(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).
State of New Jersey, Office of Employee Relations v. Communications Workers of America, AFL-CIO,
and Audrey Bomse (A-65-97)
Argued February 17, 1998 -- Decided June 9, 1998
POLLOCK, J., writing for a unanimous Court.
This appeal involves a dispute between the State of New Jersey, Office of Employee Relations (OER
or State) and a labor union, the Communications Workers of America, AFL-CIO (CWA), about a provision
in the parties' 1992-95 Collective Negotiations Agreement that concerns the termination of unclassified
employees. The dispute was over the scope of rights the provision, Article V, Section J, conferred on
unclassified employees with at least six years of service when their employment is terminated. The labor
agreement provided that such employees could arbitrate disagreements over “major discipline,” which
included discharges.
A number of terminations in which the OER and the CWA confronted each other over the rights of
the discharged employee occurred. In those cases, the CWA took the position that the employees terminated
without being informed of the reasons for discharge had been terminated for misconduct and under the
agreement, were entitled to appeal their terminations for cause to an arbitrator. The OER maintained that
the employees had been terminated for performance-related reasons and that the State could discharge these
employees, who served at the pleasure of the agency or department head, for any reason or for no reason.
According to the OER, an employee who believed the termination had been for misconduct was entitled only
to file a non-contractual grievance within the employee's department. The decision of the authority that had
appointed the employee would be final and there was no right to binding arbitration.
Because the same issue had arisen in so many cases, the OER agreed with the CWA to submit to an
arbitrator for resolution certain issues regarding Article V, Section J and agreed to use for purposes of
illustration and to provide a factual background, the termination of Audrey Bomse. Bomse had held the
unclassified position of Assistant Deputy Public Defender from March 1984 until she was terminated with ten
days' notice effective December 30, 1992. No reason for the termination was given. Bomse filed a grievance
with the OER, alleging that the termination without specific written reasons violated Article V, Section J.2.
Later, Bomse asserted through the CWA that she was fired for misconduct and therefore entitled to arbitrate
the termination.
The OER and CWA agreed that although the Bomse facts were to be used, the arbitrator was not
to render an actual decision on Bomse's termination. The parties agreed the arbitrator would decide
whether the termination of Bomse without a statement of cause had violated Article V. The State also asked
the arbitrator to decide the scope of Article V, Section J when the CWA claims an employee was terminated
for misconduct but the State gives no reason, and to decide whether the State or the CWA bears the burden
of proof under that section when the State terminates an employee for misconduct.
The arbitrator made findings on those issues after hearing four days of testimony. He concluded on
the first issue that the State has inherent discretion to terminate without a statement of reasons unclassified
employees who serve at the pleasure of the agency or department head, but concluded on the second issue
that when the CWA alleges the discharge of a classified employee without reason was for misconduct, an
arbitrator has authority to review the dismissal. Finally, the arbitrator decided that if the CWA satisfies its
burden of establishing that the State terminated the employee for misconduct, the State would bear the
burden of proving just cause for the disciplinary dismissal.
The OER asked the Law Division of Superior Court to vacate the arbitration award on the latter
two issues. The court found, however, that the award “reflected a reasonably debatable interpretation of the
contract” and that it did not violate statutory law or public policy, and so upheld the award. On appeal, the
Appellate Division disagreed, and reversed the judgment below. The Appellate Division, on its own motion
and without notice to the parties, concluded that disputes regarding the interpretation of Article V, Section J
are not arbitrable. The Supreme Court granted the CWA's petition for certification.
HELD: An unclassified State employee with six or more years of service whose employment is terminated
without a statement of reasons and who asserts the termination was for misconduct is entitled to arbitrate
the dismissal. If the employee can prove the discharge was for misconduct, the burden shifts to the State to
prove just cause for the disciplinary termination.
