An injunction temporarily blocking an arbitration hearing for 12 former employees of the Scranton Parking Authority raises issues that have not been addressed in courts or case law, attorneys told a judge Wednesday.
The dispute may set a precedent, although a narrow one, because it appears to be the first case to pit unionized employees and their labor contract against a court-ordered receiver responsible to creditors.
The crux is whether the furloughed SPA employees of Teamsters Local 229 can pursue grievances through an arbitration that potentially could affect the court-ordered receivership; or whether they must first seek permission from the court to pursue arbitration.
Receivership attorneys Jennifer Walsh Clark and Jennifer LaPorta Baker of the Scranton law firm McNees, Wallace & Nurick argued that a court consent order creating the receivership that now controls SPA's estate of five parking garages requires the union to seek court permission for arbitration, and the case also raises jurisdictional questions.
"This is not a labor-rights case. This is a creditors'-rights case," Ms. Walsh Clark said. "There is chaos here. There are jurisdictional tensions here. We're here because the (receivership) process wasn't followed."
Arbitration first
However, Teamsters' attorney Thomas Jennings of the Jennings Sigmond law firm of Philadelphia said labor law mandates arbitration as the employees' first step. If the union wins an arbitration award, it then would have to go to court to seek enforcement of the judgment, and that's when the receivership potentially could be affected, he said. And while the receivership was created by a court consent order, that pact is an agreement only between SPA, Scranton and the trustee for SPA bondholders, Wells Fargo. The 12 employees furloughed by SPA after the receiver took over never were part of the consent agreement and were not notified of it, he said.
"How am I bound by an order I didn't participate in?" Mr. Jennings asked. "We've got 12 human beings lolling around trying to find out where they're going with their lives. That's really what this is all about."
Lackawanna Judge Vito Geroulo said of the union not being notified of the consent order, "It does seem to me it was an oversight on somebody's part."
The judge instructed attorneys on both sides to submit to him by Monday further legal arguments that he will review before making a decision.
The temporary injunction was issued May 11 by the judge after the receiver of the SPA's assets, Mike Washo, objected that an arbitration hearing that had been set for May 13 could result in binding the receivership to pay monetary damages to the furloughed workers. The judge is weighing whether the injunction should become permanent or dissolved so arbitration can proceed.
SPA dismantling
The case is the latest issue stemming from the SPA's dismantling that began with city council allowing SPA to default on June 1. While the labor issue has taken two tracks - one involving six parking-garage maintenance employees who lost their jobs and the other involving six parking-meter employees who have remained employed - grievances underlying the arbitration are filed on behalf of all 12 and claim the furloughs violated their labor contract. They seek back wages/benefits and, in the case of garage workers, restoration of the jobs.
Mr. Jennings said no law or court ruling allows an injunction to permanently bar arbitration, and the constitutionality of the consent order also may be an issue for the union to eventually pursue. Ms. Walsh Clark and Ms. LaPorta Baker said the case is unique because the receiver controls only certain assets but not the entire SPA organization.
Because the employees' contract with SPA states it is binding on any SPA "successors, administrators, executors and assigns," another question is whether the receivership is a successor of SPA. The judge asked whether the consent order overrides the labor contract. Ms. Walsh replied that one has nothing to do with the other, and the receiver has no involvement in the labor contract.
SPA attorney Michael O'Brien of Oliver, Price & Rhodes of Clarks Summit said SPA agrees with the receiver's position that had the union sought court permission for arbitration, all legal disputes would have been resolved. Jason Asbell of Myers, Brier & Kelly of Scranton, attorney for bond trustee Wells Fargo, said an arbitration award would not trump the bondholders' first-priority secured interest in SPA garages.
Contact the writer: jlockwood@ timesshamrock.com