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Division 819 v. New Jersey Transit Corp.

Decided: April 8, 1993.


On appeal from Superior Court, Law Division, Essex County.

King, Brody and Landau. The opinion of the court was delivered by Landau, J.A.D.


Defendant, New Jersey Transit Corporation (NJT), appeals from a judgment of the Superior Court, Law Division declaring that it "acquired" Monmouth County Bus Lines, Inc. (MBL) and, therefore, by operation of N.J.S.A. 27:25-14f, became obliged to assume and observe the pre-existing collective bargaining agreement between MBL and certain of its employees represented by Amalgamated Transit Union. The order required that NJT continue to employ those Amalgamated members if NJT directly, or by contract with a private entity, maintains service on the MBL routes.

We reverse the trial court's judgment of November 17, 1992 and remand for further proceedings because, under the facts of this case, there was no "acquisition" within the meaning of N.J.S.A. 27:25-14f.

Division 819, Amalgamated Transit Union (Amalgamated) represents certain MBL employees. MBL entered into its most recent contract with NJT to provide busline service in Monmouth County from July 1, 1990 through June 30, 1993.*fn1 The contract was terminable at will by either party upon proper notice. Pursuant to separate leases, MBL was permitted to utilize NJT-owned buses and other equipment. MBL entered independently into a three year labor agreement with Amalgamated expiring on June 30, 1993. NJT is not a signatory.

Owing to "transgressions" by MBL's management not detailed in this record,*fn2 NJT severed its contractual relationship with MBL in July, 1992, and took possession of its rolling stock, which had been made available to MBL.

In order to maintain continuous service in the affected area, NJT awarded a temporary contract, expiring on October 31, 1992, to Jersey Shore Transportation, which began operating the NJT buses previously supplied to MBL, on the routes which MBL had serviced.

By the end of October, 1992, NJT awarded a fixed-price contract for operation of the former MBL bus routes, following receipt of competitive proposals. The award was made to a private entity, the TCT Corporation, for a contract period of 41 months. As of November 1, 1992, TCT commenced operation.

Earlier, in August, 1992, Amalgamated had filed its five count Verified Complaint alleging in part that:

(1) NJT's termination of its contract with MBL and repossession of the buses and equipment it supplied to MBL constituted an acquisition within the meaning of N.J.S.A. 27:25-14f and became obliged to honor the Union's Labor Agreement with MBL and reemploy the employees of the Union.

(2) NJT, in awarding a contract to a separate entity to furnish public transportation without complying with N.J.S.A. 27:25-14f violated the provisions of N.J.S.A. 27:25-14e.

(3) The union employees are entitled to relief under N.J.S.A. 27:25-14g.

(4) NJT is required to arbitrate its dispute with the Union pursuant to a Section 13(c)*fn3 Agreement.

(5) Jersey Shore Transportation, Inc. has an interest in the subject matter of the dispute and is joined as a party in the action pursuant to R. 4:28-1.*fn4

By agreement of the parties, only issues presented under (1) and (2) above were considered on the return of the Order to Show Cause. Disposition of Counts (3) and (4) was held in abeyance at that time, and in the order for judgment.*fn5

The Judge rendered a tentative oral decision stating he was "95% certain" that he would find NJT to have acquired MBL under N.J.S.A. 27:25-13 & 14. Citing section 13, he said:

the corporation shall acquire by purchase, condemnation, and lease gift and the magic word is otherwise. And I think the otherwise aspect of this is the fact that New Jersey Transit, in essence, by creating all the assets, letting these 40 or so employees -- not that they let them obviously, but just that these 40 or so employees were using the assets of New Jersey Transit, it is a very easy thing to de facto condemn . . . .

In an October 28, 1992 letter opinion which relied heavily upon Matter of NJ Transit Bus Operations, Inc., 125 N.J. 41, 592 A.2d 547 (1991), the Judge found that, even though NJT was not a signatory to the collective bargaining agreement between MBL and Amalgamated, N.J.S.A. 27:25-13 and 14 required it to assume "the good faith obligation of negotiating with Monmouth Bus Union employees." N.J.S.A. 27:25-13 was held to require that NJT must preserve and protect the status of MBL's former bus drivers if it "condemns" or "otherwise" acquires such a contracting party. Although NJT did not institute any condemnation proceedings, the court determined that a " de facto " acquisition occurred when, upon termination of MBL's contract, NJT repossessed all of the rolling assets it provided to MBL over the years of their agreement. ...

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