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International Brotherhood of Electrical Workers Local Union 269 v. Troop Construction & Electric


May 1, 2009


On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2882-07.

Per curiam.


Submitted December 9, 2008

Before Judges Winkelstein, Fuentes and Gilroy.

Defendant Troop Construction & Electric, Inc. appeals from the order of the Law Division confirming an arbitration award made by the Council on Industrial Relations for the Electrical Contracting Industry ("CIR"). The award directed defendant to sign and abide by the Collective Bargaining Agreement ("CBA") then in existence between plaintiff, the International Brotherhood of Electrical Workers ("IBEW"), Local Union 269, and the Mercer Division, Southern New Jersey Chapter of the National Electrical Contractors Association ("NECA").

The central question raised by this appeal concerns the jurisdiction of the CIR to arbitrate and decide whether a Letter of Assent ("LOA"), designating NECA to be defendant's collective bargaining agent, was properly terminated by defendant. By grating the relief requested by IBEW, the trial court implicitly upheld the authority of the CIR to arbitrate the issues before it.

We reverse. The jurisdiction of the CIR to arbitrate disputes between the parties is limited to matters arising out of the CBA. The question of whether defendant properly served NECA with notice to terminate the LOA is not a matter arising out of the CBA. Pursuant to N.J.S.A. 2A:24-8d, the CIR did not have jurisdiction to arbitrate this dispute.

I. The Issue In Dispute

On November 25, 2003, defendant and NECA signed the LOA, through which defendant authorized NECA to act "as its collective bargaining representative for all matters contained in or pertaining to the current and any subsequent [] labor agreement between [NECA] and [plaintiff]." By signing the LOA, defendant agreed "to comply with, and be bound by, all of the provisions contained in [the] current and subsequent approved labor agreements." The LOA was to "remain in effect until terminated by [defendant] giving written notice to [NECA] and to the [plaintiff], at least one hundred fifty (150) days prior to the then current anniversary date of the applicable approved labor agreement." The LOA did not contain an arbitration clause.

On October 1, 2004, NECA, acting as defendant's collective bargaining agent, entered into a CBA with plaintiff. The CBA applied to all employers who had signed an LOA, and was effective from the date of signing until September 30, 2007. Thereafter, the CBA would continue to be in effect "from year to year . . . unless changed or terminated in the way later provided herein."

Under Article 1.2(A) of the CBA, any party who wished to change or terminate the CBA was required to "provide written notification at least 90 days prior to the expiration date of the [CBA] or any anniversary date occurring thereafter." The remainder of Article 1.2, which includes an interest arbitration clause,*fn1 provides the following:

(B) Whenever notice is given for changes, the nature of the changes desired must be specified in the notice, or no later than the first negotiating meeting unless mutually agreed otherwise.

(C) The existing provisions of the [CBA], including this Article, shall remain in full force and effect until a conclusion is reached in the matter of proposed changes.

(D) Unresolved issues or disputes arising out of the failure to negotiate a renewal or modification of this agreement that remain on the 20th of the month preceding the next regular meeting of the [CIR] may be submitted jointly or unilaterally to the [CIR] for adjudication. Such unresolved issues or disputes shall be submitted no later than the next regular meeting of the [CIR] following the expiration date of this agreement or any subsequent anniversary date. The [CIR's] decision shall be final and binding.

(E) When a case has been submitted to the [CIR], it shall be the responsibility of the negotiating committee to continue to meet weekly in an effort to reach a settlement on the local level prior to the meeting of the [CIR].

(F) Notice of a desire to terminate this [CBA] shall be handled in the same manner as a proposed change. (Emphasis added.)

On July 27, 2006, more than one year before the September 30, 2007 anniversary date of the CBA, defendant notified plaintiff and "the Northern New Jersey Chapter of NECA, Inc. [("NNJC")] and its Divisions" that it was "terminating its NECA membership and was withdrawing NECA's authorization [the LOA)] to act as its collective bargaining representative." Defendant did not send a similar notice to NECA.

On December 26, 2006, defendant again notified plaintiff that it "withdr[ew] any authorization that it may have previously given to any association, including NECA, to act as its collective bargaining representative", and further informed plaintiff that "effective midnight May 31, 2007, [defendant] terminates its [CBA] with [plaintiff]." By letter dated January 31, 2007, defendant advised plaintiff, for a third time, of its intent to terminate all agreements that exist between it and plaintiff.

