Opinion
DOCKET NO. A-1498-13T3
07-24-2015
FRATERNAL ORDER OF POLICE, NEWARK LODGE NO. 12, Plaintiff-Respondent, v. CITY OF NEWARK, Defendant-Appellant.
Willie L. Parker, Corporation Counsel, attorney for appellant (Michael A. Oppici, Assistant Corporation Counsel, on the briefs). Markowitz and Richman, attorneys for respondent (Matthew D. Areman, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Alvarez and Waugh. On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-143-13. Willie L. Parker, Corporation Counsel, attorney for appellant (Michael A. Oppici, Assistant Corporation Counsel, on the briefs). Markowitz and Richman, attorneys for respondent (Matthew D. Areman, on the brief). PER CURIAM
Defendant City of Newark (City) appeals the Chancery Division's October 11, 2013 order upholding the arbitrator's award in a dispute over the terms of a collective negotiations Agreement (Agreement) between the City and plaintiff Fraternal Order of Police, Newark Lodge No. 12 (FOP). We affirm.
I.
We discern the following facts and procedural history from the record on appeal.
The City and the FOP entered into the Agreement in February 2010. It was to be effective from January 1, 2009 to December 31, 2012.
On August 24, the City submitted a layoff plan for the Newark Police Department (Department) to the New Jersey Civil Service Commission (Commission). Citing financial troubles as a result of cuts in federal and state funding and a need to increase efficiency, the City also requested "wage freezes and union concessions" to balance the Department's budget. The Commission approved the layoff plan on September 23.
On November 29, the Department issued a personnel order terminating the employment of approximately 160 police officers as of the following day. On January 9, 2012, ten of the officers were reinstated. On February 29, seventeen additional officers were reappointed. The reappointment of additional laid-off police officers was ongoing as of the time that this appeal was filed.
On April 16, the FOP brought a grievance, contending that the City violated the Agreement by refusing to pay the officers who were re-hired on February 29 at the "proper contractual pay rate." It argued that the City violated the Agreement by returning the officers to the same salary and longevity steps they had at the time of the layoff, rather than giving them the salary and step rates they would have been receiving had they not been laid off.
The matter was submitted to arbitration on March 8, 2013. Both parties framed the issue as follows: "Did the City place the grievants on the proper salary and longevity steps when they were reappointed on February 29, 2012? If not, what shall be the remedy?"
Both parties relied on certain provisions in the Agreement, which they agreed were substantially similar to the comparable provisions found in agreements in place since the 1970s. They also agreed on the relevance of a City ordinance concerning the effect of an interruption of service on a City employee's eligibility for longevity pay increases.
Article 8 of the Agreement, entitled "Longevity," provides:
Section 1.
All employees of the police department covered by this Agreement, for long and faithful service, shall be paid longevity payments on a pro-rated basis with each earned salary check during the calendar year at the percentage of his/her permanent salary to be computed as follows:
First Step: On the anniversary date which represents the commencement of the 5th
year of service and every anniversary date thereafter — 4%.
Second Step: On the anniversary date which represents the commencement of the 10th year of service and every anniversary date thereafter — 6%.
. . . .
Section 2.
Longevity credits shall be based on the permanent salary received by the employee as of January 1, of the current year. Longevity pay shall be calculated each January 1, and if applicable, on each employee's anniversary date, in accordance with the longevity pay schedule as enumerated in Section 1.
Section 3.
All other terms and conditions for the accrual of all payments of longevity as set forth in Ordinance 6 S&FH (Ordinance), adopted November 2, 1966, as amended shall remain in full force and effect.
Section 2:24-10.4 of the Ordinance, which is entitled "When Interruption of Service Considered," provides: "Any interruption of service due to a cause beyond the control of the employee, or for military service, injury or illness, shall be considered as service for the City for the purpose of determining the completion of the cumulative periods of years of service with the City." The FOP contends that the layoff was an interruption in service "due to a cause beyond the control of the employee."
Other relevant portions of the Agreement include Article 33, which provides for retroactive payment of salary increases; Article 21, which provides for the retention of employee rights in existence prior to the Agreement; and Appendix A, which lists specific step increases in salary based on years of service.
