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The Ocean County Utilities Authority v. United Steel


June 25, 2012


On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-213-10.

Per curiam.


Argued March 13, 2012

Before Judges Carchman and Maven.

Plaintiff Ocean County Utilities Authority appeals from a final judgment of the Chancery Division granting summary judgment to defendant United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and Service Workers International Union AFL-CIO Local 1-149, dismissing plaintiff's complaint seeking to vacate an arbitrator's award that a grievance was procedurally arbitrable.

The genesis of this public-sector dispute arose as a result of plaintiff's termination of an employee and union member. Defendant filed a grievance, challenging the discharge pursuant to the collective bargaining agreement (CBA). Plaintiff challenged the arbitrability of the grievance on procedural grounds. Thereafter, the arbitration was bifurcated, and a hearing was conducted on the narrow issue of procedural arbitrability. Following an adverse award, plaintiff filed an action in the Chancery Division to vacate that determination. Judge Buczynski concluded that the arbitrator's award was reasonably debatable, granted defendant's motion for summary judgment, dismissed the complaint and confirmed the award. We affirm.

We briefly set forth the relevant facts. Defendant Paul Gudzak, an employee of plaintiff and member of defendant union, was terminated by plaintiff for allegedly creating a hostile work environment while employed by plaintiff. Gudzak filed a timely grievance pursuant to the CBA. Under the terms of the CBA, because a termination was involved, the matter proceeded to Step Two of the contractual grievance procedure. Following that step and an adverse decision, defendant's representative, on December 2, 2009, requested additional information from Gudzak's personnel file for use in anticipation of the next step. Under the terms of the CBA, to proceed to Step Three arbitration, notice was to have been sent to plaintiff within seven working days. The notice was not sent until a letter of December 15, 2009, four days late, and was forwarded to both the State Board of Mediation as well as to plaintiff. While the notice to plaintiff was four days late, the notice to the State Board of Mediation was timely, as the contract allows for an additional seven days for such notice. Apparently, the letter to plaintiff was not received so it was resent on January 4, 2010 and subsequently received by plaintiff. Although disputed, defendant indicated that it not only sent the demand for arbitration*fn1 to the State Board of Mediation, but also sent a copy to plaintiff as well. The matter then proceeded to arbitration, with plaintiff challenging the timeliness of the demand.

In his award, the arbitrator concluded:

As a general matter, arbitrators will strictly construe contract provisions setting forth time limits for processing grievances through the various procedure steps and to arbitration and will dismiss grievances when there has been a failure to observe such limits. See, Fairweather's Practice and Procedure in Labor Arbitration, 3d Ed. (BNA Books, 1991) 88-92. Editor Ray Schoonhoven adds a caveat:

As with the initial filing of a grievance, however, arbitrators have demonstrated a reluctance to bar a grievance for untimely processing through the grievance procedure and to arbitration when other surrounding circumstances are such that requiring strict compliance with the time limits would be unreasonable. Ibid. at 91.

This is also the standard employed in New Jersey by arbitrators, New Jersey [Public Employment Relations Commissions (PERC)] and the courts. See, for example, Klumb v. Manalapan-Englishtown Regional Board of Educ., 199 N.J. 14 (2009) where the court endorsed the application of equitable tolling to excuse the late filing of a grievance ("Although parties are bound only to the extent of their agreements and have a right to stand on the precise terms of those agreements, public policy favors arbitration and contracts are to be read liberally to find arbitrability." Casino Distributors, Inc. v. Teamsters Local 331, 267 N.J. Super. 424, 428-29 (Ch. Div. 1993)).

Thus, the question is whether it would be inequitable to bar this grievance from arbitration because the Union failed to notify the Director of Human Resources of its intent to invoke arbitration within seven working days of the Step 2 decision date and thereafter failed to provide a copy of its demand for arbitration submitted to the State Board of Mediation. The contract states that if the Union is not satisfied with the Step 2 decision, then "within seven (7) working days after the response date set forth in Step Two, the Union may notify the Director, Human Resources in writing of the Union's intention to submit the grievance for binding arbitration to the New Jersey State Board of Mediation." It continues, "Within seven (7) working days after providing notice to the Director, Human Resources of the Union's intention to go to binding arbitration, the Union may invoke binding arbitration by submitting a written request theretofore to the New Jersey State Board of Mediation with a copy of such request to the Director, Human Resources."

