Millcreek Twp. SD v. Millcreek Twp. Educational Support Personnel Association

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Millcreek Township School District, :
Appellant :
:
v. :
:
Millcreek Township Educational : No. 187 C.D. 2017
Support Personnel Association : Argued: November 14, 2017

BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE J. WESLEY OLER, JR., Senior Judge

OPINION BY
JUDGE COVEY FILED: February 13, 2018

Millcreek Township (Township) School District (District) appeals from
the Erie County Common Pleas Court’s (trial court) January 30, 2017 order affirming
the November 7, 2016 arbitration award (Award) and granting the Township
Educational Support Personnel Association’s (Association) grievance that the District
violated the parties’ Collective Bargaining Agreement’s (CBA) subcontracting
clause. Essentially, the District presents two issues for this Court’s review: (1)
whether the Award satisfies the essence test; and (2) whether the Award contravenes
public policy.1

1
The District’s “QUESTION PRESENTED” contains one issue: “Whether the [trial court] erred
in denying the District’s Petition to Vacate the [Award].” District Br. at 8. The District’s
“ARGUMENT” contains two issues: (1) whether the Award draws its essence from the CBA; and (2)
whether the Award is contrary to law. District Br. at 13.
 Background
The District and the Association are parties to a CBA which became
effective July 1, 2011.2 Article III, Paragraph H of the CBA contains language
regarding subcontracting and specifically states: “No work of the bargaining unit
shall be sub[]contracted for the life of the [CBA].” Reproduced Record (R.R.) at 63a.
During labor negotiations in July 2016, the District notified the Association that a
Request for Proposals (RFP)3 for custodial services had been issued on March 29,
2016. The District provided the Association with the information it received from the
successful bidder. However, the District did not enter into a contract with the
successful bidder.
The Association filed a grievance on April 7, 2016, claiming that the
District violated the CBA by accepting bids for custodial labor services. The
grievance was submitted to arbitration and a hearing was held before an Arbitrator on
August 16, 2016. On November 7, 2016, the Arbitrator granted the Association’s
grievance, holding that the District had violated the CBA’s “no outside
subcontracting provision” and “the RFPs cannot be used in bargaining with the
Association to secure [an] advantage.” R.R. at 15a. The Arbitrator further held that
“[o]utside contracts which eliminate the Bargaining Unit cannot be used unless or

2
The CBA expired on June 30, 2016; however, the parties are maintaining the status quo by
adhering to the CBA. See Coatesville Area Sch. Dist. v. Coatesville Area Teachers’ Ass’n/Pa. State
Educ. Ass’n, 978 A.2d 413, 417 (Pa. Cmwlth. 2009) (“[T]he status quo must be maintained between
the time one contract expires and another begins[.]”). “The underlying rationale for the status quo
requirement is that during the interim period between contracts, the employer may continue
operations and the employee may continue working, while the parties are free to negotiate on an
equal basis in good faith.” Pa. State Park Officers Ass’n v. Pa. Labor Relations Bd., 854 A.2d 674,
681 (Pa. Cmwlth. 2004) (emphasis added) (quoting Fairview Sch. Dist. v. Unemployment Comp.
Bd. of Review, 454 A.2d 517, 521 (Pa. 1982)).
3
The parties and the Arbitrator reference RFPs, however, according to the record, only one
request was used.
2
until the parties are at legal impasse” and “[a]ny formal selection of prior RFPs are
therefore considered to be null and void.” R.R. at 15a.

Facts
The District filed a Petition to Vacate Arbitration Award (Petition) on
December 6, 2016. The Association filed a Motion to Strike Portions of Petition
(Motion to Strike) on December 28, 2016. The trial court held a hearing on the
Motion to Strike on January 23, 2017. By January 23, 2017 order, the trial court
granted the Motion and struck Exhibits B, C, D and E from the Petition, leaving only
Exhibits A (the CBA) and F (the Award) for consideration. On January 30, 2017, the
trial court held a hearing on the Petition, and affirmed the Award and denied the
Petition. The District appealed to this Court. The trial court issued an order directing
the District to file a Pennsylvania Rule of Appellate Procedure (Rule) 1925(b)
Concise Statement of Matters Complained of on Appeal4 (Rule 1925(b) Statement).
The District filed its Rule 1925(b) Statement on March 14, 2017. On April 13, 2017,
the trial court filed its opinion.

