SEPTA v. City of Phila., Aplts.

[J-65-2013]

IN THE SUPREME COURT OF PENNSYLVANIA

EASTERN DISTRICT

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, STEVENS, JJ.

SOUTHEASTERN PENNSYLVANIA : No. 20 EAP 2013

TRANSPORTATION AUTHORITY, :

: Appeal from the Order of Commonwealth

Appellee : Court entered on April 13, 2011 at No.

: 2445 CD 2009, reversing the Order

: entered on November 10, 2009, in the

v. : Court of Common Pleas, Philadelphia

: County, Civil Division at No. 3055 July

: Term, 2009

CITY OF PHILADELPHIA AND :

PHILADELPHIA COMMISSION ON :

HUMAN RELATIONS, :

:

Appellants : ARGUED: September 11, 2013

OPINION

MR. JUSTICE McCAFFERY DECIDED: September 24, 2014

We granted review in this case principally to clarify the standard for determining

whether a municipal ordinance applies to an agency or instrumentality of the

Commonwealth. The Commonwealth Court concluded here that the Southeastern

Pennsylvania Transportation Authority (“SEPTA”) is a Commonwealth agency and

therefore not subject to either the provisions of the Philadelphia Fair Practices

Ordinance (“FPO”),1 or the jurisdiction of the Philadelphia Commission on Human

Relations (“the Philadelphia Commission”). The Commonwealth Court also concluded

1

Phila. Code §§ 9-1101-1128.

that, because SEPTA was not amenable to the Philadelphia Commission’s jurisdiction,

it had no duty to exhaust its administrative remedies before that agency. For the

reasons that follow, we vacate the order of the Commonwealth Court and remand for

reconsideration under the proper standard.

This case has its origins in seven administrative proceedings against SEPTA that

individuals instituted with the Philadelphia Commission from July 2007 through April

2009, alleging violations of the FPO.2 At least two of the administrative complaints

included claims of types of discrimination against which the FPO offers protection, but

that the Pennsylvania Human Relations Act (“PHRA”)3 does not cover. See Stipulated

Facts, ¶ 6-7; R.R. 258a-259a (listing administrative cases). SEPTA filed a motion to

dismiss each of the administrative cases for lack of jurisdiction, and the Philadelphia

Commission denied the motions. Id.

2

In general terms, the FPO protects against discrimination: in employment based upon

a person’s race, ethnicity, color, sex, sexual orientation, gender identity, religion,

national origin, ancestry, age, disability, marital status, familial status, genetic

information, or domestic or sexual violence victim status; in public accommodations

based upon race, ethnicity, color, sex, sexual orientation, gender identity, religion,

national origin, ancestry, disability, marital status, familial status, or domestic or sexual

violence victim status; and in housing accommodation, commercial property and other

real estate opportunities based upon race, ethnicity, color, sex, sexual orientation,

gender identity, religion, national origin, ancestry, disability, marital status, age, source

of income, familial status, or domestic or sexual violence victim status. Phila. Code §§

9-1103, 1106, 1108.

3

43 P.S. §§ 951-963. The PHRA protects most, but not all, of the categories of

individuals covered by the FPO. In general terms, the PHRA protects against

discrimination in employment, housing, and public accommodation because of race,

color, familial status, religious creed, ancestry, handicap or disability, age, sex, and

national origin. In addition, it prohibits discrimination based upon the use of a guide or

support animal because of the blindness, deafness or physical handicap of the user or

because the user is a handler or trainer of support or guide animals.

[J-65-2013] - 2

While all seven administrative proceedings were still pending,4 SEPTA instituted

this civil action against Appellants seeking both declaratory and injunctive relief.

SEPTA maintained in its complaint5 that because it is a Commonwealth agency, and

Appellants are a political subdivision and a municipal agency, respectively, the FPO

does not apply to it, and the Pennsylvania Constitution barred Appellants from

exercising jurisdiction over it.6

Appellants filed preliminary objections demurring to SEPTA’s complaint.

