Court Opinion

ID: 5116030
Source: CourtListenerOpinion
Date Created: 2021-10-05 14:09:00.883733+00
Date Added: 2024-06-11T08:21:54.224024
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NOT FOR PUBLICATION WITHOUT THE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-3495-19

IN THE MATTER OF
BOROUGH OF
BERGENFIELD,

       Respondent-Appellant,

and

PBA LOCAL 309,

     Petitioner-Respondent.
_________________________

                Argued June 9, 2021 – Decided October 5, 2021

                Before Judges Ostrer, Accurso, and Enright.

                On appeal from the New Jersey Public Employment
                Relations Commission, PERC No. 2020-50.

                John L. Shahdanian argued the cause for appellant
                (McCusker, Anselmi, Rosen & Carvelli, PC, attorneys;
                John L. Shahdanian, on the briefs).

                Michael A. Bukosky argued the cause for respondent
                PBA Local 309 (Loccke, Correia & Bukosky,
                attorneys; Michael A. Bukosky and Corey M. Sargeant,
                of counsel and on the brief).
            John A. Boppert, Deputy General Counsel, argued the
            cause for respondent New Jersey Public Employment
            Relations Commission (Christine Lucarelli, General
            Counsel, attorney; John A. Boppert, on the statement in
            lieu of brief).

PER CURIAM

      Borough of Bergenfield appeals from a decision of the Public

Employment Relations Commission ordering it to cease and desist from refusing

to sign the collective negotiations agreement drafted by the Bergenfield PBA

Local No. 309 purportedly memorializing an interest arbitration award.

Bergenfield refused to sign the new CNA because it does not believe the

agreement accurately reflects the interest arbitrator's award. The PBA refused

Bergenfield's entreaty that the parties return to the interest arbitrator for

clarification, and instead filed an unfair practice charge against the Borough for

its refusal to sign its draft of the new contract, as modified by the interest

arbitration award.

      The Commission acknowledged the parties do not agree on what the

arbitrator awarded for the 2019 and 2020 contract years, and that the dispute

only arose when the PBA presented the draft CNA for signature — after the

fourteen-day period for appealing the award had expired.          It determined,

however, that as the Borough failed to appeal the award and does not dispute its

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                                        2
terms or cost calculations, the parties' disagreement over whether the Borough

correctly implemented the step increases in 2019 and 2020 "is a matter of

contract interpretation best dealt with through the CNA's grievance procedures"

and "immaterial as to whether [the Borough] was obligated to sign the agreement

drafted by the PBA pursuant to N.J.S.A. 34:13A-5.4(a)(6)," which prohibits

public employers from "[r]efusing to reduce a negotiated agreement to writing

and to sign such agreement." We cannot agree and thus, reverse and remand

with directions for the parties to return to the interest arbitrator to clarify his

award for incorporation in the CNA.

      After the parties bargained to impasse over the terms of a CNA to replace

their one-year agreement that expired on December 31, 2017, the Borough

petitioned to initiate compulsory interest arbitration.      PERC appointed an

arbitrator, and the parties participated in a formal interest arbitration in late

2018, focusing on three main issues of impasse: the duration of a new CNA,

salaries, and health benefit contributions. In his decision, the arbitrator noted

the arbitration was governed by the Police and Fire Public Interest Arbitration

Reform Act, N.J.S.A. 34:13A-14a to -21, requiring the award to comply with

the Property Tax Levy Cap, N.J.S.A. 40A:4-45.44 to -45.47, and that the award

was "issued in accordance with the 2% hard cap limitation" of N.J.S.A. 34:13A-

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16.7 as well as "the 16g interest arbitration criteria to the extent deemed

relevant," N.J.S.A. 34:13A-16(g).1

      The PBA's final offer on duration and salary was a one-year contract

extending from January 1, 2018 to December 31, 2018, with a 1.8% wage

increase applied across-the-board to the salary schedules. The Borough's final

offer was a four-year contract extending from January 1, 2018 to December 31,

2021, with no salary increase, no step increases and all bargaining unit members

still in step to remain at the same step on the salary guide as they were on

December 31, 2017, for the duration of the contract, with longevity payments

frozen during the term of the contract.

