City of Wilkes-Barre v. Wilkes-Barre Police Benevolent Association

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
City of Wilkes-Barre :
:
v. : No. 1145 C.D. 2017
: Argued: April 12, 2018
Wilkes-Barre Police Benevolent :
Association, :
Appellant :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COHN JUBELIRER FILED: June 4, 2018
The Wilkes-Barre Police Benevolent Association (PBA) and the City of
Wilkes-Barre (City) dispute whether their collective bargaining agreement or past
practice require certain forms of compensation to be included in the calculation of
pension benefits for City police officers. PBA ultimately grieved the matter, and an
Arbitrator sustained the grievance, ordering the City, inter alia, to recalculate
pension benefits for the bargaining unit members to include the disputed forms of
compensation. The City subsequently filed a Petition to Vacate and Stay the
Arbitrator’s Award, which the Court of Common Pleas of Luzerne County (common
pleas) granted. PBA now appeals that Order to this Court. Given the Arbitrator’s
findings and our limited scope of certiorari, we reverse.
I. BACKGROUND
A. Facts
The facts of this case are largely not in dispute. PBA represents members of
the City’s police force up to and including rank of lieutenant. The parties’
relationship is governed by a collective bargaining agreement, which includes
various memoranda of understanding and interest arbitration awards (CBA,
collectively). The parties are also governed by Act 111, commonly referred to as
the Policemen and Firemen Collective Bargaining Act,1 which applies to police and
fire personnel.
In 2015, a retiring police officer questioned the computation of his pension.
Specifically, he questioned the exclusion of holiday pay from the calculation.
Around the same time, two retired police officers received letters from the City
advising them that their pensions were improperly calculated because they included
forms of compensation that should have been excluded. As a result, the letters
advised that the officers’ monthly benefit amounts would be reduced and recovery
of the overpayment would be sought.
PBA raised the issue with the City. PBA maintained that compensation from
working overtime, working holidays, attending court (court pay), and completing
the annual Act 1202 certification (Act 120 pay), (disputed forms of compensation,
collectively), was always included in officers’ pension calculations and should not
have been excluded from these officers’ calculations. The City maintained that,
pursuant to an interest arbitration award in 2001 (2001 Award) involving other
officers, the City ceased including these disputed forms of compensation in pension
1
Act of June 24, 1968, P.L. 237, as amended, 43 P.S. §§ 217.1-217.10.
2
Act of June 18, 1974, P.L. 359, as amended, formerly 53 P.S. §§ 740-749.1. Act 120 has
been repealed and replaced with the Municipal Police Education and Training Act, 53 Pa. C.S.
§§ 2161-2171, which includes similar certification requirements for municipal police.
2
calculations and stopped withholding contributions from the disputed forms of
compensation paid to all officers hired after the date of the award. The three officers
who questioned their pension calculations that gave rise to the instant matter had
been hired after this award.
After trying unsuccessfully to reach an amicable resolution, PBA filed a
grievance, contending exclusion of the disputed forms of compensation from
pension calculations violated the parties’ CBA. Ultimately, a hearing was held
before the Arbitrator, at which PBA president Sergeant Phillip Myers testified for
PBA and acting director of human resources Nicole Ference testified for the City.
Sgt. Myers testified as follows. In 2007, City employees received a letter
explaining their pension benefits and were told that the pension would be calculated
based on base pay plus any longevity, acting officers’ pay, bonuses, and “other
special forms of compensation.” (Supplemental Reproduced Record (S.R.R.) at
67b-68b.) PBA contends “other special forms of compensation” includes the
disputed forms of compensation. Sgt. Myers also testified that pension calculations
performed for various other police officers included the disputed forms of
compensation. (Id. at 58b-62b.) On cross-examination, he acknowledged, though,
that the dates of hire for those officers predated 2001, when the City alleged the
calculations changed. (Id. at 103b-04b.)