Appellants argued that because Philadelphia’s powers under the First Class City Home

Rule Act7 extend to enacting and enforcing anti-discrimination laws, the FPO applied to

SEPTA and the Philadelphia Commission had jurisdiction over it. Appellants further

contended that an original action for declaratory and injunctive relief was inappropriate

because SEPTA had to await final agency decisions in the individual administrative

cases against it before it could seek appellate review in court. In response, SEPTA

pointed out that the statute authorizing the creation of metropolitan transportation

authorities, such as SEPTA, provides that such an authority “shall exercise the public

powers of the Commonwealth as an agency and instrumentality thereof,” 74 Pa.C.S.

§ 1711(a), and asserted that Philadelphia’s authority as a home-rule jurisdiction extends

4

See Complaint, ¶ 29; R.R. 50a (“In fact, SEPTA is presently litigating the jurisdiction

issue at the [Philadelphia] Commission, to no avail.”).

5

Because we are conducting appellate review of an order sustaining preliminary

objections in the nature of a demurrer to SEPTA’s complaint, we treat the material

factual allegations of SEPTA’s complaint as true and make all reasonable inferences

from those allegations in favor of SEPTA, as the party responding to the demurrer. We

then ask whether, even taking those allegations and inferences as true, the law says

with certainty that SEPTA cannot prevail. Jones v. Nationwide Prop. and Cas. Ins. Co.,

32 A.3d 1261, 1267 (Pa. 2011).

6

Complaint, ¶¶ 2, 19, 27; R.R. 46a, 49a-50a.

7

53 P.S. §§ 13101-13157.

[J-65-2013] - 3

only to the regulation of its municipal affairs. In its brief in opposition to the preliminary

objections, SEPTA did not rely upon, or refer to in any manner, the section of its

enabling legislation pertaining to sovereign and official immunity. 74 Pa.C.S. §

1711(c)(3). The trial court sustained the preliminary objections and dismissed SEPTA’s

complaint.8

SEPTA appealed to the Commonwealth Court, which reversed. SEPTA v. City of

Philadelphia, 20 A.3d 558 (Pa.Cmwlth. 2011) (en banc). A majority of the court

concluded that the Philadelphia Commission lacked jurisdiction because SEPTA is an

“agency and instrumentality” of the Commonwealth and therefore within the jurisdiction

of the Pennsylvania Human Relations Commission (the “State Commission”). The

majority noted that the State Commission is responsible for the administration of the

PHRA, which bans any “employer” from engaging in certain forms of discrimination. 43

P.S. §§ 955, 956(a). Because the PHRA defines “employer” as including “the

Commonwealth or any political subdivision or board, department, commission or school

district thereof,”9 and because neither the PHRA nor the FPO explicitly grants the

Philadelphia Commission jurisdiction over SEPTA, the majority concluded the State

Commission – and not the Philadelphia Commission – had jurisdiction over SEPTA.

The Commonwealth Court did not base any portion of its reasoning upon the section of

SEPTA’s enabling legislation pertaining to sovereign and official immunity. 74 Pa.C.S.

§ 1711(c)(3). Because the majority considered the State Commission’s jurisdiction over

SEPTA to be clear, and a Commonwealth instrumentality’s challenge to “the scope of a

governmental body’s action pursuant to statutory authority” through a declaratory

judgment action to be proper, the majority also concluded that SEPTA had no duty to

8

Trial Court Order, dated 11/9/09; R.R. 24a.

9

43 P.S. § 954.

[J-65-2013] - 4

exhaust its administrative remedies before seeking relief in court. SEPTA v. City of

Phila., supra at 563.

Now-President Judge Dante Pellegrini dissented. He concluded that SEPTA is

not a Commonwealth agency, and even if it were, it would still be subject to the

provisions of the FPO and the jurisdiction of the Philadelphia Commission. The dissent

stated that the General Assembly had enacted the portion of SEPTA’s enabling act that

provides that a metropolitan transportation authority such as SEPTA is “an agency and

instrumentality thereof” merely to avoid constitutional and statutory questions, such as

limitations on local governments’ acquisition of debt. 74 Pa.C.S. § 1711(a). The

dissent opined that the cited language was not intended to render SEPTA a state

agency for all purposes.

