TOWNSHIP OF MONTCLAIR v. MONTCLAIR PBA LOCAL NO 53

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0657-11T4

TOWNSHIP OF MONTCLAIR,

Plaintiff-Appellant,

v.

MONTCLAIR PBA LOCAL NO. 53,

Defendant-Respondent.

_______________________________

Argued April 24, 2012 Decided May 22, 2012

Before Judges Messano, Yannotti and Kennedy.

On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-105-11.

Ira B. Karasick, Montclair Township Attorney, argued the cause for appellant (Mr. Karasick, of counsel and on the brief; Joseph C. Angelo, on the brief).

David J. DeFillippo argued the cause for respondent (Klatsky, Sciarrabone & DeFillippo, attorneys; Mr. DeFillippo, of counsel and on the brief).

PER CURIAM

The Township of Montclair (Township) appeals from a Chancery Division order dismissing its complaint seeking to vacate an arbitration award entered against it on a grievance brought by the Montclair Policemen's Benevolent Association, Local No. 53 (PBA).1 For reasons expressed in this opinion, we vacate the Chancery Division order and arbitration order and remand the matter to the arbitrator for further proceedings consistent with this opinion. Given this disposition, the Chancery Division complaint is dismissed without prejudice.

I.

The grievance stems from the Township's assignment of supervisory officers to patrol duties when vacancies arose in the patrol division. Prior to 2010, vacancies in minimum staffing levels in the patrol division were filled by assigning available, off-duty patrol officers on an overtime basis. The PBA claimed the change in this "practice" violated the Collective Negotiations Agreement (CNA)2 between the Township and the PBA.

The PBA requested arbitration of the grievance with the Public Employment Relations Commission (PERC) and an arbitrator was assigned. After the hearing, the parties submitted briefs setting forth their arguments. The PBA asserted that filling vacancies in the patrol division by assigning available, off-duty patrol officers was a "practice" protected by Article XX of the CNA which provided, in pertinent part, that "practices which the employees covered by this [CNA] enjoyed prior to this [CNA] are retained by the employees, except as those rights, privileges and benefits are specifically abridged or modified by this [CNA]." The PBA also relied upon Article XXXII pertaining to overtime.

The Township contended that Article XX was specifically modified by Article IV, which reserved to it various management prerogatives, including the right to "make rules of procedure" and to "hire all employees and to promote, transfer, assign and re-assign employees," and by Article XXV, which empowered it to establish and change work schedules. The Township also asserted that the use of off-duty patrol officers in the past was not a "practice" under the CNA.

After the parties presented evidence and framed the issues for the arbitrator as noted above, the arbitrator on February 8, 2011, issued his "Opinion & Award" in favor of the PBA. However, the arbitrator addressed none of the issues raised by the parties, and instead "determined that the threshold question" was: "[W]ere the supervisors utilized by the Township recognized as members of the relevant bargaining unit, pursuant to the recognition clause set forth in Article I of the [CNA]?" He then concluded that because supervisors are not part of the bargaining unit, "assignment of bargaining unit work to supervisors violates the [CNA]."

On April 25, 2011, the Township filed a complaint in the Chancery Division seeking to set aside the arbitration award. The Township asserted that the arbitrator based the award on "entirely different grounds" than those briefed and relied upon by the parties and that, consequently, "the Township did not have an opportunity to respond to or brief this new question, or to demonstrate the fallacy of this approach." In addition, the Township claimed the award must be vacated because it is "unlawful", based upon "factual errors", and is "not a reasonably debatable interpretation of the [CNA]." The PBA responded with a counterclaim seeking to confirm the award.

