Court Opinion

ID: 6498712
Source: CourtListenerOpinion
Date Created: 2022-07-08 14:09:16.694156+00
Date Added: 2024-06-11T08:51:11.604756
License: Public Domain

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                           APPROVAL OF THE APPELLATE DIVISION
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 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-0143-21

HOBOKEN MUNICIPAL
EMPLOYEES' ASSOCIATION,

       Plaintiff-Respondent,

v.

CITY OF HOBOKEN,

     Defendant-Appellant.
____________________________

                Submitted June 2, 2022 – Decided July 8, 2022

                Before Judges Mitterhoff and Alvarez.

                On appeal from the Superior Court of New Jersey, Law
                Division, Hudson County, Docket No. L-0944-21.

                Lite Depalma Greenberg & Afanador, LLC, attorneys
                for appellant (Victor A. Afanador, on the briefs).

                Limsky Mitolo, attorneys for respondent (Marcia J.
                Mitolo, on the brief).

PER CURIAM
      In this labor dispute, defendant-appellant City of Hoboken (the City)

appeals from an August 5, 2021 order that vacated a January 15, 2021 arbitrator's

award sustaining in part and denying in part respondent Hoboken Municipal

Employees' Association's (HMEA) grievance against the City.          We affirm,

substantially or the reasons set forth in Judge Anthony V. D'Elia's well-reasoned

oral and written opinions. We add the following.

      HMEA represents civilian municipal employees of the City of Hoboken.

The City and HMEA entered into a collective bargaining agreement (CBA) for

the period of July 1, 2002 through June 30, 2005. Since the expiration of that

agreement, the parties have used a series of memorandums of agreement (MOA)

to maintain their labor agreement. The most recent MOA expired in 2017, and

since then, the parties have been trying to negotiate a new agreement, which

would cover 2018-2020 or another agreed-upon period. The parties' agreement

contains a multi-step grievance process for resolving disputes, which terminates

in binding arbitration in accordance with the rules and regulations of the New

Jersey Public Employment Relations Commission (PERC).

      By the end of 2019, the City was facing significant budgetary problems.

According to the City's Director of Finance, when budgeting for 2020, it was

clear that "anticipated increases in the spending for 2020 would lead to a

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significant budget gap, if not addressed urgently." The total budget shortfall

was estimated to be $7,420,795. The City was also limited in its ability to

compensate for the budget shortfall by taxing residents since it could only raise

property taxes to a level of $6,865,203 per year without a referendum. The onset

of the COVID-19 pandemic made the City hesitant to raise taxes out of fear of

overburdening the taxpayers.

      In January 2020, the City submitted a layoff plan to the Civil Service

Commission. Pursuant to the plan, on or about May 1, 2020, layoff rights

notices were given to the employees facing layoffs. Some of these employees

were in the bargaining unit represented by HMEA. Affected employees with

sufficient seniority were offered "lateral" or "demotional" bumping rights and

were asked to promptly advise whether they would exercise those rights instead

of being laid off. When exercising lateral bumping rights, grievants bumped

employees who were in a different position but who held the same title. When

exercising demotional bumping rights, grievants bumped employees who were

in a different title with a lower pay range. The City unilaterally set salaries for

all employees who exercised their bumping rights at $35,000 per year, and they

were provided an additional $1,000 for every year of service since 2012, even if

they were hired long before that time. Many of these employees remained in

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their own titles or positions and still received a reduced salary. The City set

these salaries without negotiation with the Union.

      On May 1, 2020, HMEA filed a grievance against the City. On or about

May 18, 2020, HMEA submitted a request for a panel of arbitrators to PERC.

At the arbitration hearing, HMEA argued the City violated the CBA by

establishing salaries for the displaced employees without engaging in a proper

negotiations process. The City contended that it followed the CBA and set

salaries for the newly created positions in accordance with previously negotiated

salary ranges already in place.

      On January 15, 2021, the arbitrator issued an opinion and award sustaining

in part and denying in part HMEA's grievance against the City. He found that

the City violated the CBA with respect to employees' lateral bumping rights but

found no violation regarding the demotional bumping. The arbitrator concluded

that because the City had unilaterally established starting salaries for newly

hired and promoted employees, a "past practice" existed that allowed the City

to likewise fix salaries for employees who were demoted.

      HMEA filed an order to show cause in the Law Division seeking to vacate

the arbitrator's decision. On May 26, 2021, Judge D'Elia reversed the arbitrator's

decision, concluding it lacked factual support to extend a past practice dealing

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with new hires and promotions to employees who are demoted to a lower title.

The judge explained:

                  The arbitrator . . . found that there was a past
           practice for new hires and promotional hires. And then
           he jumped, and he said, that, therefore, means that . . .
           the union agreed that you could always say the salary
           in the range when they get put into a new title. And I
           asked . . . a couple of times, what factual basis or
           reasons did he give to make that jump? Or did he just
           make that jump on his own?

