Court Opinion

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Date Created: 2015-10-13 21:53:45.78597+00
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Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-4-2003

Minnick v. Duquesne
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-2452

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Recommended Citation
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                                                 NOT PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT

                     No. 02-2452

                 WILLIAM MINNICK,
                              Appellant

                           v.

             CITY OF DUQUESNE;
        GEORGE MATTA; PHILIP KRIVACEK;
         LORAIN NOVAK; DAVID POLJAK

      Appeal from the United States District Court
        for the Western District of Pennsylvania
               (D.C. Civil No. 99-cv-02039)
     District Judge: Honorable Ila Jeanne Sensenich

               Argued May 14, 2003
Before: RENDELL, SMITH and ALDISERT, Circuit Judges.

                 (Filed: June 4, 2003 )

                        Edward A. Olds, Esq. [ARGUED]
                        1007 Mount Royal Boulevard
                        Pittsburgh, PA 15223
                          Counsel for Appellant

                        John F. Cambest, Esq. [ARGUED]
                        Dodaro, Kennedy & Cambest
                        1001 Armore Boulevard, Suite 100
                        Pittsburgh, PA 15221
                          Counsel for Appellees
                    ____________
                     ___________
                                 OPINION OF THE COURT

RENDELL, Circuit Judge.

       William Minnick filed this action under 42 U.S.C. § 1983 against the City of

Duquesne (the “City”), alleging that the City’s refusal to enroll him in its pension plan

violated his Fourteenth Amendment right to equal protection. The District Court held that

the facts found by the Pennsylvania Commonwealth Court in its review of an earlier

arbitration decision had “issue preclusive” effect, and had established that Minnick was not

similarly situated to the other City employees and that the City had a rational basis for its

decision. The Court then entered summary judgment in favor of the City. For the reasons

stated below, we will affirm.

       The City of Duquesne’s pension plan entitles City employees over the age of 60 who

have worked for the City for at least 20 years to receive compensation for the remainder of

their lives. Employees are required to be registered for the plan as soon as they are hired.

The plan is funded by joint contributions from the City and the employee, with the

employee required to contribute 3% of his monthly salary. The City has been a “distressed

community” since 1984; as of 1986, the Commonwealth has been making contributions to

the pension plan on behalf of the City.

       Minnick was hired by the City in 1972 as a per diem employee. Minnick was laid

off and then rehired as a permanent employee. At that time, he was told that he would not

be able to participate in the City’s pension plan unless he paid all retroactive contributions

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back to the date he had been originally hired. Minnick did have enough money to do so, and

so did not join the plan. In 1979 and again in 1989, Minnick asked about joining the plan

and was again told that he would have to buy back his years of service. Minnick still did not

have the money and so did not join. Finally, in 1998, Minnick was in a position to buy back

his previous years of service. However, the City refused to let him do so because

retroactively enrolling Minnick would impose a significant cost.

       Minnick filed a grievance with his union, which went to arbitration. The arbitrator

found that this grievance was arbitrable under the collective bargaining agreement, that

Minnick should be enrolled in the plan retroactive to March 1998, when he first filed the

grievance, and that Minnick was barred from asserting his rights under the plan prior to that

date by the doctrine of laches. The union appealed the arbitrator’s decision to the Court of

Common Pleas, on the grounds that the arbitrator failed to disclose a conflict of interest.

The court vacated the award, finding that the arbitrator’s undisclosed conflict raised the

appearance of impropriety and that the award was not consistent with the facts and the law.