The dissent then concluded that even if SEPTA were part of the Commonwealth

government, it nonetheless would be subject to the jurisdiction of the Philadelphia

Commission under Commonwealth v. Ogontz Area Neighbors Association, 483 A.2d

448, 452 (Pa. 1984). In that case, the Department of Public Welfare (“DPW”) – which

we characterized as “an agency of the Commonwealth” – applied to the City of

Philadelphia for the permits needed to build a facility for the mentally handicapped. Id.

at 449-50. The City denied the permits on the ground that the proposed facility did not

comply with use and other restrictions under the Philadelphia Zoning Code. On review

in this Court, we rejected the notion that DPW was immune from local land regulations

because it had the power to condemn property to establish the facility it sought to

construct. We reasoned that because the General Assembly had established both the

City and DPW, and had fixed the extent of each entity’s powers, we would need to

examine the enabling act of each entity to determine which entity’s authority the

legislature had intended to prevail for purposes of the parties’ controversy. Because the

[J-65-2013] - 5

applicable statutes did not clearly state which entity the legislature had intended to be

“preeminent,” we applied the rule of statutory construction that a court may determine

legislative intent by considering “the consequences of a particular interpretation.” Id. at

455 (citing 1 Pa.C.S. § 1921(c)(6)). Because Philadelphia’s zoning scheme would have

been frustrated if DPW were to have prevailed, while subjecting DPW to local zoning

rules and restrictions would not necessarily have frustrated DPW’s mandate to establish

mental health facilities, we concluded that the legislature had intended the City to have

priority in the circumstances at issue.

The dissent here applied the principles we set forth in Ogontz and concluded

that, as in Ogontz, the relevant statutes were ambiguous as to which entity was

intended to have priority. The dissent therefore considered the effect of holding each

entity preeminent and determined that ruling in SEPTA’s favor would frustrate the

legislature’s intended scheme. Characterizing the PHRA as granting the State and

Philadelphia Commissions “concurrent jurisdiction,” the dissent explained that deeming

SEPTA “preeminent” over Appellants would thwart the legislatively established system

of shared jurisdiction. The dissent explained that, on the other hand, treating Appellants

as “preeminent” would not interfere with SEPTA’s purpose of providing public

transportation. The dissent stated, “All the consequence of the City’s and the [State

Commission’s] preeminence means is that SEPTA would still have to respond to

complaints, like private companies, of those choosing to file their claims of unlawful

discrimination with [the Philadelphia Commission].” SEPTA, supra at 569 (Pellegrini, J.,

dissenting).

Appellants sought allowance of appeal, which we granted to decide the following

questions:

(1) Does the City have power to protect its residents from

acts of discrimination by SEPTA, a metropolitan

[J-65-2013] - 6

transportation authority, where the Pennsylvania

Human Relations Act explicitly states that nothing in the

PHRA shall be deemed to repeal or supersede any of

the antidiscrimination provisions of any municipal

ordinance, the City’s power to regulate discrimination is

not sourced in the PHRA, the City’s ordinance extends

by its terms to SEPTA as an employer and provider of

public accommodations, and concurrent state and local

jurisdiction would not adversely affect SEPTA’s core

transportation mission?

(2) Should the City’s Commission on Human Relations

have been permitted, following the well-established rule

of administrative exhaustion, to determine any

challenges by SEPTA to its jurisdiction in the first

instance, thereby having the opportunity to make

findings on a developed factual record suitable for

appellate review as to the nexus between the City’s

interests and the alleged discrimination, rather than the

Commonwealth Court ruling on an abstract, premature

challenge?

SEPTA v. City of Philadelphia, 65 A.3d 292, 292-93 (Pa. 2013).

Appellants’ Authority over SEPTA

The first issue involves statutory interpretation, and as in all such matters, we

follow the dictates of the Statutory Construction Act. Commonwealth v. Janssen

Pharmaceutica, Inc., 8 A.3d 267, 275 (Pa. 2010).

