Court Opinion

ID: 8488570
Source: CourtListenerOpinion
Date Created: 2022-11-22 15:09:37.202263+00
Date Added: 2024-06-11T16:50:12.239841
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of New Castle,                     :
                  Appellant             :
                                        :
             v.                         :      No. 242 C.D. 2022
                                        :      Argued: October 11, 2022
International Association of            :
Firefighters, Local 160                 :

BEFORE:      HONORABLE MICHAEL H. WOJCIK, Judge
             HONORABLE STACY WALLACE, Judge
             HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION
BY SENIOR JUDGE LEAVITT                               FILED: November 22, 2022

             The City of New Castle (City) has appealed an order of the Court of
Common Pleas of Lawrence County (trial court) that denied the City’s petition to
vacate an arbitration award. The arbitration arose from a grievance filed by the
International Association of Firefighters, Local 160 (Union) that the City had
violated the parties’ collective bargaining agreement (CBA). The arbitrator agreed,
holding that the applicable CBA required the City to pay a survivor pension benefit
equal to that paid to the retired firefighter prior to his death. The City contends that
the trial court erred because the arbitration award ordered the City to do an illegal
act. Discerning no merit to this contention, we affirm the trial court.
                                     Background
             Dennis Stone began employment with the City as a full-time firefighter
on April 1, 1967, and he retired on December 31, 2006, after 39 years of service. At
the time of his death on June 26, 2020, Stone was receiving a retirement pension at
the rate of 75% of his final average compensation in accordance with the CBA in
effect at the time of his retirement. After Stone died, the City paid a survivor benefit
to his widow at the rate of 50% of Stone’s final average compensation. The Union
filed a grievance, asserting that under the CBA, Mrs. Stone was entitled to a survivor
pension benefit equal to that paid to Stone during his lifetime.
              Prior to 1998, firefighter pension benefits were governed by the Third
Class City Code1 and set at 50% of the firefighter’s final average compensation.
With regard to surviving spouses, Section 14321(d) of the Third Class City Code
states, in pertinent part, as follows:
              (d) Payments to surviving spouse. -- Upon the death of a member
              who retires on pension or is killed in service on or after January
              1, 1960, or who dies in the service on or after January 1, 1968,
              payments as provided under this subchapter shall be made to the
              member’s surviving spouse during the life of the spouse.

11 Pa. C.S. §14321(d) (emphasis added).             In short, Section 14321(d) entitles
surviving spouses to a continued payment of the member’s pension “during the life
of the spouse.” Id.
              In 1997, relying on the authority provided under the Optional Third
Class City Charter Law,2 the City opted to negotiate with the Union on pension
benefits rather than be bound by pension provisions of the Third Class City Code.
On September 23, 1997, the City and the Union entered into a four-year agreement
that, inter alia, increased the firefighter’s pension benefit and became effective on
January 1, 1998. The 1998 CBA states that “[t]he monthly amount of the normal
retirement benefit for those who retire on or after January 1, 1998 shall be equal to
seventy-five percent (75%) of the participant’s average compensation.” Article X(2)
of the 1998 CBA; Reproduced Record at 216a (R.R. __) (emphasis added).

1
  11 Pa. C.S. §§10101-14702.
2
  Act of July 15, 1957, P.L. 901, as amended, 53 P.S. §§41101-41625.
                                              2
Although the 1998 CBA was silent on survivor benefits, it addressed “existing
benefits” as follows:
              The purpose of this Agreement is to codify and incorporate all
              existing benefits, terms and conditions of employment into an
              all-inclusive Agreement. The Parties hereto agree that all
              existing benefits, terms and conditions of employment currently
              enjoyed by all members of the City of New Castle Fire
              Department, but omitted from this Agreement are hereby
              retained as if the same had been specifically set forth herein.

Article XVI of the 1998 CBA; R.R. 224a (emphasis added).3 The 1998 CBA has
been followed by successive agreements, but Article X and Article XVI (now Article
XVIII), as quoted above, have remained the same in each agreement.
              On December 11, 1997, prior to the effective date of the 1998 CBA, the
City enacted Ordinance 7343. NEW CASTLE CITY ORDINANCE NO. 7343 (1997). It
set the survivor benefit in the City’s Firemen’s Pension Plan for firefighters retiring
after January 1, 1998, at 50% of the deceased firefighter’s average compensation at
the time of his or her retirement. Id. The Ordinance states, in relevant part, as
follows:
              For any Firefighter retiring after January 1, 1998, the monthly
              amount of the Survivor Benefit shall be equal to fifty percent
              (50%) of the Participant’s Average Compensation at the time of
              his/her retirement.

