Commonwealth Court Imposes its Own Interpretation Over an Arbitrator’s Interpretation

One of the first things they teach you in an arbitration class is that the Court may not overturn an arbitration award merely because it disagrees with the arbitrator’s reasoning. But, the Court did just that in School District of Philadelphia v. Philadelphia Federation of Teachers, Local 3. On July 14th, 2014 the Commonwealth Court of Pennsylvania remanded a case to the arbitrator because the Court disagreed with the arbitrator’s interpretation of a provision in a collective bargaining agreement.

The case revolves around the interpretation of a provision in the collective bargaining agreement between the school district and the PFT. Both parties submitted to arbitration and an arbitration award was awarded in favor of the PFT.

When reviewing an arbitrator’s interpretation of a collective bargaining agreement, a court must apply the deferential “essence” test.  The essence test requires a court to determine: (1) if the issue is within the terms of the collective bargaining agreement; and (2) if the arbitrator’s determination can be rationally derived from the collective bargaining agreement.  Therefore, an arbitration award should only be vacated if there is no possibility that the award could logically flow from the collective bargaining agreement.

On appeal from the trial court, the Commonwealth Court determined that the arbitrators’ decision could not “rationally be derived” from the collective bargaining agreement. However, both the arbitrator and the Court articulated rational interpretations of the same provision. Instead of acknowledging that the provision could be interpreted in multiple ways and deferring to the arbitrator’s interpretation, the Court claimed that the arbitrator’s interpretation was irrational and imposed its own interpretation on the agreement.

Senior Judge Rochelle Friedman filed a dissenting opinion disagreeing with the majority’s determination. Instead, she argued that both interpretations were rational. Judge Rochelle stated that “in essence, the majority believes that its interpretation is more rational than the arbitrator’s, but that is irrelevant.”

Instead of imposing its interpretation on the agreement, the Court should have followed the deferential standard of review given to arbitration awards and affirmed the arbitrator’s award in this case.

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