(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).
The Court reviews an arbitration panel's decision that a probationary employee of the New Jersey Transit Bus Operations, Inc. (NJ Transit) could not access the grievance procedure in a collective bargaining agreement to dispute his termination.
In August 2004, Juan Anaya applied for a position with NJ Transit. The application required an applicant to list all pending violations and convictions for traffic violations within the prior three years, and warned that "any omission or willful mis-statement will be cause for disqualification for employment." Anaya stated in his application that his driver's license had been suspended for two months in 2004 for unpaid parking tickets. He also certified that he did not have any driving convictions or criminal convictions and signed an affidavit and authorization attesting that his statements were true and complete, allowing NJ Transit to "review any and all criminal history and disciplinary records," and acknowledging that if he was employed in a position covered by a labor agreement and successfully completed the probationary period prescribed by such agreement, NJ Transit could terminate his employment "only in accordance with the provisions of the applicable labor agreement." In a letter dated September 15, 2004, NJ Transit offered Anaya a job as a bus cleaner, a position covered by the collective bargaining agreement (CBA). The letter informed Anaya that the probationary period was ninety days. Anaya accepted the offer by signing the letter. He began working six days later.
By operation of Section 1C of the CBA, Anaya became a member of the Amalgamated Transit Union, Local 880 (Union) thirty days after he started his employment. Section 1C stated also, however, that "the 90-day probationary period agreed to by the employee on applying for a position with the Company will be recognized." On October 5, 2004, during the thirty-day period before Anaya became a Union member, NJ Transit informed him that his criminal background check uncovered information inconsistent with his employment application. NJ Transit gave Anaya until October 26th to provide additional information. On November 10th, a union representative accompanied Anaya to a Probationary Employment Meeting, at which they discussed the falsifications in Anaya's employment application. After the meeting, NJ Transit terminated Anaya's employment.
The Union filed a grievance on Anaya's behalf. The grievance proceeded to a hearing before an arbitration panel. NJ Transit moved to dismiss the arbitration on grounds that a probationary employee's termination was not subject to the grievance procedure contained in the CBA. The arbitration panel noted that Section 1C of the CBA stated that the "90-day probationary period agreed to by the employee on applying for a position with the Company will be recognized." Finding that this language referred to the employment agreement in which Anaya acknowledged his understanding that if he successfully completed his probationary period he could be terminated only in accordance with the CBA's provisions, and noting that NJ Transit terminated Anaya's employment before he completed his probationary period, the panel determined that the termination was not required to have been in accordance with the provisions of the CBA. The panel concluded that because Anaya's termination was not governed by the CBA and Section 1A of the CBA limited the arbitration panel's jurisdiction to the interpretation, application, or operation of the CBA's provisions, the grievance must be dismissed.
The Union filed a complaint and order to show cause in the Superior Court, seeking to vacate the dismissal on the grounds that the arbitrators exceeded their authority under the CBA by deciding that Anaya's termination was not arbitrable. The trial court agreed with the arbitrators' ultimate determination that the CBA's reference to the 90-day probationary period could be read only as a limitation on the employee's rights during that period. Finding no legitimate basis for vacating the arbitration award in favor of NJ Transit, the court dismissed the Union's complaint.
The Appellate Division reversed the trial court's judgment in an unpublished decision. First, the panel noted that questions of substantive arbitrability were to be decided by a court unless the parties had agreed otherwise, whereas questions of procedural arbitrability were to be decided by an arbitrator. The panel determined that the dispute in this case was a matter of substantive arbitrability that the court must decide. Next, the panel determined that arbitrability should be determined solely on the basis of the CBA's terms, and found that the arbitrators had erred by considering Anaya's employment application. Finally, the panel held that Anaya's termination of employment was indisputably subject to grievance and arbitration because the CBA did not expressly exclude probationary employees from the grievance process outlined in Section 1A, Section 1C made all employees members of the union after 30 days, and Subsection P(j) specifically provided that part-time employees became entitled to the grievance procedure only after completion of the probationary period, but no express language applied the same limitation to full-time employees. The Appellate Division remanded for arbitration before a new arbitration panel.
HELD: Applying the "reasonably debatable" standard of review for arbitration decisions, the Court defers to the arbitration panel's conclusion that the employee in this case, who was terminated during his probationary period, did not have the right to access the grievance provisions of the collective bargaining agreement.
1. In Standard Motor Freight, Inc. v. Local Union No. 560, 49 N.J. 83 (1967), the Court separated arbitrability matters into the categories of "substantive" and "procedural." Substantive arbitrability refers to whether the grievance is within the scope of the arbitration clause in the CBA specifying what the parties have agreed to arbitrate. That determination is a function for the court, not the arbitrator, absent clear expression to the contrary. Confining courts to making assessments about substantive arbitrability effectuates the policy of ensuring that the means chosen by the parties for settling their differences under a collective bargaining agreement is given full play. Procedural arbitrability questions ask, on the other hand, whether procedural conditions to arbitration have been met. The grievance process itself is used to decide matters of procedural abitrability, so arbitrators are the decision-makers for those concerns. Determinations that properly are for the arbitrator to make are subject to a "reasonably debatable" standard of review. (Pp. 11-16).
2. The Court determines that the question of procedural versus substantive arbitrability was largely irrelevant in this case. Even if the Appellate Division correctly found that the issue was substantive, the judicial remedy could not have provided anything more than that which Anaya received from the arbitrators-namely review by them on this dispute or grievance arising out of the interpretation, application or operation of the CBA's provisions over whether a terminated probationary employee could use the CBA's arbitration provision to grieve his dismissal. Section 1A of the CBA clearly conferred on the arbitrators the broadly stated power to interpret this CBA and granted them the authority to decide the question about their own jurisdiction. In short, whether a probationary employee could access the grievance procedure to challenge his termination was a matter the CBA authorized the arbitrators to decide. The mandate to courts to leave questions of CBA interpretation and application to arbitrators requires a reviewing court to respect the decisions of arbitrators, even when the court might reach a different determination. A court should not interfere with an arbitrator's "reasonably debatable" decision, here as to whether a probationary employee was meant to have the ability to grieve his discharge under the terms of the CBA. (Pp. 16-21).
