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In re Burlington County Prosecutor's Office

Superior Court of New Jersey, Appellate Division

June 10, 2013

IN THE MATTER OF BURLINGTON COUNTY PROSECUTOR'S OFFICE.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 20, 2013

On appeal from the Public Employment Relations Commission, Docket No. IA-2012-016.

Carmen Saginario, Jr., argued the cause for appellant Burlington County Prosecutor's Office (Capehart & Scatchard, P.A., attorneys; Mr. Saginario, of counsel and on the brief; Laurel B. Peltzman and Katheryn Eisenmann, on the brief).

David J. DeFillippo argued the cause for respondents Burlington County Prosecutor's Detectives (Klatsky, Sciarrabone & DeFillippo, attorneys; Mr. DeFillippo, of counsel and on the brief).

Martin R. Pachman, General Counsel, attorney for respondent New Jersey Public Employment Relations Commission (Don Horowitz, Deputy General Counsel, on the statement in lieu of brief).

Before Judges Parrillo and Fasciale.

PER CURIAM

The Burlington County Prosecutor's Office and the County of Burlington (collectively Burlington County) appeal from a final agency decision by the New Jersey Public Employment Relations Commission (PERC) affirming an interest arbitration award permitting a salary increase. We remand for further proceedings.

Burlington County Prosecutor's Detectives PBA Local #320 (the Union) is the exclusive bargaining agent for all detectives and investigators employed by Burlington County. On December 31, 2010, the parties' collective bargaining agreement (CBA) expired. In February 2012, Burlington County filed a Petition to Initiate Compulsory Interest Arbitration. PERC appointed an Arbitrator, who conducted interest arbitration hearings on April 2, 2012, and April 5, 2012. On April 21, 2012, the arbitrator issued his written decision and awarded a salary increase for certain employees amounting to 0.5% on January 1, 2011, 1.25% on January 1, 2012, and 2% on January 1, 2013.[1]

Burlington County appealed to PERC and contended that the award was subject to a 2% salary cap enacted pursuant to N.J.S.A. 34:13A-16.7, the arbitrator failed to properly analyze nine factors enumerated in N.J.S.A. 34:13A-16g, and that the salary increases were otherwise unreasonable. On May 30, 2012, PERC issued its decision and affirmed the award regarding salary increases stating that

[t]he arbitrator discussed at length the economic condition of [Burlington] County, and the impact of the tax levy cap which is incorporated by reference into N.J.S.A. 34:13A-16g. . . . Here, he found that the award which he rendered would not cause the County to exceed its levy cap, and that the County had the ability to pay the salary award. . . .
We find that the arbitrator adequately evaluated all the statutory criteria; explained why he gave more weight to some factors and less to others; and issued a comprehensive award that reasonably determined the issues and is supported by substantial credible evidence as to the salary award. . . .

This appeal followed.

On appeal, Burlington County argues that the arbitrator failed to fully analyze the factors enumerated in N.J.S.A. 34:13A-16g, PERC's decision was arbitrary, and that the CBA expired on January 1, 2011, thereby implicating the two percent salary cap enacted pursuant to N.J.S.A. 34:13A-16.7. Based on our review of the record and the controlling legal principles, we conclude that defendant's two-percent argument is without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). Instead, we focus on whether the subsection 16g factors were sufficiently considered.[2]

"Our scope of review of PERC decisions reviewing arbitration is sensitive, circumspect[, ] and circumscribed. PERC's decision will stand unless clearly arbitrary or capricious." Twp. of Teaneck v. Teaneck Firemen's Mut. Benevolent Ass'n Local No. 42, 353 N.J.Super. 289, 300 (App. Div. 2002) (citation omitted), aff'd o.b., 177 N.J. 560 (2003). "Absent violation of standards of conduct, PERC's appellate role is to determine whether the arbitrator considered the criteria in N.J.S.A. 34:13A-16(g) . . . and rendered a reasonable determination of the issue or issues at impasse that was supported by substantial evidence in the record." Id. at 306. "Although an agency's interpretation of the statute it is charged with administering . . . is entitled to great weight, we will not yield to PERC if its interpretation is plainly unreasonable, contrary to the language of the Act, or subversive of the Legislature's intent." In re Camden Cnty. Prosecutor, 394 N.J.Super. 15, 23 (App. Div. 2007) (citations omitted) (internal quotation marks omitted).

