PATERSON POLICE PBA LOCAL 1 and PATERSON POLICE PBA LOCAL 1 SUPERIOR OFFICERS ASSOCATION, Plaintiffs-Respondents,
CITY OF PATERSON, a municipal corporation of the State of New Jersey, Defendant-Appellant.
Argued April 29, 2013
On appeal from Superior Court of New Jersey, Chancery Division, General Equity Part, Passaic County, Docket No. C-33-11.
Brian W. Kronick argued the cause for appellant (Genova, Burns, Giantomasi & Webster, attorneys; Mr. Kronick, of counsel; David K. Broderick and Brett M. Pugach, on the briefs).
Mark C. Rushfield argued the cause for respondents (Shaw, Perelson, May & Lambert, LLP, attorneys; Mr. Rushfield, of counsel and on the brief).
Robert Fagella argued the cause for amicus curiae New Jersey State Police Benevolent Association (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, attorneys; Paul L. Kleinbaum, of counsel and on the brief; Marissa A. McAleer, on the brief).
Eileen Schlindwein Den Bleyker, Senior Deputy Attorney General, argued the cause for amicus curiae Division of Local Government Services and New Jersey Department of the Treasury, Division of Pensions and Benefits (Jeffrey S. Chiesa, Attorney General, attorney; Robert Lougy, Assistant Attorney General, of counsel; Ms. Den Bleyker, on the brief).
Matthew Weng, Staff Counsel, argued the cause for amicus curiae New Jersey State League of Municipalities (William J. Kearns, Jr., General Counsel, attorney; Mr. Weng, on the brief).
Craig S. Gumpel argued the cause for amicus curiae New Jersey State Firefighters' Mutual Benevolent Association (Fox & Fox, LLP, attorneys; Mr. Gumpel, on the brief).
Before Judges Graves, Espinosa and Guadagno.
After collective negotiation agreements (CNAs) between defendant City of Paterson and plaintiffs, Paterson Police PBA Local 1 and Paterson Police PBA Local 1 Superior Officers Association,  expired, the parties engaged in compulsory interest arbitration. The resulting award required, in part, that police officers "shall make contributions toward health insurance coverage in the amount of 1.5% of base salary" pursuant to L. 2010, c. 2. Defendant interpreted base salary as an officer's base pensionable salary and made deductions accordingly. Plaintiffs initiated this action, contending that "base salary" meant base contractual salary and excluded additional items of compensation such as longevity, educational incentives, and night and detective differentials. The trial judge agreed with plaintiffs and entered judgment in their favor.
Although base salary was not defined in either the statute or the award, it was defined in a subsequent statute that was applicable to the award here. See N.J.S.A. 34:13A-16.7. In the absence of any statement to the contrary, we assume the arbitrator used the term "base salary" as directed by the Legislature. Therefore, and for the reasons that follow, we agree with defendant's interpretation of the interest arbitration award and reverse.
On February 8, 2010, the Legislature introduced Senate Bill Numbers 2, 3, and 4, which were passed and signed into law on March 22, 2010. The three bills implemented some of the recommendations of the Joint Legislative Committee on Public Employee Benefits Reform, Final Report (Dec. 1, 2006) (Final Report),  which was created to identify "proposals that will terminate abuses of the pension systems and control the cost of providing public employee retirement, health care and other benefits." Id. at 1; see also Commc'ns Workers of Am. v. State of N.J., Dep't of Treasury, 421 N.J.Super. 75, 83 (Law Div. 2011). The law at issue here, which provided changes to the health benefits program, was introduced as S. 3, enacted as L. 2010, c. 2, and codified as amended at N.J.S.A. 40A:10-21. The two other bills provided changes to public pension benefits (S. 2, enacted as L. 2010, c. 1), and employee benefits (S. 4, enacted as L. 2010, c. 3).
In the Final Report, the Committee noted that its investigation of "health benefits issues revealed a system plagued by the skyrocketing costs of health care that have dramatically increased the cost of health benefits for both current and retired public employees." Final Report, supra, at 57. The Committee recommended forty-one reforms to public employee pensions, health care benefits, and other employee benefits, which it found were long "overdue." Id. at 2-5. With regard to health care costs, the Committee recommended that the Legislature require all active public employees and future retirees to pay some portion of the cost of their health insurance premiums. Id. at 113-18. The resulting legislation was "designed to improve the fiscal strength of State and local governments, ...