Court Opinion

ID: 4222420
Source: CourtListenerOpinion
Date Created: 2017-11-21 15:16:19.366946+00
Date Added: 2024-06-11T14:42:09.102974
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3898-15T3

SOUTH JERSEY TRANSPORTATION
AUTHORITY,

        Plaintiff-Respondent,

v.

IFPTE, LOCAL 196, CHAPTER 2,
and JOHN SEGARS,

     Defendants-Appellants.
_______________________________

              Argued October 23, 2017 – Decided November 20, 2017

              Before Judges Sabatino, Ostrer and Rose.

              On appeal from Superior Court of New Jersey,
              Chancery Division, General Equity, Atlantic
              County, Docket No. C-000015-16.

              Leonard C. Schiro argued the cause for
              appellants (Mets Schiro McGovern & Paris, LLP,
              attorneys; Mr. Schiro, of counsel and on the
              briefs; Shawn M. Lopez, on the briefs).

              Benjamin S. Teris argued the cause for
              respondent (Brown & Connery, LLP, attorneys;
              Eric D. Milavsky and Mr. Teris, on the
              briefs).

PER CURIAM
       In this labor arbitration case, appellants, IFPTE, Local 196,

Chapter 2 ("the Union"), and John Segars, seek reversal of the

Chancery Division's order dated May 2, 2016.                    The court's order

modified an arbitrator's award concerning Segars, who had been

accused of engaging in inappropriate conduct during his employment

with respondent, South Jersey Transportation Authority ("SJTA").

       The arbitrator concluded the SJTA had proven that Segars had

committed some, but not all, of the charged conduct, and suspended

him from his employment for forty-five days.                   After independently

examining the evidence in the record, the trial court determined

that   Segars'    conduct   was    more       severe    and    wrongful    than    the

arbitrator     had    found.        The       court     also     determined       that

considerations of public policy required the imposition of a much

stronger sanction.        Consequently, the trial court modified the

arbitrator's     award    and     ordered      the     termination    of    Segars'

employment, as the SJTA had requested.

       For the reasons that follow, we reverse the trial court's

decision and remand for further proceedings.                  We do so because the

court's    analysis   —   although    it       has     considerable   evidentiary

support in the record — substantially rests upon findings of

specific   violations,      including         drug   dealing,     which    were    not

charged against Segars and which were not adjudicated before the

arbitrator.      As such, the trial court's decision strays from the

                                          2                                  A-3898-15T3
strict constraints imposed upon judicial review of arbitration

awards under the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to

-11.

                                         I.

       Segars was a parking lot attendant employed by the SJTA.                   He

worked at a parking garage in Atlantic City. Segars is a member

of the Union.

       On June 8, 2015, a patron complained about Segars to the

SJTA's Parking Division Manager.              The patron reported that three

days earlier, on the evening of June 5, 2015, no one was at the

booth to validate her ticket.                 Segars had been on duty that

evening.

       The Manager instructed the SJTA Parking Supervisor to review

the    video   surveillance     footage       of   the   garage    from   June    5.

Inadvertently,        the   Supervisor     retrieved     surveillance     footage

instead from June 12, 2015, a different night on which Segars was

on duty.

       As described by the trial court, the June 12 footage shows

that Segars left his post at the booth that night around 9:40 p.m.

to    retrieve   an    item   from   the      garage's    secure   office.        An

unidentified young man arrived at the garage to meet with Segars.

The man searched the abandoned booth and removed an envelope,

presumably one that contained petty cash.                Segars returned around

                                         3                                 A-3898-15T3
9:59 p.m. to meet with the visitor.         Segars then seemed to realize

the envelope was missing, confronted the visitor, and made a

telephone call.   A vehicle then arrived.         A person in that vehicle

handed what is claimed to be the missing envelope back to Segars.

       The video shows that Segars then had several heated exchanges

with   the   visitor   who   had   taken    the   envelope.     A    physical

altercation ensued.     The visitor can be seen on the video grabbing

Segars at 10:26 p.m. During another exchange at 11:32 p.m., Segars

grabbed the visitor by the arm.          Segars later pulled out a long

stick from his booth, waving it at the visitor to fend him off.

