NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3495-19
IN THE MATTER OF BOROUGH OF BERGENFIELD,
Respondent-Appellant,
and
PBA LOCAL 309,
Petitioner-Respondent. _________________________
Argued June 9, 2021 – Decided October 5, 2021
Before Judges Ostrer, Accurso, and Enright.
On appeal from the New Jersey Public Employment Relations Commission, PERC No. 2020-50.
John L. Shahdanian argued the cause for appellant (McCusker, Anselmi, Rosen & Carvelli, PC, attorneys; John L. Shahdanian, on the briefs).
Michael A. Bukosky argued the cause for respondent PBA Local 309 (Loccke, Correia & Bukosky, attorneys; Michael A. Bukosky and Corey M. Sargeant, of counsel and on the brief). John A. Boppert, Deputy General Counsel, argued the cause for respondent New Jersey Public Employment Relations Commission (Christine Lucarelli, General Counsel, attorney; John A. Boppert, on the statement in lieu of brief).
PER CURIAM
Borough of Bergenfield appeals from a decision of the Public
Employment Relations Commission ordering it to cease and desist from refusing
to sign the collective negotiations agreement drafted by the Bergenfield PBA
Local No. 309 purportedly memorializing an interest arbitration award.
Bergenfield refused to sign the new CNA because it does not believe the
agreement accurately reflects the interest arbitrator's award. The PBA refused
Bergenfield's entreaty that the parties return to the interest arbitrator for
clarification, and instead filed an unfair practice charge against the Borough for
its refusal to sign its draft of the new contract, as modified by the interest
arbitration award.
The Commission acknowledged the parties do not agree on what the
arbitrator awarded for the 2019 and 2020 contract years, and that the dispute
only arose when the PBA presented the draft CNA for signature — after the
fourteen-day period for appealing the award had expired. It determined,
however, that as the Borough failed to appeal the award and does not dispute its
A-3495-19 2 terms or cost calculations, the parties' disagreement over whether the Borough
correctly implemented the step increases in 2019 and 2020 "is a matter of
contract interpretation best dealt with through the CNA's grievance procedures"
and "immaterial as to whether [the Borough] was obligated to sign the agreement
drafted by the PBA pursuant to N.J.S.A. 34:13A-5.4(a)(6)," which prohibits
public employers from "[r]efusing to reduce a negotiated agreement to writing
and to sign such agreement." We cannot agree and thus, reverse and remand
with directions for the parties to return to the interest arbitrator to clarify his
award for incorporation in the CNA.
After the parties bargained to impasse over the terms of a CNA to replace
their one-year agreement that expired on December 31, 2017, the Borough
petitioned to initiate compulsory interest arbitration. PERC appointed an
arbitrator, and the parties participated in a formal interest arbitration in late
2018, focusing on three main issues of impasse: the duration of a new CNA,
salaries, and health benefit contributions. In his decision, the arbitrator noted
the arbitration was governed by the Police and Fire Public Interest Arbitration
Reform Act, N.J.S.A. 34:13A-14a to -21, requiring the award to comply with
the Property Tax Levy Cap, N.J.S.A. 40A:4-45.44 to -45.47, and that the award
was "issued in accordance with the 2% hard cap limitation" of N.J.S.A. 34:13A-
A-3495-19 3 16.7 as well as "the 16g interest arbitration criteria to the extent deemed
relevant," N.J.S.A. 34:13A-16(g).1
The PBA's final offer on duration and salary was a one-year contract
extending from January 1, 2018 to December 31, 2018, with a 1.8% wage
increase applied across-the-board to the salary schedules. The Borough's final
offer was a four-year contract extending from January 1, 2018 to December 31,
2021, with no salary increase, no step increases and all bargaining unit members
still in step to remain at the same step on the salary guide as they were on
December 31, 2017, for the duration of the contract, with longevity payments
frozen during the term of the contract.
