On certification to the Superior Court, Appellate Division, whose opinion is reported at 352 N.J. Super. 442 (2002).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
At the conclusion of the 1999-2000 school year, the Camden Board of Education (Board) voted not to renew the annual contracts of fifteen custodian and mechanics (defendants) for the 2000-2001 school year. One month prior to that decision, a Board representative sent each of those employees a letter warning that due to excessive absenteeism, disciplinary action might be taken, including, but not limited to, not being recommended for reappointment for the 2000-2001 school year.
The Board permitted defendants to appear for a hearing prior to its vote. Thereafter, each defendant not renewed for the 2000-2001 school year sought to arbitrate the merits of his non-renewal under the grievance provision of the applicable collective negotiation agreement (Agreement), through union representation, Local 1079 Custodial and Maintenance Employees of the Communication Workers of America, AFL-CIO (Union). The question before the Court is whether arbitration should be permitted or, more specifically, whether the parties negotiated for arbitration to apply in this non-renewal setting.
Although the Board and the Union agreed to waive the preliminary steps of the Agreement's grievance procedure and to proceed directly to the arbitration stage of Article III of the Agreement, the Board nonetheless preserved the issue of arbitrability. The Board sought to restrain the arbitrations, initially before the Commissioner of Education, and then the Superior Court. The Law Division refused to restrain arbitration and the Board appealed to the Appellate Division, which affirmed.
The Appellate Division reasoned that, although employees with fixed-term contracts have no right to continued employment (other than the employment protections under N.J.S.A. 18A:27-4.1), those employees may be entitled to arbitrate the termination of employment if the employer has negotiated a disciplinary review procedure that includes the right of an untenured employee to arbitrate termination for misconduct. The panel found such an entitlement here and permitted the arbitrations to proceed, shifting to the fixed-term employee the burden of initially proving that the termination is a ploy by the employer to avoid the agreed upon disciplinary review procedures. The Appellate Division commented that the warning letter sent to each defendant suggested an attempt by the Board to circumvent the grievance procedure of the Agreement by terminating defendants for cause without charging them with misconduct. The panel held that each defendant would be required to satisfy the aforementioned threshold in order to proceed to arbitration on the merits of the non-renewal.
The Supreme Court granted the parties' respective petition and cross-petition for certification.
HELD: The Board has the statutory right to renew, or not, a fixed-term employee for non-arbitrary and noncapricious reasons without being subject to review of that decision by an arbitrator. The collective negotiations agreement is silent about whether the parties intended the Board to give up that statutory right. In such circumstances, the agreement did not effectuate a waiver of the Board's non-renewal right.
1. N.J.S.A. 18A:27-4.1 (the statute) creates its own dispute-resolution mechanism and standard of review governing non-renewal decisions pertaining to fixed-term employees; namely, the Board may non-renew a non-certificated employee for any reason that is not arbitrary or capricious. If the reason for non-renewal is neither arbitrary nor capricious, the non-renewal is both valid and unassailable. Absent a specific agreement otherwise, the statute governs the relationship of the parties. Where, as here, a statutory provision confers a prerogative on the public employer in respect of the non-renewal of fixed-term staff, a waiver of that legislatively conferred prerogative should be unmistakable. (Pp. 7-11)
2. From a fair review of the language of the Agreement, it appears that non-renewals, disciplinary or not, were not implicitly made subject to arbitral review. The Agreement's language does not convey a clear waiver of the Board's rights in respect of non-renewals conferred by the statute. Having not included specific waiver language in the Agreement, the Court will not deem this matter to be arbitrable under its terms. More was necessary to effectuate a clear and unmistakable waiver of the Board's authority under the statute. (Pp. 11-18)