Appellants echo the position of the Commonwealth Court dissent regarding the

first issue. They argue that SEPTA is not “the Commonwealth” simply because its

enabling act states it is a Commonwealth “agency and instrumentality,” and even if it is

the equivalent of “the Commonwealth,” it is nonetheless subject to the jurisdiction of the

Philadelphia Commission.

Appellants contend that the statutory declaration that metropolitan transportation

authorities such as SEPTA are agencies and instrumentalities of the Commonwealth is

[J-65-2013] - 7

not determinative of this issue. Appellants point out that we recently held, in Goldman

v. SEPTA, 57 A.3d 1154 (Pa. 2012), that despite SEPTA’s statutory classification as a

Commonwealth agency, it is not entitled to assert in Pennsylvania courts the

Commonwealth’s Eleventh Amendment immunity against suits under the Federal

Employers Liability Act. Goldman v. SEPTA, supra at 1180. Appellants characterize

Goldman as the latest in a line of our cases addressing, in various contexts and with

varying results, whether an authority statutorily designated as a Commonwealth agency

is properly treated as part of the state government.10 Appellants maintain that our

decisions in the cases they cite are consistent in that in each case, we did not consider

the statutory declaration to be determinative of whether the authority could lay claim to

the rights and prerogatives of the Commonwealth.

Appellants further argue that instead of treating the jurisdiction of the State

Commission over SEPTA as a bar to the Philadelphia Commission’s authority over

SEPTA, the Commonwealth Court should have applied the legislative intent analysis of

Ogontz, supra. According to Appellants, the applicability of the PHRA to SEPTA would

only be relevant here if either: (1) the PHRA preempted the FPO; or (2) the PHRA were

the sole source of Philadelphia’s authority to enact the FPO. Appellants argue that

10

Compare Blount v. Phila. Parking Auth., 965 A.2d 226, 231 (Pa. 2009) (holding that

parking authority was subject to Commonwealth Court’s original jurisdiction); James J.

Gory Mech. Contracting, Inc. v. Phila. Housing Auth., 855 A.2d 669, 672 (Pa. 2004)

(holding that although housing authority’s enabling act designated it a Commonwealth

agency, the General Assembly did not intend it to be subject to Commonwealth Court’s

original jurisdiction); T&R Painting Co., Inc. v. Phila. Housing Auth., 353 A.2d 800 (Pa.

1976) (holding that housing authority was not subject to Commonwealth Court’s original

jurisdiction); with SEPTA v. Bd. of Revision of Taxes, 833 A.2d 710, 718 (Pa. 2003)

(holding that SEPTA, as a Commonwealth agency, was immune from local real estate

tax for portions of its building used in furtherance of its statutory purpose, but not for

portions rented to commercial entities); and Feingold v. SEPTA, 517 A.2d 1270, 1276

(Pa. 1986) (holding that SEPTA was immune from punitive damages).

[J-65-2013] - 8

neither is the case. They assert that SEPTA has conceded that the PHRA does not

preempt the FPO, and that Philadelphia’s power to enact the FPO flows not from the

PHRA, but rather from the First Class Cities Home Rule Act. See supra n.7. Appellants

further contend that because Philadelphia is a home-rule jurisdiction, its ordinances are

“presumed to be valid, absent a specific constitutional or statutory limitation.”

Appellants’ Brief at 32 (quoting In re Petition to Recall Reese, 665 A.2d 1162, 1164 (Pa.

1995)). Because SEPTA has identified no such limitation, Appellants argue the FPO

should be presumed lawful.

In the alternative, Appellants maintain that even if SEPTA is deemed a state

agency or instrumentality, it is properly subject, under Ogontz, to the provisions of the

FPO and the jurisdiction of the Philadelphia Commission. Appellants assert that

because, as in Ogontz, the words of the relevant statutes do not clearly resolve the

question before us, we should consider the consequences of the respective

interpretations the parties suggest. Appellants maintain that they prevail under such an

analysis because SEPTA’s purpose of providing public transportation will not be

impeded if SEPTA is subject to the FPO. Appellants state that on the other hand, the

additional protections of the FPO will be significantly hampered if a major employer and

transportation provider such as SEPTA is determined to be exempt from the ordinance.