Additionally, Sgt. Myers testified about a number of documents that PBA
introduced to support its position that the compensation always was, and should have
continued to be, included in the pension calculations. For example, he testified about
a grievance in 2005 in which two retirees, both hired before 2001, argued Act 120
pay should have been included in their pension calculations. The dispute ultimately
settled, and Paragraph 5 of a Memorandum of Understanding (2005 MOU), which
3
the parties agree is part of their CBA, provided that holiday pay, Act 120 pay, and
“other annual or semi-annual payments” were to be included in pension calculations.
(Id. at 70b-71b.) On cross-examination, Sgt. Myers acknowledged that the 2005
MOU also contains a provision that expressly states that it is not precedential. (Id.
at 104b.) Sgt. Myers also testified about a number of City ordinances that define
“salary” to include “base pay, holiday pay, night shift differential, overtime pay,
longevity increments and accumulated annual sick leave buyback.” (Id. at 72b-73b.)
Sgt. Myers also described a number of actuarial reports that were performed every
other year between 2009 and 2015, which include “other special forms of
compensation” in the explanation as to how pension benefits are calculated. (Id. at
83b-86b.) In addition, an independent audit report of the pension plan for the year
ending December 31, 2013, defined “pensionable compensation” as including “other
special forms of compensation,” as did an audit report for the aggregated pension
trust for 2016. (Id. at 86b-90b.)
Ms. Ference testified that the City did not withhold contributions for officers
hired after January 24, 2001. (Id. at 123b-24b.) She explained the City viewed the
2001 Award as controlling on whether such compensation was to be included in the
pension calculations. (Id. at 130b-31b.) The 2001 Award, which the parties agree
is part of their CBA, included a provision that “All officers hired after the issuance
of this Award shall be entitled to pension benefits not in excess of [T]he Third Class
City Code.[3]” (Id. at 35b.) Although this award was rendered in 2001, she admitted
that the City continued to withhold contributions from the disputed forms of
3
Act of June 23, 1931, P.L. 932, as amended, formerly 53 P.S. §§ 35101-39701. This
version of The Third Class City Code was repealed by Section 2(2) of the Act of November 24,
2015, P.L. 242, No. 67, effective January 25, 2016. The Third Class City Code is now codified at
11 Pa. C.S. §§ 10101-14702. We cite the former version herein because it was in effect at the time
of the proceedings. We note, however, that the relevant provisions are substantially the same.
4
compensation up until the April 30, 2002 payroll, including for officers hired after
the 2001 Award. (Id. at 126b, 128b.)
B. Arbitrator’s Decision & Award
On January 6, 2017, the Arbitrator issued his Decision and Award. He found
that the City’s pension ordinances include the disputed forms of compensation in
their definitions of compensation.4 (Arbitrator’s Decision at 6.) He also found that
the disputed forms of compensation were included, for a time, in pension
calculations and contributions were made on these amounts. (Id.) However,
following the 2001 Award, the City stopped these practices, but did not amend the
definitions of “compensation” in the ordinances to reflect this change. (Id. at 7.)
The Arbitrator also examined the 2001 Award between the parties and
analyzed whether the benefits sought in the grievance exceed those permitted by The
Third Class City Code. The Arbitrator noted The Third Class City Code defined
“salary” as “the fixed amount of compensation paid at regular, periodic intervals and
from which pension contributions have been deducted.” (Id. at 9 (quoting Section
4309 of The Third Class City Code, formerly 53 P.S. § 39309 (emphasis omitted)).)
Because the disputed forms of compensation are paid at rates fixed by the parties’
CBA, the Arbitrator found nothing in The Third Class City Code that would prohibit
inclusion of the disputed forms of compensation. (Id.) He similarly found nothing
in the 2001 Award that would have permitted the City to stop withholding
4
There are two pension plans that apply to police officers. The Bureau of Policemen’s
Relief pension plan applies to police officers hired after July 8, 1976. Participants of that plan are
eligible for benefits after 20 years of service and after reaching age 50. The Police Pension Fund
plan applies to those hired before July 8, 1976. Participants of that plan are eligible for benefits
after 20 years of service, regardless of age. (Arbitrator’s Decision at 5.)
