PSEA v. PSERB ( 2022 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania State Education :
Association, :
Petitioner :
:
v. : No. 199 M.D. 2021
: Argued: May 16, 2022
Public School Employees’ :
Retirement Board, :
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MARY HANNAH LEAVITT, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
PRESIDENT JUDGE COHN JUBELIRER FILED: July 21, 2022
Presently before the Court are the preliminary objections (POs) of the Public
School Employees’ Retirement Board (PSERB) and Intervenor Pennsylvania School
Boards Association, Inc. (PSBA) to the Amended Petition for Review in the Nature
of a Complaint Seeking Declaratory Relief (Amended Petition) filed by the
Pennsylvania State Education Association (PSEA). In its Amended Petition, PSEA
seeks declarations that (1) a resolution passed by PSERB on March 5, 2021,
regarding how PSERB would apply Section 8327.1 of the Public School Employees’
Retirement Code (Code), 24 Pa.C.S. § 8327.1, to certain circumstances (Resolution)
was ultra vires; and (2) Section 8327.1 of the Code applies to the removal of public
school employees when work is outsourced to private entities or when public schools
are converted to charter schools. In its POs, PSERB argues that PSEA lacks standing
to bring this action and that PSEA’s claim relating to charter school conversions is
not ripe for judicial review. PSBA similarly asserts in its POs that PSEA lacks
standing, that PSEA has no private right of action to enforce Section 8327.1, and
that PSEA fails to state a claim upon which relief can be granted. After careful
review, we sustain the POs related to PSEA’s lack of standing, dismiss the Amended
Petition on that basis, and dismiss the remaining POs as moot.
I. BACKGROUND
The General Assembly created PSERB to implement provisions of the Code.
(Amended (Am.) Petition at 1.) In 2019, the General Assembly amended the Code
by adding Section 8327.1,1 which states, in relevant part:
(a) General rule.--A nonparticipating employer is liable to the [Public
School Employees’ Retirement System (PSERS or System)] for
withdrawal liability in the amount determined under subsection (c). A
nonparticipating employer is an employer that is determined by the
board to have ceased:
(1) covered operations under the [S]ystem; or
(2) to have an obligation to contribute under the [S]ystem for all or any
of the employer’s school employees but continues covered operations.
(b) Determination.--An employer shall, within the time prescribed by
the board in a written request, furnish such information as the board
deems necessary to administer this section and to determine whether an
employer is a nonparticipating employer. If the board determines that
an employer is a nonparticipating employer, the board shall:
(1) determine the nonparticipation date;
(2) determine the amount of the employer’s withdrawal liability;
(3) notify the employer of the amount of the withdrawal liability; and
(4) collect the amount of the withdrawal liability.
1
Added by Section 3 of the Act of July 2, 2019, P.L. 434, No. 72.
2
24 Pa.C.S. § 8327.1(a), (b). PSERB has described Section 8327.1 as having been
“designed to relieve the additional funding burden on the remaining employers”
when an employer withdraws all or part of its workforce from the System. (Am.
Petition ¶ 12.) Previously, when an employer withdrew employees from the System,
“the unfunded liability attributed to those former System members . . . , [wa]s left
behind to be paid by those [employers] who remain[ed] in the System.” (Id. at 2.)
Section 8327.1 establishes a formula for calculating an employer’s withdrawal
liability when it withdraws all or part of its employees from the System and directs
PSERB to calculate and collect this liability. (Id.) Section 8327.1 became effective
on September 3, 2019.
Over a year after Section 8327.1’s effective date, PSERB posted “Information
on Withdrawal Liability” on its website.2 (Am. Petition ¶ 12.) Thereafter, on March
5, 2021, PSERB adopted the Resolution, which stated:
2
The post on the website stated:
Effective September of 2019, Act 72 of 2019 requires PSERS to calculate and
collect a withdrawing employer’s unfunded retirement benefit liabilities, i.e., the
employer’s “withdrawal liability.” Prior to September 2019, when an employer
terminated its participation in PSERS, for all or some of its employees, that
employer’s share of the [S]ystem’s unfunded retirement benefit liability was re-
allocated to the remaining employers. Such withdrawals, under a cost-sharing
multiple employer plan like PSERS, resulted in an increased funding obligation for
the remaining employers. The withdrawal liability is designed to relieve the
additional funding burden on the remaining employers.