       Having discovered this recorded incident, the SJTA retrieved

additional    surveillance    footage      from   Segars'   shifts   for   the

preceding sixty days, a time frame as far back as such footage is

saved.    A review of that extra footage revealed at least fifteen

similar interactions Segars had with other people.              The footage

depicts Segars going in and out of the garage's secure office

space, often accompanied by as many as fifteen unknown individuals,

and exchanges of various envelopes with those persons.

       On June 26, 2015, the SJTA brought disciplinary charges

against Segars, seeking to terminate him in accordance with the

terms of the Collective Negotiations Agreement ("CNA") between the

SJTA and the Union.     Specifically, the charges accused Segars of

the following:

                                     4                                A-3898-15T3
                You are being charged with neglect of
           duty and unbecoming conduct.     These charges
           are for misconduct that occurred during your
           shifts in the parking garage on 4/24, 4/25,
           5/8, 5/9, 6/5, 6/6, and 6/12. Your misconduct
           on those dates includes but is not limited to:
           neglecting your post, repeatedly permitting
           unauthorized persons to loiter on SJTA
           property,    engaging   in    non-work-related
           activity/transactions   with   such   persons,
           failing to report theft of [SJTA] property,
           participating in physical altercations on SJTA
           property,   and   failing  to   report   those
           altercations.

     An internal disciplinary hearing to address these charges was

conducted in August 2015.       The hearing officer recommended that

Segars be terminated, subject to the approval of the SJTA Board

of Commissioners, for "unbecoming conduct and neglect of duty."

     On behalf of Segars, the Union then requested the dispute be

submitted to arbitration, pursuant to the CNA. Among other things,

the Union contended that the sanction of termination was unjust.

     The   arbitration   took   place   on   November   9,   2015.     As    a

preliminary matter, the Union argued to the arbitrator that any

conduct of Segars occurring prior to June 5, 2015, could not be

considered as grounds for dismissal under Article X of the CNA.

Article X, entitled "Disciplinary Action," provides that "[a]ny

employee charged with misconduct shall be served a written notice

specifying the offense charged within ten (10) working days of its

occurrence or within ten (10) working days of the [SJTA] becoming

                                   5                                 A-3898-15T3
aware of its occurrence [.]"        The Union asserted that the SJTA

failed to meet this ten-day notice deadline with respect to the

earlier surveillance footage.

     The SJTA's Supervisor reviewed the videotapes and discovered

Segars' conduct on June 14, 2015.       Ten working days before that

date of discovery was June 1, 2015.          As we have noted, the SJTA

did not bring disciplinary charges against Segars until June 26,

2015.   The Union argued that the SJTA should have noticed Segars'

improper behavior depicted on the surveillance videos sooner, and

either corrected the behavior, or imposed progressive discipline

upon him over time, rather than seeking his termination.

     The arbitrator largely concurred with the Union's position

about these timing issues.     He directed his attention to the later

chronological portion of the surveillance videos, and gave little

weight to the earlier footage from April 24 through May 9, 2015.

     The arbitrator particularly focused his decision upon the

footage from the evening of June 12, 2015.       He recognized that the

footage showed Segars abandoning the booth, an unknown individual

retrieving an envelope from the booth and walking away, and a

subsequent interaction between Segars and the unknown individual.

Even so, the arbitrator noted no SJTA property was stolen or ever

reported missing.        He therefore concluded the SJTA failed to

establish   the   most   serious   charge,    theft   of   SJTA   property.

                                    6                               A-3898-15T3
However, the arbitrator was satisfied the SJTA had proven the

charges of unbecoming conduct and neglect of duty.