In general, when parties are unable through labor negotiations to reach a new agreement, they are permitted to seek compulsory interest arbitration, pursuant to N.J.S.A. 34:13A-16b. Such arbitration "involves the submission of a dispute concerning the terms of a new contract to an arbitrator, who selects those terms and thus in effect writes the parties' collective agreement." N.J. State Policemen's Benevolent Ass'n v. Irvington, 80 N.J. 271, 284 (1979). The arbitration is subject to a statutorily mandated procedure under N.J.S.A. 34:13A-16g, which states:

g. The arbitrator shall decide the dispute based on a reasonable determination of the issues, giving due weight to those factors listed below that are judged relevant for the resolution of the specific dispute. In the award, the arbitrator or panel of arbitrators shall indicate which of the factors are deemed relevant, satisfactorily explain why the others are not relevant, and provide an analysis of the evidence on each relevant factor; provided, however, that in every interest arbitration proceeding, the parties shall introduce evidence regarding the factor set forth in paragraph (6) of this subsection and the arbitrator shall analyze and consider the factors set forth in paragraph (6) of this subsection in any award:
(1) The interests and welfare of the public. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by P.L. 1976, c. 68 ([N.J.S.A.] 40A:4-45.1 et seq.).
(2) Comparison of the wages, salaries, hours, and conditions of employment of the employees involved in the arbitration proceedings with the wages, hours, and conditions of employment of other employees performing the same or similar services and with other employees generally:
(a)In private employment in general; provided, however, each party shall have the right to submit additional evidence for the arbitrator's consideration.
(b)In public employment in general; provided, however, each party shall have the right to submit additional evidence for the arbitrator's consideration.
(c)In public employment in the same or similar comparable jurisdictions, as determined in accordance with section 5 of P.L. 1995, c. 425 ([N.J.S.A.] 34:13A-16.2); provided, however, that each party shall have the right to submit additional evidence concerning the comparability of jurisdictions for the arbitrator's consideration.
(3) The overall compensation presently received by the employees, inclusive of direct wages, salary, vacations, holidays, excused leaves, insurance and pensions, medical and hospitalization benefits, and all other economic benefits received.
(4)Stipulations of the parties.
(5)The lawful authority of the employer. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by P.L. 1976, c. 68 ([N.J.S.A.] 40A:4-45.1 et seq.).
(6)The financial impact on the governing unit, its residents, the limitations imposed upon the local unit's property tax levy pursuant to section 10 of P.L. 2007, c. 62 ([N.J.S.A.] 40A:4-45.45), and taxpayers. When considering this factor in a dispute in which the public employer is a county or a municipality, the arbitrator or panel of arbitrators shall take into account, to the extent that evidence is introduced, how the award will affect the municipal or county purposes element, as the case may be, of the local property tax; a comparison of the percentage of the municipal purposes element or, in the case of a county, the county purposes element, required to fund the employees' contract in the preceding local budget year with that required under the award for the current local budget year; the impact of the award for each income sector of the property taxpayers of the local unit; the impact of the award on the ability of the governing body to (a) maintain existing local programs and services, (b) expand existing local programs and services for which public moneys have been designated by the governing body in a proposed local budget, or (c) initiate any new programs and services for which public moneys have been designated by the governing body in a proposed local budget.
(7)The cost of living.
(8) The continuity and stability of employment including seniority rights and such other factors not confined to the foregoing which are ordinarily or traditionally considered in the determination of wages, hours, and conditions of employment through collective negotiations and collective bargaining between the parties in the public service and in private employment.
(9) Statutory restrictions imposed on the employer. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by section 10 of P.L. 2007, c. 62 ([N.J.S.A.] 40A:4-45.45).
[(Emphasis added).]

An arbitrator must give "due weight" to the nine statutory factors of subsection 16g. Irvington, supra, 80 N.J. at 287. "The arbitrator need not rely on all factors, but must identify and weigh the relevant factors and explain why the remaining factors are irrelevant." In re City of Camden, 429 N.J.Super. 309, 326 (App. Div. 2013). The resulting explanation satisfies the requirement that the decision be based on the relevant statutory factors and that the arbitrator gave due weight to each factor. Ibid.; see also N.J.S.A. 34:13A-16f(5) (indicating that "[e]ach arbitrator's decision shall be accompanied by a written report explaining how each of the statutory criteria played into the arbitrator's determination of the final award"). Moreover, N.J.A.C. 19:16-5.9b provides that

[e]ach arbitrator's decision shall be accompanied by a written report explaining how each of the statutory criteria played into the arbitrator's determination of the final award. The opinion and award shall be signed and based on a reasonable determination of the issues, giving due weight to those factors listed in N.J.S.A. 34:13A-16g which are judged relevant for the resolution of the specific dispute. In the award, the arbitrator shall indicate which of the factors are deemed relevant, satisfactorily explain why the others are not relevant, and provide an analysis of the evidence on each relevant factor. The opinion and award shall set forth the reasons for the result reached.

