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Port Authority of New York v. Port Authority of New York And New Jersey Police Benevolent Association, Inc.

Superior Court of New Jersey, Appellate Division

May 28, 2019


          Argued March 7, 2019

          On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-4541-17.

          Jason F. Orlando argued the cause for appellant (Murphy Orlando, LLC, and Law Office of D. John McAusland, attorneys; W. Michael Murphy, Jr., Jason F. Orland, John W. Bartlett and D. John McAusland, on the briefs).

          Sharon K. McGahee argued the cause for respondent (Michael Farbiarz, General Counsel, Port Authority of New York and New Jersey Law Department, attorney; Sharon K. McGahee, on the brief).

          Before Judges Simonelli, Whipple and Firko.

          WHIPPLE, J.A.D.

         Defendant The Port Authority Police Benevolent Association, Inc. (Association) appeals from the February 7, 2018 order of the trial court vacating an arbitration award in favor of its member. Although this matter began with an arbitration award entered pursuant to the collective bargaining agreement between the Association and plaintiff The Port Authority of New York and New Jersey (Port Authority), our focus is whether the Port Authority, as a bi-state public corporate instrumentality, is subject to New Jersey arbitration law. For the reasons that follow, we reverse the order of the trial court and reinstate the arbitration award.

         We discern the following facts from the record. The Association and Port Authority are parties to a collective bargaining agreement known as the Memorandum of Agreement (MOA), which provides for a multi-step grievance procedure concluding with binding arbitration. The MOA distinguishes between member benefits for sick and line-of-duty injury leave. In 2011, Officer Roy Biederman was working the night shift at John F. Kennedy International Airport when, during a scheduled break, he slipped and fell in the shower. Biederman sustained a back injury that kept him out of work for several weeks. The Port Authority classified Biederman's absence from work as sick leave rather than injury in the line of duty. He filed a grievance, pursuant to the MOA, and the matter was referred to an arbitrator. The arbitrator decided in Biederman's favor and, on July 6, 2017, the arbitrator emailed the award to the parties.

         On November 3, 2017, the Port Authority filed a complaint and order to show cause seeking to vacate the arbitrator's decision. The Port Authority cited N.J.S.A. 2A:23B-23, which provides the statutory basis upon which an arbitration award may be vacated, as a basis for the Superior Court to vacate the award. The Association answered by arguing, pursuant to N.J.S.A. 2A:24-7, the Port Authority's order to show cause was time barred because it was not filed within three months after the award was served. In reply, the Port Authority argued it was not bound by New Jersey arbitration law because bi-state entities, like the Port Authority, are not subject to unilateral state legislation.

         At oral argument before the trial judge, the Port Authority argued New Jersey statutory arbitration law did not apply in actions brought by the Port Authority and instead sought vacatur under the common law. The trial judge issued a written decision that addressed the merits of and reversed the arbitrator's award. At the conclusion of the opinion, the trial judge explained, "[t]he time bar in the New Jersey Arbitration Act does not apply to the arbitration award at issue." The trial court cited Hess v. Port Authority Trans-Hudson Corp., 513 U.S. 30, 42 (1994), for the proposition that "bi[-]state entities created by compact, however, are not subject to the unilateral control of any one of the States that compose the federal system." This appeal followed.

         When we review a motion to vacate an arbitration award, "we owe no special deference to the trial court's interpretation of the law and the legal consequences that flow from the established facts." Yarborough v. State Operated Sch. Dist. of Newark, 455 N.J.Super. 136, 139 (App. Div. 2018). Indeed, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

         The Port Authority "is not the agency of a single state but rather a public corporate instrumentality of New Jersey and New York." Sullivan v. Port Auth. of N.Y. & N.J., 449 N.J.Super. 276, 284 (App. Div. 2017) (quoting Bunk v. Port Auth. of N.Y. & N.J., 144 N.J. 176, 184 (1996)); see also hip Heightened Indep. & Progress, Inc. v. Port Auth. of N.Y. & N.J., 693 F.3d 345, 356-57 (3d Cir. 2012). "Neither state may unilaterally impose additional duties, powers, or responsibilities on the Port Authority." Sullivan, 449 N.J.Super. at 284. The Port Authority Compact specifically provides the Port Authority's powers may be altered "by the action of the legislature of either state concurred in by the legislature of the other." N.J.S.A. 32:1-8. New Jersey courts interpret "concurred in" to encompass a broader set of circumstances than the federal and New York courts.

         Our courts have said, "[t]he corollary of the proposition that neither state may individually impose its legislative will on the bi-state agency is that the agency may be made subject to complementary or parallel state legislation." Ballinger v. Del. River Port Auth., 172 N.J. 586, 594 (2002) (alteration in original) (quoting E. Paralyzed Veterans Ass'n, Inc. v. City of Camden, 111 N.J. 389, 400 (1988)); see also Int'l Union of Operating Eng'rs, Local 68 v. Del. River & Bay Auth., 147 N.J. 433, 445 (1997). "[O]ne compact state's statute can be applied to the bi-state agency if it is 'substantially similar' to an enactment of the other state." Santiago v. N.Y. & N.J. Port Auth., 429 N.J.Super. 150, 157 (App. Div. 2012) (quoting Ballinger, 172 N.J. at 594). "If the states do not have complimentary legislation, the court must determine whether the bi-state agency impliedly consented to unilateral state regulation." Sullivan, 449 N.J.Super. at 285. "In order to be deemed substantially similar, the two laws at issue must 'evidence some showing of agreement.' In other words, the New Jersey and [New York] legislatures must 'have adopted a substantially similar policy' that is apparent in their respective statutes." Ibid. (alteration in original) (quoting Ballinger, 172 N.J. at 600).

         The United States Court of Appeals for the Third Circuit and New York's state courts have required evidence of express legislative intent before unilateral state legislation can be found to modify the powers of a bi-state agency. See Int'l Union of Operating Eng'rs, Local 542 v. Del. River Joint Toll Bridge Comm'n, 311 F.3d 273, 276-79 (3d Cir. 2002) (reviewing cases from New Jersey, New York, and federal courts). A court's "role in interpreting [a] [c]ompact is, therefore, to effectuate the clear intent of both sovereign states, not to rewrite their agreement or order relief inconsistent with its express terms." Id. at 276. When a compact's charter states the powers and duties of the bi-state agency can only be amended when both states have "concurred in" the alteration, both state ...

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