Id.
              In 2007, the City was designated financially “distressed,” by the
Secretary of Community and Economic Development under the Municipalities
Financial Recovery Act.4        The City’s coordinator developed a recovery plan to

3
  The same provision appears at Article XVIII in the current CBA. See R.R. 409a.
4
  Act of July 10, 1987, P.L. 246, No. 47, as amended, 53 P.S. §§11701.101-11701.712 (Act 47).
                                              3
address its financial issues. Section 221 of Act 47, 53 P.S. §11701.221; see also
Wilkinsburg Police Officers Association v. Pennsylvania Department of Community
Affairs and the Borough of Wilkinsburg, 636 A.2d 134, 135 (Pa. 1993). Notably,
“Act 47 does not allow for a plan to supersede an existing labor agreement, but once
a contract has expired, Act 47 prohibits any new contract from impairing the
implementation of the plan.” Fraternal Order of Police, Fort Pitt Lodge No. 1 v.
Yablonsky, 867 A.2d 658, 660 (Pa. Cmwlth. 2005); see also Section 252 of Act 47,
53 P.S. §11701.252.
               On July 15, 2020, the Union filed a grievance, which stated as follows:
                     Recently, New Castle Firefighters Local 160 was made
               aware that the Survivor’s Benefit for Dennis Stone’s widow was
               reduced. According to SECTION 4322 of the Third Class City
               Code:[5]
                     “Payments to surviving spouses of members retired on
               pension or killed in the service on or after January 1, 1960 or
               who die in the service on or after January 1, 1968 shall be the
               amount payable to the member, or which would have been
               payable had he retired at the time of his death.”
                     The Union contends this is a violation of Article III
               Section 3 of the Collective Bargaining Agreement, and therefore
               we are duly grieved.

5
 Former Act of June 23, 1931, P.L. 932, as amended, 53 P.S. §39322; Section 4322 was repealed
by the Act of November 24, 2015, P.L. 242.
        The language of former Section 4322 now appears at Section 14322(a)(3) of the Third
Class City Code and states, in relevant part, as follows: “Payments to surviving spouses of
members retired on pension or killed in service on or after January 1, 1960[,] or who die in service
on or after January 1, 1968, shall be the amount payable to the member, or which would have been
payable had the member been retired at the time of the member’s death.” 11 Pa. C.S. §14322(a)(3).
                                                 4
R.R. 416a (emphasis, including capitalization, in original). Thereafter, the grievance
was submitted to Act 1116 arbitration in accordance with Article XI of the CBA.7
On May 5, 2021, the arbitrator held a hearing during which the parties presented
testimonial and documentary evidence, including the testimony of individuals who
participated in the negotiation of the 1998 CBA.
                The arbitrator found that the parties did not agree to change the survivor
benefit in the 1998 CBA from what it had been in 1997; the Union was not aware
that Ordinance 7343 had been enacted in December of 1997; and the Union never
agreed to reduce the survivor benefit to 50% as provided in Ordinance 7343. The
arbitrator found that with the enactment of Ordinance 7343, the City unilaterally
changed the survivor pension benefit from that bargained for in the 1998 CBA.
Based on these findings, the arbitrator awarded Mrs. Stone a survivor benefit equal
to the pension Stone had been receiving prior to his death, i.e., 75% of Stone’s final
average compensation.
                On September 9, 2021, the City filed a petition to vacate the arbitration
award, asserting that the arbitrator exceeded his authority and that the award required
the City to perform an illegal act or acts. Specifically, the award required the City
to violate the Municipal Pension Plan Funding Standard and Recovery Act,8 which
requires an actuarial study be done before revising a municipal pension, and Act 47,
which governs financially distressed cities, such as New Castle.