The arbitrator awarded a three-year agreement from January 1, 2018 to
December 31, 2020, noting when he did so "that the first year of the agreement
under this award," 2018, had already passed, and that step increases and
1 The 2% hard cap provision expired on January 1, 2018, pursuant to a sunset provision. See N.J.S.A. 34:13A-16.9; L. 2014, c. 11, § 4. Because the parties' CNA expired on December 31, 2017, the hard cap applied to this award . See N.J.S.A. 34:13A-16.9 (providing the hard cap "shall apply only to collective negotiations between a public employer and the exclusive representative of a public police department or public fire department that relate to negotiated agreements expiring on [January 1, 2011] or any date thereafter until or on December 31, 2017, whereupon, after December 31, 2017, the provisions of section 2 of P.L.2010, c.105 (C.34:13A-16.7) shall become inoperative for all parties except those whose collective negotiations agreements expired prior to or on December 31, 2017 but for whom a final settlement has not been reached") . A-3495-19 4 longevity compensation had been paid in accordance with the expired 2017
contract, i.e., in accordance with past practice. As to salaries, the arbitrator
determined the evidence as well as the continuity and stability of employment
criterion supported "the maximum allowable award under the 2% cap," noting,
however, that the parties did not agree as to the base salary calculation for 2017,
which in accordance with N.J.S.A. 34:13A-16.7(b), serves as the baseline for
calculating the 2% hard cap.
The arbitrator accepted the Borough's calculation of base salary "as of
December 31, 2017 of $5,365,227.65 as the baseline for calculating the 2% hard
cap,"2 thus equating "to a permissible [additional] salary expense of $107,304.55
in 2018." He further found that step increases in the amount of $248,815.26 had
already been paid in accordance with past practice in 2018, exceeding the cap
by $141,510.71. The arbitrator further calculated that step increases and
longevity compensation in accordance with past practice in 2019 would amount
to $189,024.48, exceeding "the permissible spend of $109,450.64 by
$79,573.84;" and in 2020 to $189,851.00, exceeding "the permissible spend of
$111,639.65 by $78,211.35." The arbitrator thus calculated the total permissible
2 The PBA's base salary calculation as of the same date was $585,468.35 higher. The arbitrator rejected the PBA's calculation as not in accordance with N.J.S.A. 34:13A-16.7(a). A-3495-19 5 spend over the three-year term awarded as $328,394.84. Because step increases
and longevity compensation of $248,815.26 had already been paid in 2018, the
first year under the award, the arbitrator found only $79,579.58 remained to be
awarded for 2019 and 2020.
The arbitrator thus concluded that
application of the 2% hard cap formula over a three- year term supports the following Award: 2018-0% salary increase, full step increases, senior officer differential and longevity compensation (which have been paid); 2019-0% salary increase, step increases October 1, 2019 ($44,751.83), senior officer differential and longevity compensation in accordance with the Agreement in the amount of $10,017.35; 2020- 0% salary increase, no step increases, senior officer differential and longevity increases in accordance with the Agreement in the amount of $13,888.75.
He accordingly entered a salary award, representing "the maximum salary
increases that can be awarded under the cap on base salary increases with
discretion limited to the distribution of those amounts" of:
2018 0% salary increase, full step increases, longevity and senior officer differential.
2019 0% salary increase, step increases October 1, 2019, longevity compensation and senior officer differential in accordance with the terms of the Agreement.
A-3495-19 6 2020 0% salary increase, no step movement, longevity and senior officer differential in accordance with the terms of the Agreement.
The arbitrator also included two other provisions in the award important
to this dispute. First, he noted that "[a]ll provisions of the existing agreement
shall be carried forward except for those which have been modified by the terms
of this Award." Second, he "calculated the net, annual economic change in base
salary over the three-year term of the new agreement, as follows: 2018 –
$248,815.26; 2019 – $54,769.18; 2020 – $13,888.75 (pursuant to N.J.S.A.
34:13A-16.7 A and B)."
Neither party appealed the award. The Borough represents it did not do
so because it was satisfied with the arbitrator's decision. When the PBA
presented a draft CNA for signature to the Borough, after the time for any appeal
had expired, the Borough objected to the language proposed in Article III,
Section 2 concerning the payment of salary increments. Specifically, the PBA's
proposed draft provided:
Increments shall be paid in accordance with past practice except that during the year 2019 only the Salary Step Increases, where applicable, shall be effective October 1, 2019. For the year 2020 there shall be no Step movement for salary increases.
A-3495-19 7 The Borough contends the proposed language misstates the award by
inclusion of the language that "[i]ncrements shall be paid in accordance with
past practice." It notes the arbitrator did not include that language when he set
forth the specific salary award over the life of the new contract, and his interest
arbitration award modified past practice by delaying step increases until the
fourth quarter of 2019 and eliminating them altogether for 2020, the final year
of the contract. The PBA argues its draft is consistent with Article III, Section
2 of the 2017 contract, which provided that "[i]ncrements shall be paid in
accordance with past practice" as modified by the arbitrator's award for the
second and third years of the contract.
