IN THE MATTER OF BOROUGH OF OAKLAND v. PBA LOCAL 164

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 
 

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

IN THE MATTER OF

BOROUGH OF OAKLAND,

Respondent,

v.

PBA LOCAL 164,

Appellant.

-

January 5, 2017

 

Argued December 1, 2016 Decided

Before Judges Hoffman and Whipple.

On appeal from the New Jersey Public Employment Relations Commission, Docket No. IA-2014-044, PERC No. 2015-75.

Richard D. Loccke argued the cause for appellant (Loccke Correia & Bukosky, attorneys; Mr. Loccke, of counsel and on the briefs; Corey M. Sargeant, on the briefs).

Matthew J. Giacobbe argued the cause for respondent Borough of Oakland (Cleary Giacobbe Alfieri Jacobs, LLC, attorneys; Mr. Giacobbe, of counsel and on the brief; Adam S. Abramson, on the brief).

Frank C. Kanther, Deputy General Counsel, argued the cause for respondent New Jersey Public Employment Relations Commission (Robin McMahon, General Counsel, attorney; Mr. Kanther, on the statement in lieu of brief).

PER CURIAM

PBA Local 164 (PBA) appeals from the June 2015 decision of the New Jersey Public Employment Relations Commission (PERC), affirming the May 2015 public interest arbitration award of arbitrator Robert C. Gifford (Gifford) establishing the terms of the collective negotiated agreement (CNA) between the PBA and the Borough of Oakland (Borough). We affirm.

I.

The PBA consists of police officers in the ranks of patrol officer, sergeant, lieutenant, and captain. The PBA and the Borough were parties to a collective negotiations agreement that expired on December 31, 2013. On March 31, 2014, the Borough filed a petition to initiate compulsory interest arbitration. PERC appointed Gifford as the interest arbitrator.

On April 20, 2015, Gifford conducted a formal interest arbitration hearing. After receiving post-hearing briefs, Gifford closed the record. On May 4, 2015, Gifford issued his decision and award. Gifford rendered a three-year award, effective January 1, 2014, through December 31, 2016. The award contained the following provisions, in relevant part: (1) modifications to the salary guide for new hires, specifically adding two steps to the salary guide for officers hired on or after January 1, 2015, and upwardly adjusting the salary guide by 0.81% for officers hired on or after January 1, 2015; (2) eliminating longevity pay for officers hired on or after January 1, 2015; and (3) capping terminal leave payments at $15,000 for all officers hired on or after May 22, 2010.

The PBA appealed the award to PERC, which affirmed the award on June 25, 2015. The PBA then appealed to this court, arguing

POINT I

UNDER CLEAR STATUTORY STANDARDS AND UNDER SUPREME COURT DECISIONAL LAW SIGNIFICANT PORTIONS OF THE AWARD CANNOT BE SUSTAINED, AND P.E.R.C. WAS IN ERROR IN CONFIRMING THE EFFECTIVE AWARD.

POINT II

THE ARBITRATOR'S AWARD SHOULD BE [FOUND] AS VIOLATIVE OF N.J.S.A.34:13A-16(g) AND CONTROLLING CASE LAW.

II.

The New Jersey Employer-Employee Relations Act, N.J.S.A.34:13A-1 to -43, includes a compulsory interest arbitration procedure for police departments and police officer representatives who reach an impasse in collective negotiations. N.J.S.A.34:13A-16(b)(2). Either party may petition to initiate this process with PERC. Ibid. The parties may appeal the arbitrator's award to PERC, and may appeal from PERC decisions to this court. N.J.S.A.34:13A-16(f)(5)(a).

Our review of "PERC decisions reviewing arbitration is sensitive, circumspect[,] and circumscribed." 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 o.b., 177 N.J.560 (2003). We will uphold these decisions unless they are "clearly arbitrary or capricious." Ibid.(citation omitted). However, we provide heightened scrutiny of statutorily mandated public interest arbitration where public funds are at stake. Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J.71, 82 (1994).

PERC's role is to consider whether the arbitrator properly applied the factors articulated in N.J.S.A. 34:13A-16(g) and issued a reasonable determination. Teaneck, supra, 353 N.J. Super. at 306. The arbitrator's role, in turn, is to choose between the parties' final offers after considering these factors. Hillsdale, supra, 137 N.J.at 82. PERC will not vacate an award unless (1) the arbitrator failed to give due weight to the N.J.S.A.34:13A-16(g) factors he or she determined were relevant; (2) "the arbitrator violated the standards in N.J.S.A.2A:24-8 and -9; or (3) the award is not supported by substantial credible evidence in the record as a whole." In re State, 443 N.J. Super. 380, 385 (App. Div.) (citing Hillsdale, supra, 137 N.J.at 82), certif. denied, 225 N.J.221 (2016). We will similarly uphold an award if it is supported by "substantial credible evidence in the record." Hillsdale, supra, 137 N.J.at 82 (citation omitted).