The FOP presented the testimony of a former FOP official regarding the City's past practice with police officer layoffs and reappointments in the 1970s. The FOP offered a letter, written in 1982 by the City's then corporation counsel to an arbitrator, stating that, for longevity purposes, a reappointed officer is credited with service time during a gap in service due to a layoff. In addition, the FOP relied on arbitration awards from 1988 and 2001 in which arbitrators had ruled that reappointed police officers received wage, salary, and longevity credits for gaps in service, including one case that involved a layoff.
The City offered no witnesses or documentary evidence, but relied on its position letter. It argued that progression on the salary scale and entitlement to longevity payments is based solely on actual service in title. In support of its argument, the City cited N.J.A.C. 4A:3-4.17, which provides that State employees who are reappointed from a special reemployment list to the same title after a reduction in force do not receive credit for the time for salary step purposes. However, the City conceded that the longevity ordinances incorporated into the Agreement, including Section 2:24-10.4, permitted the reappointed officers to receive credit for the time spent during the layoff for the purpose of calculating their eligibility for retirement health benefits after twenty-five years of service.
On May 29, the arbitrator issued a written decision and award. She sustained the grievance, finding that "[t]he City of Newark violated the [Agreement] by failing to place the police officers reappointed on February 29, 2012 on the proper salary and longevity steps pursuant to [the Agreement]."
The arbitrator explained her decision as follows:
With consideration of this record in its entirety, including the testimony of retired P/O McEntee, prior arbitral decisions interpreting predecessor collective negotiations agreements, and City Ordinance 2:24-10.4, I find the Union has met its burden.The arbitrator determined that the four corners of the Agreement and the evidence submitted by the FOP, including past practices, demonstrated that the parties understood the Agreement to provide for step payment credit for a gap in service caused by a layoff. That practice had been in place since at least the 1970s, and the Agreement had not been changed to reflect a different understanding. The arbitrator found that Jack McEntee, who was a retired police officer and a past president of the FOP, had testified "credibly, without contradiction," that during the 1970s the term of a layoff counted as service for the purpose of calculating longevity pay increases. She also found that the City's reliance on N.J.A.C. 4A:3-4.17 was misplaced, because it was applicable solely to State employees and did not purport to apply to municipal employees.
While corporation counsel has persuaded this Arbitrator [that] the [Agreement] does not contain specific verbiage regarding officer placement with longevity and wages upon reappointment from layoffs, the four corners of the agreement, past practice of the parties, and relevant arbitration provisions evidence a clear understanding of the parties of appropriate placement when an employee's service is interrupted due to a cause beyond the control of the employee.
[(Emphasis and internal quotation marks omitted).]
The arbitrator made the following award:
1. The grievance is sustained.
2. The City of Newark [City] violated the [Agreement] by failing to place the police officers reappointed on February 29, 2012 on the proper salary and longevity steps pursuant to Article 8 — Longevity and Article 33 — Wages (Appendix A).
3. As soon as practical, the [City] shall credit the police officers of the 113th Class and 114th Class for salary and longevity purposes the time each was inactive, on layoff status.
4. As soon as practical, but no later than 60 days, the police officers of the 113th Class and 114th Class reappointed on February 29, 2012 shall be reimbursed, by the [City], all monies and benefits lost as a result of their step placement on February 29, 2012.
[(Emphasis omitted).]
In July 2013, the FOP filed a verified complaint in the Chancery Division seeking confirmation of the arbitration award. The City filed an answer and cross-motion in September. In its cross-motion, the City argued that the award should be vacated or remanded for further consideration because the Arbitrator's decision was in error.
The City asserted that the Agreement itself contained language that supported its position, citing the provision that longevity payments would be made "on a pro-rated basis with each earned salary check during the calendar year." The City also argued that certain documents not presented to, and consequently not considered by the Arbitrator, demonstrated that the Agreement did not provide salary step and longevity credit for a gap in service due to a layoff. The City asked that these documents be considered by the judge "as a matter of equity." Finally, the City maintained that the decision was against public policy because the arbitrator failed to consider the cost to the City in making the Award.
