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Freehold Regional High School District Board of Education v. Freehold Regional High School Custodial and Maintenance Association

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 25, 2012

FREEHOLD REGIONAL HIGH SCHOOL DISTRICT BOARD OF EDUCATION, PLAINTIFF-RESPONDENT,
v.
FREEHOLD REGIONAL HIGH SCHOOL CUSTODIAL AND MAINTENANCE ASSOCIATION, DEFENDANT-APPELLANT.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2936-11.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 20, 2012

Before Judges Reisner and Simonelli.

Defendant Freehold Regional High School Custodial and Maintenance Association (Association) appeals from an August 19, 2011 trial court order permanently restraining arbitration, in response to an order to show cause filed by plaintiff Freehold Regional High School District Board of Education (Board). We affirm.

I

Briefly, in April 2010, the School District issued notices to several Association members, who were non-tenured contract employees, that the Board would not renew their contracts for the coming school year. According to the Association, when asked the reason for the non-renewals, the Board responded that these employees had the worst attendance records of any of its custodial staff. See Marlboro Twp. Bd. of Educ. v. Marlboro Twp. Educ. Ass'n, 299 N.J. Super. 283 (App. Div.), certif. denied, 151 N.J. 71 (1997) (finding that a school board had a non-arbitrable right not to renew a non-tenured employee's contract due to attendance problems). The Association also claimed that the employees whose contracts were not renewed had greater seniority than other employees whose contracts were renewed.

Invoking provisions of the 2009-2012 collective negotiations agreement (CNA or contract) between the Association and the Board, the Association filed a grievance, which eventually proceeded to arbitration before the Public Employment Relations Commission (PERC).

However, before the arbitration hearings commenced, the Board applied to the arbitrator for a temporary stay, which was granted, to allow the Board to file an action in the Law Division for a determination as to whether the matter was arbitrable. Before the trial court, the Association argued that in non-renewing these employees' contracts, the Board had in effect conducted a "reduction in force" and, in doing so, had violated a contract provision requiring that "layoffs" be conducted in reverse order of seniority. Finding that the CNA provision in question did not confer any tenure rights on the contract employees whose contracts were non-renewed, the trial court held that the issue of their non-renewal was not arbitrable under the terms of the CNA. This appeal followed.

II

Because this case was finally decided on a summary basis, without an evidentiary hearing, our review of the Law Division judge's decision is de novo, considering the factual record in the light most favorable to the non-moving party and according no special deference to the trial court's resolution of purely legal questions. See Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 383 (2010); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).*fn1

Determining whether a dispute is arbitrable is a matter of contract interpretation. Therefore, like the trial court, our first task is to determine what the parties agreed to arbitrate. The question of substantive arbitrability - that is, whether the contract involves something the parties agreed to arbitrate - is for the court to decide.

[I]f the question to be decided is "whether the particular grievance is within the scope of the arbitration clause specifying what the parties have agreed to arbitrate," then it is a matter of substantive arbitrability for a court to decide. On the other hand, if the question is simply one relating to "whether a party has met the procedural conditions for arbitration," it is a matter of procedural arbitrability which has traditionally been "left to the arbitrator."

[Pascack Valley Reg. H.S. Bd. of Educ. v. Pascack Valley Reg. Support Staff Ass'n, 192 N.J. 489, 496-97 (2007) (internal citations omitted).]

However, the court generally should not construe the provision of the contract on which the party claiming arbitration is relying, so long as, "on its face," it concerns the issue which is the subject of the grievance. Likewise, the court is not to consider the underlying merits of an otherwise arbitrable grievance. As we summarized the law:

The duty to arbitrate springs from contract, and the parties can only be compelled to arbitrate those matters which are within the scope of the arbitration clause of their contract. When there is a dispute as to whether a grievance falls within the terms of the arbitration clause of the contract, it is the duty of the courts to determine whether the matter is arbitrable. However, in determining whether a matter is arbitrable, the court is limited to ascertaining whether the party seeking arbitration is making a claim which, on its face, is covered by the contract and within the arbitration clause. The court may not, in any way, pass upon the merits of the actual dispute. If the arbitrator is found to have jurisdiction over a matter, the court must send it to arbitration, even though the court may think the dispute is patently frivolous.