Under the [Code], an employer is deemed to withdraw from PSERS when it ceases
covered operations under the [S]ystem or ceases to have an obligation to contribute
under the [S]ystem for all or any of [] its employees but continues covered
operations. Thus, an employer will be responsible for paying a withdrawal liability
when, for example, it permanently closes all operations or creates an alternate
retirement plan to cover some or all new employees. The calculation and payment
of the withdrawal liability differs based on whether the employer is ceasing
3
RESOLVED that [ PSERB] . . . directs the . . . System [] staff to perform
an outreach to relevant organizations to elicit input and feedback and to
research and prepare a report for the Board assessing the applicability
of Section 8327.1 of the . . . Code to outsourcing scenarios prior to
applying the provision of Section 8327.1 to such scenarios.
In the interim, no action will be taken by [the System] regarding
withdrawal liability as it pertains to outsourcing until further
policy is approved by [PSERB] and by legislation.
(Id. ¶ 13; Exhibit A (emphasis in original).)
On August 26, 2021, PSEA filed a Petition for Review seeking declaratory
judgment under the Declaratory Judgments Act, 42 Pa.C.S. §§ 7531-7541, on two
grounds: (1) that the Resolution was ultra vires; and (2) “that Section 8327.1 applies
to the removal of public[]school employees from the System when school employee
work is outsourced (subcontracted) to private entities or when district schools are
converted to charter schools.” (Id. at 2-3.) PSEA asserts that these declarations
would “not require [PSERB] to calculate withdrawal liability prior to employees
being removed from the System,” but would
simply provide that, pursuant to Section 8327.1 . . . , a penalty will be
assessed when members are removed from the system due to charter
conversion or subcontracting so that employers and unions may
implement their obligations under the Public Employe Relations Act
operations entirely or continuing participation in PSERS for some employees, but
not all. For a complete withdrawal, a lump sum amount is due PSERS. For a partial
withdrawal, the amount owed may be paid over time.
....
If you are considering closing a school, creating an alternate retirement plan, or in
any other way limiting PSERS membership for employees, you should contact the
PSERS Employer Service Center for more information.
(Am. Petition ¶ 12 (citing Employer News Item, published Dec. 11, 2020, available at
https://www.psers.pa.gov/Employers/pages/EmployerNewsArchive.aspx (last visited July 20,
2022)) (alterations in original).)
4
[(PERA),3] and the Public School Code Financial Recovery Act
[(Recovery Act).4]
(Id. at 3.)
In support of its requested relief, PSEA asserts that “[u]nder Pennsylvania
labor law, subcontracting the work of a bargaining unit is a mandatory subject of
bargaining.” (Id. ¶ 16 (citing Pa. Lab. Rels. Bd. v. Mars Area Sch. Dist., 389 A.2d
1073, 1075 (Pa. 1978); Upper Moreland Twp. Sch. Dist. v. Pa. Lab. Rels. Bd., 695
A.2d 904, 909 (Pa. Cmwlth. 1997)).) PSEA contends that school districts,
contemplating subcontracting for economic reasons, commit unfair labor practices
“if [they] do[] not clearly advise the union of the projected savings associated with
the subcontract and provide the union with an opportunity to prevent the
subcontracting by matching those savings.” (Id. ¶ 17 (citing Morrisville Sch. Dist.
v. Pa. Lab. Rels. Bd., 687 A.2d 5, 8 (Pa. Cmwlth. 1997)).) PSEA argues that, unless
school district employers and unions representing school district employees know
the amount of withdrawal liability that will be imposed when the school district
removes members from the System due to subcontracting or converting to charter
schools, “school districts and unions will not be able to fulfill their obligations under
PERA.” (Id. ¶ 18.) PSEA points to three of its local union affiliates that have been
“aggrieved by [PSERB’s] lack of action on Section 8327.1” because subcontracting
decisions were made, or are being contemplated, without consideration of the
withdrawal liability related to those decisions. (Id. ¶ 15.)
