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Middletown Township PBA Local 124 v. Township of Middletown

November 16, 2006

MIDDLETOWN TOWNSHIP PBA LOCAL 124, PLAINTIFF-RESPONDENT,
v.
TOWNSHIP OF MIDDLETOWN, DEFENDANT-APPELLANT.
MIDDLETOWN TOWNSHIP SOA, PLAINTIFF-RESPONDENT,
v.
TOWNSHIP OF MIDDLETOWN, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket Nos. C-343-04 and C-371-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued Telephonically October 5, 2006

Before Judges Lisa, Holston, Jr. and Grall.

In this public sector arbitration case, we are required to determine whether the "ordinance or resolution as appropriate" requirement of N.J.S.A. 40A:10-23 mandates that a specific ordinance be adopted by a municipality, which sets forth a specified period of necessary service within a municipality up to twenty-five years for a retiring employee to be entitled to paid lifetime health benefits from the municipality. We hold that an ordinance that adopts by reference a Collective Bargaining Agreement (CBA) between a municipality and an employee union satisfies the "ordinance or resolution as appropriate" requirement of N.J.S.A. 40A:10-23. Therefore, a specific ordinance is not required.

In these consolidated appeals, defendant, Township of Middletown (Township), appeals a portion of the Chancery Division's February 7, 2005 order. The order confirmed an October 25, 2004, arbitration award, which memorialized the arbitrator's forty-one page written opinion. The arbitrator determined that the Township was required to provide lifetime paid health benefits to retiring police officers with less than twenty-five years of actual service with the Township who qualified for a Police and Firemen's Retirement System (PFRS) pension as a result of twenty-five years of credited service. We affirm.

The Township entered into separate CBAs with the collective bargaining representative for patrol officers, plaintiff Middletown Township Policemen's Benevolent Association Local 124 (PBA), effective January 1, 2000 through December 31, 2003, and with the collective bargaining representative for superior officers, plaintiff Middletown Township Superior Officers Association (SOA), effective January 1, 2000 through December 31, 2004. In the spring of 2003, separate but related disputes between the Township and the PBA and the Township and the SOA arose concerning the right of Patrolman (Ptl.) Anthony Gonzalez and Ptl. Wayne Bradshaw, under the PBA's CBA, and Lieutenant (Lt.) Michael Mehler, under the SOA's CBA to receive paid lifetime health benefits upon retirement.

The PBA and SOA both contended that the applicable CBAs provide that, if a Township police officer (PO) qualifies for retirement on a PFRS pension, he/she is entitled to paid health benefits in retirement from the Township without regard to how many years of employment the officer had with the Township itself. Conversely, the Township claimed that both existing law and the CBAs require retirees to satisfy both twenty-five years of service in the PFRS and twenty-five years of actual service with the Middletown Township Police Department (MTPD) in order to receive paid retiree health benefits from the Township.

This litigation arose out of grievances filed against the Township by both the PBA and the SOA in the interests of the three officers. The officers had expressed an intention in 2003 to retire from the MTPD after twenty-five years of credited service in the PFRS, but without twenty-five years of actual service with the MTPD. They were also advised by the Township's administrator that twenty-five years actual service was required for a retired officer to receive paid retiree health benefits.

After internal dispute resolution procedures failed, the dispute was assigned by the Public Employment Relations Commission (PERC) to an arbitrator pursuant to the binding arbitration provisions contained in the CBAs. On April 8, 2004, the grievances were consolidated for purposes of hearing. The arbitrator held a hearing on May 6, 2004, May 10, 2004, and June 3, 2004. On October 25, 2004, Arbitrator Licata rendered his opinion and award granting the officers paid lifetime retirement health benefits and ordering the Township to reimburse each individual officer for all out-of-pocket expenses incurred in continuing his benefits.

On November 10, 2004, the PBA and SOA filed separate complaints in the Chancery Division seeking confirmation of the award. The Township filed a counterclaim seeking to vacate the portion of the award dealing with paid retiree health benefits.*fn1

On February 7, 2005, the judge entered an order confirming the arbitrator's award. This appeal followed. On May 6, 2005, we granted a stay of the Township's obligation to reimburse the officers.

At the arbitration hearing, Bud Bradshaw, the Township's former administrator, testified that none of the CBAs between the Township and the police unions during his tenure as Township administrator ever set forth or established a minimum number of years of actual service in order to be eligible for paid retiree health benefits. Bradshaw served as Township administrator, first in the early 1970s for approximately two years and then again in the late 1970s. In 1981, he was appointed permanent Township administrator and continued in that capacity until his retirement in 1988. Bradshaw's testimony established that the parties to the CBAs, in the late 1970's, established a paid retirement health benefit for all police officers who earned a PFRS retirement, regardless of years of actual service with the Township, and without awareness of the contradicting requirements of the then-existing N.J.S.A. 40A:10-23.

After Bradshaw's retirement, paid retirement health insurance coverage continued to be included in the 1988-1990, 1991-1992, and 1993-1995 PBA's and SOA's CBAs. N.J.S.A. 40A:10-23 was amended in 1995 to permit a municipality to change the requirement for employer paid health benefits from "after 25 years' or more service with the employer" to "a period of service of up to 25 years with employer at the time of retirement." The 1995-1999 PBA's and SOA's CBAs continued to provide paid retirement health benefits regardless of the years of service with the Township.

The entitlement to paid retirement medical benefits is likewise set forth in Article XV(F)(1) of the 2000 - 2003 PBA's CBA. In pertinent part, this clause provides: "Pursuant to N.J.S.A. 40A:10-21 through -25, the employer agrees to pay for and provide such medical and health benefits as enumerated in Sections A, B AND D of this Article to all employees who have retired." Section A refers to health insurance coverage, Section B to a health insurance plan, and Schedule D to a prescription drug plan. The text of Article XV(F)(1) of the 2000 - 2004 SOA contract is slightly different. This clause provides, in pertinent part: "Pursuant to the authorities set forth in the appropriate laws of the State of New Jersey, the employer agrees to provide such benefits ...


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