       In   calibrating    the    sanction,    the    arbitrator     found    it

significant     that    Segars'      disciplinary     record    at   work    was

relatively unblemished.          Consequently, the arbitrator reasoned

that principles of progressive discipline, as endorsed within the

terms of the CNA, applied here.          The arbitrator therefore ordered

that   Segars   be     reinstated,    but   subject    to   a   forty-five-day

suspension.     The arbitrator explained his reasoning as follows:

                 As the Authority has failed to carry its
            burden on the most serious charges of theft
            of   Authority   property,   the   penalty  of
            termination is not warranted.       Article X,
            Section 1.c notes that "when applicable",
            "progressive discipline" is to be considered.
            However, while Mr. Segars discipline record
            contains nothing more than written warnings
            and a verbal warning for an incident that
            occurred six months prior, his actions as
            noted herein do not warrant a short suspension
            which is normally the next step in a
            progression of discipline, meant to alert an
            employee to change behavior before a more
            severe penalty is imposed.       Mr. Segars[']
            failure secure the area around his booth and
            his failure to secure the booth when not in
            his direct vision as well as his failure to
            report the breaking into the booth and
            altercation on June 12, 2015 call for a more
            severe penalty short of termination.

                 The   Authority   had   Just   Cause   to
            discipline the grievant for the events noted
            above, but failing to prove the theft of
            Authority property, the penalty of termination
            is excessive. Mr. Segars is to be reinstated

                                        7                              A-3898-15T3
          and made whole     after     a   forty-five   day
          suspension.

     On March 7, 2016, the SJTA filed a verified complaint in the

Chancery Division seeking to vacate the arbitration award.         The

SJTA argued the award violated public policy (count one); the

arbitrator "so imperfectly executed his powers that a mutual,

final and definite award" was not made, N.J.S.A. 2A:24-8(d) (count

two); and the arbitrator failed to consider "material and pertinent

evidence," N.J.S.A. 2A:24-8(c) (count three).       The trial court

reviewed the surveillance footage submitted to the arbitrator.

After briefing and oral argument, the court issued an oral opinion.

     In its opinion, the court concluded the arbitrator's award

was contrary to public policy.       Although recognizing the "quite

limited" scope of judicial review of arbitration awards, the court

observed the arbitrator in this case mishandled his assignment.

     The court found the surveillance tapes showed conduct that

"was so severe of a public employee sitting in a public garage and

engaging [in] the activities, illicit activities," to such an

extent that the court was "willing to cross the rubicon in terms

of overturning an arbitrator's award."

     During the course of its bench ruling, the court specifically

found the evidence showed that Segars was "selling drugs when he's

on the job," and that he was "having a business selling illegal

                                 8                            A-3898-15T3
drugs and dealing with all sorts of . . . disreputable people and

walking in and out in the course of the evening."           The court

criticized the arbitrator because he "ignored all the instances

of the drug transactions" depicted on the videos, and he failed

to appreciate that, in contrast to the offense of stealing parking

receipts, "doing a drug deal in a public garage could end up

killing someone."

       Accordingly, the court determined it was "against public

policy" to only suspend Segars for forty-five days.       In fact, the

court stated it would not find "any [period of] suspension would

be appropriate," given what it characterized as "the level of

[Segars'] misconduct while on duty."

       The court added that the arbitrator "inappropriately focused

on the fact that the [SJTA] did not prove the most serious charge

of theft of Authority property." The court "more than disagree[d]"

with   that   finding.   Consequently,    the   court   concluded   the

arbitrator "inappropriately exercised his discretion," and that,

"as a public policy matter," the court was obligated to overturn

the arbitrator's decision.     The court therefore greatly increased

the sanction by ordering the termination of Segars.

       This appeal followed.   Among other things, the Union asserts

the trial court improperly concluded from its own independent

review of the video evidence that Segars was selling drugs while

                                   9                           A-3898-15T3
on the job, an allegation that his employer never made against

him.    The Union further contends that the court violated the

Arbitration Act by substituting its own judgment and perceptions

of the evidence for those of the arbitrator.

