The Mun. Auth. of the City of McKeesport v. Utility Workers Union of America, AFL-CIO Local 433

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
The Municipal Authority of the City of :
McKeesport, Jonathan Cottom, Dale :
McCall, Luethel Nesbit, Mary Smitley, :
and Ryan Sturgess, :
Appellants :
:
v. : No. 695 C.D. 2021
: SUBMITTED: May 17, 2022
Utility Workers Union of America, :
AFL-CIO Local 433, Allen G. Wright, :
Vincent M. Wassel, Eric R. Toth, :
Michael Tedesco, Charles D. Swartz, :
John W. Stein Jr., Ryan S. Steele, Ryan :
J. Smith, Nickolas J. Shermenti, Paul E. :
Pollock, Jarred K. Nesbit, Tom :
Morrissey, Michael Moorefield, :
Shane R. McCall, Adam J. Martin, :
Justin J. Kaminsky, Eric L. Hampton, :
Mark Hammerstrom, David L. Gillie, :
Louis W. Garansi, Charles G. Frederick, :
Jr., Joseph A. Ernst, Jeffrey J. Clemente, :
Patrick Chiaverini, Christopher R. :
Brancato, Anthony D. Bosnak, Jason M. :
Anderson, Ronald J. Alfer :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE LORI A. DUMAS, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE LEADBETTER FILED: June 15, 2022
The Municipal Authority of the City of McKeesport, Jonathan Cottom,
Dale McCall, Luethel Nesbit, Mary Smitley, and Ryan Sturgess (collectively, the
City) appeal from an order of the Court of Common Pleas of Allegheny County
denying the City’s petition to vacate an Act 1951 arbitration award that sustained the
grievance of the Utility Workers Union of America, AFL-CIO Local 433 (the
Union). The Union filed the grievance under its previously operative collective
bargaining agreement (2017 CBA) with the Authority. We affirm.
For over forty years, the Authority and the Union were parties to a
CBA. The 2017 CBA was the most recent one, covering the time period of January
1, 2017 to December 31, 2017. (2017 CBA at 1-25; Reproduced Record “R.R.” at
354a-79a.) Since 2015, the parties were aware that the City was attempting to sell
the Authority’s facility and assets. (Feb. 23, 2021 Arb. Award at 2.) Consequently,
the Authority and the Union negotiated the 2017 CBA to replace the one that was
expiring. (Id. at 7.) Ultimately, the City’s asset sale to Pennsylvania American
Water Company (PAWC) for 156 million dollars was finalized on December 18,
2017. Prior thereto, PAWC sent November 28, 2017 offers of employment to union
employees contingent upon their acceptance of such things as passing a physical
examination and a drug test. (Id.) Not all of them became PAWC employees, with
several choosing to retire and some not joining for other reasons. (Id. at 8.)
On December 7, 2017, Union Steward David Denardo filed the present
grievance asserting that the City remained liable under the 2017 CBA to pay “all [of
the] earned [but] unpaid benefits” of thirty-one current employees. (Dec. 7, 2017
Grievance at 1; R.R. at 59a.) Neither the Authority nor the City responded to the
grievance. On December 15, 2017, all union employees were advised by letter that
their employment would terminate with the Authority on December 18, 2017. (Feb.
1
Act of July 23, 1970, P.L. 563, as amended, 43 P.S. §§ 1101.101-1101.2301. Act 195, as it
is commonly referred to, is the Public Employe Relations Act.
2
23, 2021 Arb. Award at 7.) On December 18, 2017, the Authority was dissolved,
the union employees’ employment was terminated, and the 2017 CBA between the
Authority and the Union discontinued.2 (Id.)
In August 2018, the Union filed an action in common pleas court raising
claims for breach of contract, promissory estoppel, quantum meruit, unjust
enrichment, and a writ of mandamus. Following preliminary objections, the court
entered an order sending the matter to arbitration. (Id. at 2.) The Arbitrator held a
hearing at which time he framed the issue as whether the union employees received
the vacation and sick leave that they were owed at the time their employment with
the Authority was terminated on December 18, 2017. In other words, whether they
received the benefits for which they bargained in connection with their employment
with the Authority. (Nov. 19, 2020 Hr’g, Notes of Testimony “N.T.” at 11; R.R. at
187a.)
The 2017 CBA “required that sick leave and vacation benefits be earned
in a year prior to the year in which they were to be taken.” (Feb. 23, 2021 Arb.
