Opinion
No. 1037 C.D. 2012
02-25-2013
Local 85 of the Amalgamated Transit Union, AFL-CIO by Patrick McMahon, as President and Trustee ad Litem, Appellant v. Port Authority of Allegheny County
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE McGINLEY
Local 85 of the Amalgamated Transit Union, AFL-CIO, by Patrick McMahon, as President and Trustee ad Litem (Local 85) appeals the order of the Court of Common Pleas of Allegheny County (common pleas court) which decreed the law does not authorize the Port Authority of Allegheny County (PAT) to pay ad hoc pension increases to retired employees.
PAT is organized and exists under the provisions of the Second Class County Port Authority Act (Act). PAT provides public mass transportation in Allegheny County. PAT came into existence in 1964. At that time it acquired a number of private rail/bus operations including the Pittsburgh Railway Company (PRC).
Act of April 6, 1956, P.L. (1955) 1414, as amended, 55 P.S. §§551-563.5.
Local 85 was the recognized collective bargaining representative for certain PRC employees. Local 85 represents two bargaining units of PAT employees. One unit consists of bus and rail operators, maintenance employees, secretaries, and claims representatives. The second unit consists of first level supervisors.
Prior to 1964, PRC and Local 85 operated a retirement plan known as the "Retirement and Disability Allowance Plan of Pittsburgh Railways Company For Employees Represented By Division 85 of the Amalgamated Association of Street, Electric Railway and Motor Coach Employees of America." After PAT acquired PRC, PAT and Local 85 established a new retirement plan known as the "Port Authority of Allegheny County Retirement and Disability Allowance Plan for Employees Represented By Division 85 of the Amalgamated Transit Union" (The Plan). The Plan was administered by two PAT representatives and two Local 85 representatives. The Plan assumed the existing assets and obligations of the retirement plan that had existed with PRC. From 1964 through 2012, PAT and Local 85 entered into sixteen collective bargaining agreements. Some of the agreements were negotiated, while some were the result of interest arbitration.
The Plan is a defined benefits plan that provides retirement benefits to PAT employees who are members of Local 85. The retirement benefit is calculated by applying a multiplier to the retired employee's years of service and annual compensation to arrive at a monthly benefit. Once an employee retires, the years of service, the annual compensation and the multiplier become permanently fixed. The retired employee receives a fixed monthly benefit for the rest of the retired employee's life. The parties have provided for ad hoc cost of living increases to the monthly retirement payment received by persons already retired. However, there is no provision in the Plan at the time of the employee's retirement, that mandates these increases, and there is no pre-determined schedule that exists. The increases occurred when the Plan was amended by collective bargaining agreements or by interest arbitration awards that mandated these payments to retired employees.
In 2008, the parties conducted negotiations before eventually reaching agreement on a collective bargaining agreement. During these negotiations a fact finder issued a report which recommended ad hoc pension increases to the pension of already retired employees of PAT with a gross annual income of under $10,400 of $100 per month, and a $50 per month increase for retired employees with a gross annual income of between $10,400 and $11,000. The fact finding did not resolve the contractual negotiations because Local 85 rejected it for reasons unrelated to the pension issue.
The parties resumed negotiations. During these discussions the parties could not agree on (1) whether PAT was mandated to bargain with Local 85 over benefits for retirees and whether Local 85 had the legal authority to bargain over benefits for retirees, and (2) whether the provision of ad hoc increases for retired employees constituted an unlawful and/or unconstitutional benefit. In the final settlement the parties agreed that they would proceed through a declaratory judgment action to resolve legal issues relative to the ad hoc increases.
Local 85 filed an action for declaratory judgment in the common pleas court. On July 14, 2009, Local 85 filed an amended complaint in an action for declaratory judgment. In the amended complaint Local 85 alleged:
14. Although the Port Authority has agreed to the language in paragraph 7 above [relating to ad hoc increases], and has, for the past 40 years, either specifically agreed to or acquiesced in arbitration awards which provided for ad hoc increases, it has now taken the position that the payment of ad hoc increases to retirees would violate Article 3, Section 26 of the Pennsylvania Constitution, and that it is not permitted to bargain over benefits for already retired employees.
