# Petition for Writ of Certiorari — City of Philadelphia v. District Council 33, American Federation of State, County & Municipal Employees > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1340%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1988 - **Citation:** 485 U.S. 982 ## Text 87-1340 No. IN THE Supreme Court of the United States October Term, 1988 CITY OF PHILADELPHIA, Petitioner . DISTRICT COUNCIL 33, AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO, by EARL STOUT, as Trustee ad Litem; and EARL STOUT: ALBERT JOHNSON; FRANCES ROONEY, ROBERT LUCAS; JAMES RAWLS; DONALD GALLIMORE; EDWARD SIMPKINS; LEONARD TILGHMAN; ANN COHEN: GEORGE WROTEN: and EARL WILLIAMS, Trustees of DISTRICT GOUNCIL 33 MUNICIPAL WORKERS HEALTH AND WELFARE FUND PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF THE COMMONWEALTH OF PENNSYLVANIA CHARLES W. BOWSER, Esquire LUTHER E. WEAVER, III], Esquire JACKIE B. SPARKMAN, Esquire JAMES P. COUSOUNIS, Esquire Three Benjamin Franklin Parkway 17th Floor Philadelphia, PA 19102 (215) 561-7100 SEYMOUR KURLAND, Esquire City Solicitor Law Department Municipal Services Building 15th Floor Philadelphia, PA 19102-1692 Attorneys for Petitioner aoe PE tae QUESTIONS PRESENTED 1. Where a state legislature has enacted a definitive public policy requiring the protection of the rights of the public when public employers and public employee unions negotiate labor agreements, does Section 1 of the Fourteenth Amendment require state courts to consider that policy sua sponte. 2. Whether the state court rules of law preventing public employer-signatories to collective bargaining agreements from contesting the illegality of their agreements, while granting that right to private parties, violates Section 1 of the Fourteenth Amendment of the United States Constitution. 3. Whether the refusal of the lower court to hear the appeal of the City, while agreeing to hear the Union's appeal on the same issue, violates Section 1 of the Fourteenth Amendment. TABLE OF CONTENTS Page Questions presented .. . ..../.0.414 54500 eee i Table of authorities ...........55:5 eee iii Opinions below .. 0.050425 l Jurisdiction .......i...050, 10, 11 Gryger v. Berke, 334 U.S. 728 (1947) ................. 8,9 Hovey v. Elliot, 167 U.S. 409 (1897) .................. 13 Kaiser Steel Corporation v. Mullins, 455 U.S. 72 eae a ise pieie ov ah hae wie 12, 13 Logan v. Zimmerman Brush Co., 455 U.S. 422 (1982) ... 7, 8 Mullane v. Central Hanover Bank & Trust Co., 339 U.S. te a: 10, 13 Muse-Art Corp. v. City of Philadelphia, 373 Pa. 329, 95 a ee Ss von ls kad 6 bikie 4.00 #:0.0 6 O’Brien v. O'Brien Steel Contruction Company, 440 Pa. re 1] Pennsylvania Labor Relations Board v. State College Area Sch. Dist., 461 Pa. 494, 337 A.2d 262 (1975) ....... 12 Pittsburgh Joint Collective Bargaining Committee v. Pitts- burgh, 481 Pa. 66, 391 A.2d 1318 (1978) ...... 5, 10, 11 ili TABLE OF AUTHORITIES— Continued) Cases: Page Ridgefield Park Education Association v. Ridgefield Park Board of Ed., 78 N.J. 144, 393 A.2d 278 (1978)..... 10 Rothberg v. Rosenbloom, 628 F.2d 746 (E.D. Pa. 1986).. 11 School Committee of Holyoke v. Larry Duprey, 8 Mass. App. Ct. 58, 391 N.E. 2d 925 (1979) .............. 10 Schuck v. School District of Baldwin Tp., 296 Pa. 408, 146 Re ed vs 5 ee ee ee A-17 through their agent, perceived their needs and priorities. Thus, the employees might emphasize job security over take-home pay and might, for obvious tax reasons, divide compensation into taxable earnings as reflected in the paycheck and non-taxable earnings designated for health and welfare purposes and di- verted to a special trust set up and operated by the agents of the employers. In either event, the payments by the city are beneficially the money of the employees as soon as paid. Appropriately, therefore, the employees and their agents have resisted attempts by the defendant to both pay the money and control it. Mayor Rizzo testified that it was never contem- plated that the City would have any such control. While a legitimate subject for negotiation between the employees’ col- lective bargaining agent and the City of Philadelphia; in no contract entered into from 1975 to date have the parties negotiated any provision giving the defendant City of Philadel- phia audit authority, representation on the trustee board, administrative responsibilities or any control of the expenditures of the employees’ money. Consequently, the court will not substitute its judgment for the collective bargaining process. The employees who are members of District Council 33 have, through their agents, provided an extraordinarily gener- ous health and welfare plan. It certainly exceeds the coverage customarily offered by other commercial or non-profit health insurance