The trial judge, following argument and consideration of the papers submitted by the parties, issued an opinion from the bench confirming the award. With respect to the Township's claim that the award was procedurally flawed because the arbitrator based the award on an issue neither party had raised, the trial judge stated:

I know of no authority, statutory or common law, which says that an arbitration decision is defective merely because the arbitrator reaches his conclusion on grounds different from that originally framed. . . . [T]he issue to me really comes down to did he hear all the facts, and I am of the mind right now to conclude from today's argument that there was testimony presented about what patrolmen do and what supervisors do because . . . the whole nature of the dispute . . . was . . . that they were using on duty supervisors to fill in for absent patrolmen. . . . [I]t's common sense that the testimony would have covered that and how it would function on a daily basis if less than the seven came in, what would happen, and how that would work.

I'm . . . hamstrung by the fact that there is no transcript from which I can verify exactly what the witness has testified to. . . .

I don't think that [the arbitrator] is necessarily required to resolve . . . Article 4 versus Article 20. I know of no law that says so, so long as he based his decision on his interpretation of the agreement, and Article 1 is certainly part of the agreement. So, I don't think there's a procedural problem. I don't think it rises to the level of due process or anything like that, and I don't think that requires this Court to vacate his decision.

Thereafter, the trial judge addressed the substance of the award and upheld it because it was "at least reasonably debatable." She then entered an order confirming the award and this appeal followed.

II.

We begin with a statement of the principles that guide our analysis. We observe a limited standard of review on appeals from arbitration decisions. In particular, an "arbitrator's award is not to be cast aside lightly[,]" and "judicial interference" is strictly limited. Cnty. Coll. ofMorris Staff Ass'n v.Cnty. Coll. of Morris, 100 N.J. 383, 390 (1985). Also, "the party opposing confirmation ha[s] the burden of establishing that the award should be vacated pursuant to N.J.S.A. 2A:24-8." Twp.of Wyckoff v. PBALocal 261, 409 N.J. Super. 344, 354 (App. Div. 2009) (citation omitted).

"[A]rbitration is a favored means of resolving labor disputes." Pascack Valley Reg'l H.S.Bd. of Educ. v.Pascack Valley Reg'l SupportStaff Ass'n, 192 N.J. 489, 496 (2007) (quoting Bd. of Educ. ofBorough of Alpha v.Alpha Educ. Ass'n, 190 N.J. 34, 41-42 (2006) (footnote and citations omitted)); Twp.of Wyckoff, supra, 409 N.J.Super. at 354. To that end, an arbitrator's award "is entitled to a presumption of validity" and will only be vacated on narrow grounds. Jersey City Educ.Ass'n v. Bd. ofEduc. of City ofJersey City, 218 N.J. Super. 177, 187 (App. Div.), certif. denied, 109 N.J. 506 (1987).

"In the public sector, an arbitrator's award will be confirmed 'so long as the award is reasonably debatable.'" LindenBd. of Educ. v.Linden Educ. Ass'n, 202 N.J. 268, 276 (2010) (quoting Middletown Twp. PBALocal 124 v. Twp.of Middletown, 193 N.J. 1, 11 (2007)). Seealso PBA, Local 11v. City of Trenton, 205 N.J. 422 (2011). Under this standard, we "may not substitute [our] judgment for that of the arbitrator, regardless of [our] view of the correctness of the arbitrator's interpretation." Linden, supra, 202 N.J. at 277 (quoting N.J.Transit Bus Operations,Inc. v. Amalgamated TransitUnion, 187 N.J. 546, 554 (2006)).

While judicial review of an arbitrator's award is very deferential, Linden, supra, 202 N.J. at 276, an arbitrator must base his decision on the four corners of the contract. PBA,Local 11, supra, 205 N.J. at 430. The arbitrator may examine the entire contract to answer a specific question. Ibid.; N.J. Transit, supra, 187 N.J. at 555. If the contract as a whole supports the arbitrator's decision, the award will be upheld. PBA,Local 11, supra, 205 N.J. at 430. We will vacate an arbitration award if the arbitrator adds new terms to an agreement or ignores its clear language, Cnty.Coll. of Morris StaffAss'n, supra, 100 N.J. at 397-98, or relies on past practices rather than the specific terms of the agreement, City Ass'n of Supervisors& Administrators v.State Operated SchoolDistrict of Newark, 311 N.J.Super. 300, 312 (App. Div. 1998).