15. Article 3, Section 26 of the Pennsylvania Constitution specifically provides:
§26. Extra compensation prohibited; claims against the Commonwealth; pensions
No bill shall be passed giving any extra compensation to any public officer, servant, employe, agent or contractor, after services shall have been rendered or contract made, nor providing for the payment of any claim against the Commonwealth without previous authority of law: Provided, however, That nothing in this Constitution shall be construed to prohibit the General Assembly from authorizing the increase of retirement allowances or pensions of members of a retirement or pension system now in effect or hereafter legally constituted by the Commonwealth, its political subdivisions, agencies or instrumentalities, after the termination of the services of said member. (Emphasis added).
16. As a result of the controversy raised by the Port Authority, unless this matter is resolved through a declaratory judgment, it will continue to be a dispute between the parties which, in the future, may result in the inability to reach a settlement on subsequent collective
bargaining agreements, thereby increasing the likelihood of a work stoppage.Amended Complaint in Action for Declaratory Judgment, July 14, 2009, Paragraph Nos. 14-19 at 4-5; Reproduced Record (R.R.) at 34a-35a.
17. Declaratory relief is needed in order to expeditiously determine the issues and eliminate the possibility of continual labor disputes and interruptions to public service. Resolving this controversy at this time will eliminate the inevitable litigation that will occur over the issue of whether ad hoc adjustments may be made to the pensions of retired employees.
18. An expeditious result is necessary to move forward in providing increase [sic] pension payments to certain retired former employees of the Port Authority whose gross income now falls below the federal poverty level.
19. This Action for Declaratory Judgment which will determine the issue as to the legality of the 'Plan' paying ad hoc increases to retirees is an economical and less contentious method by which the dispute can be resolved.
PAT answered and in new matter, asserted that Local 85 lacked authority to bargain over or alter the benefits of retired employees and that PAT was without legal authorization to grant post-retirement ad hoc pension increases to former employees.
The parties prepared a joint stipulation of facts. Each party moved for summary judgment. In its motion for summary judgment, Local 85 asserted that there was no genuine issue of material fact, and it was entitled to summary judgment because PAT could not establish that ad hoc payments to retirees were illegal.
In its motion for summary judgment, PAT asserted that it violated Article III, Section 26 of the Pennsylvania Constitution when it increased the fixed monthly pension payment of former employees, post-retirement, because the General Assembly did not authorize PAT to grant such increases. PAT also asserted that it was not mandated to collectively bargain with Local 85 over benefits for persons already retired, and Local 85 was not an authorized collective bargaining representative of persons already retired.
After hearing oral argument the common pleas court granted PAT's motion for summary judgment and denied Local 85's motion for summary judgment. Local 85 argued that Section 13.2(a) of the Act, 55 P.S. §563.2(a), must be read in conjunction with Section 701 of the Public Employe Relations Act (Act 195), 43 P.S. §1101.701. Section 701 provides for collective bargaining for "wages, hours, and other terms and conditions of employment. . . ." Local 85 asserted that since the reference to "other terms and conditions of employment" included pension and retirement benefits for existing employees the reference also included pension and retirement benefits for retired employees.
Section 13.2(a) was added by Section 13 of the Act of October 7, 1959, P.L. 1266, as amended. Section 13.2(a) of the Act provides:
The authority through its boards shall deal with and enter into written contracts with the employes of the authority through accredited representatives of such employes or representatives of any labor organization authorized to act for such employes concerning wages, salaries, hours, terms and conditions of employment, and pension or retirement provisions.
Act of July 23, 1970, P.L. 563, No. 195.
The common pleas court rejected Local 85's arguments:
This argument is without merit because the Union has put the cart before the horse. Language within earlier legislation may be helpful in construing later legislation governing the same or a related topic because legislators are in a position to consider what the earlier legislation said in selecting language for the later legislation. But a court cannot look at the language of later legislation in construing earlier legislation because, obviously, the members of the General Assembly were looking only at the proposed language of that earlier legislation when they enacted it. Thus, if the earlier legislation uses clear language, this language expresses the intent of the General Assembly.
. . . .
Section 13.2(a) of the Port Authority Act was amended on July 2, 1986 in two respects:
(1) The amendment eliminated the provision that either party could be bound by an arbitration award. This was replaced with a right to strike. . . .
(2) The amendment provided that first level supervisors shall not be included in bargaining units with other PAT employees.
The Union raises the following argument concerning the 1986 amendments: When the Legislature was amending the Port Authority Act, it would have known that the collective bargaining agreements between PAT and the Union included provisions providing for ad hoc payments to retired employees. Thus, it would have altered the language of Section 13.2(a) if it did not intend for this legislation to be construed to authorize post-retirement benefit adjustments for retired former employees.