       The SJTA counters that the trial court had a sound evidential

basis for its interpretation of the surveillance videos.       The SJTA

maintains that the court did not veer from its proper role in

reviewing arbitral awards under the statute, and that the court

rightly invoked here the "public policy" exception to the general

approach of deference.     The SJTA further asserts that an adverse

inference should be applied against Segars, because he failed to

testify at the arbitration and explain his workplace conduct.

                                   II.

       Given   New   Jersey's   "'strong   preference    for   judicial

confirmation    of   arbitration    awards,'"   New   Jersey   Turnpike

Authority v. Local 196, I.F.P.T.E., 190 N.J. 283, 292 (2007)

(quoting Weiss v. Carpenter, Bennett & Morrissey, 143 N.J. 420,

442 (1996)), the Judiciary "may not substitute its judgment for

that of a labor arbitrator and must uphold an arbitral decision

so long as the award is 'reasonably debatable.'"        Id. at 301

       Under the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to -

11, which applies to disputes arising from a collective negotiating

                                   10                           A-3898-15T3
agreement, a court may modify an arbitration award in only the

following circumstances:

          a. Where the award was procured by corruption,
          fraud or undue means;

          b. Where there was either evident partiality
          or corruption in the arbitrators, or any
          thereof;

          c. Where the arbitrators were guilty of
          misconduct in refusing to postpone the
          hearing, upon sufficient cause being shown
          therefor, or in refusing to hear evidence,
          pertinent and material to the controversy, or
          of any other misbehaviors prejudicial to the
          rights of any party;

          d. Where the arbitrators exceeded or so
          imperfectly executed their powers that a
          mutual, final and definite award upon the
          subject matter submitted was not made.

          [N.J.S.A. 2A:24-8.]

     In W.R. Grace & Co. v. Local Union 759, Int'l Union of the

United Rubber, Cork, Linoleum & Plastic Workers of Am., 461 U.S.

757, 766, 103 S. Ct. 2177, 2183, 76 L. Ed. 2d 298, 307 (1983), the

United   States   Supreme   Court        articulated   a   "public    policy

exception" whereby "courts may not enforce collective bargaining

agreements that are contrary to 'well defined and dominant' public

policy," which the New Jersey Supreme Court adopted in Local 196.

Local 196, supra, 190 N.J. at 293 (quoting W.R. Grace, supra, 461

U.S. at 766, 103 S. Ct. at 2183, 76 L. Ed. 2d at 307).

                                    11                               A-3898-15T3
       The   public   policy    exception      supplies   a   narrow   mechanism

through which a court may modify an arbitrator's award, other than

by the four statutory criteria enumerated in N.J.S.A. 2A:24-8.

Id. at 294 ("Reflecting the narrowness of the public policy

exception, that standard for vacation will be met only in 'rare

circumstances.'") (citing Tretina Printing, Inc. v. Fitzpatrick &

Assocs., Inc., 135 N.J. 349, 360 (1994)).

       The Court's opinion in Local 196 concluded with the following

instructive observation: "We hold that the public policy exception

to the review of labor arbitration awards and . . . heightened

judicial scrutiny are triggered only when the arbitrator's award-

-not the grievant's underlying conduct--violates a clear mandate

of   public    policy   embodied      in    statute,   regulation,       or     legal

precedent."     Id. at 304 (citing Weiss v. Carpenter 143 N.J. 420

(1996)).      The "public policy" to be applied by judges in these

rare   instances      "must    be   embodied    in   legislative   enactments,

administrative regulations, or legal precedents, rather than based

on amorphous considerations of the common weal."               Id. at 295.

       Applying these principles to the present case, we conclude

that the trial court erred in its reanalysis and alteration of the

arbitrator's     award.        We   reach    that    conclusion    for    several

compelling reasons.

                                       12                                     A-3898-15T3
      First, the court improperly went beyond the charges issued

by the employer in this case, by finding that Segars was engaged

in illegal drug transactions while on the job.            No such charge of

drug-dealing was set forth in the employer's disciplinary notice

it served on Segars pursuant to the CNA.            The arbitrator was not

asked to decide if Segars had been selling or buying drugs.

