December 15, 2009
BOARD OF EDUCATION OF THE TOWNSHIP OF EAST BRUNSWICK, MIDDLESEX COUNTY, PLAINTIFF-APPELLANT,
EAST BRUNSWICK EDUCATION ASSOCIATION, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-7612-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 28, 2009
Before Judges Sapp-Peterson and Espinosa.
Appellant, Board of Education of the Township of East Brunswick (Board), appeals from the trial court order confirming an arbitration award issued in favor of respondent East Brunswick Education Association (Association). We affirm.
The salient facts are not in dispute. The Board and the Association are parties to a collective bargaining agreement (Agreement) covering the period July 1, 2003 through June 30, 2006. At the commencement of the 2004-2005 school year, the Board calculated the daily rate of pay for certificated employees by using 187 days as the divisor in the calculation ratio. The Agreement makes no reference to "daily rate" or "per diem rate." The issue of the proper divisor for calculating daily rate of pay had been the subject of a 1989 grievance between the parties. In an April 5, 1989 Memorandum, the Association President memorialized a discussion that she had with the Assistant Superintendent of Personnel. The Memorandum was intended to resolve the grievance and stated:
The East Brunswick Board of Education and the East Brunswick Education Association agree that the daily rate of pay for 10 month salaried non-certified [sic] employees shall be computed by dividing their annual salary by 187 days. The daily rate of pay for 10 month salaried certified [sic] employees shall be computed by dividing their annual salary by 200 days.
Please advise in writing if these formulas still meet with your approval. Upon receipt of your confirmation, we will advise AAA that we have reached a settlement for arbitration #18 39 0373 88N.
The Assistant Superintendent sent a responding Memorandum dated April 13, 1989, in which she confirmed her understanding that "[t]he daily rate of pay for 10-month salaried certificated employees shall be computed by dividing their annual salary by 200 days. We are in agreement with this.... Again, my thanks for reaching an equitable resolution in this matter."
From that point going forward, the Board utilized 200 days as the divisor for calculating the daily rate of pay for 10-month salaried certificated employees until the commencement of the 2004-2005 school year. At that time, the Board changed the formula. The Association filed a grievance claiming the Board violated the Agreement by utilizing 187 days rather than 200 days as the divisor. The Association also filed a second grievance alleging that the Board violated the Agreement as to certificated staff who left the school district mid-year by not compensating them in accordance with the agreed upon formula of 1/20 of their salary per pay period worked.
The two grievances were consolidated and the parties proceeded to arbitration in accordance with the Agreement. They mutually agreed to limit the issues to:
(1) Did the Board of Education violate the collective bargaining agreement by utilizing the 1/187 versus 1/200 for calculating daily rates of pay for certificated employees? If so, what shall be the remedy?
(2) Did the Board of Education violate the collective bargaining agreement by paying certified [sic] employees with a change of status mid-year based on daily rates of pay instead of 1/20 of salary per pay period?
If so, what shall be the remedy?
After conducting a hearing at which both sides presented witnesses and documentary evidence and after considering the arguments of counsel, as well as post-hearing briefs submitted by the parties, the Arbitrator found that the evidence supported the Association's claims and issued an award ordering the Board to make the Association whole for any loss of compensation as a result of the misapplication of the salary provisions. The parties shall meet to consider the records of the use of 1/187 instead of 1/200 or of the use of per diem rates rather than 1/20 per fully worked pay periods with respect to the Grievants. The parties shall compute the monetary effect of the misapplication by the Board, consistent with this Decision and Award, and the Board shall compensate each Grievant for the amount of his or her lost pay as a result of that misapplication.
The Board filed a verified complaint in the Law Division seeking an order vacating the arbitration award. The Board contended the Arbitrator "exceeded or so imperfectly executed his powers that a mutual, final and definite award upon the subject matter was not made." The Board also urged that the award should be vacated because it did not "draw its essence from the bargaining agreement." The Association filed a cross- motion to confirm the award. The court conducted oral argument and at its conclusion advised the parties that it would issue a letter opinion.
On August 4, 2008, the court issued its written decision and an order confirming the Arbitrator's award. In reaching its decision the court found:
The issue which was presented to the arbitrator was whether or not the Board violated the contract by utilizing a 1/187 rate of daily pay rather than a 1/200. Both sides admit "per diem" and "daily rate" are not defined within the contract. The Board suggests that the reason for that is because there is a plain meaning. However, the plain meaning itself is not clear, given the fact that it could be either the 187 day contractual work year or the actual days worked in a year of 184. Based on the ambiguity within the pages of the Agreement, the Arbitrator must fill in the gaps, and the Court agrees that the best way to do that is to consult the unambiguous past practice.
The present appeal ensued.
On appeal, the Board challenges the award based solely upon N.J.S.A. 2A:24-8(d), namely, the Arbitrator ignored the plain meaning of the phrase "daily rate" or "per diem rate"; "ignored the limitations upon his authority in the agreement by ignoring specific contract language in Article II, Paragraphs B and D"; and "exceeded his limited authority by invoking the concept of past practice into the agreement."
We reject each of these contentions and affirm substantially for the reasons expressed in Judge Travis Francis' cogent and well-reasoned August 4, 2008 opinion. We add the following comments.