The City submitted the following evidence that it had not submitted or relied on during the arbitration: (1) an arbitration award from 1990, which, according to the City, "clearly indicat[ed] that service[-]based entitlements, including longevity and retiree medical benefits[,] would be based on the date that [a] police officer actually worked for the City"; (2) a 1993 memo in which the City's Division of Personnel defined "[y]ears of [e]mployment," in the context of service credit for salary step purposes, to include "time serve[d] in any title under the bargaining unit agreement"; (3) an August 22, 2013 order from the Chancery Division in which the judge vacated an arbitration award in which the arbitrator concluded that an officer should receive service-based entitlements following an invalid removal on the basis of psychological unfitness; (4) a December 1997 letter from the City's Division of Personnel to the City's principal account clerk stating that a break in service due to a layoff did not count as service for the purpose of calculating vacation entitlement; and (5) the deposition testimony of a senior administrative analyst in the City's Office of Management and Budget, who stated that eligibility for longevity benefits and senior step pay was based on actual service in title.
That order has since been reversed and remanded for entry of an order affirming the arbitrator's award in favor of the FOP. Fraternal Order of Police, Newark Lodge No. 12 v. City of Newark, No. A-0270-13 (App. Div. Feb. 26, 2015).
The City further argued that the additional evidence "demonstrate[d] the City's practice to grant service[-]based benefits for time actually served in title," not including gaps in service due to a layoff. The FOP argued that arbitrator's award should be upheld because the decision was "reasonably debatable" and the City's request to vacate the award was untimely, citing N.J.S.A. 2A:24-7.
On October 11, the judge heard oral argument and placed an oral decision on the record. As a preliminary matter, the judge found that the City's request to vacate was not untimely. However, the judge concluded that the arbitrator did not exceed her powers in interpreting the contractual language and applicable ordinance and that her interpretation of the contract was reasonably debatable.
The judge observed that the "most difficult issue" was whether evidence not brought to the arbitrator's attention, but bearing on the interpretation of the Agreement, should be considered in an action to confirm an award. He concluded that there was no precedent supporting such consideration, but observed that, in any event, the City's new evidence did not render the arbitrator's finding incorrect. Finally, the judge determined that, because there was no evidence in the record that the City would suffer severe economic harm as a result of the award, there was no basis to vacate the award on public policy grounds. The implementing order was filed the same day. This appeal followed.
II.
On appeal, the City argues that the motion judge erred in refusing to invalidate the award. In the alternative, it argues that the matter should be remanded to the arbitrator for further consideration.
Courts employ a limited standard of review on appeals from arbitration decisions. An "arbitrator's award is not to be cast aside lightly" and "judicial interference . . . is to be strictly limited." Cnty. Coll. of Morris Staff Ass'n v. Cnty. Coll. of Morris, 100 N.J. 383, 390 (1985). In addition, "'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. PBA Local 261, 409 N.J. Super. 344, 354 (App. Div. 2009) (alteration in original) (quoting Jersey City Educ. Ass'n v. Bd. of Educ. of Jersey 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.'" Linden Bd. of Educ. v. Linden Educ. Ass'n, 202 N.J. 268, 276 (2010) (quoting Middletown Twp. PBA Local 124 v. Twp. of Middletown, 193 N.J. 1, 11 (2007)); see also Policemen's Benev. Ass'n, Local No. 11 v. City of Trenton, 205 N.J. 422, 428-29 (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 Transit Union, 187 N.J. 546, 554 (2006)).
There is an exception to the reasonably-debatable standard. In Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349, 364 (1994), the Supreme Court held that "in rare circumstances a court may vacate an arbitration award for public-policy reasons." The Court added that
in a public-sector arbitration setting, a court can properly vacate an award because of a mistake of law. Communications Workers v. Monmouth County Bd. of Social Servs., 96 N.J. 442 (1984). That exception is necessary because public policy demands that a public-sector arbitrator, who must consider the effect of a decision on the public interest and welfare, issue a decision in accordance with the law. Kearny PBA Local #21 v. Town of Kearny, 81 N.J. 208, 217 (1979).
[Id. at 364-65.]
We first conclude that the motion judge appropriately considered the City's argument that the award should be vacated despite the fact that the City failed to seek vacation of the award during the three-month period established by N.J.S.A. 2A:24-7. In Policeman's Benevolent Association, Local 292 v. Borough of North Haledon, 158 N.J. 392, 401 (1999), the Supreme Court held that, although either party may bring a summary action to confirm or vacate the award within the time established by the statute, a common-law action to confirm may nevertheless be brought after that time. Acknowledging the potential inequity that could result from this rule, the Court noted that "[a]lthough the losing party may not institute an action to vacate an award after the expiration of three months, it may file an answer asserting affirmative defenses." Id. at 403-04. This would allow for judicial scrutiny of, for example, a losing-party's assertion that an award is contrary to public policy. Id. at 403. The City's answer and affirmative defenses in this case argue essentially the same points as its motion to vacate.