Discussion
The District first argues that the Award fails to draw its essence from the
CBA. Initially,
[a]s we have previously stated, grievance awards under the
Public Employe Relations Act [(PERA)5], . . . are reviewed
pursuant to the deferential essence test, which requires
affirmance of an award if: ‘(1) the issue as properly
defined is within the terms of the [CBA], and (2) the award
can be rationally derived from the [CBA].’ Neshaminy

4
Former Rule 1925(b) read a statement of “matters” complained of on appeal. Whereas, the
current Rule 1925(b) refers to a statement of “errors” complained of on appeal.
5
Act of July 23, 1970, P.L. 563, as amended, 43 P.S. §§ 1101.101–1101.2301.

3
 Sch[.] Dist[.] v. Neshaminy Fed[’]n of Teachers, 122 A.3d
469, 474 (Pa. Cmwlth. 2015) [(Neshaminy I)]. Pursuant to
this test, our review is ‘highly circumscribed,’ meaning that
‘[w]here it is determined that the subject matter of the
dispute is encompassed within the terms of the [CBA], the
validity of the arbitrator’s interpretation is not a matter of
concern to the court.’ Leechburg Area Sch[.] Dist[.] v.
Dale, . . . 424 A.2d 1309, 1312-13 ([Pa.] 1981).

Cty. of Allegheny v. Allegheny Court Ass’n of Prof’l Empls., 138 A.3d 701, 706 (Pa.
Cmwlth. 2016) (emphasis added). In the instant case, the relevant CBA provision
provides:

No Sub[]Contracting
1. No work of the bargaining unit shall be
sub[]contracted for the life of the Agreement.
2. No work of the bargaining unit shall be done by a
supervisor (or non-bargaining unit member). This will not
prohibit supervisory personnel from performing work of an
emergency nature, nor does this prohibit a supervisor from
teaching cleaning procedures or demonstrating cleaning
techniques to employees of the bargaining unit for training
purposes.
This will not prohibit a student from performing tasks as a
consequence of discipline or for educational purposes,
providing that no bargaining unit members experience a
reduction in working hours or overtime opportunities, or are
required to supervise students, as a result.

R.R. at 63a (text emphasis added). The District maintains that the RFP was issued for
negotiation purposes only, the CBA makes no mention of RFPs and that the CBA
was not implicated because no contract was executed. The Association rejoins that
the CBA’s subcontracting provisions were triggered once the RFP was issued.
The issue before the Arbitrator was whether “the District violate[d] the
CBA by issuing [an RFP] for custodial services in the District[.] If so, what is the
remedy?” R.R. at 8a. The issue the Arbitrator addressed was “whether the District

4
ha[d] subcontracted out work . . . .” R.R. at 10a. Clearly, the issue the Arbitrator
addressed falls within the CBA’s terms prohibiting subcontracting. However, since
it is undisputed that no contract for custodial services had been signed, that issue was
not before the Arbitrator.
In determining that the issue was before him, the Arbitrator explained:

‘[O]utside contracting,’ or ‘contracting out’ is a process.[6]
It does not start when the contractor signs the formal
contract or begins actual work. It begins when the District
decides to pursue that outside contracting avenue and then
advises the Association and advertises through the use of
RFPs.
That process, therefore, started when the current CBA was
in effect and, in my opinion, is in violation of the ‘no
subcontracting’ language. The process then continues then
[sic] through the ‘walk through’ and culminates with the
public opening of the bids and the selection of a successful
bidder. The formal contract would then follow and the
work would then commence.
In summary, the outside contracting language becomes
operative not when the outside contracting work actually
begins, but at least back to when the RFPs are announced.
Arguably, it could flow even back to when the District
[m]anagement in their [sic] internal discussions decided to
initiate the outside contracting process.

