On appeal from Superior Court, Law Division, Morris County.
Petrella, Long and Keefe. The opinion of the court was delivered by Petrella, P.J.A.D.
Defendant Morris County Policemen's Association, P.B.A. 151 (P.B.A.),*fn1 appeals from a March 9, 1992 judgment of the Law Division which vacated the award of a Public Employment Relations Commission (PERC) appointed arbitrator following binding public sector interest arbitration to set the terms of the parties' next collective negotiation agreement. The arbitrator had selected the P.B.A.'s last final offer position on the economic issues in dispute. Plaintiff, John M. Fox, who was then Morris County Sheriff (Sheriff), cross-appeals from that aspect of the judgment which remanded the matter for a new arbitration before the same arbitrator.
On its appeal, the P.B.A. argues that the Law Division's decision does not accurately reflect the record and is based largely upon consideration of matters outside the record; the arbitrator's decision complied with the applicable statute and regulations; interest arbitration is an adversarial process in which each party has the obligation to submit its final offer and evidence in support thereof; and the award was supported by substantial credible evidence in the record.
The Sheriff argues in his cross-appeal that the matter should be remanded to a new arbitrator in order to protect the public interest and welfare.
The last collective negotiation agreement between the parties expired on December 31, 1990. Due to an impasse in negotiations for the succeeding contract the P.B.A. sought compulsory interest arbitration on January 22, 1991. After the arbitrator unsuccessfully attempted to mediate the dispute, he conducted interest arbitration hearings on July 29 and August 12, 1991. On the first date, both parties presented their "initial" final offers.
It is not necessary to discuss at length the testimony, exhibits and the offers of the parties. The P.B.A.'s entire direct case consisted of offering forty-three documents into evidence, including such items as census data, activity reports, other interest arbitration awards, a memorandum of agreement dated March 1, 1991 as to a new contract between the Sheriff and the superior officers of the Corrections Bureau of the Sheriff's Office, a July 11, 1991 interest arbitration award selecting the Sheriff's offer for the 1990-1992 contract with the officers of the Correction Bureau of the Sheriff's Office, and other labor contracts involving various other counties and their sheriffs' officers, as well as certain municipal police contracts. There was no Discussion of the contents of these documents and no witnesses were called by the P.B.A. before it rested.
The Sheriff's case consisted of approximately twenty-eight documents and the testimony of three witnesses. The first witness was a senior consultant with a fringe benefits consulting firm who testified about the cost of parts of the benefit package. The Morris County Director of Finance-County Treasurer (Treasurer) addressed the preparation of the budget and the fact that Morris County lost nearly $4.6 million in tax revenues in 1991 which led to the layoff of twenty-six full-time and eight part-time employees.
The Treasurer also testified about certain financial constraints on the County and concerns with how the County was going to meet a $100,000 deficit in its budget caused by an expected salary increase for another bargaining unit. The Treasurer had originally calculated a 6% salary increase for the Sheriff's officers which he felt was consistent with what had transpired in the County's other agreements in the law enforcement area. However, he indicated that figure would be jeopardized if the Sheriff needed to use some of those funds to satisfy another contract involving superior officers of the Sheriff's Department.
The final witness presented by the Sheriff at the July 29 hearing was the Morris County Director of Labor Relations and Chief Negotiator. The record was closed at the end of that
hearing and the matter was adjourned until August 12 when the parties were to make final revisions to their final offers. At the beginning of the August 12 hearing the arbitrator announced that no further evidence would be taken and reiterated that the record was closed. He rejected the Sheriff's attempt to "update" exhibit E-6, a one-page document prepared by the Treasurer outlining the annual fringe benefit calculation for Sheriff's officers, by replacing 1990 calculations with 1991 figures.*fn2 The figures showed the County's fringe benefit expenses as a percentage of the entire County payroll. The P.B.A.'s attorney objected on the ground that he could not cross-examine the document's author who was away on vacation, and because it should have been introduced before the record was closed. The arbitrator agreed.
The Sheriff also sought to have the P.B.A. agree to a one-paragraph stipulation of funds allocated to Local 151 for the 1992 budget. The proposed stipulation contained a figure that the Treasurer assertedly would have testified about, if present, based primarily on data he had testified to at the first hearing. The proposed stipulation was to the effect that the Board of Chosen Freeholders of Morris County had appropriated $2,891,782.76 toward the total economic compensation of the Sheriff's officers for 1992. The P.B.A. attorney refused to stipulate and objected to the entering of the calculation into evidence. He asserted lack of opportunity to cross-examine any witness and the fact that the record was closed. The arbitrator again sustained the objection.
The parties recognize that the formal Rules of Evidence do not apply in arbitration proceedings. Significantly, there were statements by the arbitrator to the effect that he did not fully understand the Sheriff's offer for the final year of his proposed
two-year contract period. We consider it error in such circumstances for the arbitrator not to have clarified, or had the parties clarify, their respective positions, and error not to have afforded the Sheriff the opportunity to present the information at the August hearing. In any event, although the arbitrator purported to review the record in light of the statutory criteria, we are nonetheless satisfied that, as discussed herein, he essentially failed to make appropriate findings and Conclusions under N.J.S.A. 34:13A-16g sufficient to sustain the arbitration award. Hillsdale P.B.A. Local 207 v. Borough of Hillsdale, 263 N.J. Super. 163, 622 A.2d 872 (App.Div.1993).
The arbitrator rendered his written opinion and award on November 20, 1991, selecting the P.B.A.'s final economic offer*fn3 and rejecting both sides' non-economic proposals. His decision states initially: "The determination of the more reasonable last offer shall be based upon the criteria set forth in N.J.S.A. 34:13A-16g.
All eight criteria have been given consideration and due weight has been attributed in accordance with the issues in dispute and the particular facts of this record."
After summarizing the parties' respective positions, the arbitrator questioned why the Sheriff had not made the same offer here that had ultimately prevailed in an arbitration involving the corrections officers. He commented that such an offer "would have been Judged most reasonable." Additionally, as noted, the arbitrator seemed perplexed by the employer's offer for 1992.
With respect to the criteria in N.J.S.A. 34:13A-16g, the arbitrator grouped the public interest, the lawful authority of the employer and financial impact under the umbrella of "ability-to-pay." He concluded, based on the Treasurer's testimony, that the County had sufficient funds in the budget calculation, assertedly taking into consideration the CAP Law, to pay at least the 6% increase for 1991 sought by the P.B.A. The arbitrator assumed that the Treasurer's qualified answer at the hearing of the availability of that funding (being contingent on how another bargaining unit's award was to be paid) must be accepted as unqualified since the record did not show that the funds were allocated elsewhere. In addition, the arbitrator found that the public employer's efforts with other bargaining units supported his Conclusion that the County had the ability to pay the 6% increase sought by the P.B.A. for 1991.
The arbitrator applied the same "ability to pay" reasoning for 1992. Analyzing the split year increases sought by the P.B.A. in terms of costs over the three years it sought, the arbitrator calculated that the cost impact would be on average 6.06% from 1991 to 1993. He rejected the Treasurer's argument that the CAP Law would prevent the County from funding any award for 1992 higher than 3.5%. Opining that because the budgetary process for that year was still fluid and efforts were being made to cut the costs of running the government, the arbitrator ...