POLICEMEN'S BENEVOLENT ASSOCIATION LOCAL NUMBER 191 v. TOWNSHIP OF EAST WINDSOR
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2073-20
POLICEMEN'S BENEVOLENT
ASSOCIATION LOCAL NUMBER
191 and THE SUPERIOR
OFFICERS ASSOCIATION OF
THE POLICEMEN'S
BENEVOLENT ASSOCIATION
LOCAL NUMBER 191,
Plaintiffs-Appellants,
v.
TOWNSHIP OF EAST WINDSOR,
Defendant-Respondent.
______________________________
Argued March 15, 2022 – Decided April 8, 2022
Before Judges Fisher, DeAlmeida, and Smith.
On appeal from the Superior Court of New Jersey, Law
Division, Mercer County, Docket No. L-0119-21.
Donald C. Barbati argued the cause for appellants
(Crivelli & Barbati, LLC, attorneys; Donald C. Barbati,
on the briefs).
Mark S. Ruderman argued the cause for respondent
(Ruderman & Roth, LLC, attorneys; Mark S.
Ruderman, of counsel; Littie E. Rau, of counsel and on
the brief).
PER CURIAM
The Policemen's Benevolent Association Local 191 (PBA) and the PBA
Superior Officers Association (SOA) (collectively, the Union) appeal an order
denying their motion to vacate an arbitration award. The Union alleged the
Township of East Windsor (Township) violated the parties' 2017-2020
collective negotiated agreement (CNA). The Union contended the Township
improperly deducted Tier IV premium payments for health care benefits from
the Union members' paychecks pursuant to Chapter 78, otherwise known as the
State Health Benefits Plan. 1 An arbitrator found the Township did not violate
the CNA. On the Union's motion to vacate the arbitration award, the Law
Division found for the Township. We affirm.
I.
We briefly review the statutes governing public employees' contributions
to the cost of their health care benefits. On June 28, 2011, the Legislature
1
The State Health Benefits Plan (SHBP) is codified at N.J.S.A. 52:14-17.25 to -
17.46(a). One of the most significant changes to the SHBP, and relevant to this
appeal, is Chapter 78. See N.J.S.A. 40A-10:21.1 and N.J.S.A. 52:14-17.28(c).
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enacted Chapter 78, requiring public employees to contribute defined
percentages to their health care benefit premiums based on their annual income.
N.J.S.A. 52:14-17.28(c). Chapter 78 contains two sections relevant here,
N.J.S.A. 40A:10-21.1 and N.J.S.A. 40A:10-21.2. Under N.J.S.A. 40A:10-21.1,
the premium payable by public employees for health care benefits was phased
in over a four-year period, beginning June 28, 2011. N.J.S.A. 40A:10-21.1
states that the minimum "amount payable by any employee . . . shall not under
any circumstance be less than the 1.5 percent of base salary . . . ." Under this
statute, Union members paid "one-fourth of the . . . contribution" during the first
year (Tier I), "one-half" in the second year (Tier II), "three-fourths" during the
third year (Tier III), and the full premium rate during the fourth year (Tier IV).
Ibid. Chapter 78 also included "sunset" language for this section, providing that
N.J.S.A. 40A:10-21.1 "shall expire four years after the effective date."
N.J.S.A. 40A:10-21.2, which governs CNAs executed after Tier IV rates
are reached, requires parties to a CNA to negotiate "for health care benefits as
if the full premium share was included in the prior contract." It states that public
employees are bound by N.J.S.A. 52:14-17.28(c)2 and N.J.S.A. 40A:10-21.1,
2 N.J.S.A. 52:14-17.28(c) phased in the four-tier scale of employee
contributions to health care benefits.
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"notwithstanding the expiration of those sections, until the full amount of the
contribution . . . ha[s] been implemented . . . ." N.J.S.A. 40A:10-21.2.
Against this background, we summarize the facts, which are set forth more
fully in the arbitrator's award. The parties entered into three CNAs during the
time period relevant here. The first CNA (CNA I) governed the period from
2010 through 2012, and it contained no Chapter 78 language. In the second
CNA, covering 2013 through 2016 (CNA II), Union members contributed to
their health care benefits in accordance with Chapter 78, with payroll deductions
conforming to the statutory tier schedule. Members began paying Tier IV rates
on January 1, 2016.
