Loyalsock Township Area School District v. Loyalsock Custodial Maintenance

931 A.2d 75, 182 L.R.R.M. (BNA) 3267, 2007 Pa. Commw. LEXIS 389

• Court: Commonwealth Court of Pennsylvania
• Decided: July 17, 2007
• Status: Published

Opinions

OPINION BY

Judge FRIEDMAN.

The Loyalsock Custodial Maintenance, Secretarial and Aide Association (Union)¹ appeals from the June 16, 2006, order of the Court of Common Pleas of Lycoming County (trial court), which vacated an arbitrator’s decision to reinstate Connie Hamilton (Employee) to her employment with the Loyalsock Township Area School District (District). We reverse.

Employee worked for the District for approximately twenty-eight years, most recently as a custodian in a District elementary school. On January 14, 2005, Employee was struck in the face by a piece of equipment while she was working. The following day, Employee sought medical treatment at the Susquehanna Health System (SHS) emergency room, where SHS personnel advised Employee that a drug and alcohol screen was required because the injury may involve a workers’ compensation claim. Employee declined to take the test, stating that she would pay for the medical services herself and would not seek workers’ compensation benefits.

On January 17, 2005, SHS personnel advised the District that Employee had not submitted to testing. Over the next several days, the District’s business manager directed Employee to take the blood test. On January 24, 2005, Employee was informed that she could not report to work until she submitted to drug and alcohol screening. Employee called in sick on January 25th and 26th and finally reported to the hospital for testing on the evening of the 26th. On January 31, 2005, SHS notified the District that Employee’s screening was positive for marijuana.

When confronted with the test results, Employee at first denied using marijuana, but then she admitted that she took a few puffs on a marijuana cigarette on the evening of January 14th, following her injury, while she was off-duty and off school property. Employee stated that she was not a regular user of marijuana, but she offered to enter rehabilitation treatment if it would save her job. At that point, the District’s business manager indicated that he would recommend Employee’s termination.

On her own initiative, Employee submitted to a second drug and alcohol blood screening on February 7, 2005, and the results were negative for all drugs. Employee also reported to Genesis House, the first drug and alcohol service provider listed in the District’s drug and alcohol policy.

By letter dated February 8, 2005, the District informed Employee that the District would be recommending her dismissal to the school board based on charges of insubordination and violation of the District’s policy regarding use of a controlled substance. The letter further advised Employee that she had a right to demand a hearing on the matter, which would be conducted pursuant to the Local Agency Law.² The school board held a hearing on February 15, 2005,³ and voted to terminate Employee’s employment, (R.R. at 32a), in accordance with District Policy 551-Drug and Substance Abuse (Policy 551), which provides that “the unlawful manufacture, distribution, dispensing, possession or use of a controlled substance is prohibited in the employe’s workplace.” (R.R. at 36a, 40a (emphasis added).) After Employee was informed of her termination, she filed a grievance, asserting a lack of just cause for her termination in violation of Article 28 of the parties’ collective bargaining agreement (CBA) and a denial of due process. Pursuant to the CBA, an arbitrator was appointed to hear the grievance, and a hearing was held on September 20, 2005.

Before the arbitrator, the District asserted that if a drug is present in an employee’s system, the drug is in the workplace, and, therefore, Policy 551 applies. The District further argued that it has the right to interpret its own policies. The District also asserted that providing a safe environment for students is a core function of the District and that a public employer cannot bargain away its right to discipline employees for behavior that strikes at the employer’s core functions. In response, the Union contended that just cause did not exist to support Employee’s termination. The Union asserted that Policy 551 only prohibits drug use in the workplace and that the use in this case did not occur at work. Noting that the written policy sets forth a range of disciplinary measures that include required participation in an approved rehabilitation program, the Union also contended that the District’s discipline of Employee effectively converted Policy 551 to a zero tolerance policy, without notice to its employees. The Union cited Employee’s twenty-eight years of service as a mitigating factor and requested a remedy that was more reasonable under the circumstances.

In a decision dated November 18, 2005, the arbitrator determined that Employee did not violate Policy 551. In reaching this conclusion, the arbitrator observed that the plain language of Policy 551 prohibits drug use in the workplace and defines “drug-free workplace” as “the site for the performance of work done in connection with the performance of their job at which employees are prohibited from engaging” in the specified conduct. (R.R. at 35a.) The arbitrator noted that Employee’s drug use occurred offsite and that the District did not present evidence of any impact on Employee’s work performance. The arbitrator further noted that, absent such evidence, an employer generally cannot control an employee’s off-duty behavior. The arbitrator granted Employee’s grievance in part, reinstating her to her former position with the District as of the date of his decision. Citing Employee’s “protracted delay in admitting marijuana use,” (Arbitrator’s decision at 8), the arbitrator indicated that the period from Employee’s termination to the date of the award would constitute a suspension without pay.