3. By asking whether Anaya's probationary status at the time of his discharge entitled him to employ the grievance procedure, the arbitral panel recognized that the first question to be answered was whether the termination issue was governed, on its face, by the CBA. The arbitral panel rightfully recognized that it was. The panel further recognized that the CBA's broadly worded provision on the scope of the arbitrator's powers granted to arbitrators the right to decide the interpretative question that would affect their jurisdiction to hear the merits of the termination. Thus, only if that interpretative question about arbitral jurisdiction was answered affirmatively would the arbitrators reach and review the merits of Anaya's termination. However, because the panel interpreted the CBA not to intend that the grievance and arbitration process be used to review terminations of probationary employees, it dismissed the Union's grievance that sought review of the merits of Anaya's termination. Although the arbitrators awkwardly phrased their conclusion in respect of the CBA-interpretation question, referring at times to their inability to judge the dispute over Anaya's discharge as a lack of jurisdiction, the decision in its totality revealed the arbitrators' overarching determination that the CBA did not grant to a probationary employee the right to grieve under the CBA's arbitration provision. The arbitration panel performed its allotted interpretative task under the CBA. Because that question of CBA interpretation was properly before the arbitrators, the Court defers to the arbitration panel's decision under the "reasonably debatable" standard of review and concludes that the arbitrators' reasonable determination must stand. (Pp. 21-23).
The judgment of the Appellate Division is REVERSED, and the judgment of the trial court, dismissing the Union's complaint, is REINSTATED.
JUSTICE LONG, DISSENTING, joined by JUSTICE ALBIN, asserts that a determination of whether a dispute was arbitrable-in this case, whether a probationary employee was entitled to access the grievance procedure-was an issue that was reserved to the court. She maintains that because that issue was decided by the Appellate Division, and because the arbitrators were limited to the question of the propriety of the employee's termination but never decided that question on the merits, the Appellate Division's order that a new arbitration take place was the only option.
CHIEF JUSTICE RABNER and JUSTICES WALLACE, RIVERA-SOTO, and HOENS join in JUSTICE LaVECCHIA's opinion. JUSTICE LONG, joined by JUSTICE ALBIN, filed a separate, dissenting opinion.
The opinion of the court was delivered by: Justice LaVECCHIA
On certification to the Superior Court, Appellate Division.
In this appeal, we review an appellate judgment that upended an arbitration panel's determination that a probationary employee of New Jersey Transit Bus Operations, Inc. (NJ Transit) could not grieve his dismissal under the extant collective bargaining agreement (CBA). The arbitrators' award in NJ Transit's favor dismissed the grievance. Because we conclude that the arbitration panel properly engaged in its appropriate role as interpreter of the CBA's pertinent provisions, we defer to and uphold the arbitrators' reasonable ultimate determination. We therefore reverse the contrary judgment of the Appellate Division.
On August 23, 2004, Juan Anaya applied for a position with NJ Transit. A portion of the application provided: "Serious moving violations or accident record may disqualify you. Therefore, list below ALL pending violations and ALL convictions for traffic violations (except parking) in the last (3) years. All applicants will be thoroughly investigated. Therefore, any omission or willful mis-statement will be cause for disqualification for employment." Responding to questions in that section of the application, Anaya stated that his driver's license had been suspended from March through April 2004 due to unpaid parking tickets. He also certified that he did not have any driving convictions or criminal convictions.
On the same page of the application was an affidavit and authorization that Anaya signed, which provided:
I hereby certify that the foregoing statements are true, complete and correct to the best of my knowledge and belief and are made in good faith. I further authorize representatives of the Company to verify any and all information contained herein and to review any and all criminal history and disciplinary records of any fact. . . . 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.
NJ Transit subsequently offered Anaya a job as a bus cleaner, a position covered by the CBA. The offer came in the form of a letter, dated September 15, 2004. Among other things, the letter informed Anaya that the probationary employment period was ninety days. Anaya accepted NJ Transit's offer by signing the letter, and began working six days later.
By operation of Section 1C of the CBA, Anaya became a member of Amalgamated Transit Union, Local 880 (Union) thirty days after he started employment with NJ Transit. Section 1C of the CBA explains when employees become members of the Union and, more germane to this appeal, when employees graduate from probationary status:
[a]ll 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.
On October 5, 2004, during the thirty-day period before Anaya became a member of the Union, NJ Transit informed Anaya that his criminal background check uncovered information inconsistent with his employment application. NJ Transit gave Anaya until October 26, 2004, to provide "a certified copy of the disposition and the accusatory instrument for each conviction [uncovered by the background investigation]." On November 10, 2004, Anaya attended a Probationary Employment Meeting, accompanied by a union representative (as the initial thirty-day period of employment had expired and Anaya had become a member of the Union entitled to representation), to discuss the falsifications that NJ Transit had uncovered in his employment application. After the meeting, NJ Transit terminated Anaya's employment. The November 10, 2004, letter of termination indicated that the false information in Anaya's employment application was the impetus for his termination.
Anaya took no immediate action. The Union, however, eventually filed a grievance on his behalf. That grievance proceeded to a hearing scheduled for June 6, 2006, before an arbitration panel. At the outset of that hearing, NJ Transit moved to dismiss the arbitration on the basis that a probationary employee's ...