Article X, Section (B)(3) of CNA II addressed employee health benefits.
It read:
Employees shall contribute 1.5% of base salary toward
premium, commencing May 21, 2010. New employees
hired after January 1, 2010 shall pay an additional 0.5%
of base salary towards premium for a total of 2.0% of
base salary towards premium. All employees shall pay
1.5% of annual retirement pension towards healthcare
premium upon retirement. Payments shall be made by
January 31 of each and every year thereafter based on
the employee's annual pension for that current year.
Identical language had been included by the parties in CNA I, prior to the
enactment of Chapter 78.
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After CNA II expired, the parties began negotiations for a new CNA. The
Union sought to renegotiate health care benefit contributions for its members as
part of a new CNA, and it proposed that the Article X, Section (B)(3) language,
which pre-dated passage of Chapter 78, remain in the new agreement. This
language called for members to contribute to payment of their healthcare
premiums at the rate members were paying prior to the adoption of Chapter 78,
i.e., 1.5% of annual salary. The Township countered by proposing that the
language in Article X, Section (B)(3) be changed to reflect the existence and
operation of Chapter 78. Each of the parties' proposals was rejected by the other,
and the matter was never broached again prior to them signing the new CNA.
The parties eventually executed the 2017-2020 CNA (CNA III) without reaching
an agreement on how much members would contribute to payment of their health
care insurance premiums. Article X, Section (B)(3) remained in CNA III.
When members learned the Township was deducting Tier IV premiums
from their paychecks during the new CNA term, they immediately objected. The
Union argued that Article X, Section (B)(3) in CNA III applied, and members
were obligated to only contribute 1.5% of their salaries to healthcare premiums.
The Township interpreted the same provision as a nullity, with Chapter 78
requiring members to continue paying Tier IV rates, as in CNA II. The Union
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filed a grievance with the Public Employment Relations Commission (PERC) to
arbitrate the issue of which interpretation of the contract controlled, and PERC
conducted a hearing.
Tom Meyer, a union negotiator for CNA III, testified that the Union
sought on behalf of its members to decrease health care premiums from the Tier
IV rate they were paying under CNA II to 1.5 percent of salary. He testified
that the Township proposed to change the contract to "clear up some old
language issues that contradict[ed] with state law" and continue the members'
contributions at the Tier IV rate. On behalf of the Union, Meyer rejected the
Township proposal and stuck to the position that the language in Chapter 78 "is
ambiguous in regard to retirement benefits" and "thus the contract language must
prevail."
James Brady, a retired police officer, was the Township's manager during
the CNA III negotiations. He testified that the Township rejected the Union's
proposal to reduce health care benefit premiums to 1.5%. He "polite[ly]" told
the Union that "he did not foresee movement on this topic," because he wanted
to "shut discussion down over any intent to move off Chapter 78." The
Township's final position during negotiations was that, absent any agreed upon
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revision to the health care benefit contribution provision in CNA III, Tier IV
rates would remain in effect.
The arbitrator issued a written opinion. He concluded that the issue was
whether the Township violated CNA III by deducting Tier IV contribution rates
from the Union members' salaries in order to contribute to the premiums for
health care benefits. The arbitrator found that evidence showed "the parties
conditionally agreed to leave otherwise preempted language from [CNA II in
CNA III]." The arbitrator found that this conditional agreement was based on
"representations from the [Union] that it needed to do so in order to protect
retirees against the impact of a judicial decision and potential legislative changes
as well." He also found the Union abandoned its proposal to reduce the health
care benefit contributions and, consequently, failed to achieve a reduction in
healthcare premiums for its members through negotiations. As a result, the
arbitrator found "the Tier [IV] status quo remained unchanged and must be
deemed to coexist with the conditional language of Article X.B.3. of [CNA III]."
Applying N.J.S.A. 40A:10-21.1, the arbitrator held:
Tier [IV] must be deemed included in the 2013-2016
agreements and regarded as the status quo for the
purpose of negotiating the 2017-2020 agreements . . . .