N.J.S.A. 34:13A-16(f)(5) requires the arbitrator issue a "written report explaining how each of the statutory criteria played into the arbitrator's determination of the final award." Providing guidance for this written report, N.J.S.A. 34:13A-16(g) states

The arbitrator shall decide the dispute based on a reasonable determination of the issues, giving due weight to those factors listed below that are judged relevant for the resolution of the specific dispute. In the award, the arbitrator or panel of arbitrators shall indicate which of the factors are deemed relevant, satisfactorily explain why the others are not relevant, and provide an analysis of the evidence on each relevant factor . . . .

An arbitrator is required to consider nine specific factors under N.J.S.A. 34:13A-16(g). "The arbitrator need not rely on all factors, but must identify and weigh the relevant factors and explain why the remaining factors are irrelevant." In re City of Camden, 429 N.J. Super. 309, 326 (App. Div.) (citing Hillsdale, supra, 137 N.J. at 83-84), certif. denied, 215 N.J. 485 (2013). If the arbitrator provides a "reasoned explanation," it should satisfy the requirement he or she give "due weight" to each factor. Hillsdale, supra, 137 N.J. at 84. No single factor is dispositive, but collectively they "reflect the significance of fiscal considerations." City of Camden, supra, 429 N.J. Super. at 326-27.

In 2010, the legislature amended N.J.S.A. 34:13A-16 to prohibit an interest arbitration award from increasing public employer "base salary" costs by more than two-percent per contract year. See N.J.S.A. 34:13A-16.7(b) (codifying L. 2010, c. 105, 2).1 The statute defines "base salary" as "salary provided pursuant to a salary guide or table and any amount provided pursuant to a salary increment, including any amount provided for longevity or length of service." N.J.S.A. 34:13A-16.7(a).

As a result of the legislation, PERC modified the interest arbitration award review standard to insure that the arbitration awards will not increase base salary by more than two-percent per contract year or six-percent in the aggregate for a three-year contract award. See Borough of New Milford, & PBA Local 83, P.E.R.C. No. 2012-53, 38 NJPER 340 ( 116 2012). Here, the award was subject to this two-percent salary cap, and therefore PERC was required to determine whether Gifford complied with and adequately explained his awards consistent with the requirements of both N.J.S.A. 34:13A-16(g) and N.J.S.A. 34:13A-16.7. See In re State, supra, 443 N.J. Super. at 384-85.

III.

The PBA argues we should vacate and remand Gifford's award because he failed to provide a "costing out or other economic analysis of significant parts of the [d]ecision." Specifically, the PBA argues Hillsdale required Gifford to provide a cost analysis of his changes to the length of the wage progression schedule for future hires, elimination of longevity for future hires, and modification of terminal leave benefits for certain current employees and future hires. The PBA further contends Gifford could not conduct this required analysis because the Borough failed to provide sufficient evidence in the record, causing Gifford to base the awarded modifications on speculation. However, we find a full cost-out of these changes for new hires is impossible and has not been required in prior PERC decisions.

PERC first addressed the issue of costing out potentially speculative costs under the two-percent cap of N.J.S.A. 34:13A-16.7 in New Milford, supra, 38 NJPER 340. PERC stated

[W]e modify our review standard [under the new 2% limitation on adjustments to base salary] to include that we must determine whether the arbitrator established that the award will not increase base salary by more than 2% per contract year or 6% in the aggregate for a three-year contract award.

. . . .

Since an arbitrator, under the new law, is required to project costs for the entirety of the duration of the award, calculation of purported savings resulting from anticipated retirements, and for that matter added costs due to replacement by hiring new staff or promoting existing staff are all too speculative to be calculated at the time of the award. The Commission believes that the better model to achieve compliance with [N.J.S.A. 34:13A-16.7] is to utilize the scattergram demonstrating the placement on the guide of all of the employees in the bargaining unit as of the end of the year preceding the initiation of the new contract, and to simply move those employees forward through the newly awarded salary scales and longevity entitlements. Thus, both reductions in costs resulting from retirements or otherwise, as well as any increases in costs stemming from promotions or additional new hires would not affect the costing out of the award . . . .

[New Milford, supra, 38 NJPER 340 (emphasis added).]