3. If the majority were to presume that the Agreement meant to allow a non-renewed, fixed-term employee access to arbitration based on the theory that the Board's determination not to renew the contract was a pretext for discipline, that presumption would lead to a counterintuitive result. Namely, the non-renewed, poorly performing employee would be accorded greater rights than those given a competently performing employee whose contract was simply not renewed. The act of non-renewal remains a prerogative of the Board pursuant to statute. The Court notes the slippery slope approached by the lower courts' tacit approval of using supervisory letters alluding to discipline as the reason for requiring arbitration of a subsequent non-renewal of a fixed-term contract. (Pp. 18-20)
4. The Board is entitled to depend on the authority the Legislature conferred it, subject to constitutional limitations, unless its statutory right can be and explicitly has been negotiated away. Non-renewal must be clearly and unmistakably subjected to arbitration under the terms of the collective negotiations agreement. That requirement properly respects the Board's statutory prerogative. (Pp. 20-21)
5. The dissent contends that an overriding presumption in favor of arbitrability, stemming from the Steelworkers Trilogy, has an effect on the implementation of the language agreed to by the parties. However, Bloomfield, which applied the Steelworkers Trilogy principles to the public sector, did not adopt the presumption of arbitrability. That failure reflects a decision not to harmonize fully New Jersey public-sector arbitration jurisprudence with federal private-sector arbitration jurisprudence. (Pp. 21-28)
6. A court must assess the language of a collective negotiations agreement to determine whether it reasonably can be interpreted to have required non-renewals to be subject to arbitral review for good cause. Here, the Agreement's inclusion of the word "discipline" in its grievance procedure does not support such an interpretation. The Court will not attribute to the word "discipline" an overly broad meaning that is not sensible in light of the relevant statutory provisions governing these parties. The inclusion of the word "discipline" does not require arbitration of non-renewals of fixed-term employees. (P. 28)
Judgment of the Appellate Division is REVERSED and the arbitrations are restrained. The arbitration award previously entered in favor of defendant, Derek Copeland, is VACATED.
JUSTICE ZAZZALI, dissenting, in which JUSTICES LONG and ALBIN join, is of the view that the theory the majority applies to deny the arbitrability of this dispute goes against almost fifty years of deeply ingrained principles that have been established by courts, legislatures, and agencies on both the federal and state levels. The majority spurns the Agreement, case law, and public policy that support the arbitration of this matter and it does so in the face of the enlightened jurisprudence of our sister states. According to Justice Zazzali, in applying the principles of the Steelworkers Trilogy adopted by our case law, the Court's role is to determine whether the parties agreed to submit disputes over alleged violations, misapplications, or misinterpretations of Articles IV and XII of the Agreement to arbitration. Because there is no express exclusion or other forceful evidence suggesting that non-renewal decisions are not covered by those articles or by the grievance provision of the Agreement, the matter should be sent to arbitration. The majority denies defendants, who have labored for many years for their employer, their right to have a neutral third-party decide whether they have a job, knowing full well that at least one arbitrator has determined that the Board's actions were, in fact, disciplinary and might have been undertaken in "bad faith."
CHIEF JUSTICE PORITZ, JUSTICE VERNIERO and JUDGE PETRELLA, temporarily assigned, join in JUSTICE LaVECCHIA's opinion. JUSTICE ZAZZALI filed a separate dissenting opinion, in which JUSTICES LONG and ALBIN join. JUSTICE WALLACE did not participate.
The opinion of the court was delivered by: Justice LaVECCHIA
The Camden Board of Education (Board) voted not to renew certain custodians and mechanics (defendants) at the conclusion of the 1999-2000 school year. Defendants sought to arbitrate the non-renewal of their appointments under the grievance provision of the applicable collective negotiation agreement (CNA). The question before the Court is whether arbitration should be permitted.