5
contributions on the disputed forms of compensation or stop including them in its
pension calculations. (Id. at 9-10.)
Having concluded that The Third Class City Code was not violated, the
Arbitrator next examined whether the parties’ CBA or past practice provide for
inclusion of the disputed forms of compensation in pension calculations. With no
direct evidence of the parties’ intent, the Arbitrator looked at the record for other
indicia of intent. First, the Arbitrator examined the 2005 MOU. 5 The City
maintained the 2005 MOU was not precedential, as it was intended to resolve a
dispute involving the pensions of two employees hired before 2001, whereas PBA
argued the 2005 MOU was broader in scope. (Id. at 11.) The Arbitrator noted that
Paragraph 6 of the 2005 MOU stated it did not have precedential effect, but other
parts of it suggested otherwise. (Id. at 12.) For instance, the Arbitrator noted that
the two grievants involved in that matter were already retired. Yet, the 2005 MOU
apparently contained several provisions that would appear to apply to those still in
the workforce. As evidence, the Arbitrator referenced a provision providing that
“future back pay awards shall be included in the time period earned for pension
calculation purposes.” (Id.) The Arbitrator also cited to a paragraph where “[t]he
parties agreed on a methodology for calculating earnings in the last 12 months before
retirement.” (Id.) The same paragraph included a provision providing for
calculation if “an officer retires in the middle of a pay period.” (Id. (emphasis
omitted).) The Arbitrator found these situations would not apply to the grievants
because they had already retired. (Id.) In addition, Paragraph 4 of the 2005 MOU
5
We note that the 2005 MOU, like many of the documents apparently reviewed by the
Arbitrator, was not part of the record before common pleas or this Court. However, since the
parties do not question the Arbitrator’s description of the documents at issue, we will rely on the
Arbitrator’s description. Moreover, because we do not have the text of the 2005 MOU, we know
only those facts underlying that dispute that the parties introduced and the Arbitrator discussed.
6
discussed the timing of retroactive wage adjustments that resulted from an Act 111
interest arbitration award or a grievance arbitration award. The Arbitrator found it
was unlikely that the two retired grievants would be receiving such wage
adjustments. (Id.) But “[o]f greatest impact,” in the Arbitrator’s eyes, was
Paragraph 5 of the 2005 MOU, which provided: “Annual sick leave buyback,
holiday pay, Act 120 pay, or other annual or semi-annual payments are eligible
for inclusion in pension calculations as they have been in the past.” (Id.
(emphasis in original) (quoting 2005 MOU ¶ 5).) Again, the Arbitrator found “it is
unlikely that the parties would be addressing forms of annual or semi-annual pay for
employees who had already retired,” such as the two grievants involved in the 2005
MOU. (Id.) Based on a reading of the 2005 MOU as a whole, the Arbitrator found
“it to extend intentionally to issues beyond those raised by the grievants.” (Id. at
13.) According to the Arbitrator,
[t]he [2005 MOU] is the parties’ attempt to resolve multiple issues
between them regarding pensions in 2005, including the inclusion of
the forms of pay in dispute here in pension calculations. More
importantly, Paragraph 5 of the 2005 [MOU] recognizes the parties’
past practice of including these pay types in pension calculations.
(Id.) The Arbitrator found, “at least in the short term,” that the City acted
consistently with past practice and the 2005 MOU when it had included the disputed
forms of compensation in calculating pensions in the past.
The Arbitrator also found noteworthy that the 2007 letters that went to all
City employees included the following provision: “For purposes of calculating your
pension, your compensation will be based upon your base pay plus any longevity,
acting officers[’] pay, bonuses and other special forms of compensation.” (Id.