PERC next addressed the statutory cap in Borough of Ramsey, & Ramsey PBA Local No. 155, P.E.R.C. No. 2012-60, 39 NJPER 17 ( 3 2012), reaffirming New Milford with regard to speculative costs relating to new hires

In New Milford, we determined that reductions in costs resulting from retirements or otherwise, or increases in costs stemming from promotions or additional new hires, should not affect the costing out of the award. N.J.S.A. 34:13A-16.7(b) speaks only to establishing a baseline for the aggregate amount expended by the public employer on base salary items for the twelve months immediately preceding the expiration of the collective negotiation agreement subject to arbitration.

[Borough of Ramsay, supra, 39 NJPER17.]

Here, Gifford relied on New Milfordin providing the following cost analysis

In accordance with PERC's standards, by utilizing the same complement of officers employed by the Borough as of December 31, 2013 over a term of three (3) years, and assuming for the purposes of comparison there are no resignations, retirements, promotions or additional hires, the increases to base salary awarded herein increase the total base salary including annual base salary, holiday pay, detective differential and longevity as follows

Base Year

Total

Base Salary

Increase from Prior Year

2013

$2,669,607

2014

$2,734,265

$64,658

2015

$2,775,269

$41,005

2016

$2,834,269

$58,755

Total Increase

$164,418

We find Gifford appropriately followed New Milford by using existing personnel numbers for the twelve months preceding the new CNA to project costs over its full duration. Gifford awarded a three-year contract effective January 1, 2014, through December 31, 2016. Gifford used the agreed-upon total pensionable base salary for 2013 of $2,740,442.90 the figure from last year of the preceding contract to calculate the two-percent annual cap amount of $54,809. He then adjusted the 2013 base salary to $2,669,607 to reflect the total base salary for the twenty-one officers on the Department roster as of December 31, 2013. Gifford ultimately awarded a total salary increase of $164,418, which is equivalent to an average base salary increase of $54,806 per year over three years. This places the award just under the N.J.S.A. 34:13A-16.7 two-percent annual cap.

In reviewing Gifford's decision, PERC noted that arbitrators "should not factor in projected retirements or hiring during the term of the new contract as such projections are not consistent with the precise mathematical calculations necessary to determine compliance with the [two-percent] annual base salary cap." PERC then found Gifford appropriately relied on New Milford in rendering his calculations, stating "his overall salary award was consistent with our guidance in that decision and the interest arbitration law."

PERC thus based its decision on controlling law, including its own prior guidance and a review of Gifford's calculations. Gifford was bound to confine his calculations within the two-percent cap, which he did using established PERC criteria. We therefore find PERC's decision affirming the award without the cost analysis urged by the PBA was not arbitrary, capricious, or unreasonable.

IV.

The PBA also argues Gifford improperly analyzed the factors of N.J.S.A. 34:13A-16(g) by failing to base the award on evidence presented in the record. The PBA contends Gifford's award was "devoid of any analysis of the evidence pertaining to the relevant factors, and any explanation why other factors are irrelevant." We disagree.

As noted, N.J.S.A. 34:13A-16(g) directs arbitrators to consider nine statutory factors, and arbitrators must "identify and weigh the relevant factors and . . . explain why the remaining factors are irrelevant." Hillsdale, supra, 137 N.J. at 84. Reviewing courts may vacate an award when it fails to give "due weight" to the statutory factors. Id. at 82 (citation omitted). These factors are as follows

(1) The interests and welfare of the public.

. . .

(2) Comparison of the wages, salaries, hours, and conditions of employment of the employees involved in the arbitration proceedings with the wages, hours, and conditions of employment of other employees performing the same or similar services and with other employees generally

(a) In private employment in general

. . . .

(b) In public employment in general

. . . .

(c) In public employment in the same or similar comparable jurisdictions

. . . .

(3) The overall compensation presently received by the employees, inclusive of direct wages, salary, vacations, holidays, excused leaves, insurance and pensions, medical and hospitalization benefits, and all other economic benefits received.

(4) Stipulations of the parties.

(5) The lawful authority of the employer.

. . .

(6) The financial impact on the governing unit, its residents, the limitations imposed upon the local unit's property tax levy

. . . and taxpayers. . . .

(7) The cost of living.

(8) The continuity and stability of employment including seniority rights and such other factors not confined to the foregoing which are ordinarily or traditionally considered in the determination of wages, hours, and conditions of employment through collective negotiations and collective bargaining between the parties in the public service and in private employment.

(9) Statutory restrictions imposed on the employer. . . .

[N.J.S.A. 34:13A-16(g)(1)-(9).]