R.R. at 13a. At the time the District issued the RFP, the parties were negotiating a
new contract, and the District proposed eliminating the no subcontracting provision in
the next CBA (see Notes of Testimony August 16, 2016, Ex. E at 4), and issued the
RFP to determine whether removing that provision was in the District’s best interest.
The Arbitrator stated that the District’s action in issuing the RFP “had a ‘chilling

6
The Arbitrator cited no legal authority for this proposition, nor does the Association. In
fact, “subcontract” is defined as “[a] secondary contract made by a party to the primary contract for
carrying out the primary contract, or part of it.” Black’s Law Dictionary 373 (9th ed. 2009).
5
effect’ on the negotiations[,]” and thus “was a bargaining tactic to secure advantage
for the District.”7 R.R. at 12a-13a. The Arbitrator concluded:

There is no question that the District, while the CBA was in
effect, decided to subcontracted [sic] out and to pursue that
alternative.[8] They [sic] could have broached the subject in
negotiations and pursued it without going through the RFP
process. I do not believe that [it] went through that entire
process only to obtain information but to use it as a tactic in
negotiations to secure advantage or to bargain to impasse.
Then potentially [it] could unilaterally initiate custodial
subcontracting, thereby, eliminating the Bargaining Unit.
Therefore, in my opinion, the provisions of the CBA have
been violated.
R.R. at 14a.

However, the law is well-established as pronounced by the United States
Supreme Court:

An arbitrator is confined to interpretation and application
of the [CBA]; he does not sit to dispense his own brand of
industrial justice. He may, of course, look for guidance
from many sources, yet his award is legitimate only so
long as it draws its essence from the collective
bargaining agreement.

United Steelworkers v. Enter. Wheel & Car Corp., 363 U.S. 593, 599 (1960); see also
State Sys. of Higher Educ. (Cheyney Univ.) v. State College Univ. Prof’l Ass’n
(PSEA-NEA), 743 A.2d 405, 411 (Pa. 1999) (emphasis added) (quoting United
Steelworkers, 363 U.S. at 599); Bethel Park Sch. Dist. v. Bethel Park Fed’n of
Teachers, 55 A.3d 154, 157 (Pa. Cmwlth. 2012) (emphasis added) (quoting
Westmoreland Intermediate Unit #7 v. Westmoreland Intermediate Unit #7

7
As will be discussed below, the Arbitrator’s pronouncement is legally incorrect, and in
fact, the law is to the contrary.
8
The Arbitrator cited no evidence to support this statement.
6
Classroom Assistants Educ. Support Pers. Ass’n, PSEA/NEA, 939 A.2d 855, 862-63
(Pa. 2007)).
Here, the issue before the Arbitrator was whether the issuance of the
RFP violated the CBA. Article III, Section H of the CBA specifically states: “No
work of the bargaining unit shall be sub[]contracted for the life of the Agreement.”
R.R. at 63a. This language is clear and unambiguous. It is completely silent on RFPs
and makes no reference to RFPs or the subcontracting “process.” In performing his
responsibilities, the arbitrator exceeds his authority if he “ignore[s] the plain language
of the contract.” United Paperworkers Intern. Union, AFL-CIO v. Misco, Inc., 484
U.S. 29, 38 (1987). “When the arbitrator’s words manifest an infidelity to this
obligation, courts have no choice but to refuse enforcement of the award.” Cheyney
Univ., 743 A.2d at 411 (quoting United Steelworkers, 363 U.S. at 599). Therefore,
this Court is constrained to hold that the issue before the Arbitrator does not fall
within the CBA’s terms. Had the District entered into a contract with the successful
bidder during the life of the CBA, clearly the issue would be within the CBA’s terms,
and said subcontracting would be a violation of same. Accordingly, the Award does
not meet the first prong of the essence test.
Notwithstanding, even if the Arbitrator had properly determined that the
issue was within the CBA’s terms, the Award must be rationally derived from the
CBA. See Cty. of Allegheny. The Award in this case provided:

The grievance is granted. The District violated the ‘no
outside subcontracting’ provisions of the [CBA]. The RFPs
cannot be used in bargaining with the Association to secure
advantage. Outside contracts which eliminate the
Bargaining Unit cannot be used unless or until the Parties
are at legal impasse. Therefore, at impasse, they would be
subject to the applicable Pennsylvania [l]aw, Pennsylvania
Labor Relation[s] Board [(PLRB)] action, and N[ational]
L[abor] R[elations] B[oard] provisions. Any formal

7
 selection of prior RFPs are therefore considered to be null
and void.