Plaintiff's first response came by letter dated May 16, 2007. In it, plaintiff refused to recognize defendant's termination of NECA as its collective bargaining agent. Plaintiff asserted defendant's notice of termination was ineffective because it was directed at the NNJC and not NECA.

Thus, according to plaintiff, its CBA with defendant remained effective until September 30, 2007. In the event that defendant had provided a proper termination notice to NECA, plaintiff requested a meeting with defendant to negotiate a new CBA.

In a May 21, 2007 reply letter, defendant contended that its July 26, 2006 letter "informed NECA and [plaintiff] that it terminated its membership with all Divisions of NECA." Defendant also cited its two other letters notifying plaintiff of the termination of the LOA. Defendant took the position that in waiting ten months to respond to defendant's letters, ("where there are less than 150 days until contract expiration"), plaintiff had "ratified the termination through its inaction". Because defendant sought to sever its relationship with plaintiff upon the expiration of the then existing CBA, defendant asserted it had no obligation to schedule a bargaining session with plaintiff for a new CBA.

Over the next few months, plaintiff made various written requests for defendant to schedule a meeting to negotiate a successor CBA; defendant repeatedly rejected these requests, arguing that "it ha[d] no legal obligation to do so."

On July 17, 2007, after reaffirming its position that defendant's purported termination of the LOA was not legally binding, plaintiff notified defendant of its intent, pursuant to Article 1.2(D) of the CBA, to file a request for arbitration before the CIR "to seek a finding that the LOA remains in effect or alternatively, a successor [CBA] be awarded by the CIR." By letter dated July 20, 2007, defendant responded as follows:

The [CIR] cannot mandate that [defendant] grant[] authorization to NECA. Whether or not [defendant] has authorized NECA to act as its bargaining representative via the LOA is only between [defendant] and NECA. [Plaintiff] does not have standing to challenge the status of such authorization. Furthermore, the CIR is not empowered to determine whether or not the LOA is binding upon [defendant]. Rather, the CIR's authority as per Article I of the [CBA] is limited to situations where NECA and [plaintiff] have unresolved issues or disputes arising out of their failure to negotiate a renewal or modification to their [CBA].

On July 31, 2007, plaintiff submitted to the CIR the question of whether defendant had terminated its agency relationship with NECA.

II. The Arbitration

The CIR "is an interest arbitration panel for the electrical contracting industry; the panel is made up of twelve members, six of whom are appointed by the NECA and six by the IBEW. CIR rulings must be unanimous." Local Union No. 666 v. Stokes Elec. Serv., Inc., 225 F.3d 415, 419 (4th Cir. 2000).

Plaintiff identified the issues to be decided in the arbitration as "[t]he status of the LOA, and the entire [CBA]". According to plaintiff, defendant violated the then binding CBA "by failing and refusing to bargain over its proposed change." Plaintiff thus argued that defendant did not "timely and unequivocally" terminate the LOA because it failed to notify NECA of the proposed termination. Any notice served on NNJC cannot be imputed to NECA, plaintiff argued, because they "are separate and distinct entities."

Plaintiff requested that, "absent proof that [defendant's] LOA with [plaintiff] was properly terminated, [defendant] should be directed to comply with the provisions of the LOA binding it to the provisions of [CBA-2,] the collective bargaining agreement subsequently negotiated by and between [plaintiff] and [NECA]." Alternatively, if the CIR were to find that the LOA was properly terminated, plaintiff requested a finding that defendant had violated the then current CBA. Lastly, it sought to have the CIR tribunal award a successor collective bargaining agreement and direct both parties to sign it.

Defendant argued that the CIR was not empowered to adjudicate the parties' dispute with respect to the LOA. According to defendant, the authority of the CIR "emanates from Article I of the [CBA] and that Article does not provide authority to interpret the LOA." Specifically, "Article I of the [CBA] limits the authority [of the CIR] to hearing '[u]nresolved issues or disputes arising out of the failure to negotiate a renewal or modification to this agreement . . .' meaning the CBA. (emphasis added)."

Even if the CIR had jurisdiction, defendant maintained that resorting to arbitration at that time was premature and unwarranted, because it was "ready and willing to commence bargaining with [plaintiff]" to reach agreement on a new CBA. Defendant requested that the CIR "inform the parties accordingly," and assured the CIR that negotiations for a successor agreement would resume upon cancellation of the hearing.