       The City then appealed to the Commonwealth Court, which reversed and reinstated

the award. First, the court found that the inference of bias did not rise to the level of

“evident partiality.” Second, the court examined the arbitrator’s laches ruling. The court

stated that its standard of review was limited and that it would uphold the arbitrator’s

decision “if the arbitrator’s interpretation can rationally be derived from the collective

bargaining agreement.” State Sys. of Higher Educ. v. State College University Prof’l Ass’n,

560 Pa. 135, 150 (1999). However, the court then undertook its own laches analysis, and

                                               3
found that “the City did suffer prejudice from the admitted delay of Minnick in pursuing his

rights,” and that it “would be required to pay much more from its own funds than if Minnick

had not slept on his rights.” Because it agreed with the arbitrator’s decision, the court

reversed the court of common pleas and reinstated the award. Minnick did not appeal.

       While his grievance was making its way through the Pennsylvania courts, Minnick

filed a complaint in the District Court for the Western District of Pennsylvania, alleging

that the City’s decision violated his right to equal protection under the Fourteenth

Amendment because he was the only full time permanent City employee whose service had

not been recognized for purposes of the pension plan, claiming that the decision had

violated his rights under unidentified state laws, and requesting a declaratory judgment

stating that upon reaching the age of 60 he will be entitled to his pension. The parties

agreed to trial before a Magistrate. After discovery, the parties filed cross-motions for

summary judgment, and the Court granted summary judgment in favor of the City.

       First, the District Court held that the Full Faith and Credit Act, 28 U.S.C. § 1738,

required it to give preclusive effect to the Commonwealth Court’s review of the arbitration

award. The Court then held that because the equal protection claim could not have been

presented in the arbitration proceedings it was not barred by claim preclusion. However,

the Court held that Minnick’s undefined state law claims could have been presented in the

state litigation and were therefore barred by claim preclusion.

       Finally, the Court held that Minnick’s equal protection claim was barred by issue

preclusion. The Court found that although the state court had not decided the issue of equal

                                              4
protection, it did decide that the City suffered prejudice from Minnick’s delay in pursuing

his rights. The Court then applied the facts as found by the Commonwealth Court to the

requirements of equal protection law, stating:

       The Commonwealth Court found that the City suffered prejudice from
       [Minnick]’s delay in pursuing his rights. It had become a distressed
       community and to require it to make all contributions at one time was a form
       of prejudice. The City would be required to pay much more from its own
       funds than if [Minnick] had not slept on his rights. This would appear to be a
       rational basis for treating [Minnick] differently from the other employees for
       whom the City had been making contributions to the pension plan and also
       establish that [Minnick] was not similarly situated to the other employees.

Minnick v. City of Duquesne, No. 99-2039, slip op. at 13-14 (W.D. Pa. May 8, 2002). The

Court went on to distinguish Minnick’s case from that of the plaintiffs in Village of

Willowbrook v. Olech, 528 U.S. 562, 564 (2000), in which the Supreme Court upheld an

equal protection claim based on a “class of one,” finding that here, Minnick “was treated

differently because his situation was different. Neither he nor the City had made payments

towards his pension and to make him equal with the other employees by giving him credit

for all of his prior years of service would be very expensive for the City.” The Court then

granted summary judgment for the City, holding that “[t]he facts found by the

Commonwealth Court establish a rational factual basis for the City’s decision.” Minnick

appeals the Court’s grant of summary judgment on his equal protection claim.

       The District Court had jurisdiction over Minnick’s section 1983 action under 28

U.S.C. § 1331. We have jurisdiction over the Court’s final orders pursuant to 28 U.S.C. §

1291. We review the Court’s decision to give issue preclusive effect to the

                                              5
Commonwealth Court’s opinion de novo. Del. River Port Auth. v. Fraternal Order of

Police, 290 F.3d 567, 572 (3d Cir. 2002). We also review de novo the District Court’s

grant of summary judgment, employing the same standard as the District Court, that is,

whether there remain any genuine issues of material fact. Fed. R. Civ. Pro. 56 (c); Suders v.

Easton, 325 F.3d 432, 441 (3d Cir. 2003).

       Minnick raises three points of error: first, he argues that the Commonwealth Court’s

review of the arbitration award is not entitled to preclusive effect under the Full Faith and

Credit Act; second, that the Commonwealth Court’s finding that the City was prejudiced is

not identical to the issue of whether his equal protection rights were violated; and third, that

he was not afforded a full and fair opportunity to litigate the issue in the state courts.

