Scranton v. E.B. Jermyn Lodge No. 2 of The Fraternal Order of Police

• Decision Date: 29 October 2010
• Citation: 8 A.3d 971
• Parties: CITY OF SCRANTON v. E.B. JERMYN LODGE NO. 2 OF the FRATERNAL ORDER OF POLICE, the Pennsylvania Department of Community and Economic Development and the Pennsylvania Economy League Central Pa., LLC, as the Act 47 Coordinator for the City of Scranton. Appeal of: The City of Scranton, Pennsylvania and the Pennsylvania Department of Community and Economic Development, and the Pennsylvania Economy League Central Pa., LLC, as the Act 47 Coordinator for the City of Scranton. City of Scranton v. E.B. Jermyn Lodge No. 2 of the Fraternal Order of Police, Appellant.
• Court: Pennsylvania Commonwealth Court

8 A.3d 971

CITY OF SCRANTON

v.E.B. JERMYN LODGE NO. 2 OF the FRATERNAL ORDER OF POLICE, the Pennsylvania Department of Community and Economic Development and the Pennsylvania Economy League Central Pa., LLC, as the Act 47 Coordinator for the City of Scranton.

Appeal of: The City of Scranton, Pennsylvania and the Pennsylvania Department of Community and Economic Development, and the Pennsylvania Economy League Central Pa., LLC, as the Act 47 Coordinator for the City of Scranton.

City of Scranton

v.E.B. Jermyn Lodge No. 2 of the Fraternal Order of Police, Appellant.

Commonwealth Court of Pennsylvania.

Argued June 21, 2010.

Decided Oct. 29, 2010.

Richard M. Goldberg, Kingston, PA, for Appellant City of Scranton.

Clifford B. Levine, Pittsburgh, for designated appellants, PA Department of Community and Economic Development and the PA Economy League Central PA, LLC, as the Act 47 Coordinator for the City of Scranton.

W. Timothy Barry, Pittsburgh, for designated appellant, PA Economy League Central PA, LLC.

Stephen J. Holroyd, Philadelphia, for appellee, E.B. Jermyn Lodge No. 2 of the Fraternal Order of Police.

BEFORE: McGINLEY, Judge, and SIMPSON, Judge, and FRIEDMAN, Senior Judge.

OPINION BY Judge SIMPSON.

Table of Contents

I.	Introduction	975
II.	Background	975

A.	Distressed Status	975
B.	2002 Recovery Plan	976
C.	Scranton FOP (2009)	977

1.	Generally	977
2.	Terms of 2006 Award	978

a.	Expiration of Recovery Plan	978
b.	Wages	978
c.	Health Care	978
d.	Police Administration	979
e.	Other Provisions of Recovery Plan Not Adopted	981

D. 2009 Award 982

1.	Generally	982
2.	Wages	983
3.	Health Care	983
4.	Police Officer Safety	985
5.	Pension Benefits	985
6.	Other Provisions	986

E.	Current Appeals	986
F.	Appeal Granted in Scranton FOP (2009)	986

III.	Contentions in Appeals of 2009 Award	987
IV.	Discussion	987

A.	Violation of Plan and Controlling Law	987
B.	IAFF Local 22; Ellwood City	988
C.	Specific Challenges to 2009 Award	988

1. Wages 988

a.	Contentions	988
b.	Analysis	989

2. Health Care 990

a.	Contentions	990
b.	Analysis	991

3. Police Officer Safety 992

a.	Contentions	992
b.	Analysis	992

4. Mandatory Cost Containment Provisions 992

a.	Contentions	992
b.	Analysis	993

5. Pension Benefits 993

a.	Contentions	993
b.	Analysis	995

i.	Illegality	995
ii.	Act 205-Plan Administrator	996
iii.	Act 205-Cost Estimate	996
iv.	Retroactive Adjustment	997

6. DROP 997

a.	Contentions	997
b.	Analysis	997

7. Vacation of Entire Award 997

a.	Contentions	997
b.	Analysis	998

8. Remaining Issues 999

a. Constitutionality of Act 999

i.	Contentions	999
ii.	Analysis	999

b. Other Issues 1000

VI. Conclusion 1000

I. Introduction

In these consolidated appeals originating in a February, 2009, interest arbitration award (2009 Award) involving the City of Scranton (City) and its police personnel, we again examine the effect of the Municipalities Financial Recovery Act (Act 47) ¹ on collective bargaining rights under the statute known as the Policemen and Firemen Collective Bargaining Act (Act 111). ² The City, its allied intervenors,³ and the E.B. Jermyn Lodge No. 2 of the Fraternal Order of Police (FOP), appeal from an order of the Court of Common Pleas of Lackawanna County (common pleas court) ⁴ that denied the City's petition to vacate the award, but modified the wage, health insurance benefits and pension provisions of the award. In light of our decisions in and City of Scranton v. E.B. Jermyn Lodge No. 2 of the Fraternal Order of Police, 965 A.2d 359 (Pa.Cmwlth.2009), appeal granted, --- Pa. ----, 995 A.2d 1181 (2010) ( Scranton FOP (2009) ) and City of Scranton v. Fire Fighters Local Union No. 60, of the International Association of Fire Fighters, AFL-CIO, 964 A.2d 464 (Pa.Cmwlth.2009), appeal granted, --- Pa. ----, 995 A.2d 1180 (2010) ( Scranton Fire Fighters (2009) ), we affirm the common pleas court's order as modified.