Specifically, PSEA asserts that the Pocono Mountain Education Support
Professionals’ Association, PSEA/NEA, the Shikellamy Education Support
Professionals’ Association, PSEA/NEA, and the Port Allegany Education Support
3
Act of July 23, 1970, P.L. 563, No. 195, as amended, 43 P.S. §§ 1101.101-1101.2301.
4
24 Pa.C.S. §§ 6-601-A - 6-695-A.
5
Professionals’ Association, PSEA/NEA (Local Unions) were, or will be, harmed by
PSERB’s refusal to apply Section 8327.1 to subcontracting scenarios. (Id. ¶¶ 15,
28, 38, 46.) Each of these Local Unions has a collective bargaining agreement with
their respective school districts, and, in renegotiating those contracts, each school
district’s school board investigated subcontracting bargaining unit work, but without
factoring in what its withdrawal liability would be. Ultimately, the school boards
voted to subcontract or outsource certain positions, or have proposed to do so,
resulting in the furlough, or potential furlough, of employees. (Id. ¶¶ 20, 22-24, 30-
32, 34, 40-41, 43.) However, because PSERB refuses to implement Section 8327.1,
PSEA asserts Local Unions were unable to “fulfill [their] legal obligation to bargain
over the subcontracting” of the positions, (id. ¶¶ 28, 38, 46), as they “could not have
known” or could not have predicted “the economic impact of the subcontracting
without knowing whether [the school districts would] be required to pay to fund
[their] withdrawal liability.” (Id. ¶¶ 28, 38, 46.)
PSEA also alleges that the Chester Upland School District (Chester Upland),
a school district in financial distress pursuant to the Recovery Act, and its receiver
are considering converting its public schools to charter schools to save money. (Id.
¶ 50.) PSEA avers that due to PSERB’s failure to notify Chester Upland whether
Section 8327.1 “will apply in the event public schools are converted to charter
schools,” Chester Upland and its receiver “cannot predict the true cost of such a
conversion or determine whether the conversion results in overall financial savings,”
which is required by the Recovery Act to approve a charter school conversion. (Id.
¶ 51.) If withdrawal liability is considered, PSEA argues, Chester Upland “would
not be able to convert public schools to charter schools in compliance with the []
6
Recovery Act because” it would not lead to financial savings, and, thus, the jobs of
PSEA members would not be at imminent risk. (Id. ¶¶ 52-53.)
Based on these allegations, PSEA asserts two counts. In count I, PSEA seeks
a declaration that the Resolution is ultra vires because Section 8327.1 uses the word
“shall” in reference to PSERB’s obligations and PSERB has no power or “authority
to suspend implementation of an existing statutory mandate.” (Id. ¶¶ 59-60, 62.)
Further, PSEA asserts that PSERB has no authority to direct the General Assembly
to act or suspend the implementation of a statutory mandate “until further policy is
approved . . . by legislation.” (Id. ¶ 63 (quoting the Resolution).) In count II, PSEA
seeks a declaration that school districts that subcontract bargaining unit work or
convert their public schools to charter schools fit within the definition of a
“nonparticipating employer” set forth in Section 8327.1. (Id. ¶¶ 68, 71.) PSEA
maintains that declaratory judgment is appropriate because, “[w]ithout certainty as
to whether Section 8327.1 . . . applies” to charter school conversions, “PSEA
members are at imminent risk of losing their public employment[,] the [] Recovery
Act cannot be fully implemented[,] and PSEA will lose members.” (Id. ¶ 70.)
Additionally, PSEA asserts that because “the application of Section 8327.1 . . . will
lead to costs [to school districts], unions risk violating Section 1201(b)(3) of PERA[,
43 P.S. § 1101.1202(b)(3),] when they bargain over subcontracting/outsourcing
without knowing whether Section 8237.1 applies” in this context. (Id. ¶ 73.)