The PBA raised the argument that Gifford improperly analyzed the nine factors in its appeal to PERC. PERC disagreed and affirmed Gifford, stating

We find that the arbitrator complied with N.J.S.A. 34:13A-16(g) and sufficiently explained his basis for finding some statutory factors more relevant than others, gave due weigh to the factors deemed relevant, and analyzed the evidence on each relevant factor.

In its briefs before this court, the PBA only points to factor (6), arguing it requires the cost-out discussed above. Otherwise, the PBA fails to identify or explain which factors Gifford failed to analyze correctly. Upon our review of the record, we determine PERC's assessment of Gifford's award is supported by the record and conclude he appropriately addressed all nine statutory factors.

Gifford began by stating he considered all factors relevant, but noted not all were entitled to equal weight. First, he gave greater weight to the Borough's "ability to pay," the "lack of adverse impact," the "interests and welfare of the public," and "public sector comparability." He analyzed these criteria through statutory factors (1) (interests and welfare of the public), (2)(b) (comparison to public employment in general) and (2)(c) (comparison to public employment in the same or similar comparable jurisdictions), and (6) (financial impact on the government unit, residents, and taxpayers). He also discussed factors (5) (lawful authority of the employer) and (9) (statutory restrictions on the employer) in this context.

Regarding factor (1) (interests and welfare of the public), Gifford stated the award serves the interests of the public "through a weighing of the statutory criteria after due consideration to the Hard Cap." He also noted the overall compensation awarded served the interests of the public because the base salary calculations would not exceed the two-percent cap. He further noted his modifications for new hires would improve the Borough's ability to manage its operations within statutory limitations.

As to factor (5) (lawful authority of the employer), Gifford stated the award would not exceed the Borough's lawful authority. Regarding factor (6) (financial impact on the governing unit, residents, and taxpayers), Gifford stated the award would not have an adverse impact on the Borough, its taxpayers, and residents, as the Borough did not claim an inability to pay up to statutory permitted levels. As to factor (9) (statutory restrictions on the employer), Gifford found the award would not prohibit the Borough from meeting its statutory obligations or cause it to exceed its lawful authority.

Gifford then explained he gave less weight to factor (2)(a) (comparison to private employment), based on the unique nature of law enforcement jobs. Rather, he gave greater weight to factors (2)(b) (comparison to public employment in general) and (2)(c) (comparison to public employment in the same or similar comparable jurisdictions), noting the PBA and the Borough provided evidence comparing the PBA to other law enforcement units in Bergen County and New Jersey. He also noted the Borough provided internal comparisons to other employees in the Borough itself. Gifford further considered the comparable salary increases of other awards subject to the two-percent salary cap and the benefits received by other law enforcement units.

Gifford also gave less weight to factors (3) (overall compensation received by employees), (4) (stipulations of the parties), (7) (cost of living), and (8) (continuity and stability of employment). Regarding factor (3), he stated the evidence showed the overall compensation received by Borough officers is "fair, reasonable, and competitive." As to factor (4), Gifford noted the parties stipulated to the Borough's ability to pay up to statutory permitted levels, and they stipulated to the amounts of family medical coverage costs.

Regarding factor (7) (cost of living), Gifford considered figures from the U.S. Bureau of Labor Statistics for the Consumer Price Index for All Urban Consumers, but gave it little weight because it would not impact his awarded salary increases that would not exceed the statutory cap. Last, addressing factor (8) (continuity and stability of employment), Gifford stated the evidence showed the modifications were reasonable under the circumstances, and his award would have less of a negative impact on the Police Department than if he had adopted the Borough's proposals in full.

As far as we can discern, the PBA is arguing this analysis was insufficient because Gifford failed to fully "provide an analysis of the evidence on each relevant factor." N.J.S.A. 34:13A-16(g). We note that Gifford's analysis on some factors was limited; for instance, he completed most of his discussion of factors (1), (5), (6), and (9) in one short paragraph. However, it appears Gifford first presented the arguments of both parties and then briefly discussed each factor, "[h]aving considered the entire record." Besides reciting general standards, the PBA does not specifically explain where Gifford's analysis fell short or what type of analysis was required instead.

Therefore, because Gifford addressed every factor, we find PERC's decision to affirm Gifford's award was based on substantial evidence in the record and its decision was neither arbitrary, capricious, nor unreasonable.

Affirmed.

1 The legislature amended N.J.S.A. 34:13A-16.7(b), making it effective on June 24, 2014, and retroactive to April 2, 2014. See L. 2014, c. 11, 2. Because the Borough filed its petition to initiate compulsory interest arbitration on March 31, 2014, two days before this retroactive date, the amendment does not apply here.