Because a charge of drug-dealing was outside the designated scope

of the arbitration, a decision about Segars' discipline could not

rest on that ground.       See, e.g., Bound Brook Bd. of Educ. v.

Ciripompa,   228   N.J.   4,   17-18    (2017)   (analogously   deeming    it

erroneous for an arbitrator to redefine the substance of charges

that had been levied against a tenured teacher).1

      To be sure, we agree with the trial court that the video

proof in this record is consistent with a perception that Segars

was engaged in drug transactions while on duty.             However, it is

inappropriate to impute such an accusation into the notice of

disciplinary charges that the SJTA chose to issue in this case.

The   generic      reference    to      "engaging    in   non-work-related

activity/transactions" in the charges did not suffice as proper

notice of a claim of illegal narcotics transactions. Moreover, as

1
  We note that, at our request, the parties provided helpful
supplemental briefs addressing the Court's opinion in Ciripompa,
a decision issued after the trial court's ruling and the merits
briefs on appeal.

                                       13                           A-3898-15T3
the arbitrator noted, the video footage does not reveal what items

were actually in the envelopes.

     Second, the trial court erred in rejecting the arbitrator's

finding that the most serious charge of theft, or a failure to

report a theft, was not proven.             The video evidence on the key

date of June 12 shows that the envelope that was removed from the

garage appears to have been returned to Segars later that evening.

No proof was presented of any missing funds.           As such, the court

is bound by the arbitrator's factual findings.                We are mindful

that the Supreme Court has similarly cautioned this appellate

court   to   refrain   from   unduly    second-guessing   a    fact-finder's

interpretation of video evidence based on our own independent

viewing of those videos.        See State v. S.S., 229 N.J. 360, 374

(2017).

     Third, in light of the charges against Segars that were

actually charged and were actually proven, we are unpersuaded that

this case presents the "rare instance" in which an arbitrator's

findings should be cast aside on public policy grounds.                     We

certainly agree with the trial court with the general proposition

that untoward behavior by an employee who works alone in the night

shift at a public parking garage and who handles public funds

ought to be punished and deterred.

                                       14                            A-3898-15T3
     On the other hand, the arbitrator's determination to impose

a punishment short of termination – consistent with the progressive

discipline policies agreed upon by the SJTA and the Union in the

CNA — is not manifestly against public policy, again bearing in

mind that drug dealing was not charged and theft was not proven.

     For these reasons, the trial court's decision must be vacated

and the matter remanded for further proceedings. The remand should

not stop, however, at the trial court level.         Because we share the

court's   misgivings   about   the    relatively    short   forty-five-day

length of the suspension the arbitrator selected as a sanction,

we believe it is appropriate in these distinctive circumstances

to: (1) uphold the arbitrator's factual findings, but (2) remand

the case to the arbitrator to reconsider whether a longer period

of suspension would be more consonant with the proven facts and

the applicable public policies.           See, e.g., Kimba Med. Supply v.

Allstate Ins. Co., 431 N.J. Super. 463 (App. Div. 2013), certif.

granted, 217 N.J. 286, and certif. dismissed as improvidently

granted, 223 N.J. 347 (2017) (noting that, in limited situations,

a judicial remand to an arbitrator or dispute professional to give

further consideration to a case may be an appropriate course of

action under the overall statutory scheme).2

2
  As a side point, we agree with the arbitrator's rejection of the
SJTA's request to impose an adverse inference against Segars for

                                     15                            A-3898-15T3
     Vacated and remanded for further proceedings consistent with

this opinion.   We do not retain jurisdiction.

choosing to exercise his right to refrain from testifying in his
own defense at the hearing. Such testimony that possibly could
have incriminated Segars may well have implicated Fifth Amendment
concerns. See State, Dep't of Law & Public Safety, Div. of Gaming
Enforcement v. Merlino, 216 N.J. Super. 579, 587 (App. Div. 1987);
see also Lefkowitz v. Turley, 414 U.S. 70, 77, 94 S. Ct. 316, 322,
38 L. Ed. 2d 274 (1973).

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