In response, SEPTA argues that the City may not apply the FPO to a

Commonwealth agency and instrumentality, such as SEPTA. Citing Board of Revision

of Taxes, supra; Hoffman v. Pittsburgh, 75 A.2d, 649, 654 (Pa. 1950); and Jones v.

Tatham, 20 Pa. 398, 8 Harris 398, 1853 WL 6260 (1853), SEPTA argues that legislation

does not affect the rights of the Commonwealth in the absence of an explicit statement

or a clear indication from the legislature to the contrary. Disclaiming any preemption

argument, SEPTA asserts that the Commonwealth Court majority cited the legislature’s

[J-65-2013] - 9

explicit grant to the State Commission of authority over state agencies merely to

illustrate that the General Assembly is capable of making such an express authorization

when it wants to. On a policy note, SEPTA argues that because its operations extend

across county lines, subjecting it to the FPO will result in “regulatory chaos.” Appellee’s

Brief at 12.

SEPTA then challenges Appellants’ reliance on Ogontz. It argues that the

Ogontz analysis is only applicable where a state agency attempts to use real property in

a way that conflicts with a local municipality’s zoning ordinances. SEPTA argues that its

interpretation of Ogontz is supported by our holding in Board of Revision of Taxes,

supra, that property SEPTA owned, but leased to a commercial entity, was not immune

from local taxes.

Finally, SEPTA contends that it prevails even under Appellants’ Ogontz analysis,

characterizing as not credible Appellants’ assertion that exempting SEPTA from the

FPO will significantly weaken the ordinance. SEPTA asserts that the City amended the

FPO’s definition of covered “employers” to add major Philadelphia employers other than

SEPTA only after SEPTA instituted this litigation. SEPTA states that the earlier

absence of major employers from the definition undercuts Appellants’ argument that not

enforcing the FPO against it will undermine the FPO’s effectiveness, as other significant

employers were previously free from the FPO’s constraints. SEPTA also pointedly

asserts that prior to this suit, the Philadelphia’s Commission’s website stated that it

“does not have jurisdiction over state or federal agencies [or] authorities... .” Appellee’s

Brief at 2.

Both sides’ arguments are persuasive in part. SEPTA is correct that its enabling

legislation plainly states that it “exercise[s] the public powers of the Commonwealth as

[J-65-2013] - 10

an agency and instrumentality” of the Commonwealth. 74 Pa.C.S. § 1711(a).11

Contrary to SEPTA’s contentions, however, that is not the end of the matter.12

In a series of cases beginning with our decision in Ogontz, supra, this Court has

held that a Commonwealth agency’s challenge to a municipality’s exercise of authority

over it does not represent “a contest between superior and inferior governmental

entities, but instead a contest between two instrumentalities of the state.” See Ogontz,

supra at 452; County of Venango v. Borough of Sugarcreek, 626 A.2d 489, 490 (Pa.

1993); Hazleton Area Sch. Dist. v. Zoning Hearing Bd., 778 A.2d 1205, 1210 (Pa.

2001). That is, because the legislature authorized the creation of both entities, and set

the limits of each entity’s authority, our task is to determine, through an examination of

the relevant statutes, which entity the legislature intended to have preeminent powers.

Ogontz, supra at 452. In short, “[t]he problem, essentially, is one of statutory

interpretation.” Id. Our standard of review of such a question of statutory interpretation

is de novo, and our scope of review is plenary. Hazleton, supra at 1213.

As identified in Hazleton, our opinion in Ogontz, supra sets forth the analytical

process a court is to follow to determine which entity the legislature intended to have

preeminent powers over a given area of regulation.

