On certification to the Superior Court, Appellate Division.
For affirmance as modified -- Chief Justice Wilentz and Justices Pashman, Schreiber, Handler and Pollock. For reversal -- Justice Sullivan. The opinion of the Court was delivered by Schreiber, J. Clifford, J., concurring in part and dissenting in part. Sullivan, J., dissenting.
This case involves the relationship among a public employee, his duly designated representative, and his public employer in the administration of the arbitration procedure provided in a collective negotiation agreement. More specifically, the question is whether a public employee, whose interests conflict with the position taken by the employees' majority representative in invoking and processing a matter through the grievance procedure and arbitration, must be given notice and the opportunity to be heard in those proceedings. Resolution of this question depends on interpretation of section 5.3 of the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-5.3.
On September 15, 1978 the plaintiff, Carmen Saginario, was promoted from the rank of State Trooper I to Sergeant in the Division of State Police (Division). On September 26, 1978 the State Troopers Fraternal Association of New Jersey, Inc. (Association), the exclusive representative for all troopers in the Division, instituted grievance procedures in accordance with the collective negotiation agreement between the Association and the Division, asserting that the promotion violated the agreement.
The agreement covered numerous matters relating to the terms and conditions of troopers' employment. One article was devoted to promotions, including promotions from Trooper I to Sergeant. Such promotions were to be based in part on a competitive written examination to be weighted at 34% and in part on five other factors to be weighted at 66%. These factors were "length of service," "performance rating," "record of conduct,"
"medical condition" and "ability to perform in the next higher rank or grade." The Division assigned a maximum number of points to each of these six factors and detailed a breakdown of points within each factor. For example, length of service with a maximum of five points was graded as follows:
The total maximum for all factors aggregated 66 points.
The Association, invoking the grievance procedure, claimed that plaintiff's points had been miscalculated in the categories of job-related experience and record of conduct and that the trooper with the highest overall promotional points should be promoted retroactive to the September promotion date. The basic grievance procedure consisted of five steps, the fifth step consisting of binding arbitration. Though a grievance could be initiated either by a trooper or the Association, only the Association could demand arbitration. The Division denied the Association's grievance and the matter progressed to arbitration. Plaintiff was not notified of any of the grievance or arbitration proceedings. Nor did he participate in the arbitration hearing.
The issue presented to the arbitrator by the Association and the State was whether plaintiff's promotion had violated the Agreement and, if so, what the remedy should have been. One witness, the secretary of the Division's promotional review board, testified. The remainder of the record consisted of a stipulation of facts, exhibits, and argument of counsel. The Association contended that plaintiff was entitled to 15, not 20, points for his job-related experience and to zero, rather than 3 1/2, points for his record of conduct. The State argued that plaintiff's prior experience as a Sergeant justified the point total for job-related experience and that a prior disciplinary action was not relevant.
The arbitrator agreed with the Association and held the promotion should be rescinded and the trooper with the highest
overall promotional points should be promoted retroactive to September 8, 1978. On January 4, 1979 the arbitrator's determination was implemented by the Division and Saginario was returned to the rank of Trooper I.
Plaintiff then commenced two actions, one in lieu of prerogative writs in the Superior Court, Law Division, and the other an appeal to the Appellate Division. When the State asserted that the matter was properly before the Appellate Division as an appeal from a determination of the Division, the plaintiff agreed to dismiss the Law Division action without prejudice. The trial court entered a judgment of dismissal.
The Appellate Division, although conceiving the appeal before it to be from the decision of the arbitrator and therefore cognizable in the Law Division, decided to exercise its original jurisdiction in the interest of judicial efficiency. Premising its decision on this Court's opinion in Donnelly v. United Fruit Co., 40 N.J. 61 (1963), the Appellate Division held that the arbitral award must be vacated and another arbitration hearing held in which Trooper Saginario would be permitted to participate. We granted the Association's petition for certification. 85 N.J. 467 (1981).
The Appellate Division, professing that it was "obliged to follow" Donnelly v. United Fruit Co., supra, held that the plaintiff could not be bound by the arbitration of which he had no notice and in which he had not been given an opportunity to participate. We find, however, that this case is not governed by Donnelly and that Donnelly itself is no longer sound. Donnelly involved an employer-union-employee relationship governed by the federal Labor Management Relations Act, 29 U.S.C. § 141 et seq. Donnelly also predated Vaca v. Sipes, 386 U.S. 171, 87 S. Ct. 903, 17 L. Ed. 2d 842 (1967), which undercut the foundation upon which Donnelly was based.
In Donnelly, we held that a private sector employee whose employment was subject to a collective bargaining agreement could not be deprived of the individual right to participate in an arbitration hearing when the union's position was adverse to the individual's interest, 40 N.J. at 81, and that the individual retained a right to invoke the provisions of the grievance procedure pro se when the union refused to process his grievance, id. at 92. Donnelly claimed that he had been discharged in violation of his contract, which eliminated the right to discharge an employee except "for cause." The union agreed with his employer that the discharge was proper and refused to proceed to arbitration. The contract apparently empowered only the union to take that step. Donnelly instituted suit against his employer for wrongful discharge and the union for failure to arbitrate the propriety of the discharge.