[T]he only logical conclusion that can be reached is that
Tier [IV] continued under the status quo doctrine, as if
it continued on in the 2017-2020 agreements.
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The arbitrator rejected the Union's claim that the plain language of Article
X, Section (B)(3) evidenced the parties' intent to preempt Chapter 78 Tier IV
contribution rates. He stated that his "interpretation of [the] contract language
should be consistent with the objective which the parties sought to promote,"
and, therefore, "the parties' objective intent . . . govern[ed]." Applying that
principle, the arbitrator found "the parties did not mutually agree to modify the
Chapter 78, Tier [IV] status quo formula regarding premium contributions."
He concluded that "the parties signed [CNA III] with the Township
understandably believing that its . . . rejection of the [Union]'s proposal to reduce
Chapter 78 levels put an end to the subject and that the retention of Article
X.B.3. was conditional without an immediate economic impact." The arbitrator
denied the Union's grievance, finding "the [Union] failed to demonstrate the
Township violated the parties' agreements by continuing to deduct premium
contributions for active employees at the Chapter 78, Tier [IV] level in
accordance with N.J.S.A. 40A:10-21.2."
The Union filed an order to show cause and verified complaint in the Law
Division seeking to vacate the arbitrator's award. The trial court heard argument
and denied the motion to vacate, concluding the Union failed to meet its burden
necessary to vacate the arbitration award under N.J.S.A. 2A:24-8. The trial
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court found the award was not a product of "undue means" under N.J.S.A.
2A:24-8(a). The court found the arbitrator properly concluded the Tier IV rates
were the "status quo" after he identified that "there never was . . . mutual assent
to move off . . . [T]ier [IV]." The court cited our decision in Ridgefield Park
Board of Education v. Ridgefield Park Education Ass'n, 459 N.J. Super. 57
(App. Div. 2019), explaining that Chapter 78 unambiguously addressed the
negotiation of collective bargaining agreements after members reached full
implementation of the four-tier premium rates, holding that Tier IV would be
considered the status quo in subsequent negotiations. Recognizing Chapter 78
contained a sunset provision, the court concluded "Tier [IV] was . . . in effect
when the parties began negotiating the collective bargaining agreement[]" and,
therefore, "[T]ier [IV] was the status quo . . . ." The trial court held "the parties
did not mutually assent to . . . move off [T]ier [IV]" under CNA III, and the
Township "never agreed" to reduce the payment rates for union members.
Finally, the court found the Union failed to demonstrate the arbitrator
exceeded or imperfectly executed his powers to set aside the award under
N.J.S.A. 2A:24-8(d). In reviewing the arbitrator's decision, the judge
determined "[the arbitrator's] interpretation of . . . the facts and the intent of the
parties . . . clearly meets the reasonably debatable . . . standard." She concluded
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the arbitrator "found pretty resoundingly based upon the testimony and the
record, including the notes of Meyer, that there was no . . . mutual assent . . . ."
The court concluded the arbitrator's interpretation of CNA III was "reasonably
debatable," and affirmed the arbitration award.
The Union filed a notice of appeal on April 5, 2020. On appeal, the Union
argues the following:
I. THE TRIAL COURT ACTED ARBITRARILY,
CAPRICIOUSLY, AND UNREASONABLY IN
DENYING THE APPELLANTS' ORDER TO SHOW
CAUSE AND FAILING TO VACATE THE
ARBITRATION AWARD. AS SUCH, THE TRIAL
COURT'S DECISION MUST BE REVERSED.
II. THE ARBITRATOR IGNORED THE CLEAR,
UNAMBIGUOUS WORDING OF THE CNAS
DELINEATING THE HEALTHCARE
CONTRIBUTIONS FOR ACTIVE UNION
MEMBERS. AS A RESULT, THE ARBITRATION
AWARD WAS NOT REASONABLY DEBATABLE
AND THE TRIAL COURT WAS REQUIRED TO
VACATE THE SAME AS A MATTER OF LAW.
III. THE ARBITRATOR FAILED TO RECOGNIZE THE
PARTIES NEGOTIATED HEALTHCARE
CONTRIBUTIONS FOR ACTIVE UNION
MEMBERS. AS SUCH, THE CNAS PROPERLY
REFLECT THE PARTIES' INTENT AND
AGREEMENT PERTAINING TO THE SAME.