The first step requires the reviewing court to determine, through

examination of the statutes, which governmental entity, if any, the General

Assembly expressly intended to be preeminent. Id. In the event there is

no such express legislative mandate, the second step requires the court

“to determine legislative intent as to which agency is to prevail ... turn[ing]

to the statutory construction rule that legislative intent may be determined

11

In its brief to this Court, SEPTA again does not rely upon, or refer to in any manner,

the section of its enabling legislation pertaining to sovereign and official immunity, 74

Pa.C.S. § 1711(c)(3).

12

To be clear, we need not, and do not, determine whether SEPTA is properly treated

as a Commonwealth agency for all purposes.

[J-65-2013] - 11

by a consideration, inter alia, of the consequences of a particular

interpretation.”

Hazleton, supra at 1210 (quoting Ogontz, supra at 455 (citing in turn 1 Pa.C.S. §

1921(c)(6))) (emphasis omitted).

Thus, in accordance with Ogontz, Venango, and Hazleton, SEPTA is wrong in

asserting that, in order for a local governmental agency to prevail over a

Commonwealth agency or instrumentality, the legislature must have clearly stated its

intent in that regard. Rather, pursuant to this line of cases, we have applied the

Statutory Construction Act in order to discern the legislature’s intent. See Hazleton,

supra at 1213 (applying Ogontz to determine that school district’s authority to lease

school grounds to others for recreational purposes did not trump local zoning code);

Venango supra at 492 (applying Ogontz to conclude that county’s statutory authority to

use its property for jails was subject to borough’s zoning ordinance). SEPTA has

mistaken our insistence that courts seek out and effectuate the intent of the legislature

for a requirement that the legislature state its intent clearly or explicitly that a

municipality is to have “preeminent powers” over a state agency in a given area of law.

Indeed, we concluded in Ogontz, supra, that Philadelphia could enforce its zoning code

against DPW even though we could not discern from the face of the applicable statutes

the legislature’s intent as to which of the governmental entities was intended to have

priority. And, contrary to SEPTA’s suggestion and the dissent’s approach, nothing in

the Ogontz/Venango/Hazleton line of cases, or the reasoning behind those decisions,

suggests that this analysis is restricted to conflicts over the applicability of zoning laws.

SEPTA’s argument essentially is that the structure of Pennsylvania government

imposes an implicit limitation on Philadelphia’s powers and bars it from regulating the

state, its agencies, or instrumentalities in the absence of the General Assembly’s clear

indication to the contrary. But SEPTA’s argument runs counter to

[J-65-2013] - 12

Ogontz/Venango/Hazleton, which instructs us that, rather than being a competition

between “superior” and “inferior” governmental entities, the issue is one of legislative

intent.

For similar reasons, we conclude that Appellants’ reliance on home-rule

principles is misplaced. We consider the rule that a home-rule municipality’s exercise of

legislative power is presumed valid, absent a specific constitutional or statutory

limitation, to relate to a municipality’s authority to enact ordinances regarding a

particular subject matter. That rule does not pertain to whether the municipality may

enforce ordinances and regulations against a Commonwealth agency or instrumentality.

We view the latter question as properly resolved under the Ogontz/Venango/Hazleton

legislative intent analysis.

The cases on which SEPTA relies do not indicate otherwise. In Board of

Revision of Taxes, supra, we held that although portions of a building owned and used

by SEPTA were exempt from local taxation, other portions leased to private commercial

enterprises, were subject to local real estate tax. We reached that conclusion by

applying the longstanding presumption that a Commonwealth agency is immune from

taxation when acting within its authorized governmental purposes and powers. Id. at

712 (citing Del. County Solid Waste Auth. v. Berks County Bd. of Assessm’t Appeals,

626 A.2d 528 (Pa. 1993)). We stated that nothing in the statute authorizing SEPTA to

lease its property to others provided any basis for concluding that SEPTA had been

absolved from paying real estate tax for property used for “such a commercial venture.”

Id. at 717.

