Phila. Fed'n of Teachers v. Sch. Dist. of Phila., 31 EAP 2015

• Decision Date: 15 August 2016
• Docket Number: No. 31 EAP 2015,31 EAP 2015
• Parties: PHILADELPHIA FEDERATION OF TEACHERS, AFT, LOCAL 3, AFL–CIO and Jerry Jordan, Appellees v. SCHOOL DISTRICT OF PHILADELPHIA, the School Reform Commission, William J. Green, Feather Houstoun, Fara Jimenez, Marjorie Neff, and Sylvia Simms, in their Official Capacities as Members of the School Reform Commission, and Dr. William R. Hite, Jr., in his Official Capacity as the Superintendent of Schools, School District of Philadelphia, Appellants.
• Court: Pennsylvania Supreme Court

144 A.3d 1281

PHILADELPHIA FEDERATION OF TEACHERS, AFT, LOCAL 3, AFL–CIO and Jerry Jordan, Appellees

v.SCHOOL DISTRICT OF PHILADELPHIA, the School Reform Commission, William J. Green, Feather Houstoun, Fara Jimenez, Marjorie Neff, and Sylvia Simms, in their Official Capacities as Members of the School Reform Commission, and Dr. William R. Hite, Jr., in his Official Capacity as the Superintendent of Schools, School District of Philadelphia, Appellants.

No. 31 EAP 2015

Supreme Court of Pennsylvania.

Argued May 11, 2016.

Decided Aug. 15, 2016.

John R. Bielski, Lauren Miller Hoye, Amy Louise Rosenberger, Ralph J. Teti, Deborah R. Willig, Willig, Williams & Davidson, Philadelphia, for Appellees.

Lisa Ann Barton, Richard L. Bazelon, A. Richard Feldman, Bazleon Less & Feldman, P.C., David Pittinsky, Ballard Spahr LLP, Philadelphia, for Appellants.

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, JJ.

OPINION

Chief Justice SAYLOR

.

This appeal concerns whether power is invested in a school reform commission, under a statutory regime designed to facilitate rehabilitation of financially distressed school districts, to unilaterally alter terms and conditions of employment for teachers whose interests are represented by a bargaining unit.

In 1959, the General Assembly enacted the Distressed School Law,¹ amending the Public School Code of 1949,² and providing for special boards of control to govern school districts deemed to be financially distressed. See 24 P.S. §§ 6–692

(repealed), 6–693. Of particular relevance to the present appeal, Section 693 of the enactment conferred upon on such boards the power to:

cancel or to renegotiate any contract other than teachers' contracts to which the board or the school district is a party, if such cancellation or renegotiation of contract will effect needed economies in the operation of the district's schools.

Id. § 6–693(a)(1)

(emphasis added).

In 1998, the Legislature implemented additional measures specific to distressed school districts of the first class—i.e., the School District of Philadelphia (the “District”)—by adding Section 696 to the School Code.³ Among other provisions that had the effect of affording the Commonwealth an expanded role in the governance of financially-distressed school districts of the first class, the legislation, as amended as of October 2001,⁴ provided for the establishment of a five-member school reform commission, within 30 days after the issuance of a declaration of distress by the Secretary of Education, to assume the responsibility for the operation, management and educational program of the district. See 24 P.S. § 6–696(a)

, (e)(1).⁵

Of particular relevance here, Section 696(i) conferred upon a school reform commission the powers afforded to special boards of control under Section 693(a)(1). See id. § 6–696(i)

. Thus, derivatively, a school reform commission has the ability, in delineated circumstances, to “cancel or to renegotiate any contract other than teachers' contracts to which the board or the school district is a party[.]” Id. § 6–693(a)(1) ; see also

id. § 6–696(i).

Within its subsection (k), Section 696 also imposed a number of requirements and restrictions upon collective bargaining between the distressed district and employee bargaining units, see id. § 6–696(k)

, while repealing the Public Employe Relations Act,⁶ to the extent of any inconsistency. See Act 46, § 28(a). Notably, as originally enacted in 1998, Section 696(k)(5) stated that nothing in subsection (k) “shall eliminate, supersede or preempt any provision of an existing collective bargaining agreement until the expiration of the agreement unless otherwise authorized by law.” 24 P.S. § 6–696(k)(5)

(superseded). In the 2001 amendments, however, the Legislature added language stating that such qualification pertained “[e]xcept as specifically provided in section 693.” Id. (as amended by Act 83). Via subsection (l ), the General Assembly also prohibited school employees from striking during the tenure of a school reform commission. See

id. § 6–696(l ).

