210 A.3d 993
Pa.2019Background
- Millcreek Township School District and Millcreek Township Educational Support Personnel Association were parties to a CBA (2011–2016) that contained a clear no-subcontracting clause and an exclusivity provision.
- During successor negotiations in 2016 the District proposed removing the no-subcontracting clause; the Association rejected that proposal.
- While negotiations were ongoing, the District issued an RFP (March 29, 2016) soliciting bids for custodial services for the post-CBA period; the Association filed a grievance alleging a CBA violation.
- The arbitrator found the District violated the no-subcontracting provision by issuing the RFPs and taking related steps, concluding subcontracting begins when the employer pursues outside contracting (e.g., solicits bids, advertises, walkthroughs).
- The arbitrator ordered that the RFPs not be used to gain bargaining advantage, declared any formal selection null and void, and prohibited outside contracts that would eliminate the bargaining unit unless legal impasse occurred.
- The trial court confirmed the award; the Commonwealth Court vacated it as beyond the CBA and violative of public policy; the Pennsylvania Supreme Court reversed, reinstating the award.
Issues
| Issue | Plaintiff's Argument (Association) | Defendant's Argument (District) | Held |
|---|---|---|---|
| Whether the arbitrator's decision addressed an issue encompassed by the CBA | The grievance pleaded violation of the no-subcontracting clause; arbitrator permissibly interpreted that clause to include the process of subcontracting | The CBA only bars the final act of subcontracting; it says nothing about RFPs or preliminary steps, so issue not within CBA | Issue was within the CBA; reviewing court must defer to arbitrator’s contract interpretation for this prong |
| Whether the arbitrator’s award rationally derives from the CBA (essence test second prong) | Arbitrator’s factual findings and context (history, chilling effect) supported reading the no-subcontracting clause to bar RFPs and related steps | Arbitrator rewrote the CBA and added terms not present; award not rationally derived from CBA | Award rationally derived from the CBA given deference to arbitrator’s factfinding and interpretation |
| Whether the award violates dominant public policy (public policy exception to essence test) | The remedy is traditional make-whole and preserves employer’s rights post-impasse; does not compel illegal conduct or breach of PERA | Enforcing the award would prevent the District from soliciting and sharing bids and thus conflict with PERA’s good-faith bargaining duties and PLRB precedent | Award does not violate dominant public policy here: (1) remedy identified; (2) no Pennsylvania statute or controlling precedent clearly requires issuing RFPs when negotiating removal of a no-subcontracting clause; (3) remedy does not compel violation of PERA given arbitration findings and impasse framework |
| Proper scope of appellate review of arbitration awards under PERA (deference level) | Courts must apply the two-prong essence test and give great deference to arbitrator’s factual findings and contract interpretation | Courts may independently interpret clear CBA language and refuse enforcement if award is inconsistent with contract text | Reviewing courts must afford deference: interpretive findings by arbitrators control the first prong and the award must be upheld unless indisputably without foundation in the CBA; public-policy exception is narrow |
Key Cases Cited
- Beaver County, Community College v. Community College of Beaver County, 375 A.2d 1267 (Pa. 1977) (adopts deferential federal arbitration standard; arbitrator’s interpretation upheld if rationally derived from agreement)
- Cheyney Univ. v. State Coll. Univ. Prof’l Ass’n, 743 A.2d 405 (Pa. 1999) (articulates two-prong "essence test" for review of arbitration awards)
- Westmoreland Intermediate Unit #7 v. Westmoreland Intermediate Unit #7 Classroom Assistants Educ. Support Pers. Ass’n, 939 A.2d 855 (Pa. 2007) (recognizes narrow public-policy exception to enforcing awards that otherwise satisfy essence test)
- United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960) (federal Trilogy principle: minimal judicial review of arbitration awards)
- Warrior & Gulf Navigation Co. v. United Steelworkers, 363 U.S. 574 (1960) (arbitration finality principle; arbitrator interprets CBA as a practical code)
- United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (1987) (arbitrator’s factual findings and contract interpretation should not be overturned because a court would read the contract differently)
- Danville Area Sch. Dist. v. Danville Area Educ. Ass’n, 754 A.2d 1255 (Pa. 2000) (reinforces deference to arbitrator’s application of CBA language in context)
- Philadelphia Housing Authority v. AFSCME, 52 A.3d 1117 (Pa. 2012) (applies public-policy exception where reinstatement would violate strong public policy against sexual harassment)