Award at 8.) In other words, “the benefits earned in the year worked[] were eligible
to be taken the following year.” (Id. at 16.) To that end, the parties “set January of
the new year as the date to trigger the vesting or accrual of the previous year’s work
for vacation and sick time.” (Id.)3 When the December 2017 asset sale occurred,
2
The Union and PAWC entered into a new CBA beginning December 18, 2017 and ending
June 30, 2021. (Feb. 23, 2021 Arb. Award at 7.)
3
The contractual provisions of the 2017 CBA pertaining to the benefits at issue provide:
Article III, Section 2 - Vacations
During each calendar year, regular employees shall receive
vacations with pay computed on the basis of a forty (40) hour week,
(Footnote continued on next page…)
3
not including shift differentials. Employees shall receive only the
amount of vacation earned during the previous calendar year.
During the first calendar year of employment, beginning
with the date of employment and ending on December 31 of that
year, employees shall earn five-sixths (5/6) of one (1) work days’
vacation for each month of employment. Vacation so earned during
the first calendar year of employment may not be taken until after
the first anniversary date of employment at the Authority, and must
be taken between the first anniversary day of employment and the
last day of that calendar year.
From January 1 to December 31 of each calendar year,
regular employees will be earning vacations for each subsequent
calendar year. On every January 1, each employee shall be credited
with the amount of vacation earned the previous calendar year. After
the first calendar year of employment, vacations shall be earned as
follows:
a. Two (2) weeks’ vacation for each full calendar year
employed.
b. After five (5) years of continuous employment, three (3)
weeks’ vacation for each full calendar year employed.
c. After ten (10) years of continuous employment, four (4)
weeks’ vacation for each full calendar year employed.
d. After fifteen (15) years of continuous employment, five
(5) weeks’ vacation.
e. After twenty (20) years of continuous employment, six (6)
weeks’ vacation for each full calendar year employed.
f. In determining the amount of vacation in those years in
which an increase occurs, the amount from the previous year plus
five-twelfths (5/12) of a day for each month worked after the
employee’s anniversary date rounded to the nearest whole day.
Vacations can be scheduled and taken for the week which
includes New Year’s Day, but no employee shall have more than
two (2) consecutive weeks of vacation at any time.
Upon termination of employment, all employees shall be
paid for any vacation earned during the previous calendar year of
employment but not yet taken.
(Footnote continued on next page…)
4
All vacation days earned the previous year must be taken
during the calendar year immediately following and cannot be
carried over to any subsequent year.
The Authority is willing to buy back up to one (1) week of
vacation from any employee wishing to do so. The request must
come from the employees when submitting their vacation dates for
consideration. If by granting these requests the Authority feels that
it may place a burden on the budget, it may either reduce the number
of days granted or deny the requests altogether. If the Authority
decides to purchase vacation, employees will receive the economic
benefit of that decision by the end of January.
....
Article III, Section 6 – Sickness, Accident and Life Insurance
Benefits
Each employee of the Authority shall be permitted a total of
ten (10) days sick leave per year with pay and shall have the right to
carryover five (5) or fewer of any of those unused sick days to a
maximum accumulation of fifteen (15) unused paid sick days. If and
when an employee reaches the maximum accumulated number of
fifteen (15) unused sick days, and so that the employee does not lose
the benefit of carryover sick days beyond the maximum number of
fifteen (15), at the end of each calendar year of this Agreement the
employee shall be reimbursed by the Authority for up to five (5)
unused sick days beyond the accumulated maximum number of
fifteen at his/her then current hourly rate.
If an employee’s absence from work due to sickness or
injury is for one (1) day, the employee will be paid for that day’s
wages without a physician’s excuse. If an employee’s absence from
work is for two (2) or more days, the employee will be paid for those
days’ wages, but only upon providing a physician's excuse after
returning to work.
(2017 CBA at 13-16; R.R. at 367a-70a) (emphasis added). The provision pertaining to successors
provides:
Article VII, Section 1 - Successors
In the event of any sale . . . of the operations and maintenance
of the . . . Authority during the term of this Agreement, including
the whole or any portion or part thereof, which is under contract with
(Footnote continued on next page…)
5
approximately two weeks remained before the January 1 triggering date for payout
of those benefits. Emphasizing the timing, the Arbitrator found that “in my opinion,
it is no accident that [the sale occurred] two weeks prior to the January 1 date.” (Id.
at 17.) He then concluded that “a triggering event did occur on December 18, 2017,
and the employees, therefore, became eligible for same as if it was in fact 13 days
later on January 1 of the new year.” (Id. at 18.) Accordingly, he sustained the
grievance thereby concluding that the union employees were vested for the prior
work year 2017 on December 18, 2017, and that they should be paid their earned
vacation pay and sick benefits for the work year and service for 2017. (Id. at 19.)