The City argues that, because the arbitrator made her decision on the basis of incomplete information, the award should be vacated or resubmitted for further consideration because the result is unreasonable. Of course, the incompleteness of the information before the arbitrator was the result of the City's unexplained failure to submit it to her in the first place. In arguing that the judge should nevertheless have considered the new evidence, the City relies, in part, on Fox v. Morris County Policemen's Ass'n, 266 N.J. Super. 501, 514 (App. Div. 1993), certif. denied, 137 N.J. 311 (1994), for the proposition that an arbitrator "should not be limited to considering only factors which the parties choose to produce evidence on," and, therefore, should request evidence when necessary to decide an issue. The City's reliance on Fox is misplaced. In Fox, we upheld the trial court's judgment vacating the arbitration award because, among other things, the arbitrator refused to admit "pertinent and material evidence" offered by one of the parties and decided an issue for which neither party submitted any evidence. Id. at 514-17. Here, however, the arbitrator based her decision on the evidence submitted to her by both sides. Her decision is not invalid because the City failed to submit what it now argues is important evidence.
The City's reliance on N.J.A.C. 19:16-5.7(e), which authorizes an arbitrator presiding over compulsory interest arbitration to require the production of evidence that "the arbitrator may deem material to a just determination of the issues in dispute," is equally unavailing. The City offers no convincing argument that the arbitrator was or should have been aware of the evidence that the City did not offer.
The City further argues that Kearny PBA Local #21 v. Town of Kearny, 81 N.J. 208 (1979), supports its position that the arbitration should be reopened to consider the additional evidence. In that case, the Supreme Court noted:
It frequently may be necessary to consider evidence extrinsic to the award to decide whether any of the statutory grounds for vacating the award exist. . . . [T]his had been the practice in courts of equity and, since the 1947 Constitution, Art. VI, § III, par. 4, vested equitable jurisdiction in the Superior Court, may now be found in the Chancery and Law Divisions of the Superior Court.The statutory grounds "upon which awards may be set aside" included instances where "they have been procured by corruption, fraud or undue means[;] where the arbitrators have refused to hear pertinent and material evidence or committed other prejudicial misbehaviors[;] or where the arbitrators exceeded or imperfectly executed their powers so that a mutual, final and definite award was not made." Id. at 220 (citations and internal quotation marks omitted). None of the above circumstances apply in the present case.
[Id. at 219-20.]
Here, the City is seeking to vacate the award because of its failure to submit evidence to the arbitrator, when it had every opportunity to do so. It has not offered any reasons for its failure to provide the evidence. The City is not entitled to a second chance. See S. Plainfield Bd. of Educ. v. S. Plainfield Educ. Ass'n ex rel. English, 320 N.J. Super. 281, 295 (App. Div.), certif. denied, 161 N.J. 332 (1999).
In any event, we have exercised original jurisdiction, pursuant to Rule 2:10-5, and considered the additional documents in the interests of judicial economy. See Vas v. Roberts, 418 N.J. Super. 509, 523-24 (App. Div. 2011). Like the motion judge, we conclude that the additional documents would not warrant a change in the result.
Turning to the merits of the arbitrator's decision, our review of the record convinces us that the arbitrator's decision satisfies the "reasonably debatable" standard. The Agreement, read as a whole and in the context of past practice, can reasonably be interpreted to provide that police officers should receive salary and longevity credit for a gap in service due to a layoff, which is necessarily a break in service beyond their control. Section 3 of Article 8 effectively incorporates the City's longevity ordinance, including Section 2:24-10.4, which as already noted, provides that "[a]ny interruption of service due to a cause beyond the control of the employee . . . shall be considered as service" for the purpose of calculating longevity. The arbitrator also chose to rely on evidence of past practice, as she was permitted to do by Article 21 of the Agreement, which covers the retention of employee rights in existence prior to the Agreement.
