SEPTA had to

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await final agency decisions in the individual administrative cases against it before it could seek appellate review in court. In response, SEPTA pointed out that the statute authorizing the creation of metropolitan transportation authorities, such as SEPTA, provides that such an authority " shall exercise the public powers of the Commonwealth as an agency and instrumentality thereof," 74 Pa.C.S. § 1711(a), and asserted that Philadelphia's authority as a home-rule jurisdiction extends only to the regulation of its municipal affairs. In its brief in opposition to the preliminary objections, SEPTA did not rely upon, or refer to in any manner, the section of its enabling legislation pertaining to sovereign and official immunity. 74 Pa.C.S. § 1711(c)(3). The trial court sustained the preliminary objections and dismissed SEPTA's complaint.[8]

SEPTA appealed to the Commonwealth Court, which reversed. SEPTA v. City of Philadelphia, 20 A.3d 558 (Pa.Cmwlth. 2011) (en banc). A majority of the court concluded that the Philadelphia Commission lacked jurisdiction because SEPTA is an " agency and instrumentality" of the Commonwealth and therefore within the jurisdiction of the Pennsylvania Human Relations Commission (the " State Commission" ). The majority noted that the State Commission is responsible for the administration of the PHRA, which bans any " employer" from engaging in certain forms of discrimination. 43 P.S. § § 955, 956(a). Because the PHRA defines " employer" as including " the Commonwealth or any political subdivision or board, department, commission or school district thereof," [9] and because neither the PHRA nor the FPO explicitly grants the Philadelphia Commission jurisdiction over SEPTA, the majority concluded the State Commission -- and not the Philadelphia Commission -- had jurisdiction over SEPTA. The Commonwealth Court did not base any portion of its reasoning upon the section of SEPTA's enabling legislation pertaining to sovereign and official immunity. 74 Pa.C.S. § 1711(c)(3). Because the majority considered the State Commission's jurisdiction over SEPTA to be clear, and a Commonwealth instrumentality's challenge to " the scope of a governmental body's action pursuant to statutory authority" through a declaratory judgment action to be proper, the majority also concluded that SEPTA had no duty to exhaust its administrative remedies before seeking relief in court. SEPTA v. City of Phila., supra at 563.

Now-President Judge Dante Pellegrini dissented. He concluded that SEPTA is not a Commonwealth agency, and even if it were, it would still be subject to the provisions of the FPO and the jurisdiction of the Philadelphia Commission. The dissent stated that the General Assembly had enacted the portion of SEPTA's enabling act that provides that a metropolitan transportation authority such as SEPTA is " an agency and instrumentality thereof" merely to avoid constitutional and statutory questions, such as limitations on local governments' acquisition of debt. 74 Pa.C.S. § 1711(a). The dissent opined that the cited language was not intended to render SEPTA a state agency for all purposes.

The dissent then concluded that even if SEPTA were part of the Commonwealth government, it nonetheless would be subject to the jurisdiction of the Philadelphia Commission under Commonwealth v. Ogontz Area Neighbors Association, 505 Pa. 614, 483 A.2d 448, 452 (Pa. 1984). In that case, the Department of Public Welfare (" DPW" ) -- which we characterized as " an

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agency of the Commonwealth" -- applied to the City of Philadelphia for the permits needed to build a facility for the mentally handicapped. Id. at 449-50. The City denied the permits on the ground that the proposed facility did not comply with use and other restrictions under the Philadelphia Zoning Code. On review in this Court, we rejected the notion that DPW was immune from local land regulations because it had the power to condemn property to establish the facility it sought to construct. We reasoned that because the General Assembly had established both the City and DPW, and had fixed the extent of each entity's powers, we would need to examine the enabling act of each entity to determine which entity's authority the legislature had intended to prevail for purposes of the parties' controversy. Because the applicable statutes did not clearly state which entity the legislature had intended to be " preeminent," we applied the rule of statutory construction that a court may determine legislative intent by considering " the consequences of a particular interpretation." Id. at 455 (citing 1 Pa.C.S. § 1921(c)(6)). Because Philadelphia's zoning scheme would have been frustrated if DPW were to have prevailed, while subjecting DPW to local zoning rules and restrictions would not necessarily have frustrated DPW's mandate to establish mental health facilities, we concluded that the legislature had intended the City to have priority in the circumstances at issue.

