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Case Law - save on Lexis / WestLaw. IN THE COMMONWEALTH COURT OF PENNSYLVANIA Philadelphia Gas Works, : Appellant : : v. : No. 1266 C.D. 2004 : Gas Workers' Employees' Union Local : 686, UWUA, AFL-CIO : Philadelphia Gas Works : : v. : No. 1441 C.D. 2004 : Argued: November 1, 2004 Gas Workers' Employees' Union Local : 686, UWUA, AFL-CIO : Appellant : BEFORE: HONORABLE JAMES GARDNER COLINS, President Judge HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE JIM FLAHERTY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY SENIOR JUDGE FLAHERTY FILED: February 18, 2005 Philadelphia Gas Works (PGW) appeals from the June 2, 2004 order of the Court of Common Pleas of Philadelphia County (trial court), which denied PGW's petition to vacate and modify an arbitration award directing the reinstatement of William Donahue (Donahue). The trial court confirmed the award, which directed that Donahue's time off the job be treated as a disciplinary suspension and that upon presentation of proof required under PGW's residency policy, Donahue was to be reinstated with no back pay but at the pay rate, seniority and retirement benefits he would have accrued had he not been terminated. We affirm. Gas Workers' Employee Union Local 686, UWUA, AFL-CIO (Union) cross-appeals from that part of the trial court's June 2, 2004 order denying the Union's request for attorney's fees and costs as the trial court did not find PGW's appeal to be frivolous. Donahue was employed for fifteen years as a Field Service Technician for PGW and was a member of the Union from 1987 to November 7, 2001, when he was discharged for failing to comply with PGW's residency requirements. In January of 1983 PGW implemented a policy (residency policy) requiring all employees to maintain a legal domicile within the City of Philadelphia. The residency policy was later modified in 1993 through the parties' collective bargaining agreement (CBA).1 Donahue lived in Philadelphia from the date of his hire until August 1993. In August 1993 Donahue's family moved to Quakertown so that his wife could complete chemotherapy treatments for breast cancer. Donahue rented an apartment at 417 Quince Street in Philadelphia and then later, in December 1993, rented two rooms at 7102 Frankford Avenue in Philadelphia. 1The Residency Policy requires in pertinent part as follows: "all [PGW] employees hired after January 1, 1983 to maintain their residence within the geographic limits of the City of Philadelphia. Those hired after January 1, 1983, who are already residents in the City must agree to maintain their residence within the City for the duration of the Company employment. A reasonable period of time, generally not to exceed on[e] (1) year, will be provided for newly hired non-residents to establish their residence within the City." Memorandum of Agreement, October 21, 1993, No.7 at 4. 2 In December 1993, after adoption of the parties' modified residency policy, Union counsel issued a memorandum explaining his interpretation of the residency policy, which stated in pertinent part that "while the change from domicile to residence clearly has legal significance and employees may no longer be required to maintain their fixed, permanent and principal home in Philadelphia, it is clear that they must maintain a legitimate residence within the City limits." Modified PGW Residency Policy, at 1. The Union continued to seek clarification of the residency policy from PGW. Because Donahue was required to maintain a residence within Philadelphia city limits, he continued to rent the two rooms located at 7102 Frankford Avenue for $250 per month until the property owner sold the home in July of 2001 after eight years. The rent never increased, and Donahue never paid utility bills for the duration of the lease. In May of 2001, Donahue learned that he would have to vacate the premises because the property had been sold and the new owner wanted it vacant. After interviewing Donahue, PGW concluded that he lacked a Philadelphia residence and terminated him effective November 7, 2001. The Union filed a grievance protesting Donahue's termination, and the parties selected Kinard Lang as the Arbitrator. The Arbitrator issued the award on March 23, 2004 reinstating Donahue. The Arbitrator stated that he was not persuaded that "when the Union ratified the residence Policy, it intended that violation of that Policy, under the instant circumstances, would result in the "disciplinary consequence" of termination." Arbitration Award, March 23, 2004, at 5. More significantly, the Arbitrator did not believe that Donahue "was on notice that his more than eight (8) years of Policy compliance would mean nothing, if he were found to be out of compliance." Arbitration Award at 5. Further, "it is 3 patently unreasonable to allow a new employee a year to find a Philadelphia residence, while terminating an employee with nearly fifteen (15) years of unblemished service; who complied with the Policy for eight (8) years, upon discovery of his months of non-compliance, July 31, 2001 until his November 2001 termination." Arbitration Award at 5. The trial court applied the "essence test" and upheld the award. The trial court determined that the residency policy was clearly within the terms of the CBA as it provided that PGW "reserves the right to terminate, demote and discipline for cause." Art. III, §3. The trial court reasoned that since the term "for cause" was not defined in the CBA the Arbitrator had the authority to define the term and to determine whether Donahue was terminated for cause. Further, the trial court agreed that PGW's application of the residency policy was unreasonable; and that the arbitrator "properly and reasonably interpreted the term "just cause" under the facts of this case." Trial Court Opinion, August 8, 2004, at 5. The trial court found the arbitrators award rationally derived from the CBA and denied PGW's petition to vacate and modify the arbitration award. PGW appealed to our Court. On appeal, PGW contends that the Arbitrator's award was an irrational interpretation and application of the CBA where the CBA, as supplemented by negotiated terms of a Memorandum of Agreement, requires that PGW bargaining unit employees continuously maintain