By letter dated August 8, 2007, the Secretary of the CIR informed defendant that "[t]he issue of whether [it] has successfully repudiated its agreement is a question of fact" which "goes beyond mere[] procedural issues" capable of being addressed prior to a hearing. The Secretary concluded the letter as follows:

You have the right to question whether the case is properly before the CIR. You may do so in advance, by laying out a more complete history of the negotiations (or lack thereof) that have taken place, or you may do so at the time the case is called. The CIR reserves the right to determine whether or not the case is properly before it and may render a decision on the facts of the case or direct the parties to continue to negotiate locally.

Defendant chose not to submit a brief to the CIR or appear at the hearing. After plaintiff presented its position, the CIR rendered an award seemingly in plaintiff's favor. As a threshold issue, however, the CIR noted that "evidence that the [defendant] had properly terminated the [LOA] and requested changes to the [CBA] has not been provided . . . . [T]here was no evidence that [NECA] had been notified that the [LOA] had been terminated as required in the [LOA] itself." (Emphasis added.)

Accordingly, the CIR issued a two-part award: (1) if defendant could provide the CIR with evidence that it properly notified NECA of the termination of the LOA, it would require defendant to "sign and implement immediately the Inside Agreement [("CBA-3"),] which is . . . hereby made a part of th[e] decision"; and (2) if defendant could not submit such proof, "then [defendant] continues to be bound to [CBA-2] between [NECA] and [plaintiff]."

Thereafter, attempts by the parties to reach an amicable resolution were unsuccessful.

III. Proceedings Before the Law Division

Pursuant to N.J.S.A. 2A:24-7, plaintiff filed a summary action in the Law Division to confirm the award. Plaintiff requested that the court "confirm and require that [defendant] remain bound to the [CBA] between [NECA] and [plaintiff], which expired on September 30, 2007[,] as well as all subsequently approved [collective bargaining agreements]."

Defendant filed an answer arguing that "[t]he Award cannot be confirmed and must be vacated pursuant to N.J.S.A. 2A:24-[8d] because the [CIR] exceeded and so imperfectly executed its powers that a mutual, final and definite award upon the subject matter submitted was not made." Defendant also sought affirmative relief in the form of an order to vacate the award, arguing that the CIR "was not empowered to hear the dispute between the parties, and even if it was so empowered, the dispute was not ripe because the parties had agreed to engage in direct negotiations."

In response, plaintiff argued that the CIR had jurisdiction to arbitrate the dispute because the LOA and CBA are "inextricably intertwined." Thus, the award should be confirmed because defendant "presented no basis to overcome the presumption of validity afforded to the arbitrators' decision."

Both parties agreed that N.J.S.A. 2A:24-8 contained the relevant legal standards for resolving this dispute. As framed by the parties, the sole issue to be addressed by the court was whether the CIR had jurisdiction to arbitrate the validity of defendant's termination of its agency relationship with NECA. The court thus focused on N.J.S.A. 2A:24-8d, which provides that an award can be vacated by the court "[w]here the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made."

Plaintiff argued that the LOA was "part and parcel" of the CBA and, in essence, "really serve[d] as a signature page" for the CBA. The tribunal was thus empowered to hear the parties' dispute based both on the LOA, and on defendant's failure to negotiate under the CBA. According to plaintiff, despite its limited scope of review, the court had the authority to determine whether NECA was properly served with notice of termination under the LOA.

Conversely, defendant argued that "[t]he issue before the [c]court [was] not the status of the LOA." Given the limited scope of review inherent in these summary proceedings, defendant argued that the only option available to the court was to vacate the award because: (1) there was no agreement to arbitrate issues concerning the LOA; and (2) the relevant CBA arbitration clause only covered "unresolved or disputed issues arising from a failure to negotiate." Defendant also objected to the equivocal nature of the CIR's ruling. Specifically, defendant argued that the conditional nature of the award ("if this happened, then do this"), rendered it irreparably flawed and unenforceable.

In confirming the award, the trial court inferred that the arbitrator concluded he had jurisdiction. The court noted that defendant had the burden "to demonstrate proper notice under the LOA" and that the CIR panel "found no evidence of proper termination." The court also independently found "no evidence of proper termination."

IV. Legal Analysis

On appeal, defendant reiterates the primary argument advanced without success before the trial court. That is, because the award dealt primarily with the termination of the LOA, and not with any issue concerning the CBA itself, the CIR did not have the authority to arbitrate the dispute. The trial court order confirming the award must thus be vacated pursuant to N.J.S.A. 2A:24-8d. We agree with defendant's argument.

"[A]rbitration is simply a matter of contract between . . . parties; it is a way to resolve those disputes -- but only those disputes -- that the parties have agreed to submit to arbitration." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 1924, 131 L.Ed. 2d 985, 993 (1995).