                  And [counsel for the City] pointed to the one
           paragraph that was in the briefs, and nothing else. And
           I'm just telling you, based on that record, I don't see any
           facts to support the arbitrator's decision that that was
           the past practice.

                   . . . I think it's unreasonable based on this record
           to conclude that the union would have shut its mouth in
           the past if they reduce people's salaries, and . . .
           unilaterally pick the salaries that they would get when
           . . . they had a bump and go to a lower title.

                  There's been no . . . factual basis to support that
           conclusion at all. That's what I'm saying. So, therefore,
           I don't think he had a good reason to make that jump,
           based on this record. Because the facts are not in
           dispute. The facts are definitely not in dispute. In the
           past, the union was very happy to let the City pick the
           salaries when somebody was hired new, or got
           promoted.

                 And there's never been one instance where the
           union shut its mouth and was happy with someone
           getting demoted, and letting the City pick the salary.

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                  All right? That's my finding on the record
            factually on that. And so that's not going to be re-
            argued. . . . I find that it is not reasonably debatable. I
            think that the arbitrator's decision in that regard was
            unreasonable. No factual support in the record to
            support a conclusion that . . . there was a past practice
            of the union shutting its mouth when . . . an employee
            was reduced in salary and demoted to a lower title.

                  So . . . now we get to managerial prerogative.
            That's going to be briefed in three weeks. Everybody
            will have ten days to respond. . . .

      On July 8, 2021, Judge D'Elia heard arguments on the managerial

prerogative issue. On August 5, 2021, in a written opinion, the judge concluded

that the City did not have a managerial prerogative to unilaterally set salaries

for employees who exercised their "demotional" bumping rights. He reasoned:

            [I]n [Robbinsville Twp. Bd. of Educ. v. Washington
            Twp. Educ. Ass'n, 227 N.J. 192 (2016)] the [Supreme]
            Court specifically found that [Borough of Keyport v.
            Int'l Union of Operating Eng'rs, 222 N.J. 314 (2015)]
            does not stand for the proposition that any time a
            municipal public employer claims an economic crisis,
            managerial prerogative allows that employer to throw a
            collectively negotiated agreement out the window. It
            specifically found ". . . to the contrary, Keyport
            painstakingly emphasized the significance of an agency
            of state government enacting a temporary emergency
            regulation to provide local governmental managers
            with enhanced prerogatives in handling the
            extraordinary fiscal times in the late 2000['s].[" ]Ibid.
            The regulation['s] existence made all the difference in
            Keyport as, ". . . it was mentioned by the Court
            repeatedly throughout the opinion[.]" Ibid. The

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Robbinsville Court emphasized that "[h]ad the
temporary regulation not provided that extra
managerial authority, the fact patterns in the three
consolidated cases in Keyport would have foundered on
the [third] prong analysis[.]"[] Ibid. (emphasis added).

       The parties agree in the instant matter that there
is no regulatory authority for the unilateral actions
taken by the . . . City of Hoboken. Thus, this [c]ourt
finds that the [C]ity did not have the managerial
prerogative to unilaterally set salaries for those
employees who exercised "demotional" bumping rights
into lower titles under the layoff plan.

       This [c]ourt agrees with the Supreme Court in
Robbinsville[] when the Court stated ". . . a claimed
need for managerial prerogative to prevail in tight
budgetary times in order for municipal governmental
policy to be properly determined would eviscerate the
durability of collective negotiated agreements.
Collective negotiated agreements – promises on wages,
rates of pay and hours, and other traditional terms and
conditions of employment – would mean nothing in the
wake of any financial setback faced by a local
governmental entity." Robbinsville, . . . at . . . 204.

      The City's argument in this case is essentially that
the tight budgetary times of 2019 operated to give
Hoboken a managerial prerogative to ignore the
collective negotiated agreement regarding wages and
rates of pay simply because the [C]ity was facing a
financial setback. This is exactly the type of argument
that was rejected in Robbinsville, as summarized
above.

      For the above reasons, the arbitrator's decision is
vacated in its entirety: the [c]ourt finds there was an
insufficient basis for a finding that there was past

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            practice justifying the [C]ity's actions in this case and
            now finds that the [C]ity did not have a managerial
            prerogative to unilaterally set salaries for those
            employees who exercised their "demotional" bumping
            rights. The parties must now negotiate the appropriate
            salaries for those employees who exercised their
            "demotional" bumping rights; retroactive to the date
            their salaries were reduced.

