NEWARK PUBLIC SCHOOL DISTRICT v. CITY ASSOCIATION OF SUPERVISORS AND ADMINISTRATORS NEW JERSEY EDUCATION ASSOCIATION

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Superior Court of New Jersey, Appellate Division.

NEWARK PUBLIC SCHOOL DISTRICT, Plaintiff–Appellant, v. CITY ASSOCIATION OF SUPERVISORS AND ADMINISTRATORS and NEW JERSEY EDUCATION ASSOCIATION, Defendants–Respondents.

DOCKET NO. A–1087–12T2

Decided: March 14, 2014

Before Judges Messano, Sabatino and Rothstadt. Scarinci & Hollenbeck, L.L.C., attorneys for appellant (Ramon E. Rivera, of counsel and on the brief;  Kara A. Kaczynski and Christina M. Michelson, on the briefs). Lindabury, McCormick, Estabrook & Cooper, P.C., attorneys for respondents (Dennis McKeever, of counsel and on the brief;  Scott Zucker and Blake C. Width, on the brief). Zazzali, Fagella, Nowak, Kleinbaum & Friedman, P.C., attorneys for amicus curiae New Jersey Education Association (NJEA) (Kathleen Naprstek Cerisano, on the brief).

Plaintiff Newark Public School District (the District) and defendant City Association of Supervisors and Administrators (CASA) entered into a collective negotiations agreement (the Agreement), effective July 1, 2006.1  It is undisputed that CASA is the “professional association and labor union that represents” approximately 333 “supervisory and administrative personnel in the District.”   By its terms, the Agreement was “binding and effective as of the first day of July 2006 and ․ continue[d] in full force and effect until and through the thirtieth day of June 2009.”

The Agreement included a grievance resolution procedure, intended to “secure solutions at the lowest possible step to problems that affect[ed] [CASA's] members.”   A “grievance” was defined as “any dispute or controversy ․ concerning the interpretation, application, or enforcement of the provisions of [the Agreement ] ․ or the rules, regulations, or orders of the District ․, or any other dispute concerning the terms of employment or allegation of bias or vindictive action against the personnel.”  (Emphasis added).   The procedure contemplated three steps, progressing from step one, informal attempts at resolution, to step two, the filing of a written grievance with the Superintendent, who was required to render a decision after meeting with CASA representatives.   If still unresolved, the third step permitted the “grievant or CASA” to submit the grievance “to final and binding arbitration within seven (7) days of receipt of the decision of the Superintendent․”

The arbitration would take place before a “Tripartite Panel” (the Panel), consisting of two partisan members and one neutral member “selected by mutual agreement between the two partisan panel members.”   Under the terms of the Agreement, the partisan members “serve[d] for the duration of the contract [,]” and the “neutral member ․ s[at] as chairman for the duration of the contract.”  (Emphasis added).   The panel was “empowered to hear and determine only grievances within the scope of the definition of the term “Grievance” under [the Agreement].”

The District and CASA were unable to negotiate a new agreement after June 30, 2009.   On November 4, 2010, CASA filed two grievances.   Grievance 1348 involved three meetings held in September and October 2010, which the District required CASA members to attend without compensation or reimbursement for travel expenses.   Grievance 1349 resulted from the District's decision to implement an “Extended Day Program” at Central High School, which CASA alleged obligated its members to work more hours than required by the Agreement without added compensation.   The District denied both grievances in writing on November 22, 2010.

Pursuant to step three of the Agreement, both grievances were scheduled before the Panel by the American Arbitration Association (AAA).   However, the parties agreed to “place th[e] matter[s] in abeyance pending the outcome of settlement discussions/negotiations” on December 1, 2011.   It is unclear from the record if those negotiations occurred.

In any event, on March 2, 2012, the District filed a Verified Complaint and Order to Show Cause seeking to enjoin arbitration of both grievances.   Judge Kenneth S. Levy permitted the New Jersey Education Association (NJEA) to appear as amicus curiae.   He subsequently held two hearings after which he filed a written decision denying the District's request for injunctive relief.   The judge subsequently entered a conforming order dated September 19, 2012 that also dismissed the District's complaint with prejudice.   This appeal followed.