In December 2001, the Secretary of Education issued a declaration of financial distress pertaining to the District, and a school reform commission (the “SRC” or the “Commission”) was constituted and assumed responsibility for the District's operations, management, and educational program, per Section 696 of the School Code. Throughout the ensuing years, the SRC and appellee, the Philadelphia Federation of Teachers, AFT, Local 3, AFL–CIO (the “Union”),⁷ negotiated several collective bargaining agreements, the most recent of which was effective from September 2009 through August 2012, and extended through August 2013. For some period thereafter, the parties adhered to the terms of the expired agreement, consistent with the general, labor-law protocol. See In re Appeal of Cumberland Valley Sch. Dist., 483 Pa. 134, 143, 394 A.2d 946, 951 (1978)

.

In 2014, the SRC sought leave to file an original jurisdiction complaint in this Court, seeking a declaration that it had the power to unilaterally modify work practices and rules that, under Section 696(k)(2), lay outside the scope of mandatory bargaining. The Court denied such request in June 2014. See SRC v. Phila. Fed'n of Teachers, 626 Pa. 115, 95 A.3d 269 (2014)

(per curiam ).⁸

Several months later, the SRC adopted “Resolution SRC–1,” entitled, “Implementation of Modified Economic Terms with [the Union]; Cancellation of Collective Bargaining Agreement.” The instrument explained that the District's longstanding and extreme financial crisis continued, despite “significant and historic cost-reduction measures,” including dozens of school closures, thousands of employee layoffs, a prolonged freeze on charter-school expansion, and substantial wage and benefit concessions from employee organizations. Resolution SRC–1, at 1 (Oct. 6, 2014). According to the document, the District's operating budget remained insufficient to provide adequate funding for essential services.

The resolution further described an ongoing multi-year negotiations process, referred to as a “marathon of collective bargaining,” between the District and the Union with the assistance of mediators from the Pennsylvania State Bureau of Mediation, which had yet to culminate in an agreement. Id. In the Commission's judgment, it related, curtailment of benefits for the employees, and modification of some other terms and conditions of employment, was necessary to effect needed economies in school operations. See id.

For these reasons, the SRC invoked Sections 693(a)(1) of the School Code, as incorporated into Section 696(i), to “make specific limited changes and to implement ... modified economic terms and conditions for employees in the bargaining units represented by the [Union], consistent with economic terms proposed in negotiations, while maintaining all other existing terms and conditions to the extent required by law[.]”⁹ Id. at 2. The Commission predicted that the changes would save about $44 million in 2014 through 2015 and $198 million over four years. Ultimately, the resolution purported to cancel the most recent collective bargaining agreement between the District and the Union, to the extent that it continued to govern the parties' relations.

Contemporaneous with the issuance of Resolution SRC–1, the Commission, the District, and the Department of Education lodged a declaratory judgment action in the Commonwealth Court. The plaintiffs asked that court to uphold the imposition of the new economic terms and conditions as being authorized by applicable law.

The Union responded with a grievance protesting the SRC's actions and seeking arbitration, an unfair labor practice charge filed before the Pennsylvania Labor Relations Board, and a complaint in equity for temporary restraining order and preliminary injunctive relief. The complaint sought solely to preserve the status quo until the parties concluded the anticipated labor arbitration of their dispute and attained resolution of the unfair labor practice charge. Throughout its various submissions to the common pleas court, the Union took the position that the restriction, within Section 693(a)(1), upon the cancellation or renegotiation of “teachers' contracts” plainly encompassed contracts that govern teachers' employment, such as a collective bargaining agreement establishing the terms and conditions for such engagement. The Union also maintained that the bargaining efforts between it and the District had not reached an impasse.

The SRC urged the common pleas court to stay the proceedings before it, so that material legal issues could be adjudicated in the Commonwealth Court. Further, the Commission took the position that the injunction requested by the Union, if granted, would cause irreparable harm by requiring the District to “stop restoring crucial funds to the schools to pay for books, school supplies as basic as paper and art supplies, and most importantly, much needed staff, such as counselors, reading specialists, and other specialists and programs to be devoted to the District's most at-risk students.” Defendants' Memorandum of Law in Opposition to Plaintiffs' Petition for a Temporary Restraining Order and Preliminary Injunctive Relief (“Defendants' Memorandum”) in Phila. Federation of Teachers, AFT, Local 3, AFL–CIO v. Sch. Dist. of Phila., No. 01842 Oct. Term 2014 (C.P.Phila), at 3.

On the merits, the SRC maintained that, since a collective bargaining agreement is a contract, there could be no question that such an agreement was subject to cancellation to facilitate needed economies in the operation of the District's schools. See 24 P.S. § 6–693(a)(1)

. The need, the Commission contended, was also undeniable, given a projected funding shortfall for the next fiscal year of $71 million, heralded in part by the two major cost drivers of employee health care costs and state-mandated contributions to employee pensions.

The SRC depicted Section 696 as “redr[awing] the map for...