Although the Authority presented evidence of grievances where the Union failed to follow the contractual grievance procedure and the matters were dropped, the only evidence that the parties strictly enforce the requirement that the Union provide notice to the Director, Human Resources, is a statement from Assistant Director Skrocki that the followed the contractual requirements in the other cases that proceeded to arbitration [sic]. Union President Goley testified that sending a demand directly to the State Board without prior notice to the Authority is "how we do it"; that he only informed the Chief Shop Steward that the Union planned to seek arbitration. In the absence of definitive evidence that the parties have always insisted that the Union first notify the Authority of its intention to seek arbitration, I find that it would be unreasonable to bar this grievance due to the Union's failure to do so.

This leads to the question whether the Union's attempted invocation of arbitration on December 15 met the requirements of the contract. I find that it does. The December 15 demand for arbitration was timely under the terms of the contract. The Step 2 decision was dated December 2; the deadline for notice to the Director, Human Resources, was by December 11 and the Union had seven workdays thereafter to submit its request for arbitration to the State Board, i.e., December 22. The Union's demand was sent to the State Board on December 15 and received on December 22 (Auth. Exhs. G and M). The fact that the Authority's copy of that demand was misdelivered was explained at the arbitration hearing.

Clearly there were miscommunications during the processing of this grievance and the Union should have done a better job of keeping the Authority informed of its intentions, but based on all of the evidence presented, I find that it would be unreasonable to bar this grievance from arbitration due to the failure of the Union to inform the Authority of its intent to invoke arbitration prior to sending notice to the State Board or due to its missending of the Authority's copy of the demand sent to the State Board. I find that the matter is arbitrable.

In the proceeding in the Chancery Division, Judge Buczynski agreed and then added:

And in particular, the reason why the [c]court finds that the arbitrator could make that reasonable interpretation is when one looks back at language that was specifically negotiated and chosen in Step 1 is that, for example, that initial request . . . to make the, to give rise to the grievance, and if you fail to do that within the seven working days . . . it would be deemed to constitute an abandonment of the grievance. And that kind of language does not yet find itself into other parts of the agreement.

I tend to, I understand full well what the [p]laintiff's position is, but there is enough of an ambiguity or say vagueness, if you will, in that end of the agreement that the arbitrator had it within his discretion the ability to determine as a matter of law the fact that there was a failure to comply, and I think there absolutely was a failure to comply, but that should be deemed as a matter of law based on case law, the strong public policy of the State of New Jersey, to stand on that procedural issue and then preclude the grievant from being able to proceed with the arbitration.

I do also note for the record that I was not the least bit persuaded by what . . . may or may not have occurred during an Unemployment hearing. That has no bearing on what the [c]court would even determine. I don't really, it's not binding, it's not evidential and I really didn't consider it, but I did look at the totality of the circumstances. I looked at giving all reasonable inferences in favor of the [p]laintiff, looking at the way the agreement was written, and I believe the arbitrator had within his right the authority to make that determination. Whether I actually would have made that determination myself one way or the other is not really the issue. The issue is does that fall within the authority granted to him by the case law and it does, and I don't believe he so imperfectly carried out his obligation that it fell outside the . . . artful language of the arbitration agreement.

On appeal, plaintiff asserts that the arbitrator's award was not reasonably debatable and improperly applied equitable principles.

We have carefully considered plaintiff's arguments and conclude that they are without merit. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons set forth in Judge Buczynski's thorough and thoughtful oral opinion of June 13, 2011. In so doing, we acknowledge the careful analysis rendered by the arbitrator in considering and ultimately rejecting plaintiff's procedural challenge to the arbitration. We also take particular note of the admonition of the Supreme Court in New Jersey Turnpike Authority v. Local 196, I.F.P.T.E., 190 N.J. 283, 291 (2007), strongly restating the bedrock principle that New Jersey law encourages the use of arbitration to resolve labor-management disputes. While we do not suggest that plaintiff improperly attempted to prevent a resolution of the merits of Gudzak's termination by invoking procedural arguments, Judge Buczynski's finding that plaintiff suffered no prejudice by the confluence of the procedural difficulties that ensued in this matter is an important consideration in ensuring that the substantive arbitration can proceed to final resolution. Affirmed.

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