Delaware County v. Delaware County Prison Employees Independent Union ( 1998 )

OPINION ANNOUNCING JUDGMENT OF THE COURT

FLAHERTY, Chief Justice.

This is an appeal by allowance from an order of the Commonwealth Court which reversed an order of the Court of Common Pleas of Delaware County and reinstated an arbitrator’s award prohibiting Delaware County from “privatizing,” i.e., fully subcontracting, the operation of a prison facility. The factual background of the case is as follows.

In July of 1995, the Delaware County Prison Employees Independent Union was notified by Delaware County Council that, effective September 30, 1995, all of the correctional officers employed at the county’s prison would be laid off. The layoff was due to the fact that the county had entered a contract with Wackenhut Corrections Corporation to have Wackenhut’s employees serve as corrections officers.

In an effort to avert the planned layoff, the union filed a grievance under the existing labor contract and filed charges of unfair labor practices against the county. The union also sought a preliminary injunction.

The court of common pleas denied injunctive relief. On September 29, 1995, the commonwealth court granted an injunction pending appeal. Subsequently, it reversed the lower court’s denial of a preliminary injunction and remanded for further proceedings. On March 19, 1996, the court of common pleas granted a preliminary injunction with a proviso that the injunction would expire on March 31, 1996, the date when the collective bargaining agreement was to lapse. On March 28, 1996, arbitration proceedings under the collective bargaining agreement culminated in a decision by an arbitrator that the county’s prison privatization efforts violated the bargaining agreement. Nevertheless, on April 1, 1996, Wackenhut assumed control over operation and management of the prison and laid off all of the correctional officers. Wackenhut then rehired nearly all of the officers to serve as its own employees and to perform the same work at the prison.¹

On April 15, 1996, the court of common pleas denied additional requests by the union for injunctive relief and granted the county’s petition to vacate the arbitrator’s award. An appeal was taken to the commonwealth court, whereupon the decision below was reversed, the arbitrator’s award was reinstated, and the county was directed to cease and desist from privatizing the prison operation. We reverse on the ground that the arbitrator’s decision was erroneous.

The standards governing review of an arbitrator’s award are well established. As we stated in Greater Johnstown Area Vocational-Technical School v. Greater Johnstown Area Vocaiionalr-Technical Education Association, 520 Pa. 197, 199-200, 553 A.2d 913, 914-15 (1989) (citations omitted),

It is well settled that, in reviewing an arbitrator’s interpretation of a collective bargaining agreement, broad deference is to be accorded the arbitrator’s decision....

The so-called “essence of the collective bargaining agreement” test has been frequently enunciated by this Court as the standard governing judicial deference to arbitrators’ decisions. It requires that an arbitrator’s interpretation be upheld if it can, in any rational way, be derived from the language and context of the agreement. When an issue, properly defined, is within the terms of a collective bargaining agreement and the arbitrator’s decision can in a rational way be derived from the terms of the agreement, one can say that the decision draws its “essence” from the agreement, and reversal is not warranted even if a court believes that the decision, though rational, is incorrect.

Accord. Midland Borough School District v. Midland Education Association, PSEA; 532 Pa. 530, 535-36, 616 A.2d 633, 635-36 (1992) (arbitrator’s interpretation of a collective bargaining agreement is valid under the “essence” test if it can in any rational way be derived from the agreement).

We perceive no rational manner in which an arbitrator, upon consideration of the provisions of the present agreement, could have determined that privatizing operations at the county prison by subcontracting operation of the facility to Wackenhut was violative of the agreement. The decision prohibiting Wackenhut from being retained to operate the prison simply does not derive its “essence” from the agreement.