providers. It may be actuarially unsound. Certainly, it — includes the potential that a few members with catastrophic illness may preempt the resources available in a given period of time for the general membership. However, just as the defendant may not, unless provided in the collective bargaining agreement tell the members and their agent how to spend their money; neither may the court. The constructive trust imposed by the court in the Order of April 27, 1984, was of necessity, a temporary device designed to assure the court that the status quo would be maintained until final adjudication. The court’s power to impose such a trust expires with the final adjudication. The court concludes, as_a matter of law, that the prelimi- nary injunction entered April 27, 1984, shall be made final: but A-18 shall be modified to provide that the defendant City of Phila- delphia pay to the plaintiff District Council 33 Health and Welfare Trust the sum of $178.00 per member per month for the period January 1, 1983 to June 30, 1984. APPENDIX E District Council 33, American Federation of State, County and Municipal Employees, AFL-CIO, by Earl Stout, as Trustee ad Litem, et al. v. City of Philadelphia Labor Law — Municipal Collective Bargaining Agreement — Health and Welfare Benefits. Civil Procedure — Preliminary Injunction — Constructive Trust. (1) The City of Philadelphia’s breach of its contractual obligation under the collective bargaining agreement with Dis- trict Council 33, AFSCME, has caused union members and their families to suffer irreparable harm by being denied neces- sary health care services due to the union’s inability to pay for required medical services for its members and their depen- dents. (2) Plaintiff Union’s request for a preliminary injunction increasing the city’s contribution to union’s health and welfare fund is granted where the union has demonstrated a substantial probability that it will succeed on the final merits of their litigation; irreparable injury will occur if preliminary injunctive relief is not granted; union is seeking preservation of the status quo; and the collective bargaining agreement creates mutual obligations under which this court should impose a constructive trust. C.P., Phila. Co., January Term, 1983, No. 3504. Robert C. Daniels, Esquire, for Plaintiff. John M. Myers, Deputy City Solicitor, for Defendant. PRATTIS J., April 27, 1984 FINDINGS OF FACT 1. Since July 1, 1975, the City of Philadelphia (“City”) and District Council 33, AFSCME (“Union”), have been bound by an agreement, embodied in a “Memorandum of Agreement” eee A-19 (P-1), and subsequently in a Collective Bargaining Agreement (P-2), which provides in relevant part: Each full-time employee in a class of position repre- sented by District Council #33 shall have health and welfare benefits as such benefits are presently defined including major medical family coverage, under the Blue Cross/Blue Shield group health medical plan, with the City paying the full contribution of such benefits, to District Council 33 Health and Welfare Fund. (1975-76) (as of 1/1/81 receive $92.00 per month). (Emphasis added.) The phrase “benefits as presently defined”, as negotiated with and.agreed to by representatives of the City and Union during negotiations preceding the signing of the 1975 Agreement, was intended to provide for health and welfare benefits as then defined and provided by the Union at the time of the negotia- tions in February, March and April of 1975 and at the time of the inception of the Agreement on July 1, 1975 (i.e. 365 unlimited in-patient hospital days per year, no co-payments by union members, no deductible for the payment of any expenses and no cap on the amount of payments for any one particular illness for a union member or his dependents). 2. From July 1, 1975, through December 31, 1981, the City paid to the Fund for each employee and retiree covered by the Collective Bargaining Agreement, pursuant to Paragraphs 5 and 23(B), an amount equal to that charged by Blue Cross/Blue Shield to the City under an “A700” contract for health and welfare benefits of City employees (D-13). The A700 contract defined the health and welfare benefits for a group of City employees which, in 1975, included among others, a significant number of members of the Union. However, the City never indicated or suggested to Earl Stout or any members of Union that the 1975 Agreement provision regarding health and welfare benefits would be tied to any particular Blue Cross or Blue Shield Group or Plan. Rather, the City agreed and contractually undertook to use Blue Cross/Blue Shield as a guide with respect to pricing the cost of purchasing a health care plan which would provide the “health and welfare benefits as such benefits are A-20 presently defined” and were being provided by District Council 33 to its union members at the time of the negotiation of that Agreement in March, April and May 1975 and at the time of its inception on July 1, 1975. 