In enacting Title 18, the Legislature set up a scheme for the employment of school personnel. Included therein is N.J.S.A. 18A:27-4.1, which provides:
Notwithstanding the provisions of any law, rule or regulation to the contrary.
b. A board of education shall renew the employment contract of a certificated or non-certificated officer or employee only upon the recommendation of the chief school administrator and by a recorded roll call majority vote of the full membership of the board. The board shall not withhold its approval for arbitrary and capricious reasons. A non-tenured officer or employee who is not recommended for renewal by the chief school administrator shall be deemed non-renewed. Prior to notifying the officer or employee of the non-renewal, the chief school administrator shall notify the board of the recommendation not to renew the officer's or employee's contract and the reasons for the recommendation. An officer or employee whose employment contract is not renewed shall have the right to a written statement of reasons for non-renewal pursuant to section 2 of P.L. 1975, c. 132 (C.18A:27-3.2) and to an informal appearance before the board. The purpose of the appearance shall be to permit the staff member to convince the members of the board to offer reemployment. The chief school administrator shall notify the officer or employee of the non-renewal pursuant, where applicable, to the provisions of section 1 of P.L. 1971, c. 436 (C. 18A:27-10).
The parties agree that that statute does not preempt them from contractually granting greater protection to fixed-term employees by subjecting non-renewals to a just cause requirement, and submitting non-renewal grievances to binding arbitration. See also Wright v. Bd. of Ed. of City of E. Orange, 99 N.J. 112, 116 (1985) (holding that N.J.S.A. 18A:17-3 did not bar collective negotiations agreement providing tenure rights for fixed-term custodians). Thus, the question -- can this matter be negotiated - is not in issue. This case is about whether the parties, in fact, did negotiate for arbitration to apply in this non-renewal setting.
As members of Local 1079 Custodial and Maintenance Employees of the Communications Workers of America, AFL-CIO (Union), defendants were protected by the CNA negotiated by the Union. The CNA's grievance provision, and two related provisions, follow:
Article III: Grievance Procedure
A "Grievance" shall mean a complaint by an employee or the Union that there has been to him/her a personal loss, injury or inconvenience because of a violation, misinterpretation, or misapplication of this Agreement.
6. (a) The following procedure will be used to secure the services of an arbitrator: The Union will make a request to the Public Employment Relations Commission for a panel of arbitrators no later than 45 days after receipt of the Board's decision.
(b) The arbitrator shall limit himself/herself to the issue submitted to him/her and shall consider nothing else. He/she can add nothing to, nor subtract anything from, the Agreement between the parties or any policy of the Board of Education. The recommendations of the arbitrator shall be binding on the parties. Only the Board and the aggrieved and his/her representatives shall be given copies of the arbitrator's report and findings and recommendations. This shall be accomplished within (30) days of the completion of the arbitrator's hearings.*fn1
Article IV: Employee Rights
A. No employee shall be disciplined or reprimanded without just cause. Any such action asserted by the Board, or any agent or representative thereof, shall be subject to the Grievance Procedure herein set forth.
C. The Board, subject only to the language of this Agreement reserves to itself full jurisdiction and authority over matters of policy and retains the right, in accordance with applicable laws and regulations.
b. to hire, promote, transfer, assign and retain employees in positions within the School District, and to suspend, demote, discharge or take other disciplinary action against employees.
Toward the end of the 1999-2000 school year, each defendant received from a supervisor a letter warning that due to excessive absenteeism, "disciplinary action maybe [sic] taken which may include but not be limited to not being recommended for reappointment for the 2000-2001 school year." Thereafter, on the recommendation of the chief school administrator, the Board voted on June 28, 2000, not to renew defendants' appointments. We note that the Board permitted defendants to appear and to be heard prior to its vote. See N.J.S.A. 18A:27-4.1b. Each defendant not renewed for the 2000-01 school year then sought to arbitrate the merits of his non-renewal under the CNA's grievance procedures.
