petition for allowance of appeal or exclusive jurisdiction

8/9/2019 Petition for Allowance of Appeal or Exclusive Jurisdiction

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IN THE SUPREME COURT OF PENNSYLVANIA

EASTERN DISTRICT

NO. __ EAL 2015

PHILADELPHIA FEDERATION OF TEACHERS, AFT, LOCAL 3, AFL-

CIO and JERRY JORDAN, President and Trustee Ad Litem,

Respondents,

v.

SCHOOL DISTRICT OF PHILADELPHIA, SCHOOL REFORM

COMMISSION, WILLIAM J. GREEN, IV, in his official capacity as

Chairman and Member of the Commission, FEATHER HOUSTOUN,

FARAH JIMENEZ, MARJORIE NEFF, SYLVIA P. SIMMS, in their officialcapacities as Members of the Commission, and WILLIAM R. HITE, JR., in

his official capacity as Superintendent of Schools,

Petitioners.

PETITION FOR ALLOWANCE OF APPEAL, OR, IN THE

ALTERNATIVE, FOR THE EXERCISE OF EXCLUSIVE JURISDICTION

Petition for Allowance of Appeal from the Order of the Commonwealth Court

entered January 22, 2015 at 1951 C.D. 2014, affirming the Final Injunction

Order of the Court of Common Pleas of Philadelphia County entered October

27, 2014 at No. 01842, October Term, 2014, or for Exclusive Jurisdiction

Mark A. Aronchick Richard L. Bazelon

Matthew A. Hamermesh A. Richard Feldman

Hangley Aronchick Segal Lisa A. Barton

Pudlin & Schiller, P.C Bazelon, Less & Feldman, P.C.

One Logan Square, 27th

Floor One South Broad Street, Suite 1500

Philadelphia, PA 19103-6995 Philadelphia, PA 19107

(215) 568-6200 (215) 568-1155

Attorneys for Petitioners Attorneys for Petitioners

Received 02/23/2015 Supreme Court Eastern Distric


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i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ................................................................................... iii

I. THE OPINIONS BELOW....................................................................................i

II. THE ORDER IN QUESTION ............................................................................. 1

III. THE QUESTIONS PRESENTED FOR REVIEW ............................................. 1

IV. STATEMENT OF THE CASE ........................................................................... 2

A. The Underlying Facts ......................................................................................2

B. The Proceedings Below ...................................................................................6

C.

The Relevant Statutory Background ...............................................................6

V. THE REASONS FOR GRANTING ALLOWANCE OF APPEAL ................. 11

A. The Question of the SRC’s Statutory Power to Cancel the PFT’s CollectiveBargaining Agreement and to Impose New Economic Terms Is a Matter ofSubstantial Public Importance that Presents Issues of First Impression andRequires a Prompt and Definitive Resolution by this Court .........................11

1. Sections 693 and 696 of the Public School Code plainly and

unequivocally give the SRC the power to cancel “any contract,”including collective bargaining agreements, and the CommonwealthCourt erred in holding to the contrary ......................................................16

a) The court below misconstrued the 2001 amendments to section696(k)(5), which confirmed that the SRC’s power to cancel “anycontract” includes collective bargaining agreements ...........................20

b) The court below also misconstrued the significance of the SchoolDistrict Financial Recovery Act of 2012, which further confirmed the

SRC’s power to cancel collective bargaining contracts .......................22

2. Sections 693(a)(1) and 696(k)(5) authorize the SRC and the SchoolDistrict to impose new economic terms following a cancellation and thecourt below erred in holding otherwise ....................................................25


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ii

a) Sections 693(a)(1) and 696(k)(5) granted the SRC the power to imposechanged economic terms following a cancellation of the collective

bargaining contract ...............................................................................25

b) The court below further erred by rejecting section 28(a)’s repeal of

PERA as inapplicable and assuming that PERA treats a cancellationthe same as an expiration ......................................................................27

3. Commonwealth Court’s additional reasons for its ruling also do notwithstand scrutiny .....................................................................................32

4. The collective bargaining agreement between the School District and thePFT is not a “teachers’ contract” within the meaning of section693(a)(1) ...................................................................................................34

5.

Section 696 does not impair any contractual obligations or constitute anunconstitutional delegation of legislative power ......................................37

VI. THE REASONS FOR EXERCISING EXCLUSIVE JURISDICTION ........... 40

A. In the Alternative, this Court Has Exclusive Jurisdiction over this MatterPursuant to Section 27 of Act 46 and Should Exercise that Jurisdiction toDecide it Promptly and Definitively ..............................................................40

B. The PFT’s Anticipated Arguments against Exclusive Jurisdiction Lack Merit

.......................................................................................................................45

VII. CONCLUSION .............................................................................................48

APPENDICES

CERTIFICATION


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iii

TABLE OF AUTHORITIES

Cases

Appeal of Cumberland Valley Sch. Dist.,

483 Pa. 134, 394 A.2d 946 (1978)..................................................... 27, 28, 30, 31 Appeal of Watson,

377 Pa. 495, 105 A.2d 576, cert. denied , 348 U.S. 879 (1954) ...........................35

Bd. of Pub. Educ. Sch. Dist. of Phila. v. Intille, 401 Pa. 1, 163 A.2d 420, cert. denied , 364 U.S. 910 (1960) ...............................36

Burger v. Bd. of Sch. Directors of McGuffey Sch. Dist., 576 Pa. 574, 839 A.2d 1055 (2003)............................................................... 26, 36

Burke ex rel. Burke v. Independence Blue Cross, 103 A.3d 1267 (Pa. 2014) .....................................................................................45

Cali v. City of Philadelphia, 406 Pa. 290, 177 A.2d 824 (1962)........................................................................17

Capecci v. Joseph Capecci, Inc., 392 Pa. 32, 139 A.2d 563 (1958)..........................................................................16

Casino Free Philadelphia v. Pennsylvania Gaming Control Bd.,

594 Pa. 202, 934 A.2d 1249 (2007)......................................................................42

Cerra v. East Stroudsburg Area Sch. Dist., 450 Pa. 207, 299 A.2d 277 (1973)........................................................................36

City of Erie v. v. Workers' Comp. App. Bd. (Annunziata), 575 Pa. 594, 838 A.2d 598 (2003)........................................................................16

Commonwealth v. 2101 Cooperative, Inc., 408 Pa. 24, 183 A.2d 325 (1962)..........................................................................17

Commonwealth v. Bigelow, 484 Pa. 476, 399 A.2d 392 (1979)................................................................. 23, 24

Commonwealth v. Cherney, 454 Pa. 285, 312 A.2d 38 (1973) ..........................................................................39


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Commonwealth v. Davidson, 595 Pa. 1, 938 A.2d 198 (2007)............................................................................17

Commonwealth v. Jones, 593 Pa. 295, 929 A.2d 205 (2007)........................................................................46

Commonwealth v. Kerstetter,

94 A.3d 991 (Pa. 2014) .........................................................................................33

Commonwealth v. Mazzetti, 615 Pa. 555, 44 A.3d 58 (2012)..................................................................... 23, 24

Commonwealth v. McCoy, 599 Pa. 599, 962 A.2d 1160 (2009)......................................................................16

Community Coll. of Beaver Cty. v. Community Coll. of Beaver Cty., Soc'y of theFaculty (PSEA/NEA), 473 Pa. 576, 375 A.2d 1267 (1977)......................................................................16

DePaul v. Commonwealth, 600 Pa. 573, 969 A.2d 536 (2009)........................................................................42

DePaul v. Kauffman, 441 Pa. 386, 272 A.2d 500 (1971)................................................................. 38, 39

In re Employees of Student Servs., Inc., 495 Pa. 42, 432 A.2d 189 (1981)..........................................................................48

Fonner v. Shandon, Inc., 555 Pa. 370, 724 A.2d 903 (1999)........................................................................23

General Motors Corp. v. Romein, 503 U.S. 181 (1992) ....................................................................................... 37-38

Kirsch v. School Dist. of Philadelphia, 563 Pa. 513, 762 A.2d 1081 (2000)......................................................................43

Kirsch v. School Dist. of Philadelphia, 563 Pa. 345, 761 A.2d 540 (2000)........................................................................43

Klopp v. Keystone Ins. Co., 528 Pa. 1, 595 A.2d 1 (1991) ................................................................... 22, 30, 33


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Kozura v.Tulpehocken Area Sch. Dist., 568 Pa. 64, 791 A.2d 1169 (2002) .......................................................................16

Landay v. Rite-Aid of Pa., Inc., 104 A.3d 1272 (Pa. 2014) .....................................................................................37