THEREFORE, THE ARBITRATION AWARD MUST
BE VACATED.
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IV. IN THE EVENT THE ARBITRATION AWARD IS
VACATED, THE UNIONS' MEMBERS MUST BE
REIMBURSED FOR ALL MONIES THAT WERE
WRONGFULLY DEDUCTED AND/OR
COLLECTED BY THE TOWNSHIP FOR
HEALTHCARE CONTRIBUTIONS FROM
JANUARY 1, 2017 FORWARD.
II.
We "review [a] trial court's decision on a motion to vacate an arbitration
award de novo." Yarborough v. State Operated Sch. Dist. of City of Newark,
455 N.J. Super. 136, 139 (App. Div. 2018) (citing Minkowitz v. Israeli, 433 N.J.
Super. 111, 136 (App. Div. 2013)). However, "[j]udicial review of an arbitration
award is very limited." Bound Brook Bd. of Educ. v. Ciripompa, 228 N.J. 4, 11
(2017) (quoting Linden Bd. of Educ. v. Linden Educ. Ass'n ex rel. Mizichko,
202 N.J. 268, 276 (2010)). "The public policy of this State favors ar bitration as
a means of settling disputes that otherwise would be litigated in a court." Badiali
v. N.J. Mfrs. Ins. Grp., 220 N.J. 544, 556 (2015) (citing Cnty. Coll. of Morris
Staff Ass'n v. Cnty. Coll. of Morris, 100 N.J. 383, 390 (1985)). "[T]o ensure
finality, as well as to secure arbitration's speedy and inexpensive nature, there
exists a strong preference for judicial confirmation of arbitration awards."
Borough of E. Rutherford v. E. Rutherford PBA Loc. 275, 213 N.J. 190, 201
A-2073-20
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(2013) (alteration in original) (quoting Middletown Twp. PBA Loc. 124 v. Twp.
of Middletown, 193 N.J. 1, 10 (2007)).
We apply "an extremely deferential review when a party to a collective
bargaining agreement has sought to vacate an arbitrator's award." Policemen's
Benevolent Ass'n, Loc. No. 11 v. City of Trenton, 205 N.J. 422, 428 (2011). "In
the public sector, an arbitrator's award will be confirmed 'so long as the award
is reasonably debatable.'" Linden Bd. of Educ., 202 N.J. at 276 (quoting
Middletown Twp. PBA Loc. 124, 193 N.J. at 11). An award is "reasonably
debatable" if it is "justifiable" or "fully supportable in the record." Policemen's
Benevolent Ass'n, 205 N.J. at 431 (quoting Kearny PBA Loc. # 21 v. Town of
Kearny, 81 N.J. 208, 223-24 (1979)). "Under the reasonably debatable standard,
a court reviewing [a public-sector] arbitration award may not substitute its own
judgment for that of the arbitrator, regardless of the court's view of the
correctness of the arbitrator's position." Borough of E. Rutherford, 213 N.J. at
201-02 (alteration in original) (citations and internal quotation marks omitted).
N.J.S.A. 2A:24-8 sets forth the limited statutory grounds on which we
may vacate an arbitration award. Pertinent to this appeal, we may vacate an
arbitration award "[w]here the award was procured by corruption, fraud or undue
means" or "[w]here the arbitrators exceeded or so imperfectly executed their
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powers that a mutual, final and definite award upon the subject matter was not
made." N.J.S.A. 2A:24-8(a) and (d).
"'[U]ndue means' ordinarily encompasses a situation in which the
arbitrator has made an acknowledged mistake of fact or law or a mistake that is
apparent on the face of the record . . . ." Borough of E. Rutherford, 213 N.J. at
203 (alteration in original) (quoting Off. of Emp. Rels. v. Commc'ns Workers of
Am., AFL-CIO, 154 N.J. 98, 111 (1998)).