The District appealed to the trial court, arguing that the arbitrator exceeded his authority and that his award contravenes the rights afforded the District under section 514 of the Public School Code of 1949 (Code)⁴ to remove employees for cause. The trial court initially noted that courts reviewing an arbitrator’s award apply a two-prong analysis commonly known as “the essence test.” Under the essence test, the court must determine: (1) whether the issue presented is encompassed by the terms of the collective bargaining agreement, and (2) whether the arbitrator’s interpretation can be rationally derived from that agreement. State System of Higher Education (Cheyney University) v. State College University Professional Association (PSEA-NEA), 560 Pa. 135, 743 A.2d 405 (1999).⁵ The parties agreed that the only issue before the trial court was whether the arbitrator’s award can be rationally derived from the CBA. (Trial ct. op. at 4.)

Citing Greene County v. District 2, United Mine Workers of America, 578 Pa. 347, 852 A.2d 299 (2004), and City of Easton v. American Federation of State, County and Municipal Employees, AFL-CIO, Local 447, 562 Pa. 438, 756 A.2d 1107 (2000), the trial court stated that our courts have modified the essence test where a governmental employer is involved and will not allow a collective bargaining agreement to be interpreted to allow public employers to relinquish powers that are essential to the discharge of their core functions. The trial court quoted the following language from Greene County:

Due to their unique nature and role, public employers must be able to perform the functions they are charged to carry out by our citizenry. Consistent with this status, our Court has recognized that public employers cannot be compelled in arbitration to relinquish powers that are essential to the proper discharge of their functions. Thus, while as a general proposition, an arbitrator has broad authority to interpret an undefined provision regarding termination for just cause in a collective bargaining agreement, to permit an arbitrator to interpret the agreement as to require reinstatement of an employee who was determined to have engaged in egregious misconduct[⁶] that strikes at the very core function of the public enterprise would be to deprive the employer of its ability to discharge that essential function.

Greene County, 578 Pa. at 362, 852 A.2d at 308 (citations omitted).

The trial court observed that the arbitrator had acknowledged that prohibiting drug use in the work place is a core function of the District. Determining that the school district’s interpretation of its own policy should be given credence,⁷ the trial court concluded that the arbitrator exceeded his authority by substituting his own judgment in place of the school board’s in an area acknowledged to be a core function of the District. Accordingly, the trial court vacated the arbitrator’s award and reinstated the District’s decision to terminate Employee’s employment.

On appeal to this court, Employee argues that the trial court erred in holding that the arbitrator exceeded his authority on the grounds that Employee’s conduct implicated a core function of the District. We agree.

We begin by noting that, contrary to the trial court’s observation, our supreme court continues to apply the “essence test,” as articulated in Cheney University, when reviewing arbitration awards involving a government employer. See Greene County and City of Easton (holding that arbitrators’ awards were not rationally derived from the parties’ collective bargaining agreements.) In Greene County, the court observed that an award requiring reinstatement of an employee whose egregious misconduct strikes at the very core function of the public enterprise deprives the employer of its ability to discharge that essential function and, thus, “[a]n arbitrator’s award granting reinstatement in such a situation would not be rational and would therefore fail the essence test.” Greene County, 578 Pa. at 362, 852 A.2d at 308 (emphasis added).⁸

Next, we turn to the collective bargaining agreement at issue. As the arbitrator noted, the District’s policy does not address off-duty conduct. Indeed, the District is not granted carte blanche in developing policies but must do so in a manner consistent with applicable constitutional and statutory authority. Section 510 of the Code, 24 P.S. § 5-510, authorizes school districts to adopt reasonable rules and regulations and provides in relevant part as follows:

The board of school directors in any school district may adopt and enforce such reasonable rules and regulations as it may deem necessary and proper, regarding the management of its school affairs and the conduct and deportment of all superintendents, teachers, and other appointees or employes during the time they are engaged in their duties to the district, as well as regarding the conduct and deportment of all pupils attending the public schools....

24 P.S. § 5-510 (emphasis added). The arbitrator recognized that prohibiting drug use in the workplace is a core function of the District, but the arbitrator found no evidence that Employee’s conduct implicated that core function. Employer offered no evidence of any impact on Employee’s work performance and no evidence that the positive test result established that Employee was “under the influence” of any controlled substance at any particular time.⁹ Thus, there is no evidence that Employee’s conduct affected any function, let alone a core function, of the District. Where, as here, the record fails to establish that the employee engaged in conduct that impacted the employer in any way, consideration of the employer’s core functions is unwarranted and, in this case, constitutes error.