II. Background

A. Distressed Status

The background in this matter has not changed significantly since our decision in Scranton FOP (2009). In January, 1992, DCED determined the City to be a "financially distressed municipality" underAct 47 and appointed the Pennsylvania Economy League, LLC, as the City's Act 47 Coordinator (Coordinator), to develop a Recovery Plan.⁵ The City is still operating under its third Plan, which it adopted in May 2002 (2002 Recovery Plan). The City remains a financially distressed municipality; DCED has not terminated the City's financially distressed status. See Section 253 of Act 47, 53 P.S. § 11701.253 (termination of status); Borough of Wilkinsburg v. Dep't of Cmty. & Econ. Dev., 728 A.2d 389 (Pa.Cmwlth.1999) (it is within sole discretion of the Secretary of DCED to determine whether to terminate a municipality's distressed status).

B. 2002 Recovery Plan

Chapter II-B of the 2002 Recovery Plan, titled "LABOR RELATIONS, COST CONTAINMENT, AND RELATED PROVISIONS," sets forth specific requirements for the City's employees. It states in part:

The following are the labor relations, cost containment and related provisions of the [2002 Recovery Plan]. They become effective as of the date of the plan's adoption. They cover the remainder of 2002 as well as the period 2003-2005 and beyond; provided that the terms and provisions of any existing collective bargaining agreement shall be followed for the remainder of the current term.

These cost containment provisions are both reasonable and necessary to the recovery of the City. It is the intention of the City to negotiate these cost containment provisions with the bargaining unit representative in good faith.

However, to the extent that the City is unable to reach agreement with any of its Unions, it is the express intention of the City that implementation of these cost containment provisions is mandatory. All cost containment provisions must be addressed. The only exception to the mandatory intent and nature of these provisions will be by amendment to said provisions, based upon approvalfrom the Coordinator, in conjunction with [DCED]. Any such change must be in conformance with the financial parameters of the Recovery Plan.

R.R. at 555a (emphasis added). Chapter II-B contains mandatory provisions applying to all City employees, departments, bureaus and offices, R.R. at 555a-62a, provisions specifically for the fire department, R.R. at 562a-65a, provisions specifically for the police department, R.R. at 565a-70a, and provisions for other employees. Act 47 prohibits clear, specific recommendations of a recovery plan from being violated, expanded or diminished. City of Farrell v. Fraternal Order of Police, Lodge No. 34, 538 Pa. 75, 645 A.2d 1294 (1994).

Chapter II-C of the 2002 Recovery Plan, titled "GENERAL PLAN PROVISIONS," sets forth the Plan's general provisions for 2002-05 "and beyond." R.R. at 576a. Chapter II-C provides in part (with emphasis added):

Employee Benefits/Pensions. The City will continue to follow the requirements of Act 205 ^{[ 6} particularly as they relate to budgeting the entire cost of the Minimum Municipal Obligation. The Recovery Plan provides for $800,000 per year to be made as a contribution to the Pension Plans to amortize the cost of the advance payment made by Provident Mutual in the year 2000 to meet the City's unfunded MMO's as of that date. The City shall review on an annual basis in conjunction with the pension actuarial reports the status of this payment and its required MMO payments. Finally, all pension plan amendments shall be made in accordance with cost containment provisions outlined in Chapter II-B.

R.R. at 577a (footnote added).

C. Scranton FOP (2009)

1. Generally

Pursuant to Act 111, the City and the FOP operate under a collective bargaining agreement (CBA). Their last CBA expired on December 31, 2002. After negotiations for a 2003-2007 CBA reached an impasse, the parties selected an interest arbitration panel to establish the terms and conditions of employment for police personnel.

On April 7, 2006, following extensive hearings and deliberations, a divided arbitration panel issued an interest award (2006 Award) covering the period from January 1, 2003 through December 31, 2007. Among other provisions, the 2006 Award directed retroactive wage increases and lump sum bonuses in excess of the 2002 Recovery Plan's mandates.

In response, the City immediately filed a petition to vacate or modify with the common pleas court. FOP answered and raised new matter.⁷ Ultimately, after argument and deliberations, the common pleas court determined the 2006 Award violated the 2002 Recovery Plan and directed modification of the award. The FOP appealed to this Court.

In Scranton FOP (2009), we undertook limited review under a narrow certiorari standard. We rejected the argument that Act 47 is an unconstitutional limitation on Act 111 collective bargaining. See Wilkinsburg Police Officers Ass'n by Harder v. Commonwealth, 129 Pa.Cmwlth. 47, 564 A.2d 1015 (1989), aff'd, 535 Pa. 425, 636 A.2d 134 (1993) ( Wilkinsburg I) (restrictions embodied in Act 47 are constitutional; even if Section 252 of Act 47 operates as a bar to prospective bargaining agreements; it would not violate the Pennsylvania Constitution); Wilkinsburg Police Officers Ass'n by Harder v. Commonwealth, 535 Pa. 425, 636 A.2d 134 (1993) ( Wilkinsburg II) (plurality decision of Supreme Court affirming Wilkinsburg I; Act 47 did not unconstitutionally delegate municipality's fiscal authority because municipality retains its fiscal authority; Act 47 is not a prohibited special law regulating labor).

Further, we dismissed the FOP's contention that the arbitration panel could compel the City to amend the 2002 Recovery Plan. Here, the City adopted the Coordinator's three recovery plans. Because the Coordinator developed the 2002 Recovery Plan, only the Coordinator may initiate amendments to it. Id.

2. Terms of 2006 Award

In Scranton FOP (2009), we reviewed each component of the 2006 Award to determine whether the mandatory requirements of the 2002 Recovery Plan preclude its implementation, and modified the terms of the award to comply with the Plan.

a. Expiration of Recovery Plan

First, we rejected the FOP's argument that the 2002 Recovery Plan expired by its own terms on ...