City of Philadelphia v. District Council 33, American Federation of State, County & Mun. Employees, AFL-CIO

• Decision Date: 01 October 1991
• Docket Number: AFL-CIO
• Citation: 528 Pa. 355,598 A.2d 256
• Court: Pennsylvania Supreme Court
• Parties: , 14 Employee Benefits Cas. 1573 CITY OF PHILADELPHIA, W. Wilson Goode, Mayor of the City of Philadelphia, Carlo R. Gambetta, Finance Director of the City of Philadelphia, Eric Pookrum, Treasurer of the City of Philadelphia, James Stanley White, Managing Director of the City of Philadelphia, Orville W. Jones, Personnel Director of the City of Philadelphia, Councilman Joseph E. Coleman, President of City Council, Councilman David Cohen, Councilman Francis Rafferty, Councilman Leland Beloff, Councilman Lucien E. Blackwell, Councilman John F. Street, Councilman Brian F. O'Neill, Councilwoman Ann J. Land, Councilwoman Patricia Hughes, Councilwoman Joan L. Krajewski, Councilwoman Augusta A. Clark, Councilwoman Ann C. Verna, Philadelphia Board of Pension & Retirement, Anthony Witlin, Executive Director, Philadelphia Board of Pensions & Retirement, and Joseph C. Vignola, City Controller of the City of Philadelphia, Appellants, v. DISTRICT COUNCIL 33, AMERICAN FEDERATION OF STATE, COUNTY & MUNICIPAL EMPLOYEES,, and Earl Stout, as Trustee Ad Litem and President of District Council 33, AFSCME,.

Page 256

598 A.2d 256

528 Pa. 355, 14 Employee Benefits Cas. 1573

CITY OF PHILADELPHIA, W. Wilson Goode, Mayor of the City of

Philadelphia, Carlo R. Gambetta, Finance Director of the

City of Philadelphia, Eric Pookrum, Treasurer of the City of

Philadelphia, James Stanley White, Managing Director of the

City of Philadelphia, Orville W. Jones, Personnel Director

of the City of Philadelphia, Councilman Joseph E. Coleman,

President of City Council, Councilman David Cohen,

Councilman Francis Rafferty, Councilman Leland Beloff,

Councilman Lucien E. Blackwell, Councilman John F. Street,

Councilman Brian F. O'Neill, Councilwoman Ann J. Land,

Councilwoman Patricia Hughes, Councilwoman Joan L.

Krajewski, Councilwoman Augusta A. Clark, Councilwoman Ann

C. Verna, Philadelphia Board of Pension & Retirement,

Anthony Witlin, Executive Director, Philadelphia Board of

Pensions & Retirement, and Joseph C. Vignola, City Controller of the City of Philadelphia, Appellants, v. DISTRICT COUNCIL 33, AMERICAN FEDERATION OF STATE, COUNTY &

MUNICIPAL EMPLOYEES, AFL-CIO, and Earl Stout, as

Trustee Ad Litem and President of

District Council 33, AFSCME, AFL-CIO.

Supreme Court of Pennsylvania.

Argued Oct. 24, 1989.

Resubmitted Sept. 30, 1991.

Decided Oct. 1, 1991.

[528 Pa. 357] Ralph J. Teti, Philadelphia, for appellants.

Deborah Willig and Alaine S. Williams, Philadelphia, for appellees.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and CAPPY, JJ.

ORDER

PER CURIAM:

AND NOW, this 30th day of September, 1991, the Application for Reconsideration is granted. Matter to be resubmitted on briefs.

OPINION OF THE COURT

LARSEN, Justice.

This is an appeal from an en banc order of the Commonwealth Court affirming the grant of a preliminary injunction by the Court of Common Pleas of Philadelphia County. Appellees District Council 33 of AFSCME, et al. (Union), instituted the underlying action seeking to enjoin appellants City of Philadelphia, et al. (City), from enforcing Philadelphia Ordinance 1107, which would have put Municipal Retirement System Benefit Plan 1987 into effect. That plan, commonly known as Plan 1987, differed significantly and adversely from the benefit plan contained in the collective bargaining agreement then in effect between the parties. The issues raised by this appeal are (1) whether the Court of Common Pleas had subject matter jurisdiction over this action; and (2) whether the Union was entitled to preliminary injunctive relief enjoining the City from enforcing Philadelphia Ordinance 1107 as it pertains to the Union.

On July 22, 1986, the parties agreed to continue in effect, until June 30, 1988, the provisions of their previous collective bargaining agreement, including the pension and retirement benefit provisions referred to as Plan J. In December of 1984, the legislature had enacted the Municipal Pension Plan Funding Standard and Recovery Act ¹ (Act 205), which establishes procedures whereby, among other things, municipalities with financially distressed pension plans could avail themselves of the Act's special relief provisions. Depending on the municipality's degree of financial distress, as determined by the Public Employee Retirement Study Commission (Commission), a municipality could elect to participate in one of the program's three levels of recovery. A municipality's participation in the program affords the municipality financial and other benefits, while imposing obligations on new municipal employees designed to restore actuarial health to the ailing pension plan.