       The first question is whether the Commonwealth Court’s review of the arbitration

award is entitled to any preclusive effect. The Federal Full Faith and Credit Act, 28 U.S.C.

§ 1738, states that “judicial proceedings . . . shall have the same full faith and credit in every

court within the United States and its Territories and Possessions as they have by law or

usage in the courts of such State, Territory or Possession from which they are taken.” The

Act thus “obliges federal courts to give the same preclusive effect to a state-court judgment

as would the courts of the State rendering the judgment.” McDonald v. City of West

Branch, 466 U.S. 284, 287 (1984). Under Pennsylvania law, arbitration proceedings are

considered final judgments for purposes of issue preclusion. Witkowski v. Welch, 173

F.3d 192, 199 (3d Cir. 1999). However, under federal law, unappealed arbitration awards

are not entitled to preclusive effect, because they are not “judicial proceedings.”

                                                6
McDonald, 466 U.S. at 287.

       Minnick conceded at oral argument that a state court’s review of an arbitration

award, as opposed to an unappealed arbitration decision, may be entitled to preclusive

effect under the Full Faith and Credit Act. See Rider v. Pennsylvania, 850 F.2d 982, 988

(3d Cir. 1988); Jalil v. Avdel Corp., 873 F.2d 701, 704 (3d Cir. 1989). However, he argues

that here, the state court did not actually review the arbitrator’s factual findings, since its

review was limited to determining whether the arbitrator acted within his authority,

therefore the facts found in the arbitration decision are not entitled to preclusive effect.

       Minnick’s argument is unavailing. Although we have held that a state court’s review

of an arbitration award is not entitled to preclusive effect where the state court limits its

review of the arbitration to the question of “whether the arbitrator exceeded his authority or

whether his decision was obtained by undue means,” Jalil, 873 F.2d at 705, we have also

held that where a state court does not actually limit its review to whether the arbitrator had

exceeded his authority but rather undertakes its own interpretation of the underlying issue,

the state court’s judgment is entitled to preclusive effect. Rider, 850 F.2d at 987. This is

because it is not for us to decide “[w]hether the Commonwealth Court exceeded its

authority by straying beyond the confines of its proper standard of review;” rather, we must

take the Commonwealth Court’s analysis as presented. Id. at 993. Here, as in Rider, even

though the Commonwealth Court recognized its limited standard of review, it actually

undertook its own laches analysis and independently made a determination on the issue of

prejudice: “the City did suffer prejudice from the admitted delay of Minnick in pursuing his

                                                7
rights,” because it “would be required to pay much more from its own funds than if Minnick

had not slept on his rights.” This is the very aspect of the state court ruling that the District

Court incorporated into its analysis.

       Having found that the Commonwealth Court’s review of the arbitration award may be

entitled to preclusive effect under the Full Faith and Credit Act, we must now evaluate

whether the state court’s findings are entitled to preclusive effect under Pennsylvania law.

       Under Pennsylvania law, a legal or factual issue may not be relitigated in a

subsequent action when:

       (1) An issue decided in a prior action is identical to one presented in a later
       action;
       (2) The prior action resulted in a final judgment on the merits;
       (3) The party against whom collateral estoppel is asserted was a party to the
       prior action, or is in privity with a party to the prior action; and
       (4) The party against whom collateral estoppel is asserted had a full and fair
       opportunity to litigate the issue in the prior action.

Rue v. K-Mart Corp., 713 A.2d 82, 84 (Pa. 1998). Minnick argues that there should be no

preclusion here because the Commonwealth Court judgment does not meet prongs (1) and

(4).

