On certification to the Superior Court, Chancery Division, Bergen County.
For reversal -- Chief Justice Hughes and Justices Sullivan, Pashman, Clifford, Schreiber and Handler. Concurring and dissenting -- Judge Conford. The opinion of the court was delivered by Pashman, J. Conford, P.J.A.D. (temporarily assigned), concurring.
At issue herein is whether the 1974 amendments to the New Jersey Employer-Employee Relations Act, L. 1968, c. 303, as amended by L. 1974, c. 123, N.J.S.A. 34:13A-1 et seq. (the Act), created a class of permissively negotiable matters which, while not qualifying as mandatorily negotiable terms and conditions of employment, are nevertheless negotiable on a voluntary basis. The Public Employment Relations Commission (PERC) has concluded that such a permissive category indeed exists. See In re Bd. of Ed. of the Borough of Fair Lawn, PERC No. 76-7, 1 NJPER 47, 48 n. 9 (1975). PERC has also determined that disputes involving provisions of collectively negotiated agreements covering permissive matters may be resolved by binding arbitration if the matter is otherwise arbitrable, as is the case with those covering mandatorily negotiable matters. In re Ridgefield Park Bd. of Ed., PERC No. 78-9, 3 NJPER 319, 320 (1977); In re Bd. of Ed. of City of Trenton, PERC No. 77-24, 2 NJPER 351, 352 (1976); In re Bridgewater-Raritan Regional Bd. of Ed., PERC No. 77-21, 3 NJPER 23, 25 (1976). The public employer herein contends that with respect to the issue of negotiability there are but two types of subjects -- those as to which collective negotiation is mandatory and those as to which it is unlawful. The former category is comprised of those subjects which pertain to the terms and conditions of public employment while the latter includes all other subjects. It claims that any provision of a negotiated agreement which concerns subjects in the latter category is ultra vires and thus unenforceable.
The facts of this case are not in dispute. The collective agreement between plaintiff Association, the majority representative of the Board's teaching employees, and the defendant Board, which ran until July 1, 1977, defined a grievance as follows:
The term, "grievance," means a complaint by an employee, group of employees, or the Association, that, as to him, there has been an
inequitable, improper, or unjust application, interpretation, or violation of a policy, agreement, or administrative decision.
The contract provided for binding arbitration as the terminal step in the grievance process:
In the event the aggrieved party is dissatisfied with the determination of the Board he shall have the right to request arbitration pursuant to rules and regulations established by the Public Employment Relations Commission under the provisions of Chapter 303, Public Laws of 1968. The findings of the arbitrator shall be binding on all parties.
The collective agreement included a provision governing the subject of teacher transfers and reassignments.
ARTICLE XIV -- Voluntary and Involuntary Transfers and Reassignments --
A. Employees who desire a change in grade and/or subject assignment or who desire to transfer to another building may file a written statement(s) of such desire with the superintendent. Such statement(s) shall include the grade and/or subject to which the employee desires to be assigned and the school or schools to which he desires to be transferred, in order of preference.
As soon as practicable, and in no case later than June 1, the superintendent shall post in each school and deliver to the Association a system-wide schedule showing the names of all employees who have been reassigned or transferred and the nature of such reassignment or transfer.
B. In the determination of requests for voluntary reassignments and/or transfers, the wishes of the individual employee shall be honored, upon the recommendation of the superintendent and approval of the Board, to the extent that the transfer or reassignment does not conflict with the instructional requirements and best interests of the school system.
C. Notice of an involuntary transfer or reassignment shall be given to the employee as far in advance as practicable. In the case of teachers, except in an emergency situation, notice shall be given not later than April 30.
During the 1975-1976 and 1976-1977 school years certain teachers were involuntarily reassigned to teach courses or grades which they did not wish to teach, were refused a
desired transfer to a different school, or were involuntarily transferred to another school. The Association filed grievances on behalf of these teachers. The Board denied all of them. The Association then sought to have these grievances resolved by binding arbitration, pursuant to the contractual arbitration clause. See ante at 150. The Board contended that the grievances pertained to matters outside the legal scope of negotiations, and hence were not arbitrable.