      The arbitrator awarded a three-year agreement from January 1, 2018 to

December 31, 2020, noting when he did so "that the first year of the agreement

under this award," 2018, had already passed, and that step increases and

1
  The 2% hard cap provision expired on January 1, 2018, pursuant to a sunset
provision. See N.J.S.A. 34:13A-16.9; L. 2014, c. 11, § 4. Because the parties'
CNA expired on December 31, 2017, the hard cap applied to this award . See
N.J.S.A. 34:13A-16.9 (providing the hard cap "shall apply only to collective
negotiations between a public employer and the exclusive representative of a
public police department or public fire department that relate to negotiated
agreements expiring on [January 1, 2011] or any date thereafter until or on
December 31, 2017, whereupon, after December 31, 2017, the provisions of
section 2 of P.L.2010, c.105 (C.34:13A-16.7) shall become inoperative for all
parties except those whose collective negotiations agreements expired prior to
or on December 31, 2017 but for whom a final settlement has not been reached") .
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                                          4
longevity compensation had been paid in accordance with the expired 2017

contract, i.e., in accordance with past practice. As to salaries, the arbitrator

determined the evidence as well as the continuity and stability of employment

criterion supported "the maximum allowable award under the 2% cap," noting,

however, that the parties did not agree as to the base salary calculation for 2017,

which in accordance with N.J.S.A. 34:13A-16.7(b), serves as the baseline for

calculating the 2% hard cap.

      The arbitrator accepted the Borough's calculation of base salary "as of

December 31, 2017 of $5,365,227.65 as the baseline for calculating the 2% hard

cap,"2 thus equating "to a permissible [additional] salary expense of $107,304.55

in 2018." He further found that step increases in the amount of $248,815.26 had

already been paid in accordance with past practice in 2018, exceeding the cap

by $141,510.71.     The arbitrator further calculated that step increases and

longevity compensation in accordance with past practice in 2019 would amount

to $189,024.48, exceeding "the permissible spend of $109,450.64 by

$79,573.84;" and in 2020 to $189,851.00, exceeding "the permissible spend of

$111,639.65 by $78,211.35." The arbitrator thus calculated the total permissible

2
 The PBA's base salary calculation as of the same date was $585,468.35 higher.
The arbitrator rejected the PBA's calculation as not in accordance with N.J.S.A.
34:13A-16.7(a).
                                                                             A-3495-19
                                        5
spend over the three-year term awarded as $328,394.84. Because step increases

and longevity compensation of $248,815.26 had already been paid in 2018, the

first year under the award, the arbitrator found only $79,579.58 remained to be

awarded for 2019 and 2020.

      The arbitrator thus concluded that

            application of the 2% hard cap formula over a three-
            year term supports the following Award: 2018-0%
            salary increase, full step increases, senior officer
            differential and longevity compensation (which have
            been paid); 2019-0% salary increase, step increases
            October 1, 2019 ($44,751.83), senior officer
            differential and longevity compensation in accordance
            with the Agreement in the amount of $10,017.35; 2020-
            0% salary increase, no step increases, senior officer
            differential and longevity increases in accordance with
            the Agreement in the amount of $13,888.75.

He accordingly entered a salary award, representing "the maximum salary

increases that can be awarded under the cap on base salary increases with

discretion limited to the distribution of those amounts" of:

            2018 0% salary increase, full step increases, longevity
                 and senior officer differential.

            2019 0% salary increase, step increases October 1,
                 2019, longevity compensation and senior officer
                 differential in accordance with the terms of the
                 Agreement.

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                                        6
            2020 0% salary increase, no step movement, longevity
                 and senior officer differential in accordance with
                 the terms of the Agreement.