The District argues Judge Levy erred by finding the terms of the Agreement were sufficiently broad enough to vest the Panel with authority to decide an issue of “substantive arbitrability,” i.e., whether CASA had the right to arbitrate these or any grievance because the Agreement had expired.   The District contends that Judge Levy, not the panel, should have decided that issue.   The District further argues that because the Agreement expired, CASA had no right to arbitration.   The District also contends that it met the prerequisites for injunctive relief.

CASA and the NJEA both contend that, under the broad provisions of the Agreement, the Panel was vested with authority to decide the effect, if any, of the Agreement's expiration upon the grievance procedure, including the right to binding arbitration.   They both argue that pursuant to the New Jersey Employer–Employee Act (PERA), N.J.S.A. 34:13A–1 to –30, and the School Employees Contract Resolution and Equity Act (SECREA), N.J.S.A. 34:13A–31 to –43, a public employer may not change the terms of employment contained in a collective negotiations agreement even after its expiration.   CASA argues that by initially submitting the grievances to arbitration, the District waived any attempt to enjoin the Agreement's dispute resolution procedures, and, lastly, that Judge Levy properly denied injunctive relief.

We have considered these arguments in light of the record and applicable legal standards.   We affirm.

We need only determine the threshold issue of whether the Panel was authorized to decide the effect, if any, of the Agreement's expiration date upon the dispute resolution procedure contained therein, or whether that issue had to be decided by Judge Levy. As Judge Levy rightly recognized, the case presented an issue of “substantive arbitrability.”  Amalgamated Transit Union Local 880 v. N.J. Transit Bus Operations, Inc., 200 N.J. 105, 115 (2009) (citing Standard Motor Freight, Inc. v. International Brotherhood of Teamsters, 49 N.J. 83, 96–97 (1967)).   Substantive arbitrability refers to “whether the particular grievance is within the scope of the arbitration clause ․ specifying what the parties have agreed to arbitrate.”  Ibid. (internal quotations omitted).

Questions of substantive arbitrability are generally subject to judicial resolution.  Ibid. Courts are instructed to decide “only ․ ‘whether the party seeking arbitration is making a claim which on its face is governed’ ” by the Agreement.  Ibid. at 115 (quoting Standard Motor Freight, supra, 49 N.J. at 96).2  “Confining courts to making assessments about substantive arbitrability effectuates the policy of ensuring that ‘the means chosen by the parties for settlement of their differences under a collective bargaining agreement is given full play.’ ”  Ibid. (quoting Standard Motor Freight, supra, 49 N.J. at 95).   However, this general rule applies “ ‘absent clear expression in the contract to the contrary.’ ”  Ibid. (quoting Standard Motor Freight, supra, 49 N.J. at 96).

The District contends the Agreement provides that each member of the Panel serves only for the duration of the contract.   It suggests that after the Agreement's expiration date, the Panel can no longer exist.   The District argues that this reflects the parties' agreement that the grievance procedure was no longer in effect after June 30, 2009.

In further support of its position, the District cites to the United States Supreme Court decision in Litton Financial Printing Division v. N.L.R.B., 501 U.S. 190, 111 S.Ct. 2215, 115 L. Ed.2d 177 (1991).   There, the Court found that, subject to certain exceptions, arbitration is a “term and condition of employment” that does not “survive expiration of an agreement.”  Litton, supra, 501 U.S. at 199, 111 S.Ct. at 2221, 115 L. Ed.2d at 192.   Exceptions include whether the grievance involved acts that arose during the term of the agreement;  or the employer took an action after expiration of the agreement that infringed upon employees' accrued or vested rights;  or, under principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement.  Id. at 205–06, 111 S.Ct. at 2225, 115 L. Ed.2d at 196.   The District contends that since the subjects of CASA's grievances concern events that arose after the Agreement expired, involved no vested rights and, because the Panel's authority terminated with the expiration of the Agreement, CASA had no right to arbitration.

We reject the District's arguments.   Here, the Agreement includes a clear expression of the parties' intent to have the Panel, not the court, interpret the Agreement.   Pursuant to Article III, Section A.1, grievances were defined to include disputes “concerning the interpretation, application, or enforcement of the provisions” of the Agreement.  (Emphasis added).   Article III, Section C.3, authorized the Panel “to hear and determine ․ grievances within the scope of the definition of the term “Grievance” under Section A of Article III.” We note, as NJEA argues, that the Agreement does not provide for the Panel to serve only until June 30, 2009, or that the Panel cannot serve beyond that date.   Rather, the agreement explicitly provides that Panel members shall serve for the duration of the contract.

