March 4, 2008
AMALGAMATED TRANSIT UNION LOCAL 880, PLAINTIFF-APPELLANT,
NEW JERSEY TRANSIT BUS OPERATIONS, INC., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Essex County, L-8126-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: December 12, 2007
Before Judges A.A. Rodríguez, C.S. Fisher and C.L. Miniman.
Plaintiff Amalgamated Transit Union Local 880 (Union) appeals from a January 3, 2007, judgment of the Law Division denying and dismissing the Union's application to vacate an arbitral award in favor of defendant New Jersey Transit Bus Operations, Inc. (Transit). The arbitral panel concluded that the Union's grievance was not subject to the grievance procedure set by the Collective Bargaining Agreement (CBA) and dismissed the arbitration. We reverse the Law Division dismissal and remand for a new arbitration hearing.
The basis of the Union's grievance is Transit's termination of Juan Anaya's probationary employment. Anaya completed an application for employment on August 23, 2004. According to the application, Anaya previously served in the U.S. Navy from August 2000 to February 2003 and then worked briefly for a plumbing and heating contractor. He indicated that his driver's license had been suspended from March through April 2004 as a result of unpaid parking tickets. He certified that he did not have any "driving convictions" or criminal convictions. In the affidavit portion of his application, Anaya stated: "I understand that if I am employed in a position covered by a labor agreement and successfully complete the probationary period prescribed by such agreement, NJ Transit may terminate my employment only in accordance with the provisions of the applicable labor agreement."
Anaya was hired on September 15, 2004, as a bus cleaner, a position covered by the CBA, and began work six days later. The letter of appointment stated that his probationary period was ninety days. On October 5, 2004, Transit sent a letter to Anaya stating that an investigation of his criminal background "is showing data inconsistent" with his application. Transit required Anaya to provide no later than October 26, 2004, "a certified copy of the disposition and the accusatory instrument for each conviction" with a court's seal or certification affixed. Although the letter stated that the conviction or convictions were attached, they do not appear in the record on appeal and that record does not reveal whether the requested documents were supplied by Anaya. On October 21, 2004, Anaya became a member of the Union.
On November 10, 2004, Anaya was given a notice to appear that day with a Union representative*fn1 respecting an incident occurring two days earlier regarding his background check results. The incident report from November 8, 2004, indicated that the "background check revealed that he falsified his job application." The November 10 appearance was described as a "Probationary Employee Meeting." Transit terminated Anaya's employment that day and issued a letter dated November 10, 2004, stating:
This in reference to your employment application dated August 23, 2004. On that application you indicated that you had never been convicted of a crime other than minor traffic violations. As a result of the background investigation which was conducted, we received a report that indicated that you, in fact, had been arrested and convicted of a crime(s).
In accordance with the rules, regulations, and policies of this agency, this is to advise you that you are hereby terminated from your employment with NJ TRANSIT effective immediately for providing false information on your employment application.
Anaya did not immediately grieve the termination.
Section 1A of the CBA specifies the grievance procedure:
Should any dispute or grievance arise between the Company and the Union, or any of its members, as to the interpretation, application, or operation of any provisions of this agreement, not specifically settled in said agreement, both parties shall endeavor to settle the question in the simplest and most direct manner. The procedure shall be as follows unless any step thereof is waived by mutual consent:
First: Such dispute or grievance is to be taken up between the employee and the Union representative and the supervisor, foreman, or department head.
Second: Between the President or Business Agent of the Union and/or the State Business Agent of the Union and the Division Manager or department head. . . .
Third: Between the President or Business Agent of the Local involved and/or the State Business Agent of the Union and the General Manager of the Company. . . .
Fourth: It is the stated intent and purpose of both parties at all times to reach agreement by negotiation between the Company and the Union, without recourse to arbitration. In the event, however, that such dispute or grievance is not settled to the satisfaction of the parties through recourse to the third step, the dispute or grievance may be referred, on the request, in writing, by any Division of the State Council of the Union, or Company, to a temporary arbitration board of two . . . . After the appointment of the third arbitrator, the Arbitration Board shall meet for the purpose of reaching a determination of the dispute or grievance, and the decision of the majority of the board, submitted in writing, to the Company and the Union, shall be final and binding upon both parties. . . .*fn2
At the arbitration hearing on June 6, 2006, Transit moved to dismiss the arbitration on the ground that the termination of a probationary employee's employment was not arbitrable. Transit argued that Anaya was not a member of the Union when his employment was terminated and that the Union had agreed in the CBA that the probationary period "will be recognized." The Union argued that case law requires that issues of arbitrability be decided by the courts and arbitrators have no jurisdiction to decide such an issue unless it was specifically granted to them in the CBA, which was not the case here. The CBA provided in Section 1A that:
Authority of the arbitration board shall be limited to the determination of the dispute or grievance arising out of the interpretation, application or operation of the provisions of this agreement, on submission of the issues involved by the parties to this agreement. It shall not have any authority whatsoever to alter, amend or modify any of the provisions of this agreement.