      The arbitrator also included two other provisions in the award important

to this dispute. First, he noted that "[a]ll provisions of the existing agreement

shall be carried forward except for those which have been modified by the terms

of this Award." Second, he "calculated the net, annual economic change in base

salary over the three-year term of the new agreement, as follows: 2018 –

$248,815.26; 2019 – $54,769.18; 2020 – $13,888.75 (pursuant to N.J.S.A.

34:13A-16.7 A and B)."

      Neither party appealed the award. The Borough represents it did not do

so because it was satisfied with the arbitrator's decision.     When the PBA

presented a draft CNA for signature to the Borough, after the time for any appeal

had expired, the Borough objected to the language proposed in Article III,

Section 2 concerning the payment of salary increments. Specifically, the PBA's

proposed draft provided:

            Increments shall be paid in accordance with past
            practice except that during the year 2019 only the
            Salary Step Increases, where applicable, shall be
            effective October 1, 2019. For the year 2020 there shall
            be no Step movement for salary increases.

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                                       7
      The Borough contends the proposed language misstates the award by

inclusion of the language that "[i]ncrements shall be paid in accordance with

past practice." It notes the arbitrator did not include that language when he set

forth the specific salary award over the life of the new contract, and his interest

arbitration award modified past practice by delaying step increases until the

fourth quarter of 2019 and eliminating them altogether for 2020, the final year

of the contract. The PBA argues its draft is consistent with Article III, Section

2 of the 2017 contract, which provided that "[i]ncrements shall be paid in

accordance with past practice" as modified by the arbitrator's award for the

second and third years of the contract.

      The PERC examiner who heard the PBA's summary judgment motion on

the unfair practice charge agreed with the PBA that incorporating the "past

practice" language into Article III, Section 2, the salary provision of the new

CNA, was consistent with the interest arbitration award, and thus the Borough

committed an unfair labor practice by refusing to sign the agreement. He

rejected the Borough's claim, backed up by calculations of its chief financial

officer, that the costs of implementing the award pursuant to the PBA's draft

CNA would greatly exceed the costs specified by the interest arbitrator in his

award.

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                                          8
      The hearing examiner found the Borough "does not object to the terms of

the CNA, but to the costs of implementing those terms." He concluded that "[t]o

the extent the Borough is challenging the accuracy of the arbitrator's calculations

under the 2% base salary cap," it was obligated to appeal the award, which it

failed to do. And to the extent "the Borough is choosing to interpret the 2018-

2020 CNA as only requiring it to pay the salary amounts set forth in the [interest

arbitration] Award, that contract interpretation may be challenged by the PBA

in accordance with the CNA's grievance procedures." The arbitrator concluded

that the Borough's "interpretation, however, does not change the fact that the

draft CNA's terms are consistent with the [interest arbitration] Award and must

be signed by the employer" pursuant to N.J.S.A. 34A-5.4(a)(6).

      PERC adopted the hearing examiner's decision. It acknowledged "the

parties evidently disagree about the amounts required to be paid pursuant to the

step increases dictated by the Award," and noted the Borough's argument that

under the PBA's proposed draft contract, "the 2020 economic change will be

over $240,000, a figure not consistent with the Award's allowance of a total

spend or economic change of $13,888.75."          The Commission nevertheless

concluded the draft accurately reflected the interest arbitration award by

carrying over into the salary provision the language from the 2017 CNA that

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                                        9
"[i]ncrements shall be paid in accordance with past practice," and rejected the

Borough's contention that accuracy also required inclusion of the terms of the

award and the arbitrator's calculations of economic change, finding "no

authority for the latter proposition."

