On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County.
Approved for Publication January 17, 1996. As Corrected January 29, 1996.
Before Judges Michels, *fn1 Baime, and Villanueva. The opinion of the court was delivered by Baime, J.A.D.
The opinion of the court was delivered by: Baime
The opinion of the court was delivered by BAIME, J.A.D.
This appeal presents a novel question under the Compulsory Interest Arbitration Act (N.J.S.A. 34:13A-14 to -21). The Act and its implementing regulations permit a mediator in a public employment dispute to serve as the arbitrator in the event that mediation efforts are not successful. N.J.S.A. 34:13A-16a and -f(3); N.J.A.C. 19:16-5.7(b). We hold that information learned by an arbitrator during the mediation process but not presented at the arbitration hearing may not be considered by the arbitrator in rendering the final decision.
We need not recount the facts at length. This case arises from a dispute between the Township of Aberdeen and the union representing its police officers. For several years, the Township and the union were parties to a series of collective bargaining agreements. Near the expiration of the 1992-1993 contract, the parties entered into negotiations for a successor agreement. When the negotiations reached an impasse, the union petitioned the Public Employment Relations Commission (PERC) to initiate interest arbitration. Prior to commencement of the formal arbitration hearings, the parties agreed at the suggestion of the arbitrator to engage in mediation. Acting as a mediator, the arbitrator met with the parties jointly and individually on six separate occasions over the course of four months.
Unfortunately, mediation efforts were complicated by an incident that occurred during the second session. Apparently, a newspaper article appeared that morning, reporting several areas of contention between the parties. The union believed that the Township had "leaked" this information in order to obtain a political climate more conducive to its position. At the mediation session, the union expressed its outrage concerning this breach on the Township's part of a prior agreement between the parties to maintain confidentiality during the negotiations. However, the union ultimately agreed to continue mediation efforts.
During mediation, both parties agreed upon the need for additional police officers to be hired at an entry level salary below the current salary guidelines. In addition, the Township proposed that the workweek for all police officers be increased from an average of thirty-five hours to forty hours in order to reduce overtime costs and provide greater protection to the public. The additional hours would result in an increase to the base salaries of existing police officers in order to compensate them for the loss of overtime.
On July 14, 1994, the parties entered into a written stipulation permitting the Township to hire additional police officers at a reduced starting salary. The purpose of the stipulation was to allow the Township to hire these individuals immediately so that they could commence training at the police academy rather than waiting six months for the new collective bargaining agreement to be signed. According to the union, the parties also reached an oral understanding that the Township would adopt a forty hour workweek with a corresponding increase in the base salary of existing police officers. The Township's version is markedly different. It claims that it reserved agreement on the proposed revision of the work schedule and the increase in base salaries pending the approval of its Mayor and Council. Immediately prior to the next scheduled mediation session, the Township announced that it was no longer seeking a forty hour schedule but preferred to remain with the current thirty-five hour work week. Retaining the thirty-five hour week meant that existing officers would lose overtime pay due to the addition of the newly hired officers without receiving the increase to their base pay resulting from a longer work week. The Township also rejected the union's proposed annual increase in base salaries of four and one-half percent. The Township's decision was perceived by the union as an act of bad faith, and mediation efforts terminated at that point.
Following protracted arbitration hearings, the arbitrator issued his report in which he adopted the union's final offer on the outstanding economic issues. Although the arbitrator reviewed each of the statutory factors required to be considered by N.J.S.A. 34:13A-16g, he additionally made repeated references to information received and statements made during the mediation process. None of these references was grounded in the evidence presented at the arbitration hearings. The arbitrator also described in great detail the Township's shifting positions during the mediation process. Clearly exasperated by the Township's breach of confidentiality and its decision to withdraw its proposal for a forty hour work schedule, the arbitrator complained that he had been "exposed to the full rancor of the [union's] leadership." The arbitrator repeatedly returned to these subjects in his Discussion of the statutory factors, virtually all of which he found to favor the union's proposal.
The Township filed a complaint in the Chancery Division seeking an order vacating the award, and the union counterclaimed. The matter was decided by summary judgment. The Chancery Division vacated the award on the ground that the arbitrator had impermissibly relied upon information presented only in the mediation proceedings. In reaching this Conclusion, the court found that the arbitrator had been improperly influenced by the manner in which the Township had conducted negotiations during the mediation process. The union appeals. We affirm.
Compulsory interest arbitration is a statutory method of resolving collective bargaining disputes between police and fire departments and their employees. Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 80, 644 A.2d 564 (1994). Unlike grievance arbitration, which involves the consensual submission to arbitration of disputes concerning the interpretation or application of an existing contract, see Tp. of West Windsor v. Public Employment Relations Comm'n, 78 N.J. 98, 393 A.2d 255 (1978); State v. State Supervisory Employees Ass'n, 78 N.J. 54, 393 A.2d 233 (1978), compulsory interest arbitration is statutorily mandated and requires the arbitrator to select the terms of and, in effect, write a new collective bargaining agreement. Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. at 80; N.J. State P.B.A., Local 29 v. Town of Irvington, 80 N.J. 271, 284, 403 A.2d 473 (1979); Division 540, Amalgamated Transit Union, AFL-CIO v. Mercer County Improvement Auth., 76 N.J. 245, 249, 386 A.2d 1290 (1978). Because fire and police departments do ...