The Union also pointed out that Anaya was in fact a member of the Union when his employment was terminated and thus was entitled to arbitrate a grievance under the CBA. This contention was based on the first paragraph of Section 1A of the CBA, quoted above, and Section 1C, which provides:
All present employees and all new employees shall become and remain members in good standing of the Union as a condition of continuous employment with the Company. Employees entering the service of the Company shall become members of the Union after 30 days. However, the 90-day probationary period agreed to by the employee on applying for a position with the Company will be recognized.
Furthermore, the Union stated that the issue to be decided was whether Transit made a mistake when it said that Anaya had been convicted of a crime because Anaya received a conditional discharge and was free of any violations for six months, after which the criminal complaint was dismissed. The arbitrators reserved decision on arbitrability pending receipt of briefs from both parties and the hearing was adjourned to permit the arbitrators to decide the arbitrability issue before proceeding to the merits.
The arbitration panel granted Transit's motion to dismiss on September 6, 2006. After reciting the positions of the parties, the panel issued the following decision:
The parties have contracted to provide the arbitrator with the right to determine any dispute or grievance arising out of the interpretation, application or operation of the provisions of this agreement. Section 1A. Whether a probationary employee is to be treated like a non-probationary employee is answered by the agreement.
In Section 1C, all employees, both present and new, are to become members of the Union within 30 days and remain members of the Union as a condition of employment. Therefore, after thirty days, Mr. Anaya became a Union member. "However," the collective bargaining agreement notes, "the 90-day probationary period agreed to by the employee on applying for a position with the Company will be recognized." Clearly, then, the parties intended to somehow limit the new employee's rights during his first ninety days with the Company.
That phrase from Section 1C recognized the probationary period "agreed to" by the new employee "on applying for a position with the Company." To determine precisely what Mr. Anaya "agreed to" "on applying for a position with the Company," we must look to the referenced employment application (Exh. U-1(A)). On page 4 of the NJ Transit Application For Employment, just above Mr. Anaya's signature, he affirms inter alia that
. . . I understand that if I am employed in a position covered by a labor agreement and successfully complete the probationary period prescribed by such agreement, NJ Transit may terminate my employment only in accordance with the provisions of the applicable labor agreement.
The language limits the Company's right to terminate Mr. Anaya's employment (which was in fact "covered by a labor agreement") to a termination "in accordance with the provisions of the applicable labor agreement," but only if he successfully completes the probationary period. Here the Company terminated Mr. Anaya's employment before he completed the probationary period. Therefore, the termination was not required to have been in accordance with the provisions of the collective bargaining agreement.
Since the issue of Mr. Anaya's termination cannot be reviewed with reference to the collective bargaining agreement, and since this arbitration panel's jurisdiction is limited to "the interpretation, application or operation of the provisions" of that agreement, the grievance is hereby dismissed.
The Union filed a complaint on October 2, 2006, alleging the operative facts and seeking an order under N.J.S.A. 2A:24-8 vacating the dismissal of the arbitration on the ground that the arbitrators exceeded their authority under the CBA when they determined that the issue in dispute was not arbitrable. The Union sought entry of an order to show cause, which issued and was heard by the trial court on January 3, 2007. The trial judge placed a decision on the record at the conclusion of the parties' argument making three basic rulings.
First, the judge stated that he was going to apply general principles of contract interpretation*fn3 to construe the contract provision that refers to probationary employees and honoring the ninety-day probationary period. Second, the judge agreed with the arbitrators' conclusion that it "can only be read so as to be a limitation on the . . . employee's rights during the probationary period" and found that this was "the only reasonable meaning." Third, the judge found that Transit timely raised its position that the grievance was not arbitrable and concluded that there was no basis for vacating the award. Accordingly, the judge dismissed the Union's complaint and entered judgment against it. This timely appeal followed.
The Union contends that the issue of arbitrability is for the court to decide, not the arbitrator, that all unresolved grievances are arbitrable, that Transit waived its right to contest arbitrability by not seeking a stay in a court of competent jurisdiction, that the trial judge should have concluded from the language of the CBA that the grievance was arbitrable and, assuming the matter is arbitrable, that the matter should be remanded for arbitration. Transit, on the other hand, argues that the judge properly denied the Union's effort to vacate the award.
Because the issue before us is purely a question of law and its application to the CBA, our review of the trial court's ruling is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.") (citing State v. Brown, 118 N.J. 595, 604 (1990); Dolson v. Anastasia, 55 N.J. 2, 7 (1969); Pearl Assurance Co. Ltd. v. Watts, 69 N.J. Super. 198, 205 (App. Div. 1961)).