[Clifton Bd. of Educ. v. Clifton Teachers Ass'n, 154 N.J. Super. 500, 503-04 (App. Div. 1977) (citations omitted).] Turning to the contract here, we find that Article III defines an arbitrable "Grievance" in pertinent part as "a claim by a member of the bargaining unit or the Union . . . based upon an alleged violation, misinterpretation or misapplication of the express terms of this Agreement." (emphasis added). That is what the parties agreed to arbitrate.

We are required by N.J.S.A. 34:13A-5.3 to construe this clause broadly, in favor of arbitration:

In interpreting the meaning and extent of a provision of a collective negotiation agreement providing for grievance arbitration, a court or agency shall be bound by a presumption in favor of arbitration. Doubts as to the scope of an arbitration clause shall be resolved in favor of requiring arbitration.

[N.J.S.A. 34:13A-5.3.] To put the issue in context, we briefly review the statutes concerning the employment of public school custodians or janitors. N.J.S.A. 18A:17-3 addresses the rights of tenured janitors, and makes clear that they are treated differently than fixed-term janitors for purposes of reductions in force and other forms of negative employment action:

Every public school janitor of a school district shall, unless he is appointed for a fixed term, hold his office, position or employment under tenure during good behavior and efficiency and shall not be dismissed or suspended or reduced in compensation, except as the result of the reduction of the number of janitors in the district made in accordance with the provisions of this title or except for neglect, misbehavior or other offense and only in the manner prescribed by subarticle B of article 2 of chapter 6 of this title.

In turn, N.J.S.A. 18A:17-4 establishes a "last in, first out" rule for reductions in force of tenured janitors only:

[W]hen any janitor, janitor engineer, custodian or janitorial employee under tenure is dismissed by reason of reduction in the number of such employees, the one having the least number of years to his credit shall be dismissed in preference to any other having a longer term of service and the person so dismissed shall be and remain upon a preferred eligibility list, in the order of years of service, for reemployment whenever vacancies occur and shall be reemployed by the board in such order and upon reemployment shall be given full recognition for previous years of service in his respective positions and employments.

[N.J.S.A. 18A:17-4 (emphasis added).]

A custodial employee with a fixed contract has no right to tenure. Wright v. Bd. of Educ., 99 N.J. 112, 119 (1985). However, because the statute, N.J.S.A. 18A:17-3, is written in the alternative, making it lawful for a school board to confer tenure on a janitor, a board can negotiate the employees' tenure rights:

Yet even though the statute provides mechanisms for immediate tenure and complete denial of tenure, these are not the only alternatives contemplated by the statute. By using the word unless to modify the word shall, the legislature has signaled its intention to leave employing boards with some flexibility. Accordingly, boards may, without contravening the terms of the statute, permissibly pick and choose between the statutory minimum of no tenure for any custodial employee and the statutory maximum of instant tenure for all custodians. Article XIII of the negotiated agreement, which grants tenure after three years of employment, is but one example of a clause that falls between N.J.S.A. 18A:17-3's outer limits without derogating the statute's intent.

Inasmuch as N.J.S.A. 18A:17-3 leaves a school district with considerable discretion in making custodian-tenure decisions, there is no preemption hurdle blocking the negotiability of custodians' tenure rights.

[Wright, supra, 99 N.J. at 119-20.] In Wright, the Court also recognized that, historically, janitors had tenure rights, and extending tenure rights to janitors was not contrary to a school district's educational mission. Id. at 122-23.

Not only does the instant collective-negotiations clause satisfy this Court's three part test for determining public sector negotiability, but allowing custodians to bargain for tenure rights also comports with the legislative intent behind N.J.S.A. 18A:17-3. Janitors were first granted statutory tenure in 1911. L.1911,

c. 44. As the statute granted immediate tenure to all janitors, its purpose was to fulfill the janitors' need for help in acquiring job security. There is no reason to believe that the intent of N.J.S.A. 18A:17-3, which presumptively grants tenure in the absence of a fixed contract, is different from that of its predecessor.

Moreover, if the representative unit of the custodians were prohibited from negotiating job security, the result would frustrate, rather than promote, the intent of the janitors' tenure statute. In our view it is more consistent with the statutory purpose of N.J.S.A. 18A:17-3 to uphold the negotiated provision, which affords custodians a right to tenure after having worked for three years.

