IN THE MATTER OF MONMOUTH COUNTY LAYOFFS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5048-11T3

IN THE MATTER OF MONMOUTH

COUNTY LAYOFFS.

______________________________

Argued May 29, 2013 Decided June 6, 2013

Before Judges Yannotti, Harris, and Hoffman.

On appeal from the New Jersey Public Employment Relations Commission, PERC Docket No. CLO-2009-288.

Robert A. Fagella argued the cause for appellant Monmouth County Corrections P.B.A. Local 240 (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, attorneys; Mr. Fagella, of counsel and on the brief; Genevieve M. Murphy-Bradacs, on the brief).

Steven W. Kleinman, Monmouth County Counsel, argued the cause for respondents County of Monmouth and Monmouth County Sheriff's Office (Mr. Kleinman, attorney, on the brief).

Mary E. Hennessy-Shotter, Deputy General Counsel, argued the cause for the respondent New Jersey Public Employment Relations Commission (Martin R. Pachman, General Counsel, attorney; Ms. Hennessy-Shotter, on the statement in lieu of brief).

PER CURIAM

Appellant Monmouth County Corrections P.B.A. Local No. 240 (Local 240) appeals from the September 30, 2011 Public Employment Relations Commission (PERC) final agency action dismissing its unfair practice charges against the County of Monmouth (the County).1 We affirm.

I.

A.

We first recite the tangled procedural history antedating this appeal in order to place the issues under review in proper context. All of the disputes emanate from the County's implementation of a county-wide layoff plan in early 2009, which was triggered by its fiscal reaction to the global recession and adverse economic circumstances of the previous year.

In February 2009, Local 240 filed an unfair practice charge with the PERC, alleging that the County violated several provisions of the New Jersey Employer-Employee Relations Act (the NJEERA), N.J.S.A. 34:13A-1 to -39, in connection with its fulfillment of a layoff plan. Specifically, Local 240 contended that the NJEERA was violated when the County unilaterally demanded that all negotiating unit members accept a wage freeze for 2009 or face immediate layoffs. In that same month, a similar unfair practice charge was lodged against the County by the Monmouth County Sheriff's Officers PBA Local 314, which alleged similar conduct regarding the looming layoffs.

Separately, a series of appeals were presented to the Civil Service Commission (the Commission) by individuals affected by the County's layoff plan. In April 2010, the PERC and Commission complaints were administratively consolidated by an administrative law judge. In a Joint Order issued by the PERC and the Commission in May 2010, the consolidation was ratified, with both agencies ordering the following:

The Administrative Law Judge will first offer recommended findings of fact and conclusions of law to both the [PERC] and the [Commission] disposing of all issues in controversy through a single initial decision under [N.J.A.C.] 1:1-18.3 and consistent with N.J.A.C. 1:1-17.8(a).

Upon transmittal of the initial decision to both agencies, the underlying record will be forwarded to PERC to determine whether hostility to protected activity was a substantial or motivating factor in the decision to lay off the PBA-represented employees; whether the County refused to negotiate in good faith with the PBA Locals; and whether the County dominated or interfered with the formation, existence or administration of PBA Local 314; and

The PERC decision and the complete record will then be sent to the Civil Service Commission which will then determine whether the layoff was for legitimate business reasons and was otherwise warranted under Civil Service law[.]

After several days of hearings, the administrative law judge issued a fifty-four-page initial decision on June 6, 2011. The administrative law judge dismissed Local 240's unfair practices charges, but contrary to the Joint Order, directly submitted the record to the Commission instead of filing it first with the PERC. In short order, the Commission rejected the initial decision and remanded the matter to the administrative law judge with instructions to "issue an amended initial decision following the procedural disposition as delineated in the Joint Order."

On August 16, 2011, the Commission-ordered initial decision was rendered by the administrative law judge, which did not change the "language and substantive recommendations" of the June 6, 2011 initial decision. The record, at that time, was then properly filed with the PERC. As already noted, the PERC failed to act on the August 16, 2011 initial decision, which rendered it and the June 6, 2011 initial decision as the PERC's action. Eventually, the Commission took up the matter and rendered its final decision on May 2, 2012. The Commission's actions are not the subject of the present appeal.

B.

The factual background of the parties' unfair practice dispute was presented through stipulations, documentary evidence, and testimony. Anthony Anderson, a corrections officer and then-vice president of Local 240, testified that on January 9, 2009, he attended a meeting with at least forty union and non-union representatives of departments employed by the County. The County was represented by its administrator, Robert Czech, and a personnel officer, Fredrica Brown. Czech was reported as saying that "basically every bargaining unit in the room needed to agree had to agree to a zero percent wage increase or face layoffs."

