Court Opinion

ID: 4428239
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:03:03.914271+00
Date Added: 2024-06-11T14:50:48.400458
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NOT FOR PUBLICATION WITHOUT THE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-5087-17T1

CITY OF SOUTH AMBOY,
a Municipal Corporation of
New Jersey,

          Plaintiff-Appellant,

v.

MUNICIPAL EMPLOYEES
UNION OF SOUTH AMBOY,

     Defendant-Respondent.
___________________________

                    Argued May 22, 2019 – Decided June 20, 2019

                    Before Judges Reisner and Mawla.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Middlesex County, Docket No. L-7343-16.

                    John R. Lanza argued the cause for appellant (Lanza &
                    Lanza, LLP, attorneys; John R. Lanza and Monica A.
                    Hoopes, on the briefs).

                    William P. Hannan, II, argued the cause for respondent
                    (Oxfeld Cohen PC, attorneys; William P. Hannan, II, of
                    counsel and on the brief).
PER CURIAM

      Plaintiff City of South Amboy (the City) appeals from two orders dated

March 28, 2018, denying its summary judgment motion seeking to vacate

portions of an arbitration award, and granting summary judgment in favor of

defendant Municipal Employees Union of South Amboy (MEUSA), confirming

the award. Plaintiff also appeals from a June 22, 2018 order denying its motion

for reconsideration. We affirm for the reasons stated by the trial judge in his

oral opinions issued March 28 and June 22, 2018, and for the reasons stated

below.

                                        I

      Because we are writing this opinion primarily for the benefit of the parties,

who are fully familiar with the facts, a short background summary will suffice

here. The dispute centers around health care issues addressed in paragraphs 1

and 2 of Article II of the 2014-2018 collective bargaining agreement (CBA). In

the first sentence of paragraph 1, the City agreed, without any stated

qualifications, that it would pay the full cost of providing employees and their

families with health benefits. Next, subsections A through D listed the four

types of coverage the City would provide. Finally, subsection E stated that the

City could provide those four listed types of coverage through the New Jersey

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State Health Benefits Program (SHBP). In 2015, the City made the switch to

the SHBP, as the CBA permitted. However, the SHBP imposed a two-month

waiting period for new employees and their families to obtain coverage.

      The arbitrator determined that, because Article II, paragraph 1 did not

include any specific provision permitting the City to delay providing coverage,

the City was required to provide the coverage, even if that meant paying fo r

separate coverage for the first two months. Among other things, the arbitrator

considered that the most recent previous CBA contained a specific provision

permitting the City to delay providing coverage for new employees' families.

He reasoned that the parties knew how to provide for such a delay if they agreed

to it, and inferred that they reached no such agreement here.

      The second issue focused on paragraph 2A of Article II, which provided

that "[u]pon retirement of an employee covered by this Agreement, the City shall

continue to provide medical coverage as set forth in Appendix B." Appendix B

of the CBA was a copy of City Ordinance #2-2010, providing that the City would

extend paid health benefits to certain employees "who retire" with defined

amounts of service credit. The ordinance also provided that on reaching age

sixty-five, a retired employee who is receiving employer-provided health

coverage and who qualifies for Medicare "shall be entitled to receive Medicare

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as primary coverage and City health insurance as secondary coverage." The

next sentence provided: "Employee shall be responsible for the payment of

Medicare Part B premiums." Based on that specific ordinance language, which

was incorporated by reference and attached to the contract, the arbitrator

concluded that employees who retire under the 2014-2018 CBA must pay their

own Part B premiums. However, the arbitrator concluded that the 2014-2018

CBA did not apply to employees who had retired under the auspices of prior

contracts, that is, employees who retired before the 2014-2018 CBA was

ratified. He reasoned that the rights of those retirees were governed by the terms

of whichever contract governed their employment at the time they retired.

      MEUSA accepted the arbitration award, including provisions unfavorable

to the union, while the City sought to vacate award provisions it found

unfavorable. The trial judge concluded that the arbitrator's interpretation of the

contract was reasonably debatable and the City did not satisfy any of the limited

grounds set forth in N.J.S.A. 2A:24-8 for overturning an arbitration award. The

judge later denied the City's reconsideration motion, noting that the City was

largely recycling arguments the judge considered and rejected on the original

motion. The judge also rejected the City's attempt to raise new substantive

issues on the reconsideration motion.

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                                        II

      On this appeal, the City contends that the arbitrator exceeded the scope of

his authority in addressing the rights and obligations of retirees, the trial court

should have considered the City's reconsideration arguments based on M & G

Polymers USA, LLC v. Tackett, __U.S.__, 135 S. Ct. 926 (2015), and the

arbitrator effectively rewrote the contract as it applied to "gap coverage" for new

employees. Our review of the trial court decision is de novo. Minkowitz v.

Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013). By contrast, neither the trial

judge nor this court may second-guess the arbitrator's interpretation of the CBA,

so long as his construction of the contract is reasonably debatable . Middletown

Twp. PBA Local 124 v. Twp. of Middletown, 193 N.J. 1, 11 (2007). "Consistent

with the reasonably debatable standard, a reviewing court may not substitute its

own judgment for that of the arbitrator, regardless of the court's view of the

correctness of the arbitrator's interpretation." Linden Bd. of Educ. v. Linden

Educ. Ass'n ex rel. Mizichko, 202 N.J. 268, 277 (2010) (citation omitted). After

reviewing the record with that standard in mind, we find no merit in any of the

City's arguments.