I do not find this argument to be persuasive. The issues that the Legislature was addressing had nothing to do with ad hoc payments to retired employees. Also, it is unclear as to why the Legislature, if it wanted to bar such payments, would amend legislation which clearly did not authorize such payments where there is no case law authorizing such payments.
The Union finds it to be significant that the Union and PAT have historically permitted pension increases for
retired employees. However, even assuming that the Union and PAT had considered Article III, Section 26 of the Pennsylvania Constitution and the language of Section 13.2(a) of the Port Authority Act (as opposed to being unaware of the language of the Act), the controlling issue is what the General Assembly intended as of the date of enactment of the Port Authority Act, this being approximately eight years before PAT came into existence.
The Union refers to a 1969 [sic] arbitration award where the arbitrator ruled that the Pittsburgh Railway Company is required to bargain with the Union as to retirees. The Union contends that this establishes that the Union is authorized to represent the pensioners. Even assuming that the Union has standing to represent the interests of retired employees, the law is settled that an arbitrator may only require a public employer do that which it could voluntarily do. . . .
. . . .
The Union relies on established case law holding that a public employer cannot repudiate the existing terms of a collective bargaining agreement by asserting, after an agreement has been reached, that it will not fulfill the conditions of the agreement because the agreement is contrary to law. . . . The rationale for the case law is 'to permit a public employer to secure an advantage in the bargaining process by agreeing to a term and subsequently avoid compliance by belatedly asserting the term's illegality is . . . inimical to the integrity of the bargaining process and undermines the harmonious relationship it was designed to foster' . . . .
In Upper St. Clair Police Officers Ass'n [v. Pennsylvania Labor Relations Board, 689 A.2d 362 (Pa. Cmwlth. 1997)], the township, while collectively bargaining for a new contract, stated that it would not bargain over benefits that are contrary to Act 600. In prior negotiations over the existing collective bargaining agreement, the township had not sought to change or
modify the existing pension plan. The Court held that when bargaining for a new collective bargaining agreement, the township had not sought to change or modify the existing pension plan. The Court held that when bargaining for a new collective bargaining agreement, it is not an unfair labor practice for the township to refuse to bargain over pension benefits that are contrary to state law even though the township had previously bargained over such benefits.Common Pleas Court Opinion, May 1, 2012, at 7-10; Reproduced Record (R.R.) at 11a-14a.
The present case is similar to Upper St. Clair Police Officers Ass'n. PAT did not secure an advantage in the bargaining process by agreeing to a term and subsequently seeking to avoid compliance. To the contrary, the Union entered into a collective bargaining agreement that specifically provided for PAT to question the legality of proposed ad hoc payments to former employees.
The Union contends that since PAT had initially agreed to make the ad hoc payments proposed by the fact-finder, it cannot now take the position that such payments are illegal. The difficulty with the Union's position is that the collective bargaining agreement that the parties reached was conditioned on the outcome of this declaratory judgment action. It was not based on the Union's belief that PAT would make the ad hoc payments. The case law upon which the Union relies is based on reliance on a promise by the employer to make payments that it promised to make. In the present case, there is no promise.
The arbitration award was actually in 1959.
Local 85 contends that the common pleas court erred as a matter of law when it concluded that the Act does not provide the authorization required under Article III, Section 26 of the Pennsylvania Constitution for PAT to make ad hoc adjustments to the pension benefits of already retired former employees.
This Court's review of a common pleas court's grant of summary judgment is limited to determining whether the common pleas court made an error of law or abused its discretion. Salerno v. LaBarr, 632 A.2d 1002 (Pa. Cmwlth. 1993), petition for allowance of appeal denied, 537 Pa. 655, 644 A.2d 740 (1994). Summary judgment should only be granted in a clear case and the moving party bears the burden of demonstrating that no material issue of fact remains. The record must be reviewed in the light most favorable to the non-moving party. Id.
Before this Court Local 85 contends that Section 3(b)(17) of the Act, 55 P.S. §553(b)(17), permits PAT to provide ad hoc pension increases to retirees. Local 85 argues that the plain language of Section 3(b)(17) permits PAT to continue an existing pension or retirement system, and that is exactly what PAT and Local 85 did when PAT acquired PRC and its existing pension/retirement system. According to Local 85, PAT acquired the pension/retirement system that existed with PRC, and that system included the established right to make ad hoc post-retirement adjustments to the monthly pension benefits.