Anderson testified that "many people respond[ed]" to Czech's ultimatum. He told Czech that he "would like to sit down and negotiate with him . . . . [He] would like to do it across the table at the negotiations table because [Local 240's] contract was up."2 Czech responded, "You have to decide now if you want to do it," and Anderson testified, "that was the end of it."

Brown, now retired from her County position, testified that Czech "called the meeting of all the unions . . . advising the unions of the economic harsh realities of the budget crisis of the [C]ounty[.]" She said that the County, in order to save jobs, asked all employees "to give up their raises, and it was already determined that the non-union employees would forfeit raises, and the unions were asked to open negotiations to also forfeit their raises, contractual raises." In Brown's opinion, Czech used "a very direct approach" but "[i]t wasn't as an ultimatum." Brown agreed that no agreement was reached between the County and the unions at the January 9, 2009 meeting.

On February 6, 2009, the County submitted a proposed layoff plan to the Commission, with an effective date of May 1, 2009. The plan outlined a potential "gaping budget deficit" of approximately $36.5 million. The plan summarized the County's consultation with Local 240, indicating a limited discussion of layoff alternatives. The County's plan reflected Local 240's position that it did not agree to a wage freeze and "layoffs would not be cost effective to the [C]ounty due to increased overtime."

William Fraser, Warden of the Monmouth County Correctional Institution, testified that the County jail "require[s] . . . 24 hour[s] a day, 7 days per week staffing." Fraser explained the "manning formula" used to ensure that the correctional facility is run safely:

[T]he manning formula is put together using an actuarial mathematical formula where you take the number of posts that you have, the budgeted positions which is your table of organization, and then you take the number of hours that are contracted for each staff member and you take those contracted . . . excusals, such as vacation, an average of sick leave, personal leave days, military time and things like that, and then you can come up with how many exact members and you take that into your relief schedule factor and you come up with the number of people it takes to fill that particular position seven days a week, three tours. Obviously, it will take more than one person to fill one of those lines with relief, and it usually comes to approximately 5.87 [corrections officers], in that range, to fill a seven-day post, three days three tours.

According to Fraser, this calculation yielded a need for 336 corrections officers in order to fully staff the County's correctional facilities.

Fraser was asked to indicate what impact reducing the number of corrections officers would have. After performing calculations reducing staffing from 336 corrections officers to 298 corrections officers, Fraser testified that annually "it would cost 1.8 million dollars more to operate the facility with the 298 people than it would with the 336 people[.]" Fraser stated that there was "no doubt in [his] mind" that "it was going to cost more to run the facility with [fewer] individual officers than it would cost to run the facility without laying off the officers[.]"

On February 3, 2009, Sheriff Kim Guadagno issued an email to County officials indicating that the proposed number of Local 240 employees to be laid off would be thirty-five. At that time, Guadagno wrote, "I am compelled to note that the scope of the numbers is such that the layoffs will compromise public safety and will result in exorbitant increases in overtime. I do not recommend these cuts and advise against them on both public safety and economic grounds." Nevertheless, on February 12, 2009, Guadagno provided authorization for the County to institute the planned layoffs of corrections officers.

Teri O'Connor was the County's deputy administrator in 2009. O'Connor testified about her understanding of the January 9, 2009 meeting, stating that "[i]t was to share information and subsequent to that meeting, [she] did meet with a number of the unions and freeholder director . . . to . . . talk to them about other ideas that they had for cost savings."

O'Connor further testified that the layoffs were "only motivated by money," and were made in good faith. Thus, "[i]f the money could have been located someplace else without harming the budget," the layoffs would have been avoided. O'Connor responded that the layoffs were meant to provide long-term cost savings to the County, not just in 2009 but also in the years going forward. In 2009, O'Connor conceded, "the savings wouldn't be as great because of overtime, because of unemployment." The County was "looking to save . . . $4.5 million from salary accounts" across all twenty-three bargaining units. However, O'Connor had not seen any documentation "that calculated the savings that were associated with the statement[,] [']take a 0 percent or there will be a layoff[.']" O'Connor had "no idea how much money 0 percent would save by [each] bargaining unit [in 2009]."

Ultimately, the administrative law judge found that "[p]etitioners' charges [were] not borne out by the preponderating evidence . . . . As a result, . . . the charged violations of N.J.S.A. 34:13A-5.4(a)(1), (2), (3), or (5) before PERC should be dismissed." The administrative law judge reviewed the testimony provided during the hearings and found that the evidence, taken as a whole, "does not disclose anti-union animus. This conclusion is true for the deciding body, the Board of Freeholders, and equally true for [County administrator] Czech." In dismissing the unfair practice charges, the administrative law judge noted that while it was "unclear on this record exactly what Mr. Czech did, or did not, eventually do with respect to formally or informally convened collective negotiations[,] . . . the concentration of officials involved, including Mr. Czech, was saving the budget." This appeal followed.