III.

The Township argues on appeal that the issue upon which the arbitrator based the award "was not briefed or argued or even mentioned in the proceedings below. As such, the Township was denied any opportunity to be heard on the issue." We agree.

After briefly adverting to the claims of the parties with respect to the applicable provisions of the CNA, the arbitrator ignored those claims and found, instead, that "the threshold question in every [CNA] dispute is answered very clearly by Article I of the [CNA]. It is incontrovertible that supervisors are excluded from the bargaining unit; accordingly, assignment of bargaining unit work to supervisors violates the [CNA]." Not only does this determination hinge on an issue neither party raised, but also it incorporates a term - "bargaining unit work" - found nowhere in Article I or, indeed, any other section of the CNA. We deal with each of these issues hereinafter.

The New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to -11, dictates that a reviewing court may vacate an arbitration award only in the following instances:

a. Where the award was procured by corruption, fraud or undue means;

b. Where there was either evident partiality or corruption in the arbitrators, or any thereof;

c. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause being shown therefor, or in refusing to hear evidence, pertinent and material to the controversy, or of any other misbehaviors prejudicial to the rights of any party;

d. Where the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made.

[N.J.S.A. 2A:24-8.]

N.J.S.A. 2A:24-8(c) mandates that an award be vacated where an arbitrator unreasonably refuses an adjournment, refuses to hear evidence pertinent and material to the controversy, or engages in "misbehaviors prejudicial to the rights of any party." As we have noted, this is not a case where the Township knew or should have known that the arbitrator would focus upon the terms of Article I of the CNA and knowingly elected not to adduce evidence or argument to address the issue. Rather, this is a case where the arbitrator sua sponte proceeded to adjudicate the grievance on the basis of a claim neither party raised nor even considered.

We perceive the problem here as one of fundamental fairness to a party in arbitration. This is not a case where the arbitrator generally considered the parties' arguments in light of all the contract provisions. See, e.g., N.J.Transit, supra, 187 N.J. at 555. Rather, the arbitrator utterly disregarded the arguments of both sides and decided the case on the basis of a provision that neither party cited, relied upon or even had notice was at issue. Such action constitutes a type of procedural misbehavior prejudicial to the rights of a party and is sufficient to warrant vacating the award under N.J.S.A. 2A:24-8(c). See, generally, Brotherton, Inc. v.Kreielsheimer, 8 N.J. 66, 70 (1951) ("The obligation of arbitrators . . . is to act fairly and impartially and to determine the cause upon the evidence adduced before them at the hearing.").

A proceeding which affects property rights and is accorded finality in the law must be conducted in accordance with the fundamental requirements of due process. Mullane v.Cent. Hanover B. &T. Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed. 865, 873 (1950); Montville v. Block 69,Lot 10, 74 N.J. 1, 10 (1977); seealso Bechler v. Parsekian, 36 N.J. 242, 256 (1961). "Administrative due process is generally satisfied if 'the parties had adequate notice, a chance to know opposing evidence, and the opportunity to present evidence and argument in response[.]'" Moore v.Dep't of Corr., 335 N.J.Super. 103, 108 (App. Div. 2000) (quoting In reDep't of Ins. Order, 129 N.J. 365, 382 (1992)). Such standards apply, as well, to arbitration proceedings where the awards are accorded finality in the law. See Manchester Twp. Bd.of Ed. v. ThomasP. Carney, Inc., 199 N.J.Super. 266, 274 (App. Div. 1985) ("the parties to arbitration are entitled to a full hearing"); JohowernCorp. v. AffiliatedInterior Designers, Inc., 187 N.J. Super. 195, 199-200 (App. Div. 1982) (parties have a right to a "fair and reasonable opportunity to be heard by the arbitrators.").