Although the Board and Union agreed to waive the preliminary steps of the CNA's grievance procedure and to proceed directly to the arbitration stage of Article III, the Board nonetheless preserved the issue of arbitrability.*fn2 The Board sought to restrain the arbitrations, initially before the Commissioner of Education, and thereafter in Superior Court. This appeal comes to us by way of the Appellate Division's affirmance, with modification, of the Law Division's refusal to restrain arbitration. Camden Bd. of Educ. v. Alexander, 352 N.J. Super. 442, 450 (2002).*fn3 The Appellate Division stated that although employees with fixed-term contracts have no right to continued employment (other than enjoyment of the protections provided by N.J.S.A. 18A:27-4.1), such employees "may also be entitled to arbitrate the termination of employment if the employer has negotiated a disciplinary review procedure which includes the right of an untenured employee to arbitrate a termination for misconduct." Id. at 447. Finding that to be the case here, the court allowed the arbitrations to proceed but shifted to the fixed-term employee the burden of initially proving "that the termination is a ploy by the employer to avoid the agreed disciplinary review procedures." Ibid. (citing OER, supra, 154 N.J. at 114-15). The panel commented that the warning letter sent to each defendant suggested an attempt by the Board to circumvent the grievance procedure of the CNA by "terminating [defendants] for cause without officially charging the[m] with misconduct." Id. at 449. Nonetheless, the court held that each defendant would be required to satisfy the above-described threshold to proceed to arbitration on the merits of the non-renewal. Id. at 450.
We granted the parties' respective petition and cross petition for certification, 175 N.J. 77 (2002), and now reverse.
The New Jersey Constitution grants public employees "the right to organize, present to and make known to the State, or any of its political subdivisions or agencies, their grievances and proposals through representatives of their choosing." N.J. Const. art. I, ¶ 19. Unlike private-sector employees, public employees are not given the right to "bargain collectively." Ibid. Public employees instead may engage in collective negotiations. N.J. State College Locals v. State Bd. of Higher Educ., 91 N.J. 18, 25-26 (1982). See generally Lullo v. Int'l Ass'n of Fire Fighters, 55 N.J. 409, 436-441 (1970) (discussing distinction between "collective bargaining" and "collective negotiation").
Twenty-five years ago we provided guidelines for courts grappling with the distinct inquiries engendered by public sector employment disputes. State v. State Supervisory Employers Ass'n, 78 N.J. 54 (1978); Township of W. Windsor v. Public Employment Relations Comm'n, 78 N.J. 98 (1978). We resolved that the Public Employment Relations Commission (PERC), and not the courts, was the entity to determine whether, in a public-sector labor dispute, a specific subject is negotiable (the "scope-of-negotiations" determination). Ridgefield Park Educ. Ass'n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 153-56 (1978). However, as noted by the parties and the Appellate Division in this case, there is no "scope" question here. See Wright, supra, 99 N.J. at 122-23.*fn4 The issue is whether the parties negotiated to provide for arbitration of the non-renewal of fixed-term employees. That issue is a legal question of contract interpretation for a court to decide: has the CNA made this public-sector dispute substantively arbitrable? State v. State Troopers Fraternal Ass'n, 134 N.J. 393, 399-400 (1993); Ridgefield Park, supra, 78 N.J. at 153-55.
As in the review of public-sector arbitration awards,*fn5 and certificated employee for any reason that is not arbitrary or capricious. Ibid. As long as the reason for non-renewal is not arbitrary or capricious, the non-renewal is both valid and unassailable. Ibid. Absent a specific agreement to the contrary, N.J.S.A. 18A:27-4.1 governs the relationship between the parties.
As a general matter, legislative and other regulatory enactments are "a silent factor in every contract[, and p]arties in New Jersey are likewise presumed to have contracted with reference to the existing law." Silverstein v. Keane, 19 N.J. 1, 13 (1955). In the public-sector-employment context, however, statutory and regulatory provisions serve as more than mere "gap-fillers." Where, as here, a statutory provision confers a prerogative on the public employer in respect of the non-renewal of fixed-term staff, a waiver of that legislatively conferred prerogative should be unmistakable. We have commented before that when a statutory provision has defining import, its application must be negotiated away clearly and unmistakably. Cf. Red Bank Reg'l Educ. Ass'n v. Red Bank Reg'l High Sch. Bd. of Educ., 78 N.J. 122, 140 (1978) (finding that "[t]he propriety of a contractual waiver of statutory rights is well-established in the private sector.... To be given effect [in that setting], any such waiver must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively").*fn6 Thus, the question is whether the CNA is specific enough to bring about, in effect, a waiver of the Board's authority under N.J.S.A. 18A:27-4.1b in respect of decisions concerning the renewal of its fixed-term employees.