(emphasis in original) (quoting 2007 Statement of Benefits).) The Arbitrator stated
7
that actuarial valuations performed every other year between 2009 and 2015
defined “pensionable compensation” as including other special forms of
compensation, as did independent audit reports for 2012-13 and 2014-15. (Id. at
13-14.) All of this served as other indicia of intent and past practice, in the
Arbitrator’s mind. Based upon the above findings, the Arbitrator concluded that
“[t]he record here amply demonstrates that City had a prior practice of including the
disputed pay forms in pension calculations.” (Id. at 16.)
The Arbitrator found the City violated the CBA by failing to: include the
disputed forms of compensation in the pension calculations for officers hired after
the 2001 Award; “accept pension contributions on these disputed forms of
compensation”; “abide by its agreement with [PBA] to include the disputed forms
of compensation in” the calculation of pension benefits; “notify [PBA] of its . . .
refusal to include the disputed forms of compensation in pension calculations or
accept pension contributions on these forms of compensation”; and bargain with
PBA over the changes. (Id. at 20.) The Arbitrator ordered the City to recalculate
the pension benefits of those affected to include overtime, court time, holiday, and
Act 120 pay. (Id.) The Arbitrator further ordered the City to cease and desist
excluding the disputed forms of compensation from pension calculations and cease
and desist refusing to accept contributions on these forms of compensation. (Id. at
20-21.) Finally, the Arbitrator ordered all affected bargaining unit members to make
the appropriate contributions owed on the disputed forms of compensation pursuant
to a payment plan that would be negotiated between the parties.6 (Id. at 21.)
6
PBA has never contended that its members do not have to pay the contributions owed and
originally proposed a repayment plan.
8
C. Common Pleas’ Opinion and Order
The City filed a Petition to Vacate and Stay Arbitration Award with common
pleas, asserting the Arbitrator exceeded his authority by requiring the City to
perform an illegal act, namely, modifying the pension plan without a cost estimate
as required by the Municipal Pension Plan Funding Standard and Recovery Act (Act
205).7 Common pleas granted the Petition to Vacate. Common pleas found the
Arbitrator’s Award “modified the administration of the pension plan as to the
treatment of the employees affected by the 2001 Award[;] thus, an Act 205 study
was required.” (Common Pleas’ Opinion (Op.) at 12.) Common pleas stated the
“relevant class of employees” was “those officers hired after the issuance of the
[2001] Award” on January 24, 2001. (Id.) Common pleas noted that the City did
not withhold pension contributions on the disputed forms of compensation from
those employees hired after January 24, 2001, a fact that PBA did not contest. (Id.
at 12-13.) This “history of non-withholding [was] critical,” in common pleas’
opinion. (Id. at 13.) It served as evidence to rebut PBA’s claim that the pension
plan was not modified by the 2001 Award because the City had, historically,
included the disputed forms of compensation in pension calculations. (Id. at 14.)
Common pleas stated PBA’s “argument overlooks more than ten (10) years of plan
administration that did not include the disputed forms of compensation for
officers hired after January 2001, and, instead focuses on officers hired prior to
2001 whose pensions included the disputed forms of compensation.” (Id. at 14-15
(emphasis added).) Thus, common pleas found the PBA’s arguments were not
focused on the “relevant class: those officers hired after January 24, 2001.” (Id.
7
Act of December 18, 1984, P.L. 1005, as amended, 53 P.S. §§ 895.101-895.803.
9
at 15 (emphasis added).) Common pleas found inclusion of the disputed forms of
compensation in the pension calculations of other employees was irrelevant. (Id.)
Unlike the Arbitrator, common pleas was not swayed by the various
documents introduced as exhibits.8 With regard to the 2005 MOU, common pleas
noted that the agreement explicitly stated that it was not intended to be precedential.
(Id. at 16.) The actuarial reports, common pleas found, “likely relate[d] only to
retired officers hired prior to 2001.” (Id.)