PSERB and PSBA filed POs challenging PSEA’s standing to bring this action
because PSEA, its members, and its local affiliates are not aggrieved by the
challenged conduct. Additionally, PSERB argues that the claims based on the
potential charter school conversion of Chester Upland are not ripe because such
conversion may not ever happen. Finally, PSBA argues that PSEA does not have a
7
private right of action to enforce Section 8327.1 because that provision does not
authorize such actions, and PSEA has failed to state a legally sufficient claim. PSEA
has filed answers to the POs, arguing it has standing, its claims are ripe, it is not
asserting a private action to enforce Section 8327.1, and it has stated a claim upon
which relief may be granted. The parties have filed briefs in support of their
respective positions, and the POs are now ready for disposition.
II. DISCUSSION
PSEA has filed this declaratory judgment action, which is used to “declare[]
the rights, status, and other legal relations ‘whether or not further relief is or could
be claimed.’” Eagleview Corp. Ctr. Ass’n v. Citadel Fed. Credit Union, 150 A.3d
1024, 1029 (Pa. Cmwlth. 2016) (quoting Section 7532 of the Declaratory Judgments
Act, 42 Pa.C.S. § 7532). “The purpose of awarding declaratory relief is to finally
settle and make certain the rights or legal status of parties.” Id. (quoting Geisinger
Clinic v. Di Cuccio, 606 A.2d 509, 519 (Pa. Super. 1992)). The Declaratory
Judgments Act requires a petitioner “to demonstrate an ‘actual controversy’
indicating imminent and inevitable litigation and a direct, substantial and present
interest.” Cnty. Comm’rs Ass’n of Pa. v. Dinges, 935 A.2d 926, 931 (Pa. Cmwlth.
2007). It is this last requirement, primarily, that PSERB and PSBA challenge in
their POs, which we review under the following standard.
When ruling on preliminary objections, the Court must accept all well-pleaded
factual allegations in the petition for review as true along with any reasonable
inferences deducible therefrom. Larry Pitt & Assocs., P.C. v. Butler, 785 A.2d 1092,
1096 (Pa. Cmwlth. 2001). The Court is not bound, however, by “conclusions of law,
unwarranted inferences from facts, argumentative allegations, or expressions of
opinion.” Id. Preliminary objections should be sustained only where it “appear[s]
8
with certainty that the law will not permit recovery, and any doubt should be resolved
by a refusal to sustain them.” Id.As a threshold matter, we must determine whether PSEA has standing to bring
this action. “Standing is a justiciability concern, implicating a court’s ability to
adjudicate a matter.” Firearm Owners Against Crime v. Papenfuse, 261 A.3d 467,
481 (Pa. 2021) (FOAC). Accordingly, a court must resolve issues of justiciability
before reaching the merits to ensure that the court does not issue improper advisory
opinions. Id. (citing Stuckley v. Zoning Hearing Bd. of Newtown Twp., 79 A.3d 510,
516 (Pa. 2013)). “The doctrine of standing ‘stems from the principle that judicial
intervention is appropriate only where the underlying controversy is real and
concrete, rather than abstract.”’ Id. (quoting City of Philadelphia v. Commonwealth,
838 A.2d 566, 577 (Pa. 2003)). “The touchstone of standing is ‘protect[ing] against
improper [petitioners].’” Id. (quoting In re Application of Biester, 409 A.2d 848,
851 (Pa. 1979)). To determine standing, courts require petitioners to “demonstrate
he or she has been ‘aggrieved’ by the conduct” being challenged. Id. A party is
“aggrieved” for standing purposes when that party’s interest in the outcome of the
case “is substantial, direct, and immediate.” Id.In this regard, our Supreme Court has established the following principles in
determining whether a party is “aggrieved” for standing purposes:
A party’s interest is substantial when it surpasses the interest of all
citizens in procuring obedience to the law; it is direct when the asserted
violation shares a causal connection with the alleged harm; finally, a
party’s interest is immediate when the causal connection with the
alleged harm is neither remote nor speculative.