Our opinion in Board of Revision of Taxes thus addressed an issue not

presented here: whether “a governmental agency or instrumentality [may] automatically

claim immunity from local real estate taxation for property leased to third-party

[J-65-2013] - 13

commercial entities.” City of Phila. v. Cumberland County Bd. of Assessm’t Appeals, 81

A.3d 24, 51 (Pa. 2013). Moreover, to the extent local taxation is an exercise of

municipal power, our treatment of the tax immunity issue in Board of Revision of Taxes

is consistent with our application of the Ogontz/Venango/Hazleton test here. In both

instances, we have sought to enforce the legislature’s allocation of authority. We

explained in Board of Revision of Taxes that we could not presume that the legislature’s

general grant of taxing power to local municipal governments was “meant to include

property owned by the Commonwealth, since to allow such taxation would upset the

orderly processes of government.” Id. at 713. That is, allowing municipalities to tax

Commonwealth real estate would, in effect, allow local municipalities to override the

legislature’s allocation of Commonwealth tax revenues, an outcome we could not

reasonably endorse in the absence of an indication from the legislature that it intended

such a result. See 1 Pa.C.S. § 1922(1) (courts are to presume that the legislature does

not intend an unreasonable or absurd result); Commonwealth v. Dauphin County, 6

A.2d 870, 872 (Pa. 1939) (“The legislators did not intend to upset the orderly processes

of government by allowing the sovereign power to be burdened by being subjected to

municipal taxes.”). We did not rely on the status of one entity as part of the

Commonwealth government to resolve the dispute; rather, we engaged in the familiar

processes of statutory construction to divine the legislature’s intent as to which entity

should prevail.

Nor do Hoffman v. Pittsburgh, supra, and Jones v. Tatham, supra, require a

different outcome. SEPTA cites statements in each of those cases to the effect that

“[w]ords of a statute applying to private rights do not affect those of the state.”

Appellee’s Brief at 10 (quoting Jones, supra, 1853 WL 6260, at *12); see also Hoffman,

supra at 654. While that statement is correct as a very general proposition, its

[J-65-2013] - 14

application is limited. As we explained in In re Public Parking Authority of Pittsburgh, 76

A.2d 620, 621 (Pa. 1950), the rule SEPTA cites is limited to cases “where there is a

conflict between the sovereign power of the Commonwealth and the private rights of

individuals, or whether the sovereign intended to make itself liable for torts of its

servants, or whether the sovereign intended to pay interest on its obligations.” This

case falls into none of those categories. We are not faced here with a conflict between

the Commonwealth and an individual; a controversy over the Commonwealth’s liability

under the doctrine of respondeat superior; or a question about whether the

Commonwealth should pay interest on an obligation. Rather, we consider a dispute

between two Commonwealth-created entities regarding the circumstances under which

one of the entities may be subject to the authority of the other.13

In addition, we reject SEPTA’s suggestion that a ruling in Philadelphia’s favor

here will risk extra-territorial application of the FPO and subject SEPTA to “regulatory

chaos.” Extra-territorial enforcement of the FPO is precluded by the First Class Cities

Home Rule Act, which bars cities of the first class, i.e., Philadelphia, from “exercis[ing]

any powers or authority beyond the city limits, except such as are conferred by an act of

the General AssemblyP .” 53 P.S. § 13133. No one has cited any statute remotely

suggesting the FPO is viable outside of Philadelphia, and we are aware of none.

Furthermore, the potential that Philadelphia might in some instance or instances attempt

13

While SEPTA has not asserted the section of its enabling legislation pertaining to

sovereign and official immunity, the Chief Justice dissents on the basis that pursuant to

74 Pa.C.S. § 1711(c)(3), SEPTA enjoys sovereign immunity in this case because the

General Assembly has not expressly waived SEPTA’s immunity from administrative

proceedings. Concurring and Dissenting Opinion at 7. However, when presented with

two competing absolutes-- here sovereign immunity and the authority of Philadelphia to

enforce its ordinance, we employ the tools of statutory construction and interpretation to

resolve the conflict. See Frazier v. W.C.A.B. (Bayada Nurses, Inc.), 52 A.3d 241, 247

(Pa. 2012).