Initially it was error simply to apply principles of contract law to the CBA. In labor cases where Transit is the employer, we are obliged to consider a mixture of federal rights under the Labor-Management Relations Act, 29 U.S.C.A. §§ 151-87, and state rights under the Employer-Employee Relations Act, N.J.S.A. 34:13A-1 to -30. In re Matter of N.J. Transit Bus Operations, Inc., 125 N.J. 41 (1991). Even were this not so, our Supreme Court has consulted federal jurisprudence for guidance in issues respecting labor arbitration. State v. Int'l Fed'n of Prof'l & Technical Eng'rs, 169 N.J. 505, 513-14 (2001). Federal courts have recognized that:
"A collective bargaining agreement is not governed by the same principles of interpretation applicable to private contracts." Operating Eng'rs Pension Trusts v. B & E Backhoe, Inc., 911 F.2d 1347, 1352 (9th Cir. 1990) (citing Transportation-Communication Employees Union v. Union Pac. R.R. Co., 385 U.S. 157, 160-61, 17 L.Ed. 2d 264, 87 S.Ct. 369 (1966) (a collective bargaining agreement is not a private contract between two private parties, but is rather a generalized code to govern a myriad of cases and parties that calls into being a new common law of a particular industry or plant, and cannot be interpreted without considering the scope of other related collective bargaining agreements as well as the practice, usage and custom pertaining to all such agreements)). A court may consider extrinsic evidence of the parties' intent at the time of execution if the collective bargaining agreement is ambiguous.*fn4 Id. (citing Kemmis v. McGoldrick, 767 F.2d 594, 597 (9th Cir. 1985)). Whether the language of a written agreement is ambiguous is a question of law that "'may be resolved summarily.'" Parrett v. Am. Ship Bldg. Co., 990 F.2d 854, 858 (6th Cir. 1993) (quoting Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1360 (11th Cir. 1988)). Summary judgment is appropriate only when no question exists as to intent. Id. [Int'l Union, United Mine Workers v. Apogee Coal Co., 330 F.3d 740, 744 (6th Cir. 2003).]
The only issue before us is whether the grievance is arbitrable. In deciding an issue of arbitrability, we must bear in mind that New Jersey encourages the use of arbitration to resolve labor disputes. See, e.g., N.J.S.A. 34:13A-2 (declaring that the State's "best interests . . . are served by the prevention or prompt settlement of labor disputes" in the public sector); Scotch Plains-Fanwood Bd. of Educ. v. Scotch Plains-Fanwood Educ. Ass'n, 139 N.J. 141, 149 (1995) ("Our courts view favorably the settlement of labor-management disputes through arbitration."); Jersey Cent. Power & Light Co. v. Local Union No. 1289 of the Int'l Bhd. of Elec. Workers, 38 N.J. 95, 103-04 (1962) (arbitration is "an integral part of our economic life and welcomed as a practical and expeditious means of disposition of industrial disputes."). Arbitration is "a substitute for and not a springboard for litigation." Local No. 153, Office & Prof'l Employees Union v. The Trust Co. of N.J., 105 N.J. 442, 449 (1987); see also County Coll. of Morris Staff Ass'n v. County Coll. of Morris, 100 N.J. 383, 390 (1985).
The responsibility for deciding whether an issue is arbitrable depends on the nature of the issue. Questions of "substantive arbitrability" relate to "whether the particular grievance is within the scope of the arbitration clause specifying what the parties have agreed to arbitrate." Standard Motor Freight, Inc. v. Int'l Bhd. of Teamsters, 49 N.J. 83, 96 (1967); see also Pascack Valley Reg'l High Sch. Bd. of Educ. v. Pascack Valley Reg'l Support Staff Ass'n, 192 N.J. 489, 496 (2007). These substantive questions are decided by the courts, Laborers' Local Nos. 472 and 172 v. Interstate Curb & Sidewalk, 90 N.J. 456, 463-64 (1982),*fn5 unless the parties have agreed that issues of substantive arbitrability shall be decided by the arbitrator. Franklin Elec. Co. v. Int'l Union, UAW, 886 F.2d 188, 191 (8th Cir. 1989) ("Because arbitration is rooted in the agreement of the parties, they may agree to submit arbitrability questions to arbitration in addition to the merits of a dispute."). On the other hand, "procedural arbitrability" refers to "whether procedural conditions to arbitration have been met." Standard Motor Freight, supra, 49 N.J. at 97. Those issues are to be left to the arbitrator. Ibid. This is so because "ordinarily procedural problems in arbitrations cannot be answered without consideration of the merits of the dispute, in which a court should not become involved." Ibid.