[Id. at 122-23.]

By statute, a non-tenured school employee whose contract is

not renewed has a very limited right to appeal the non-renewal:

A non-tenured officer or employee who is not recommended for renewal by the chief school administrator shall be deemed non-renewed. Prior to notifying the officer or employee of the non-renewal, the chief school administrator shall notify the board of the recommendation not to renew the officer's or employee's contract and the reasons for the recommendation. An officer or employee whose employment contract is not renewed shall have the right to a written statement of reasons for non-renewal pursuant to section 2 of P.L.1975, c.132 (C.18A:27-3.2) and to an informal appearance before the board. The purpose of the appearance shall be to permit the staff member to convince the members of the board to offer reemployment.

[N.J.S.A. 18A:27-4.1.]

In Camden Board of Education v. Alexander, 181 N.J. 187, 199 (2004), the Court addressed the arbitrability of a school board's decision not to renew the contracts of several non- tenured custodians. The Court's opinion suggested (although the parties there agreed) that section 4.1 allows a board to negotiate "greater protection" to fixed-term employees than the statute would normally allow, by "subjecting non-renewals to a just cause requirement, and submitting non-renewal grievances to binding arbitration." Id. at 190-91. Camden also acknowledged that PERC must decide whether a "specific subject is negotiable." Id. at 194. In Camden, the parties stipulated to negotiability and disputed whether the union contract made the dispute over the non-renewals arbitrable. The Court observed that section 4.1

creates its own dispute-resolution mechanism and standard of review governing non-renewal decisions pertaining to fixed-term staff; namely, the Board may non-renew a noncertificated employee for any reason that is not arbitrary or capricious. As long as the reason for non-renewal is not arbitrary or capricious, the non-renewal is both valid and unassailable. Absent a specific agreement to the contrary, N.J.S.A. 18A:27-4.1 governs the relationship between the parties

[Id. at 195 (citations omitted).]

The Court also stated that "the term 'layoff,' . . . connotes involuntary dismissal during the term of a contract, and is not applicable to the non-renewal of a particular employee's appointment at the end of a fixed term." Id. at 200. The Court held that, in that case, the CNA did not clearly contract away the board's managerial prerogative to non-renew a fixed-term employee without going to arbitration over its decision. In so holding the Court noted that "we have not endorsed a presumption in favor of arbitrability for the public sector." Camden, supra, 181 N.J. at 203. However, in 2006, the Legislature abrogated that portion of the Court's decision by enacting N.J.S.A. 34:13A-5.3, which created a presumption in favor of arbitration and broad construction of arbitration clauses in union contracts. See Pascack Valley, supra, 192 N.J. at 496 and n. 1; Bd. of Educ. of Bor. of Alpha v. Alpha Educ. Ass'n, 190 N.J. 34, 48 (2006).*fn2

A school district can agree to grant limited tenure rights to its janitorial contract employees. Wright, supra, 99 N.J. at 119-20. Therefore, we infer that it could agree to grant limited tenure rights to its contract employees in the form of an agreement that, if it reduces its workforce for purely economic reasons by non-renewing the contracts of its contract janitors, it will effectuate the non-renewals in reverse order of seniority. With that inference in mind, we turn to the substantive clause at issue in this case. The Reduction in Force clause of the contract (Article XII) provides:

In the event that the Board of Education determines that it is necessary to reduce the size of the custodial, grounds and maintenance staff, layoffs shall be in inverse order of seniority within job title. That is, the most recently hired employee in any job title shall be the first to be laid off.

What does this clause mean? More specifically, did the parties intend the word "layoff" in this clause to be defined as Camden defined it: that is, the termination of a tenured employee or of a contract employee whose contract had not expired? Or did they mean it to encompass any management decision to deprive employees of their employment on the basis of a management judgment that the staff needed to be reduced, as opposed to a decision that any individual employee was not doing a good job or was otherwise no longer needed? And, did they intend the term "reduction in force" to have its normally understood meaning, i.e., a formal process by which an employer declares a need to reduce the workforce for economic reasons and follows through on that plan, or did they intend to define the term more broadly?