The Association instituted this action under N.J.S.A. 2A:24-1 and 3 seeking an order from the Chancery Division compelling the Board to submit the grievances involving transfers and reassignments to binding arbitration. The Board made a cross-application for an order enjoining the arbitrations. In the proceedings before the Chancery Judge, the Board admitted that it had a contractual duty to arbitrate the disputes herein, but submitted that the real issue was the legality of arbitrating these matters. The Board's request that the case be transferred to PERC for a decision on the negotiability of the issues involved in the grievances was denied. On March 4, 1977 the Chancery Division rendered an oral opinion adverse to the Board. On March 22, 1977 the Chancery Judge issued a judgment and order that the parties proceed to arbitration.
On March 2, 1977 the Board had filed a Petition for Scope-of-Negotiations Determination with PERC pursuant to N.J.S.A. 34:13A-5.4(d). It sought an order from PERC enjoining arbitration on both an interim basis and on a permanent basis. The interim request was denied in an interlocutory decision on April 5, 1977. PERC No. 77-45, 3 NJPER 150. This denial was based on PERC's determination that its decisions in In re Bridgewater-Raritan Regional Bd. of Ed., supra, and In re Bd. of Ed. of City of Trenton, supra, mandated a conclusion that the matters in issue, though permissive and not mandatorily negotiable, would be arbitrable if otherwise within the contractual arbitration clause.
Meanwhile, the Board obtained a temporary stay of the enforcement of the Chancery judgment in order to enable it to apply for a stay from the Appellate Division. On April 20, 1977 a single judge of the Appellate Division denied the motion for a stay. However, arbitration had not commenced as of July 7, 1977, when a full panel of the Appellate Division granted the Board's motion for a stay.
PERC gave the matter a full hearing and issued its scope determination on August 17, 1977. PERC No. 78-9, 3 NJPER 319 (1977). PERC reaffirmed its earlier holding in In re Bridgewater-Raritan Bd. of Ed., supra, 3 NJPER at 25, that in enacting L. 1974, c. 123, the Legislature reacted to the restrictiveness of the standards enunciated by this Court in Dunellen Bd. of Ed. v. Dunellen Ed. Ass'n, 64 N.J. 17 (1973), concerning negotiability and arbitrability in the public sector. PERC observed that the critical factor in the Court's Dunellen holding was the L. 1968, c. 303 version of N.J.S.A. 34:13A-8.1, which provided, in effect, that negotiated agreements could not "annul or modify any statute or statutes of this State." Thus, great significance was ascribed to L. 1974, c. 123, § 6, which amended that statute effectively to provide that no negotiated agreement could "annul or modify any pension statute or statutes of this State." PERC also cited pertinent language from the 1974 amendments to N.J.S.A. 34:13A-5.3, which establishes the primacy of the negotiated grievance procedures in dispute resolution:
Notwithstanding any procedures for the resolution of disputes, controversies or grievances established by any other statute, grievance procedures established by agreement between the public employer and the representative organization shall be utilized for any dispute covered by the terms of such agreement. (emphasis added)
PERC concluded that one of the purposes of L. 1974, c. 123 was to expand the scope of arbitrable issues. So long as no specific statutes are violated and no overriding public
policy contravened, PERC was of the opinion that both negotiation and arbitration of permissive matters are acceptable. In support of this view, PERC cited In re Bd. of Ed. of City of Trenton, supra, 2 NJPER at 352, where it had found that involuntary employee transfers were not precluded from negotiation by statute and were thus a permissible subject of negotiation, and In re Bd. of Ed. of the Borough of Verona, PERC No. 77-42, 3 NJPER 80 (1977), where it had found that a Board's decision to replace a teacher's non-teaching duty period with a classroom teaching period was also a permissibly negotiable subject. PERC held that the disputes herein were permissively negotiable and thus arbitrable if otherwise arbitrable under the agreement. 3 NJPER at 320-321.