Local 22, Philadelphia Fire Fighters' Union, IAFF, AFL-CIO v. Commonwealth, 531 Pa. 334, 613 A.2d 522 (1992)........................................................................42

Mabey Bridge & Shore, Inc. v. Schoch, 666 F.3d 862 (3d Cir. 2012) .................................................................................38

Malone v. Hayden, 329 Pa. 213, 197 A. 344 (1938)............................................................................35

Morrisville Sch. Dist. v. PLRB, 687 A.2d 5 (Pa. Cmwlth. 1996) ............................................................................31

Mulligan v. Sch. Dist. of Hanover Tp., 241 Pa. 204, 88 A. 362 (1913)..............................................................................26

Northside Urban Pathways Charter Sch. v. State Charter Sch. App. Bd., 56 A.3d 80 (Pa. Cmwlth. 2012), app. denied, 621 Pa. 685, 76 A.3d 540(2013) ....................................................................................................................26

Olshansky v. Montgomery Cty. Election Bd., 488 Pa. 365, 412 A.2d 552 (1980)........................................................................31

Patton v. Worthington Assocs., Inc., 89 A.3d 643 (Pa. 2014) .........................................................................................35

Pennsylvania State Troopers Ass'n v. Commonwealth, Gaming Control Bd., 591 Pa. 561, 920 A.2d 173 (2007)........................................................................43

Philadelphia Federation of Teachers, AFT, Local 3, AFL-CIO v. School District of

Philadelphia,

2015 WL 263941 (Pa. Cmwlth. Jan. 22, 2015) ............................................ passim

Philadelphia Federation of Teachers, AFT, Local 3, AFL-CIO v. School Dist. of

Philadelphia, 610 Pa. 452, 21 A.3d 679 (2011)..........................................................................44


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Pittsburgh Palisades Park, LLC v. Commonwealth, 585 Pa. 196, 888 A.2d 655 (2005)........................................................................42

Reichley by Wall v. N. Penn Sch. Dist., 533 Pa. 519, 626 A.2d 123 (1993)........................................................................36

Rike v. Com., Sec'y of Educ., 508 Pa. 190, 494 A.2d 1388 (1985)......................................................................36

School Sec. Services, Inc. v. Duquesne City Sch. Dist., 851 A.2d 1007 (Pa. Cmwlth. 2004), app. denied , 582 Pa. 690, 870 A.2d 325(2005) ....................................................................................................................39

School Reform Commission v. Philadelphia Federation of Teachers, Local 3, AFT,

AFL-CIO,

95 A.3d 269 (Pa. 2014) ........................................................................ 8, 14, 32, 45

Snyder v. Murphy, 333 Pa. 305, 5 A.2d 226 (1939)............................................................................35

South Union Tp. v. Commonwealth, 839 A.2d 1179 (Pa. Cmwlth. 2003), aff'd , 578 Pa. 564, 854 A.2d 476(2004) ............................................................................................................. 37, 38

Spahn v. Zoning Bd. of Adjustment,

602 Pa. 83, 977 A.2d 1132 (2009) .......................................................................36

Spigelmire v. Sch. Dist. of Borough of N. Braddock, 352 Pa. 504, 43 A.2d 229 (1945)..........................................................................35

Toy v. Metropolitan Life Ins. Co., 593 Pa. 20, 928 A.2d 186 (2007)..........................................................................36

United States v. Schooner Peggy, 1 Cranch 103 (1801) .............................................................................................15

Walsh v. Sch. Dist. of Philadelphia, 343 Pa. 178, 22 A.2d 909 (1941), cert. denied , 315 U.S. 823 (1942)..................35

West Philadelphia Achievement Charter Elem. Sch. v. School Dist. of Philadelphia, No. 31 EM 2014 (May 15, 2014) .........................................................................44


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Wilchenski v. Sch. Dist. of Bor. of Throop, 383 Pa. 394, 119 A.2d 510 (1956)........................................................................35

William Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 346 A.2d 269 (1975)................................................................. 38, 39

Constitutional Provisions

Constitution of Pennsylvania

Article I, § 17 ......................................................................................................37

Statutes

Act of April 27, 1998, P.L. 270, No. 46 .......................................................... passim Section 27, Act 46 of 1998...................................................... 1, 9, 14, 40-48

Section 28(a), Act 46 of 1998 .................................................... 9, 14, 27, 28

Act of October 30, 2001, P.L. 828, No. 83 ..............................................................10

Act of July 12, 2012, P.L. 1142, No. 141 ..................................................... 7, 10, 11

Judicial Code

42 Pa. C.S. § 726 .........................................................................................44

Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the FirstClass, Act No. 6 of 1991, P.L. 9 (June 5, 1991), 53 P.S. §§ 12720.101, et seq.

53 P.S. § 12720.702 ....................................................................................43

Pennsylvania Race Horse Development and Gaming Act, Act No. 71 of 2004, P.L.572 (July 5, 2004), 4 Pa. C.S. §§ 1101, et seq................................................ 42-43

4 Pa. C.S. § 1904 .........................................................................................43

Public Employe Relations Act, Act No. 195 of 1970, P.L. 563(July 23, 1970), as amended , 43 P.S. §§ 1101-101, et seq........................... passim

Public School Code of 1949, Act No. 14 of 1949, P.L. 30(Mar. 10, 1949), as amended , 24 P.S. §§ 1-101, et seq.. ......................................28


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Section 211, 24 P.S. § 2-211 .....................................................................26

Section 507, 24 P.S. § 5-507 .................................................................2, 30

Section 664, 24 P.S. § 6-664 .......................................................................2

Public School Code, Art. VI(f), Distressed School Law, added byAct of Dec. 15, 1959, No. 675 of 1959, § 2, P.L. 1842, 1844,as amended , 24 P.S. §§ 6-691 to 6-697 ...........................................................7, 35

Section 693(a)(1), 24 P.S. § 6-693(a)(1)............................................. passim

Section 693(a)(5), 24 P.S. § 6-693(a)(5).....................................................21

Section 693(a)(6), 24 P.S. § 6-693(a)(6).....................................................21

Section 693(b), 24 P.S. § 6-693(b) .............................................................11

Section 693(1), 24 P.S. § 6-693(1) ...............................................................7

Section 696, 24 P.S. § 6-696 .............................................................. passim

Section 696(a), 24 P.S. § 6-696(a) ................................................................8

Section 696(e)(1), 24 P.S. § 6-696(e)(1).......................................................8

Section 696(i), 24 P.S. § 6-696(i) ....................................................... passim

Section 6-696(i)(2)(i), 24 P.S. § 6-696(i)(2)(i) .............................................8

Section 696(i)(3), 24 P.S. § 6-696(i)(3) ..................................................8, 44

Section 696(i)(7), 24 P.S. § 6-696(i)(7) ..................................................8, 44

Section 696(k)(1), 24 P.S. § 6-696(k)(1), repealed (Act of June 22, 2001,P.L. 530, No. 35, §7) ............................................................................ 19, 32

Section 696(k)(2), 24 P.S. § 6-696(k)(2) ......................................... 8, 32, 44

Section 696(k)(3), 24 P.S. § 6-696(k)(3) ................................................9, 19

Section 696(k)(4), 24 P.S. § 6-696(k)(4) ....................................................19

Section 696(k)(5), 24 P.S. § 6-696(k)(5) ............................................ passim


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Section 696(k)(6), 24 P.S. § 6-696(k)(6) ....................................................19

Section 696(l), 24 P.S. § 6-696(l) ................................................................. 9

Public School Code, Art. VI-A, School District Financial Recovery

Law, added by Act of July 12, 2012, P.L. 1142, No. 141, 24 P.S.§§ 6-601-A to 6-693-A.................................................................................. 10, 11

Section 642-A(a)(3), 24 P.S. § 6-642-A(a)(3) ......................... 10, 11, 23, 24

Public School Code, Art. XI, Professional Employes, as amended ,24 P.S. §§ 11-1101 to 11-1195.1

Section 1121, 24 P.S. § 11-1121 .......................................................... 34-36

Public School Code, Art. XI-A, Collective Bargaining, as amended ,24 P.S. §§ 11-1101-A – 11-1172-A

Section 1111-A, 24 P.S. § 11-1111-A ........................................................19

Section 1152-A, 24 P.S. § 11-1152-A ........................................................19

Public School Code, Art. XX-A, State System of Higher Education, as amended ,24 P.S. §§ 20-2001-A – 20-2020-A

Section 20-2003-A, 24 P.S. §20-2003-A ....................................................20

Public School Code, Art. XVII-A, Charter Schools, as amended, 24 P.S. §§ 17-1701-A to 17-1751-A ......................................................................8