We construed sections 9(a) and 301 of the federal Labor Management Relations Act*fn1 to permit the employee to "intervene in arbitration proceedings and obtain independent representation, if the union is acting adversely to his interests as they
appear in, or derive from, the collective bargaining contract," 40 N.J. at 80-81. We concluded that "an individual employee has a statutorily vested right to present his grievance to, and to have it determined by, his employer when the union declines to process it in his behalf." Id. at 87.
The United States Supreme Court's analysis of this federal statute has led it to a different position. After holding in Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S. Ct. 912, 1 L. Ed. 2d 972 (1957), that section 301 encompassed substantive rights and in Republic Steel Corp. v. Maddox, 379 U.S. 650, 85 S. Ct. 614, 13 L. Ed. 2d 580 (1965), that the employee was required to invoke and exhaust the contractual grievance procedures before resorting to judicial remedies, the Supreme Court substantially completed the outline of an employee's rights in the private sector in Vaca v. Sipes, 386 U.S. 171, 87 S. Ct. 903, 17 L. Ed. 2d 842 (1967). There an employee sued his union for failure to process to arbitration his grievance, which arose out of his discharge. Id. at 173, 87 S. Ct. at 907, 17 L. Ed. 2d at 848. The Court held that the employee did not have a right to compel the union to invoke arbitration and thus disregard the terms of the collective bargaining agreement. In reaching this holding the Court relied upon the following considerations: (1) the employer and union contemplated that each would endeavor to settle grievances short of arbitration; (2) the employer and union wanted frivolous grievances disposed of prior to costly and time consuming arbitration; (3) the settlement process would further the interest of the union as statutory agent and as coauthor of the negotiation agreement in representing the employees in enforcement of that agreement; (4) to permit the employee to compel arbitration would undermine the settlement machinery and destroy the employer's confidence in the union.
However, under Vaca the employee was not left without any remedy. The union owed a duty "of fair representation in its handling of the employee's grievance" and therefore the
employee [could] bring an action against his employer in the face of a defense based upon the failure to exhaust contractual remedies, provided the employee
[could] prove that the union as bargaining agent breached its duty of fair representation in its handling of the employee's grievance. [ Id. at 186, 87 S. Ct. at 914, 17 L. Ed. 2d at 855]
In Hines v. Anchor Motor Freight, Inc., 424 U.S. 554, 96 S. Ct. 1048, 47 L. Ed. 2d 231 (1976), the Supreme Court was confronted with a situation in which the employees' discharge had been upheld in arbitration. The employees sued the employer for breach of contract and the union for breach of the union's duty of fair representation because of its failure to investigate and present a defense that would have shown no disciplinary action was warranted. The trial court dismissed the claim against the employer on the ground that the arbitration award was final and binding on the employees. The Supreme Court, reversing, held that the union's breach of duty relieved the employees of an express or implied requirement that disputes be settled through contractual grievance procedures and, since the union's breach seriously undermined the integrity of the arbitral process, it also removed the bar of the finality provisions of the contract. Id. at 567, 96 S. Ct. at 1057, 47 L. Ed. 2d at 243. Thus, the arbitration award could be vacated and the employees would be entitled to an appropriate remedy against the employer and the union.
Nowhere in this federal scheme does the individual have the right to pursue his grievance to arbitration when the contract gives that right only to the union. Professor Kaden has pointed out that Vaca and Hines yield "the conclusion that the collective bargaining agreement confers rights [with respect to use of grievance procedures] only upon the collective interests who execute it: the union and the employer. The union's basic right is its control of and access to the grievance machinery, which the employer is obliged to respect; the employer's basic right is that of enforcement of the union's promise not to strike during the contract term." Kaden, "Judges and Arbitrators: Observations on the Scope of Judicial Review," 80 Colum.L.Rev. 267, 279 (1980).
Nowhere does Vaca suggest that the employee be allowed to intervene in the arbitration procedure. If the employee were allowed to intervene and participate in the arbitration proceeding, it would undercut the legitimacy of the arbitration, predicated as it is on terms of the contract that the parties have voluntarily made. The individual employee's claim against his employer and the union is therefore conditioned on the duty of fair representation owed to him by the union. It is this failure of fair representation that impelled the Court in Vaca and Hines to sanction a suit by the individual employee. Bad faith and arbitrariness on the part of the union triggers the breach of the duty of fair representation, which in turn permits the individual to have recourse to the courts and to vacate the arbitral award.
The Appellate Division has doubted the continued viability of Donnelly. Zalejko v. Radio Corp. of America, 98 N.J. Super. 76, 81-82 (App.Div.1967), certif. den. 51 N.J. 397 (1968) ("to the extent that [ Donnelly ] conflicts with Vaca v. Sipes, [it] must yield in favor of the latter's declaration of the applicable law"). See Vaca v. Sipes, 386 U.S. at 191 & n.13, 87 S. Ct. at 917 & n.13, 17 L. Ed. 2d at 858 & n.13; Kaden, supra, 80 Colum.L.Rev. at 278. Donnelly, relying as it does on the Labor Management Relations Act, can no longer be considered viable precedent after Vaca and Hines.
Indeed, plaintiff Saginario, is a state employee whose relationship with the Division of State Police as his employer is not governed by the Labor Management Relations Act. 29 U.S.C. § 152(2). Therefore, ...