II.

Although the deemed-approved provision of N.J.S.A. 52:14B-10(c) is to be cautiously applied, Mastro v. Bd. of Trs., Pub. Employees' Ret. Sys., 266 N.J. Super. 445, 450 (App. Div. 1993), the PERC's failure in this case to issue a final decision within the allowed time transformed the initial decisions of the administrative law judge into the agency's final decision. Capone v. N.J. Racing Comm'n, 358 N.J. Super. 339, 344 (App. Div. 2003). Accordingly, we will review the resultant findings of fact and conclusions of law as if they were the product of the PERC's analysis and review.3

Appellate scrutiny of an agency decision is "'sensitive, circumspect and circumscribed.'" Twp. of Franklin v. Franklin Twp. PBA Local 154, 424 N.J. Super. 369, 377 (App. Div. 2012) (quoting Twp. of Teaneck v. Teaneck Firemen's Mut. Benevolent Ass'n Local No. 42, 353 N.J. Super. 289, 300 (App. Div. 2002), aff'd 177 N.J. 560 (2003)). An agency determination is granted "'a strong presumption of reasonableness.'" Ibid. (quoting Aqua Beach Condo Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 16 (2006)).

Generally, [the appellate court's] role is restricted to:

"(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency bases its action; and (3) whether, in applying the legislative policies to the facts, the agency erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors."

[In re Jersey City v. Jersey City Police Officers Benevolent Ass'n, 154 N.J. 555, 567 (1998) (quoting In re Musick, 143 N.J. 206, 216 (1996)).]

[Ibid.]

Thus, in this case, unless the determination was arbitrary, unreasonable, or capricious, or lacks foundation in the record, the initial decision by the administrative law judge must be upheld. Div. of Youth & Family Servs. v. T.B., 207 N.J. 294, 301 (2011).

Our review of the record reveals an abundance of credible evidence to support the expressed factual findings. Indeed, as noted in the June 6, 2011 initial decision, "[m]any of the core facts have been stipulated." Local 240 contends that from that core of facts there is only one inevitable result: the County refused to negotiate in good faith and retaliated against Local 240's membership when the union representatives refused to accede to Czech's threat of a salary freeze. We disagree that there is but one inexorable conclusion to be reached from the factual matrix presented to the administrative law judge.

Allegations of unfair practices are not proven just because they have been leveled against a public employer. An analysis of the "totality of a party's conduct is necessary" to determine whether there was an impropriety or violation of the NJEERA. State v. Council of N.J. College Locals, 141 N.J. Super. 470, 473 (App. Div. 1976). Because the administrative law judge's disposition constituted action that was not arbitrary, capricious, or unreasonable, we unhesitatingly affirm that determination.

In the present case, the administrative law judge found "no violation of the Civil Service Act" and proceeded to "determine[] whether application of [the NJEERA would] reveal violations of its provisions." He made a point to note that "a finding of unfair practice and anti-union animus under [the NJEERA] does not necessarily equate with 'bad faith' under Civil Service law[.]" This approach, which preserves the salutary purposes of the NJEERA to deal fully and completely with complaints of unlawful practices relating to employee rights is consistent with Hackensack v. Winner, 82 N.J. 1 (1980), and its progeny.

Local 240 argues that the County refused to bargain in good faith. N.J.S.A. 34:13A-5.4(a)(5) states

a. Public employees, their representatives or agents are prohibited from:

. . . .

(5) Refusing to negotiate in good faith with a majority representative of employees in an appropriate unit concerning terms and conditions of employment of employees in that unit, or refusing to process grievances presented by the majority representative.

The statute requires negotiation in good faith, where the matter at issue is negotiable. While a wage freeze is negotiable, a plan to reduce the size of the work force is not. See e.g., N.J. State Policemen's Benevolent Ass'n v. Irvington, 80 N.J. 271, 288-89 (1979).

Local 240 myopically focuses on Czech's January 9, 2009 demand for a wage freeze, and urges that this ultimatum trumps everything else. We cannot subscribe to such a narrow-minded approach, which ignores the unique economic reality of the time. On the other hand, the administrative law judge properly recognized and integrated the totality of the circumstances into his carefully calibrated determination.