6
  The Policemen and Firemen Collective Bargaining Act, Act of June 24, 1968, P.L. 237, No. 111,
as amended, 43 P.S. §§217.1-217.12, commonly referred to as Act 111. Act 111 specifically
authorizes collective bargaining between police and firefighters and their public employers.
7
  Article XI of the CBA states, in pertinent part, “[i]f the grievance is not settled at the fourth step,
the Union may within [21] days submit the matter to arbitration . . . .” R.R. 406a.
8
  Act of December 18, 1984, P.L. 1005, No. 205, as amended, 53 P.S. §§895.101-895.1131 (Act
205).
                                                   5
                 The trial court denied the petition to vacate. It found no merit in the
City’s contentions.
                 In so holding, the trial court relied upon the arbitrator’s findings. The
arbitrator found that approximately one year before the inception of the 1998 CBA,
the City had undertaken an actuarial study of the impact of increasing survivor
benefits, as required by Act 205.9 Specifically, the arbitrator found, in pertinent part,
as follows:
                 In preparation for the 1997 labor negotiations for a successor
                 Collective Bargaining Agreement to the 1995-1997 Collective
                 Bargaining Agreement the City was concerned about the
                 excessive cost . . . of providing Firefighters an unlimited right to
                 accumulate and sell back sick days. With this concern in mind
                 the City had its actuary study the effect of improving the monthly
                 amount of the Normal Retirement Benefit for those Firefighters
                 who retire on or after January 1, 1998[,] from 50% of the
                 Participant’s Average Compensation to 75%. The actuary
                 looked at two (2) alternative proposals. The first proposal
                 involved changing the Survivor Benefit for any Firefighter
                 retiring after January 1, 1998[,] to a monthly amount equal to
                 50% of the Participant’s Average Compensation at the time of
                 retirement. The second proposal maintained the Survivor Benefit
                 at 100% of the amount payable to the retired Participant at the
                 time of retirement.

9
    Section 301(a) of Act 205 states:
        Notwithstanding any provision of law, municipal ordinance, municipal resolution,
        municipal charter, pension plan agreement or pension plan contract to the contrary,
        the applicable provisions of this chapter shall apply to any municipality which has
        established and maintains, directly or indirectly, a pension plan for the benefit of
        its employees, irrespective of the manner in which the pension plan is administered,
        and to the respective pension plan.
53 P.S. §895.301(a). Section 305 of Act 205, 53 P.S. §895.305, requires an actuarial cost estimate
for any benefit plan modification.
                                                6
Arbitration Award at 12; R.R. 663a (emphasis added). Given the actuarial study that
preceded the increase in the firefighter pension, the trial court held that the
arbitration award did not require the City to do an illegal act under Act 205. Because
the arbitration award construed the 1998 CBA, which predated the City’s Act 47
Recovery Plan by approximately 10 years, the arbitration award did not violate the
City’s recovery plan or Act 47.
                On February 17, 2022, the trial court denied the City’s petition to
vacate, and the City appealed to this Court.
                                               Appeal
                On appeal, the City raises two issues.10 First, it contends that the
arbitrator exceeded his powers because the award orders the City to perform an
illegal act. The City will be required to pay a pension enhancement without a timely
Act 205 study and in contravention of the City’s Act 47 recovery plan. Second, it
contends that the arbitrator exceeded his jurisdiction by usurping the role of the
Pennsylvania Labor Relations Board (PLRB) in holding “that the City allegedly
failed to bargain over the enactment of a pension ordinance in 1997.” City Brief at
56.
                In response, the Union argues that the trial court did not err because the
arbitration award does not require the City to perform an illegal act under either Act
205 or Act 47. The arbitrator determined that the 1998 CBA left “existing benefits,”
including those paid to surviving spouses, unchanged from the prior CBA, which

10
   Our review in cases arising under Act 111 is narrow certiorari. We consider questions relative
to four issues, i.e., “(1) the jurisdiction of the arbitrator, (2) the regularity of the proceedings, (3)
whether the arbitrator exceeded his powers, and (4) whether there has been deprivation of
constitutional rights.” Town of McCandless v. McCandless Police Officers Association, 901 A.2d
991, 995 (Pa. 2006).