Statutory Construction Act of 1972, Act of Dec. 6, 1972, P.L. 1339, No. 290, §3, 1 Pa. C.S. § 1501, et seq. .................................................................36

1 Pa. C.S. § 1903(a) ....................................................................................36

1 Pa. C.S. § 1921(a) ....................................................................... 22, 29, 47

1 Pa. C.S. § 1922(1) ...................................................................................27

1 Pa. C.S. § 1922(2) ...................................................................................48

1 Pa. C.S. § 1922(4) ...................................................................................35

1 Pa. C.S. § 1924 ........................................................................................17


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1 Pa. C.S. § 1933 ........................................................................................31

Court Rules

Pennsylvania Rules of Appellate Procedure

Pa.R.A.P. 1114 .............................................................................................. 13, 15

Other Authorities

Black’s Law Dictionary (6th ed. 1990) .....................................................................15

Black’s Law Dictionary (9th ed. 2009) .....................................................................30

Webster’s New Collegiate Dictionary (1979) .........................................................15

2001 Pa. Legislative Journal – House (Oct. 23, 2001) ........................................9, 20


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I. THE OPINIONS BELOW

The opinion of the Commonwealth Court may be found at 2015 WL 263941

(Pa. Cmwlth. Jan. 22, 2015). A copy of the slip opinion is attached hereto as

Appendix A. The opinion of the Court of Common Pleas for Philadelphia County

is unreported; a copy may be found at Appendix B of this Petition.

II. THE ORDER IN QUESTION

The Commonwealth Court’s Order reads in full as follows:

AND NOW, this 22nd day of January, 2015, the order of the Court ofCommon Pleas of Philadelphia County, dated October 27, 2014, ishereby affirmed.

III. THE QUESTIONS PRESENTED FOR REVIEW

A. Whether sections 693 and 696 of the Distressed School Law and Act

46 of 1998 authorized the School Reform Commission and the School

District of Philadelphia to cancel their collective bargaining

agreement with the Philadelphia Federation of Teachers and impose

new economic terms?

B. Whether, in the alternative, this Court should exercise exclusive

jurisdiction over this case pursuant to section 27 of Act 46 of 1998

because it involves challenges to issues related to collective

bargaining arising under section 696 as well as constitutional

challenges to that section?


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IV. STATEMENT OF THE CASE

A. The Underlying Facts

On October 6, 2014, the School Reform Commission (“SRC”), the

governing body of the School District of Philadelphia (“School District”), adopted

Resolution SRC-1, canceling the collective bargaining agreement between the

School District and its largest union, the Philadelphia Federation of Teachers,

AFT, Local 3, AFL-CIO (“PFT”). (R.229a.) The Resolution further authorized

the School District to implement changes principally in the health benefits package

of the PFT bargaining units, as well as in certain other economic terms described

more fully below. As authority for these steps, the Resolution cited sections 696(i)

and 693(a)(1) of the Public School Code, 24 P.S. §§6-696(i), 6-693(a)(1). By

making these changes, the School District estimated it would save approximately

$54 million during the fiscal year ending June 30, 2015. (R.388a.)

These decisions followed a four-year downward spiral in the School

District’s funding. By statute, see 24 P.S. §5-507, the School District, which is a

school district of the first class, is the only district in the Commonwealth lacking

the power to impose taxes. (R.385a (¶14).) Its ability to operate is dependent

almost completely upon funding from the City of Philadelphia, the Commonwealth

and the United States. Deficit spending is prohibited by law. 24 P.S. §6-664

(requiring balanced budget).


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By the Fall of 2014, four years of budget shortfalls had left the School

District a pale image of its former self. To make ends meet, the School District

had laid off thousands, losing one-third of its full-time staff, and closed 31 schools.

(R.383a (¶5).) The loss of so many guidance counselors, school nurses, teachers,

school police and assistant principals left schools severely understaffed. Deep

budget cuts decimated school cleaning and facilities maintenance and created

severe shortages in books, paper and school supplies, while programs in sports, art,

advanced placement, and career and technical education all suffered as well.

(R.383a (¶6); R.602a-603a.)

At the time of cancellation, these abject conditions in the Philadelphia

schools remained. (R.604a-605a.) The PFT did not dispute these facts. Indeed,

PFT’s President conceded that the School District was failing to provide “very

basic things . . . paper, toilet paper, hand sanitizer, books.” (R.574a.)1

The School District also took steps to reduce the compensation it pays its

remaining staff, which accounts for approximately 50% of its budget. The School

District imposed benefit changes and medical plan contributions on its non-

unionized employees, and sought economic concessions from its unionized labor

1 In September, 2014, the General Assembly passed and the Governor signed an act authorizingthe City to place a $2-per-pack tax on cigarette sales, the proceeds of which were to be paid tothe School District. Even with this new tax in place, the undisputed evidence in the recordindicated that the School District’s funding for this fiscal year would fall short of covering itsexpenses, that a deficit for the 2015-2016 fiscal year in the amount of $71 million loomed ahead,and that the School District could not count on receiving sufficient funds in either year to remedythe unsatisfactory conditions prevailing in its schools. (R.384a.)


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force through collective bargaining. Those efforts yielded substantial economic

concessions from two of its employee organizations. However, the School District

was unable to reach an agreement with the PFT. (R.385a (¶17).)

The School District’s effort to reach a new contract with the PFT containing

substantial concessions began in January 2013, seven months before the then-

current contract would expire on August 31, 2013. Bargaining continued beyond

expiration and throughout the 2013-2014 school year. The parties held more than

120 bargaining sessions, and exchanged hundreds of proposals (R.94a (¶24);

R.385a (¶17)), but at all times remained tens of millions of dollars apart. (R.385a.)

During nearly two years of negotiations, the generous health benefits

enjoyed by PFT-bargaining-unit employees were a key disputed issue. The School

District had been providing a premier Independence Blue Cross Personal Choice

health insurance plan, covering employees, their spouses and dependents. No

deductibles or co-insurance were required, and the monthly premiums (with some

exceptions) were paid 100% by the School District. No extra charge was made for

employees’ spouses who could have obtained health insurance paid for by their

own employers. The School District further contributed $4,353 per employee per

year (approximately $1 million per week) to a PFT-controlled Health and Welfare

Plan, covering dental, optical and prescription benefits to bargaining-unit members

and retirees.


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While generous medical benefits like these were common a decade or so

ago, now most employers have shifted part of the burden of paying for them to

their employees. In light of its perennial funding shortages and rising costs, the

School District had no choice but to follow suit.

The chief health benefit changes announced by the School District on

October 6, 2014, included:

• a Personal Choice plan that would provide the same medical coverage

(with minor exceptions) as the current plan, but would shift more of

the cost to the participant through co-pays, deductibles and co-

insurance;

• requiring that PFT-bargaining-unit employees contribute between 5%

and 13% of the premiums for the modified Personal Choice plan,

based on salary levels;

• a new charge of $70 per pay period to insure an employee’s spouse

who declined coverage from his or her own employer; and

• the cessation of the $1-million-a-week contributions to the PFT’s

Health and Welfare Fund, to be replaced by a new plan administered

by the School District to cover dental, optical and prescription


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benefits solely for current employees and their families (i.e., not

retirees).2

B. The Proceedings Below

The PFT responded on October 16, 2014 by filing a complaint in the Court

of Common Pleas of Philadelphia County, together with a request for a preliminary

injunction. (R.19a; R.49a.) An injunction hearing was held on October 20 at the

end of which the trial court issued a preliminary injunction. (R.689a.) The parties

stipulated to make the injunction permanent, while reserving their appellate rights,

and the trial court entered the Final Injunction Order on October 27, 2014.

(R.717a.) Petitioners immediately appealed, and the Commonwealth Court, at the

parties’ joint request, scheduled an expedited briefing and argument schedule

before an en banc panel of five judges. The Commonwealth Court issued its

Opinion and Order affirming the trial court’s final order on January 22, 2015. This

petition is being timely filed.

C.

The Relevant Statutory Background

This case arises from a series of statutes and amendments imposing new

governance on school districts in financial distress, and granting the newly created

2 The changes described in text were estimated to save $39.5 million during the 2014-2015 fiscalyear. Further changes to compensation for substitute teachers, a legal services fund run by thePFT, paid leave benefits, opt-out payments for those who declined health benefits, and benefitsreceived upon termination of employment would have saved another $4.3 million. An additional$10 million in federal funds would have been realized had these changes gone into effect. Thechanges included in the SRC’s Resolution are described more fully at R.386a-388a.


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governing boards special powers and authority to resolve the districts’ financial

difficulties.

