Deferential Essence Test to Review An Arbitration Award
In Greene County v. District 2, United Mine Workers of America, 578 Pa. 347, 852 A.2d 299 (2004), the Supreme Court relied heavily on its decision in City of Easton v. American Federation of State, County and Municipal Employees, AFL-CIO, Local447, 562 Pa. 438, 756 A.2d 1107 (2000).
In Greene County, the Supreme Court summarized its City of Easton decision as follows:
In City of Easton, the City of Easton terminated an employee for, inter alia, holding a second job with a security company, and submitting time sheets to both employers for the same hours worked to collect double pay.
The employee grieved his dismissal.
An arbitration board found that the employee had committed either a theft against the City itself or the security company while he was working for the City, but nevertheless reinstated the employee with back pay, finding that the City had failed to prove that the employee's misconduct provided just cause for his termination because the evidence presented failed to establish that the employee had stolen time from the City or from the security company.
On appeal, the Court vacated the arbitration board's award.
Initially, the Court reaffirmed the deferential essence test as the proper standard by which to review the award, but explained that this usual degree of deference to be accorded an arbitrator's award is moderated in a situation in which the arbitrator's interpretation of the agreement led to the governmental employer relinquishing essential control over the public enterprise, i.e., those powers essential to its ability to discharge its functions. Id. at 1111.
Specifically, the Court pointed out that the collective bargaining agreement between the parties included a schedule of discipline which provided that an employee could be immediately dismissed for "willful misconduct."
The board determined that the employee was guilty of theft.
Cognizant of our prior cases emphasizing the need for government to control its powers that are essential to the proper discharge of the functions entrusted to that governmental body and recognizing that governmental authorities simply do not have the freedom of private enterprises to discontinue or bargain away the control over such functions, we held that the arbitrator's determination could not be rationally derived from the collective bargaining agreement as it compelled a governmental entity to relinquish essential control over the enterprise. Id.
Thus we vacated the arbitrator's award. Greene County, 578 Pa. at 361-362, 852 A.2d at 308.