The Board filed a motion for direct certification on July 18, 1977. On July 27, 1977 the Association appealed to this Court to vacate the interlocutory stay issued by the Appellate Division. In the alternative the Association requested direct certification. We directly certified this case while it was pending unheard in the Appellate Division, 75 N.J. 584 (1977).
Before we address the merits, some guidelines regarding proper procedure in these cases should be set. Under our existing legislative scheme it may be necessary to go to both PERC and the Superior Court in order to completely resolve a disagreement concerning the arbitrability of a particular dispute. When one party claims that a given dispute is arbitrable under the contract and the other party resists arbitration, the party desiring arbitration should seek an order from the Superior Court compelling arbitration. See N.J.S.A. 2A:24-1 et seq. Where the trial judge determines that the real controversy is not one of contractual arbitrability,
but rather concerns the propriety of the parties negotiating and agreeing on the item in dispute, he should refrain from passing on the merits of that issue.
PERC has primary jurisdiction to make a determination on the merits of the question of whether the subject matter of a particular dispute is within the scope of collective negotiations. N.J.S.A. 34:13A-5.4(d). See State v. State Supervisory Employees Ass'n, 78 N.J. 54 (1978); Bd. of Ed. of Plainfield v. Plainfield Ed. Ass'n, 144 N.J. Super. 521, 524-526 (App. Div. 1976); Newark Teachers Union v. Bd. of Ed. of Newark, 149 N.J. Super. 367, 374-375 (Ch. Div. 1977). However, the reach of this decision is limited. PERC discussed this point in In re Hillside Bd. of Ed., PERC No. 76-11, 1 NJPER 55, 57 (1975):
The Commission is addressing the abstract issue: is the subject matter in dispute within the scope of collective negotiations. Whether that subject is within the arbitration clause of the agreement, whether the facts are as alleged by the grievant, whether the contract provides a defense for the employer's alleged action, or even whether there is a valid arbitration clause in the agreement, or any other question which might be raised is not to be determined by the Commission in a scope proceeding. Those are questions appropriate for determination by an arbitrator and/or the courts.
Of course, where the existence of a contractual obligation to arbitrate is not contested, the parties need only go to PERC for a ruling on whether the subject matter of the dispute whose grievability is contested is within the scope of collective negotiations. PERC can then afford complete relief. If PERC concludes that the dispute is within the legal scope of negotiability and agreement between the employer and employees, the matter may proceed to arbitration. Where PERC concludes that a particular dispute is not within the scope of collective negotiations, and thus not arbitrable, it must issue an injunction permanently restraining arbitration. See Bd. of Ed. of Englewood v. Englewood Teachers, 135 N.J. Super. 120, 124 (App. Div. 1975). Moreover, we agree with the decision in Bd. of Ed. of Englewood v. Englewood
Teachers, supra, that PERC is empowered to order that arbitration proceedings be suspended during the pendency of a scope-of-negotiations proceeding. Where necessary, PERC may go to the Appellate Division to seek an appropriate order to compel compliance with its orders in scope proceedings. N.J.S.A. 34:13A-5.4(f). Where a party disagrees with PERC's determination on the scope question, an appeal to the Appellate Division is expressly authorized. N.J.S.A. 34:13A-5.4(d).
We agree with PERC that contract interpretation is a question for judicial resolution. Thus, where a party resists an attempt to have a dispute arbitrated, it may go to the Superior Court for a ruling on the issue of its contractual obligation to arbitrate. However, the issue of contractual arbitrability may not be reached if the threshold issue of whether the subject matter of the grievance is within the scope of collective negotiations is contested. In that event, a ruling on that issue must be obtained from PERC. Thus, the preferable procedure in the instant case would have been for PERC to have rendered its scope determination before the issue of contractual arbitrability was addressed. ...