The dissent here applied the principles we set forth in Ogontz and concluded that, as in Ogontz, the relevant statutes were ambiguous as to which entity was intended to have priority. The dissent therefore considered the effect of holding each entity preeminent and determined that ruling in SEPTA's favor would frustrate the legislature's intended scheme. Characterizing the PHRA as granting the State and Philadelphia Commissions " concurrent jurisdiction," the dissent explained that deeming SEPTA " preeminent" over Appellants would thwart the legislatively established system of shared jurisdiction. The dissent explained that, on the other hand, treating Appellants as " preeminent" would not interfere with SEPTA's purpose of providing public transportation. The dissent stated, " All the consequence of the City's and the [State Commission's] preeminence means is that SEPTA would still have to respond to complaints, like private companies, of those choosing to file their claims of unlawful discrimination with [the Philadelphia Commission]." SEPTA, supra at 569 (Pellegrini, J., dissenting).

Appellants sought allowance of appeal, which we granted to decide the following questions:

(1) Does the City have power to protect its residents from acts of discrimination by SEPTA, a metropolitan transportation authority, where the Pennsylvania Human Relations Act explicitly states that nothing in the PHRA shall be deemed to repeal or supersede any of the antidiscrimination provisions of any municipal ordinance, the City's power to regulate discrimination is not sourced in the PHRA, the City's ordinance extends by its terms to SEPTA as an employer and provider of public accommodations, and concurrent state and local jurisdiction would not adversely affect SEPTA's core transportation mission?
(2) Should the City's Commission on Human Relations have been permitted, following the well-established rule of administrative exhaustion, to determine any challenges by SEPTA to its jurisdiction in the first instance, thereby having the opportunity to make findings on a developed factual record suitable for appellate

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review as to the nexus between the City's interests and the alleged discrimination, rather than the Commonwealth Court ruling on an abstract, premature challenge?

SEPTA v. City of Philadelphia, 619 Pa. 468, 65 A.3d 292, 292-93 (Pa. 2013).

Appellants' Authority over SEPTA

The first issue involves statutory interpretation, and as in all such matters, we follow the dictates of the Statutory Construction Act. Commonwealth v. Janssen Pharmaceutica, Inc., 607 Pa. 406, 8 A.3d 267, 275 (Pa. 2010).

Appellants echo the position of the Commonwealth Court dissent regarding the first issue. They argue that SEPTA is not " the Commonwealth" simply because its enabling act states it is a Commonwealth " agency and instrumentality," and even if it is the equivalent of " the Commonwealth," it is nonetheless subject to the jurisdiction of the Philadelphia Commission.

Appellants contend that the statutory declaration that metropolitan transportation authorities such as SEPTA are agencies and instrumentalities of the Commonwealth is not determinative of this issue. Appellants point out that we recently held, in Goldman v. SEPTA, 618 Pa. 501, 57 A.3d 1154 (Pa. 2012), that despite SEPTA's statutory classification as a Commonwealth agency, it is not entitled to assert in Pennsylvania courts the Commonwealth's Eleventh Amendment immunity against suits under the Federal Employers Liability Act. Goldman v. SEPTA, supra at 1180. Appellants characterize Goldman as the latest in a line of our cases addressing, in various contexts and with varying results, whether an authority statutorily designated as a Commonwealth agency is properly treated as part of the state government.[10] Appellants maintain that our decisions in the cases they cite are consistent in that in each case, we did not consider the statutory declaration to be determinative of whether the authority could lay claim to the rights and prerogatives of the Commonwealth.

Appellants further argue that instead of treating the jurisdiction of the State Commission over SEPTA as a bar to the Philadelphia Commission's authority over SEPTA, the Commonwealth Court should have applied the legislative intent analysis of Ogontz, supra. According to Appellants, the applicability of the PHRA to SEPTA would only be relevant here if either: (1) the PHRA preempted the FPO; or (2) the PHRA were the sole source of Philadelphia's authority to enact the FPO. Appellants argue that neither is the case. They assert that SEPTA has conceded that the PHRA does not preempt the FPO, and that Philadelphia's power to enact the FPO flows not from the PHRA, but rather from the First Class Cities Home Rule Act. See

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supra n.7. Appellants further contend that because Philadelphia is a home-rule jurisdiction, its ordinances are " presumed to be valid, absent a specific constitutional or statutory limitation." Appellants' Brief at 32 (quoting In re Petition to Recall Reese, 542 Pa. 114, 665 A.2d 1162, 1164 (Pa. 1995)). Because SEPTA has ...

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