We note that this case is factually distinguishable from other “core function” cases, in that the arbitrator here found that Employee was not guilty of the serious misconduct with which she was charged and for which she was terminated.¹⁰ Moreover, in Office of the Attorney General v. Council 13, American Federation of State, County & Municipal Employees, AFL-CIO, 577 Pa. 257, 844 A.2d 1217 (2004), our supreme court upheld an arbitration award reinstating an employee even though the arbitrator determined that the employee committed the off-duty misconduct for which he was terminated. In that case, a narcotics agent (employee) employed by the Office of the Attorney General (employer) was stopped by a police officer while driving a state vehicle. The police officer observed signs of intoxication, including slurred speech, glassy eyes, an unsteady gait and an odor of alcohol. After investigating the matter, the employer charged the employee with: (1) unbecoming conduct; (2) use of alcohol while off-duty; (3) operation of an official vehicle while off-duty and while using alcohol; (4) violations of standards of professional courtesy and etiquette; and (5) unauthorized use of departmental equipment. The employee was terminated after an investigating agent found validity to the first three charges. The employee filed a grievance, and the matter proceeded to arbitration. The arbitrator found that the employee had committed the alleged misconduct; however, the arbitrator considered extenuating circumstances and concluded that the employer did not have just cause to terminate the employee. On appeal, the Commonwealth Court equated the finding of misconduct with the contractual requirement of just cause and vacated the arbitrator’s award.

On further appeal, the supreme court repeated that the applicable standard of review is the essence test as set forth in Cheney University.

In setting forth this two-prong test, we emphasized the deferential nature of the review.

Specifically, strict adherence to the essence test is mandated by our Commonwealth’s strong historical preference for the swift and efficient means of settling disputes that arise under a collective bargaining agreement by a grievance procedure culminating in binding arbitration. This preference has its roots both in statute and in our case law.... Thus ... courts should play an extremely limited role in resolving such disputes. Indeed, “[fjrequent judicial disapproval of the awards of labor arbitrators would tend to undermine a system of private ordering that is of the highest importance to the well-being of employer and worker alike.”

Office, of the Attorney General, 577 Pa. at 265-66, 844 A.2d at 1222-23 (citations omitted). The court in Office of the Attorney General began its analysis with a review of the parties’ collective bargaining agreement. The court observed that the agreement did not define the term “just cause,” and the court concluded that, by failing to incorporate a definition of just cause into the agreement, and by casting the arbitrator into the role of resolving disputes arising under the agreement, the parties intended for the arbitrator to have the authority to interpret that term and to determine whether there was just cause for termination in that particular case. The court next determined that it was entirely rational for the arbitrator to interpret this undefined term as permitting consideration of mitigating circumstances. Accordingly, the court reversed the order of the Commonwealth Court and reinstated the arbitrator’s award.¹¹

Applying this analysis, we reject the District’s arguments that, where Employee avoided drug tests and eventually tested positive for marijuana, the arbitrator’s award interferes with the District’s right under the CBA to discharge an employee for just cause. “A just cause provision, in its most basic terms, is a negotiated form of limited job security that to a degree restricts the employer’s otherwise unfettered right [subject, of course, to applicable constitutional and statutory requirements] to discharge and discipline employees.” Office of the Attorney General, 577 Pa. at 269, 844 A.2d at 1224 (footnote omitted). Section 514 of the Code authorizes the school board to remove employees for incompetence, neglect of duty, violation of the Code “or other improper conduct.” 24 P.S. § 5-514. This statutory authority is reflected in several provisions of the parties’ CBA, which provide the District the exclusive right to suspend or discharge for just cause and protect employees from disciplinary action taken without just cause. (CBA, Art. Ill § 1; Art. XXVIII § 2.) The term “just cause” is not defined in the parties’ CBA. Pursuant to the supreme court’s decision in Office of the Attorney General, the parties’ failure to define just cause in the CBA and their appointment of the arbitrator to resolve disputes arising under the CBA reflects the parties’ intent to have the arbitrator interpret the meaning of “just cause.” The arbitrator found the District lacked just cause to terminate Employee, and, because the record contains no evidence that Employee’s off-duty conduct violated Policy 551 or had any effect on any District function, we conclude that the arbitrator’s award is rationally derived from the parties’ CBA.¹²

Accordingly, we reverse.

ORDER

AND NOW, this 17th day of July, 2007, the order of the Court of Common Pleas of Lycoming County, dated June 16, 2006, is hereby reversed.

1 . The Union is also known as Loyalsock Township Educational Support Personnel Professionals.

2 . 2 Pa.C.S. §§ 551-555, 751-754.