The first of these statutes, passed in 1959, is known as the Distressed School

Law, Act of December 15, 1959, P.L. 1842, No. 675, codified in its current form at

24 P.S. §§6-691–6-697. It authorized the Secretary of Education to declare school

districts in distress and appoint special boards of control to supervise them.

Section 693 of the 1959 Law, which lies at the center of the present dispute,

gave the special board of control the power:

To cancel or to renegotiate any contract other than teachers’ contractsto which the board or the school district is a party, if such cancellationor renegotiation of contract will effect needed economies in theoperation of the district’s schools. [24 P.S. §6-693(1).]3

In 1998, following a financial crisis in the School District in which it faced

the possibility of a systemwide shutdown, the General Assembly greatly expanded

the Distressed School Law by adding section 696, addressed exclusively to school

districts of the first class.4 This statute, the Act of April 27, 1998 (P.L. 270, No.

46), known as Act 46, gave the Secretary of Education the power to declare the

School District to be in distress, thereby suspending the existing school board’s

3 In 2012, section 693(1) was recodified as section 693(a)(1). Act of July 12, 2012, P.L. 1142, No. 141, Section 6. A copy of section 693 is appended hereto in Appendix C.

4 Section 696 of the School Code, 24 P.S. §6-696, is set forth in full in Appendix D.


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powers and duties, and creating a new governing body – the SRC – in its stead. 24

P.S. §§6-696(a) (SRC creation); 6-696(e)(1) (existing board suspension).

Act 46 “granted the SRC sweeping powers” to cope with the challenges

posed by financially distressed circumstances. School Reform Commission v.

Philadelphia Federation of Teachers, Local 3, AFT, AFL-CIO, 95 A.3d 269, 270

(Pa. 2014) (Castille, C.J., dissenting). For example, after a declaration of distress,

Act 46 authorizes the SRC to suspend provisions of the Public School Code and

accompanying regulations, 24 P.S. §6-696(i)(3) (with several exceptions). It

expressly relieves the School District from having to comply with certain

provisions of the Charter School Law.5 24 P.S. §6-696(i)(2)(i). And, significantly,

section 696(i) gives the SRC all of the powers granted to a special board of control

under section 693. 24 P.S. §6-696(i) (incorporating §6-693 powers).

“Section 696 also radically shifted the balance of power in the collective

bargaining process,” SRC v. PFT , supra, curtailing union rights and expanding the

powers of the SRC and the School District. After a declaration of distress, the Act

authorizes the SRC to lay off professional employees without regard to seniority,

24 P.S. §6-696(i)(7); carves out a wide array of topics from the duty to bargain,

including subcontracting, decisions related to layoffs and recalls, and staffing

patterns and assignments, id., §§6-696(k)(2)(i)–(vi); requires certain provisions to

5 24 P.S. §§17-1701-A, et seq.


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be included in any collective bargaining agreement, id., §§6-696(k)(3)(i)–(iii); and

prohibits School District employees from engaging in any strike, id., §6-696(l).

Three provisions are most relevant to this Petition: (1) the power described

above “to cancel . . . any contract” conferred by sections 696(i) and 693(a)(1); (2)

section 28(a) of Act 46, which repealed the Public Employe Relations Act

(“PERA”), 43 P.S. §§1101-101, et seq., “insofar as it is inconsistent with the

provisions of” the Public School Code; and (3) section 27 of Act 46, which grants

this Court exclusive jurisdiction “to hear any challenge . . . concerning the

constitutionality of . . . section 696 of the act and issues related to collective

bargaining arising under [that] section[].”6

Following the passage of Act 46, no declaration of distress issued until

December of 2001, more than three-and-a-half years later. Shortly before that

declaration, as the Governor and the Mayor of Philadelphia negotiated over which

entity would provide the funds to close a large School District budget gap, the

Governor’s Administration sponsored a group of amendments to Act 46. As the

House Majority Leader explained, the Governor “has indicated to us that he wants

these additional tools in case it comes down to a takeover of the Philadelphia

public schools.” Legislative Journal – House (October 23, 2001) at 1890.7

6 Neither section 28(a) nor 27 of Act 46 is codified in Purdon’s.

7 Excerpts from the Legislative Journal are appended hereto as Appendix E.


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The amendments proposed by the Administration passed as part of the Act

of October 30, 2001 (P.L. 828, No. 83) (“Act 83”). In relevant part, Act 83

amended subsection (k)(5) of section 696, 24 P.S. §6-696(k)(5), by adding an

exception for section 693.

As originally enacted, section 696(k)(5) had provided that nothing in

subsection (k) would “eliminate, supersede or preempt any provision of an existing

collective bargaining agreement . . . .” After amendment, section 696(k)(5) read in

full as follows:

Except as specifically provided in section 693, nothing in thissubsection shall eliminate, supersede or preempt any provision of anexisting collective bargaining agreement until the expiration of theagreement unless otherwise authorized by law. [24 P.S. §6-696(k)(5),as amended (emphasis added to indicate added language).]

This amendment made clear that the SRC’s powers under section 693, including

the power to cancel “any contract,” are an exception to 696(k)(5)’s ban on

eliminating, superseding, or preempting collective bargaining agreements.

In 2012, the General Assembly passed the School District Financial

Recovery Act, 24 P.S. §§6-601-A, et seq., overhauling the statutes governing

distressed school districts of the other four classes and greatly expanding their

scope. See Act of July 12, 2012, P.L. 1142, No. 141 (“Act 141”). In section 642-

A(a)(3), 24 P.S. §6-642-A(a)(3), Act 141 gave all other classes of school districts

the same power to cancel “any contract” to “effect needed economies in the


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operation of the district’s schools” that section 693 conferred upon the SRC. It did

so using language lifted directly from section 693(a)(1). However, section 642-

A(a)(3) went on to say something that section 693(a)(1) did not – “[c]ollective

bargaining agreements are specifically exempt from this clause.” 24 P.S. §6-642-

A(a)(3).

Significantly, Act 141 also amended sections 693 as well as 696. See Act

141, §§6, 9. The General Assembly thus had the opportunity to add an exemption

to section 693 or 696 like the one inserted in section 642-A(a)(3), making clear that

the power to cancel “any contract” did not apply to collective bargaining

agreements. But it declined to insert such an exemption in either section, thereby

ensuring that no such exemption could be implied in section 693(a)(1)’s power to

cancel.8

V.

THE REASONS FOR GRANTING ALLOWANCE OF APPEAL

A.

The Question of the SRC’s Statutory Power to Cancel the PFT’s

Collective Bargaining Agreement and to Impose New Economic

Terms Is a Matter of Substantial Public Importance that Presents

Issues of First Impression and Requires a Prompt and Definitive

Resolution by this Court

The School District is by far the largest school district in Pennsylvania,

responsible for providing or funding the public education of approximately

200,000 children. Its success in performing these tasks is not only essential to the

8 Act 141 amended section 693 to clarify that it no longer applied to the other four classes ofschool districts. 24 P.S. §6-693(b).


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lives of those students, it is essential as well to the long-term vitality of the City of

Philadelphia and the Commonwealth.

In the last several years, the School District has faced drastic funding

shortfalls. In response, it has diligently acted to cut its costs to the bone, laying off

thousands of employees, closing schools, and cutting programs, the sad particulars

of which are described in part above.

After the School District was declared to be in distress in 2001, the SRC was

constituted to govern and oversee the School District. To assist the SRC in this

task, Act 46 gave the SRC powerful and unprecedented tools to use as needed to

address the School District’s financial woes. Those tools included the express

power “to cancel . . . any contract other than teachers’ contracts to which . . . the

school district is a party, if such cancellation . . . will effect needed economies in

the operation of the district’s schools.” 24 P.S. §6-693(a)(1), incorporated in §6-

696(i).

For nearly two years, while the School District was making drastic cuts in all

other areas of its operations, it engaged in collective bargaining with the PFT in an

effort to reach a new contract that would contain needed economic concessions.

Those talks came to naught.

With the consensual processes of the past no longer working, the SRC

invoked for the first time section 693(a)(1) of the School Code, canceling the PFT


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collective bargaining agreement, and putting in place changes in health benefits

and other economic terms. By doing so, the SRC sought to generate significant

savings that would have greatly enhanced the School District’s ability to restore

essential services and supplies to its students during this school year and in years to

come.