[J-65-2013] - 15

extra-territorial enforcement of the FPO against SEPTA, is not truly relevant to the

disposition of this declaratory judgment action. The issue here is whether, as a matter

of law, the FPO and the Philadelphia Commission can ever have authority over SEPTA.

The possibility that, in a particular case, the Philadelphia Commission might seek to

apply the FPO outside Philadelphia has no bearing on the overarching legal question

we address here – which entity the General Assembly intended to have priority. Any

attempt at extra-territorial enforcement of the FPO will be properly dealt with if it ever

arises.

Finally, SEPTA’s arguments regarding alleged changes to the Philadelphia

Commission’s website and the FPO’s new and more inclusive definition of employer

after SEPTA initiated this case are not relevant. The issue here is whether the General

Assembly intended for the Philadelphia Commission and the FPO to have jurisdiction

over SEPTA. Because the FPO was enacted by Philadelphia City Council, the

provisions of the FPO are not evidence of the General Assembly’s intent. For similar

reasons, any statements on the Philadelphia Commission’s website are likewise not

relevant.

In summary, we reiterate that the legislative intent analysis set forth in

Ogontz/Venango/Hazleton represents the proper analysis for deciding this issue.

Because the Commonwealth Court did not conduct that analysis, we vacate its order

and remand the case for it to do so in the first instance.

Administrative Exhaustion

Appellants maintain that the Commonwealth Court erroneously concluded that

SEPTA had no need to exhaust its administrative remedies through the Philadelphia

Commission before commencing suit. Appellants argue that we have consistently held

that an administrative agency is competent to determine its own jurisdiction, and that

[J-65-2013] - 16

SEPTA is not subject to any exception to that rule. SEPTA responds that it did not need

to exhaust its administrative remedies before the Philadelphia Commission, contending

that a party may bypass an agency’s procedures and instead immediately seek

declaratory relief in court to challenge that same agency’s jurisdiction.

As a rule, where an adequate administrative process is available, a party may not

forgo that process in favor of seeking judicial relief. Bayada Nurses, Inc. v. Com., Dep’t

of Labor and Indus., 8 A.3d 866, 875 (Pa. 2010); Empire Sanitary Landfill, Inc. v.

Commonwealth, Dep’t of Envtl. Res., 684 A.2d 1047, 1053 (Pa. 1996). Instead, the

party must first exhaust its administrative remedies before proceeding to court.

However, an exception exists for cases in which a litigant makes a purely legal

challenge to an agency’s jurisdiction. Id. at 1054. In such a case, the litigant may seek

declaratory and injunctive relief in court without first exhausting its administrative

remedies. Mercy Hospital of Pittsburgh v. Pennsylvania Human Relations Comm’n, 451

A.2d 1357, 1359 (Pa. 1982), is distinguishable. There, the provision of the PHRA under

which the commission had sought to proceed pertained only to cases of discrimination

in employment relationships, and the hospital argued that it had no employment

relationship with the complainant. We concluded that equitable jurisdiction was not

available in that case because the commission was competent to resolve the factual

question of whether an employment relationship existed. Here, in contrast, we are

confronted with a purely legal challenge to an agency’s jurisdiction, not a factual one.

Under our precedents, SEPTA was not required to exhaust its administrative remedies.

In conclusion, although the Commonwealth Court correctly determined that

SEPTA was not required in this instance to exhaust its administrative remedies before

commencing this declaratory judgment action, it erred by not applying the Ogontz

legislative intent analysis to determine whether SEPTA may properly be held to the

[J-65-2013] - 17

provisions of the FPO and the jurisdiction of the Philadelphia Commission. We

therefore vacate the Commonwealth Court’s order and remand the case to that court for

it to conduct that analysis.

Mr. Justice Baer, Madame Justice Todd and Mr. Justice Stevens join the opinion.

Mr. Chief Justice Castille files a concurring and dissenting opinion.

Mr. Justice Eakin files a concurring and dissenting opinion.

Mr. Justice Saylor files a dissenting opinion.

[J-65-2013] - 18