Arbitrators exceed their authority where they ignore "the clear and
unambiguous language of the agreement . . . ." City Ass'n of Supervisors &
Adm'rs v. State Operated Sch. Dist. of City of Newark, 311 N.J. Super. 300, 312
(App. Div. 1998). It is fundamental that "an arbitrator may not disregard the
terms of the parties' agreement, . . . nor may he [or she] rewrite the contract for
the parties." Cnty. Coll. of Morris, 100 N.J. at 391 (citation omitted).
Furthermore, "the arbitrator may not contradict the express language of the
contract . . . ." Linden Bd. of Educ., 202 N.J. at 276.
III.
The Union asserts the arbitrator's award was a product of undue means in
that the arbitrator exceeded his statutory powers in disregarding the plain,
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unambiguous language in the agreement. Consequently, it argues, the trial court
abused its discretion when it affirmed the arbitrator's award. We disagree.
N.J.S.A. 40A:10-21.2 addresses health care contributions after full
implementation of Tier IV contribution rates. The statute provides:
A public employer and employees who are in
negotiations for the next collective negotiation
agreement to be executed after the employees in that
unit have reached full implementation of the premium
share set forth in section 39 of P.L.2011, c. 78
(C:52:14-17.28c) shall conduct negotiations
concerning contributions for health care benefits as if
the full premium share was included in the prior
contract. The public employers and public employee
shall remain bound by the provisions of sections 39, 42,
and 44 of P.L. 2011, c. 78 . . . notwithstanding the
expiration of those sections, until the full amount of the
contribution required by section 39 has been
implemented . . . .
....
After full implementation, those contribution levels
shall become part of the parties' collective negotiations
and shall then be subject to collective negotiations in a
manner similar to other negotiable items between the
parties.
[ N.J.S.A. 40A:10-21.2 (emphasis added).]
The parties dispute whether union members were required to contribute
1.5 percent of their base salary or the Tier IV rates toward health care benefits
under CNA III. The plain language of the statute makes clear that where Tier
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IV contributions were part of the parties' prior CNA, the Tier IV rate is the
starting point for negotiating the terms of the new CNA. Ibid. Consequently,
the status quo, i.e., Tier IV rates, must apply for calculating the health care
benefit contributions withheld from union members' paychecks.
"[O]nce achieved, Tier 4 contribution levels are to remain in effect unless
and until the parties negotiate lower health insurance premium contribution rates
in the next CNA." In re Ridgefield Park Bd. of Educ., 244 N.J. 1, 21 (2020).
The CNA at issue in Ridgefield required the employees pay "1.5 [percent] or the
minimum set forth by statute, regulation or code." Id. at 9. The employees in
that case argued because the Tier IV rates were achieved in the first year of the
CNA, they were only obligated to pay the 1.5 percent minimum rate,
notwithstanding there were several years remain on the existing CNA. Id. at 9-
10. The Ridgefield Board of Education argued that its employees were required
to pay Tier IV rates for the remainder of the CNA's term and any reduction could
only be negotiated in a subsequent agreement. Id. at 10. In analyzing the statute,
the Court wrote, "the Legislature . . . made the achieved Tier 4 contribution level
the status quo for purposes of negotiating contributions for the successor
contract." Id. at 20. Relying on the legislative history of Chapter 78, the Court
found:
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The Legislature clearly viewed the increasing cost of
employee health care to be among the State's most
serious fiscal challenges, destined to worsen absent
significant reform. The Legislature did not enact
Chapter 78 to achieve only a transient increase in
employees' health insurance premium contributions,
followed by an immediate reversion to pre-statute
contribution rates as soon as employees had contributed
at the Tier 4 level for a year. Instead, it envisioned that
Chapter 78 would increase employee health insurance
premium contributions over the long term.
[Id. at 23.]
Given the clear language of the statute and the Court's holding in
Ridgefield, we find, on this record, that full Tier IV rates were the status quo for
the parties in CNA III. There was no meeting of the minds on the benefit
contribution issue, therefore the Tier IV rates remained in effect for CNA III.
The arbitrator's award was reasonably debatable, and neither procured by undue
means, nor contrary to law. We find it fully supportable in the record.
Policemen's Benevolent Ass'n, 205 N.J. at 431. To the extent we have not
addressed the Union's other arguments, we conclude they are without sufficient
merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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