3. The Union was not required under the Collective Bar- gaining Agreement to purchase a Blue Cross/Blue Shield con- tract. The 1975 Agreement between the City of Philadelphia and Union intended that the level of benefits provided for the union members would be determined by District Council 33. The level of benefits as “such benefits are presently defined” in the 1975 Agreement referred to that level of benefits that were being provided to the union members during the negotiations between District Council 33 and the City. 4. The City’s payments under Paragraphs 5 and 23(B) were consistent with its interpretation of the Agreement, as set forth in published Civil Service Regulations, amended in 1975, 1979, 1980, 1981 and 1982 (D-11), but the Civil Service Regulations unilaterally varied the obligations undertaken by the City in the Collective Bargaining Agreement. 5. Section 27.0111 of the Civil Service Regulations have described the City’s obligation for health and welfare payments to be: For each full-time employee in a class of position represented by District Council #33, one hundred percent (100%) of the cost of family coverage including Major Medical, under the City’s Blue Cross/Blue Shield group health medical plan as presently defined (7/1/75) . . . 6. By 1983, the figures provided by Blue Cross/Blue Shield were a grossly inappropriate guide under Paragraphs 5 and 23(B) because the number of city employees covered under the A700 plan was either extremely small or nonexistent. As of this date, the City’s Blue Cross/Blue Shield A700 contract has been cancelled. 7. Paragraph 5 of said Memorandum of Agreement pro- vides as follows: A-21 Each full-time employee in a class or position repre- sented by District Council 33 shall have health and welfare benefits as such benefits are presently defined including major medical family coverage, under the Blue Cross/Blue Shield group health medical plan, with the City paying the full contribution of such benefits, to District Council 33 Health and Welfare Fund. (P-1, emphasis added). 5. Prior to and since July of 1975 and up until and including the present time, Union provided its members with full 100 percent coverage for all of their medical expenses, including, but not limited to, 365 day in-patient hospitalization, with no co-pay provisions or obligations, no deductibles, no cap on the total amount of coverage for health and medical care for each union member and his or her dependent family members, including full and complete payment of all hospital, medical and doctor bills. 9. However, the City never indicated or suggested to Earl Stout or any members of Union that the 1975 Agreement provision regarding health and welfare benefits would be tied to any particular Blue Cross or Blue Shield Group or Plan. 10. The City agreed to “provide 100 percent medical coverage to city employees’ consistent with the 100 percent medical coverage provided by District Council 33 to its union members prior to and at the time of the contract negotiations. 11. Both the City and Union agreed that the Union had the exclusive right to determine the full and proper level of benefits which were to be provided to its members and the City would pay to the District Council 33 Health and Welfare Fund (Fund) a monthly sum of money based upon a rate quotation provided by Blue Cross to the City, in costing out the monthly monetary amount necessary to provide said levels of benefits. 12. It was never contemplated by the City or Union that Blue Cross would actually provide the benefits to the members of Union. 13. The City agreed that the money paid to Union pursuant to the terms of the Agreement, became the property and A-22 responsibility of Union and that the City had no right to administer or control the Fund’s money. 14. The City agreed that the Collective bargaining Agree- ment gave the City of Philadelphia no right to control the expenditures of the Union Health and Welfare Fund and that said right was exclusively vested with the trustees of the Fund. 15. From July 1, 1975 up to and including the present time, defendant, City of Philadelphia, and Union have entered into a series of collective bargaining agreements and/or signed and executed memorandums of agreement in ratification thereof. 16. Paragraph 5 of that original 1975-76 Agreement has remained unchanged and has been carried forward in its exact language since 1975 up through the present Agreement of 1982-1984, as paragraph 23(B) of the Collective Bargaining Agreement between Union and the City of Philadelphia. 