      We first address the City's argument about the scope of the arbitration,

and whether it included the issue of retirees' right to payment for their Medicare

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Part B benefits (the retiree issue). We were not provided with a transcript of the

arbitration, presumably because no verbatim record was made. In addition,

other than the list of issues to be arbitrated, the CBA, and a previous arbitration

award, the parties have not placed before us any relevant documents submitted

to the arbitrator, including their post-hearing briefs.

      As a result, we are limited in our ability to determine what arguments the

parties actually presented to the arbitrator or whether either side waived

objection to the arbitrator considering those arguments.       In the award, the

arbitrator characterized the union's argument about payment of Medicare Part B

premiums as having two parts, one applying to current employees and one

applying to employees who retired before this CBA was ratified. Without a

verbatim record of the arbitration, or copies of the post-arbitration briefs, we

cannot meaningfully evaluate the City's argument that the arbitrator

unexpectedly addressed the retiree issue sua sponte when neither side had raised

the issue. See R. 2:6-1(a)(1); State v. Cordero, 438 N.J. Super. 472, 489 (App.

Div. 2014). However, we will briefly address the issue.

      We agree with the trial judge that the arbitrator had the authority to

construe the CBA that was before him, and that the CBA clearly referred to

retirees as well as current employees. The wording of the union's arbitration

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issue was broad enough to encompass the issue of which retirees were covered

by the Medicare Part B language of the CBA. That said, we conclude that the

City's argument on the merits of the Medicare issue is based on a misreading of

the arbitrator's award.

      In his decision, the arbitrator did not state that all retirees who retired

before this CBA was ratified (prior retirees) were entitled to have the City pay

for their Medicare Part B premiums. Rather, the arbitrator merely stated the

general legal proposition that the rights of prior retirees to specific retirement-

related contractual benefits are controlled by the terms of the contracts that were

in effect at the time they retired.      Those prior CBAs were not before the

arbitrator, and he was not called upon to construe their terms. The 2014-2018

CBA was before him, and he reasonably construed that CBA as applying to

future retirees (those who retire after the contract was ratified), not prior retirees.

      In fact, at oral argument on the reconsideration motion, the City's counsel

agreed that "the retirees referred to [in the CBA] are the . . . employees who

retire under this contract." By logical extension, that concession means that the

contract does not require prior retirees to pay for their own Part B premiums,

because it simply does not address the rights or obligations of prior retirees. On

the flip side, in response to a question from the trial judge, MEUSA's counsel

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conceded that if a prior employee had retired under a previous contract that

required retirees to pay their own Part B premiums, the arbitrator's decision

would not require the City to now pay that retiree's premiums. However, counsel

also conceded that the arbitration record did not include all of the prior contracts.

      Based on the record discussed above, we affirm the trial judge's decision

to confirm the arbitration award relating to Medicare Part B premiums. We also

find no abuse of the trial judge's discretion in denying the motion for

reconsideration. See In re Belleville Educ. Ass'n, 455 N.J. Super. 387, 405

(App. Div. 2018). In particular, we find no abuse of discretion in the judge's

refusal to consider legal issues the City raised for the first time on

reconsideration.   Those issues include the substantive effect of the City's

healthcare ordinance on the existing contract rights of prior retirees, the impact

of State legislation concerning health benefits on the rights of prior retirees, and

the substantive impact of M & G Polymers, 135 S. Ct. at 937, on prior

employees' rights under previous contracts. None of those issues were timely

raised in the trial court, and they are not properly before us on this appeal.

                                        III

      We next address the issue of a waiting period for new employees and their

families. In the trial court, the City conceded that the SHBP sets a floor, not a

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ceiling, on what the City must provide. That is, the City was free to agree to

provide benefits beyond those set forth in the SHBP. 1 The arbitrator determined

that the City had, in fact, committed to provide such additional benefits when it

agreed to provide healthcare to new employees and their families without

specifying any waiting period. In making that determination, the arbitrator was

not construing the SHBP or purporting to change its provisions. Rather, he was

construing the CBA, the very function he was authorized to perform. We agree

with the trial judge that the contract was ambiguous as to the timing of the

benefits, and the arbitrator's interpretation was reasonably debatable.2      See

Linden Bd. of Educ., 202 N.J. at 276-77. That ends the inquiry.

      Affirmed.

1
   The trial judge indicated in his opinion that, at oral argument of the motion,
the City conceded that the SHBP "only sets minimum coverage standards and
that South Amboy is free to provide benefits in excess of the minimum standards
provided for [by] the SHBP." Because the City did not provide us with the
transcript of the summary judgment motion argument from November 17, 2017,
we rely on the judge's characterization of the argument record.
2
   In response to our question at oral argument, counsel advised that the SHBP
plan documents, which stated that there was a waiting period for benefits, were
not appended to the CBA. By contrast, the City ordinance, providing that the
City would not pay for Medicare Part B premiums, was included in the CBA as
Appendix B and was referenced in the body of the contract. Thus, the CBA by
its terms clearly incorporated the non-payment for Medicare Part B premiums,
but contained no such clear notice of, or agreement to, the time delay for
receiving health benefits.
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