The courts below both barred the SRC and the School District from using

these statutory powers, but each gave different reasons for its decision. The trial

court held that the SRC’s power to cancel expired in February, 2002, sixty (60)

days after the declaration of distress was issued. (Trial Ct. Op. at 10.) In the

alternative, it held that the PFT’s contract fit within the exception to the power to

cancel for “teachers’ contracts.” ( Id.) On appeal, the Commonwealth Court did

not agree with either of these holdings. Instead, it adopted a statutory

interpretation for which neither party nor any of the four amici curiae had

contended – that the SRC’s power to cancel “any contract” contained a second,

unspoken exception for collective bargaining agreements. (Cmwlth. Ct. Op. at 24.)

The case undeniably presents a number of critical issues of first impression

that “require prompt and definitive resolution by [this] Court.” Pa.R.A.P.

1114(b)(4). Does the SRC’s power to cancel “any contract” to “effect needed

economies” apply to collective bargaining agreements? If so, does the School

District have the power, express or implied, to impose new economic terms,


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irrespective of whether a bargaining impasse occurred? Should the PERA

requirement to maintain the mandatory terms of a collective bargaining agreement

after its expiration be expanded to apply after a cancellation? If so, does section

28(a) of Act 46 of 1998 repeal the PERA rule as inconsistent? Does the agreement

between the PFT and the School District fall within section 693(a)(1)’s exception

for “teachers’ contracts,” as the PFT contended below, or does that term refer

exclusively to the individual employment contracts the School Code requires

between school districts and their tenured teachers?

These questions of first impression are indisputably of substantial public

importance, and need a prompt and definitive resolution. Recognizing this, the

PFT agreed to expedited proceedings before the Commonwealth Court. That

Court also understood the urgency and importance of hastening the resolution of

the dispute over the SRC’s powers. It accordingly scheduled expedited briefing,

added the case to its December 10 en banc list, and delivered an opinion, all in less

than three months from the filing of the appeal.

The General Assembly has also made clear its conviction that “any

challenge . . . concerning . . . issues related to collective bargaining arising under”

section 696 is of such public importance as to warrant this Court’s attention. Act

46 of 1998, §27. See SRC v. Philadelphia Federation of Teachers, supra, 95 A.3d

at 270 (Castille, C.J., dissenting) (opining in favor of exclusive jurisdiction over


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suit arising under section 696(k)(2)). This special treatment for collective

bargaining disputes arising under section 696 is a potent indication of the public

importance the General Assembly assigned to matters like this, and the need for

prompt and definitive rulings on such issues by this Court.

The interplay between the enhanced powers granted by statute to a

financially distressed school district and a school district’s collective bargaining

duties under PERA and other applicable law is an issue that cries out for this

Court’s guidance. The Court has yet to address that topic in a precedential

opinion.

The need for this Court’s review in this case in particular could not be

clearer. The Opinion of the Commonwealth Court not only fails to provide a

“definitive resolution”9 – it is clearly and demonstrably wrong. The Court’s core

holding – that the power to cancel “any contract” must be construed to exempt

collective bargaining agreements (Op. at 24) – is fundamentally flawed. As

demonstrated below, this and other errors in the lower court’s Opinion deprive the

SRC and the School District of the protections of Act 46 and call for a full airing

before this Court.

9 See Pa.R.A.P. 1114 (factors meriting allowance of appeal). A “definitive resolution” is one that“finally and completely ends and settles a controversy.” Black’s Law Dictionary (6th ed. 1990)(definition of “definitive”). See United States v. Schooner Peggy, 1 Cranch 103 (1801)(Marshall, C.J.) (treaty calling for a “definitive condemnation” required a condemnation by thecourt of last resort). See also Webster’s New Collegiate Dictionary (1979) (“definitive” means“authoritative and apparently exhaustive”).


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1. Sections 693 and 696 of the Public School Code plainly and

unequivocally give the SRC the power to cancel “any

contract,” including collective bargaining agreements, and

the Commonwealth Court erred in holding to the contrary

Section 693(a)(1), incorporated in section 696 of the Public School Code,

provides that the SRC has the power “[t]o cancel or to renegotiate any contract

other than teachers’ contracts to which the board or the school district is a party, if

such cancellation or renegotiation will effect needed economies in the operation of

the district’s schools.” 24 P.S. §6-693(a)(1) (emphasis added).

It is beyond dispute that a collective bargaining agreement is a contract.

Kozura v. Tulpehocken Area Sch. Dist., 568 Pa. 64, 71, 791 A.2d 1169, 1174

(2002) (“fundamental principle that a collective bargaining agreement constitutes a

contract”); Community Coll. of Beaver Cty. v. Community Coll. of Beaver Cty.,

Soc’y of the Faculty (PSEA/NEA), 473 Pa. 576, 595, 375 A.2d 1267, 1276 (1977)

(“[C]ollective bargaining agreements under the PERA are, of course, ‘written

contracts’”); Capecci v. Joseph Capecci, Inc., 392 Pa. 32, 33, 139 A.2d 563, 564

(1958) (same).

Moreover, section 693(a)(1) says that the power to cancel applies to “any

contract.” (emphasis added). It is well-settled that “any,” when used in a statute,

means “every” or “all.” Commonwealth v. McCoy, 599 Pa. 599, 611, 962 A.2d

1160, 1167 (2009) (“every”); City of Erie v. Workers’ Comp. App. Bd.

(Annunziata), 575 Pa. 594, 607, 838 A.2d 598, 606 (2003) (“all”); see also


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Commonwealth v. Davidson, 595 Pa. 1, 35-36, 938 A.2d 198, 219 (2007) (“the

term ‘any’ . . . suggests a lack of restriction or limitation”). And, of course, the

fact that section 693(a)(1) expressly lists a single exception – for “teachers’

contracts” – means that no additional exceptions can be inferred, since

“[e]xceptions expressed in a statute shall be construed to exclude all others.” 1

Pa.C.S. §1924. Accord Cali v. City of Philadelphia, 406 Pa. 290, 305, 177 A.2d

824, 832 (1962) (exception in election code for certain offices prevented implying

additional exceptions); Commonwealth v. 2101 Cooperative, Inc., 408 Pa. 24, 24,

183 A.2d 325, 330 (1962) (where statute expressly exempted only nonprofit

agricultural cooperatives from tax, other types of nonprofit cooperatives were not

exempt).

In short, the plain language of section 693(a)(1) and settled principles of

statutory construction require a holding that the power to cancel applies to

collective bargaining agreements.

Given this natural and straightforward reading of section 693(a)(1), it is not

surprising that in both courts below, no party nor any of the four amici curiae

thought to argue that the term “any contract” in section 693(a)(1) somehow

exempted collective bargaining agreements. Indeed, the PFT agreed with the

School District defendants that the PFT collective bargaining agreement was a

“contract” within the meaning of that provision. PFT contended instead that its


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collective bargaining agreement fell within the exception for “teachers’ contracts”

in section 693(a)(1), and therefore could not be canceled.10

The Commonwealth Court, however, opted for a reading that no one had

advanced. In an effort to explain its ruling that the term “any contract” in section

693(a)(1) does not include collective bargaining agreements, the Court reasoned:

“the School Code separately addresses contracts and CBAs throughout, and . . . if

it intended that a contract and a CBA were one and the same, it would not

reference them individually in the pertinent sections of the School Code, namely

sections 693 and 696.” (Op. at 24.)

This puzzling explanation – the fulcrum of the Court’s Opinion – erred in its

logic as well as its facts. The term “any contract” in section 693(a)(1) refers to all

contracts in general. The term “collective bargaining agreement” as used in

section 696 refers to one specific kind of contract – a contract between an

employer and a collective bargaining representative. Using the term “collective

bargaining agreement” when referring specifically to such agreements does not

create an inference that when the statute speaks generally of “contracts,” collective

bargaining agreements are excluded. This would be like saying that the author of a

book about flowers intended the term “flowers” to exclude roses, because the

book’s chapter about roses referred to them consistently as “roses.”

10 The proper construction of the exception for “teachers’ contracts” is discussed below at pp. 34-37.


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Moreover, the Court was wrong as a factual matter to say that section 696 in

particular and the School Code in general always use the term “collective

bargaining agreement” and not “contract” when referring to collective bargaining

agreements. Section 696(k)(1), prior to repeal, referred to a collective bargaining

agreement as both a “collective bargaining agreement” and a “contract.” (See Op.

at 18) (quoting §6-696(k)(1).) Further, in an obvious reference to collective

bargaining agreements, section 696(k)(4) states that “[a] provision in any contract

in effect on the date of the declaration of distress under this subsection that is in

conflict with this subsection11 shall be discontinued in any new or renewed

contract .” 24 P.S. §6-696(k)(4) (emphasis added).12 And subsections 696(k)(5)

and (k)(6) both use a synonym for “contract,” i.e., “agreement,” to refer to a

collective bargaining agreement. In short, the General Assembly used the terms

“collective bargaining agreement,” “contract” and “agreement” interchangeably

when referring to collective bargaining agreements in section 696. The same is

true elsewhere in the School Code.13 The core holding of the Commonwealth

Court’s Opinion cannot stand.