Common pleas “found that the City consistently administered the pension
plan in relation to the post-2001 hired officers as not including the disputed forms
of compensation.” (Id. at 17.) As a result, common pleas concluded that the
Arbitrator’s Award was a pension plan “modification,” which required an Act 205
study. (Id.) Because no Act 205 study was completed, common pleas held that the
Arbitrator exceeded his power by compelling an illegal act, i.e., modification of the
pension plan without an Act 205 study, and vacated the Arbitrator’s Award. (Id.)
PBA now seeks review of that Order, arguing common pleas erred in:
(1) “reversing the . . . [A]rbitrator’s finding of fact that all the disputed forms of
compensation were included in the pension calculation of all prior retiring police
officers”; and (2) concluding the “[A]rbitrator exceeded his powers by awarding a
modification of [the] police pension plan” without the benefit of an Act 205 study.
(PBA’s Brief at 4.) PBA asserts common pleas exceeded its narrow scope of
certiorari in vacating the Arbitrator’s Award. It also argues that there was no
8
As common pleas noted, a number of exhibits that were introduced at the arbitration were
not made part of the record before it. (Common Pleas Op. at 17.) Accordingly, its review, like
ours, was limited to the testimony concerning the documents and the Arbitrator’s Decision.
Although ideally these documents would be part of the record before us, because the parties do not
dispute the accuracy of the Arbitrator’s description of the documents, we also proceed with our
review.
10
modification of the pension plan since the disputed forms of compensation had been
previously included in the pension calculations until the City stopped withholdings
in 2001-02. PBA contends it is simply seeking to maintain the status quo ante. As
evidence, it points to the actuarial reports, all of which were performed after 2001,
which define compensation to include the disputed forms. It also points to the
pension plan ordinances and the 2005 MOU. Because there was no modification,
according to PBA, an Act 205 study was not required, and, therefore, the Arbitrator
did not exceed his authority because his award did not require an illegal act or a
public employer to do something it cannot otherwise do voluntarily.
The City argues common pleas was correct in concluding that the Arbitrator
exceeded his authority. According to the City, it did not withhold contributions from
the disputed forms of compensation and did not include them in pension calculations
for employees hired after the 2001 Award. Thus, the Arbitrator’s Award requiring
the City to withhold contributions from the disputed forms of compensation and
include them in the pension calculations without the benefit of an Act 205 study was
an illegal act that requires reversal.
II. ANALYSIS
Our scope of review of grievance arbitration9 awards is “narrow certiorari,”
which “limits courts to reviewing questions concerning: (1) the jurisdiction of the
arbitrators; (2) the regularity of the proceedings; (3) an excess of the arbitrator’s
powers; and (4) deprivation of constitutional rights.” Pa. State Police v. Pa. State
Troopers’ Ass’n, 656 A.2d 83, 89-90 (Pa. 1995). The parties here stipulated before
9
“‘Grievance arbitration’ is the arbitration which occurs when the parties disagree as to
the interpretation of an existing collective bargaining agreement.” Pa. State Police v. Pa. State
Troopers’ Ass’n, 656 A.2d 83, 85 n.2 (Pa. 1995).
11
the Arbitrator that there were no substantive or procedural defects, and PBA does
not assert its bargaining unit members have been deprived of any constitutional
rights. Thus, our review is limited to a determination of whether the Arbitrator
exceeded his authority.
An arbitrator exceeds his authority if he mandates an illegal act.10 Id. at 90.
An arbitrator “may only require a public employer to do that which the employer
could do voluntarily.” Id. Here, common pleas concluded the Arbitrator exceeded
his authority by ordering modification of the pension plan without the benefit of an
Act 205 study. Because an Act 205 study is required by law before any plan
modification, common pleas held the Arbitrator required an illegal act.