As discussed in detail in the June 6, 2011 initial decision, the County was in serious financial distress in 2009. There were clear economic motivating factors and nowhere an indication that the County's decisions were due to anti-union animus. Additionally, the administrative law judge noted, "[i]t is not an insignificant fact that the County and its Board of Freeholders could simply have exercised its prerogative to lay off, without offering a wage freeze option. The Board's decision to bypass such unilateral action falls short as a viable marker of unfair practice."

The same may be said of the timing of events, which the administrative law judge found militated in favor of both sides. Ultimately, however, he concluded, "the totality of the circumstances suggest that overwhelming economic pressure on the Board of Freeholders and its Administrator to act as rapidly as possible was the substantial impetus and motivation of both. The facts do not fit with the charge that [Local 240 was] singled out." There is nothing unreasonable about either this analysis or the result.

Local 240 also claims that untoward (and illegal) retaliation was proven under N.J.S.A. 34:13A-5.4(a)(3), which provides:

a. Public employees, their representatives or agents are prohibited from:

. . . .

(3) Discriminating in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage employees in the exercise of the rights guaranteed to them by this act.

In support of its argument, Local 240 relies upon In re Township of Bridgewater, 95 N.J. 235 (1984). In In re Bridgewater, the Court set forth guidelines for considering unfair practice charges brought by a public employee:

the employee must make a prima facie showing sufficient to support the inference that the protected union conduct was a motivating factor or a substantial factor in the employer's decision. Mere presence of anti-union animus is not enough. The employee must establish that the anti-union animus was a motivating force or a substantial reason for the employer's action. Once that prima facie case is established, however, the burden shifts to the employer to demonstrate by a preponderance of evidence that the same action would have taken place even in the absence of the protected activity. This shifting of proof does not relieve the charging party of proving the elements of the violation but merely requires the employer to prove an affirmative defense.

[Id. at 242 (citations omitted).]

Although finding a prima facie case to exist, the administrative law judge concluded that the County's across-the-board reaction to the economic recession its "potential for pain" "was universal, and had already descended on non-union County staff. This imposition of sacrifice was broad based. It cannot be said that the County, in unjustifiable reaction to rampant economic decline, singled out [Local 240]." From this, it is clear that the administrative law judge properly applied In re Bridgewater.

No one disputes the financial straits the County found itself in following the 2008 economic downturn. Local 240 argues, however, that because the County did not actually save money from the layoffs of its negotiating unit's members in 2009, "the layoffs [were] clearly pretextual." The County recognized that there were going to be expenses associated with layoffs of corrections officers. The layoffs were meant to provide long-term cost savings to the County, not just in 2009 but also in the years going forward. The County knew that in 2009 "the savings wouldn't be as great because of overtime, because of unemployment."

Local 240 further argues that because no immediate savings were realized and there was a lack of documentation that calculated the putative savings, the layoffs carried out within Local 240 were pretextual and retaliatory. In the face of Local 240's lack of presenting viable and realistic cost-saving alternatives, we cannot conclude that the administrative law judge erred in deciding that pretext was not proven.

Ultimately, the administrative law judge found that Local 240's arguments were "insufficient to overcome the facts here when evaluated against the backdrop of the Court's holding in Bridgewater." We fail to discern that this determination was arbitrary, unreasonable, or capricious, and lacks foundation in the record. The administrative law judge followed the law; the "record contains substantial evidence to support the findings"; and the conclusion was one that could "reasonably have been made on the showing of the relevant factors." In re Jersey City, supra, 154 N.J. at 567. We have no basis to substitute our judgment for the deemed-approved agency decision, In re Stallworth, 208 N.J. 182, 194 (2011), even if we might have reached a different result had we been the trier of fact. In re Carter, 191 N.J. 474, 483 (2007).

A

1 PERC never actually rendered a final decision in this matter. Instead, the August 16, 2011 initial decision of the administrative law judge who heard the unfair practice matter was deemed adopted pursuant to the automatic-approval provision of N.J.S.A. 52:14B-10(c). The PERC did not appeal the Office of Administrative Law's March 2, 2012 order denying the PERC's request for an extension under N.J.A.C. 1:1-18.8 and therefore the status of the final administrative action is not before us. For ease of reference, we will refer to the PERC's deemed-approved decision as that of the administrative law judge.

2 Local 240's collective negotiating agreement had expired on December 31, 2008, and there had not been any negotiation sessions with the County by the time of the January 9, 2009 meeting.

3 The County's and Local 240's briefs are not at odds concerning the appropriate scope of appellate review, and make no distinction between an agency head's final decision and a deemed-approved initial decision that becomes, by default, "the final decision of the head of the agency." See N.J.S.A. 52:14B-10(c). We see no reason to depart from the parties' views in this respect.