11 The term “subsection” refers to subsection (k) of section 696, which states at the outset that“[c]ollective bargaining . . . shall be conducted in accordance with this subsection.”

12 Section 696(k)(4) follows section 696(k)(3), which set forth certain provisions that it mademandatory in any future collective bargaining agreement.

13 See, e.g., 24 P.S. §11-1111-A (“written contract” incorporating agreement reached throughcollective bargaining); id. §11-1152-A (“provisions of any collective bargaining


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a) The court below misconstrued the 2001 amendments

to section 696(k)(5), which confirmed that the SRC’s

power to cancel “any contract” includes collective

bargaining agreements

In October, 2001, shortly before the declaration of distress issued, the

General Assembly created an exception to section 696(k)(5), which had protected

collective bargaining agreement provisions from being “eliminate[d], supersede[d],

or preempt[ed]” by Act 46’s rules governing collective bargaining. The exception

was for section 693 powers.

The addition of this exception to section 696(k)(5) clarified that the SRC,

using its section 693(a)(1) powers, could “eliminate, supersede or preempt” an

existing collective bargaining contract. 24 P.S. §6-696(k)(5). The legislative

history of the debate on this amendment in the House supports this conclusion.

When a member of the minority party asked the House Majority Leader

whether the proposed exception of section 693 powers from section 696(k)(5)

“would enable the abrogation of collective bargaining agreements,” the latter

answered affirmatively by quoting the power-to-cancel language of section

693(a)(1), and noting that “[w]e only took out what was inconsistent with the act of

1959.” Legislative Journal – House (October 23, 2001) at 1892. This exchange

made it abundantly clear that the General Assembly adopted the October 2001

agreement…shall continue valid until the expiration of such contract ”) (emphasis added); id., §20-2003-A(c) (“Collective bargaining agreements…shall remain in force for the term of thecontract ”) (emphasis added).


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amendment to section 696(k)(5) with the express intent to allow the SRC to cancel

collective bargaining agreements. The “inconsisten[cy]” referred to by the House

Majority Leader was the conflict between section 693’s power to cancel “any

contract,” including collective bargaining contracts, and section 696(k)(5)’s ban on

eliminating, superseding or preempting collective bargaining contract provisions.

In its discussion of the legislative history, the Commonwealth Court

overlooked this interchange, despite its having been discussed prominently in the

parties’ briefs. The Court stated flatly: “it is clear from this legislative history that

there was no discussion of the right to cancel a CBA . . . .” (Op. at 31.)

The Commonwealth Court’s analysis of the meaning of the amendment to

section 696(k)(5) was similarly flawed. Despite the emphasis the Court put on the

supposed need for an express statutory indication that the power to cancel “any

contract” included collective bargaining agreements, the Court denied that the

amendment to section 696(k)(5) had any effect on the provision’s ban on

eliminating, superseding or preempting collective bargaining agreement

provisions. The Court allowed that two of section 693’s subsections –

§§693(a)(5), (6) – granted the SRC discretion to “bypass[]” certain provisions in

the PFT contract, but then concluded that section 696(k)(5), as amended in 2001,

“does not . . . implicitly authorize the eliminating, superseding, or preempting of

CBA provisions.” (Op. at 25-26.) This interpretation of the exception in section


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696(k)(5) renders the October 2001 amendment a nullity and violates the Statutory

Construction Act of 1972, which provides: “Every statute shall be construed, if

possible, to give effect to all its provisions.” 1 Pa. C.S. §1921(a).

Surprisingly, the Court’s discussion of the 2001 Amendment to section

696(k)(5) does not even discuss section 693(a)(1), the cancellation provision.

Surely, canceling a contract “eliminate[s]” the contract’s provisions. Klopp v.

Keystone Ins. Co., 528 Pa. 1, 7 n.6, 595 A.2d 1, 4 n.6 (1991) (cancellation destroys

“the force and effectiveness of the contract”). This omission is even more

perplexing in light of the October 2001 legislative history described above, in

which the power to cancel collective bargaining agreements in section 693(a)(1)

was the only subsection of section 693 that sparked legislative discussion.

Subsections 693(a)(5) and (6) were never even mentioned.

b)

The court below also misconstrued the significance of

the School District Financial Recovery Act of 2012,

which further confirmed the SRC’s power to cancel

collective bargaining contracts

The General Assembly confirmed its intent to authorize the SRC to cancel

collective bargaining agreements most recently in the 2012 School District

Financial Recovery Act. As noted above, this Act gave other classes of school

districts the power to cancel contracts, but expressly exempted collective

bargaining agreements.


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“[W]here the legislature includes specific language in one section of a

statute and excludes it from another section, the language may not be implied

where excluded.” Commonwealth v. Mazzetti, 615 Pa. 555, 569, 44 A.3d 58, 67

(2012). “Moreover, where a section of a statute contains a given provision, the

omission of such a provision from a similar section is significant to show a

different legislative intent.” Id. See also Commonwealth v. Bigelow, 484 Pa. 476,

484, 399 A.2d 392, 395 (1979) (same); accord Fonner v. Shandon, Inc., 555 Pa.

370, 378-79, 724 A.2d 903, 907 (1999).

Here, the Commonwealth Court read an implied exemption for collective

bargaining agreements into section 693(a)(1). It did so even though in 2012, the

General Assembly declined to amend section 693(a)(1) to include the exception

language it inserted in the otherwise nearly identical section 642-A(a)(3).

As justification for its action, the Commonwealth Court attempted to

distinguish this Court’s decisions in Mazzetti and Bigelow by emphasizing that the

two statutes concerned different classes of school districts:

We fail to see how the General Assembly’s exemption of CBAs fromthe cancellation power of certain classes of distressed school districtsevidences its intent that the SRC, which is only relevant in distressed

school districts of the first class, impliedly maintains this power. [Op.at 34.]

This reasoning misses the mark. Different sections of a statute containing

similar language are always different in some respect – if they were identical, there


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would be no need for both. In Mazzetti, for example, one provision, dealing with

violations of county or state intermediate punishments, allowed the

Commonwealth to seek a mandatory minimum at resentencing; the other provision,

for resentencing after revocation of probation, did not. While the two situations

were different, this Court held that the mandatory minimum language could not be

implied where the General Assembly had omitted it. Mazzetti, 44 A.3d at 67-68.

The fact that the two provisions were different is exactly the point.

Similarly, Bigelow concerned two different but very similar provisions. The

Court held that the language in one but missing in the other could not be implied

where the legislature had omitted it. 399 A.2d at 395.

The 2012 amendments addressed both section 693 and section 642-A(a)(3).

Both used very similar language to describe the power to cancel “any contract.”

The General Assembly inserted additional language in section 642-A(a)(3)

expressly exempting collective bargaining agreements from the power to cancel

“any contract,” but chose not to insert that exemption language in section 693(a)(1)

or 696. It follows that an exemption for collective bargaining agreements cannot

be implied in section 693(a)(1), where the Legislature declined to state one. This

additional error in the Commonwealth Court’s reasoning further underscores the

need for independent review by this Court.


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2. Sections 693(a)(1) and 696(k)(5) authorize the SRC and the

School District to impose new economic terms following a

cancellation and the court below erred in holding otherwise

In addition to finding no power to cancel a collective bargaining contract,

the Commonwealth Court ruled that the School Code did not grant the SRC or the

School District the power to impose changed economic terms, either expressly or

impliedly. (Op. at 24, 29.) The Court went further and held that PERA prohibited

any such changes absent a bargaining impasse and that nothing in the Distressed

School Law repealed this aspect of PERA. (Op. at 23.) Like the ruling on the

power to cancel, these holdings are mistaken as a matter of law.

a)

Sections 693(a)(1) and 696(k)(5) granted the SRC the

power to impose changed economic terms following a

cancellation of the collective bargaining contract

The power to cancel “any contract” in section 693(a)(1) authorizes the SRC

to impose unilateral terms following a cancellation. That provision authorizes

cancellation only if it will “effect needed economies in the operation of the

district’s schools.” 24 P.S. §6-693(a)(1). This express command that a

cancellation must effect needed economies constitutes an explicit statutory grant of

the power to impose new terms unilaterally.

Similarly, the exception in section 696(k)(5) for section 693 powers is an

express statutory grant of the power to impose terms. Section 696(k)(5) safeguards

the terms of collective bargaining agreements from change. Section 693 is

expressly excepted from that rule. Hence, section 696(k)(5), as amended in 2001,


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expressly authorizes cancellation for the purpose of changing terms of employment

that were set by collective bargaining agreements.