R.R. at 15a. As discussed supra, the CBA is silent on RFPs and makes no mention of
RFPs or the “subcontracting process.” “An arbitrator’s award cannot be said to
draw its essence from the [CBA], where it violates the express terms of that
agreement by ‘changing the language of the contract or adding new and additional
provisions.’” Cheyney Univ., 743 A.2d at 422 (emphasis added) (quoting Am. Fed’n
of State, Cty. & Mun. Emps., Dist. Council 84, AFL-CIO v. City of Beaver Falls, 459
A.2d 863, 865 (Pa. Cmwlth. 1983)). “Moreover, where the arbitrator’s words exhibit
an infidelity to the agreement, courts have no choice but to refuse enforcement of the
award. Cheyney Univ., 743 A.2d at 422. The Arbitrator took it upon himself to
fashion an Award to eliminate what he perceived to be the District’s unfair advantage
in negotiations which “had a ‘chilling effect’”.9 R.R. at 12a. “In doing so[,] the
Arbitrator went outside the CBA to make his determination. Thus, the Arbitrator’s
award was not rationally derived from the CBA. Accordingly, the Arbitrator’s award
does not meet the second prong of the essence test.” Bethel Park, 55 A.3d at 158-59
(citation and footnote omitted).
The District next argues that the Award contravenes the well-defined
and established public policy of good faith bargaining. The Pennsylvania Supreme
Court adopted a public policy exception to the essence test in Westmoreland
Intermediate Unit #7 v. Westmoreland Intermediate Unit #7 Classroom Assistants
Educational Support Personnel Ass’n, PSEA/NEA, 939 A.2d 855 (Pa. 2007). The
Westmoreland Court concluded:
that the essence test should be subject to a narrow exception
by which an arbitrator’s award will be vacated if it is
violative of the public policy of the Commonwealth. . . .
[L]ike our adoption of the federal essence test for purposes
of PERA, we conclude that the federal public policy

9
See, supra, footnote 6.
8
 exception is appropriately applied to arbitrator’s awards
arising under PERA as well. We believe that such a public
policy exception constitutes a reasonable accommodation of
the sometimes competing goals of dispute resolution by
final and binding arbitration and protection of the public
weal . . . .
More specifically, we hold that upon appropriate challenge
by a party, a court should not enforce a grievance
arbitration award that contravenes public policy. Such
public policy, however, must be well-defined, dominant,
and ascertained by reference to the laws and legal
precedents and not from general considerations of supposed
public interests.

Westmoreland, 939 A.2d at 865-66 (emphasis added); see also Phila. Housing Auth.
v. Am. Fed’n of State, Cty. & Mun. Emps., Dist. Council 33, 52 A.3d 1117 (Pa. 2012);
Neshaminy Sch. Dist. v. Neshaminy Fed’n of Teachers, 171 A.3d 334 (Pa. Cmwlth.
2017) (Neshaminy II); Slippery Rock Univ. of Pa., Pa. State Sys. of Higher Educ. v.
Ass’n of Pa. State College & Univ. Faculty, 71 A.3d 353 (Pa. Cmwlth. 2013); Bethel
Park.
The public policy exception requires the application of a
three-prong test:
First, the nature of the conduct leading to the
discipline must be identified. Second, we must
determine if that conduct implicates a public policy
which is ‘well-defined, dominant, and ascertained
by reference to the laws and legal precedents and
not from general considerations of supposed public
interests. . . . . Third, we must determine if the
arbitrator’s award poses an unacceptable risk
that it will undermine the implicated policy and
cause the public employer to breach its lawful
obligations or public duty, given the particular
circumstances at hand and the factual findings of the
arbitrator.
City of Bradford v. Teamsters Local Union No. 110, 25
A.3d 408, 414 (Pa. Cmwlth. 2011) (quoting Westmoreland,
. . . 939 A.2d [at] 866 . . .).