      The Commission reasoned that

                    [t]he Arbitrator's calculations of economic
             change were based on the record evidence before him,
             and his calculations were "constructed based on
             evidence of financial conditions and personnel costs
             taken from a particular snapshot in time." City of
             Orange Twp., P.E.R.C. No. 2017-13, 43 NJPER 101
             (¶31 2016). There is no support for the Borough's
             assertion that the Arbitrator's calculations would
             necessarily be the same at another snapshot in time,
             such as that addressed by the Borough's subsequent
             independent calculations and analysis nearly one year
             after the [interest arbitration] Award's issuance. In any
             case, that analysis was not presented to the Arbitrator.
             N.J.S.A. 34:13A-16f(3).

                    Moreover, as the Borough did not appeal the
             Award and does not dispute its terms or cost
             calculations, the Borough’s post-Award independent
             analysis can have relevance only with respect to the
             parties' ongoing disagreement as to whether the
             Borough correctly implemented the October 1, 2019
             step increases in accordance with the Award. We agree
             with the Hearing Examiner that this is a matter of
             contract interpretation best dealt with through the
             CNA's grievance procedures, and that the Borough's
             argument is immaterial as to whether it was obligated
             to sign the agreement drafted by the PBA pursuant to
             N.J.S.A. 34:13A-5.4(a)(6).

                                                                         A-3495-19
                                         10
      We cannot agree. This is not a disagreement over contract interpretation.

It is a dispute over whether the draft contract presented by the PBA to

Bergenfield accurately reflects the interest arbitration award rendered in a

compulsory interest arbitration. As the only arbitrator who can resolve that

dispute is the interest arbitrator who entered the interest arbitration award, we

reverse PERC's decision mandating that Bergenfield sign the disputed draft and

remand with direction that the parties return to the interest arbitrator to clarify

his award.

      "[C]ompulsory interest arbitration is a statutory method of resolving

collective-negotiation disputes between police and fire departments and their

employers." Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 80,

(1994). As our Supreme Court has explained, 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." N.J. State Policemen's Benevolent Ass'n, Local 29 v. Town of

Irvington, 80 N.J. 271, 284 (1979) (emphasis added). The Court has instructed

that "[i]t is to be distinguished from 'grievance' arbitration, which is a method

of resolving differences concerning the interpretation, application, or violation

of an already existing contract." Ibid. Compulsory interest arbitration is "a

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                                       11
statutorily-mandated procedure for resolving the terms of a new contract."

Hillsdale PBA Local 207, 137 N.J. at 80.

      This clear distinction between compulsory interest arbitration and

grievance arbitration was missed here. The only issue in this case is whether

the PBA accurately copied down the new salary term the interest arbitrator wrote

for the parties. The arbitrator's award reads as follows:

                               AWARD

            1.    Duration. January 1, 2018 through December 31,
                  2020.

            2.    Salary. 2018-0% salary increase, full step
                  increases, longevity and senior officer
                  differential; 2019-0% salary increase, step
                  increases    October    1,    2019,   longevity
                  compensation and senior officer differential in
                  accordance with the terms of the Agreement;
                  2020-0% salary increase, no step movement,
                  longevity and senior officer differential in
                  accordance with the terms of the Agreement.

            3.    Health Benefit Contributions. Fifteen (15%) of
                  the cost of premiums.

            4.    All other proposals by the Borough and the PBA
                  not awarded herein are denied and dismissed.

            5.    All provisions of the existing agreement shall be
                  carried forward except for those which have been
                  modified by the terms of this Award.

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                                      12
             6.    Pursuant to N.J.S.A. 34:13A-16(f), I certify that
                   I have taken the statutory limitation imposed on
                   the local tax levy cap into account in making the
                   award.     My Award also explains how the
                   statutory criteria factored into my final
                   determination.

             7.    I have also calculated the net, annual economic
                   change in base salary over the three-year term of
                   the new agreement, as follows: 2018-
                   $248,815.26; 2019-$54,769.18; 2020-$13,888.75
                   (pursuant to N.J.S.A. 34:13A-16.7 A and B).

In his decision, the arbitrator makes clear "[t]he salary amounts awarded

represent the maximum salary increases that can be awarded under the cap on

base salary increases with discretion limited to the distribution of those

amounts." (Emphasis added.)