In answering those questions, we must also consider Article V of the contract (Management Rights), in which the Board reserved to itself, "except as limited by the express terms of this Agreement, sole jurisdiction and authority over matters of policy." (emphasis added). The Board also specifically reserved the exclusive right "to hire, assign, promote, transfer, and retain employees." The use of the phrase "express terms" in Article V and in the Grievance clause (Article III) strongly indicates that the Board was not agreeing to waive its managerial rights by implication, but rather that the waiver of any managerial prerogative had to be done expressly, that is, specifically and unambiguously. We also note that Article IV (D) of the contract, addressing "employee rights," provides that "[t]he Board shall not discharge, suspend or discipline a permanent employee without just cause," but it does not address the non-renewal of a non-tenured employee's contract. See Cresskill Bd. of Educ. v. Cresskill Educ. Ass'n, 362 N.J. Super. 7, 13-14 (App. Div. 2003), certif. denied, 181 N.J. 546 (2004). We further consider the issue before us, as the parties have framed it. As the union would phrase it, the question is whether the Board honored the RIF clause or whether it sought to avoid honoring the clause by letting employees go one by one instead of declaring a RIF. As the Board frames it, the question is whether the clause applies at all to non-renewed employees, as opposed to employees who are subject to a "layoff" as that term is traditionally defined in the case law. We conclude that the union's claim is not arbitrable because it is not premised on an asserted violation of an "express term" of the contract - which is what the employer agreed to arbitrate. Rather it is premised on what the union claims is an implicit term of the contract - that the non- renewals of contract employees must be done by seniority, even if the employer has not declared a RIF, so long as the non- renewals result in a reduction in the total number of employees in the workforce. This interpretation flies in the face of the traditionally understood definition of "layoff," which appears in Camden, i.e., the termination of an employee mid-contract. Moreover, unlike Camden, and several other cases on which the union relies, here the Board did not negotiate an agreement to only non-renew employee contracts for just cause. Our review of additional cases, decided after the adoption of the 2006 amendment to N.J.S.A. 34:13A-5.3, and specifically addressing the employment rights of custodians, also leads us to affirm the Law Division's order. Mount Holly Twp. Bd. of Educ. v. Mount Holly Twp. Educ. Ass'n, 199 N.J. 319 (2009), concerned the procedural right to arbitration, where the individual non- tenured employee's contract did not grant him that right, but the CNA did. The Court held that the CNA prevailed. Notably, in Mount Holly, the CNA specifically excluded "non-renewal of a contract for a non-tenured employee from the definition of grievance" but did not exclude arbitration for "termination or discharge of an employee mid-contract." Id. at 323. The Court also rejected the employer's attempt to draw a semantic difference between being "terminated under his employment contract" and being "disciplined" under the CNA, pointing out that the employee, Mr. Gonzalez, was fired, which was covered by the CNA.

The Mount Holly Court distinguished Camden:

The Board mistakenly suggests that Camden requires a different outcome. Camden, supra, focused on a school board's decision not to renew custodians at the end of their annual contracts. Unlike Gonzalez, the custodians were not discharged mid-contract. Plus, the CNA in question was silent on whether non-renewal for disciplinary reasons was subject to arbitration. Camden therefore does not apply to the facts of this case: the discharge of an employee in the middle of a contract, when the relevant CNA declares that employees cannot be discharged without just cause.

[Id. at 332 (citations omitted).] In discussing a portion of the CNA dealing with employees whose contracts were non-renewed, the Court also distinguished the rights of those employees from the rights of an employee terminated mid-contract:

Article IX(E)(3) provides that "[a]ny employee who does not receive a new contract or whose services are terminated or suspended or who is disciplined or reprimanded or who is reduced in rank or compensation" is entitled to a statement of reasons and a hearing before the Board on request. The clause mirrors language contained in N.J.S.A. 18A:27-4.1(b), which is designed to permit employees whose contracts are not renewed an opportunity "to convince the members of the board to offer reemployment."

The additional language in the CNA neither expressly nor by implication supersedes an employee's right to pursue grievance arbitration under Article IX(B). For some employees, like those whose contracts are not renewed and cannot file a grievance under the CNA, Article IX(E)(3) is their only recourse.