[T]he grievance machinery under a collective bargaining agreement is at the very heart of the system of industrial self-government. Arbitration is the means of solving the unforeseeable by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. [United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581, 80 S.Ct. 1347, 1352, 4 L.Ed. 2d 1409, 1416 (1960).]

It is now well-settled that a dispute is not arbitrable unless it falls within the scope of the arbitration agreement; "[t]he agreement must embrace the subject matter of the alleged grievance," Flintkote Co. v. Textile Workers Union, 243 F. Supp. 205, 212 (D.N.J. 1965), and an arbitrator's award "'is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.'" Local No. 153 v. The Trust Co. of N.J., 105 N.J. 442, 450 (1987) (quoting United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed. 2d 1424, 1428 (1960)).

In New Jersey, the few statutory grounds for vacating an arbitration award are provided by N.J.S.A. 2A:24-8:

a. Where the award was procured by corruption, fraud or undue means;

b. Where there was either evident partiality or corruption in the arbitrators, or any thereof;

c. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause being shown therefor, or in refusing to hear evidence, pertinent and material to the controversy, or of any other misbehaviors prejudicial to the rights of any party;

d. Where the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made.

If any one of those grounds is found, a court must "vacate the [arbitration] award." Ibid.; see also Local No. 153, supra, 105 N.J. at 449 (noting that it is "only where the arbitrator has exceeded his authority or acted improperly" that the court should overturn an arbitral award). In addition, since this dispute concerns labor arbitration regarding a collective bargaining agreement, this court must apply federal substantive law when determining whether the trial court properly confirmed the award. Allwood Plumbing & Heating Co. v. Local Union 274, 199 N.J. Super. 517, 521 (App. Div. 1985).

"The major limitation on the arbitrator's authority is the collective bargaining agreement itself. The arbitrator has no authority beyond that delegated to him by the parties." Local No. 153, supra, 105 N.J. at 450; see also Warrior & Gulf, supra, 363 U.S. at 582; 80 S.Ct. at 1353, 4 L.Ed. 2d at 1417 ("For arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."). As such, "an arbitrator may not disregard the terms of the parties' agreement, nor may he rewrite the contract for the parties." County Coll. of Morris Staff Assoc. v. County Coll. of Morris, 100 N.J. 383, 391 (internal citation omitted).

Here, the arbitration clause contained in Article 1.2(D) of the CBA is quite narrow in scope. It provides that "[u]nresolved issues or disputes of this agreement . . . may be submitted jointly or unilaterally to the [CIR] for adjudication." (Emphasis added.) Further, subsection 1.2(F) explains that terminations are dealt with "in the same manner as a proposed change."

Article 1.2(D)'s constriction renders disputes regarding the LOA outside the scope of the words "this agreement." The LOA was a bilateral agreement creating and defining the agency relationship between defendant and NECA. Plaintiff is not a party to the LOA, and does not have legal standing to object to its termination. By contrast, the CBA is a contract between the employer and the employees' collective bargaining unit, regulating the terms and conditions of employment. Termination of the LOA does not terminate defendant's obligations under the first CBA.

Here the first CBA was negotiated and agreed to by the employer (acting through NECA as its agent) and the IBEW. There is simply no support for plaintiff's claim that the LOA essentially serves as the signature page of the CBA. The CBA contains its own signature page. The LOA was entered into by defendant and NECA on November 25, 2003. The CBA was not finalized and executed until October 1, 2004.

In our view, the CIR did not have jurisdiction to adjudicate disputes regarding the status of the LOA. Under Article 1.2(D) of the CBA, the CIR could only determine whether there was a failure to negotiate a subsequent CBA on the part of either party and the consequences thereof. Defendant has consistently maintained throughout this protracted process that it stands ready and willing to engage in good faith negotiations, directly with plaintiff, toward the goal of reaching an agreement on a new CBA.

Based on this lack of jurisdiction, the CIR's decision directing defendant to execute a new CBA with plaintiff is also vacated. The CIR did not find that: (1) defendant violated the CBA in any respect; (2) defendant refused to negotiate with plaintiff toward a new CBA; or (3) defendant engaged in any other form of unfair labor practice. Given our conclusion that the CIR did not have jurisdiction, we express no opinion on whether a CBA negotiated by NECA legally binds defendant after its purported termination of the LOA. Stated differently, the question of whether defendant correctly terminated its agency relationship with NECA lies outside the scope of this appeal.

V. Conclusion

The order of the trial court confirming the arbitration award of the CIR is vacated.


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