Scranton v. Fire Fighters Loc. Union No. 60

• Decision Date: 23 January 2009
• Docket Number: No. 213 C.D. 2008.,No. 2314 C.D. 2007.,2314 C.D. 2007.,213 C.D. 2008.
• Citation: Scranton v. Fire Fighters Loc. Union No. 60, 964 A.2d 464 (Pa. Commw. Ct. 2009)
• Parties: CITY OF SCRANTON v. FIRE FIGHTERS LOCAL UNION NO. 60, OF the INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO, Appellant. City of Scranton v. Fire Fighters Local Union No. 60, Appellant.
• Court: Pennsylvania Commonwealth Court

964 A.2d 464

CITY OF SCRANTON v. FIRE FIGHTERS LOCAL UNION NO. 60, OF the INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO, Appellant.

City of Scranton v. Fire Fighters Local Union No. 60, Appellant.

No. 2314 C.D. 2007.

No. 213 C.D. 2008.

Commonwealth Court of Pennsylvania.

Argued September 10, 2008.

Decided January 23, 2009.

Thomas W. Jennings and Stephen J. Holroyd, Philadelphia, for designated appellant, Fire Fighters Local Union No. 60.

Richard M. Goldberg, Kingston; Clifford B. Levine, Pittsburgh, and W. Timothy Barry, Pittsburgh, for appellee, City of Scranton.

BEFORE: LEADBETTER, President Judge, and McGINLEY, Judge, and FRIEDMAN, Judge,¹ and COHN JUBELIRER, Judge, and SIMPSON, Judge, and LEAVITT, Judge, and BUTLER, Judge.

OPINION BY Judge SIMPSON.

Table of Contents
                  I. Background                                                         470
                 II. Arbitration Award                                                  471
                III. Petition to Vacate or Modify                                       473
                 IV. Issues on Appeal                                                   473
                     A. Section 252 of Act 47                                           474
                     B. Judicial Review                                                 475
                         1. Scope of Review                                             475
                         2. Standard of Review                                          476
                         3. Available Remedies                                          476
                     C. Unlawful Act                                                    477
                         1. Amendment of Recovery Plan                                  477
                         2. Terms of Award                                              478
                              a. Expiration of Recovery Plan                            478
                              b. Wages                                                  479
                              c. Health Care                                            481
                              d. Staffing and Management                                483
                                    i. Provisions of Award, Recovery Plan               483
                                   ii. Contentions                                      485
                                  iii. Management Positions, Paid Leave                 486
                                  iv. Minimum Manning                                   486
                                   v. Managerial Rights                                 487
                               e. Other Provisions of Recovery Plan Not Adopted         487
                         3. Waiver by Failure to Raise Arguments 488
                

     D. Illegality of Recovery Plan                                     489
                         1. State Adverse Interest Act                                  489
                         2. Recovery Plan Conflict with Act 111                         489
                     E. Preclusion by Conduct                                           491
                

V. Conclusion

These appeals originating in an interest arbitration award involving public safety employees of a distressed municipality require this Court to again examine the effect of the Municipalities Financial Recovery Act (Act 47)² on collective bargaining rights under the statute known as the Policemen and Firemen Collective Bargaining Act (Act 111).³

In particular, the Fire Fighters Local Union No. 60 (Fire Fighters) appeals from two orders of the Court of Common pleas of Lackawanna County (common pleas court),⁴ in favor of the City of Scranton (City) and its allied intervenors.⁵ The first order, entered October 23, 2007, vacated unspecified provisions of an interest arbitration award between the Fire Fighters and the City because the award violated the City's 2002 Recovery Plan enacted under Act 47. The second order, entered January 15, 2008, attempted to clarify the first order by generally modifying the arbitration award "to incorporate the terms of the [2002] Recovery Plan, until the Recovery Plan is amended or the [City's] designation as `distressed' under Act 47 is removed." Reproduced Record (R.R.) at 19a.

I. Background

The largely uncontested history of this vigorous collective bargaining litigation has roots in 1992, when the City was determined to be financially distressed under Act 47. The Commonwealth of Pennsylvania, Department of Community and Economic Development (DCED) appointed an Act 47 Coordinator for the City. The Coordinator developed several financial recovery plans for the City. The third and most recent recovery plan was adopted in 2002 (2002 Recovery Plan), and it was overwhelmingly approved by referendum. The City remains a financially distressed municipality, and it continues to operate under Act 47 and the 2002 Recovery Plan.