Article 2, Section 1 of the agreement is entitled “Inherent Management Rights.” In pertinent part, it provides:

The Employer [Delaware County] reserves the right to manage and operate its establishment in such manner as it sees fit, including but not limited to:

(a) Right to hire, transfer, promote, demote, lay off, discipline or discharge employees to the extent not modified by this Agreement;

(c) To subcontract work and services and delete and discontinue departments and personnel within County Government;

In the most plain and unambiguous terms, this provision invests the county with authority to manage and operate the prison “as it sees fit,” to “lay off’ or “discharge” employees, to “subcontract work,” and to “discontinue departments and personnel.” Such powers are precisely those which the county exercised by hiring Wackenhut to operate the prison. There is no language in any other portion of the agreement that contradicts the powers conferred by this section. Further, Article 28, Section 1 of the agreement sets forth an integration clause which provides that “[t]he parties mutually agree that the terms and conditions expressly set forth in this Agreement represent the full and complete understanding, Agreement and commitment between the parties thereto.” Thus, Article 2, Section 1 constitutes the entire agreement of the parties as to the subject matter under dispute.

The intent of the parties to a written contract is deemed to be embodied in the writing itself, and when the words are clear and unambiguous the intent is to be gleaned exclusively from the express language of the agreement. Steuart v. McChesney, 498 Pa. 45, 48-49, 444 A.2d 659, 661 (1982). Indeed, “the focus of interpretation is upon the terms of the agreement as manifestly expressed, rather than as, perhaps, silently intended.” Id.

The arbitrator in the present case concluded that the union would not have intended to confer such broad powers upon the county as those that wrere ostensibly expressed in the agreement. He determined, therefore, that the county’s right to subcontract was limited in scope, to wit, that it did not permit such extensive subcontracting as would amount to privatization of the entire prison operation. He viewed the unfettered power to subcontract as being highly unfavorable to the interests of union employees and concluded that if the parties had really intended that such extensive subcontracting could occur then there should have been language in the agreement specifying that a complete privatization was permitted. Absent such language, the power to subcontract was deemed to have been intended as limited in scope.

Under Steuart v. McChesney, however, the inquiry must focus on what the agreement manifestly expressed, not what the parties may have silently intended. It is not proper, under the guise of construction, to alter the terms to which the parties, whether in wisdom or folly, expressly agreed. Id. at 51, 444 A.2d at 662. Here, the agreement expressly provided the county with power to subcontract work and lay off employees. No limits on that power were set forth in the agreement. The arbitrator was obliged to apply the agreement as written, without imposing additional terms that modify and limit what the parties expressed.

In addition, the arbitrator’s authority to resolve grievances in this case was expressly limited by the agreement itself. Article 9, Section 6 of the agreement states that “[i]n rendering a decision, the arbitrator shall be confined to the meaning and interpretation of the particular provision of this Agreement which gave rise to the grievance.” Further, Article 9, Section 7 states that “[t]he arbitrator shall not have the authority to change, amend, modify, supplement or otherwise alter this Agreement in any respect whatsoever....” In short, the arbitrator was required to adhere to the express terms of the agreement and was not empowered to diverge therefrom in resolving a grievance.

The arbitrator’s decision in this case was a plain departure from the terms of the agreement. It cannot, therefore, be sustained.² The commonwealth court’s decision to the contrary must be reversed.

Order reversed.³

CAPPY, J., files a concurring opinion in which NEWMAN, J., joins. NIGRO, J., concurs in the result.

1 . More than 150 of the 170 union corrections officers became Wackenhut employees. Wackenhut was willing to employ nearly all of the remaining officers. However, various union members declined to accept employment. Only two union applicants were rejected by Wackenhut.

2 . In view of our disposition of this issue, we need not extensively address the county's argument that the arbitrator erred in extending the prohibition on privatization beyond the expiration date of the collective bargaining agreement. See Midland Borough School District, 532 Pa. at 537-40, 616 A.2d at 636-38 (limits on an arbitrator’s power to award a remedy that extends beyond the expiration of the bargaining agreement). A fortiori, where the arbitrator’s decision was erroneous, any extension of the period of its effectiveness was likewise erroneous.

3 . The parties’ applications for leave to file post-submission communications pursuant to Pa.R.A.P. 2501(a) are denied on the basis that the proffered submissions contain no information relevant to the issues in this case.