The PERC examiner who heard the PBA's summary judgment motion on
the unfair practice charge agreed with the PBA that incorporating the "past
practice" language into Article III, Section 2, the salary provision of the new
CNA, was consistent with the interest arbitration award, and thus the Borough
committed an unfair labor practice by refusing to sign the agreement. He
rejected the Borough's claim, backed up by calculations of its chief financial
officer, that the costs of implementing the award pursuant to the PBA's draft
CNA would greatly exceed the costs specified by the interest arbitrator in his
award.
A-3495-19 8 The hearing examiner found the Borough "does not object to the terms of
the CNA, but to the costs of implementing those terms." He concluded that "[t]o
the extent the Borough is challenging the accuracy of the arbitrator's calculations
under the 2% base salary cap," it was obligated to appeal the award, which it
failed to do. And to the extent "the Borough is choosing to interpret the 2018-
2020 CNA as only requiring it to pay the salary amounts set forth in the [interest
arbitration] Award, that contract interpretation may be challenged by the PBA
in accordance with the CNA's grievance procedures." The arbitrator concluded
that the Borough's "interpretation, however, does not change the fact that the
draft CNA's terms are consistent with the [interest arbitration] Award and must
be signed by the employer" pursuant to N.J.S.A. 34A-5.4(a)(6).
PERC adopted the hearing examiner's decision. It acknowledged "the
parties evidently disagree about the amounts required to be paid pursuant to the
step increases dictated by the Award," and noted the Borough's argument that
under the PBA's proposed draft contract, "the 2020 economic change will be
over $240,000, a figure not consistent with the Award's allowance of a total
spend or economic change of $13,888.75." The Commission nevertheless
concluded the draft accurately reflected the interest arbitration award by
carrying over into the salary provision the language from the 2017 CNA that
A-3495-19 9 "[i]ncrements shall be paid in accordance with past practice," and rejected the
Borough's contention that accuracy also required inclusion of the terms of the
award and the arbitrator's calculations of economic change, finding "no
authority for the latter proposition."
The Commission reasoned that
[t]he Arbitrator's calculations of economic change were based on the record evidence before him, and his calculations were "constructed based on evidence of financial conditions and personnel costs taken from a particular snapshot in time." City of Orange Twp., P.E.R.C. No. 2017-13, 43 NJPER 101 (¶31 2016). There is no support for the Borough's assertion that the Arbitrator's calculations would necessarily be the same at another snapshot in time, such as that addressed by the Borough's subsequent independent calculations and analysis nearly one year after the [interest arbitration] Award's issuance. In any case, that analysis was not presented to the Arbitrator. N.J.S.A. 34:13A-16f(3).
Moreover, as the Borough did not appeal the Award and does not dispute its terms or cost calculations, the Borough’s post-Award independent analysis can have relevance only with respect to the parties' ongoing disagreement as to whether the Borough correctly implemented the October 1, 2019 step increases in accordance with the Award. We agree with the Hearing Examiner that this is a matter of contract interpretation best dealt with through the CNA's grievance procedures, and that the Borough's argument is immaterial as to whether it was obligated to sign the agreement drafted by the PBA pursuant to N.J.S.A. 34:13A-5.4(a)(6).
A-3495-19 10 We cannot agree. This is not a disagreement over contract interpretation.
It is a dispute over whether the draft contract presented by the PBA to
Bergenfield accurately reflects the interest arbitration award rendered in a
compulsory interest arbitration. As the only arbitrator who can resolve that
dispute is the interest arbitrator who entered the interest arbitration award, we
reverse PERC's decision mandating that Bergenfield sign the disputed draft and
remand with direction that the parties return to the interest arbitrator to clarify
his award.
"[C]ompulsory interest arbitration is a statutory method of resolving
collective-negotiation disputes between police and fire departments and their
employers." Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 80,
(1994). As our Supreme Court has explained, interest arbitration "involves the
submission of a dispute concerning the terms of a new contract to an arbitrator,
who selects those terms and thus in effect writes the parties' collective
agreement." N.J. State Policemen's Benevolent Ass'n, Local 29 v. Town of
Irvington, 80 N.J. 271, 284 (1979) (emphasis added). The Court has instructed
that "[i]t is to be distinguished from 'grievance' arbitration, which is a method
of resolving differences concerning the interpretation, application, or violation
of an already existing contract." Ibid. Compulsory interest arbitration is "a
A-3495-19 11 statutorily-mandated procedure for resolving the terms of a new contract."
Hillsdale PBA Local 207, 137 N.J. at 80.