3 . Employee did not attend the hearing, apparently due to uncertainly between the parties as to whether Employee was compelled by law to choose between her grievance rights under the parties’ collective bargaining agreement (CBA) and her right to a hearing before the school board. (R.R. at 20a-26a.)

4 . Act of March 10, 1949, P.L. 30, as amended, 24 P.S. § 5-514. Section 514 of the Code sets forth the rights of a board of school directors to remove any employee for incompetency, intemperance, neglect of duty, violation of any of the school laws of this Commonwealth, or other improper conduct.

5 . Justice Cappy’s majority opinion in Cheyney University includes a historical review of cases addressing the role of appellate courts when reviewing labor arbitration awards. As noted in this opinion, Pennsylvania courts have stated the applicable standard of review using differing verbiage and indicating various degrees of judicial deference. The court in Cheyney University rejected the “reasonableness standard," which recently had been applied in Pennsylvania Liquor Control Board v. Independent State Stores Union, 520 Pa. 266, 553 A.2d 948 (1989); County of Centre v. Musser, 519 Pa. 380, 548 A.2d 1194 (1988); and Philadelphia Housing Authority v. Union of Security Officers # 1, 500 Pa. 213, 455 A.2d 625 (1983), stating that such a standard encourages a reviewing court to assert its own brand of labor relations philosophy. In Cheney University, the court repeatedly emphasized that the role of a reviewing court is one of deference.

6 . According to the trial court, “the arbitrator obviously found [Employee’s] conduct egregious” because he suspended her for nine months without pay. (Trial ct. op. at 7.) However, the arbitrator states that the suspension was based on the fact that Employee "refuse[d] to admit to such conduct [drug use in the off hours]" until she faced the results of the drug test. (Arbitrator’s decision at 8.) Thus, the conduct on which the arbitrator "obviously” based the suspension was not Employee’s off-duty marijuana use, but her delay in admitting that. Moreover, we cannot agree that a nine-month suspension "obviously” means that the arbitrator found Employee’s conduct "egregious.”

7 . The trial court cited Giles ex rel. Giles v. Brookville Area School District, 669 A.2d 1079 (Pa.Cmwlth.1995), appeal denied, 544 Pa. 686, 679 A.2d 231 (1996), to support its statement that “the district’s policy should be given credence unless it is apparent that the school district's conduct is arbitrary, capricious and to the prejudice of the public interest.” (Trial ct. op. at 8.) However, the decision in Giles involved review of a school board’s action, rather than review of an arbitrator’s decision, and our scope of review is significantly different in each case.

8 . Because our supreme court has considered a public employer’s core function as a factor in analyzing the second prong of the essence test, decisions describing a core function analysis as the core function "test” or "exception,” or as imposing "a legal restriction on the arbitrator’s authority to interpret an agreement,” are inaccurate and somewhat misleading. Thus, while PSEA, in its Brief of Amicus Curiae, argues forcefully and eloquently that the "core function test” is inappropriate in all arbitration cases, we interpret the supreme court’s decisions in this area as holding that consideration of a public employer’s core function is an essential part of the analysis under the essence test.

9 . Because the arbitrator emphasized the lack of evidence in this regard, we reject the District’s argument that, under the arbitrator’s award, an employee may step off school property, take drugs and return to school without the risk of disciplinary action.

10 . See, e.g., Greene County (vacating the arbitrator’s reinstatement of an employee of the county’s Children and Youth Services where the arbitrator determined that the employee engaged in the misconduct for which he was terminated and placed the safety of children at serious risk); City of Easton (vacating an arbitrators’ reinstatement of an employee to his position at a city water treatment facility where the arbitrators found he had stolen time, failed to fill a chemical feed bin with the proper amount of chemicals, failed to properly complete chemical feed reports and left work without permission); Philadelphia Housing Authority v. American Federation of State, County and Municipal Employees, District Council 33, Local 934, 900 A.2d 1043 (Pa.Cmwlth.2006) (holding that an arbitration award was not rationally derived from the collective bargaining agreement where the arbitrator found that the employee committed repeated acts of sexual harassment, including physical assaults); and Allegheny County Airport Authority v. Construction General Laborers and Material Handlers Union 1058, 874 A.2d 1250 (Pa.Cmwlth.2005) (vacating an arbitrator’s reinstatement of an employee where the arbitrator found that he committed a serious breach of trust by falsifying work records and by improperly using his security badge).

11 . In so doing, the court concluded as follows: "Finally, we do not find that the award, reinstating an officer without back pay for off-duty misconduct has required the governmental employer to bargain away control over core powers that are essential to the proper discharge of the functions for which the governmental entity is responsible. City of Easton.” Office of the Attorney General, 577 Pa. at 273, 844 A.2d at 1227 (emphasis added).

12 . Having so concluded, we need not address Employee’s argument that she was denied due process of law.