9
Neshaminy II, 171 A.3d at 338 (emphasis added). In the instant case, the conduct
leading to the grievance (first prong) was the District’s issuance of an RFP for
custodial services. The District maintains that it did so to fulfill its statutory duty to
bargain in good faith.
The General Assembly pronounced its well-defined, dominant public
policy that public employers and their employees’ representatives have a mutual
obligation to collectively bargain in good faith in Section 701 of PERA, which
specifically mandates the parties to a CBA to “confer in good faith with respect to
wages, hours and other terms and conditions of employment, or the negotiation
of an agreement . . . .” 43 P.S. § 1101.701 (emphasis added) (second prong).
Further, Section 1201(a)(5) of PERA expressly prohibits public employers from, and
makes it an unfair labor practice for, “[r]efusing to bargain collectively in good faith
. . . .” 43 P.S. § 1101.1201(a)(5) (emphasis added). The import of this mandate is
revealed through its similar imposition on unions as Section 1201(b)(5) of PERA
equally prohibits unions from, and makes it an unfair labor practice for, “[r]efusing to
bargain collectively in good faith . . . .” 43 P.S. § 1101.1201(b)(5) (emphasis
added). Moreover, “[t]he duty to bargain in good faith extends to the subject of
moving bargaining unit work to a private contractor.” Snyder Cty. Prison Bd. v. Pa.
Labor Relations Bd., 912 A.2d 356, 364 (Pa. Cmwlth. 2006); see also Morrisville
Sch. Dist. v. Pa. Labor Relations Bd., 687 A.2d 5, 8 (Pa. Cmwlth. 1996).
With respect to the third prong, the United States Supreme Court
explained:
Good[ ]faith bargaining necessarily requires that claims
made by either bargainer should be honest claims. This is
true about an asserted inability to pay an increase in wages.
If such an argument is important enough to present in the
give and take of bargaining, it is important enough to
require some sort of proof of its accuracy.

10
Nat’l Labor Relations Bd. v. Truitt Mfg. Co., 351 U.S. 149, 152 (1956). Further,
“[a]s part of its duty to bargain in good faith, an employer must provide the union
with information that is relevant and necessary to bargaining. H & R Indus. Servs.,
Inc., 351 N.L.R.B. 1222, 1223 (2007) (citing [Nat’l Labor Relations Bd.] v. Acme
Indus. Co., 385 U.S. 432, 435–36 . . . (1967)).”10 Frankel ex rel. Nat’l Labor
Relations Bd. v. HTH Corp., 693 F.3d 1051, 1064 (9th Cir. 2012).
Here, the District was negotiating to eliminate the subcontracting
prohibition from the CBA. In fulfilling its good faith bargaining duty, the District
issued an RFP to determine whether it was financially feasible and thus in the
District’s best interest to do so. The District presented the information it received
from the successful bidder in order to provide the Association with an opportunity to
match or counter the proposal. The Arbitrator concluded “that the request [sic] for
RFPs announced in the newspaper and in negotiations, had a ‘chilling effect’ on the
negotiations.” R.R. at 12a.
However, the PLRB, the administrative agency the General Assembly
expressly created and empowered to enforce and uphold its legislative mandates, see
Section 501 of the PERA, 43 P.S. § 1101.501, has long since specifically rejected the

10
Although this case involved Section 8(a) of the National Labor Relations Act (NLRA), 29
U.S.C. § 158(a),
[b]ecause [S]ections 1201(a)(1) and (a)(5) of PERA are modeled after
[S]ections 8(a)(1) and (a)(5) of the NLRA, this Court may rely upon
federal case law interpreting those provisions as persuasive authority.
Office of Administration v. [Pa.] Labor Relations [Bd.], . . . 916 A.2d
541, 550 ([Pa.] 2007) (‘[O]ur Court has not hesitated to consider, and
to follow, federal interpretation of the NLRA due to the similarity
between the federal labor law and our own laws dealing with labor
relations.’); see also [Pa.] Labor Relations [Bd.] v. Mars Area Sch[.]
Dist[.], . . . 389 A.2d 1073, 1076 ([Pa.] 1978); accord In re Appeal of
Cumberland Valley Sch[.] Dist[.], . . . 394 A.2d 946, 950 ([Pa.] 1978).