      As is immediately apparent from a review of the award, the interest

arbitrator did not include the language that "[i]ncrements shall be paid in

accordance with past practice," in the salary provision of the award. Instead, he

noted only that "longevity and senior officer differential [be paid] in accordance

with the terms of the [expired] Agreement" for 2019 and 2020. Bergenfield

asserts that inserting the phrase "[i]ncrements shall be paid in accordance with

past practice" into the new salary provision is inconsistent with the salary term

the arbitrator wrote for the parties, and makes the provision ambiguous, at best,

necessitating, if not correction, at least the inclusion of the interest arbitrator's

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                                        13
calculated costs of the step increases and longevity compensation for each year

of the contract to make it an accurate reflection of the interest arbitrator's

decision.

      Bergenfield attempted to illustrate the error in the PBA's proposed salary

term by presenting its CFO's calculations of the cost of increments paid in

accordance with the PBA's draft.       The Borough obviously hoped that a

comparison between what the arbitrator calculated as the permissible additional

spend in the second and third years of the contract — $54,769.18 for 2019 and

$13,888.75 for 2020 — against the additional spend calculated in accordance

with the PBA's proposed draft — $140,330.00 for 2019 and $265,294.00 for

2020 — would make clear the PBA had not accurately copied the interest

arbitration award's salary term into its proposed CNA.       Unfortunately, the

hearing examiner and PERC misinterpreted Bergenfield's objection to the "past

practice" language in the new salary provision as an objection "to the costs of

implementing" the terms of the new contract and deemed Bergenfield's

calculations of the cost of increments paid in accordance with the PBA's

proposed salary term relevant "only with respect to the parties' ongoing

disagreement" as to whether Bergenfield "correctly implemented the October 1,

2019 step increases in accordance with the Award," which they deemed a

                                                                          A-3495-19
                                      14
contract interpretation issue appropriately resolved through grievance

arbitration.3

      The PBA proposed a salary term that incorporated a "past practice" clause

the interest arbitrator did not include in his salary provision: "[i]ncrements shall

be paid in accordance with past practice except that during the year 2019 only

the Salary Step Increases, where applicable, shall be effective October 1, 2019.

For the year 2020 there shall be no Step movement for salary increases." And

it left out the "past practice" clause the interest arbitrator did include: that

"longevity and senior officer differential [be paid] in accordance with the terms

of the [expired] Agreement." Although the PBA's proposed salary term may

appear, on first blush, to be a not inaccurate recapitulation of the interest

arbitrator's salary award, a closer review of the interest arbitrator's award,

including his careful calculations of "the maximum allowable award under the

2% hard cap," suggests the language does not accurately reflect his decision on

the parties' salary impasse.

      Specifically, the arbitrator determined that in 2018, the first year of the

new contract, step increases and longevity compensation, which were paid in

3
  The parties have advised the PBA has since grieved the Borough's payment of
increments due in 2019 and 2020.
                                                                              A-3495-19
                                        15
accordance with past practice, cost Bergenfield $248,815.26, exceeding the 2%

hard cap of $107,304.55 by $141,510.71. According to the interest arbitrator, if

step increases and longevity compensation were awarded in accordance with

past practice for the duration of the new contract, Bergenfield would pay

$189,024.48 in 2019, "exceed[ing] the permissible spend of $109,450.64 by

$79,573.84," and $189,851.00 in 2020, "exceed[ing] the permissible spend of

$111,639.65 by $78,211.35."