Section 305(a) of Act 205 provides: “Prior to the adoption of any benefit plan
modification by the governing body of the municipality, the chief administrative
officer of each pension plan shall provide to the governing body of the municipality
a cost estimate of the effect of the proposed benefit plan modification.” 53 P.S.
§ 895.305(a). The cost estimate must be “complete and accurate” and shall disclose
“the impact of the proposed benefit plan, the modification on the future financial
requirements of the pension plan and the future minimum obligation of the
municipality with respect to the pension plan.” 53 P.S. § 895.305(e). In
Shippensburg Police Association v. Borough of Shippensburg, 968 A.2d 246, 251
(Pa. Cmwlth. 2009), this Court held that modification of a pension plan without an
Act 205 study is an “illegal act necessitating vacation” of an arbitrator’s award.
Therefore, we must examine whether the Arbitrator’s Award was a
modification of the pension plan. In reaching its conclusion that a modification
occurred, common pleas focused on the City’s actions related only to officers hired
10
“‘Illegal act[s]’” [are] not synonymous with [] “‘criminal act[s].’” Borough of Nazareth
v. Nazareth Borough Police Ass’n, 680 A.2d 830, 833 n.4 (Pa. 1996).
12
after 2001 and found that the City did not include the disputed forms of
compensation in the pension calculations for those officers. It also found that the
City did not withhold contributions for those officers based upon that compensation.
Therefore, requiring it to do so now is a modification.
PBA argues no modification took place because the Arbitrator’s Award
merely required the City to continue doing what it previously did – withhold
contributions from the disputed forms of compensation and include them in the
pension calculations. The City argues, much like common pleas found, that because
it never withheld contributions or included the disputed forms of compensation in
pension calculations for officers hired after 2001, requiring it to do so now amounts
to a modification requiring an Act 205 study.
Here, the City’s change in practice was based upon the 2001 Award, which
provides “[a]ll officers hired after the issuance of this Award shall be entitled to
pension benefits not in excess of [T]he Third Class City Code.” (S.R.R. at 35b.)
Section 4303(b) of The Third Class City Code provided, in relevant part:
The basis of the apportionment of the pension shall be determined by
the rate of the monthly pay of the member at the date of the injury . . .
or retirement, or the highest average annual salary which the member
received during any five years of service preceding injury . . . or
retirement, whichever is the higher, and . . . shall not in any case exceed
in any year one-half the annual pay of the member computed at the
monthly or average annual rate, whichever is the higher.
Formerly 53 P.S. § 39303(b) (emphasis added). Section 4309 of The Third Class
City Code defined “salary” as “the fixed amount of compensation paid at regular,
periodic intervals by the city to the member and from which pension contributions
13
have been deducted.” Formerly 53 P.S. § 39309.11 The City understood this to mean
that the disputed forms of compensation should not be included in the pension
calculations.
However, important to our determination here, are the Arbitrator’s findings
that the City took no action after the 2001 Award to formalize its interpretation,
despite multiple opportunities to do so over the course of many years.12 Because the
City never formally changed the plan, the Arbitrator found its past practice of
withholding contributions and including the disputed forms of compensation in
pension calculations remained intact. Therefore, his Award did not modify the plan,
as common pleas concluded; it simply sought to maintain the status quo.
The Arbitrator cited a significant amount of evidence that supports this
conclusion. First, the pension ordinances that govern the plans provide that the
disputed forms of compensation are to be included in the pension calculations.
(Arbitrator’s Decision at 6.) For example, Section 2-247 of the City’s ordinance
governing the Bureau of Policemen’s Relief pension plan defines “monthly
compensation” to include “basic monthly compensation plus longevity payments,
acting officers’ pay, bonuses and other special forms of compensation.” (S.R.R.
at 13b (emphasis added).) Yet, after the 2001 Award, “[t]he applicable pension
ordinances were not amended to reflect [the City’s] new ‘policy’” to exclude those
forms of disputed compensation. (Arbitrator’s Decision at 10; see also id. at 7
11
This definition is identical to the definition found in Section 14300(b) of the current
version of the Third Class City Code, 11 Pa. C.S. § 14300(b).