Chapter I-B of the 2002 Recovery Plan is titled "CURRENT AND PROJECTED FINANCIAL OUTLOOK." It contains detailed estimates for essentially flat revenues and increasing expenditures from 2002 through 2007 under the prior administrations. The Plan concludes that in the absence of corrective action, the City faces sizeable and growing deficits, resulting in a cumulative deficit in 2007 of $7.21 million. R.R. at 77a.

Chapter II-A of the 2002 Recovery Plan is titled "OVERVIEW OF REVISED AND UPDATED RECOVERY PLAN FOR 2002, 2003, 2004, 2005, AND BEYOND." In this chapter the Act 47 Coordinator offers an overview of planned corrective action "for the period 2002, 2003, 2004, 2005 and beyond." R.R. at 171a. It contains detailed estimates of revenues and expenditures for 2003 through 2005 based on compliance with the 2002 Recovery Plan, resulting in no deficits. R.R. at 171a-72a.

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

However, to the extent that the City is unable to reach agreement with any of its Unions, resulting in interest arbitration or other legal proceedings, it is the express intention of the City that the implementation of these cost containment provisions is mandatory. All costs 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 approval from the Coordinator, in conjunction with the Pennsylvania Department of Community and Economic Development. Any such change must be in conformance with the financial parameters of the Recovery Plan.

R.R. at 190a (emphasis added). The chapter contains mandatory provisions applying to all City employees, R.R. at 190a-97a, provisions specifically for the fire employees, R.R. at 197a-200a, provisions specifically for the police, R.R. at 200a-205a, and provisions specifically for other employees.

II. Arbitration Award

Pursuant to Act 111, the City and the Fire Fighters operate under a collective bargaining agreement (CBA). The last CBA expired as of December 31, 2002. Because collective bargaining for a new CBA reached an impasse, a panel of arbitrators was selected to render an arbitration award that would establish the terms and conditions of employment for fire personnel. A similar panel was selected to establish the terms and conditions for police.

After extensive hearings throughout 2003 and 2004, at which the impact of Act 47 and the 2002 Recovery Plan was hotly contested, and after more extensive deliberations, a divided arbitration panel issued an award regarding the Fire Fighters on May 30, 2006.⁶ The award covered the period January 1, 2003 through December 31, 2007.

In the award, the panel majority acknowledged the City's status under the 2002 Recovery Plan but concluded that Fire Fighters wages and other benefits fell significantly below that paid to other fire fighters throughout the state. The majority was "convinced that the modifications to those wages and benefits set forth herein can be implemented, on balance, in concert with the [2002 Recovery] Plan...." R.R. at 22a. The majority believed "this Award is not violate [sic] of the Plan, but is in harmony with the Plan's objectives." Id. The panel majority awarded retroactive lump sum bonuses to all fire personnel of $1000 for 2003 and again for 2004, a retroactive lump sum bonus of $1250 for 2005, a salary increase of 5.5% as of the last day of 2005, a salary increase of 3.5% for 2006, and a salary increase of 4% for 2007. R.R. at 24a. Further, the majority adjusted health insurance deductibles and provided health benefits to fire personnel retiring after January 1, 2007 for five years. R.R. at 24a-26a. The majority opined that the changes will not violate the City's maximum health care costs permitted in Section II-B of the 2002 Recovery Plan. R.R. at 26a.

Separately, the panel majority expressed concern over the safety of Fire Fighters. Accordingly, the majority abolished the 150 person department limit in the previous CBA and replaced it with various manning requirements. R.R. at 26a-29a.

Finally, the panel majority determined that all other proposals for change submitted by the City and the Fire Fighters which were not expressly addressed were nevertheless considered and denied. R.R. at 29a.⁷

III. Petition to Vacate or Modify

The next day, the City filed a petition to vacate or modify the award with the common pleas court. The Fire Fighters answered and raised new matter. At about the same time, the City filed a similar petition with regard to the parallel arbitration involving its police union. The common pleas court handled both petitions together. The court permitted intervention by DCED and the Act 47 Coordinator. After argument on both arbitration awards, and after deliberation, the common pleas court issued its first order, which vacated both arbitration awards.

The common pleas court summarized the positions of the parties, and it reviewed cases addressing the interplay between Act 47 and Act 111 collective bargaining.⁸ Ultimately, the court concluded the awards violated the 2002 Recovery Plan, and it generally vacated those award provisions, although the...