       Minnick first argues that the legal significance of the facts found in the state

proceeding on laches is different from the legal significance of the facts at issue in the

equal protection claim, and that the District Court erred in finding that the state court

decided the equal protection issues. He states that because his equal protection claim,

which requires an adjudication of whether he was “intentionally treated differently from

others similarly situated and there [was] no rational basis for the difference in treatment,”

                                                8
Olech, 528 U.S. at 564, has nothing to do with the state court’s holding on laches, which is

an “equitable concept going to the issue of repose,” there can be no preclusion. In making

this argument, Minnick appears to conflate two different kinds of preclusion and to

misunderstand the basis of the District Court’s grant of summary judgment.

       The Supreme Court of Pennsylvania has recently clarified the difference between

issue preclusion based on pure facts and issue preclusion based on legal facts. See Rue,

713 A.2d at 85. In Rue, the court explained that questions turning on pure facts are

preclusive in later litigation dealing with the same facts, regardless of the legal standard or

the public policy behind the different suits. Id. There, a K-Mart employee had been fired

because “security personnel had observed her stealing a bag of potato chips from inventory

and eating the chips.” Id. at 83. She applied for and received unemployment compensation

benefits. K-Mart appealed to a Referee, arguing that she had committed willful misconduct

and therefore should not receive benefits, but the Referee found as a matter of fact that she

had not stolen the potato chips and affirmed the grant of benefits. Id. Rue then filed suit

against K-Mart for defamation. She filed a motion in limine seeking to prevent K-Mart

from offering testimony to establish the truth of its assertion that she had stolen the chips.

The trial court granted the motion, holding that K-Mart was precluded by the Referee’s

factual finding from litigating the issue of whether the chips were stolen. After the jury

found K-Mart liable for defamation, K-Mart appealed. The Superior Court remanded for a

new trial, finding that issue preclusion did not apply.

       The Supreme Court affirmed. It first held that the Superior Court had erroneously

                                               9
decided that the issues were not identical, but then affirmed the grant of a new trial because

K-Mart had not been afforded a “full and fair opportunity” to litigate at the Referee’s

hearing. Id. at 87. In determining that the issues were identical, the court distinguished

Odgers v. Unemployment Comp. Brd. of Review, 525 A.2d 359 (Pa. 1987), in which it held

that “the Commonwealth Court’s decision that a work stoppage by teachers was an illegal

‘strike’ pursuant to . . . the Public Employee Relations Act (PERA), did not have preclusive

effect in the teachers’ subsequent appeal of the Unemployment Compensation Board of

Review’s denial of unemployment compensation benefits pursuant to . . . the

Unemployment Compensation Law,” because the two laws were “enacted to promote

decidedly different public policies,” and “the determination of what constitutes a strike for

purposes of PERA is not coextensive with the determination whether a work stoppage is a

strike or a lock-out under the terms of the Unemployment Compensation Act.” Rue, 713

A.2d at 85. The court explained that in the case before it, “[a]lthough the Superior Court . . .

correctly noted that the determination of whether Rue committed an act of willful

misconduct for purposes of the Unemployment Compensation Law is far different from the

determination of whether K-Mart made defamatory statements about her, those legal

conclusions are not at issue here.” Id. Unlike in Odgers, the issue in Rue was

       neither one of law, nor a mixed question of law and fact. Instead, it [was] an
       issue of pure fact, concerning whether Rue did or did not steal a bag of potato
       chips. As such, the differences between the public policies of the
       Unemployment Compensation Law and the civil action for defamation are
       not relevant. A fact is a fact, regardless of public policy.

Id. See also Jones v. United Parcel Serv., 214 F.3d 402, 406 (3d Cir. 2000) (applying Rue

                                              10
and predicting that the Pennsylvania Supreme Court would give preclusive effect in an

American with Disabilities Act claim to the factual finding of the Workers’ Compensation

Judge that the plaintiff had “fully recovered from his work-related injury, regardless of the

differing policies behind the ADA and the Workers’ Compensation Act”).