at least some Philadelphia residence and where Donahue admitted that he had no such residence; that the Arbitrator impermissibly dispensed his own brand of industrial justice while ignoring the essence of the CBA where PGW's residency policy requires all members of the bargaining unit as a condition of active employment to continuously maintain a 4 Philadelphia residence; and that the Arbitrator reviewed impermissible factors when he concluded that Donahue's discharge was not supported by just cause under the circumstances where he willfully and knowingly violated the policy. The Union on cross-appeal contends that the trial court erred in denying its request for an award of attorney's fees and costs when PGW's petition failed to even allege that the award violated the essence test and was filed contrary to Supreme Court precedent; and that Pa. R.A.P. 2744 justifies an award of counsel fees and costs. Under the applicable "essence test" the Arbitrator is confined in his review to interpretation and application of the CBA. Musser v. County of Centre, 515 A.2d 1027 (Pa. Cmwlth.1986). The interpretation must be consistent with and logically derive from the terms of the agreement. City of Pittsburgh v. Pittsburgh Joint Collective Bargaining Committee, 852 A.2d 452 (Pa. Cmwlth. 2004). First, the court must determine if the issue was properly defined within the terms of the CBA; and second, if the issue is embraced by the agreement, the Arbitrator's award will be upheld if the arbitrator's interpretation can rationally be derived from the CBA. State System of Higher Ed. (Cheyney University) v. State College, 560 Pa. 135, 743 A.2d 405 (1999). An arbitrator's award must not be disturbed unless a court finds that it "indisputably and genuinely is without foundation in or fails to logically flow from the collective bargaining agreement." Cheyney University, 743 A.2d at 413. Both parties acknowledge that the first part of the test was satisfied. The issue that was submitted to the arbitrator, "was there just cause to terminate the employment of William Donahue, if not, what shall the remedy be," was 5 encompassed within the terms of the CBA. This issue was properly before the arbitrator. The second part of the test asks if the arbitrator's interpretation can rationally be derived from the CBA, whether the award is without foundation in or fails to logically flow from the CBA. Under the terms of the CBA, PGW employees have the obligation to maintain a Philadelphia residence for the duration of their PGW employment. Donahue admitted that he fell out of compliance with the requirement when he failed to secure a new residence in July of 2001. From July of 2001 to November 7, 2001, he continued to claim that he could not locate an apartment in a suitable neighborhood at the price he wanted to pay. The residency policy states that an employee who fails to conform to the policy is "subject to termination." The Arbitrator reasonably concluded that "subject to termination" is an ambiguous phrase that can be construed to mean that a range of disciplines could be imposed, up to and including termination on a case by case basis. It was also within the Arbitrator's discretion to determine whether PGW had "just cause" to terminate Donahue. In considering other relevant factors, the arbitrator reasonably found that PGW failed to adequately inform its employees of the policy requirements; that Donahue made numerous attempts to receive clarification from PGW regarding what he would need to do in order to be in compliance with the policy; that Donahue had complied with the policy for many years and had attempted to obtain a suitable residence; and that new hires were given one year to meet the residency requirement. In Office of Attorney General v. Council 13, Amer. Fed. Of State, County & Municipal Employees, 577 Pa. 257, 844 A.2d 1217 (2004), the Supreme 6 Court held that an arbitrator does not have to uphold a discipline imposed by a public employer even if the arbitrator determines that the employee did commit an infraction, where extenuating circumstances exist including "long service with the employer." The Supreme Court has explicitly held that "it is entirely rational for [an] arbitrator to interpret [an] undefined just cause provision as permitting consideration of mitigating circumstances." Office of Attorney General, 577 Pa. at 270, 844 A.2d at 1225. In the present controversy, the Arbitrator found mitigating circumstances to support Donahue's reinstatement. The trial court did not err in upholding the arbitrator's award. Next, Union contends that the trial court abused its discretion in failing to grant attorney's fees and costs where PGW's petition to vacate the award was a frivolous and vexatious effort to reargue the merits of the award. Under Section 2503(9) of the Judicial Code, a trial court may award counsel fees if it finds "the conduct of another party in commencing the matter or otherwise was arbitrary, vexatious or in bad faith." 42 Pa. C.S. §2503(9); R.A.P. No. 2744. A suit or appeal may be deemed "vexatious" if filed "without sufficient grounds in either law or in fact and if [it] served the sole purpose of causing annoyance." Thunberg v. Strause, 545 Pa. 607, 615, 682 A.2d 295, 299 (1996). The trial court denied Union's petition for attorney's fees and costs because it "did not find PGW's appeal to be frivolous, nor did it find that PGW's conduct was dilatory, obdurate or vexations, particularly because Lang's decision could have reasonably favored either party." Trial Court Opinion, at 3. After a 7 review of the record, we find no error in the trial court's decision. Accordingly, we affirm the decision of the trial court. JIM FLAHERTY, Senior Judge Judge Smith-Ribner concurs in result only. 8 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Philadelphia Gas Works, : Appellant : : v. : No. 1266 C.D. 2004 : Gas Workers' Employees' Union Local : 686, UWUA, AFL-CIO : Philadelphia Gas Works : : v. : No. 1441 C.D. 2004 : Gas Workers' Employees' Union Local : 686, UWUA, AFL-CIO : Appellant : O R D E R AND NOW, this 18th day of February, 2005 the order of the Philadelphia Court of Common Pleas in the above-captioned matter is affirmed. JIM FLAHERTY, Senior Judge
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