17. From July 1, 1975 to the present, and including the period covered by the 1982-1984 Collective Bargaining Agree- ment involved herein, defendant's contractual obligation to pay monies over to the Health and Welfare Fund has been defined in two paragraphs of both the current agreement, and in all preceding agreements, which paragraphs read, in relevant part, as follows: [T]here shall be made available to each employee and to [categories of] former employee[s] . . . and paid over to the established organization or agency designated by such employee or former employee against the cost to him of an established health-medical plan: . . . Payment shall be made to the Secretary-Treasurer of District Council 33 of the American Federation of State, County and Municipal Employees, AFL-CIO (1968). (23(A)) Each full-time employee in a class or position repre- sented by District Council 33 shall have health and welfare benefits as such benefits are presently defined including major medical family coverage, under the Blue Cross/Blue Shield Group health medical plan, with the City paying the 5 adtin alate Ah. atl ail és A-23 full contribution of such benefits, to District Council 33 Health and Welfare Fund. (23(B)) 18. The Agreement requires that defendant pay over to the Health and Welfare Fund such amount of money per union member per month as it would cost to purchase a plan that would provide the same full level of health care benefits as provided by District Council 33 to its members immediately preceding the effective date of the current Agreement. 19. As of September 1, 1981, Union applied to Blue Cross/Blue Shield for medical benefits providing union mem- bers with 365 days of in-patient hospital care, with no co- payment obligations by union members, full coverage of ancil- lary, semi-private room benefits, a private room, if medically necessary, certain out-patient benefits and full coverage for diagnostic and emergency treatment for medical and accidents. 20. By letter dated October 18, 1982 (P-5) Blue Cross, acting on its behalf and for Blue Shield, informed Union that for a package of health-medical benefits providing a lesser level of medical benefits from Blue Cross/Blue Shield of Greater Phila- delphia (Plan 100) than the Union had contracted for on behalf of its members with defendant, City of Philadelphia, the monthly cost to the Health and Welfare Fund for each union member would be $122.13. 21. In said letter of October 18, 1982 (P-5), Blue Cross quoted the Union a major medical plan which was a standard One Million ($1,000,000.00) Dollar medical program which has an annual $100.00 deductible per member each year, with Blue Cross reimbursing 80 percent of the charges and the individual union member being responsible for the remaining 20 percent of the medical expense incurred; this plan also contained a $10,000.00 maximum benefit for mental health benefits. 22. The Blue Shield Plan 100 is the top program offered through Blue Shield. 23. The City never requested a rate quotation from Blue Cross/Blue Shield with respect to the amount of money it would cost to purchase a health care plan which would provide benefits A-24 “as such benefits are presently defined” and as were being provided by District Council 33 to its union members. 24. The City has been paying $92.00 per union member per month for Health and Welfare benefits since July 1, 1981 and up until the present time, despite acknowledgements by members of the City administration and its counsel that more money is owed to the Fund under the terms of the 1982-1984 Collective Bargaining Agreement. 25. Even during the period that District Council 33 con- tracted with Blue Cross and Blue Shield, the union continued to provide its members with 100 percent medical coverage by underwriting those medical and hospital costs and expenses not covered by the Blue Cross/Blue Shield medical insurance plan in effect between DC 33 and Blue Cross/Blue Shield. 26. District Council 33 relied on the assumption that the City would fairly and honestly procure an accurate rate quota- tion from Blue Cross with respect to determining the amount of contribution it was obliged to make per union member per month to the Fund, pursuant to its contractual obligation so to do under the Agreement (P-1). 27. Members of Union have been denied health care and medical services and beneits because of the Union’s inability to pay the bills of medical health care providers due to the City's breach of its Collective Bargaining Agreement (P-2) with Union. 28. There have been numerous lawsuits and other out- standing claims against individual members of DC 33 due to unpaid medical and hospital bills for DC 33 members (P-10). 