                                                   7
had awarded a surviving spouse a continued payment of the firefighter’s pension.
Further, the award is based solely on the language of the CBA and not upon a failure
to bargain.
                                        Analysis
              An arbitration award is subject to a deferential standard of review.
Nevertheless, an arbitrator may not order a public employer to do an illegal act.
Rather, a public employer can be ordered to do only what the employer can do
voluntarily. Pennsylvania State Police v. Pennsylvania State Troopers’ Association
(Betancourt), 656 A.2d 83, 90 (Pa. 1995). An arbitration award must bear a rational
relationship to the terms or conditions of employment, defined in Act 111 as
“compensation, hours, working conditions, retirement, pensions and other benefits.”
Section 1 of Act 111, 43 P.S. §217.1.
              Merely because a court differs in its interpretation of the collective
bargaining agreement is “insufficient justification for vacating an award.” State
System of Higher Education (Cheyney University) v. State College University
Professional Association (PSEA-NEA), 743 A.2d 405, 411 (Pa. 1999) (Cheyney
University). Under the so-called “essence test,”
              there is a strong presumption that the Legislature and the parties
              intended for an arbitrator to be the judge of disputes under a
              collective bargaining agreement. That being the case, courts
              must accord great deference to the award of the arbitrator chosen
              by the parties. A fortiori, in the vast majority of cases, the
              decision of the arbitrator shall be final and binding upon the
              parties. However, there exists an exception to this finality
              doctrine. The arbitrator’s award must draw its essence from the
              collective bargaining agreement. Pursuant to the essence test . . .
              a reviewing court will conduct a two-prong analysis. First, the
              court shall determine if the issue as properly defined is within the
              terms of the collective bargaining agreement. Second, if the
              issue is embraced by the agreement, and thus, appropriately
                                           8
             before the arbitrator, the arbitrator’s award will be upheld if the
             arbitrator’s interpretation can rationally be derived from the
             collective bargaining agreement. That is to say, a court will only
             vacate an arbitrator’s award where the award indisputably and
             genuinely is without foundation in, or fails to logically flow
             from, the collective bargaining agreement.[]

Id. at 413 (footnotes omitted). If the interpretation of the CBA can in any rational
way be derived from the agreement, it must be respected.               Westmoreland
Intermediate Unit #7 v. Westmoreland Intermediate Unit #7 Classroom Assistants
Educational Support Personnel Association (PSEA/NEA), 939 A.2d 855, 862 (Pa.
2007).
             The City argues that the arbitration award requires it to do what it
cannot do voluntarily. City Brief at 21. Specifically, it argues that the survivor
benefit ordered by the arbitrator is an enhancement that violates two statutes: Act
205 and Act 47.
             Under Act 205, a municipality must undertake an actuarial study before
making a benefit plan modification to ensure the pension is sound. See, e.g., City of
Erie v. International Association of Firefighters Local 293, 836 A.2d 1047, 1051
(Pa. Cmwlth. 2003). Section 305 of Act 205 states, in pertinent part, as follows:
             (a)   Presentation of cost estimate.--Prior to the adoption
                   of any benefit plan modification by the governing
                   body of the municipality, the chief administrative
                   officer of each pension plan shall provide to the
                   governing body of the municipality a cost estimate
                   of the effect of the proposed benefit plan
                   modification.
                                          ****
             (e)   Contents of cost estimate.--Any cost estimate of the
                   effect of the proposed benefit plan modification
                   shall be complete and accurate and shall be
                   presented in a way reasonably calculated to disclose

                                          9
                    to the average person comprising the membership
                    of the governing body of the municipality, the
                    impact of the proposed benefit plan, the
                    modification on the future financial requirements of
                    the pension plan and the future minimum obligation
                    of the municipality with respect to the pension plan.

53 P.S. §895.305(a), (e). The City argues that without “an actuarial cost estimate
conducted in accordance with Section 305 of Act 205,” the City cannot lawfully
provide a benefit enhancement to surviving spouses. City Brief at 14-15. Further,
the arbitration award’s benefit enhancement violates the City’s Act 47 recovery plan,
which “continues to prohibit increases to the pension or retiree medical benefits for
current, future or retired employees.” Actuarial Valuation Report for City of New
Castle at 59; R.R. 371a. In support, the City cites Section 252 of Act 47, 53 P.S.
§11701.252 (stating CBAs executed after the adoption of a plan cannot violate,
expand or diminish the plan’s provisions).
             The City’s argument is based on the premise that the award directed an
“enhancement” to survivor benefits.         The 1998 CBA increased the firefighter
pension benefit from 50% to 75%, but it was silent on the level of the survivor
benefit. The CBA stated that “existing benefits” that were “omitted from this
Agreement are hereby retained[.]” Article XVI of the 1998 CBA; R.R. 224a. There
are two ways to read this clause: it retained the survivor benefit at 50% of the
firefighter’s final average compensation while raising the firefighter’s pension
benefit to 75%, or it retained a survivor benefit equal to that of the retired firefighter.
             The arbitrator read Article XVI to mean that the survivor was entitled
to a continued payment of the firefighter’s pension, resolving the ambiguity in favor
of the Union. Our Supreme Court has directed that “[t]he arbitrator’s award must
be ‘respected by the judiciary if the interpretation can in any rational way be derived