1. The State and the CWA agreed to submit to arbitration issues regarding the meaning of Article V, Section
J. The record demonstrates that the parties intended the arbitration to be binding. The Appellate Division
should have permitted the parties to address the issue of arbitrability, which was raised by the court itself
without being compelled by the interests of justice to do so. ( pp. 12-16)
2. The arbitrator's interpretation of Article V, Section J is reasonable. The State has the right thereunder to
discharge unclassified employees without reason, but Section J.5 reveals an intent to provide employees with
six or more years of service with more protection. Those employees are permitted to appeal major discipline,
including discharge, to arbitration. ( pp.17 -19)
3. The arbitrator's interpretation does not violate statutory law or public policy implicated in public-sector
collective negotiations. The right to appeal a termination of employment intimately and directly affects the
work and welfare of unclassified public employees. By statute, disciplinary review procedures are mandatorily
negotiable. Permitting an arbitrator to decide whether a dismissal is based on performance or misconduct
provides a mechanism by which it can be determined whether the State has attempted to avoid the agreed
disciplinary procedures and tacitly disciplined an unclassified employee. Requiring the State to officially
charge an unclassified employee with misconduct when that is the reason for termination does not
significantly interfere with the inherent right of management to determine discipline. ( pp. 19-25)
4. The arbitrator's conclusion that in the Collective Negotiations Agreement with the CWA, the State
intended to adhere to the traditional burdens of proof once a discharged employee satisfies the employee's
burden under Section J.5 is reasonable. ( p. 25)
Judgment of the Appellate Division is REVERSED and the judgment of the Law Division is
REINSTATED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN and
COLEMAN join in JUSTICE POLLOCK's opinion.
SUPREME COURT OF NEW JERSEY
A-
65 September Term 1997
STATE OF NEW JERSEY,
OFFICE OF EMPLOYEE RELATIONS,
Plaintiff-Respondent,
v.
COMMUNICATIONS WORKERS OF AMERICA,
AFL-CIO, and AUDREY BOMSE,
Defendants-Appellants.
Argued February 17, 1998 -- Decided June 9, 1998
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
296 N.J. Super. 223 (1997).
Steven P. Weissman argued the cause for
appellants (Weissman and Mintz, attorneys).
Mary L. Cupo-Cruz, Senior Deputy Attorney
General, argued the cause for respondent
(Peter Verniero, Attorney General of New
Jersey, attorney; Mary C. Jacobson, Assistant
Attorney General, of counsel).
The opinion of the Court was delivered by
POLLOCK, J.
This appeal involves a dispute between the Communications
Workers of America, AFL-CIO (CWA) and the State of New Jersey,
Office of Employee Relations (OER or State) over the
interpretation of Article 5, Section J of the parties' 1992-95
Collective Negotiations Agreement, which concerns the termination
of employment of unclassified employees. The parties submitted
their dispute to an arbitrator who decided, among other things,
that when the State gave no reason for terminating certain
unclassified employees, the employees could submit to arbitration
the question whether they had been terminated for misconduct.
Finding that the arbitrator's award “reflected a reasonably
debatable interpretation of the contract,” the Law Division
upheld the award. The Appellate Division reversed.
296 N.J.
Super. 223, 226 (1997). Although the Appellate Division did “not
necessarily disagree” with the arbitrator's interpretation of the
contract, id. at 225, the court decided on its own motion that
disputes over the interpretation of Article 5, Section J were not
arbitrable. Ibid. We granted the CWA's petition for
certification,
150 N.J. 25 (1997), and now reverse.
Traditionally, the CWA and the OER negotiate a new labor agreement every three years. The 1989-92 labor agreement included a clause stating that employees with at least eight years of service could arbitrate disagreements over “major discipline.” Major disciplinary penalties included discharges. In the 1992-95 labor agreement, the parties reduced the required number of years of service from eight to six.
Accordingly, the parties revised Article V, Section J of the
previous labor agreement to include a new section 5. As revised,
Section J read:
J. Unclassified, Provisional and Special
Services Employee Discipline Procedures
1. The following shall constitute the
disciplinary appeal procedure rights for
unclassified and provisional employees who
have been employed in such a capacity for a
minimum of six (6) months . . . .
In all disciplinary matters, except
dismissal from service, such employees shall
be entitled to utilize the provisions of this
Article through the departmental hearing
level.
2. In the event an unclassified or
provisional employee is dismissed from State
employment without receiving specific written
reasons and such dismissal is not related to
fiscal problems or programmatic changes and
in the judgment of the State such dismissal
is not of a nature whereby the employee must
be immediately removed from the work
location, the State shall provide the
employee with at least ten (10) calendar days
notice in advance of the dismissal.
Unless there are exceptional
circumstances, when such employees are
dismissed from State employment due to
misconduct, management shall serve the
employee with the specific reasons relating
to the misconduct. The employee may request
and shall be granted a hearing by the
department or agency head or his designee,
whose decision shall be final . . . . The
burden of proof for unclassified employees
shall be on the employee.
3. It is understood that nothing herein shall be construed as limiting the State from exercising its inherent discretion to terminate unclassified employees who serve at the pleasure of the department or agency head, without stating the reasons therefore. Dismissal related to job performance shall
not fall within the purview of this article.
Grievances concerning the interpretation of
this article shall be processed in accordance
with Article IV as non-contractual (A.2.)
grievances.
. . . .
5. Unclassified employees not covered
by a statutory discipline procedure, who have
served in unclassified titles for a minimum
of six (6) consecutive years may appeal a
Department level decision involving major
discipline, for just cause, as defined under
Section F.1. (a through d) of this article,
to the Office of Employee Relations.
. . . .
The Office of Employee Relations will
meet with the Union to review the record of
the discipline within 30 days of receipt of
the appeal from the Union. If the discipline
appeal is not resolved at that meeting it
shall be so noted in writing. The Union, may
elect to appeal the discipline to binding
arbitration.
. . . .
The arbitrators shall confine themselves
to determinations of guilt or innocence and
the appropriateness of penalties and shall
neither add to, subtract from, nor modify any
of the provisions of this Agreement by any
award. The arbitrator's decision with
respect to guilt, innocence or penalty shall
be final and binding upon the parties.
. . . .
Article IV, referenced in Section J, identified two types of grievance: a contractual grievance (A.1 grievance) and a non-contractual grievance (A.2 grievance). Depending on the type of grievance, Article IV, Section H provided for two or three grievance steps. “Step One” required a grievance meeting or hearing. “Step Two” permitted a grievant to appeal the
“disposition of the grievance at Step One” to the “Department
Head or his designee.” “Step Three,” available only if “the
grievance involve[d] an alleged violation of the Agreement as
described in . . . A.1 above,” authorized the CWA to appeal the
Department Head's decision to an arbitrator. If the dispute
proceeded to arbitration, Section H.5 provided in relevant part:
d. The arbitrator shall hold the hearing at
a time and place convenient to the parties
within thirty (30) calendar days of his
acceptance to act as arbitrator and shall
issue his decision within thirty (30) days
after the close of the hearing. In the event
a disagreement exists regarding the
arbitrability of an issue, the arbitrator
shall make a preliminary determination as to
whether the issue is arbitrable under the
express terms of this Agreement. Once a
determination is made that such a dispute is
arbitrable, the arbitrator shall then proceed
to determine the merits of the dispute.
e. Whenever a grievance which is to be
resolved at Step Three, Arbitration, is based
on a provision of this Agreement in which the
power or authority of the arbitrator is
specifically limited to an advisory award,
that limit shall be observed and all the
provisions of paragraphs b, c and d above
shall be operable except that the award and
opinion shall be advisory and not binding on
the parties. However, absent a particular
exception the provisions of the grievance
procedure above shall be operable.
Finally, Article V, Section D, provided, “The burden of
proof in disciplinary procedures shall be upon the State, except
as otherwise provided in J.2.”
Soon after revising Article V, a dispute arose between the
CWA and the OER concerning the scope of rights that Section J
conferred on unclassified employees. The CWA complained that the
State had terminated several unclassified employees with eight or
more years of service without informing the employees of the
reasons for their termination. According to CWA, the State had
terminated the employees for misconduct. Consequently, under
Section J.5, the employees were entitled to appeal their
terminations for cause before an arbitrator. The OER disagreed.
It maintained that the State terminated the employees for
performance-related reasons, and, therefore, under Section J.3,
the State retained the right to terminate for any reason or no
reason.
The OER contends that if an unclassified employee believes
the State terminated him or her for misconduct, the employee's
only option is to file an A.2 non-contractual grievance within
the department. The appointing authority's decision would be
final, and the employee would have no right to binding
arbitration.
To illustrate their dispute, the parties referred to the
case of Audrey Bomse. Since March 1984, Bomse had held the
unclassified position of Assistant Deputy Public Defender. See
N.J.S.A. 2A:158A-6 (providing that assistant deputy public
defenders “shall serve at the pleasure of the Public Defender.”);
N.J.A.C. 4A:3-1.3(a)(4) (providing that employees who serve at
the pleasure of appointing authority shall be allocated to the
unclassified service).
Effective December 30, 1992, the State
terminated Bomse's employment on ten days notice, but did not
provide her with a reason for the termination. Bomse filed a
grievance with the OER on January 5, 1993, alleging a violation
of Article V, Section J.2 because the State had failed to provide
her with specific written reasons for the dismissal. Later,
through the CWA, Bomse alleged that she was fired for misconduct
and therefore entitled to arbitrate the dispute.
Initially, the OER was unsure whether it should attempt to
stay the Bomse arbitration and request a court to decide the
matter. Melvin L. Gelade, Director of the OER, expressed the
State's position in a letter to Steven Weissman, CWA's counsel,
dated February 1, 1993:
I disagree with your letter of January
26, 1993, in which you contend that an issue
of arbitrability is involved.
Ms. Bomse was an unclassified employee
who served at the pleasure of the Public
Advocate, as set forth in the statute. As
such, her termination is covered under
Article V, Section J.3. of the Professional
agreement. Pursuant to that section,
grievances concerning the interpretation of
the article are noncontractual and not
subject to arbitration. There is no
jurisdictional basis for arbitration.
Accordingly, the State declines to
submit any issues involving Ms. Bomse's
termination to arbitration until such time as
the CWA obtains a court order compelling
arbitration. We disagree with your position
that an arbitrator should decide his own
jurisdiction. Rather, it is for the court to
decide.
Because “cases were piling up involving issues coming out of Article V section J,” however, the OER later agreed to “set forth on a specific arbitration regarding Article V, Section J.” The OER further agreed to authorize the arbitrator to “decide what
the meaning was of J-1 through 5, and what was arbitrable under
J-1 through 5, if anything.” Although the parties agreed to rely
on Bomse's case as an illustration, they instructed the
arbitrator not to address the specific merits of her case.
Finally, the OER reserved the right to “make a court
challenge in the event that it was held that someone terminated
without reason, had arbitration rights.” David Collins, Employee
Relations Coordinator for the OER, memorialized the parties'
agreement in a letter to Steven Weissman, dated August 10, 1993:
As per our telephone conversation on
August 9, 1993, it is my understanding that
under Article IV (Grievance Procedure),
Section H(5)(d), the parties agree to select
arbitrator Carl Kurtzman to hold a hearing
and render a written decision as to issues of
arbitrability and contract interpretation of
Article V, Section J, entitled, “Unclassified
and Provisional Employee Discipline
Procedures”. For purposes of presenting the
arbitrator with an actual factual background,
the parties will use the Audrey Bomse case.
It is understood, however, that the
arbitrator in this proceeding shall not
render a decision on Ms. Bomse's separation
from State service.
At the initial hearing, the arbitrator identified three issues that the parties agreed to submit for arbitration. First, both parties asked the arbitrator to decide whether the State had violated Article V when it terminated Audrey Bomse from State service without stating any cause (the “at-will termination issue”). Second, the State proposed that the arbitrator decide the scope of Article V, Section J of the labor agreement when the CWA claims an employee was terminated for misconduct but the State gives no reason for the employee's termination (the
“misconduct issue”). Third, the State requested the arbitrator
to decide whether, in cases when the State terminates an employee
for misconduct, the State or the CWA bears the burden of proof
under Article V, Section J (the “burden-of-proof issue”).
Pursuant to the parties' agreement, the arbitrator also
placed on the record several stipulations regarding Audrey
Bomse's termination. Neither party objected to the arbitrator's
presentation of issues or stipulations. The State's counsel,
however, added:
If I may, the only thing I would also like to
make clear is that even though we have
utilized Audrey Bomse for an example, if you
will, of facts and circumstances to set up
this case for at least the major issues that
the parties have agreed upon, you're not to
render a specific decision with regard to Ms.
Bomse's separation. This is simply a set of
facts that has been established in order for
you to make a contractual interpretation.
After hearing four days of testimony, the arbitrator made
the following findings. The arbitrator ruled in favor of the OER
on the at-will termination issue, finding “the State is not
limited, due to the length of service of the unclassified
employee, from exercising its inherent discretion to terminate
unclassified employees who serve at the pleasure of the
department or agency head, without stating the reasons
therefore.” Conversely, the arbitrator ruled in favor of the CWA
on the misconduct and burden-of-proof issues.
The arbitrator found that an unclassified employee's right
to appeal “major discipline” under Article V, Section J.5
encompassed cases in which the State terminates an unclassified
employee without reason, but the CWA alleges that the discharge
was for misconduct. The arbitrator concluded:
Although an arbitrator in accordance with
J.3, is precluded from substituting his
judgment in place of management's in cases
where dismissal is related to job
performance, the [arbitrator] believes that
J.5 empowers an arbitrator to review an A.2
determination that a dismissal is related to
job performance as opposed to the Union claim
that the dismissal is attributable to
misconduct warranting discipline and, in
those cases where the arbitrator determines
that the dismissal is not related to job
performance, proceed with a determination of
the just cause of the disciplinary dismissal.
Additionally, the arbitrator concluded that if the CWA
satisfies its burden of establishing that the State terminated
the unclassified employee for misconduct, the State would bear
the burden of proving just cause for the disciplinary dismissal.
In reaching that conclusion, the arbitrator noted the tension
between Sections J.2 and J.5 of Article V.
Section J.2, which applies generally to unclassified
employees, places the burden of proof on the employee. The
arbitrator ruled that allocating the burden of proof to the
employee deviated from the traditional allocation of that burden
to the employer. Section J.5, which applies to unclassified
employees who appeal their disciplinary termination to an
arbitrator, is silent on the allocation of the burden of proof.
Because Section J.5 requires a showing of “just cause,” however,
the arbitrator concluded that the parties intended disciplinary
terminations under that section should adhere to the traditional
allocation of the burden of proof. Thus, the arbitrator held
that the State, as the employer, would bear the burden of proving
just cause for misconduct of an employee with six or more years
of service.
The State requested that the Law Division vacate the
arbitration award on the misconduct and burden-of-proof issues.
Finding that the arbitrator's award “reflected a reasonably
debatable interpretation of the contract,” and that it did not
violate statutory law or public policy, the Law Division upheld
the award.
The Appellate Division reversed, stating that it did “not
necessarily disagree with the trial judge's view that the
arbitrator's interpretation of the pertinent provisions was
reasonably debatable and not offensive of public policy or
specific statutory authority.” 296 N.J. Super. at 225. Without
notice to the parties, however, the court decided that disputes
over the interpretation of Article V, Section J were not
arbitrable. Ibid. Specifically, the court stated:
[W]e think there is a threshold issue
concerning whether binding arbitration on the
disputed interpretation of the provisions was
within the authority of the arbitrator in the
first instance. That is, does the contract
confer upon the arbitrator authority to issue
a binding interpretation of the provisions of
Article V as they related to an unclassified
employee with six or more years of service
who has been separated from service without a
statement of reasons? This precise issue was
not addressed by the trial judge, most likely
because the respective applications for
confirmation and vacation of the arbitrator's
decision may not have raised the issue.
Since arbitration in the public-sector must
comply with the parties' contract, the law,
and the public policy, we think the issue
critical. The answer seems quite clear to
us. The applicable terms of the contract may
authorize the parties to agree to an advisory
opinion from the arbitrator but they do not
permit binding arbitration on the threshold
issue. On that basis alone we reverse.
II.
We first address the Appellate Division's introduction on its own motion and without notice to the parties of the issue of arbitrability. Ordinarily, courts do not raise issues that the
parties have not raised. Sometimes, however, courts introduce
new issues when the interests of justice require, if the
introduction will not prejudice the parties. Rivera v. Gerner,
89 N.J. 526, 537-38 (1982); R. Wilson Plumbing & Heating, Inc. v.
Wademan,
246 N.J. Super. 615, 617-19 (App. Div. 1991); see also
Bolyard v. Berman,
274 N.J. Super. 565, 582 n.6 (App. Div.)
(recognizing that Appellate Division should not pass on issues
neither presented to trial court nor briefed on appeal), certif.
denied,
138 N.J. 272 (1994). If a court introduces a new issue,
the better practice is to permit the parties to address it.
Otherwise, courts deprive themselves of the benefit of the
contributions of counsel. The opposing views of counsel often
illuminate a case in an adversary system of justice. Our goal is
not to inhibit innovative judicial solutions, but to encourage
courts to invite counsel to participate in any such innovations.
In the present case, we conclude that the Appellate Division
should have permitted counsel to address the issue of
arbitrability. The interests of justice, moreover, did not
compel the court to raise the issue on its own motion.
Apart from the terms of a written arbitration agreement,
parties may consent either explicitly or implicitly to submit an
issue to an arbitrator. Grover v. Universal Underwriters Ins.
Co.,
80 N.J. 221, 229 (1979). Thus, in Grover, an arbitration
clause in an insurance agreement required arbitration of certain
issues, but not those pertaining to coverage. Id. at 226. We
nonetheless found that because the defendant-insurer had
submitted the issue of coverage to the arbitrator without
objection from the insured, the issue “thereby came within the
scope of those matters which the arbitrator could properly
decide.” Id. at 229.
Importantly, we discussed the steps a party should take to
preserve the issue of arbitrability for a court:
Defendant could have objected to arbitration
of the coverage issue and protected its
position in a number of ways. It could have
instituted an action for a judicial decision
on that issue and requested that the
arbitration be stayed . . . . Defendant also
had the choice of making an objection to the
propriety of the arbitration on the ground of
no coverage and participating in the
arbitration proceeding under protest to
decide the other . . . questions. Use of
either of these provisions would have
preserved the issue of arbitrability for the
court.
Here, the State neither moved to stay the arbitration nor objected to the arbitrator's authority to interpret Section J. To the contrary, the State decided not to seek a stay of the arbitration, because “cases were piling up involving issues
coming out of Article V, Section J.” Instead, the State elected
to “set forth on a specific arbitration regarding Article 5,
Section J,” and to authorize the arbitrator to “decide what the
meaning was of J-1 through 5, and what was arbitrable under J-1
through 5, if anything.” The parties memorialized their
agreement in writing before the arbitrator. Indeed, it was the
State, not the CWA, that asked the arbitrator to interpret
Article V, Section J.
In addition to introducing the issue of the arbitrability of
disputes under Section J, the Appellate Division also introduced
the issue whether any such arbitration would be advisory or
binding. Without analysis, the court concluded that the
arbitration should be merely advisory. 296 N.J. Super. at 230.
Because the issue had not been raised previously, neither the
parties, the arbitrator, nor the Law Division had addressed it.
The record, moreover, supports the conclusion that the parties
intended the arbitration to be binding.
After the arbitrator identified the issues for resolution,
the Deputy Attorney General stated that “the only thing” he
wanted to clarify was that the arbitrator would not “render a
specific decision with regard to Ms. Bomse's separation. This is
simply a set of facts that has been established in order for you
[, the arbitrator,] to make a contractual interpretation.”
Additionally, when asked whether the State would pursue
resolution of the dispute in another forum, the OER's Director,
Mel Gelade, answered that the State reserved the right to “make a
court challenge in the event that it was held that someone
terminated without reason, had arbitration rights.” If the
arbitration were to have been merely advisory, rather than
binding, it is unlikely that the State would have been concerned
with the right to mount a “court challenge,” as limited as that
challenge might be.
We gain further insight from the uncontradicted
certification submitted by Mr. Weissman, the CWA's attorney, in
support of a motion for reconsideration in the Appellate
Division. See R.R. 1:6-6; 2:5-5(b). Mr. Weissman has been
actively involved in this matter, including the negotiations
leading to the arbitration, from its inception. His
certification explains in detail the facts supporting the
conclusion that parties intended the arbitration to be binding.
Finally, Article V, Section H.5(e) states that any
arbitration award shall be binding unless "specifically limited
to an advisory award." No one placed any such limitation on the
subject arbitration.
In effect, the Appellate Division raised on its own an issue
that the State could not have raised. By raising the issue of
arbitrability, the Appellate Division impermissibly gave the
State a second bite at the apple. Highgate, supra, 224 N.J.
Super. at 333.
N.J.S.A. 2A:24-8 identifies the reasons a court may vacate an arbitration award. Two of the statutory reasons are relevant to this appeal:
a. Where the award was procured by corruption, fraud or undue means;
. . . .
d. Where the arbitrator exceeded or so
imperfectly executed their powers that a
mutual, final and definite award upon
the subject matter submitted was not
made.
The statutory phrase “undue 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. PBA Local 160 v. Township of North Brunswick, 272 N.J. Super. 467, 474 (App. Div.), certif. denied, 138 N.J. 262 (1994). Arbitrators also exceed their authority by disregarding the terms of the parties' agreement. Ibid.
Generally, courts will accept an arbitrator's interpretation
so long as the interpretation is reasonably debatable. Old
Bridge Tp. Bd. of Educ. v. Old Bridge Educ. Ass'n,
98 N.J. 523,
527 (1985). A distinction exists, however, between public and
private employment disputes. PBA Local 160, supra, 272 N.J.
Super. at 472. When reviewing an arbitrator's interpretation of
a public-sector contract, in addition to determining whether the
contract interpretation is reasonably debatable, the court must
also ascertain whether the award violates law or public policy.
Communications Workers of America v. Monmouth County Bd. of
Social Services,
96 N.J. 442, 448, 453 (1984); PBA Local 160,
supra, 272 N.J. Super. at 473.
In the instant case, the arbitrator concluded that if an
unclassified employee with six or more years of service can prove
that the State fired the employee for misconduct, then, under
Article V, Section J.5, the employee has the right to arbitrate
the dismissal for "just cause." The State challenges the award
on several grounds.
First, the State claims that the arbitrator exceeded his
authority by ignoring Article V, Section J.3, which permits the
State to terminate an unclassified employee "without stating the
reasons therefore." Second, the State maintains that the award
was procured by undue means because the arbitrator interpreted
the labor agreement to establish terms and conditions of
employment that the parties themselves could not have negotiated.
Lastly, the State asserts that the arbitrator's interpretation
impermissibly impinges on the employer's power to terminate
unclassified employees for any reason or to determine whether to
discipline formally an employee.
In response, the CWA argues that the arbitrator's
contractual interpretation is reasonable and does not violate
either statutory law or public policy. Moreover, the CWA insists
that the State's public policy arguments are merely a ruse to
induce the Court to address a scope-of-negotiations issue, which
PERC should address initially.
We find the arbitrator's interpretation to be reasonable.
Although Section J.3 recognizes the State's authority to dismiss
unclassified employees without reason, Section J.5 evidences an
intent to provide greater protection to unclassified employees
with six or more years of service. Section J.5 permits those
employees to appeal major discipline to Step Three arbitration.
The provision would mean little to unclassified employees with
six or more years of service, if the State could terminate those
employees for misconduct without filing charges.
We also find the interpretation does not violate existing
law or offend public policy. In public-sector collective
negotiations, employment issues fall into one of two categories:
“'mandatorily negotiable terms and conditions of employment' and
'non-negotiable matters of governmental policy.'” Teaneck Bd. of
Educ. v. Teaneck Teachers Ass'n,
94 N.J. 9, 14 (1983). A three-part test applies in determining whether an issue is negotiable:
[A] subject is negotiable between public
employers and employees 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. To decide whether a negotiated
agreement would significantly interfere with
the determination of governmental policy, it
is necessary to balance the interest of the
public employees and the public employer.
When the dominant concern is the government's
managerial prerogative to determine policy, a
subject may not be included in collective
negotiations even though it may intimately
affect employees' working conditions.
[Local 195, IFPTE, AFL-CIO v. State,
88 N.J. 393, 404-05 (1982).]
Applying the three-part test, we have no difficulty in
concluding that the right to appeal a termination of employment
intimately and directly affects the work and welfare of
unclassified public employees. Remaining are the issues whether
any statute or regulation would have preempted negotiation of the
disciplinary review procedure and whether the arbitration award
will significantly interfere with a managerial prerogative.
The State Legislature has declared that unclassified
employees are exempt from the tenure provisions of Title 11A,
which apply to career service employees. See N.J.A.C. 4A:1-1.3
(defining “unclassified service” to mean “those positions and job
titles outside the senior executive service, not subject to the
tenure provisions of Title 11A . . . .”). Since 1982, however,
disciplinary review procedures have been mandatorily negotiable.
The New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1
to -29, provides in pertinent part:
[T]he majority representative and designated
representatives of the public employer shall
meet at reasonable times and negotiate in
good faith with respect to grievances,
disciplinary disputes, and other terms and
conditions of employment.
. . . .
Public employers shall negotiate written
policies setting forth grievance and
disciplinary review procedures by means of
which their employees or representatives of
employees may appeal the interpretation,
application or violation of policies,
agreements, and administrative decisions,
including disciplinary determinations,
affecting them, provided that such grievance
and disciplinary review procedures shall be
included in any agreement entered into
between the public employer and the
representative organization. Such grievance
and disciplinary review procedures may
provide for binding arbitration as a means
for resolving disputes . . . .
By reading statutes establishing unclassified employees' at-will status in conjunction with N.J.S.A. 34:13A-5.3, we gain insight into the intent of the Legislature. From our perspective, the two-step arbitration review procedure enunciated in the arbitration award is consistent with statutory law. N.J.S.A. 34:13A-5.3 authorizes the State to negotiate disciplinary review procedures, including binding arbitration. We disagree with the State's assertion that N.J.S.A. 34:13A-5.3 permits negotiation of disciplinary review procedures only for employees who are disciplined. Implicit in the right to
negotiate disciplinary review procedures is the right to
negotiate the means to enforce those procedures. Contrary to the
State's assertion, permitting an arbitrator to decide whether the
dismissal relates to performance or misconduct will not require
the State to discipline an employee it otherwise would not have
disciplined. The award simply provides a mechanism to ascertain
whether the State, in an attempt to circumvent the agreed
disciplinary review procedures, has tacitly disciplined an
unclassified employee.
The award, moreover, does not significantly interfere with
management's inherent prerogative to determine discipline. As
the Law Division found:
[T]he arbitrator's interpretation does not
have such a radical impact upon plaintiff's
prerogative. It allows plaintiff to
discharge “at will” employees without stating
reasons, and in doing so it places a
substantial burden upon any employee who
believes that he or she was discharged for
misconduct. Such employees must be employed
for six or more consecutive years, must come
forward to raise the issue of misconduct and
must persuade the arbitrator the discharge
was for misconduct. Only after all of these
requirements have been satisfied may such
employees ask an arbitrator to determine
whether there was just cause for the
discharge.
The State maintains that under the arbitrator's award it may be forced to prove, even when it never charges an employee with misconduct, that it had just cause to terminate the employee. We acknowledge that it may seem counter-intuitive to permit an employer to fire an employee for no reason, yet require the employer to provide a hearing to an employee who is not charged
with misconduct. It is not for us, however, to question the
wisdom of a clause to which the State has twice agreed in
collective negotiations. If the State made a bad deal, the place
to remedy it is at the bargaining table.
Lastly, the arbitrator's award does not offend public
policy. A procedure that shifts the burden of persuasion between
employee and employer is familiar in the employment context.
Employment discrimination cases in which employers deny
terminating employees for discriminatory reasons illustrate the
point. Because of the conflict between an employer's right to
terminate an at-will employee and the employee's protection
against illegal discrimination, both Federal and State courts
follow a procedure in which the burden of production shifts
between employer and employee. See, e.g., McDonnell Douglas
Corp. v. Green,
411 U.S. 792,
93 S. Ct. 1817,
36 L. Ed.2d 668
(1973); Anderson v. Exxon Co.,
89 N.J. 483 (1982); Maiorino v.
Schering-Plough Corp.,
302 N.J. Super. 323 (App. Div. 1997).
Requiring a public employer to provide reasons for a
termination, moreover, does not by itself significantly impinge
on managerial authority. In Donaldson v. Board of Education,
65 N.J. 236 (1974), we addressed the issue whether a public school
teacher who was denied tenure was entitled to a statement of
reasons for her dismissal. We acknowledged that the local school
board possessed broad discretion in granting or denying tenure.
Id. at 241. Fundamental fairness and justice nonetheless
required disclosure of the reasons for a teacher's termination.
Id. at 245. Admittedly, the expectations of non-tenured teachers
and unclassified employees differ: teachers may anticipate
receiving tenure, but unclassified employees know they will never
enjoy such security. Donaldson, however, confirms that merely
requiring an employer to provide reasons for a termination does
not significantly impinge on managerial prerogative.
Walsh v. State,
147 N.J. 595 (1997), adopting dissent in
290 N.J. Super. 1 (App. Div. 1996), on which the State relies, is
distinguishable. Walsh involved an Assistant Deputy Public
Defender who claimed that the Public Defender had breached an
implied contract to promote him. 290 N.J. Super. at 4. In a
divided opinion, the Appellate Division agreed with the Assistant
Deputy Public Defender. Id. at 4. Judge Skillman dissented,
finding that the Public Defender had no authority to contract to
promote the assistant. Id. at 15-16 (Skillman, J.A.D.,
dissenting). Rather, “so long as his personnel actions are not
invidiously discriminatory, the Public defender has unfettered
discretion in determining whether to hire, discharge, transfer,
demote or withhold promotion from an Assistant Deputy Public
Defender.” Id. at 13. We reversed in reliance on Judge
Skillman's dissent.
Unlike the present case, Walsh did not involve the issue of
negotiability of disciplinary review procedures. Neither does
the present case raise the issue of the State's inherent
authority to discharge or discipline an unclassified employee.
The issue is whether the State may circumvent the agreed
disciplinary review procedures by terminating unclassified
employees for misconduct without officially charging the
employees with misconduct. We hold that it may not.
Finally, we hold that the arbitrator's decision on the
burden of proof issue is reasonable. Because Article V, Section
J.5 requires a traditional showing of "just cause," the
arbitrator could conclude that the State also intended to adhere
to traditional burdens of proof once employees satisfied their
burden under Section J.5.
The judgment of the Appellate Division is reversed and the
judgment of the Law Division is reinstated.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN, and COLEMAN join in JUSTICE POLLOCK's opinion.
NO. A-65 SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
STATE OF NEW JERSEY,
OFFICE OF EMPLOYEE RELATIONS,
Plaintiff-Respondent,
v.
COMMUNICATIONS WORKERS OF AMERICA,
AFL-CIO, and AUDREY BOMSE,
Defendants-Appellants.
DECIDED June 9, 1998
Chief Justice Poritz PRESIDING
OPINION BY Justice Pollock
CONCURRING OPINION BY
DISSENTING OPINION BY