At the very least, the power to impose terms unilaterally following a

cancellation is implied. School districts in Pennsylvania enjoy the powers that are

“conferred by statutory grant and necessary implication.” Burger v. Bd. of Sch.

Directors of McGuffey Sch. Dist., 576 Pa. 574, 585, 839 A.2d 1055, 1061 (2003);

Mulligan v. Sch. Dist. of Hanover Tp., 241 Pa. 204, 207, 88 A. 362, 362 (1913). In

Burger , this Court held broadly: “Section 211 of the School Code reflects the

General Assembly’s explicit and open-ended confirmation of implied powers in

furtherance of school districts’ essential functions.” Burger, 576 Pa. at 585, 839

A.2d at 1062. Accord Northside Urban Pathways Charter Sch. v. State Charter

Sch. App. Bd., 56 A.3d 80, 83-85 (Pa. Cmwlth. 2012), app. den., 621 Pa. 685, 76

A.3d 540 (2013). No function is more essential to a financially-distressed school

district than reducing its costs.

Burger and section 211, 24 P.S. §2-211, provide ample authority for an

implied power to impose terms unilaterally after cancellation. The whole point of

a statute authorizing a distressed school district to cancel a collective bargaining

agreement to reduce costs is to give it the option, when all less drastic measures

fail, of removing the constraint of a contract it can no longer afford. To hold that a

distressed school district has authority to cancel a collective bargaining agreement


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to effect needed economies, but lacks any authority after cancellation to change

economic terms, would produce an absurd result. See 1 Pa.C.S. §1922(1)

(presumption that legislature “does not intend a result that is absurd, impossible of

execution or unreasonable”).

The Commonwealth Court simply ignored this Court’s precedent concerning

the broad express and implied powers of a school board. It ignored the express

statutory language requiring that a cancellation “effect needed economies” and

never addressed what significance that requirement had for the SRC’s power to

impose. Instead, it merely stated repeatedly in conclusory fashion that no authority

to impose terms was granted. (Op. at 23, 24, 29, 38, 39.) This Court should grant

review to ensure that this case is decided in conformity with its precedents on the

express and implied authority of school districts.

b)

The court below further erred by rejecting section

28(a)’s repeal of PERA as inapplicable and assuming

that PERA treats a cancellation the same as an

expiration

The Commonwealth Court relied heavily on this Court’s decision in Appeal

of Cumberland Valley Sch. Dist., 483 Pa. 134, 143, 394 A.2d 946, 950 (1978),

holding that an employer must continue to honor a collective bargaining


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agreement’s economic terms after the agreement expires, so long as bona fide

bargaining continues over a new contract.14

That reliance was misplaced.

Section 28(a) of Act 46 repealed PERA “insofar as it is inconsistent with the

provisions of this act,” i.e., the School Code.15 Here, section 693(a)(1) expressly

authorizes the SRC to cancel “any contract . . . if such cancellation . . . of contract

will effect needed economies in the operation of the district’s schools.” 24 P.S. §6-

693(a)(1). As shown above, this power applies to collective bargaining contracts,

and requires that the cancellation achieve needed economies. The power to cancel

to achieve needed economies is thus plainly inconsistent with any requirement

under PERA that the economic terms of employment cannot be altered after a

cancellation. If the PERA rule applied to cancellations, and prohibited any

changes in the economic terms of employment, it would be impossible for a

cancellation to effect any economies in the operation of the schools.

The PERA status quo rule is likewise inconsistent with the express language

in section 696(k)(5), exempting section 693 from its scope. The very purpose of a

cancellation is to eliminate and supersede the terms of a collective bargaining

agreement by changing the terms of employment after cancellation.

14 As the court below noted, imposition of changed mandatory terms is permitted by CumberlandValley if bargaining reaches an impasse. (Op. at 19-22.)

15 References to “this act” in the Public School Code refer to the entire Code. 24 P.S. §1-101(“act” means the School Code).


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The Commonwealth Court never attempted to address the obvious

inconsistency between the PERA rule banning changes in economic terms and the

provisions in sections 693 and 696 requiring cost reductions and enabling contract

terms to be overridden. Instead, the Court simply insisted that in order to effectuate

a repeal of the PERA rule, the General Assembly had to insert express language

setting that rule aside. Yet, as noted above, the Court never came to grips with the

express language actually used in section 693(a)(1) and 696(k)(5) to which

Petitioners directed its attention.

This was mistaken. In construing a statute, the polestar “is to ascertain and

effectuate the intention of the General Assembly” and “give effect to all its

provisions.” 1 Pa.C.S. §1921(a). Here, instead of construing the words the General

Assembly actually did use in section 693(a)(1) and section 696(k)(5) to see if they

created an inconsistency with the PERA rule, the Court seemed to be insisting that

the Legislature use a different formulation of the Court’s own devising. This

mirrored the Court’s treatment of the power to cancel, where it ignored the broad

scope of the statutory term, “any contract,” and held that the only way the General

Assembly could authorize a power to cancel a collective bargaining agreement was

to use precisely those three words. See pp. 16-22, supra.

The Court further erred by assuming that a cancellation of a collective

bargaining agreement is no different than an expiration. Black’s defines a


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“cancellation” as “[a]n annulment or termination of a promise or an obligation.”

Black’s Law Dictionary (9th

ed. 2009). After a cancellation, a contract is of no

further force or effect. Klopp v. Keystone Ins. Co., supra, 528 Pa. at 7 n.6, 595

A.2d at 4 n.6 (cancellation destroys “the force and effectiveness of the contract”)

(citation omitted). By contrast, an expiration occurs at the end of a contract’s

agreed term, and is consistent with certain obligations continuing in effect post-

expiration. A financially distressed school district therefore has no duty to

continue complying with the mandatory terms contained in a collective bargaining

contract that has been canceled; the contract’s terms no longer exist.

No case has ever held that the Cumberland Valley rule applies to

cancellation of a collective bargaining agreement, and sound policy reasons exist

for not making that leap. That rule, borrowed from federal labor law, see

Cumberland Valley, 394 A.2d at 950-51, does not take into account the public

employer’s financial situation, and whether it can afford to keep maintaining the

economic status quo. In most cases this is justified – almost every public

employer, including school districts, can raise taxes or tap other revenue sources.

A school district of the first class, however, does not have its own taxing power.

24 P.S. §5-507 (denying first class school districts the power to levy and collect

taxes). It can only beseech the City and the Commonwealth for more funds.

Where, as here, the School District is in financial distress and unable to obtain


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necessary funding, it defies reason to suppose that the General Assembly intended

and expected that the School District should be required to bargain indefinitely or

to declare an impasse and then litigate the impasse question for years before it can

obtain the right to cut its costs. See, e.g., Morrisville Sch. Dist. v. PLRB, 687 A.2d

5 (Pa. Cmwlth. 1996) (over three years to complete PLRB proceedings and court

appeals of unfair labor practice charge after declaration of impasse).

The General Assembly had both the power and good reasons to enact a

statute providing different rules for collective bargaining in distressed school

districts of the first class, in contrast to other classes of school districts or public

employers generally. Collective bargaining is not a constitutional right, but rather

a statutory one.16 The court below ignored the critical distinctions the General

Assembly drew between bargaining under Act 46 and under PERA, and between

school districts of the first class, which can cancel collective bargaining

agreements, and all other classes of school districts, which cannot. The

Commonwealth Court thus erred in finding the Cumberland Valley rule to be

16 Section 696, which concerns only financially-distressed school districts of the first class, ismuch more specific in its scope than PERA, which sets the collective bargaining rules for all public employers in Pennsylvania with minor exceptions. Section 696 therefore controls underwell-established rules of statutory construction. 1 Pa.C.S. §1933 (specific statute controlsgeneral); Olshansky v. Montgomery Cty. Election Bd., 488 Pa. 365, 370, 412 A.2d 552, 554(1980) (same).