In March 2021, the City filed a petition to vacate the award. The trial court denied
the petition and the City’s appeal to this Court followed.
When reviewing arbitration awards under Act 195, this Court’s role is
one of deference. State Sys. of Higher Educ. (Cheyney Univ.) v. State Coll. Univ.
Pro. Assoc. (PSEA/NEA), 743 A.2d 405, 413 (Pa. 1999). Recognizing the strong
presumption that the legislature and the parties intended for an arbitrator to be the
judge of disputes under a CBA, we review an arbitration award using the essence
Local 433, such sale . . . shall be specifically conditioned upon the
purchaser . . . offering any employment opportunities . . . first to
those employees in the bargaining unit represented by Local 433
who are affected by such sale . . . . Such sale . . . shall also be
conditioned upon the purchaser . . . recognizing the . . . seniority of
those employees accepting employment with the purchaser . . . and
conditioned upon the purchaser[’s] . . . prior written agreement to
honor this Agreement for the remainder of its term with reference to
the transferred portion of the . . . . Authority operations and
maintenance. The Union shall be given at least sixty (60) days’
notice that such operations are being transferred to a particular party.
(Id. at 23-24; R.R. at 377a-78a.)
6
test. Id. Pursuant to the essence test, “if the issue as properly defined falls within
the scope of the parties’ CBA, the arbitration award may only be vacated if the award
‘indisputably and genuinely is without foundation in, or fails to logically flow from,’
the CBA.” Neshaminy Sch. Dist. v. Neshaminy Fed’n of Teachers, 171 A.3d 334,
337 n.3 (Pa. Cmwlth. 2017) (citation omitted). If the essence test is met, then the
award can be vacated only if it satisfies the narrow public policy exception, which
means that the award’s enforcement would contravene a well-defined and dominant
public policy. Shamokin Area Sch. Dist. v. Am. Fed’n of State, Cnty., & Mun. Emps.
Dist. Council 86, 20 A.3d 579, 582 (Pa. Cmwlth. 2011).4 In making these
determinations, we are bound by the arbitrator’s findings of fact. Blairsville-
Saltsburg Sch. Dist. v. Blairsville-Saltsburg Educ. Ass’n, 102 A.3d 1049, 1050 (Pa.
Cmwlth. 2014).
In the present case, there is no dispute that the first prong of the essence
test is satisfied. The issue of whether the City (as successor to the Authority)
violated the 2017 CBA by failing to pay for earned but unused leave clearly falls
within the scope of the 2017 CBA. Pursuant to the second prong of the essence test,
the question is whether the award determining the City’s liability for those benefits
and the triggering event for entitlement thereto is without foundation or fails to
logically flow from the 2017 CBA. We hold that it does not.
Unquestionably, the January 1 triggering date for crediting of past
earned benefits is stated in the CBA. However, this paradigm assumes the status
quo of the Authority’s remaining as the employer and the employee’s continuation
of employment in the next calendar year. Here, the asset sale disrupted that status
quo. The Authority ceased to exist before January 1 and no one worked for it on
4
The public policy exception is not at issue here.
7
that date. The end of the calendar year had almost been reached on December 18
when the Authority was dissolved. Thus, a literal reading of the January 1 trigger
would result in depriving all employees of nearly an entire year of benefits which
the CBA characterized as having been earned. Hence, the Arbitrator determined that
“a triggering event must also be the sale of the Authority, the termination of
employment for the employees[,] and the dissolution of the prior controlling CBA.”
(Feb. 23, 2021 Arb. Award at 17.) In so determining, he reasoned:
The position that the vacation and sick benefits
earned during the year but not vested or accrued until
January of the next year is what the City argues. Given
the current factual situation, this is form without
substance. The basic concept of the vacation and sick
benefits since the CBA inception has been that the benefits
earned in the year worked[] were eligible to be taken the
following year. This compact was broken by the sale of
the assets and the closing of the Authority by the City. The
benefits, vacation and sick time are then due at that time.
They had been previously earned through all but the last
13 days of the year.
(Id. at 16.)