While we explicitly do not infringe upon the Panel's paramount right to decide the issue, the District's argument that there could be no arbitration after the expiration date of the Agreement, except for those circumstances outlined in Litton, is not consonant with the express language of PERA and SECREA.   In the context of collective negotiations involving a school district and its employees, the Court has stated that “[a]s a general matter, legislative and other regulatory enactments are ‘a silent factor in every contract[, and p]arties in New Jersey are likewise presumed to have contracted with reference to the existing law.’ ”  Camden Bd. of Educ. v. Alexander, 181 N.J. 187, 195 (2004) (quoting Silverstein v. Keane, 19 N.J. 1, 13 (1955)), superceded by statute on other grounds as explained in Bd. of Educ. of Alpha v. Alpha Educ. Ass'n, 190 N.J. 34, 48 (2006)).  “[W]hen a statutory provision has defining import, its application must be negotiated away clearly and unmistakably.”  Id. at 196.

N.J.S.A. 34:13A–5.3 provides that public employers “shall negotiate written policies setting forth grievance and disciplinary review procedures․  Such ․ procedures may provide for binding arbitration․”  The same section of PERA also provides that when “interpreting the meaning and extent of a provision of a collective negotiation agreement providing for grievance arbitration, a court or agency shall be bound by a presumption in favor of arbitration.   Doubts as to the scope of an arbitration clause shall be resolved in favor of requiring arbitration.”  Ibid. (Emphasis added).  N.J.S.A. 34:13A–33 provides:

Notwithstanding the expiration of a collective negotiations agreement ․ no public employer shall unilaterally ․ modify, amend, delete or alter any terms and conditions of employment as set forth in the expired or expiring collective negotiations agreement, or unilaterally ․ modify, amend, delete or alter any other negotiable terms and conditions of employment, without specific agreement․

Judge Levy correctly applied this statute, as the parties' agreement did not contain a provision specifying that arbitration rights would automatically cease once the agreement expired.   The District could have bargained to include such an termination provision in the agreement, but failed to do so.   The Court in Litton recognized that “terms and conditions” of employment may “continue in effect by operation of” law.  Litton, supra, 501 U.S. at 206 111 S.Ct. at 2225, 115 L. Ed.2d at 197.  “They are no longer agreed-upon terms;  they are terms imposed by law, at least so far as there is no unilateral right to change them.”  Ibid. In this regard, we note that the National Labor Relations Act (NLRA), 29 U.S.C. 151 to 169, does not include a presumption in favor of arbitration of disputes, nor does it mandate that grievance procedures be negotiated.   Indeed, the Litton Court noted that the N.L.R.B. had previously held, and the Court had agreed, that “arbitration clauses are excluded from the prohibition on unilateral changes” otherwise deemed to be unfair practices under the NLRA. Id. at 199–200, 111 S.Ct. at 2222, 115 L. Ed.2d at 192.   That is not the case under New Jersey's statutory regime.

We conclude that under the express terms of the Agreement and applicable law, the Panel was authorized to decide what, if any, effect the expiration date had upon the arbitrabiity of the two grievances at issue.

Affirmed.

FOOTNOTES

1.  FN1. We note that “[i]n public sector labor relations in New Jersey, courts use the terms ‘collective negotiation’ and ‘collective negotiations agreements' rather than ‘collective bargaining and collective bargaining agreements.’ ”  Troy v. Rutgers, 168 N.J. 354, 359 n.1 (2001) (quoting N.J. Tpk. Employees Union v. N.J. Tpk. Auth., 64 N.J. 579, 581 (1974)).

2.  FN2. In contrast, “procedural arbitrability” involves questions of “whether procedural conditions to arbitration have been met.”  Id. at 116.   Matters of procedural arbitrability are resolved through the grievance process — “procedural disagreements should be regarded not as separate disputes but as aspects of the dispute which called the grievance procedures into play.”  Ibid.

PER CURIAM

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