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consistent with a distressed school district’s use of the cancellation power to effect

sorely needed economies.17

3. Commonwealth Court’s additional reasons for its ruling

also do not withstand scrutiny

In addition to its principal rulings, the Commonwealth Court found great

significance in what was not said in an opinion by former Chief Justice Castille,

dissenting from a per curiam denial of School District petition to file an exclusive

jurisdiction action.18 (Op. at 35-37, 39-40). In that case, which did not involve

cancellation of a collective bargaining agreement but rather the District’s powers

under a separate provision, section 696(k)(2), 24 P.S. §6-696(k)(2), then-Chief

Justice Castille dissented from the denial of the application on the ground that the

Court should not refuse to exercise statutory exclusive jurisdiction, particularly

given the important issues involved. In doing so, the dissent noted a number of

changes wrought by Act 46, but did not mention the power to cancel a collective

bargaining contract. From this the Commonwealth Court concluded: “Such a

17 In another section of its Opinion, the Commonwealth Court misconstrued section 696(k)(1)and the significance of its repeal in 2001. As enacted in 1998, section 696(k)(1) provided thatany collective bargaining agreement in effect at that time would have no further effect after itexpired. 24 P.S. §6-696(k)(1), repealed, Act of June 22, 2001, P.L. 530, No. 35, §7. By the timethis section was repealed in 2001, all the agreements in effect in 1998 had expired and newcontracts had taken their place, rendering section 696(k)(1) of no further force or effect. Thecourt below thus erred in assuming that the provision would have had continuing effect had it not been repealed, and in concluding, based upon that misguided assumption, that the repealsignified a “clear intent by the legislature not to alter the status quo requirement.” (Op. at 18.)

18 School Reform Comm’n v. Philadelphia Federation of Teachers, supra, 95 A.3d at 270.


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significant change as the right to cancel a CBA would presumably have been duly

noted by then-Chief Justice Castille in this detailed overview.” (Op. at 37.)

The former Chief’s dissent provides no support for the Commonwealth

Court’s refusal to recognize a power to cancel a collective bargaining contract.

That power was not relevant to the issues before this Court at the time, and neither

party had raised it. Moreover, placing reliance on what a dissent from a per

curiam order did not say about an issue that was not before the Court is a rather

perilous technique for interpreting a statute. The preferred method for ascertaining

the legislature’s intent is to focus on the statute’s “plain language.”

Commonwealth v. Kerstetter, 94 A.3d 991, 1001 (Pa. 2014) (“The plain language

of a statute is, as a general rule, the best indicator of . . . legislative intent”). This

the Court failed to do.

Elsewhere, the Commonwealth Court “questioned” whether the SRC’s

action constituted a cancellation of the parties’ agreement, concluding that the SRC

had not canceled the entire contract but only a select number of provisions. (Op. at

32.) In fact, the SRC’s Resolution SRC-1 expressly cancelled the collective

bargaining agreement. (R.229a.) As a result, the parties currently have no contract

whatsoever. Klopp, supra. The Resolution further stated that the SRC and the

School District intended to maintain salaries, other benefits, and certain work rules,

and did not change other practices described in the former agreement. However,


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this decision to continue other terms of employment was completely voluntary on

Petitioners’ part and does not give rise to any contractual obligation.

4. The collective bargaining agreement between the School

District and the PFT is not a “teachers’ contract” within the

meaning of section 693(a)(1)

In the courts below, a major focus of the PFT’s argument was that its

collective bargaining agreement with the School District was exempt from

cancellation under the exception for “teachers’ contracts” in section 693(a)(1).

The Commonwealth Court’s Opinion acknowledged both sides’ arguments on this

point, but declined to decide the issue. Because the trial court relied on this

ground, and the PFT will no doubt raise it in its response to this Petition, we are

obliged to address it.

The term “teachers’ contracts” has long had a specific and definite meaning

in Pennsylvania law. It refers to the individual employment contracts that each

school district has with its tenured teachers pursuant to 24 P.S. §11-1121. In

addition to protecting public school teachers from arbitrary dismissal, and

providing a discharged tenured teacher notice and a hearing, the School Code

provides that each tenured “professional employe” – a term that includes teachers –

must receive a written employment contract in the form set forth verbatim in

section 1121. The statute further prohibits any variance in the terms of the

statutory contract. It is these identically-worded statutory employment contracts


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that are the sole object of the exception for “teachers’ contracts” in section

693(a)(1).

At the time that section 693 was enacted in 1959 as part of the Distressed

School Law, the Supreme Court had already referred in numerous cases to the

individual employment contracts set forth in section 1121 in the plural as

“teachers’ contracts,” or in the singular as a “teacher’s contract.” See, e.g.,

Wilchenski v. Sch. Dist. of Bor. of Throop, 383 Pa. 394, 396, 119 A.2d 510, 512

(1956); Appeal of Watson, 377 Pa. 495, 500, 105 A.2d 576, 579, cert. denied , 348

U.S. 879 (1954); Spigelmire v. Sch. Dist. of Borough of N. Braddock , 352 Pa. 504,

507, 43 A.2d 229, 230 (1945); Walsh v. Sch. Dist. of Philadelphia, 343 Pa. 178, 22

A.2d 909, 912 (1941), cert. denied , 315 U.S. 823 (1942); Snyder v. Murphy, 333

Pa. 305, 306, 5 A.2d 226, 227 (1939); Malone v. Hayden, 329 Pa. 213, 225, 197 A.

344, 353 (1938).

Where, as here, “a court of last resort has construed the language used in a

statute, the General Assembly in subsequent statutes on the same subject matter

intends the same construction to be placed upon such language.” 1 Pa.C.S.

§1922(4); Patton v. Worthington Assocs., Inc., 89 A.3d 643, 649 n.6 (Pa. 2014).

Given this Court’s repeated use of the term “teacher’s contract” to refer to the

individual employment contracts spelled out in section 1121 of the School Code,

when the General Assembly subsequently created an exception for “teachers’


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contracts” in section 693(a)(1) of the School Code, the reference must be

understood as intending to exempt precisely those section 1121 contracts from the

scope of the cancellation power.19

The exception for “teachers’ contracts” must be construed as meaning

section 1121 individual contracts for a second reason. Under the Statutory

Construction Act of 1972, 1 Pa.C.S. §§1501, et seq., when “words and phrases” in

a statute “have acquired a peculiar and appropriate meaning,” they “shall be

construed according to such peculiar and appropriate meaning.” Id. at §1903(a).

This includes terms that have acquired a special meaning in the law. See Spahn v.

Zoning Bd. of Adjustment, 602 Pa. 83, 112-13, 977 A.2d 1132, 1149-50 (2009)

(“peculiar and appropriate meaning” includes “words or terms that have acquired a

particular meaning in the law”); Toy v. Metropolitan Life Ins. Co., 593 Pa. 20, 35,

928 A.2d 186, 195-96 (2007) (“bad faith” had acquired a peculiar and appropriate

meaning in the law at time insurance bad-faith statute was enacted).

The term “teachers’ contracts” in section 693(a)(1) thus must be construed

according to the “peculiar and appropriate meaning” that it had in Pennsylvania

19 Since the passage of the Distressed School Law in 1959, this Court has continued to use theterm “teacher (or teacher’s) contract” exclusively to refer to section 1121 teacher tenurecontracts. See, e.g., Burger, supra, 576 Pa. at 581, 839 A.2d at 1059; Reichley by Wall v. N.Penn Sch. Dist., 533 Pa. 519, 525-26, 626 A.2d 123, 127 (1993); Rike v. Com., Sec’y of Educ.,508 Pa. 190, 195, 494 A.2d 1388, 1390 (1985); Cerra v. East Stroudsburg Area Sch. Dist., 450Pa. 207, 211, 299 A.2d 277, 278-79 (1973); Bd. of Pub. Educ. Sch. Dist. of Phila. v. Intille, 401Pa. 1, 4 n.3, 163 A.2d 420, 422 n.3, cert. denied , 364 U.S. 910 (1960).


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law at the time section 693 was enacted – the individual teacher’s contracts spelled

out word for word in section 1121. Landay v. Rite Aid of Pa., Inc., 104 A.3d 1272,

1283 (Pa. 2014) (“When construing a statute, we must ascertain the intent of our

legislature based on the law at the time the statute was enacted or amended”).

5. Section 696 does not impair any contractual obligations or

constitute an unconstitutional delegation of legislative

power

In the Commonwealth Court, the PFT also argued at length that section

696’s authorization of a power to cancel contracts violates the Contracts Clause of

the Pennsylvania Constitution, Art. I, §17, and also constitutes an unconstitutional

delegation of legislative powers.20 Although the Commonwealth Court did not

reach these issues (Op. at 40-41, n.34), Petitioners are nonetheless obliged to

briefly address them. Neither constitutional challenge withstands analysis.21

To sustain an impairment-of-contract challenge, PFT must “demonstrate that

a change in state law has operated a substantial impairment of [its] contractual

relationship.” South Union Tp. v. Commonwealth, 839 A.2d 1179, 1188 (Pa.

Cmwlth. 2003) (en banc), aff’d , 578 Pa. 564, 854 A.2d 476 (2004), citing General

20 The passa

petition for allowance of appeal or exclusive jurisdiction

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