      Because the 2% hard cap limited the total permissible spend over the

three-year term awarded to $328,394.84, the arbitrator made clear his "discretion

[was] limited to the distribution" of that amount over the three-year term. As

$248,815.26 of the available $328,394.84 had already been spent in the first year

when step increases and senior officer differential were paid in accordance with

past practice, he calculated only $79,579.58 remained available to him for

distribution in 2019 and 2020. Employing that discretion, the interest arbitrator

determined the salary award for 2019 and 2020 would consist in 2019 of "step

increases October 1, 2019 ($44,751.83), senior officer differential and longevity

compensation in accordance with the [expired] Agreement in the amount of

$10,017.35," and in 2020 "no step increases, senior officer differential and

longevity increases in accordance with the [expired] Agreement in the amount

                                                                           A-3495-19
                                      16
of $13,888.75." As Bergenfield attempted to explain to the hearing examiner

and PERC, the PBA's inclusion of the "past practice" language into the salary

term, which the arbitrator did not include, would suggest a spend in 2020 of an

amount much closer to the $248,815.26 in step increases and longevity

differential the Borough paid in 2018, than the $13,888.75 the interest arbitrat or

awarded for 2020, limited to the longevity differential. 4

      Although not clearly explained in the parties' submissions, their dispute is

over whether the interest arbitrator awarded bargaining unit members an amount

of money in 2019 equal to what they would have received under the expired

2017 CNA had the 2019 step increase been delayed until October 1, in other

words the monetary equivalent of a one-quarter step, or whether he decreed that

those members would ascend on October 1, 2019 to their next step "in

accordance with past practice" and remain there for 2020, the last year of the

contract.

4
   We accordingly reject PERC's finding that the interest arbitrator's included
calculations of economic change amount to nothing more than "evidence of
financial conditions and personnel costs taken from a particular snapshot in
time." They were instead the arbitrator's calculations demonstrating his award
would not increase base salary by more than 2% per contract year for a three -
year contract in accordance with Borough of New Milford and PBA Local 83,
P.E.R.C. No. 2012-53, 38 N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18 at 13
(2012). See In re State, 443 N.J. Super. 380, 384-85 (App. Div. 2016).
                                                                             A-3495-19
                                       17
      Although the calculations the interest arbitrator included in his decision

suggest the "past practice" language in the new CNA salary term does not

accurately reflect the interest arbitrator's contract award, that decision is not one

for this court. We decide only that the parties have a legitimate dispute over

whether the PBA's proposed draft of the salary term is an accurate reflection of

the salary term the interest arbitrator wrote for the parties. As it is readily

apparent that Bergenfield could only be compelled to sign a contract that

accurately reflected the interest arbitration award, we vacate PERC's order

compelling the Borough to sign the PBA's draft and remand with directions for

the parties to return to the interest arbitrator to clarify the award.

      We add only the following. This was a compulsory interest arbitration

over the terms of a new contract. The arbitrator decided the duration of the new

contract and, in effect, wrote the new salary term for inclusion in the new CNA.

See N.J. State Policemen's Benevolent Ass'n, 80 N.J. at 284. The failure of the

hearing examiner and PERC to recognize this was a dispute over whether the

PBA had accurately copied down the interest arbitrator's salary term instead of

a disagreement over "the interpretation, application, or violation of an already

existing contract," ibid., led both to conclude, erroneously, that the matter could

be resolved through grievance arbitration.

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                                         18
      Besides thwarting the legislative goal of ensuring the prompt resolution of

labor disputes through compulsory interest arbitration, see Newark Firemen's

Mut. Benevolent Ass'n v. Newark, 90 N.J. 44, 56 (1982), PERC's decision also

overlooked that this award, in the words of the interest arbitrator, "represent[ed]

the maximum salary increases that can be awarded under the [2% hard] cap"

with his "discretion limited to the distribution of those amounts." Because the

interest arbitrator was prohibited by statute from entering an award that would

increase base salary by more than two percent of the prior year's expenditure,

N.J.S.A. 34:13A-16.7, see In re State, 443 N.J. Super. 380, 384-85 (App. Div.

2016), PERC's decision that a grievance arbitrator could resolve the amounts

due under the interest arbitration award, potentially resulting in salary increases

exceeding the two percent hard cap, was error.

      Reversed and remanded. We do not retain jurisdiction.

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                                       19