By predicating his ruling upon an issue that neither party raised nor had notice of, the arbitrator effectively denied the parties the right to marshal evidence and be heard on the pivotal issue identified by the arbitrator. Fundamental fairness requires, at the very least, notice of claim and the right to be heard.

No matter how innocently conceived, the arbitrator's election to decide the case before him without reference to the issues of law raised by the parties, and upon an issue of law that neither side relied upon nor had the opportunity to address, deprived the Township of notice and an opportunity to be heard.

Further, by predicating his decision upon the term "bargaining unit work" - a term neither used nor defined in the CNA - the arbitrator violated Article XVII(g) which states that an arbitrator is bound by the provisions of the agreement and "shall not have the authority to amend, expand, modify, alter, replace, or change any of the provisions. . . [.]"

As we have explained, an arbitrator may not "disregard the terms of the parties' agreement" or "rewrite the contract for the parties." Cnty. Coll. ofMorris Staff Ass'n, supra, 100 N.J. at 383; see also Commc'nsWorkers of Am. v.Monmouth Cnty. Bd. ofSoc. Servs., 96 N.J. 442, 448 (1984) (noting that when contractual limits on arbitral authority are not heeded, arbitrator exceeds his powers). To be enforced, the award must "draw its essence from the collective bargaining agreement." United Steelworkers ofAm. v. Enterprise Wheel& Car Corp., 363 U.S. 593, 597, 80 S. Ct. 1358, 1361, 4 L. Ed. 2d 1424, 1428 (1960); Cnty. Coll.of Morris Staff Ass'n, supra, 100 N.J. at 391-92; Belardinelli v.Werner Cont'l., Inc., 128 N.J.Super. 1, 7 (App. Div. 1974).

Although the arbitrator may not contradict unambiguous language in the CNA, he is not limited to a perfunctory application of its provisions in isolation and without consideration of other provisions in the CNA he may find applicable. It is his construction of the agreement as a whole that is bargained for by the parties. PBA,Local 11, supra, 205 N.J. at 430; Linden, supra, 202 N.J. at 276. Moreover, where a term is not defined, an arbitrator may "fill in the gap and give meaning to that term." Id. at 277.

Here, however, the arbitrator went wide of the mark by incorporating a term into the CNA that is not there to begin with, and then compounded the problem by deciding the arbitration upon that undefined term. By doing so, the arbitrator violated N.J.S.A. 2A:24-8(d). Cnty. Coll. ofMorris Staff Ass'n, supra, 100 N.J. at 392 ("[A]n arbitrator may not disregard the terms of the parties' agreement, nor may he rewrite the contract for the parties.").

We address neither the merits of the arbitrator's award nor the trial judge's thoughtful application of the "reasonably debatable" standard. However, the award was reached on the basis of a procedural flaw that prejudiced the Township.

We remedy this flaw by vacating the arbitration award and remanding the matter to the arbitrator. We do not address the arbitrator's analysis of the impact of Article I and we do not preclude the arbitrator from again considering Article I in an opinion and award. We direct that the arbitrator confer with the parties about the need to present additional evidence, if any, that may affect any consideration of Article I, and allow the parties to present argument with respect to its applicability here. We also direct the arbitrator to address the contentions of the parties respecting the applicability of the other articles in the CNA which they raised in their post-hearing submissions.

1 The PBA represents all police officers employed by the Township below the rank of sergeant and, for purposes of this opinion, are referred to as "patrol officers." Supervisory officers, as that term is used in this opinion, includes all Township police with the rank of sergeant or above.

2

As a general rule, "[i]n public sector labor relations in New Jersey, courts use the terms 'collective negotiation' and 'collective negotiations agreements' rather than 'collective bargaining' and 'collective bargaining agreements.'" Troy v. Rutgers, 168 N.J. 354, 359 n.1 (2001). We will adopt this terminology even though the parties use "collective bargaining unit" and "bargaining unit" in the materials submitted on appeal.