[(Emphasis added).]

"No one factor is dispositive, " but the factors "reflect the significance of fiscal considerations." In re City of Camden, supra, 429 N.J.Super. at 326-27. Three of the statutory factors, the "interests and welfare of the public"; the "lawful authority of the employer"; and the "financial impact on the governing unit, its residents, . . . and taxpayers, were so phrased as to insure that budgetary constraints were 'giv[en] due weight' prior to the rendition of an award." Irvington, supra, 80 N.J. at 291 (internal quotation marks omitted).

The New Jersey Supreme Court has addressed the need to comply with the statutory requirements. In Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 86 (1994), the Court determined that the arbitrator's award did not comply with the requirements of subsection 16g. The award failed to identify the relevant factors, analyze the evidence pertaining to those factors, and explain why other factors are irrelevant. Id. at 85-86. The Court stated that the arbitrator's award "unduly emphasized the comparison with police salaries in other communities and inappropriately relied on the Borough's perceived 'ability to pay.'" Id. at 86. The Court specifically criticized the arbitrator's analysis of two factors, N.J.S.A. 34:13A-16g(2) and (6). Id. at 85-86.

Subsection 16g(2) requires more than a comparison of public employer salaries in other communities. The Court indicated that it "invites comparison with other jobs in both the public and private sectors." Id. at 85. Moreover, the Court stated that "[t]he arbitrator should also consider the relationship between any such increases . . . in comparable areas of private employment, " and after considering such information, "an arbitrator may still conclude that police and fire-fighters' salaries in similar municipalities provide the most relevant" comparison. Ibid. An arbitrator should set forth the reasons for reaching that conclusion. Ibid. The Court found the arbitrator failed to explain his reasoning for accepting the PBA's submission of the salary increases from other municipalities and for rejecting other bases for comparison. Ibid.

Here, the arbitrator did not address salary increases in comparable areas of private employment, as required by subsection 16g(2). Although he discussed the salaries and salary increases of similar detectives and investigators in other counties, a consideration that is certainly relevant, subsection 16g(2) also requires an analysis of private sector jobs. This analysis was not done.

Moreover, subsection 16g(6) requires an analysis of the financial impact on the governing unit, its residents, and its taxpayers. "The terms of that factor do not equate with the municipality's ability to pay." Hillsdale, 137 N.J. at 85. "[I]t is not enough to simply assert that the public entity involved should merely raise taxes to cover the costs of a public interest arbitration award." Id. at 86 (internal quotation marks omitted). "The statutory direction to consider the financial impact on the municipality demands more than answering the question whether the municipality can raise the money to pay the salary increase." Ibid.

Here, the arbitrator "inappropriately relied" on the County's ability to pay instead of focusing on the financial impact on the County as required by subsection 16g(6). See id. at 86. He made no mention of the financial impact of the salary increases, and instead focused on current tax revenues and projected revenues from tax increases. This analysis is insufficient under subsection 16g(6). The arbitrator must demonstrate more than simply asserting that raising taxes would cover the increased costs of an arbitration award. See Hillsdale, supra, 137 N.J. at 86 (stating that "[i]t is not enough to simply assert that the public entity involved should merely raise taxes to cover the costs of a public interest arbitration award" (internal quotation marks omitted)). Moreover, the arbitrator's decision failed to give sufficient consideration to the factors identified in N.J.S.A. 34:13A-16g(6), such as

the impact of the award for each income sector of the property taxpayers of the local unit; the impact of the award on the ability of the governing body to (a) maintain existing local programs and services, (b) expand existing local programs and services for which public moneys have been designated by the governing body in a proposed local budget, or (c) initiate any new programs and services for which public moneys have been designated by the governing body in a proposed local budget.

Although he acknowledged that he had to address all nine factors, the arbitrator did not indicate which factors he deemed relevant nor did he explain why others were irrelevant as the statute requires. It is therefore unclear from the arbitrator's opinion which factors he relied on in making his decision. "Without such an explanation, the opinion and award may not be a 'reasonable determination of the issues.'" Hillsdale, supra, 137 N.J. at 84 (quoting N.J.A.C. 19:16-5.9).

We therefore remand to develop the record regarding the arbitrator's subsection 16g analysis consistent with this opinion. We leave this task to the discretion of PERC. We do not retain jurisdiction.


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