Off. of Governor v. Donahue, 98 A.3d 1223, 1229 (Pa. 2014). In addition to these
principles, “[o]ur existing jurisprudence permits pre-enforcement review of statutory
9
provisions in cases in which petitioners must choose between equally unappealing
options and where the third option . . . is equally undesirable.” Robinson Twp.,
Wash. Cnty. v. Commonwealth, 83 A.3d 901, 924 (Pa. 2013) (plurality); see also
Cozen O’Connor v. City of Phila. Bd. of Ethics, 13 A.3d 464, 465 (Pa. 2011)
(concluding that law firm had standing to bring declaratory judgment action to
clarify whether its forgiveness of the debt of a client, a political action committee,
would violate a yearly limit on political contributions); Donahue, 98 A.3d 1223(concluding that the Office of Governor had standing to bring declaratory judgment
action to challenge the Office of Open Records’ interpretation of the Right-to-Know
Law’s5 timeframe for responding to written requests for documents that would have
increased the number of deemed denials and cases that would have to be litigated).
Both PSERB and PSBA assert that PSEA lacks standing to bring this action.
Specifically, PSERB argues that there is no harm to PSEA, its members, or its local
affiliates because no decision regarding withdrawal liability occurs until after a
subcontracting or conversion decision is reached. (PSERB’s Brief (Br.) at 11.)
PSERB contends that the employers that do not pay the withdrawal liability will only
affect the funding status of the System, which affects the remaining employers that
have to make up the shortfall, not the pension benefits of PSEA members. (Id.
(citing Duncan v. Muzyn, 885 F.3d 422, 428 (6th Cir. 2018)).) PSERB argues that,
in this way, the causal connection between the alleged harm and PSERB’s future
action or inaction is speculative and indirect because “PSEA is not an employer
paying into [the System] and will not be directly affected by [the System’s] funding
status.” (Id. at 11-13.) Thus, PSERB maintains that PSEA’s “true dispute is not
with, or caused by, [the System] or [ PSERB]; PSEA’s dispute is with the receiver
5
Act of February 14, 2008, P.L. 6, 65 P.S. §§ 67.101-67.3104.
10
and/or school district in Chester Upland and the [S]chool [D]istricts in Pocono
Mountain, Shikellamy, and Port Allegany.” (Id. at 15.) PSBA similarly argues
PSEA lacks standing because PSEA has not “allege[d] an actual cognizable right
under Section 8327.1 or a cognizable harm to itself or to its [local affiliates] arising
by virtue of [] PSERB’s alleged action or inaction.” (PSBA’s Br. at 6-7 (emphasis
in original).) PSBA argues that whether, or not, PSERB imposes withdrawal
liability does not foreclose a school district from making decisions affecting the
employment status of its employees. (Id. at 9; see also PSBA’s PO ¶ 23.) To that
end, PSBA asserts that, notwithstanding withdrawal liability, “school districts . . .
may still act as they wish” by either converting to a charter school or outsourcing
jobs resulting in the furlough of employees, thereby rendering the causal connection
between the asserted harm and PSERB’s action remote and speculative. (Id. at 9-
11.) Finally, PSBA argues that the interests PSEA seeks to enforce are “the same
common interest of all citizens in procuring obedience to the law at issue” and that
the interests sought to be protected under Section 8327.1 are “not the interests of the
employees in the [S]ystem or the unions representing public employees,” but those
of the remaining employers that must make up for any unfunded liability resulting
from the withdrawal. (Id. at 11, 13.)
PSEA responds that it has standing to bring this action on behalf of itself, its
members, and its local affiliates. Specifically, PSEA contends that “[u]nion standing
to enforce members’ rights is not limited to collective bargaining issues; it extends
to any action where there is a direct relationship (causal connection) between the
challenged action and harm suffered.” (PSEA’s Br. in Opp’n to PSERB’s POs at
14.) PSEA asserts that this harm includes its members’ interest in their pension
benefits and both PSEA’s and its affiliates’ ability to negotiate to prevent
11
subcontracting and charter school conversions, thereby maintaining its members’
public employment and its own membership. PSEA explains that, if withdrawal
liability was factored into subcontracting decisions, “the ‘pension cost avoided’ by
subcontracting would be significantly off-set by the withdrawal liability charged by”
the System, and the resulting negotiations would be based on “real, comparable
costs, not costs skewed in favor of subcontracting.” (Id. at 16.) Because PSERB is
not complying with its obligation under Section 8327.1, PSEA asserts that “unions
[] face an improperly tilted negotiations table.” (Id. at 19.) Finally, PSEA asserts
that standing in cases brought under the Declaratory Judgments Act have been
relaxed as explained by our Supreme Court in Cozen O’Connor, Robinson
Township, Yocum v. Pennsylvania. Gaming Control Board., 161 A.3d 228 (Pa.