This clear distinction between compulsory interest arbitration and
grievance arbitration was missed here. The only issue in this case is whether
the PBA accurately copied down the new salary term the interest arbitrator wrote
for the parties. The arbitrator's award reads as follows:
AWARD
1. Duration. January 1, 2018 through December 31, 2020.
2. Salary. 2018-0% salary increase, full step increases, longevity and senior officer differential; 2019-0% salary increase, step increases October 1, 2019, longevity compensation and senior officer differential in accordance with the terms of the Agreement; 2020-0% salary increase, no step movement, longevity and senior officer differential in accordance with the terms of the Agreement.
3. Health Benefit Contributions. Fifteen (15%) of the cost of premiums.
4. All other proposals by the Borough and the PBA not awarded herein are denied and dismissed.
5. All provisions of the existing agreement shall be carried forward except for those which have been modified by the terms of this Award.
A-3495-19 12 6. Pursuant to N.J.S.A. 34:13A-16(f), I certify that I have taken the statutory limitation imposed on the local tax levy cap into account in making the award. My Award also explains how the statutory criteria factored into my final determination.
7. I have also calculated the net, annual economic change in base salary over the three-year term of the new agreement, as follows: 2018- $248,815.26; 2019-$54,769.18; 2020-$13,888.75 (pursuant to N.J.S.A. 34:13A-16.7 A and B).
In his decision, the arbitrator makes clear "[t]he salary amounts awarded
represent the maximum salary increases that can be awarded under the cap on
base salary increases with discretion limited to the distribution of those
amounts." (Emphasis added.)
As is immediately apparent from a review of the award, the interest
arbitrator did not include the language that "[i]ncrements shall be paid in
accordance with past practice," in the salary provision of the award. Instead, he
noted only that "longevity and senior officer differential [be paid] in accordance
with the terms of the [expired] Agreement" for 2019 and 2020. Bergenfield
asserts that inserting the phrase "[i]ncrements shall be paid in accordance with
past practice" into the new salary provision is inconsistent with the salary term
the arbitrator wrote for the parties, and makes the provision ambiguous, at best,
necessitating, if not correction, at least the inclusion of the interest arbitrator's
A-3495-19 13 calculated costs of the step increases and longevity compensation for each year
of the contract to make it an accurate reflection of the interest arbitrator's
decision.
Bergenfield attempted to illustrate the error in the PBA's proposed salary
term by presenting its CFO's calculations of the cost of increments paid in
accordance with the PBA's draft. The Borough obviously hoped that a
comparison between what the arbitrator calculated as the permissible additional
spend in the second and third years of the contract — $54,769.18 for 2019 and
$13,888.75 for 2020 — against the additional spend calculated in accordance
with the PBA's proposed draft — $140,330.00 for 2019 and $265,294.00 for
2020 — would make clear the PBA had not accurately copied the interest
arbitration award's salary term into its proposed CNA. Unfortunately, the
hearing examiner and PERC misinterpreted Bergenfield's objection to the "past
practice" language in the new salary provision as an objection "to the costs of
implementing" the terms of the new contract and deemed Bergenfield's
calculations of the cost of increments paid in accordance with the PBA's
proposed salary term relevant "only with respect to the parties' ongoing
disagreement" as to whether Bergenfield "correctly implemented the October 1,
2019 step increases in accordance with the Award," which they deemed a
A-3495-19 14 contract interpretation issue appropriately resolved through grievance
arbitration.3
The PBA proposed a salary term that incorporated a "past practice" clause
the interest arbitrator did not include in his salary provision: "[i]ncrements shall
be paid in accordance with past practice except that during the year 2019 only
the Salary Step Increases, where applicable, shall be effective October 1, 2019.
For the year 2020 there shall be no Step movement for salary increases." And
it left out the "past practice" clause the interest arbitrator did include: that
"longevity and senior officer differential [be paid] in accordance with the terms
of the [expired] Agreement." Although the PBA's proposed salary term may
appear, on first blush, to be a not inaccurate recapitulation of the interest
arbitrator's salary award, a closer review of the interest arbitrator's award,
including his careful calculations of "the maximum allowable award under the
2% hard cap," suggests the language does not accurately reflect his decision on
the parties' salary impasse.
Specifically, the arbitrator determined that in 2018, the first year of the
new contract, step increases and longevity compensation, which were paid in
3 The parties have advised the PBA has since grieved the Borough's payment of increments due in 2019 and 2020. A-3495-19 15 accordance with past practice, cost Bergenfield $248,815.26, exceeding the 2%
hard cap of $107,304.55 by $141,510.71. According to the interest arbitrator, if
step increases and longevity compensation were awarded in accordance with
past practice for the duration of the new contract, Bergenfield would pay
$189,024.48 in 2019, "exceed[ing] the permissible spend of $109,450.64 by
$79,573.84," and $189,851.00 in 2020, "exceed[ing] the permissible spend of
$111,639.65 by $78,211.35."
Because the 2% hard cap limited the total permissible spend over the
three-year term awarded to $328,394.84, the arbitrator made clear his "discretion
[was] limited to the distribution" of that amount over the three-year term. As
$248,815.26 of the available $328,394.84 had already been spent in the first year
when step increases and senior officer differential were paid in accordance with
past practice, he calculated only $79,579.58 remained available to him for
distribution in 2019 and 2020. Employing that discretion, the interest arbitrator
determined the salary award for 2019 and 2020 would consist in 2019 of "step
increases October 1, 2019 ($44,751.83), senior officer differential and longevity
compensation in accordance with the [expired] Agreement in the amount of
$10,017.35," and in 2020 "no step increases, senior officer differential and
longevity increases in accordance with the [expired] Agreement in the amount
A-3495-19 16 of $13,888.75." As Bergenfield attempted to explain to the hearing examiner
and PERC, the PBA's inclusion of the "past practice" language into the salary
term, which the arbitrator did not include, would suggest a spend in 2020 of an
amount much closer to the $248,815.26 in step increases and longevity
differential the Borough paid in 2018, than the $13,888.75 the interest arbitrat or
awarded for 2020, limited to the longevity differential. 4
Although not clearly explained in the parties' submissions, their dispute is
over whether the interest arbitrator awarded bargaining unit members an amount
of money in 2019 equal to what they would have received under the expired
2017 CNA had the 2019 step increase been delayed until October 1, in other
words the monetary equivalent of a one-quarter step, or whether he decreed that
those members would ascend on October 1, 2019 to their next step "in
accordance with past practice" and remain there for 2020, the last year of the
contract.
4 We accordingly reject PERC's finding that the interest arbitrator's included calculations of economic change amount to nothing more than "evidence of financial conditions and personnel costs taken from a particular snapshot in time." They were instead the arbitrator's calculations demonstrating his award would not increase base salary by more than 2% per contract year for a three - year contract in accordance with Borough of New Milford and PBA Local 83, P.E.R.C. No. 2012-53, 38 N.J.P.E.R. ¶340, 2012 N.J. PERC LEXIS 18 at 13 (2012). See In re State, 443 N.J. Super. 380, 384-85 (App. Div. 2016). A-3495-19 17 Although the calculations the interest arbitrator included in his decision
suggest the "past practice" language in the new CNA salary term does not
accurately reflect the interest arbitrator's contract award, that decision is not one
for this court. We decide only that the parties have a legitimate dispute over
whether the PBA's proposed draft of the salary term is an accurate reflection of
the salary term the interest arbitrator wrote for the parties. As it is readily
apparent that Bergenfield could only be compelled to sign a contract that
accurately reflected the interest arbitration award, we vacate PERC's order
compelling the Borough to sign the PBA's draft and remand with directions for
the parties to return to the interest arbitrator to clarify the award.
We add only the following. This was a compulsory interest arbitration
over the terms of a new contract. The arbitrator decided the duration of the new
contract and, in effect, wrote the new salary term for inclusion in the new CNA.
See N.J. State Policemen's Benevolent Ass'n, 80 N.J. at 284. The failure of the
hearing examiner and PERC to recognize this was a dispute over whether the
PBA had accurately copied down the interest arbitrator's salary term instead of
a disagreement over "the interpretation, application, or violation of an already
existing contract," ibid., led both to conclude, erroneously, that the matter could
be resolved through grievance arbitration.
A-3495-19 18 Besides thwarting the legislative goal of ensuring the prompt resolution of
labor disputes through compulsory interest arbitration, see Newark Firemen's
Mut. Benevolent Ass'n v. Newark, 90 N.J. 44, 56 (1982), PERC's decision also
overlooked that this award, in the words of the interest arbitrator, "represent[ed]
the maximum salary increases that can be awarded under the [2% hard] cap"
with his "discretion limited to the distribution of those amounts." Because the
interest arbitrator was prohibited by statute from entering an award that would
increase base salary by more than two percent of the prior year's expenditure,
N.J.S.A. 34:13A-16.7, see In re State, 443 N.J. Super. 380, 384-85 (App. Div.
2016), PERC's decision that a grievance arbitrator could resolve the amounts
due under the interest arbitration award, potentially resulting in salary increases
exceeding the two percent hard cap, was error.
Reversed and remanded. We do not retain jurisdiction.
A-3495-19 19