Moreover, the Arbitrator recognized the Authority’s past practice of
paying for earned but unused benefits upon retirement, quits, and discharges.5 In
support, he cited the testimony of Union Steward David Denardo and the Authority’s
attorney noting:
The Authority has paid for prior work earned
vacation and sick pay and such were paid for retirements,
5
“[R]eliance upon past practice in the face of an ambiguous contract provision is not only
permissible, but is an important tool through which an arbitrator may discover the intent of the
parties.” Danville Area Sch. Dist. v. Danville Area Educ. Ass’n, PSEA/NEA, 754 A.2d 1255, 1262
(Pa. 2000).
8
quits, discharges, etc., although the City challenged the
testimony of [Union] Stewar[d] for not having exhibits to
prove this claim. But the claim and his testimony are
credible and he has been in a position of authority with the
[Union] for many years to know how these issues were
handled. Moreover, the testimony later in the hearing that
the Authority’s Solicitor confirmed that when terminated,
employees were paid out any back vacation and sick
benefits.
(Id. at 16-17.) Given the fact that these separations could occur anytime in a given
year, the triggering event dates obviously varied. Mr. Denardo testified that he had
worked for the Authority for thirty-five years and PAWC for three years. (N.T. at
65; R.R. at 200a.) Mr. Denardo stated that when individuals in the past were
terminated or retired, the Authority paid them 100% of whatever earned and accrued
vacation and sick time remained unused. (N.T. at 76-77, and 91; R.R. at 203a and
207a.) The Authority’s attorney confirmed that “when terminated, employees were
paid out any back vacation and sick benefits.”6 (Feb. 23, 2021 Arb. Award at 16-
17.)
As stated above, in rejecting the City’s argument that January 1 was the
triggering date, the Arbitrator noted that such application would result in a twenty-
year employee receiving vacation pay for nineteen years of service but not the twenty
years that he actually worked for lack of a fourteen-day total of the entire year.
Noting that “it is no accident that the consummation of the sale occurred two weeks
before January 1, the Arbitrator held that “[s]uch argument and claim cannot be
upheld.” (Id. at 17.) Indeed, the subterfuge provision in the 2017 CBA inserts a
good faith obligation on the part of the parties not to subvert the agreement. Article
I, Section 7 of the 2017 CBA provides: “The parties will not engage in subterfuge
6
(N.T. at 139; R.R. at 219a.)
9
for the purpose, or with the result, of defeating or abating the provisions of this
Agreement.” (2017 CBA at 4; R.R. at 358a.) To that end, the timing of the sale
should not preclude the City from making the union employees whole by paying
them what they earned and what they are owed.
Finally, public policy supports upholding the award. As the Union
observed: “[The City] will not be required to violate any even arguable lawful
obligations or public duty by complying with the Arbitration Award. To the
contrary, [it] [is] merely being required to pay the value of bargaining unit members’
earned, but unused vacation and sick leave benefits.” (Union’s Br. at 20.) As the
Arbitrator concluded, notwithstanding the fact that the concept of earning
vacation/sick benefits may have changed in the new agreement between the Union
and PAWC, “that did not abrogate the City from making employees whole for what
they earned under the previous vacation/sick benefit scheme that was in the [2017]
CBA with the Authority.” (Feb. 23, 2021 Arb. Award at 18.)
Accordingly, we affirm.
_____________________________________
BONNIE BRIGANCE LEADBETTER,
President Judge Emerita
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
The Municipal Authority of the City of :
McKeesport, Jonathan Cottom, Dale :
McCall, Luethel Nesbit, Mary Smitley, :
and Ryan Sturgess, :
Appellants :
:
v. : No. 695 C.D. 2021
:
Utility Workers Union of America, :
AFL-CIO Local 433, Allen G. Wright, :
Vincent M. Wassel, Eric R. Toth, :
Michael Tedesco, Charles D. Swartz, :
John W. Stein Jr., Ryan S. Steele, Ryan :
J. Smith, Nickolas J. Shermenti, Paul E. :
Pollock, Jarred K. Nesbit, Tom :
Morrissey, Michael Moorefield, :
Shane R. McCall, Adam J. Martin, :
Justin J. Kaminsky, Eric L. Hampton, :
Mark Hammerstrom, David L. Gillie, :
Louis W. Garansi, Charles G. Frederick, :
Jr., Joseph A. Ernst, Jeffrey J. Clemente, :
Patrick Chiaverini, Christopher R. :
Brancato, Anthony D. Bosnak, Jason M. :
Anderson, Ronald J. Alfer :
ORDER
AND NOW, this 15th day of June, 2022, the order of the Court of
Common Pleas of Allegheny County is hereby AFFIRMED.
_____________________________________
BONNIE BRIGANCE LEADBETTER,
President Judge Emerita