This Court notes that the common pleas court did not address this issue, although it was raised by Local 85 in its brief in opposition to PAT's motion for summary judgment.
Section 3(b)(17) of the Act provides:
(b) Each authority is hereby granted and shall have and may exercise all powers necessary or convenient for carrying out the aforesaid purposes included, but without limiting the generality of the foregoing, the following rights or powers:
. . . .
(17) to enter into contracts of group insurance for the benefit of its employees, or to continue in existence any existing insurance and/or pension or retirement system and/or any other employee benefit arrangement covering employees in an acquired existing transportation system, and/or to set up a retirement or pension fund or any other employee benefit arrangement for such employees. (Emphasis added).
It is clear from the plain language of Section 3(b)(17) of the Act that PAT was permitted to continue an existing pension or retirement system. PRC had a pension plan for its employees. PAT acquired PRC shortly after it was formed. Twice, PRC awarded ad hoc pension benefits increases to retirees. Clearly, PAT was authorized to continue the PRC pension plan under Section 3(b)(17) of the Act. The question that remains for this Court is whether Section 3(b)(17) meets the constitutional requirement of Article III, Section 26 of the Pennsylvania Constitution which provides:
No bill shall be passed giving any extra compensation to any public officer, servant, employe, agent or contractor, after services shall have been rendered or contract made, nor providing for the payment of any claim against the Commonwealth without previous authority of law: Provided, however, That nothing in this Constitution shall be construed to prohibit the General Assembly from authorizing the increase of retirement allowances or pensions of members of a retirement or pension system now in effect or hereafter legally constituted by the Commonwealth, its political subdivisions, agencies or instrumentalities, after the termination of the services of said member.
Local 85 cites no case law in support of its position. In its brief PAT provides a detailed review of laws passed by the General Assembly which authorize a city, county, a municipality, the Pennsylvania Municipal Retirement Board, the Pennsylvania Public School Employees' Retirement System, and the Pennsylvania State Retirement System to grant post-retirement ad hoc increases to retirees of the various governmental units. These acts either explicitly state the amount of the ad hoc increase or explicitly authorize the governmental body to enact an ad hoc increase. Section 3(b)(17) of the Act does not specifically mention the pension benefits of retired workers.
In McVay v. City of Washington, 566 A.2d 367 (Pa. Cmwlth. 1989), this Court held that firemen who retired prior to the time that their pension fund was transferred into the City of Washington pension fund were not entitled to receive the benefit of a service increment included in the City of Washington Pension Fund pursuant to Section 4320 of The Third Class City Code (Code). This Court affirmed the order of the Court of Common Pleas of Washington County on the basis that the Code contained no provision for former employees to receive retroactive coverage in the form of the service increment.
Act of June 23, 1931, P.L. 932, as amended, 53 P.S. §39322.
Similarly, because there is no explicit authorization by the General Assembly to permit ad hoc additional benefits to retirees of PAT, PAT lacks the authority to pay the ad hoc additional benefits.
Further, Local 85 admitted before the common pleas court that the PRC pension plan did not provide for ad hoc pension payments or adjustments to retired employees. Twice arbitrators ordered PRC to award one time, ad hoc increases to the pension payments of retired employees. The PRC pension plan itself, which PAT took over, did not authorize increases post-retirement. Even if this Court accepted Local 85's argument that Section 3(b)(17) of the Act was an authorization by the General Assembly to permit ad hoc increases to retirees based on the PRC pension plan in compliance with the Pennsylvania Constitution, this argument would fail because the PRC pension plan contained no provision for ad hoc increases for retired employees.
Local 85 also asserts that because PAT paid ad hoc pension adjustments for many years that it may not now argue that it may not pay them. The common pleas court determined that the key question is whether the payments were constitutional, regardless of whether they had been made in the past. This Court must agree. --------
In conclusion this Court agrees with PAT that the General Assembly has not authorized ad hoc pension increases for retired employees as required under Article III, Section 26 of the Pennsylvania Constitution. Section 3(b)(17) of the Act is too general to provide the necessary authorization and the PRC pension plan which PAT assumed did not provide for ad hoc increases.
Accordingly, this Court must affirm.
/s/_________
BERNARD L. McGINLEY, Judge ORDER
AND NOW, this 25th day of February, 2013, the order of the Court of Common Pleas of Allegheny County in the above-captioned matter is affirmed.
/s/_________
BERNARD L. McGINLEY, Judge