The arbitrator was clearly persuaded by McEntee's testimony that, during the 1970s, the City counted the term of a layoff as service for calculating salary increases and longevity. The arbitrator also relied on the letter from corporation counsel in 1982 and two prior arbitration awards in 1988 and 2001, all of which supported the conclusion that gaps in service due to layoffs should count as service for salary and longevity purposes. The City did not counter the FOP's past-practice evidence with documents or testimony.
The City also argues that the arbitrator's award violates public policy. First, the City argues that the arbitrator failed to consider the financial impact of the award on the City. Second, it argues that the award is contrary to or preempted by N.J.A.C. 4A:8-1.4.
In South Plainfield, supra, 320 N.J. Super. at 287, we held "that an arbitrator may consider the fiscal impact of an award in a public sector grievance arbitration in fashioning an appropriate remedy." South Plainfield involved a grievance against the Board "alleging violations of the initial salary placement provisions of their negotiated agreement." Id. at 285. It potentially affected the salaries of approximately seventy-two teachers hired over a period of five years. See id. at 286. The arbitrator found that the Board violated the contract, and fashioned an award that required the Board to review records and place the affected teachers at the appropriate salary step. Ibid. The award would "compensate the affected teachers retroactively" and impact the salaries of future hires. Ibid.
The Board filed a complaint to vacate the award, arguing that the arbitrator failed to account for the economic impact of her decision on the education budget. Ibid. The trial judge vacated the award on different grounds, and did not reach the issue of whether the arbitrator should have considered the financial impact of the award. Id. at 286-87.
On appeal, we found that the judge should have upheld the arbitrator's ruling that the Board violated the contract. Id. at 294-96. Nevertheless, we found that the arbitrator should also have considered the fiscal impact of the award. Id. at 296. In so finding, we emphasized that "the cost of the remedy must be borne by the public." Id. at 293. However, we observed that consideration of the financial impact of an award is not appropriate in all cases.
The identification of the public good is not always a constant; the demands on government resources are sometimes not predictable. Here, the arbitrator was confronted withWe concluded that the matter should be remanded for supplemental arbitration regarding the fiscal impact of the award. Id. at 296.
alleged grievable behavior that had extended over years, and yet the full impact was to be borne not by the public of the past but that of the present and future.
. . . [W]e . . . are especially concerned that the arbitrator's failure to consider the public employer's ability to finance the award could force the employer to cut services it provides, ultimately to the detriment of the public. We acknowledge that the grievance asserted a violation of the contract; however, the substantial length of time in issue as well as the numbers of employees involved demands fiscal consideration as a matter of public interest and welfare.
We need not define the parameters of public interest and welfare consideration except to note that where a decision may result in a bona fide claim of layoffs and service reduction, the arbitrator must factor in such concerns in fashioning a remedy that balances the rights of the grievants with the public interest and welfare. We expect that consideration of fiscal impact will be a matter of limited application and neither suggest nor hold that fiscal considerations will be relevant in every grievance arbitration. It is relevant here. It may be counterproductive to award substantial back salary credits over an extended number of years if that award reduces personnel and programs within the district.
[Id. at 293-94.]
In contrast to South Plainfield, where the Board specifically offered eleven possible points of service reduction to the children of the district that might be defunded, id. at 293, this case does not present a situation in which there is any evidence that implementation of the arbitrator's award could result in layoffs or a reduction in services to the public. The award affects approximately seventeen officers and credit for approximately fifteen months of service. In addition, as the trial judge noted, in asserting that the award will be costly, the City speaks in only generalities without supporting its position with specific facts. The City is, of course, free to negotiate future agreements that clarify the issue of salary step and longevity credit for gaps in service. We find no factual basis to set aside the award on the basis of cost.
Having reviewed the City's argument that the award is contrary to and preempted by N.J.A.C. 4A:8-1.4, we find it to be without merit and not warranting discussion in a written opinion. R. 2:11-3(e)(1)(E).
The City's arguments with respect to N.J.A.C. 4A:8-1.4 were not raised in the Chancery Division or before the arbitrator and need not be considered on appeal. State v. Robinson, 200 N.J. 1, 20-22 (2009); State v. Arthur, 184 N.J. 307, 327 (2005); Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973); see also Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 2:6-2 (2015). "Generally, an appellate court will not consider issues, even constitutional ones, which were not raised below." State v. Galicia, 210 N.J. 364, 383 (2012). --------
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION