(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of
the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity,
portions of any opinion may not have been summarized).
Argued February 14, 2001 -- Decided June 20, 2001
ZAZZALI, J., writing for a unanimous Court.
This appeal, which involves an employment dispute, requires the Court to decide whether plaintiffs, seven tenured
Rutgers University-Newark faculty members, presented sufficient evidence to establish the existence of individual
agreements with the University and, if so, whether those individual agreements were superseded by a collective agreement.
Plaintiffs, seven tenured members of the Rutgers University-Newark Faculty of Arts and Sciences, allege that the
University unilaterally changed their employment status from calendar-year (CY) appointments to academic-year (AY)
appointments in breach of their individual agreements. The alleged individual agreements are independent of the collective
negotiations agreement negotiated between the University and the American Association of University Professors (AAUP)
that governs the terms and conditions of employment of University faculty members.
Under the collective agreement, a CY appointment means that the faculty member “is expected” to devote the
entire year to his or her University duties with the exception of a one-month vacation. Under the salary schedules
negotiated by the AAUP, CY appointees receive more favorable pay. In contrast, an AY appointment “requires” the
faculty member to be in attendance from September 1 to the date of commencement.
In March 1992, David Hosford, Dean of Rutgers-Newark's Faculty of Arts and Sciences, informed plaintiffs that
unless they maintained sufficient duties to satisfy CY criteria (i.e., duties that occupied eleven months of the year), their
appointments would be changed to AY status effective July 1992. Plaintiffs objected, arguing that their CY appointments
were made without conditions attached, such that they had no obligations to perform specific duties beyond the academic
year. In support of their argument, plaintiffs offered evidence suggesting that University officials had intended to
grandfather the appointment of CY appointees during the Union negotiations in the early 1970s; evidence indicating that
the University had been unsuccessful in its past attempts to alter the CY appointments of other University faculty members,
presumably because of the agreement to grandfather unconditional CY appointees; and evidence of their own employment
history, which suggested that the University was aware that plaintiffs maintained CY appointment status even though they
at times did not devote the entire year to University duties. Finally, plaintiffs argued that a July 1984 memorandum from
the then executive vice president of the University established a policy that insulated CY appointees from any changes to
the conditions of employment of faculty members.
In May 1992, plaintiffs filed a grievance through the AAUP pursuant to the collective agreement. Later, the
grievance was submitted to arbitration. However, when an arbitrator determined that the nature of the dispute fell under an
article in the collective agreement that subjected the dispute only to advisory, as opposed to binding arbitration, plaintiffs
abandoned the arbitration. After a somewhat unsuccessful attempt to pursue litigation in federal court, plaintiffs filed suit
against the University in the Law Division in 1996, alleging breach of contract. Plaintiffs and the University filed motions
for summary judgment, both of which were denied. The University then filed a motion for leave to file an interlocutory
appeal with the Appellate Division. The panel denied the motion without prejudice and remanded the matter to the motion
court for a statement of reasons underlying its decision. In response, the motion court stated that there were a number of
factual issues to be resolved by a fact finder, including whether the plaintiffs were “grandfathered” into CY appointments,
either under the AAUP agreement or by the conduct of the University.
The University subsequently filed a second for interlocutory review, which also was denied by the Appellate
Division. Again, however, the panel remanded the matter to the Law Division to address the University's argument that
the alleged individual agreements were superseded by the collective agreement. On remand, the Law Division concluded
that there was a fact issue concerning whether plaintiffs were grandfathered into unconditional CY appointments and
exempt from any conflicting provisions under the collective agreement. The University then renewed its motion for leave
to appeal with the Appellate Division, which was granted.
On appeal, the Appellate Division held that plaintiffs did not have individual contract rights and that any other
rights asserted were to be governed by the collective agreement. Specifically, the panel found that the collective agreement
and University regulations fully described the obligations of a CY appointee and that the collective agreement thus
superseded any separate agreements between plaintiffs and the University. The panel further concluded that the matter was
one of managerial prerogative subject to advisory arbitration under the collective agreement. The Appellate Division
therefore reversed and remanded the matter for entry of judgment dismissing the complaint without prejudice to the rights
plaintiffs had under the collective agreement.
The Supreme Court granted plaintiffs' petition for certification.
HELD: Plaintiffs, a group of tenured Rutgers University professors, presented sufficient evidence to establish a fact
question regarding the existence of individual agreements with the University that would prevent it from altering plaintiffs'
alleged status as unconditional calendar-year appointees; the collective agreement reached between the University and the
American Association of University Professors would not supersede the professors' individual agreements in the unusual
circumstances of this case.
1. An employment contract may be formed by the existence of conditions, not only manifested by words, but also implied
from the circumstances of employment. Implied contract terms generally are considered as binding as express contract
terms. (pp. 12-14)
2. Whether the parties acted in a manner sufficient to create implied contractual terms is a question of fact generally
precluding summary judgment. (pp. 14-15)
3. Because plaintiffs did not assert that the University's actions towards other CY appointees were communicated to the
workforce, or even that there was a general awareness of those actions, the evidence offered by plaintiffs in respect of the
University's past actions generally would not support a claim under Woolley v. Hoffman-La Roche,
99 N.J. 284 (1985),
that Rutgers had a University-wide policy about unconditional CY appointees. (pp. 15-21)
4. Although Wooley and Shebar involve implied contracts that protect the employee against arbitrary termination, the
principle of holding an employer responsible for the promises it chooses to make to its employees is equally applicable to
other terms and conditions of employment, such as work schedule and attendant salary reduction. (pp. 20-21)
5. Evidence exists to support plaintiffs' position that their appointment status was in the nature of an enforceable
contractual obligation; the ultimate resolution of whether plaintiffs had an enforceable contract in respect of CY
appointments must be rendered by the finder of fact. (pp. 21-23)
6. New Jersey courts have applied the federal labor principle that individual contracts are void only to the extent that they
conflict with collective agreements or interfere with the principle of collective negotiation. Courts may look to the
collective agreement to decide whether a conflict exists between the alleged individual agreement and the collective
agreement. (pp. 23-29)
7. The collective agreement in this case does not preclude the type of agreements plaintiffs allege were established because
those individual agreements would not be inconsistent with the collective agreement, would not diminish any rights
provided for under the collective agreement, and because the AAUP has agreed to allow individual rights to be enforced by
faculty members. (pp. 29-33)
8. Generally, collective agreements prevail over individual agreements and, where there is a conflict, the individual
agreements may not be enforced. Long-standing principles favoring collective agreements and forbidding unfair labor
practices would not be subverted in this case by a finding that the individual agreements were not precluded by the
collective agreement. (pp. 33-34)
9. Questions concerning whether subjects are mandatorily negotiable should be made on a case-by-case basis. The dispute
in this case, which involves an issue over whether plaintiffs are required to work for the calendar year as CY appointees, is
not a matter of managerial prerogative, but rather a dispute over a faculty work schedule, a term of employment, that may
be litigated. (pp. 34-42)
10. There is a fact question in this case regarding whether the University created an enforceable obligation that prevented
palintiffs' alleged status as unconditional CY appointees from being altered. If plaintiffs can establish that obligation to a
fact finder, then the collective agreement would not supersede those individual agreements in the unusual circumstances of
this case. The collective agreement in this case permits the dispute to be litigated. The Appellate Division erred in
characterizing this dispute as one involving managerial prerogative. (pp.42-43)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED.
JUSTICE VERNIERO filed a separate concurring opinion in which JUSTICES COLEMAN and LaVECCHIA
joined. Justice Verniero emphasizes that although the Court discusses the contours of Woolley, it did so only in the course
of concluding that the doctrine of Woolley did not apply. Justice Verniero notes that the Court has never directly extended
the requirements of that case to public employers. Justice Verniero further did not consider the Court's reliance on Shebar
v. Sanyo Business Systems Corp.,
111 N.J. 276 (1988), to suggest that implied contracts may now be routinely recognized
between public employers and employees.
CHIEF JUSTICE PORITZ and JUSTICES STEIN and LONG join in JUSTICE ZAZZALI's opinion. JUSTICE
VERNIERO has filed a separate concurring opinion in which JUSTICES COLEMAN and LaVECCHIA join.
SUPREME COURT OF NEW JERSEY
A-
17 September Term 2000
DR. LEO TROY, DR. STAN HALL,
DR. ERNST U. MONSE, DR. HUGH
THOMPSON, DR. IRWIN ROTHBERG,
DR. DANIEL WILHOFT and DR.
IRWIN PRIMER,
Plaintiffs-Appellants,
v.
RUTGERS, THE STATE UNIVERSITY,
Defendant-Respondent.
Argued February 14, 2001 -- Decided June 20, 2001
On certification to the Superior Court,
Appellate Division.
Michael H. Sussman, a member of the New York
bar, argued the cause for appellants (John
P. Brennan, Jr., attorney).
John J. Peirano, Jr. argued the cause for
respondent (Carpenter, Bennett & Morrissey,
attorneys; Mr. Peirano, Kevin C. Donovan and
Seth Ptasiewicz, on the brief).
The opinion of the Court was delivered by
ZAZZALI, J.
This employment dispute requires us to decide whether
plaintiffs presented sufficient evidence to establish the
existence of individual agreements with defendant and, if so,
whether those individual agreements were superseded by a
collective agreement.
Plaintiffs, seven tenured Rutgers University-Newark faculty
members, allege that defendant Rutgers University unilaterally
changed their employment status from calendar-year appointments
to academic-year appointments in breach of their individual
agreements. The Appellate Division held that the professors did
not provide sufficient evidence of individual agreements and,
even if they had, the collective agreement generally would
prevail over any individual agreements. The court also concluded
that the dispute was a matter of managerial prerogative, such
that it could be resolved only through non-binding advisory
arbitration under the collective agreement. We disagree, and
therefore reverse and remand.
I
Plaintiffs, seven tenured members of the Rutgers University-
Newark Faculty of Arts and Sciences, allege that defendant
University unilaterally changed their employment status from
calendar-year (CY) appointments to academic-year (AY)
appointments in breach of their individual agreements. The
alleged individual agreements are independent of the collective
negotiations agreement negotiated between defendant and the
American Association of University Professors (AAUP) that governs
the terms and conditions of employment of University faculty
members.See footnote 11
By 1991, each plaintiff had held a CY appointment for at
least twenty years. A CY appointment, under the collective
agreement, means that the faculty member is “expected to” devote
the entire year to his or her University duties with the
exception of a one-month vacation. An AY appointment, in
contrast, “requires” the faculty member to be in attendance from
September 1 to the date of commencement. Defendant and the AAUP
negotiated two separate salary schedules for AY and CY
appointees, with CY appointees receiving more favorable pay.
In March 1992, David Hosford, Dean of Rutgers-Newark's
Faculty of Arts and Sciences, advised plaintiffs that, unless
they maintained sufficient duties to satisfy CY criteria, i.e.,
duties that occupy their time for eleven months of the year,
their appointments would be changed to AY status effective July
1992. Plaintiffs objected, arguing that their CY appointments
were made without conditions attached to those appointments, such
that they had no obligation to perform specific duties beyond the
academic year. Plaintiffs contended at that time, and assert
here, that defendant elected to “grandfather” their appointments
so as to exclude them from any requirement that they work beyond
the academic year.
In support of their argument, plaintiffs point to, among
other proofs: (1) the deposition of George Horton, a professor
and former AAUP representative, who testified that University
officials intended to grandfather the appointment status of CY
appointees during Union negotiations with defendant in the early
1970s; (2) the deposition of Wells Keddie, a former AAUP
President, who testified that the AAUP and defendant had an
unwritten understanding that although the University discussed
ending the practice of making “unconditional” CY appointments,
existing CY appointees would be grandfathered from any changes;
(3) the appointment history of other University faculty members
indicating that defendant unsuccessfully attempted to alter their
CY appointments to AY appointments, presumably because of the
agreement to grandfather unconditional CY appointees; and (4) the
appointment history of each of the seven plaintiffs, including
evidence that suggests in part that defendant was aware that
plaintiffs maintained CY appointment status even though they at
times did not devote the entire year to University duties.
Further, plaintiffs argue that a July 1984 memorandum from
T. Alexander Pond, then Executive Vice President of Rutgers
University, established a policy that insulated CY appointees
such as plaintiffs from any changes to the conditions of
employment of faculty members. That memo (the Pond Memorandum)
was addressed to Provosts and Deans and states:
The University Senate recently
considered the question of calendar year
appointments and provided the President with
advice that formalized in writing what has
essentially been our practice for some time
in regard to such appointments. That advice
was reviewed by the Board of Governors.
Set forth below is the statement
regulating calendar year appointments which
was adopted by the Senate and which I am now
promulgating as the University's policy in
regard to calendar year faculty appointments:
1. All persons initially appointed
and/or tenured on calendar year
appointments without conditions
attached to those appointments
shall continue to hold those
appointments, unless an entire
class of said appointments is
reduced.
2. No further calendar year
appointments without specific
written conditions shall be made.
3. Non-administrative calendar year
appointments shall be made only in
instances where the special
circumstances of the faculty
member's academic work require
her/his presence on campus (or
usual place of work), on a year-
long basis.
4. When the conditions which led to
the new calendar year appointment
no longer apply, the appointment
shall revert to an academic year
appointment.
Please note that point number 1. above
should not be construed to mean that initial
appointment on a calendar year basis without
conditions eliminates the obligation of a
faculty member to be engaged in his or her
professional duties at the University during
the full term of his or her appointment, nor
should it be construed to mean that a faculty
member and his or her chairperson and dean
cannot agree to reduce an appointment from
calendar year to academic year. In regard to
point number 2., the specific written
conditions should be understood to refer to
an explicit statement of the professional
responsibilities entailed by the calendar
year appointment.
[(Second emphasis added).]
Plaintiffs filed a grievance in May 1992 through the AAUP,
pursuant to the collective agreement. Parenthetically, we note
that the grievance procedure delineated under this collective
agreement is different from similar procedures contained in
private-sector collective bargaining agreements covering, for
instance, factory workers or construction workers. Nor is this
grievance procedure typical of that contained in most collective
agreements in the public sector, such as those covering police
officers, fire officers, or K-12 teachers. The standard
grievance procedure in those agreements usually consists of a few
paragraphs. The intricate grievance procedure in this collective
agreement consumes twenty-three single-spaced pages of the fifty-
three page contract.
The agreement states that either the AAUP or a faculty
member can file a grievance. The grievance procedure begins at
“Step One,” in which University personnel conduct their own
investigation resulting in a written response to the grievant.
If dissatisfied with the disposition of the grievance at Step
One, the AAUP or the grievant ordinarily has thirty working days
from the receipt of the Step One decision to appeal the grievance
to “Step Two,” which is arbitration.
Here, the AAUP, on behalf of plaintiffs, started Step One of
the grievance procedure by alleging in a letter to defendant that
its unilateral change of plaintiffs' appointments was a violation
of the collective agreement and University regulations and
policies. In an August 1992 memorandum, the University's
Assistant Vice President for Faculty Affairs denied the
grievance, stating in part that “[t]he seven grievants were the
only FAS faculty who were performing academic year assignments
while being paid for calendar year appointments. All other
calendar year appointees, regardless of age, have calendar year
assignments.”
In October 1992, the AAUP appealed that denial to Step Two
arbitration. Plaintiffs argued that the dispute was a “Category
One” grievance under the collective agreement; defendant argued
that it was a “Category Two” grievance. A Category One grievance
alleges that the University violated mandatorily-negotiable terms
and conditions in the collective agreement. A Category Two
grievance generally does not involve a violation of the
collective agreement itself, but instead alleges that the
University violated policies, other agreements, or regulations
affecting mandatorily-negotiable terms. Unlike a Category One
grievance that is resolved in binding arbitration, a Category Two
grievance is resolved by “advisory arbitration,” in which an
arbitrator issues an advisory recommendation to the Office of the
President, who is charged with issuing a final and binding
determination. Article XXII of the collective agreement defines
AY and CY appointments and states that grievances under that
Article are Category Two grievances.
In March 1994, the arbitrator concluded that the dispute
fell under Article XXII of the collective agreement and thus was
properly characterized as a Category Two grievance subject only
to advisory arbitration. Plaintiffs decided not to pursue
advisory arbitration.
In the meantime, plaintiffs had instituted an action against
the University in December 1992 in the United States District
Court for the District of New Jersey, alleging age
discrimination,
29 U.S.C.A.
§621, violations of due process
rights, and common-law breach of contract. In 1995, the
Honorable William G. Bassler, U.S.D.J., granted defendant's
motion for summary judgment on the discrimination and due process
claims. In denying summary judgment on the breach of contract
claim, the court observed:
A genuine issue of material fact exists as to
whether there was a contract preventing
reversion of historic calendar year
appointments to academic year appointments.
A reasonable jury provided with the plain
language of the [collective agreement], the
1984 policy statement, the evidence of
Rutgers' response to prior challenges to the
“historical” calendar year appointments and
the testimony of Keddie and Horton regarding
the unwritten agreement could find for either
party. Consequently, summary judgment on
this issue is denied.
Nevertheless, the court dismissed the breach of contract claim
without prejudice, citing an insufficient basis to exercise
pendent jurisdiction. The Third Circuit affirmed. Troy v.
Rutgers, The State Univ., No. 95-5805 (3d Cir. June 5, 1996).
Plaintiffs filed this breach of contract action in the Law
Division in October 1996. Plaintiffs and defendant filed summary
judgment motions, both of which were denied. Defendant then
filed a motion for leave to file an interlocutory appeal with the
Appellate Division. The Appellate Division denied defendant's
motion without prejudice and remanded the matter to the Law
Division for a statement of reasons underlying its decision. In
response, the motion court stated that there were a number of
material facts at issue, including
whether these plaintiffs were “grandfathered”
into calendar year appointments (defendant
maintaining such wording was never included
in the AAUP agreement; plaintiffs submitting
deposition testimony that the acts and
conduct of Rutgers supports their position).
A fact finder must determine whether or
not the acts and conduct of the defendant
created a binding agreement between the
parties and if not a determination as to
whether or not the defendant had the right to
terminate the status of the seven plaintiffs
from a calendar term to an academic term
along with justifiable reasons which would
include a question as to whether or not these
seven plaintiffs constituted an entire class.
There is also conflicting certification facts
and deposition testimony as to what the
agreement was with regard to the work, as to
where and how these plaintiffs were to spend
the summer months. A reasonable jury must
make a determination. The [c]ourt cannot as
a matter of law rule in either direction and
thus both plaintiffs' motion and defendant's
motion are denied.
Defendant subsequently filed a second motion for
interlocutory review with the Appellate Division. The Appellate
Division denied defendant's motion, but remanded the matter to
the Law Division for disposition of defendant's argument that the
alleged individual agreements were superseded by the collective
agreement. Accordingly, on remand, the motion court concluded
that there was a fact issue concerning whether plaintiffs were
grandfathered into unconditional calendar-year appointments and
exempt from any conflicting provisions under the collective
agreement. Defendant then filed a renewed motion for leave to
appeal with the Appellate Division. The Appellate Division
granted that motion.
The Appellate Division held that plaintiffs did not have
individual contract rights and that any other rights asserted
were to be governed by the collective agreement. The Appellate
Division was not persuaded that the testimony of Horton and
Keddie, the individual employment histories of plaintiffs, or the
Pond memorandum created a contract right. Rather, the court held
that the collective agreement and University regulations fully
described the obligations of a CY appointee and that the
collective agreement thus superseded any separate agreements
between plaintiffs and defendant. The court also concluded that
the matter was one of managerial prerogative subject to advisory
arbitration under the collective agreement. The court therefore
reversed and remanded the matter for entry of judgment dismissing
the complaint without prejudice to the rights plaintiffs had
under the collective agreement.
Plaintiffs sought certification, which this Court granted.
165 N.J. 602 (2000). We now reverse.
We first address whether there exist genuine issues of material fact relating to whether defendant created an enforceable obligation permitting plaintiffs to maintain their CY appointments. R. 4:46-2.
An employment contract may be formed by the existence of conditions, not only manifested by words, but also implied from the circumstances of employment. White v. Atlantic City Press, 64 N.J. 128, 133 (1973); 27 Am. Jur. 2d Employment Relationship § 13 (1996). Oral promises, representations, employee manuals, or the conduct of the parties, depending on the surrounding circumstances, have been held to give rise to an enforceable obligation on the part of an employer. See, e.g., Wanaque Borough Sewerage Auth. v. Township of West Milford, 144 N.J. 564, 574 (1996) (“Courts often find and enforce implied promises by interpretation of a promisor's word and conduct in light of the surrounding circumstances.”); Shebar v. Sanyo Bus. Sys. Corp., 111 N.J. 276, 289 (1988) (holding that material issue of fact existed concerning whether employer orally promised to discharge employee only for cause); Gilbert v. Durand Glass Mfg. Co., 258 N.J. Super. 320, 329-30 (App. Div. 1992) (finding that oral representation by employer can support implied contract claim); 30 C.J.S. Employer-Employee § 24b (1992) (describing employment contract as “not only what is expressly stated, but also what is necessarily implied from the nature of the relationship created”).
Implied contract terms generally are considered as binding as express contract terms. See Wanaque Borough Sewerage Auth., supra, 144 N.J. at 574 (“[C]ontracts implied in fact are no different than express contracts.”); Restatement (Second) of Contracts § 19 cmt. a (1981) (“[T]here is no distinction in the effect of the promise whether it is expressed in writing, or orally, or in acts, or partly in one of these ways and partly in others.”). But see Jackson v. Georgia-Pacific Corp., 296 N.J. Super. 1, 15 (App. Div. 1996) (holding that employment manual's express disclaimer superseded alleged implied contractual term), certif. denied, 149 N.J. 141 (1997). The recognition of implied-in-fact contract provisions is contrary to “'the common law presumption that the parties' writing and the official law of contract are the definitive elements of the agreement.'” Foley v. Interactive Data Corp. 765 P.2d 373, 386 (Cal. 1988) (quoting Goetz & Scott, The Limits of Expanded Choice: An Analysis of the Interactions Between Express and Implied Contract Terms 73 Cal. L. Rev. 261, 273-276 (1985)). The modern view is that, “[j]ust as assent may be manifested by words or other conduct, sometimes including silence, so intention to make a promise may be manifested in language or by implication from other circumstances.” Restatement (Second) of Contracts § 4 cmt. a (1981).
Whether the parties acted in a manner sufficient to create implied contractual terms is a question of fact generally precluding summary judgment. See Reynolds v. Palnut Co., 330 N.J. Super. 162, 171-72 (App. Div. 2000) (holding summary dismissal of breach of implied employment contract claim inappropriate where factual issue over existence of oral policy). As the court noted in Giudice v. Drew Chem. Corp., 210 N.J. Super. 32, 36 (App. Div.), certif. denied, 104 N.J. 465 (1986), summary judgment ordinarily is not appropriate in an implied employment contract claim because “factual questions will persist concerning the meaning and intent of certain documents relevant to [such] a decision.” See also Witkowski v. Thomas J. Lipton, Inc., 136 N.J. 385, 399 (1994) (concluding that jury should determine whether employee could reasonably expect job security from employment manual); Labus v. Navistar Int'l Transp. Corp., 740 F. Supp. 1053, 1063 (D.N.J. 1990) (observing that, under New Jersey law, “[t]he legitimacy of the representations and the reasonableness of the employee's reliance are questions for the finder of fact that are not appropriate for summary judgment”). Of course, when no reasonable juror could reach other than one conclusion, the question of whether a document constitutes an implied contract may be resolved in a motion for summary judgment. Rosemary Alito, New Jersey Employment Law, § 1-6:2 at 20 (2d ed. 1999). See also Ware v. Prudential Ins. Co., 220 N.J. Super. 135, 146-47 (App. Div. 1987) (holding that court erred as matter of law in failing to enter judgment for employer at close of plaintiff's implied employment contract action), certif. denied, 113 N.J. 335 (1988).
In Shebar v. Sanyo Bus. Sys. Corp., supra, this Court distinguished an implied contract action based on a company-wide policy under Woolley v. Hoffmann-La Roche, 99 N.J. 284 (1985), modified on other grounds, 101 N.J. 10 (1985), from an implied contract claim that is based on representations made to a particular employee. 111 N.J. at 288. The plaintiff in Shebar was hired as an at-will employee but alleged that, after he attempted to resign to accept another job offer, his employer orally promised him that if he stayed he would have a job for life and that he would not be fired without cause. Id. at 282- 84. The plaintiff was fired four months later and subsequently filed a claim for breach of oral contract of employment. Id. at 283. The Appellate Division held that the plaintiff could prove under Woolley that his employer created an oral company-wide policy that permitted him to be fired only for cause. Id. at 284. This Court affirmed on different grounds. Rather than relying on Woolley, the Shebar Court held that the plaintiff's circumstances created a “special contract with a particular employee, not a general agreement covering all employees.” Id. at 288. The Court explained that while Woolley concerned a company-wide policy, defendant's alleged oral promise to the plaintiff was “made specifically to him.” Id. at 284.
The Shebar Court therefore declined to apply Woolley's implied contract analysis to the facts of that case or to consider whether to extend Woolley to oral company-wide policies.See footnote 22 Whereas Woolley held that an employee's continued work in reliance on the employer's promise of job security contained in such a manual was sufficient consideration for contractual purposes, 99 N.J. at 303, the Shebar Court held that the plaintiff's breach of contract claim “should be analyzed by those contractual principles that apply when the claim is one that an oral employment contract exists.” Id. at 288. Although the Court did not discuss those principles, it cited with approval Shiddell v. Electro Rust-Proofing Corp., 34 N.J. Super. 278 (App. Div. 1954), certif. denied, 17 N.J. 408 (1955), which observed that, within the context of an alleged oral promise for long-term employment, the creation of an implied contract depends on “[t]he intent of the parties [that] may be ascertained from the language employed, from all attending circumstances, and from the presence or absence of the giving by the employee of consideration additional to the services incident to his employment.” Id. at 289. That analysis therefore differs from the implied employment contract analysis under Woolley in which consideration “shall be presumed.” 99 N.J. at 307. Shebar further held that the plaintiff's claim for a lifetime contract was barred by Savarese v. Pyrene Mfg. Co., 9 N.J. 595 (1952), which required that “a contract for lifetime employment be demonstrated by unmistakably clear signs of the employer's intent.” Id. at 287. After reciting the pronouncement in Savarese that contracts for lifetime employment are “at variance with general usage and sound policy,” the Shebar Court found the plaintiff's claim of a promise to discharge only for cause distinguishable from a lifetime employment claim because the latter claim “protects the employee only from arbitrary termination.” Ibid. The Court held that summary judgment was not appropriate because a fact finder could determine that the alleged representations made to the plaintiff were intended to induce him to remain with the employer and were relied on by him in declining an offer from another company. Id. at 288-89. The Court concluded that a fact finder could determine that “additional consideration” was given because the plaintiff relinquished a competing job offer and the employer, in exchange, relinquished its right to terminate his employment at will. Id. at 289. Shebar applies retroactively. See Smith v. Squibb Corp., 254 N.J. Super. 69, 73 (App. Div.) (“New Jersey has acknowledged for over three-quarters of a century that an act or promise of forbearance may be sufficient consideration to support an alleged oral contract of employment.”), certif. denied, 130 N.J. 10 (1992).
In this case, plaintiffs' action is more akin to a breach of an individual implied contract of employment claim under Shebar than it is to a Woolley claim. The circumstances surrounding plaintiffs' complaint suggest that defendant made promises that were specific to plaintiffs, namely, that they were allowed to hold special status as unconditional CY appointees. Plaintiffs claim that only twenty percent of University-wide faculty members hold CY appointments. Of those faculty members, the record is silent regarding the percentage who hold CY appointments but do not work for the entire calendar year. Nevertheless, in denying plaintiffs' initial grievance, defendant claimed that as of August 1992 plaintiffs “were the only FAS faculty who were performing academic year assignments while being paid for calendar year appointments.” Moreover, as defendant correctly points out, plaintiffs' claim rests largely on the allegation that after they were appointed on a CY basis, defendant made a decision, unique to each plaintiff, not to alter their CY appointments until 1992. That decision, according to plaintiffs, was made despite defendant's awareness that each plaintiff had not performed responsibilities during the course of an entire calendar year. Under those circumstances, we are convinced that the situation here involves an alleged “special contract” with each individual plaintiff. Shebar, supra, 111 N.J. at 288. Plaintiffs point to the Pond Memorandum, the deposition testimony of Horton and Keddie, and the University's action towards other CY appointees as evidence that defendant had a University-wide policy under Woolley with regard to unconditional CY appointees. Because plaintiffs do not assert that those alleged actions and representations were communicated to the workforce, or even that there was general awareness of those actions, those proofs generally do not support a claim under Woolley. 99 N.J. at 302-04. Nevertheless, because the surrounding circumstances are relevant in deciding whether the parties intended an individual implied employment contract to exist, those proofs may demonstrate that defendant's alleged agreement not to challenge plaintiffs' appointment status was consistent with a long-standing practice not to change the status of all unconditional CY appointees. Shebar, supra, 111 N.J. at 290; N.J.R.E. 401.
We also see no barrier to the recognition of plaintiffs' implied contract action because it concerns a change of work schedule and attendant reduction in pay. Although both Shebar and Woolley involve implied contracts that protect the employee against arbitrary termination, the principle of holding an employer responsible for the promises it chooses to make to its employees is equally applicable to other terms and conditions of employment and personnel decisions. See, e.g., Marzano v. Computer Science Corp., 91 F.3d 497, 512 (3d Cir. 1996) (applying New Jersey law in determining whether memo concerning maternity leave gave rise to enforceable obligation); Kennedy v. Chubb Group of Ins. Cos., 60 F. Supp.2d 384, 399 (D.N.J. 1999) (applying New Jersey law in deciding whether employer's short- week program given contractual force); Barone v. Leukemia Soc. of Am., 42 F. Supp.2d 454, 457 (D.N.J. 1998) (applying New Jersey law in noting employee handbook may create binding obligations concerning sick leave or bereavement leave); Giuntoli v. Garvin Guy Butler Corp., 726 F. Supp. 494, 508 (S.D.N.Y. 1989) (holding that plaintiff may proceed with implied contract for bonus claim based on employer's written policies, course of dealing between parties, and oral representations made to plaintiff); Scott v. Pac. Gas and Elec. Co., 904 P.2d 834, 839 (Cal. 1995) (“[T]here is no rational reason why an employer's policy that its employees will not be demoted except for good cause, like a policy restricting termination or providing for severance pay, cannot become an implied term of an employment contract.”); Sledge v. New Haven Coliseum Auth., 1 996 WL 548163 (Conn. Super. 1996) (recognizing employee's right to establish implied contract governing right to annual performance evaluations and wage and benefit reviews); Popovich v. Bekert Corp., 474 S.E.2d 286, 288 (Ga. Ct. App. 1996) (holding that employee may claim contract created based on employer promise of severance pay to employee). The Appellate Division held that the evidence could not support a determination that defendant's conduct created a contract right. We disagree. A fact finder could conclude that defendant promised not to change plaintiffs' alleged status as unconditional CY appointees. Certain faculty CY appointments apparently were made without conditions. Although defendant alleges it eventually wished to ensure that CY appointees would be obligated to work past the academic year, a fact finder could conclude that defendant may have been willing to insulate plaintiffs from any such requirement. Plainly stated, a fact finder may conclude that defendant promised plaintiffs individually that their status as CY appointees did not hinge on the performance of specific duties beyond the academic year and that that promise was intended to induce plaintiffs to remain at the University. Further, a fact finder could conclude that that arrangement could constitute valuable consideration, namely, that plaintiffs enjoyed unconditional CY status and, in exchange, defendant enjoyed plaintiffs' decision to remain at Rutgers rather than to seek employment elsewhere. Shebar, supra, 111 N.J. at 289.
We hold therefore that evidence exists to support plaintiffs' position that their appointment status was in the nature of an enforceable contractual obligation. We find it persuasive that the federal district court, in its thoughtful opinion, determined that summary judgment was not appropriate on that issue. The ultimate resolution of whether plaintiffs had an enforceable contract in respect of CY appointments must be rendered by the finder of fact.
N.J.S.A. 34:13A-5.3 provides that representatives selected by public employees for collective negotiating purposes “shall be the exclusive representatives for collective negotiation concerning the terms and conditions of employment.” Public employees who have selected a representative therefore have no separate negotiating rights. Their collective negotiations representative protects and advances their interests. The union in turn is charged with fairly representing the interests of all employees in negotiating a collective agreement and representing the employees after the parties consummate an agreement.
Three decades ago, Justice Francis, writing for a unanimous Court in Lullo v. Int'l Assoc. of Fire Fighters, 55 N.J. 409 (1970), addressed the very concerns implicated in this appeal. He observed that collective agreements are designed to “supersede the possible terms of individual agreements of employers with terms which reflect the strength and bargaining power and serve the welfare of the group.” Id. at 428. The Court explained that the union movement “was born of the realization that a single employee had no substantial economic strength. He had little leverage beyond the sale of his own efforts to aid him in obtaining fair wages, hours of work and working conditions.” Id. at 425 (citing N.L.R.B. v. Jones & Laughlin Steel Corp., 301 U.S. 1, 33-34, 57 S. Ct. 615, 622-623, 81 L. Ed. 893, 909 (1937)). Employees thus turned to labor unions “to strengthen and further that community of interest” because “in union there is strength and a means of achieving an equitable balance of bargaining power.” Ibid. The collective agreement that would result from union representation was viewed by the Court as an effective way to protect employees against exploitation. Although the negotiation rights of individuals generally would have to yield to the interests of the collective group under such agreements, employees as a whole benefit because the “terms and advantages of the collective agreement become open to every employee in the represented unit” as opposed to “advantages to an employee through an individual contract [that] 'may prove as disruptive of industrial peace as disadvantages.'” Id. at 428 (quoting J.I. Case Co. v. Nat'l Labor Relations Bd., 321 U.S. 332, 338, 64 S. Ct. 576, 581, 88 L. Ed. 762, 768 (1944)).
In support of the policy favoring collective agreements over piecemeal agreements by individuals, the Lullo Court relied on the landmark United States Supreme Court decision of J.I. Case Co. v. Nat'l Labor Relations Bd., supra.See footnote 33 The J.I. Case Court considered the issue of whether an employer could have separate individual agreements with unionized employees despite an existing collective bargaining agreement. The union in that case was certified as the exclusive bargaining representative of the employees whose individual employment contracts still were in effect. 321 U.S. at 333, 64 S. Ct. at 578, 88 L. Ed. at 765. The employer argued that the preexisting individual contracts precluded negotiating over matters affecting rights and obligations under those individual contracts. Id. at 334, 64 S. Ct. at 578, 88 L. Ed. at 765. The union then filed an unfair labor practice charge. Ibid. The Supreme Court concluded that employers and employees could not maintain individual agreements that waive any benefit to which the employees would be entitled under the collective agreement. Otherwise, the goal of permitting employees to use their bargaining power to secure favorable terms of employment while serving the welfare of the group would be undermined. Id. at 338, 64 S. Ct. at 580, 88 L. Ed. at 768. The Court noted that individual agreements typically are a way of “interfering with organization and choice of representatives” and, even if they provide for increased compensation, create the suspicion that that benefit is “being paid at the long-range expense of the group as a whole.” Id. at 338-39, 64 S. Ct. at 581, 88 L. Ed. at 768.
The J.I. Case decision, however, does not impose an absolute bar on the ability of bargaining unit members to enter into individual contracts with the employer. The Court noted that it was “not called upon to say that under no circumstances can an individual enforce an agreement more advantageous than a collective agreement.” Id. at 338, 64 S. Ct. at 580, 88 L. Ed. at 768. The Court declared that “where there is great variation in circumstances of employment or capacity of employees, it is possible for the collective bargain to prescribe only minimum rates or maximum hours or expressly to leave certain areas open to individual bargaining.” Id. at 338, 64 S. Ct. at 581, 88 L. Ed. at 768. Moreover, the Court observed that “[i]ndividual contracts cannot subtract from collective ones, and whether under some circumstances they may add to them in matters covered by the collective bargain, we leave to be determined by appropriate forums under the laws of contracts applicable, and to the Labor Board if they constitute unfair labor practices.” Id. at 339, 64 S. Ct. at 581, 88 L. Ed. at 768. The J.I. Case decision, therefore, “does not stand for the proposition that all individual employment contracts are subsumed into, or eliminated by, the collective-bargaining agreement.” Caterpillar Inc. v. Williams, 482 U.S. 386, 396, 107 S. Ct. 2425, 2431, 96 L. Ed.2d 318, 329 (1987).
In Caterpillar, the Supreme Court relied on J.I. Case in holding that individual agreements are not inevitably superseded by the adoption of a collective agreement. The employees in that case, who were abruptly fired, filed suit alleging that the employer made them oral and written promises for long-term employment upon which the employees relied in staying at the company rather than seeking other employment. Id. at 389, 107 S. Ct. at 2427-28, 96 L. Ed. at 325. The employer sought to remove the case to federal court, contending that the breach of contract claims essentially were claims arising under § 301 of the Labor Management Relations Act (LMRA), 29 U.S.C.A. §185. Section 301 governs claims founded on rights created by collective agreements in industries affecting commerce and thus preempts state causes of action to enforce those rights. Id. at 394, 107 S. Ct. at 2431, 96 L. Ed. at 328. The employer argued that the subsequent collective agreement extinguished the state-law individual contract claims by the employees. Id. at 390, 107 S. Ct. at 2428, 96 L. Ed. at 326.
Justice Brennan, writing for the Court, observed that the employer's basic error was “its failure to recognize that [an employee] covered by a collective-bargaining agreement is permitted to assert legal rights independent of that agreement, including state-law contract rights, so long as the contract relied upon is not a collective-bargaining agreement.” Id. at 396, 107 S. Ct. at 2431, 96 L. Ed. at 330. See also Lingle v. Norge Div. of Magic Chef, 486 U.S. 399, 411, 108 S. Ct. 1877, 1884, 100 L. Ed.2d 410, 422 (1988) (noting that under Section 301 analysis “judges can determine questions of state law involving labor-management relations only if such questions do not require construing collective-bargaining agreements”). Moreover, the collective agreement may reserve certain issues to be resolved by individual agreement. Order of R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342, 347, 64 S. Ct. 582, 585, 88 L. Ed. 788, 791 (1944).
Similarly, New Jersey courts have applied the federal labor principle that individual contracts are void only to the extent that they conflict with collective agreements or interfere with the principles of collective negotiation. See New Jersey Transit Auth. v. New Jersey PBA, 314 N.J. Super. 129, 139-40 (App. Div. 1998) (noting that employer could include requirement in individual employment contracts that does not conflict with collective negotiations agreement); Mossberg v. Standard Oil Co., 98 N.J. Super. 393, 403 (Law Div. 1967) (stating that “individual contract is only given force and effect if it can in no way frustrate the policy of the National Labor Relations Act and does not conflict with a collective bargaining agreement”). Courts may look to the collective agreement to decide whether a conflict exists between the alleged individual agreement and the collective agreement. Ibid.; Caterpillar, supra, 482 U.S. at 398, 107 S. Ct. at 2433, 96 L. Ed. 2d at 331.
In our view, the collective agreement in this case does not preclude the type of agreements plaintiffs allege were established. First, the individual agreements, if established, would not be inconsistent with the collective agreement. Second, the alleged individual agreements do not diminish any rights provided for under the collective agreement. Finally, the AAUP in this case has agreed to allow individual rights to be enforced by faculty members.
The primary reason why plaintiffs' individual agreements would not be superseded by the collective agreement is the absence of a conflict. If a conflict did exist, the University persuasively argues that the collective agreement should prevail over the individual agreement, because otherwise the collective agreement would be undermined and labor relations destabilized. It is true that the subject matter of this dispute, namely, whether plaintiffs are entitled to CY appointments, is covered by the collective agreement. Article XXII of the collective agreement -- “CONDITIONS OF EMPLOYMENT” _- defines the responsibilities of AY appointments and CY appointments. AY appointments are defined as follows: “Appointment for the academic year requires that the appointee be in attendance at the University from September 1 to Commencement, or an equivalent period, within each academic year unless excused by the appropriate academic officer.” (Emphasis added). Conversely, CY appointments are defined as follows: “Appointees for the calendar year (July 1 - June 30) are expected to devote the entire year to their University duties with the exception of a vacation of one month.” (Emphasis added).
The more precise question is whether a conflict exists between the individual contracts and the terms included in the collective agreement. We conclude that the collective agreement, by its own language, does not preclude the existence of individual agreements with varying terms applicable to CY appointees. CY appointees are “expected to” work year-round -- they are not required to be in attendance for the calendar year, as AY appointees are “require[d]” to be in attendance for the academic year. “Expected to” obviously denotes something less than required. Given the two different standards, we believe that the parties intended a distinction between the terms applicable to CY and AY appointees, especially in light of the fact that defendant was aware that there existed unconditional CY appointees who, in the past, had successfully protested when defendant attempted to alter their appointment status. Accordingly, the definition of a CY appointee under the collective agreement embraces faculty members who, although “expected to,” do not necessarily perform year-round responsibilities at the University. We conclude that the parties intended greater flexibility, perhaps even an accommodation, by imposing the lesser standard of “expected to” for CY appointees. Plaintiffs' agreements would not be inconsistent with the terms of the collective agreement and the absence of a conflict erases any concern that the collective agreement would be undermined.
Second, we find it noteworthy that the individual agreements asserted here would not diminish plaintiffs' collective rights. Although the J.I. Case decision clearly precludes an individual agreement that would take away collective rights, that decision does not preclude an individual agreement that is more advantageous than a collective agreement, so long as it does not conflict with the goals of collective bargaining in general. That is precisely the case here. Finally, the acquiescence of the AAUP in allowing faculty to pursue individual rights under the collective agreement supports our conclusion. The rationale for the general rule that collective agreements prevail over individual agreements is that the latter tend to undermine both the collective agreement and the collective negotiations representative, the union, which is charged with enforcing the collective agreement. This case is different, however, because (1) the AAUP agreed, as we will discuss in more detail below, that Category Two grievances may be enforced by either the Union or the faculty member and that either may do so by way of litigation rather than arbitration; and (2) the record demonstrates that the AAUP actively assisted faculty members in instances when defendant sought to eliminate the unconditional CY status of professors. Accordingly, we conclude that the collective negotiations representative here has agreed, by its contract and by its conduct, that individual rights may be enforced by individual plaintiffs. When a union specifically agrees that disputes arising apart from the collective agreement may be enforced, it voluntarily surrenders a degree of its hegemony. In such cases, the traditional concerns of piecemeal agreements interfering with collective agreements are substantially reduced, if not eliminated.
Our holding undermines neither the fundamental importance nor the function of collective agreements. Indeed, we reinforce the rule of Lullo: generally, collective agreements prevail over individual agreements and, when there is a conflict, the individual agreements may not be enforced. Nevertheless, we follow established principles of State and federal labor law in allowing an employee to bring an individual contract claim in the unique circumstances of this case. First, the individual agreements, if proven, do not conflict with the collective agreement itself or the benefits of collective negotiation in general. Caterpillar, supra, 482 U.S. at 396, 107 S. Ct. at 2431, 96 L. Ed. 2d at 329 (“[I]ndividual employment contracts are not inevitably superseded by any subsequent collective-bargaining agreement.”). A contrary result would permit an employer to make individual, independent promises to employees that are not precluded by the collective agreement, and then raise the collective agreement as a defense when the employee seeks to have those promises fulfilled. Further, the alleged agreements would not diminish rights provided by the collective agreement. Finally, this case presents the unusual circumstance in which the Union, by language in the collective agreement, and by its assistance with regard to faculty grievances, specifically approves and condones the pursuit of individual rights. If the Union concludes, as it apparently has here, that the enforcement of individual rights is not in derogation of its status as collective negotiations representative, we will not interfere with that judgment. In our view, long-standing principles favoring collective agreements and forbidding unfair labor practices are not subverted in this case.
We address next whether a court of law is the proper forum for this dispute.
Our Legislature requires that collective agreements in the public sector include provisions for grievance procedures through which the employees may appeal “the interpretation, application or violation of policies, agreements, and administrative decisions . . . affecting them.” N.J.S.A. 34:13A-5.3. The grievance procedures established under the collective agreement “shall be utilized for any dispute covered by the terms of such agreement.” Ibid. See also New Jersey Tpk. Employees Union v. New Jersey Tpk. Auth., 123 N.J. Super. 461, 467 (App. Div. 1973), (upholding exclusivity of grievance procedure for disputes brought by public employees), aff'd, 64 N.J. 579 (1974). The Employer-Employee Relations Act “permits the parties to include dispute resolution mechanisms, including arbitration, in the negotiated agreement.” Saginario v. Attorney General, 87 N.J. 480, 490 (1981). Nevertheless, the question whether a particular dispute is arbitrable under the terms of the parties' contract is an issue to be decided by the courts. Ridgefield Park Educ. Ass'n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 153-54 (1978).
Before we determine whether this dispute is arbitrable or justiciable, we review the complex grievance procedure established under the collective agreement. The grievance begins at Step One, in which University personnel conduct their own investigation resulting in a written response to the grievants. After Step One, the AAUP or the grievant has under normal circumstances thirty working days from the receipt of the Step One decision to appeal the grievance to Step Two, which is arbitration. If the grievance is a Category One grievance, it proceeds to binding arbitration; Category Two grievances are resolved through advisory arbitration.
In October 1992, the AAUP sought Step Two arbitration after the University's Assistant Vice President for Faculty Affairs denied the grievance at Step One. The threshold question the arbitrator faced was whether the dispute was a Category One grievance, to be resolved through binding arbitration, or a Category Two grievance, to be resolved through advisory arbitration. The arbitrator concluded that plaintiffs' grievance was a Category Two grievance and the parties do not dispute that determination.
Article IX, Section E(6)(b) of the collective agreement provides that Category Two grievances are to be resolved by Step Two advisory arbitration. Section F(4) of that Article provides that “[w]hether or not pursued, this [Ste