To resolve the instant question of contract interpretation, we begin by noting that the CNA's language does not specifically include disciplinary non-renewal, nor does it specifically exclude that subject. See, e.g., Hanover Twp. Bd. of Educ., PERC No. 99-7, 24 NJPER ¶ 29191 (1988), aff'd A-306-98T2 (1999) (SPA 1999) (restraining arbitration where board and association negotiated grievance procedure that specifically excluded "any matter for which [a] complaint related to the non-renewal or termination on notice of a non-tenure employee's contract")(internal quotation marks omitted). As might be expected, the parties disagree on the scope of the grievance language. Defendants essentially argue that the contract provides that decisions not to renew would be rendered implicitly subject to a good cause requirement by the inclusion of the word "discipline" in the CNA's grievance provision; and that, therefore, any form of disciplinary non-renewal should be subject to arbitral review. The Board contends that such an interpretation rewrites the CNA, contravening the principle that there must be clear and unmistakable language in the contract that non-renewals would be subject to arbitrator review before a waiver of the Board's rights under N.J.S.A. 18A:27-4.1b can be found. Stated differently, the CNA's language must be more specific to override N.J.S.A. 18:27-4.1b.
In a matter closely resembling the instant appeal, the Appellate Division considered whether a fixed-term employee's allegedly disciplinary non-renewal was subject to arbitration because the pertinent collective negotiations agreement made "discipline" subject to arbitration. See Marlboro Twp. Bd. of Educ. v. Marlboro Twp. Educ. Ass'n, 299 N.J. Super. 283, 286-87 (holding that non-renewal of bus driver who had excessive absences over long period was not subject to grievance procedure), certif. denied, 151 N.J. 71 (1997). The court held that it would not "rewrite" the contract to provide for arbitration in the context of the Board's right to non-renew its fixed-term employee when clear language to that effect was not present in the collective negotiation agreement. Judge Landau stated for the panel:
The Board here did not purport to discipline Goldberg, nor is there any reason so to characterize its decision not to rehire her. It merely exercised a clearly enunciated contractual right not to renew, an issue we do not regard as arbitrable in these circumstances. We decline to insert judicially a tenure provision into a contract when it was not negotiated by the parties. See Standard Refinery Union v. Esso Standard Oil Co., 31 N.J. Super. 548, 552, 107 A.2d 513 (App. Div. 1954) ("[C]court will not write a new contract for the parties or vary, enlarge, alter or distort its terms for the benefit of one to the detriment of the other under the guise of judicial interpretation."). However, even if we deemed this to be a disciplinary termination, the rights of a similarly situated disciplinee should rise no higher than those of a faultless employee who had no right to reemployment.
In another case, the Supreme Court of New Hampshire similarly held that grievance language employed in the collective agreement between a school board and union (specifically, a reference to "discipline" and "discharge" of employees) was not specific enough to override a New Hampshire statute giving the school board authority not to renominate probationary teachers. Appeal of Westmoreland Sch. Bd., 564 A.2d 419, 422-23 (1989). The court reasoned as follows:
The heart of the dispute between the parties is whether the school board is required to process a grievance concerning the non-renewal of a probationary teacher's contract, which the WTA alleges constitutes a discharge under Article 16 requiring just cause.