2017), Donahue, and FOAC. (Id. at 22, 24.) Based on the allegations contained in
its Amended Petition, PSEA maintains it has standing to challenge PSERB’s
inaction under Section 8327.1. (Id. at 25.)
After review, we cannot agree that PSEA has established standing to
challenge PSERB’s inaction under Section 8327.1 on behalf of itself, its members
and its local affiliates because PSEA has not established a substantial, direct, and
immediate interest in PSERB’s application, or not, of Section 8327.1. In reviewing
our Supreme Court’s jurisprudence relating to standing under the Declaratory
Judgments Act, the case sub judice is distinguishable from the cases relied upon by
PSEA.
In Robinson Township, a physician claimed, in a declaratory judgment action,
that the restrictions imposed by former Section 3222.1 of Act 13, formerly 58 Pa.C.S.
§ 3222.1, on obtaining and sharing information with other physicians regarding
chemicals used in fracking operations impeded his ability to properly diagnose and
12
treat his patients. The physician asserted that the restrictions forced medical
professionals to choose between complying with the statute’s mandatory provisions
“and adhering to their ethical and legal duties to report findings in medical records
and to make th[o]se records available to patients and other medical professionals.”
Id. at 923-24. Our Supreme Court determined that the physician had standing to
seek declaratory relief because Act 13 placed the physician in the “untenable and
objectionable” position of choosing between violating the law, violating his legal
and ethical obligations to his patient, or refusing to treat a patient. This position, the
Supreme Court reasoned, meant that the physician’s interest was substantial and
direct, giving him standing to pursue pre-enforcement review. Id. at 924.
Following Robinson Township, the Supreme Court addressed another
standing challenge under the Declaratory Judgments Act in FOAC. There,
individual gun owners and a political action committee (FOAC) challenged the
validity of five ordinances enacted by the City of Harrisburg (City). The ordinances
regulated the use, possession, ownership, and/or transfer of firearms within the City.
The City challenged FOAC’s standing because FOAC “did not aver that [any of its
members] were arrested for violating the ordinances or that they changed their
behavior to comply with” the ordinances. FOAC, 261 A.3d at 476. The Supreme
Court concluded that FOAC and its members had standing, explaining that FOAC’s
members “currently must make a choice to either comply with the ordinances,
thereby forfeiting what they view as their constitutionally and statutorily protected
firearms rights[,] or violate the ordinances by exercising their rights, thereby risking
criminal prosecution,” or to avoid the City altogether. Id. at 487. “That [a]ppellees
are confronted with these options shows that their interest in the outcome of the
constitutionality and preemption of the challenged ordinances is substantial,
13
immediate, and direct.” Id. Further, in rejecting a challenge that pre-enforcement
challenges could only be brought in industrial or occupational situations, the
Supreme Court explained:
There is no basis to constrain the power granted by the Declaratory
Judgments Act. The Declaratory Judgments Act gives courts the
“power to declare rights, status, and other legal relations whether or not
further relief is or could be claimed.” 42 Pa.C.S. § 7532. The
[Declaratory Judgments] Act refers to the “rights, status, and other legal
relations” without qualification and does not limit it to the occupational
or business arena.
Id. at 490. Thus, it concluded that the Declaratory Judgments Act offered “an avenue
of relief for a plaintiff to determine its rights when a law forces upon the plaintiff a
number of choices, including surrendering perceived rights to comply with the law,”
which included FOAC and its members. Id.