[Id. at 333-34 (emphasis added).] Like the definition of "layoff" in Camden, this language strongly suggests that the RIF clause of the CNA here does not apply to the non-renewal of individual employee contracts. Language in Pascack Valley also suggests this conclusion:

In particular, we address whether, although the individual employment contracts may be terminated on notice and although such employees have no right to the renewal of their individual contracts, they nonetheless have a right to pursue grievance arbitration if their contracts are terminated in the middle of a contract term based on facts that would ordinarily call for imposition of discipline.

[Pascack Valley, supra, 192 N.J. at 491 (emphasis added).]

The Court similarly described these fixed-contract employees'

rights as limited to those granted by N.J.S.A. 18A:27-4.1b:

In addition, the Board entered into individual contracts of employment with a variety of employees, including custodians, who are not entitled to tenure rights. All of those individual contracts have terms of one year, and, as permitted by statute, see N.J.S.A. 18A:27-4.1b, the custodial employees have no right to renewal of the contracts. In accordance with the statute, employees whose contracts are not renewed are entitled to a written statement of the reasons for the decision not to renew. See ibid. These employees are then considered "non-renewed" rather than terminated or dismissed.

[Id. at 492-93.]

In Pascack, the Court acknowledged that most custodial employees

are contract employees:

The practice of offering separate, annual employment contracts to non-tenured school employees is long-standing. Indeed, the statute itself acknowledges this practice, and its reference to "non-renewal" of these contracts makes them permissible and, as a general rule, not grievable as a disciplinary action under CNAs. See N.J.S.A. 18A:27-4.1b.

[Id. at 497 (citations omitted).]

In Pascack, the Court condemned the employer's effort to circumvent the CNA, holding that the employer could not avoid the "termination for cause" clause of the CNA by relying on an inconsistent provision of the employee's individual contract that would allow a mid-term termination on fifteen days' notice. Id. at 499. However, providing a further gloss on Camden, the Court distinguished a non-renewal at the end of an employee's contract from a mid-contract termination.

In addressing the relationship between CNA-protected grievance rights and individual employment contracts, we have rejected the assertion that a decision not to renew an individual contract, based on grounds that would also support imposition of discipline, was grievable. See Camden Bd. of Educ. v. Alexander, 181 N.J. 187, 199 (2004). We there considered the specific language of the CNA, the language of the particular individual contracts, and the policies that support both collectively-negotiated rights and individual contract rights. See id. at 196-201. In that context, we declined to consider the employees' argument that the decision not to renew the contracts was a pretext for discipline because to do so would be to effectively elevate the rights of an employee whose contract was not renewed because of a disciplinary problem above the rights of an employee who, although blameless, was simply not renewed.

Even so, we do not intend to imply that plaintiff could not have waited until the end of the annual term and opted not to renew Dombrowski's contract. Rather, in light of the annual nature of the contract, in light of statutory permission for non-renewal, in light of our precedents concluding that non-renewal even for a disciplinary reason is excluded from the scope of arbitration, we echo our observation that we will not afford greater protections to offending employees like Dombrowski at the end of the term than we accord to entirely blameless employees whose contracts are not renewed. See Camden, supra, 181 N.J. at 201. Nor do we suggest that a contract termination on fifteen days' notice for reasons unrelated to discipline would not be both permissible and outside of the scope of the grievance clause. Under those circumstances, however, were the custodian dissatisfied with his termination, the issue, if any, would be one of contract interpretation for a court to decide, rather than one for the arbitrator to address.

[Id. at 497-500.]

Based on the contract itself and all of the applicable case law reviewed above, we find that the Law Division reached the correct result here. The Association essentially argues that Article XII of the contract implicitly grants to its members who are non-tenured fixed-contract employees, the same rights that are granted by statute only to tenured custodial employees, and that the term "layoff" should be construed to include failure to renew a contract, although Article XII does not explicitly say either of those things. We conclude that if the Association intended to negotiate tenure rights for its otherwise non- tenured contract-employee members, in the form of a "last in, first out" clause applicable outside a traditional "layoff" situation, it should have negotiated a provision specifically so providing. We reject the Association's attempt to imply such tenure rights, in the face of a grievance clause limiting arbitration to "express provisions" of the contract and Article V, in which the employer retained all of its management prerogatives unless waived in an "express provision" of the contract.

Finally, we note that the current CNA expires in June 2012, and the parties are free to negotiate different provisions in a future contract.*fn3 Affirmed.


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