The issue of substantive arbitrability, like the CBA, is subject to special rules of interpretation:
In the Steelworkers Trilogy,*fn6 the Supreme Court made clear that doubts as to arbitrability should be resolved in favor of arbitration and that ambiguities about the scope of a collective bargaining agreement should be left to an arbitrator. As the Court stated: The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. Steelworkers v. Am. Mfg. Co., 363 U.S. 564, 567-68, 80 S.Ct. 1343, 4 L.Ed. 2d 1403 (1960). [Winston-Salem Mailers Union 133 v. Media Gen. Operations, Inc., 55 Fed. Appx. 128, 133-34 (4th Cir. 2003) (emphasis added).]
Here, the parties agreed to submit all questions of contract interpretation to the arbitrator because the grievance procedure in the CBA applies to "any dispute or grievance aris[ing] between the Company and the Union, or any of its members, as to the interpretation, application, or operation of any provisions of this agreement, not specifically settled in said agreement." The issue then becomes "whether the party seeking arbitration is making a claim which on its face is governed by the contract." Ibid.
The CBA contains a management-rights clause in Section 1A:
The Management of the Company and the direction of the working forces, including the right to hire, suspend, discharge for proper cause, promote, demote, or transfer, and the right to determine the size of the working forces, are recognized to be in the Company, but each employee covered in this agreement shall have the right provided in this agreement for the adjustment of grievances. (Emphasis added.)
Indisputably, Anaya was a covered employee in the CBA. The language of Section 1C, providing that the Union will "recognize" the "90-day probationary period agreed to by the employee on applying for a position with the Company,"*fn7 does not expressly exclude probationary employees from the right to grieve that is recognized in Section 1A.
Arbitrability is determined from the CBA, not from the terms of an individual employee's agreement. PBA Local 160 v. Twp. of N. Brunswick, 272 N.J. Super. 467, 474 (App. Div.) ("The scope of the arbitrator's authority depends on the terms and conditions contained within the agreement between the parties and, properly, the arbitrator can neither disregard those terms nor rewrite the agreement for the parties."), certif. denied, 138 N.J. 262 (1994). The arbitrators and the trial court erred in basing their decisions on the employment agreement between Transit and Anaya. They should have confined themselves to the language of the CBA because mere recognition of a 90-day probationary period to which an employee may agree does not empower Transit to modify the CBA with language it and it alone inserts in a standard application for employment. "Grievance and disciplinary review procedures established by agreement shall be utilized for any dispute covered by the terms of such agreement." N.J.S.A. 34:13A-5.3.
When Transit wanted employees not to have access to the grievance procedure, it knew how to negotiate language making that intent clear. Subsection P(j) of the CBA provides: "Part-time operators shall be entitled to, and covered by, the contract provisions of Union membership and check-off on a nondiscriminatory basis, and the grievance procedure after completion of the probationary period." This language stands in stark contrast to the language of Section 1C, providing that the Union will "recognize" the "90-day probationary period agreed to by the employee on applying for a position with the Company." If the parties were able to agree on the issue, it was here that Transit should have made it abundantly clear that ninety-day probationary employees were not "entitled to, and covered by, the contract provisions of . . . the grievance procedure" until their probationary period expired. Not only did Transit not do so, but it also agreed that probationary employees, as distinct from part-time probationary employees, were required to become members of the Union after thirty days, and acknowledged in the Management Rights clause that "each employee covered in this agreement shall have the right provided in this agreement for the adjustment of grievances." Parties to a CBA "have a right to stand upon the precise terms of their contract." Collingswood Hosiery Mills, Inc. v. Am. Fed. of Hosiery Workers, 28 N.J. Super. 605, 610 (Ch. Div. 1953) (quoting Goerke Kirch Co. v. Kirch Holding Co., 118 N.J. Eq. 1 (E. & A. 1934)), reversed on other grounds, 31 N.J. Super. 466 (App. Div. 1954).
We conclude as a matter of law that the Union was entitled to arbitrate its grievance over the termination of Anaya's employment because "the party seeking arbitration is making a claim which on its face is governed by the contract."*fn8 Winston-Salem Mailers, supra, 55 Fed. Appx. at 134. This is so because a termination of employment is indisputably subject to grievance and arbitration under this CBA. As in United Steelworkers of America, AFL-CIO v. Century Aluminum of Kentucky, 157 Fed. Appx. 869, 874 (6th Cir. 2005), the Union, at the very least, is entitled to arbitrate the issue of Anaya's guilt.
In light of this conclusion, we need not address the Union's alternative argument that Transit waived its right to dispute arbitrability. The dismissal of the Union's demand for arbitration is reversed and the Union and Transit are to reselect their arbitrators, Kimm v. Blissett, LLC, 388 N.J. Super. 14, 26 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007), who will then select a new neutral arbitrator.
Reversed and remanded for arbitration consistent with this opinion. We do not retain jurisdiction.