Applying the Supreme Court’s reasoning in Robinson Township and FOAC,
as well as the more traditional interpretations of standing, to the allegations here,
PSEA has not shown that it, its members, or its local affiliates have a substantial,
direct, and immediate interest in PSERB’s action, or, in this instance, inaction to
establish the standing required to bring this action. The gravamen of PSEA’s
Amended Petition is that, without knowing whether withdrawal liability will attach
if school districts subcontract bargaining unit work or convert schools to charter
schools, PSEA, and its local affiliates, cannot effectively bargain with the public
school district employers. This inability, PSEA argues, violates its obligations
under PERA because neither PSEA nor the “[s]chool districts can[] predict the true
costs of [] subcontracting without knowing” whether withdrawal liability applies to
them – a decision that PSERB is not making. (Am. Petition ¶¶ 26, 36, 46.) PSEA’s
request for a declaration regarding PSERB’s obligations under Section 8327.1 is to
14
aid PSEA, and its local affiliates, in their relationship and transactions with school
district employers. However, declaratory judgment is not to resolve remote
questions or to aid a party in a different transaction. Petition of Cap. Bank & Tr., 6
A.2d 790, 792 (Pa. 1939). The harm PSEA asserts, the subcontracting of bargaining
unit work and charter school conversions, is not the immediate or direct result of the
challenged action of PSERB, but of the school district employers’ decisions. As
PSEA admits in its response to PSBA’s PO, school districts could still choose to
subcontract bargaining unit work even if PSERB was to impose withdrawal liability
on those school districts. (PSBA’s POs ¶ 23; PSEA’s Answer to PSBA’s POs ¶ 23.)
Because PSERB’s decision may not affect the ultimate decision of a school district
to subcontract bargaining unit work resulting from negotiations, PSEA’s interests in
PSERB’s decision is not direct or immediate. Accordingly, there is a lack of causal
connection between the harm and the challenged action.
Further, Section 8327.1 applies to employers’ obligations to the System if
they become nonparticipating employers and/or the obligations of the remaining
employers that must assume responsibility for any unfunded liability. Unlike the
physician in Robinson Township or the firearm owners in FOAC, Section 8327.1
does not require PSEA to choose between “equally unappealing options,” Robinson
Township, 83 A.3d at 924. And PSERB’s refusal to render a preliminary decision
as to the application of Section 8327.1 to a particular situation does not prevent
PSEA from bargaining over subcontracting and/or charter school conversions.
PSEA acknowledges that a school district’s potential withdrawal liability under
Section 8327.1 can be calculated using the formula set forth in Section 8327.1(c),
stating “[a] close approximation of the amount due can be developed by the school
district and the union as part of the negotiations related to subcontracting.” (PSEA’s
15
Br. at 19 n.2.); see also 24 Pa.C.S. § 8327.1(c).6 Thus, PSEA’s allegation that, absent
PSERB action, PSEA and its local affiliates will be unable to know the cost of
subcontracting or converting to a charter school is inconsistent with Section
8237.1(c).
Additionally, a decision in this case will not afford the parties “relief from
uncertainty and insecurity with respect to rights, status, and other legal relations,”
6
Section 8327.1(c) provides:
Calculation of withdrawal liability.--A nonparticipating employer’s withdrawal
liability shall be determined as of the employer’s nonparticipation date and shall be
calculated as follows:
(1) For a nonparticipating employer under subsection (a)(1), the excess of the
actuarial present value of the vested accrued benefits of the [S]ystem’s members
over the market value of assets, both as of the date of the last actuarial valuation
adopted by the board prior to the employer’s nonparticipation date, shall be
multiplied by a withdrawal fraction, calculated as follows:
(i) The numerator of the withdrawal fraction shall be the total present value of
accrued benefits of all active members of the employer.
(ii) The denominator of the withdrawal fraction shall be the total present value of
accrued benefits of all active members of the [S]ystem.
(2) For a nonparticipating employer under subsection (a)(2), the excess of the
actuarial accrued liability of the [S]ystem’s members over the market value of
assets, both as of the date of the last actuarial valuation adopted by the board prior
to the employer’s nonparticipation date, shall be multiplied by a withdrawal
fraction, calculated as follows:
(i) The numerator of the withdrawal fraction shall be the total present value of
accrued benefits of all active members of the employer.