      On appeal, the City presents the following arguments for our

consideration:

            POINT I

            THE TRIAL COURT ERRED IN FAILING TO
            DEFER TO THE ARBITRATOR'S REASONABLY
            DEBATABLE DECISION AND FAILED TO
            ANALYZE THE ARBITRATOR'S DECISION
            UNDER THE NEW JERSEY ARBITRATION ACT,
            N.J.S.A. 2A:24-8.

            POINT II

            THE TRIAL COURT ERRED IN CONCLUDING
            THAT THE CITY DID NOT HAVE A MANAGERIAL
            PREROGATIVE TO IMPLEMENT A PERMANENT
            LAYOFF PLAN.

                  A.    The Trial Court incorrectly applied
                  Robbinsville's narrow holding to the facts of this
                  case.

                  B. Borough of Keyport supports a finding that
                  the City had a managerial prerogative to
                  implement a permanent layoff plan.

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      "In the public sector, an arbitrator's award will be confirmed 'so long as

the award is reasonably debatable.'" Linden Bd. of Educ. v. Linden Educ. Ass'n

ex rel. Mizichko, 202 N.J. 268, 276 (2010) (quoting Middletown Twp. PBA Loc.

124 v. Twp. of Middletown, 193 N.J. 1, 11 (2007)). An award is "reasonably

debatable" if it is "justifiable" or "fully supportable in the record." Policemen's

Benevolent Ass'n v. City of Trenton, 205 N.J. 422, 431 (2011) (quoting Kearny

PBA Loc. # 21 v. Town of Kearny, 81 N.J. 208, 223-24 (1979)). "Under the

'reasonably debatable' standard, a court reviewing [a public-sector] arbitration

award 'may not substitute its own judgment for that of the arbitrator, regardless

of the court's view of the correctness of the arbitrator's position.'" Borough of

E. Rutherford v. E. Rutherford PBA Loc. 275, 213 N.J. 190, 201-02 (2013)

(alteration in original) (quoting Middletown Twp., 193 N.J. at 11).

      N.J.S.A. 2A:24-8 sets forth the limited statutory grounds on which we

may vacate an arbitration award. Pertinent to this appeal, we may vacate an

arbitration award "[w]here the award was procured by corruption, fraud or undue

means" or "[w]here 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(a) and (d).

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      "'[U]ndue means' ordinarily encompasses a situation in which the

arbitrator has made an acknowledged mistake of fact or law or a mistake that is

apparent on the face of the record . . . ." Borough of E. Rutherford, 213 N.J. at

203 (alteration in original) (quoting Off. of Emp. Rels. v. Commc'ns Workers of

Am., AFL-CIO, 154 N.J. 98, 111 (1998)). Arbitrators exceed their authority

where they ignore "the clear and unambiguous language of the agreement." City

Ass'n of Supervisors & Adm'rs v. State Operated Sch. Dist. of City of Newark,

311 N.J. Super. 300, 312 (App. Div. 1998). It is fundamental that "an arbitrator

may not disregard the terms of the parties' agreement, . . . nor may he [or she]

rewrite the contract for the parties." Cnty. Coll. of Morris Staff Ass'n. v. Cnty.

Coll. of Morris, 100 N.J. 383, 391 (1985) (citation omitted). Furthermore, "the

arbitrator may not contradict the express language of the contract." Linden Bd.

of Educ., 202 N.J. at 276.

      The City argues that the judge did not afford the arbitrator's findings the

proper deference owed under the reasonably debatable standard. We reject this

argument as we agree with Judge D'Elia that the arbitrator made mistakes of

both fact and law that are apparent on the face of the record.

      First, we conclude, as did the judge, that the record was devoid of facts to

support of a past practice of unilaterally setting wages that could be extended to

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demoted employees. As the judge observed, new hires and promoted employees

do not have the same expectation of a certain salary within the range. New hires

can either accept or reject the job based on the salary offer. Promoted employees

presumably receive either a more prestigious title, a pay raise, or both. Demoted

employees, in contrast, are required to accept a lesser title and salary than that

which they previously bargained for. The judge was correct that the absence of

a factual basis for extending the City's past practice to demoted employees is

obvious and not subject to debate. Borough of E. Rutherford, 213 N.J. at 203.

      Second, we concur with the judge's rejection of the arbitrator's conclusion

that the budgetary crisis conferred upon the City a managerial prerogative to

ignore the CBA and set wages without negotiation. The judge explained:

                   In Robbinsville, the Supreme Court clearly stated
            that its earlier opinion, Borough of Keyport, does not "
            . . . support a general proposition that, in times of
            economic crisis, a [local public entity] may unilaterally
            impose furlough days on staff members in
            contravention of a parties' collective negotiation
            agreement governing terms and conditions of
            employment." Robbinsville, . . . at 194.