12
We reiterate that the 2001 Award was an interest arbitration award. “‘Interest arbitration’
is the arbitration which occurs when the employer and employee are unable to agree on the terms
of a collective bargaining agreement.” Pa. State Police, 656 A.2d at 85 n.2. The 2001 Award is
2 ½ pages long containing 8 separately numbered paragraphs that set forth certain terms and
conditions of employment, such as wages, shift differentials, health insurance, Heart and Lung
Claims, holiday pay, and personal days. (2001 Award, S.R.R. at 33b-35b.)
14
(“Despite the [2001 Award’s] addition to pension provisions in the parties’
collective bargaining agreement, the City did not modify either of the ordinances
governing the [pension p]lans.”).) Thus, “[t]he definitions of compensation
contained in those ordinances remained in place after the [2001 Award], and
continue to remain in place.” (Id. at 7.) Moreover, while the ordinances do
distinguish between officers hired before July 1976 and after July 1976, they do not
distinguish between officers hired before the 2001 Award and officers hired after the
2001 Award.
Second, the 2007 letter that was sent to plan participants included the
following statement: “For purpose of calculating your pension, your compensation
will be based upon your base pay plus any longevity, acting officers[’] pay, bonuses
and other special forms of compensation.” (Id. at 13 (emphasis in original)
(quoting 2007 Statements of Benefits).) Like the ordinances, there is no evidence
that the letter distinguishes between officers hired before the 2001 Award and those
hired after.
Third, the actuarial valuations that were performed for 2009, 2011, 2013,
and 2015, all defined “pensionable compensation” as including “basic pay, longevity
payments, acting officers[’] pay, bonuses and other special forms of
compensation.” (Id. (emphasis in original) (quoting actuarial valuations).) While
the actuarial valuations draw a distinction between those hired pre- and post-2001,
that distinction relates to computation of the basis for the pension. The actuarial
valuations provide:
If hired before 1/24/01, the average of a member’s monthly pensionable
compensation for the 12 months (or lesser period of time in case of non
job-related disability retirement and member has less than one year of
service) immediately preceding a member’s retirement or termination.
If hired after 1/23/01, the member’s monthly salary rate at time of
15
retirement, or, if higher, 1/12 of the member’s average annual
salary for his five years of service which produce the highest such
average. Pensionable compensation includes basic pay, longevity
payments, acting officers’ pay, bonuses and other special forms of
compensation.
(Arbitrator’s Decision at 13 (emphasis in original) (quoting actuarial valuations).)13
The definition of “pensionable compensation” is not different based upon date of
hire.
In short, the Arbitrator found based on evidence in the record, that the City
never formally changed the pension plan, as evidenced by the failure to amend the
pension ordinances or to distinguish between pre- and post-2001 hires in the 2007
letter or in any of the actuarial valuations that were performed every other year. The
Arbitrator found the parties, by agreement and through past practice, included the
disputed forms of compensation in pension calculations, and these findings are
entitled to deference under narrow certiorari review. Because of our narrow
certiorari scope of review, we cannot disregard an arbitrator’s findings of fact or
contract interpretation so long as the arbitrator is arguably construing or applying
13
The above-quoted language also provides another plausible interpretation as to what was
meant by the provision in the 2001 Award that “[a]ll officers hired after the issuance of this Award
shall be entitled to pension benefits not in excess of [T]he Third Class City Code.” (2001 Award
¶ 7, S.R.R. 35b.) Section 4303(b) of The Third Class City Code provided, in pertinent part,
The basis of the apportionment of the pension shall be determined by the rate of the
monthly pay of the member at the date of injury . . . or retirement, or the highest
average annual salary which the member received during the five years of service
preceding injury . . . or retirement, whichever is the higher[.]