The Commission evaluated the financial condition of the City's pension plan and determined that the City's plan was "severely distressed." This being the worst rating, the Commission found that the City was entitled to participate in Level III of the recovery program. The City then elected to participate in the program at that level.

One of the mandatory remedies required of Level III participants is:

The establishment of a revised benefit plan for newly hired municipal employees.... The revised benefit plan shall have a normal cost which is less than the normal cost of the benefit plan applicable to current municipal employees as reported in the most recent prior actuarial valuation report of the pension plan.

53 P.S. § 895.606(b)(2). Act 205 also provides that, "[n]otwithstanding any provision of law, municipal charter, municipal ordinance, municipal resolution, or pension plan agreement, document or instrument to the contrary, the remedies specified in this section shall be available to the applicable municipalities." 53 P.S. § 895.607(a).

Philadelphia Ordinance 1107, passed on January 8, 1987, was designed to comply with the Act 205 requirement of establishing a revised benefit plan. The ordinance contained new benefit provisions, known as Plan 87, which differed significantly from the Plan J provisions then currently in effect. Plan 87 changed the eligibility requirements making it more difficult to be eligible for benefits, altered the benefit calculation formula so as to reduce benefits and eliminated service-connected disability benefits for newly hired employees.

On January 14, 1987, the Union filed its complaint in equity claiming that the City, through Ordinance 1107, had unilaterally abrogated the pension provisions of the collective bargaining agreement and impaired the obligations of the contract in violation of the Pennsylvania and United States constitutions. The Union sought injunctive and declaratory relief. That same day, the Union filed a motion for preliminary injunction.

After a hearing, the Court of Common Pleas of Philadelphia County issued an order on March 6, 1987 that (1) preliminarily enjoined the City from enforcing Ordinance 1107, as it pertained to the Union, until the expiration of the collective bargaining agreement, (2) maintained jurisdiction over the matter through June 30, 1988 or until a full hearing on the permanent injunction or other resolution, (3) stated that the injunction might be dissolved upon the City's showing that enforcement of the injunction would be more harmful than beneficial, and (4) required that the Union post a $15,000 bond. The City appealed, and the Commonwealth Court, sitting en banc, affirmed on December 18, 1987.

The City first asserts that the Court of Common Pleas did not have jurisdiction over this matter. The City characterizes this case as a labor dispute and claims that, as such, the Pennsylvania Labor Relations Board (PLRB) has exclusive jurisdiction over the matter. The Public Employe Relations Act (PERA) provides:

The [PLRB] is empowered, as hereinafter provided, to prevent any person from engaging in any unfair practice listed in Article XII of this act. This power shall be exclusive and shall not be affected by any other means of adjustment or prevention that have been or may be established by agreement, law, or otherwise.

43 P.S. § 1101.1301. In accordance with this, this Court has developed a policy of judicial deference where unfair labor practices are involved and has stated that:

[I]f a party directly seeks redress of conduct which arguably constitutes one of the unfair labor practices listed in Article XII (Section 1201) of the PERA, 43 P.S. § 1101.1201 (Supp.1976), 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, 469 Pa. 358, 366, 365 A.2d 1245, 1249 (1976).

Among the unfair labor practices listed in Article XII of the PERA is the refusal to "bargain collectively in good faith with an employe representative which is the exclusive representative of employes in an appropriate unit." 43 P.S. § 1101.1201(a)(5). The City claims that the subject matter of the Union's complaint involves a labor dispute over the City's failure to bargain with the Union about the new pension system, and therefore, the PLRB has exclusive jurisdiction. The Union, on the other hand, maintains that the complaint does not assert unfair labor practices, but rather it asserts a breach of contract and an unconstitutional impairment of the contract and is thus properly before the Court of Common Pleas.

One need only look at the complaint itself to see that the underlying case sounds in contract. In its complaint, the Union raises two contract issues--whether the City's enforcement of Philadelphia Ordinance 1107 breached the contract and whether that same enforcement violated the protections against laws impairing contracts contained in the Pennsylvania Constitution ² and the United States constitution. ^{3 3} Neither issue addresses a failure to bargain, as the City alleges. Moreover, the complaint did not seek relief that would force the City to bargain over the new pension plan. Instead, the complaint sought to enjoin the City from enforcing Ordinance 1107 and to declare the enforcement of the ordinance both a breach of the collective bargaining agreement and an unconstitutional impairment of their contract.

This Court, in Hollinger, supra, held the PLRB's exclusive jurisdiction over unfair labor practice cases "does not, of course, divest a court of jurisdiction to entertain suits for breach of contract merely because the alleged breach may arguably be an unfair labor practice." 469 Pa. at 365 n. 10, 365 A.2d at 1249 n. 10 (emphasis in the original). As noted above, the complaint clearly alleges a breach of contract, and as such, the Court of Common Pleas had proper jurisdiction over this matter.

The City's second issue on appeal is whether the Union was entitled to preliminary injunctive relief enjoining the City from enforcing Philadelphia Ordinance 1107 as it pertains to the Union. The City claims that the Union has not met all of the requirements for a preliminary injunction. The prerequisites for a preliminary injunction, as established by this Court, are:

[F]irst, that it is...