"Arbitration is a favored means of resolving labor disputes." Pascack Valley Reg'l High Sch. Bd of Educ. v. Pascack Valley Reg'l Support Staff Ass'n, 192 N.J. 489, 496 (2007) (quoting Bd. of Educ. of Borough of Alpha v. Alpha Educ. Ass'n, 190 N.J. 34, 41-42 (2006)). Its objective is to provide finality in a prompt and inexpensive manner. Ibid. To that end, an arbitrator's award "is entitled to a presumption of validity" and will only be vacated on narrow grounds. Jersey City Educ. Ass'n Inc. v. Bd. of Educ. of City of Jersey City, 218 N.J. Super. 177, 187 (App. Div.), certif. denied, 109 N.J. 506 (1987). The party opposing confirmation "ha[s] the burden of establishing that the award should be vacated pursuant to N.J.S.A. 2A:24-8." Ibid.; see also Delran Educ. Ass'n v. Delran Bd. of Educ., 277 N.J. Super. 538, 542 (App. Div. 1994). Moreover, in the context of public contracts, the scope of review in matters of interpretation is confined to determining whether the interpretation of the contractual language is "reasonably debatable." County Coll. of Morris Staff Ass'n v. County Coll. of Morris, 100 N.J. 383, 390-91 (1985).
Here, there is no dispute that the Agreement is completely silent as to what constitutes the "per diem rate" and "daily rate" for purposes of calculating the pay of certificated employees and those certificated employees who leave the district mid-year. The Board urges that the Agreement did not address this issue because it is clear that the calculation is based upon the number of days worked. We disagree.
The number of days worked in a school year may not necessarily be the equivalent of the "per diem rate" or "daily rate." For example, "Prolonged absence beyond sick leave period," in Title 18A, addresses compensation for those persons on sick leave beyond annual sick leave and accumulated sick leave and directs that the board of education may pay that person "each day's salary less the pay of a substitute." N.J.S.A. 18A:30-6. The statute then defines a day's salary as "1/200 of the annual salary." Ibid. Moreover, as Judge Francis observed here, the actual work year under the Agreement is 184 days, unless there are unexpected school closings, in which case the actual work year is 187 days. Hence, contrary to the Board's assertion, the agreement does not clearly and unequivocally equate "work year" with "per diem rate" and "daily rate."
In the absence of a clear expression otherwise, it is not "patently obvious" that the terms "per diem rate" and "daily rate" refer to the definition of the "work year" contained in Article IX of the Agreement. Given the absence of any reference or definition of "per diem rate" and "daily rate" in the Agreement for purposes of calculating daily rates of pay for certificated employees and certificated employees with a change of status mid-year, the "arbitrator was obligated to discern the applicable [rate]." Scotch-Plains Fanwood Bd. of Educ. v. Scotch Plains Fanwood Educ. Ass'n, 139 N.J. 141, 156 (1995).
As the Court made clear in Local No. 153, Office and Prof'l Employees Int'l Union, AFL-CIO v. Trust Co. of New Jersey, 105 N.J. 442, 452 (1987), "[i]t is the arbitrator's role to fill the gaps" in the agreement. The gap filler here was the written manifestation of the parties' intent memorialized in the 1989 Memoranda and the repeated ratification of this expressed intent through the parties' practices over the next fifteen years. In Kearny PBA Local 21 v. Town of Kearney, 81 N.J. 208, 221 (1979), the Court observed:
Any number of interpretative devices have been used to discover the parties' intent. These include consideration of the particular contractual provision, an overview of all the terms, the circumstances leading up to the formation of the contract, custom, usage, and the interpretation placed on the disputed provision by the parties' conduct.
This is precisely what occurred here. The Arbitrator utilized the Memoranda and parties' past practice as "interpretative devices," ibid., to "fill [in] the gaps." Scotch-Plains Fanwood Bd. of Educ., supra, 139 N.J. at 156. Additionally, we are in complete accord with the Arbitrator's conclusion that
[t]he existence of the 1989 memoranda of agreement actually raises the level of the Association's position beyond that of an ordinary past practice claim. That evidence truly establishes a separate, side-bar understanding defining the intent of the parties to apply certain elements of the express salary provision of the contract.
In sum, we are satisfied, based upon our review of the record, that the Arbitrator did not "exceed or so imperfectly execute [his] powers that a mutual, final and definite award upon the subject matter submitted was not made." N.J.S.A. 2A:24-8(d)." His interpretation of the parties' Agreement is reasonably debatable and entitled to our deference. New Jersey Transit Bus Operations, Inc. v. Almalgamated Transit Union, 187 N.J. 546, 554 (2006). Likewise, the Arbitrator's interpretation of the issues submitted to him is also entitled to our deference. Twp. of Wyckoff v. PBA Local 261, 409 N.J. Super. 344, 355-56 (App. Div.) (noting that although no New Jersey precedent addresses whether reviewing courts should accord deference to an arbitrator's interpretation of issues submitted for arbitration, ample federal precedent exists approving application of this deferential standard of review in order to ensure that: (1) the purposes of arbitration are not undermined; (2) consistent standards of review are applied to interpretations of collective bargaining agreements and issues submitted for arbitration; and (3) judicial resources are not strained by requiring courts to engage in close scrutiny of issues submitted to arbitrators).
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