29. Defendant’s breach of its contractual obligation under the Agreement (P-2) has caused union members and their families to suffer irreparable harm by being denied necessary health care services due to the Union’s inability to pay for required medical services for its members and their depen- dents. 30. The Court cannot determine, on the basis of the present limited record, what the proper payment under Para- graphs 5 and 23(B) should have been either in 1983 or 1954, but it is clearly not less than the $122.13 quoted to the Union in oe ve ate A-25 October, 1982 as the cost for less than 100% of the then existing benefit package. 31. The Union and Fund have an obligation under Para- graphs 5 and 23(B) to use the funds received thereunder exclusively for the health and welfare benefits of persons covered by the Collective Bargaining Agreement and their dependents (221). 32. At the preliminary stage, the Court cannot determine the amount of money the Fund has expended for health and welfare benefits and other expenses on behalf of City employees for health and welfare benefits under Paragraphs 5 and 23(B) of the Collective Bargaining Agreement. 33. Although the Union produced evidence that the total claims against it, exclusive of JFK Hospital and Blue Cross/Blue Shield is approximately $11 million, it has not yet produced evidence as to the amount of valid claims asserted by health and welfare benefit providers who have rendered covered health and welfare services to persons as to whom the City of Philadelphia has an obligation under the Collective Bargaining Agreement. 34. There is, however, substantial evidence that District Council 33 will be able to establish a clear right to the relief it seeks. CONCLUSIONS OF LAW 35. The Union has demonstrated a substantial probability that it will succeed on the final merits of this litigation. 36. The Union hs demonstrated that irreparable injury to it, the Fund, and City employees has occurred and will occur if preliminary injunctive relief is not granted. 37. The Union has established that it is seeking preserva- tion of the status quo; to wit, provision of 100% of the cost of health and welfare benefits. 38. Paragraphs 5 and 23(B) create an obligation of the City to pay money to the Fund, subject to a condition that the fund use the money so paid exclusively for health and welfare benefis for persons on whose behalf the payment has been made. A-26 39. The Union and Fund have yet to establish that they have fulfilled his condition. 40. The language of Paragraphs 5 and 23(B) creates mutual obligations under which this Court should impose a constructive trust. Buchanan v. Brentwood Federal S & L Assn., 457 Pa. 13, 320 A.2d 117 (1974). 41. On the basis of the record before the Court, the Union’s request for a preliminary injunction increasing the amount of the City’s payment to the Fund should be granted. ORDER And Now, this 3rd day of May, 1984, upon due and proper notice to the defendant, and in consideration of plaintiffs’ verified complaint, the motion for preliminary injunction, sup- porting memorandum of law, the evidence presented at the preliminary hearings in support thereof — April 6, 13 and 16, 1984, and the Findings of Fact and Conclusions of Law entered by the Court on April 27, 1984, it is hereby ORDERED and DECREED the Defendant City of Phila- delphia pay to the Plaintiff District Council 33, AFSCME Health and Welfare Fund, the sum of $122.13 per member per month as such payments are provided for in the existing Collective Bargaining Agreement; said payment to become effective the month of May, 1984 and to continue until said existing Collective Bargaining Agreement expires. For the period of January, 1983, until and including April, 1984, the Defendant City of Philadelpia shall pay to the Plaintiff District Council 33 the difference between the sum of $92.00 per member per month, and $122.13 per member per month, as such payments are provided for in the existing Collective Bargaining Agreement, provided that such payment shall be made: Subject to a constructive trust for the benefit of members of District Council 33, which trust shall be discharged by payments of the claims of the third party health providers who have rendered service to said District fey age A-27 Council 33 members but whose agreed upon charges therefore are due and unpaid. Defendant City of Philadelphia shall make such pay- ments to District Council Health and Welfare Fund for payment of said providers, upon presentation to defendant of statements by the plaintiff certified to by an accountant agreed upon by the parties. The accumulated arrearages from January, 1983 to April, 1984 shall be paid by the defendant by June 30, 1984. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1340%3A1. Public record. Not legal advice.