The overarching issue in the present case is whether the parties actually have negotiated to arbitrate,... not whether they have the authority to do so.... The board contends that the term discipline, as used in CBA Article 16, refers only to those situations where a teacher has violated one of its rules or regulations and that, because the board never contended that Hanson had violated a rule or regulation, she was not entitled to the procedural protection of discharge only for just cause. The board contends, rather, that Hanson's non-renewal was outside the scope of the CBA and covered only by RSA 189:14-a (Supp. 1988). That statute requires school districts to provide written notice on or before March 31 to teachers who have taught in that district for one or more years that they will not be renominated or reelected. Id.,:14-a, I(a) (Supp. 1988).... In contrast, the WTA focuses not on the word discipline, but on the word discharge. It contends that Article 16 governs discharges, and that the term discharge is broad enough to include non-renewals. The WTA reasons that because Black's Law Dictionary (5th ed. 1979) defines discharge as termination, id. 529 A.2d at 416, and this court has treated a non-renewal as a termination, see Appeal of Watson, 122 N.H. at 667, 448 A.2d at 419, the term discharge encompasses the non-renewals involved here. Article 16 therefore requires the board to have just cause before deciding not to renominate Hanson. The WTA further reasons that since all disciplinary complaints are subject to the grievance procedure, a discharge (i.e., non-renomination) is as well. Based on these arguments, the WTA asserts that it has raised a question of contract interpretation which, under Article 9, is sufficient to send the matter through the grievance procedure....
We disagree with the WTA's reading of the CBA and hold that it is not susceptible of a reading which covers this dispute. The term discharge in Article 9 is clearly used in connection with disciplinary action taken for violation of the board's regulations. The CBA provision states that "[a]n employee shall not be disciplined except for just cause." (Emphasis added.) Although we agree with the WTA that as a general proposition, the term discharge may be broad enough to encompass non-renominations, in the context of this CBA the article does not use the word discharge in such a broad manner. Rather, the article refers to discharge only in the context of a violation of board rules. Viewed in this light, we can state with positive assurance that the CBA is not susceptible of a reading which would cover the asserted dispute....
The real issue here... is whether the contracting parties have agreed to arbitrate a particular dispute. As we have stated before, "the extent of an arbitrator's jurisdiction depends upon the extent of the parties' agreement to arbitrate." School Dist. # 42 v. Murray, 128 N.H. at 420, 514 A.2d at 1272. [T]he WTA takes the contractual language of the CBA provision it relies on too far out of context for us to conclude that the parties intended to arbitrate this dispute.
[Id. at 421-23 (some citations omitted).]
Just as those courts determined in the above cases,*fn7 it appears to us from a fair review of the language of the CNA that non-renewals, disciplinary or not, were not implicitly made subject to arbitral review. The CNA's language does not convey a clear waiver of the Board's rights in respect of non-renewals conferred by N.J.S.A. 18A:27-4.1b. A waiver would have been accomplished had the agreement included specific language to that effect, such as that included in a public-sector negotiated agreement reviewed by the Supreme Judicial Court of Massachusetts that stated: "No teacher will be disciplined, reprimanded, reduced in compensation, suspended, demoted, dismissed or non-renewed without just cause." Sch. Comm. of Natick v. Educ. Ass'n of Natick, 666 N.E.2d. 486, 487 (1996) (emphasis added). Having not included such language, despite all parties' (the Board and Union) awareness of N.J.S.A. 18A:27-4.1b, we will not deem the instant matter to be arbitrable under the terms of this CNA. See also Morris v. Bd. of Educ. of Laurel Sch. Dist., 401 F. Supp. 188, 205-06 (D. Del. 1975) (holding that contract reference to "discipline" is insufficient to convey intent by school board to delegate to arbitrators its legislatively authorized discretion concerning contract renewal).
To arrive at defendants' interpretation of the CNA, either words must be added to it (i.e., "non-renewed" in Article IV), or the contractual language (here, "discipline") must be taken "too far out of context [for us] to conclude the parties intended to arbitrate this dispute." Westmoreland, supra, 564 A.2d at 423. The same goes for the term "layoff," which connotes involuntary dismissal during the term of a contract, and is not applicable to the non-renewal of a particular employee's appointment at the end of a fixed term. Contractual language such as that used in Natick, supra, 666 N.E.2d. at 487, was available to the parties; yet, their negotiated agreement does not include the necessary specificity to subject non renewal of fixed-term employees to arbitral review. Given the statutory backdrop against which the parties' negotiation occurred, we hold that more was necessary ...