(ii) The denominator of the withdrawal fraction shall be the total present value of
accrued benefits of all active members of the [S]ystem.
24 Pa.C.S. § 8327.1(c).
16
42 Pa.C.S. § 7541(a), associated with Section 8327.1 because neither PSEA, its
members, nor its local affiliates are themselves subject to having to pay withdrawal
liability under that provision. Only employers that are determined by PSERB to be
“nonparticipating employers” would be subject to withdrawal liability under Section
8327.1. For these reasons, PSEA does not have to make a difficult decision to
comply with Section 8327.1 or to violate it, like the parties who were found to have
standing in Robinson Township and FOAC. As such, PSEA has not established that
its interest in the challenged action is “substantial, direct[,] and immediate.”
Robinson Township, 83 A.3d at 917.
PSEA also asserts associational standing on behalf of public school
employees because its employee members have an interest in their pension benefits
and the funding of the System and because public school employees may face
furloughs if their employers decide to subcontract their bargaining unit work or
convert schools to charter schools. “An association has standing to bring an action
on behalf of its members where at least one of its members is suffering an immediate
or threatened injury as a result of a challenged action.” Americans for Fair
Treatment, Inc. v. Phila. Fed’n of Teachers, 150 A.3d 528, 533 (Pa. Cmwlth. 2016).
An association needs to show “that at least one of its members has a substantial,
direct[,] and immediate interest.” Id. “Where the organization has not shown that
any of its members have standing, the fact that the challenged action implicates the
organization’s mission or purpose is not sufficient to establish standing.” (Id. at 534
(citing Armstead v. Zoning Bd. of Adjustment of City of Phila., 115 A.3d 390, 399-
400 (Pa. Cmwlth. 2015); Concerned Taxpayers of Allegheny Cnty. v.
Commonwealth, 382 A.2d 490, 494 (Pa. Cmwlth. 1978)).)
17
PSEA’s members’ interests in their individual pensions do not necessarily
translate into standing, absent allegations of mismanagement that places those
pensions in jeopardy, to challenge how the System is funded or managed because
any alleged injury is speculative or hypothetical. See Duncan, 885 F.3d at 428
(holding pension beneficiaries lacked standing because any harm caused was
hypothetical where they were still receiving benefits and there were no allegations
that the challenged actions put the pension fund at risk of default). Whether the
withdrawal liability is imposed on employers that become “nonparticipating
employers,” 24 Pa.C.S. § 8327.1, through subcontracting or charter school
conversion, PSEA does not assert that the unfunded liability would be passed onto
its members or that its members’ pension benefits are reduced as a result. Further,
because, as PSEA acknowledges, a school district could still choose to subcontract
bargaining unit work even if PSERB imposed withdrawal liability, the causal
relationship between the challenged action and the harm to PSEA’s members’
employment status is remote, not direct. Accordingly, PSEA may not assert the
interests of its employee members to establish associational standing in order to
challenge PSERB’s actions in relation to Section 8327.1.
III. CONCLUSION
For the reasons stated above, PSEA has failed to establish the requisite
standing needed to bring this action, and we sustain PSERB’s and PSBA’s
corresponding POs, dismiss PSEA’s Amended Petition on this basis, and dismiss the
remaining POs as moot.
__________________________________________
RENÉE COHN JUBELIRER, President Judge
Judges Dumas and Wallace did not participate in the consideration of this matter.
18
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Pennsylvania State Education :
Association, :
Petitioner :
:
v. : No. 199 M.D. 2021
:
Public School Employees’ :
Retirement Board, :
Respondent :
ORDER
NOW, July 21, 2022, the preliminary objections filed by the Public School
Employees’ Retirement Board and Intervenor Pennsylvania School Boards
Association, Inc. to Pennsylvania State Education Association’s (PSEA) Amended
Petition for Review in the Nature of a Complaint Seeking Declaratory Judgment
(Amended Petition) challenging PSEA’s standing is SUSTAINED, the Amended
Petition is DISMISSED on this basis, and the remaining preliminary objections are
DISMISSED AS MOOT.
__________________________________________
RENÉE COHN JUBELIRER, President Judge