         Just as in Rue and Jones, the legal conclusions of the Commonwealth Court about

laches and the District Court’s legal conclusion that Minnick’s right to equal protection

was not violated are not at issue here. What is at issue is the pure fact that if the City were

forced to enroll Minnick in the pension plan, “[t]he City would be required to pay much

more from its own funds than if [Minnick] had not slept on his rights.” In the same way that

it was proper (insofar as identity of issues was concerned) for the trial court in Rue to take

the fact that Rue had not stolen the chips and apply the law of defamation to that fact, it was

proper for the District Court here to take the facts found by the Commonwealth Court and

apply equal protection law to those facts, finding that those facts provided “a rational basis

for treating [Minnick] differently from the other employees for whom the City had been

making contributions to the pension plan and also establish[ed] that [Minnick] was not

similarly situated to the other employees.” The District Court was doing what courts must

do on summary judgment: asking whether there were any genuine issues of material fact.

The Court held that, given the facts found by the Commonwealth Court, there were not. We

agree.

         Minnick next argues that he did not have a full and fair opportunity “to develop his

equal protection case” in the arbitration. A party does not have an opportunity for a full and

                                               11
fair hearing when the state proceedings “fall below the minimum requirements of due

process as defined by federal law.” Witkowski, 173 F.3d at 205. This is an “admittedly

general standard.” Rider, 850 F.2d at 991.

       Minnick characterizes this argument as whether or not he had a fair opportunity “to

develop his equal protection case” in the arbitration, but that is not the real question. The

question is whether he had a full and fair opportunity to litigate the facts whose further

litigation is precluded in this litigation: that is, the fact that the City would have to pay more

from its own funds than if Minnick had contributed from the beginning.

       Regarding these facts, Minnick argues that he did not have a fair opportunity to

develop the record at the arbitration and that discovery in this case revealed that “there was

no state funding of the pension plan which included Minnick for the time period which was

pertinent.” He quotes extensively from a deposition of the City Manager, to the effect that

the state did not contribute any money for funding the retirement accounts of employees,

like Minnick, who were hired before 1987.

       Even if this evidence were to create a genuine issue, Minnick has not explained why

he could not have presented this evidence to the arbitrator. This was indeed the focal issue

in the arbitration – whether the City was prejudiced by having to pay more when Minnick

later tried to enroll in the pension plan. Minnick does not raise any procedural

deficiencies from the arbitration, other than by conclusorily stating that the record was

“scanty.” The record was only “scanty” because he did not develop it, on the very issue that

was the crux of the arbitration. We have held on at least two occasions that the fact-finding

                                               12
procedures involved in arbitration hearings meet the minimum standards of due process.

See Witkowski, 173 F.3d at 205; Rider, 850 F.2d at 991-92. In Witkowski, we examined

the arbitration hearing and found that it encompassed the facts at issue in the later federal

action and that the Witkowskis had had a full opportunity to present their case there. We

stated, “[t]hat the arguments made during the arbitration hearing were not accepted in full by

the arbitrator does not mean that the Witkowskis were prevented from fully presenting

them.” Witkowski, 173 F.3d at 205 (emphasis added). Similarly, here, Minnick had the

chance to fully develop the facts with regard to the City’s funds at the arbitration. That he

did not do so, and that his arguments were not accepted, does not mean that he did not have

the opportunity.

       Because the Commonwealth Court’s finding that the City would have to pay more

from its own funds than if Minnick had entered the pension plan earlier is entitled to

preclusive effect, and because those facts establish that Minnick was not similarly situated

to other City employees and that the City had a rational basis for not enrolling him in the

pension plan, there remain no genuine issues of material fact regarding whether his equal

protection rights were violated. We will therefore affirm the District Court’s order

granting summary judgment in favor of the City.

                                              13
TO THE CLERK OF COURT:

     Please file the foregoing not precedential opinion.

                                               /s/ Marjorie O. Rendell
                                               Circuit Judge

                                          14