Erie Cty. Tech. Sch. v. Pa. Labor Relations Bd., 160 A.3d 151, 159 n.4 (Pa. Cmwlth. 2017).
11
Arbitrator’s statement and reasoning upon which the Arbitrator based his conclusion
that the District violated the CBA. In doing so, the PLRB opined:
We recognize that in Township of Little Egg Harbor, PERC
No. 76-15 2 NJPER 5 (1976), the New Jersey Public
Employment Relations Commission (PERC) found that an
employer had committed unfair practices in violation of
Sections 5.4(a)(1) and (5) of the New Jersey Employer-
Employee Relations Act[11] under circumstances similar to
those of the present case. During the course of negotiations,
the employer in Little Egg Harbor advertised for bids to
subcontract garbage collections. The employer rejected all
the bids received. Nevertheless, the PERC’s hearing
examiner found that the employer had engaged in unfair
practices by failing to negotiate in good faith about the
issues of subcontracting. The hearing examiner said:
A decision to advertise for bids to provide the
services currently performed by the employees of
the Sanitation Department during the middle of
negotiations for a first contract could only have had
a ‘chilling effect’ on the entire negotiations process.
This unilateral action certainly affected changes in
the ‘status quo’ with reference to the terms and
conditions of employment of a Sanitation
Department employee, specifically with regard to an
individual’s job security and expectation of
continuing employment. The record established that
a municipal sanitary collection service has been
maintained for approximately the past nine years.
The very act of setting in motion the process of
subcontracting the unit work, in a drastic departure
from the existing and past practices, is tantamount
to the sending of termination notices to employees
negotiating a first contract with only the precise date
of termination left blank.
The New Jersey PERC adopted the findings of fact and
conclusions of law but not necessarily the dicta of the
hearing examiner.
Little Egg Harbor is in conflict with our own decisions
which focus on whether the public employer has

11
N.J.S. §§ 34:13A-1-13A-21.
12
 approached the bargaining table with an open mind and
a sincere desire to reach an agreement and on whether
the employe organization has been afforded the
opportunity to formulate its own proposal in response to
subcontracting proposals received by the employer. We
have not in the past viewed the mere solicitation of bids as
an inherently coercive act on the part of a public employer
which would have a ‘chilling effect’ on negotiations. We
have, rather, regarded such solicitations as prerequisites
for intelligent bargaining. Accordingly, we reject the
view of the New Jersey PERC as set forth in Little Egg
Harbor.

Pa. Labor Relations Bd. v. Sch. Dist. of the Twp. of Millcreek, 9 PPER ¶ 9136 (No.
PERA-C-10, 439-W, June 7, 1978) (emphasis added).
Importantly, this Court is mindful that the Board:
possesses administrative expertise in the area of
public employee labor relations and that great
deference ought to be given to the PLRB’s
assessment of the often competing concerns relevant
to the issue of whether the conduct of an employer
or a union constitutes a refusal to meet the mutual
obligation to bargain in good faith.
Richland Sch[.] Dist[.] v. [Pa.] Labor Relations [Bd.], . . .
454 A.2d 649, 652 ([Pa. Cmwlth.] 1983).

Mars Area Ass’n of Sch. Serv. Personnel PSSPA/PSEA v. Pa. Labor Relations Bd.,
538 A.2d 585, 597 (Pa. Cmwlth. 1987).
Based on the above, this Court holds that by granting the grievance and
directing that “[t]he RFPs cannot be used in bargaining with the Association[,]” R.R.
at 15a, the Arbitrator’s Award violated the well-defined, dominant public policy of
good faith collective bargaining and will “cause the [District] to breach its lawful
obligations” to bargain in good faith. Neshaminy II, 171 A.3d at 338.

13
 For all of the above reasons, the trial court’s order is reversed.

___________________________
ANNE E. COVEY, Judge

Judge Brobson concurs in the result only.

14
 IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Millcreek Township School District, :
Appellant :
:
v. :
:
Millcreek Township Educational : No. 187 C.D. 2017
Support Personnel Association :

ORDER

AND NOW, this 13th day of February, 2018, the Erie County Common
Pleas Court’s January 30, 2017 order is reversed.

___________________________
ANNE E. COVEY, Judge