Court Opinion

ID: 9859363
Source: CourtListenerOpinion
Date Created: 2023-09-24 21:17:53.132495+00
Date Added: 2024-06-11T10:41:20.581653
License: Public Domain

SCHREIBER, J.,
dissenting.
The issue in this case is whether an arbitrator exceeded his delegated powers in his interpretation of certain provisions of a contract between the State of New Jersey and the State Troopers Fraternal Association of New Jersey, Inc. See N.J.S.A. 2A:24-8(d) (providing that an award shall be vacated where arbitrator exceeded power). The specific problem presented is whether the State agreed and was obligated to continue the State administered Prescription Drug Program that was in effect on June 30, 1978 (the 1978 Program) throughout the two-year term of the contract, July 1, 1978 to June 30, 1980. Under the 1978 Program as implemented, eligible members of the State Trooper’s family had to pay the first $1.25 toward the cost of prescription drugs, the State paying the balance. In 1979 the State unilaterally amended the Program to require payment of the first $2.50. The State Troopers Fraternal Association objected and the matter was subsequently submitted to the arbitrator. The arbitrator held that the State could not validly raise the copayment requirement under the terms of the contract. I believe this interpretation “reasonably debatable” and therefore should be sustained.
The guidelines to be utilized in analyzing the viability of the arbitrator’s opinion are settled. They are fully applicable to arbitration in the public sector. When, as here, an arbitrator is charged with interpretation of an agreement, he may not disregard the terms and rewrite the contract. In re Arbitration Between Grover and Universal Underwriters Ins. Co., 80 N.J. 221, 230 (1979). Moreover, parties are deemed to have intended that their contract be interpreted in accordance with the law. *473Brooks v. Pennsylvania Mfrs. Ass’n Ins. Co., 121 N.J.Super. 51, 54-55 (App.Div.1972), modified on other grounds, 62 N.J. 583 (1973). However, if an arbitrator’s interpretation of the contractual language is reasonably debatable, it must be upheld. Kearny P.B.A. Local 21 v. Town of Kearny, 81 N.J. 208, 221 (1979).
In all matters, the arbitrator is limited to the authority vested in him by the parties. Ridgefield Park Educ. Ass’n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 155 (1978); see Barcon Assoc. v. Tri-County Asphalt Corp., 86 N.J. 179, 209-10 (1981) (Clifford, J., dissenting). However, when public employees are involved, the parties may not agree to authorize the arbitrator to decide legal issues conclusively as he deems fit. Rather, the arbitrator is constrained and bound in his interpretative function by the public interest, the public welfare, and any pertinent statutory criteria. Kearny P.B.A. Local 21 v. Town of Kearny, supra, 81 N.J. at 217; see Division 540, Amalgamated Transit Union v. Mercer County Improvement Auth., 76 N.J. 245, 252 (1978).
The Agreement between the State and the State Troopers was executed on June 30,1978. The parties undoubtedly intended that State Troopers and members of their families were entitled to the benefits of the 1978 Program. The 1978 Program was expressly included as a term and condition of employment in Article X(B) of the contract. That provision lists nine benefits to which the State Troopers are entitled. The seventh reads as follows:
7. The State administered Prescription Drug Program shall be continued for the remainder of the Agreement and the State shall provide any necessary funds to maintain the program. Each employee shall be provided with an authorization and identification card, and a brochure describing the details of the Program. [Emphasis supplied]
Use of the word “the” throughout the paragraph may be reasonably understood to refer to the State administered Drug Program in effect on June 30, 1978. Indeed, according to the Agreement, each employee had to be provided with a brochure describing the details of that program. The Attorney General *474conceded on oral argument that this brochure described the benefits of the Drug Program effective when the contract was made.
The express directive and obligation in Article X(B)(7) was, as the majority states, subject to Article XXV(E), which reads: “All terms of this Agreement are subject to budgetary and/or legislative limitations or changes.” The majority recognizes that the current appropriation covering this Program is sufficient to fund the benefits that would be payable on behalf of the State Troopers subject to the Agreement in accordance with the terms of the Program as of 1978. The Attorney General concedes the sufficiency of the amount appropriated for this purpose. Hence it is not asserted that there is any “budgetary limitation” that can serve to alter the Program benefits paid or to satisfy the State’s unilateral attempt to reduce these benefits.
However, the majority contends that an explanatory note to the $5,100,000 appropriation funding the State Prescription Drug Program in the Legislature’s Annual Appropriations Act is a “legislative change” activating this provision. See L.1979, e. 119, at 462. I disagree. This is not the type of legislative change envisaged in the contract. Rather, the parties probably contemplated that the contractual undertaking was subject only to a duly enacted legislative modification in the underlying statute creating and authorizing a drug prescription program. The State Health Benefits Commission has been charged with the duty to establish a health benefits program and authorized to purchase contracts to provide drug prescription benefits “as may be required to implement a duly executed collective negotiations agreement .... ” N.J.S.A. 52:14-17.29(F). The Legislature did not modify this act, which is the basic source of authority for drug prescription programs. The Legislature, if it had desired such a modification, would have amended the underlying legislation. Cf. Act to Amend the Pharmaceutical Assistance to the Aged, L.1978, c. 171, § 3 (codified at N.J.S.A. 30:4D-22) (increasing statutory copayment requirement from $1.00 to $2.00). Regardless of the purpose and effect in other *475contexts, it is certainly reasonably debatable that the note in the Appropriations Act failed to constitute the type of legislative change contemplated by the Troopers’ contract.
The majority claims that the State’s Office of Employee Relations would not have agreed to a provision that might create differences in the benefits available to the State Troopers and other State employees under the Prescription Drug Program. This argument assumes that there was no give and take between the parties on a multitude of issues that in the judgment of the Office of Employee Relations warranted its singular treatment of the State Troopers. Nothing in the record supports this assumption. Quite to the contrary, as noted, the Division of State Police excluded State Troopers from the copayment obligation for their prescription drugs. I am unaware of a similar practice elsewhere in State government serving to exempt eligible employees from the obligation to contribute to the Program. There simply is no support for the assumption that uniformity requires the result imposed by the majority’s decision.
The arbitrator’s interpretative conclusion is certainly reasonably supportable.
I would affirm.
Justice HANDLER joins in this opinion.
For reversal — Chief Justice WILENTZ and Justices CLIFFORD and O’HERN — 3.
For affirmance — Justices SCHREIBER and HANDLER — 2.