                                            10
from the agreement.’” Westmoreland Intermediate Unit #7, 939 A.2d at 862
(quoting Community College of Beaver County v. Community College of Beaver
County, Society of Faculty (PSEA/NEA), 375 A.2d 1267, 1275 (Pa. 1977)) (emphasis
added). That this Court may have construed the existing benefit clause differently
is of no moment. So long as the award draws its essence from the language of the
1998 CBA, it must be affirmed. Here, the award draws its essence from Article XVI
of the 1998 CBA.
             In any case, the arbitration award does not compel the City to do illegal
acts. With respect to Act 205, the study of November 18, 1996, considered the
impact of an increase in retirement benefits for firefighters from 50% of average
final compensation to 75%, as well as survivor benefits at both the 50% and 75%
rates. See Trial Court Op., 2/17/2022, at 7; R.R. 132a. With respect to Act 47, the
arbitrator explained that “[t]here was no mention of the [s]urvivor [b]enefit in the
1998-2002 [CBA]. Nor [has] there ever been any mention of the [s]urvivor [b]enefit
in any of the [] subsequent agreements.” Arbitration Award at 13; R.R. 664a. “Act
47 prohibits any new contract from impairing the implementation of the plan,” but
it does not permit a recovery plan “to supersede an existing labor agreement.”
Yablonsky, 867 A.2d at 660. Here, because the existing labor agreement has
remained unchanged since 1998, it did not impair the City’s Act 47 recovery plan.
Simply, the award did not enhance the survivor benefit, and the trial court did not
err in refusing the City’s petition to vacate.
             We next consider the City’s argument that the arbitrator exceeded his
jurisdiction by ruling that the City did not bargain over Ordinance 7343. The City
contends that failing to bargain is not an issue that can be resolved through an
interpretation of the CBA. In this regard, the City maintains that a failure to bargain

                                           11
over Ordinance 7343 would constitute an unfair labor practice and, thus, falls within
the exclusive jurisdiction of the PLRB. City Brief at 51. Our Supreme Court has
explained that if a party seeks redress of an arguably unfair labor practice,
“jurisdiction to determine whether an unfair labor practice has indeed occurred and,
if so, to prevent a party from continuing the practice is in the PLRB, and nowhere
else.” Hollinger v. Department of Public Welfare, 365 A.2d 1245, 1249 (Pa. 1976).
             Here, the arbitrator found “the City unilaterally changed the [s]urvivor
[b]enefit in violation of the [CBA]” based on the issue put before him by the parties.
Arbitration Award at 20; R.R. 671a. The arbitration award was not a ruling on
Ordinance 7343 or a failure to negotiate. In considering the parties’ competing
interpretations of the 1998 CBA, the arbitrator considered whether Ordinance 7343
could be used to resolve the ambiguity in the CBA. The arbitrator concluded that
the contract language, not Ordinance 7343, was dispositive. The arbitrator did not
exceed his jurisdiction by holding Ordinance 7343 irrelevant to his construction of
the 1998 CBA.
             The arbitrator arrived at a reasoned interpretation of the 1998 CBA,
concluding that the City violated the parties’ agreement by paying Stone’s surviving
spouse a pension lower than what Stone had received in his lifetime. As our
Supreme Court stated in Cheyney University:
             [A] reviewing court will conduct a two-prong analysis. First, the
             court shall determine if the issue as properly defined is within the
             terms of the collective bargaining agreement. Second, if the
             issue is embraced by the agreement, and thus, appropriately
             before the arbitrator, the arbitrator’s award will be upheld if the
             arbitrator’s interpretation can rationally be derived from the
             collective bargaining agreement.

                                          12
Cheyney University, 743 A.2d at 413 (emphasis added). Firefighter pensions, and
accompanying benefits, are plainly embraced within Sections X and XVI of the 1998
CBA. While several considerations factored into the arbitrator’s interpretation of
the CBA, the award was rationally derived from it.
                                    Conclusion
             For the foregoing reasons, we affirm the order of the trial court, which
affirmed the award of the arbitrator.

                            ____________________________________________
                            MARY HANNAH LEAVITT, President Judge Emerita

                                         13
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of New Castle,                :
                  Appellant        :
                                   :
            v.                     :     No. 242 C.D. 2022
                                   :
International Association of       :
Firefighters, Local 160            :

                                 ORDER

            AND NOW, this 22nd day of November, 2022, the February 17, 2022,
order of the Court of Common Pleas of Lawrence County, in the above-captioned
matter, is AFFIRMED.

                           ____________________________________________
                           MARY HANNAH LEAVITT, President Judge Emerita