November 15, 2013
IN THE MATTER OF COUNTY OF MORRIS, MORRIS COUNTY SHERIFF'S OFFICE, and PBA LOCAL 298.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: October 30, 2013
On appeal from the Public Employment Relations Commission, Docket No. IA-2012-035.
Stephen E. Trimboli argued the cause for appellant County of Morris/Morris County Sheriff's Office (Trimboli & Prusinowski, LLC, attorneys; Mr. Trimboli, of counsel and on the briefs).
Steven Backfisch argued the cause for respondent PBA Local 298 (Lindabury, McCormick, Estabrook & Cooper, attorneys; Donald B. Ross, Jr., on the brief).
Martin R. Pachman, General Counsel, argued the cause for respondent Public Employment Relations Commission (Mary E. Hennessy-Shotter, Deputy General Counsel, on the statement in lieu of brief).
Before Judges Fuentes, Fasciale and Haas.
The Morris County Sheriff's Office and the County of Morris (collectively Morris County) appeal from a final agency decision by the New Jersey Public Employment Relations Commission (PERC) affirming an interest arbitration award permitting automatic step increments for the 2011 calendar year. We remand for further proceedings.
PBA Local 298 (the Union) is the exclusive bargaining agent for all sheriff's officers employed by Morris County. On December 31, 2010, the parties' collective bargaining agreement (CBA) expired. On April 17, 2012, Morris County filed a Petition to Initiate Compulsory Interest Arbitration. PERC appointed an arbitrator, who conducted an interest arbitration hearing on May 17, 2012 and June 4, 2012. On June 18, 2012, the arbitrator issued a written decision establishing a three-year contract with a term of January 1, 2011 through December 31, 2013. The arbitrator awarded the Union step increments for 2011, with no other salary increases in that year. He further awarded the Union two percent salary increases in each of the final two years of the contract, but with no step movement in those years.
Morris County and the Union both appealed to PERC. Morris County challenged the arbitrator's decision to award the step increases in 2011. The Union sought additional salary increases. On July 19, 2012, PERC issued a decision upholding both appeals and remanding the matter to the arbitrator. PERC found that the arbitrator failed to make adequate findings regarding the statutory factors set forth in N.J.S.A. 34:13A-16g, which govern an arbitrator's determination of an interest arbitration. Thus, PERC concluded that "[t]his award must be remanded to the arbitrator to provide an independent analysis of each of the statutory factors and to explain how the evidence and each relevant factor was considered in arriving at his award."
On August 28, 2012,  the arbitrator issued a new decision reaffirming the terms of his prior award, including the award of step increments for 2011. Morris County appealed to PERC and argued that the arbitrator had again failed to consider the factors set forth in N.J.S.A. 34:13A-16g. On October 11, 2012, PERC issued its decision and affirmed the arbitrator's award. PERC stated:
Our review of the record confirms that the arbitrator evaluated all of 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 in the record.
This appeal followed.
On appeal, Morris County argues that PERC's affirmance of the award was arbitrary and capricious. It contends that PERC should have vacated the award because the arbitrator failed to fully analyze the factors enumerated in N.J.S.A. 34:13A-16g. We agree.
"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 and 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).
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-16(g) 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.
"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 [of an award] 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 (alteration in original) (citations and internal quotation marks omitted).
When an arbitrator's award fails to adequately address the criteria set forth in N.J.S.A. 34:13A-16g, the award should be vacated and the matter remanded to ensure compliance with the statutory requirement. See Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 82 (1994) (arbitrator's award failed to identify the relevant statutory factors, analyze the evidence pertaining to those factors, and explain why other factors were irrelevant); In re City of Camden, supra, 429 N.J.Super. at 335 (arbitrator did not provide an adequate explanation of the statutory criteria or how they factored into the determination of the award).
Here, we are constrained to conclude that the arbitrator failed to meet the requirements of N.J.S.A. 34:13A-16g. PERC specifically instructed the arbitrator on the remand "to provide an independent analysis of each of the statutory factors and to explain how the evidence and each relevant factor was considered in arriving at his award." That did not occur. Instead, the arbitrator merely restated his initial conclusion that the Union should receive step increments in 2011 and explained that this decision was based solely upon his belief that the payments were required by the terms of the expired contract. The arbitrator stated:
In my award I included the payment of increments in the first year of the contract. This was done because of the particular provision of the expired agreement which I defended as being enforceable.
The key area of dispute raised by the employer had to do with my award of increment pay in 2011. My determination of that issue was simply an interpretation of the commitment incorporated in the expiring agreement of 2010. Although this was disputed at hearing I found the claim of the Union as to the payment of increments to be convincing and awarded same. Clearly the parties had addressed that issue and formulated such payments as part of their prior agreement. The agreed upon option to revisit that commitment was never timely exercised by the County and no evidence to the contrary was offered. I did not find that the costs involved provided a sufficiently compelling rationale to warrant a change in what was determined to be a contractual obligation.
There are two problems with the arbitrator's determination. First, this was an interest arbitration, not a grievance arbitration. An interest 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.'" In re City of Camden, supra, 429 N.J.Super. at 324 (quoting Irvington, supra, 80 N.J. at 284. On the other hand, in a grievance arbitration, "'differences concerning the interpretation, application, or violation of an already existing contract' are submitted to an arbitrator." Ibid.
In an interest arbitration, consideration of the terms of an expired contract is not one of the nine statutory factors set forth in N.J.S.A. 34:13A-16g. Here, the arbitrator's task was to establish a new contract for the parties, not to interpret the terms of their prior, expired contract. Thus, the arbitrator clearly erred by basing his decision to award step increments in 2011 entirely upon his interpretation of the expired contract.
Just as importantly, by limiting his rationale for awarding step increments in 2011 to a statement of his belief that the expired contract required such payments, the arbitrator ignored his responsibility to thoroughly analyze the statutory factors. For example, N.J.S.A. 34:13A-16g(6) requires an analysis of the financial impact of the award on the governing unit, its residents, and its taxpayers. However, because the arbitrator decided that the increments were a "contractual dedication" required by the expired contract, he stated that this factor "is not essentially a matter requiring my further attention." Thus, the arbitrator made no findings concerning
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.
While the arbitrator mentioned the other factors in his decision, he did so only in the context of explaining why he rejected the arguments raised by the Union for additional salary increases. For example, in discussing the public interest under N.J.S.A. 34:13A-16g(1), the arbitrator noted that the Union had done much better than other Morris County employees, who had received no salary increases or step increments during their negotiations. The arbitrator found that "those in non-police positions harbor the feeling that they are being treated as second citizens when comparison is made with the police employed by the County." Similarly, in discussing the "continuity and stability of employment" factor under N.J.S.A. 34:13A-16g(8), the arbitrator stated "[t]here was no indication of these employees being negatively impacted by this award" and that "while [the] salary increases granted herein may not have been as generous as were requested[, ] there is nothing in the record to suggest a problem of turnover." While these brief remarks might explain why no additional compensation was awarded to the Union, they do nothing to justify the arbitrator's decision to award the step increments.
In sum, the arbitrator did not explain why his analysis of any of the statutory factors justified the award of step increments for 2011. "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 analysis of the factors established in N.J.S.A. 34:13A-16g consistent with this opinion. We leave this task to the discretion of PERC. We do not retain jurisdiction.