Formerly 53 P.S. § 39303(b). The language in the actuarial valuations that distinguishes between
pre- and post-2001 hires closely tracks that of The Third Class City Code. As the Arbitrator notes,
“[c]ontrary to the City’s arguments, the language of Paragraph 7 [of the 2001 Award] is not clear
and unambiguous with respect to the inclusion or exclusion of the disputed forms of compensation
in pension calculations. Rather, that language is silent regarding the issue.” (Arbitrator’s Decision
at 10 (internal citation omitted).)
16
the contract and acting within the scope of his authority. Shippensburg Police Ass’n,
968 A.2d at 249. Nor is an error of law sufficient to “warrant reversal under the
narrow certiorari scope of review.” Pa. State Police, 656 A.2d at 90.
In vacating the Award, common pleas did not defer to those findings but
substituted its own findings for that of the Arbitrator, which it was not permitted to
do. This was reversible error. While the City stopped withholding contributions
after the 2001 Award, it did nothing to formalize this change. Accordingly, requiring
the City to continue including the disputed forms of compensation in the pension
calculations and to continue withholding contributions was not a modification to the
plan that required an Act 205 study; it was merely consistent with the City’s written
policy. In light of our narrow certiorari scope of review and, more importantly, the
Arbitrator’s findings, we are constrained to reverse common pleas and reinstate the
Arbitrator’s Award.
To the extent that the City relies on Shippensburg Police Association and
Muhlenberg Township v. Muhlenberg Township Police Labor Organization (Pa.
Cmwlth., No. 1327 C.D. 2013, filed May 2, 2014),14 for the proposition that an Act
205 study is required, that reliance is misplaced. In those cases, the arbitration
awards required an actual modification of the pension plans at issue; there was no
finding of a past practice that included the disputed compensation in the pension
calculations, as exists here.
14
Muhlenberg Township is an unreported panel decision of this Court, which can be cited
for its persuasive value but not as binding precedent under Section 414(a) of our Internal Operating
Procedures, 210 Pa. Code § 69.414(a).
17
III. CONCLUSION
As discussed above, we conclude the Arbitrator’s Award was not a
modification of the pension plan. Rather, the Award was an attempt to maintain,
what the Arbitrator found, was the status quo ante. Because the Award was not a
modification, an Act 205 study was not required. Therefore the arbitrator was acting
within his authority and did not direct the City to perform an illegal act. Common
pleas, in substituting its factual findings for those of the Arbitrator, did exceed its
authority under the narrow scope of certiorari. Accordingly, common pleas’ Order
is reversed.
_____________________________________
RENÉE COHN JUBELIRER, Judge
18
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
City of Wilkes-Barre :
:
v. : No. 1145 C.D. 2017
:
Wilkes-Barre Police Benevolent :
Association, :
Appellant :
ORDER
NOW, June 4, 2018, the Order of the Court of Common Pleas of Luzerne
County, in the above-captioned case, is REVERSED.
_____________________________________
RENÉE COHN JUBELIRER, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
City of Wilkes-Barre :
:
v. : No. 1145 C.D. 2017
: Argued: April 12, 2018
Wilkes-Barre Police Benevolent :
Association, :
Appellant :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ELLEN CEISLER, Judge
HONORABLE DAN PELLEGRINI, Senior Judge
OPINION NOT REPORTED
CONCURRING OPINION BY
SENIOR JUDGE PELLEGRINI FILED: June 4, 2018
I concur with the majority. I write separately because I agree with the
Court of Common Pleas of Luzerne County that the arbitrator impermissibly amended
the collective bargaining agreement by including overtime, working holidays, court
pay and other incidental pay into what is salary for the purposes of calculating pension
benefits. However, because of our narrow scope of review involving police arbitration
cases, we can do nothing about it and, therefore, I concur.
__________________________________
DAN PELLEGRINI, Senior Judge