                  In Robbinsville, the local Board of Education
            imposed involuntary furlough days on teachers, thereby
            negatively impacting those employees' wages. An
            unfair labor practice charge was filed with P.E.R.C.
            challenging the Board's action as violating the terms of
            the collective bargaining agreement and the New Jersey
            Employer-Employees Act. N.J.S.A. 34:13A-1 to 43. In

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            granting summary judgment to the Board, P.E.R.C.
            relied upon the Appellate Division opinion in Keyport.
            The Appellate Division then affirmed P.E.R.C.'s ruling
            based upon the Supreme Court opinion in Borough of
            Keyport of July 14, 2015, (which had been rendered
            after P.E.R.C. granted the board summary judgment).

                     In reversing summary judgment, the Robbinsville
            Court held that the Appellate Division relied upon an
            overly broad and mistaken reading of its earlier
            Keyport opinion. In doing so, the Supreme Court
            affirmed that [it] is beyond dispute: public employers
            have a non-negotiable managerial prerogative to reduce
            the work force by laying off employees. Robbinsville
            . . . , at . . . 200. The Court emphasized that in Keyport
            it recognized that public employers could unilaterally
            alter an employee's rate of pay and workdays in
            accordance with a duly authorized layoff plan during
            times of acute economic crisis. Ibid. [T]he Court also
            emphasized that the analytical approach in Keyport
            resorted to the well-established three prong analysis
            from [(IFPTE, AFL-CIO v. State 88 N.J. 393, 403-05
            (1982)] Local 195 to determine negotiability of
            furloughs.[1] The Court held that []. . . the critical
            question turned on the [third] prong, which required a
            balancing of the public employer's interest in "the
            determination of governmental policy" and the
            employee's interest in their work and welfare. Id. at
            . . . 201. The Robbinsville Court emphasized that it had

1
   In Keyport, the Court clarified that New Jersey only has two categories of
subjects for public employment negotiation: mandatorily negotiable terms and
conditions of employment and non-negotiable matters of government policy.
222 N.J. at 333. The Court held that a subject is negotiable when "(1) the item
intimately and directly affects the work and welfare of public employees; (2) the
subject has not been fully or partially preempted by statute or regulation; and
(3) a negotiated agreement would not significantly interfere with the
determination of governmental policy." Id., at 334.
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                                       12
recognized – in Keyport – that the ". . . emergency
regulation (which was then in place) authorizing
temporary layoffs due to the exigent financially
distressing conditions was a clear expression of public
policy authorizing such actions to be taken." Ibid.
(citing to the Keyport opinion). Significantly, the
Robbinsville Court emphasized that it was important to
the Court in Keyport that the municipality there had
acted while the emergency regulation was in effect and
while the municipality faced financial crisis. Id. at . . .
202.

       The Court expressly held that []. . . because there
was no statute or regulation in place (in Robbinsville as
there had been in the Keyport matter) authorizing a
local entity to unilaterally negatively affect the salary
of certain employees, the appellate panel had
misapplied the Court's earlier holding in Keyport when
analyzing the [third] prong of the test. The Court found
that the appellate panel had undervalued the lack of an
authorizing temporary emergency regulation that
permitted temporary furloughs – a factor that had the
significant impact of titling the public policy calculus
under the [third] prong of the Local 195 analysis in
favor of non- negotiability. Id. at . . . 203.

       Moreover, in Robbinsville, the Court specifically
found that Keyport does not stand for the proposition
that any time a municipal public employer claims an
economic crisis, managerial prerogative allows that
employer to throw a collectively negotiated agreement
out the window. It specifically found ". . . to the
contrary, Keyport painstakingly emphasized the
significance of an agency of state government enacting
a temporary emergency regulation to provide local
governmental managers with enhanced prerogatives in
handling the extraordinary fiscal times in the late
2000['s].[" ]Ibid. The regulation['s] existence made all

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                           13
            the difference in Keyport as, ". . . it was mentioned by
            the Court repeatedly throughout the opinion[.]" Ibid.
            The Robbinsville Court emphasized that "[h]ad the
            temporary regulation not provided that extra
            managerial authority, the fact patterns in the three
            consolidated cases in Keyport would have foundered on
            the [third] prong analysis[.]"[] Ibid. (emphasis added).

                   The parties agree in the instant matter that there
            is no regulatory authority for the unilateral actions
            taken by the . . . City of Hoboken. Thus, this [c]ourt
            finds that the [C]ity did not have the managerial
            prerogative to unilaterally set salaries for those
            employees who exercised "demotional" bumping rights
            into lower titles under the layoff plan.

      As noted by Judge D'Elia, the City agrees there was no emergency

regulation enacted to permit the City to disregard the CBA and set salaries as a

matter of managerial prerogative. Thus, the arbitrator erred as a matter of law

to the extent he relied on the fiscal crisis alone as the reason why the wages of

the demoted workers were non-negotiable.

      Affirmed.

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