Mount Holly Township Board of Education v. Mount Holly Township Education Ass'n

972 A.2d 387, 199 N.J. 319, 2009 N.J. LEXIS 567

• Court: Supreme Court of New Jersey
• Decided: June 24, 2009
• Docket: A-24 September Term 2008
• Status: Published

Opinions

Chief Justice RABNER

delivered the opinion of the Court.

Plaintiff Mt. Holly Township Board of Education (Board) terminated Juan Gonzalez, a custodian, after conducting a disciplinary hearing. At the time, Gonzalez was in the middle of a one-year individual employment contract. The Board terminated him under that contract, and not the existing collectively negotiated agreement (CNA) between the Board and defendant Mt. Holly Township Education Association (Association).

Under the individual contract, Gonzalez was entitled to and received fourteen days’ notice of termination. Under the CNA, employees could not be discharged without just cause. Any such action was subject to the grievance procedure outlined in the CNA, which allowed for arbitration.

The Association filed a grievance on Gonzalez’s behalf and requested arbitration. The trial court permanently restrained arbitration, and its judgment was affirmed on appeal.

Today we reaffirm principles established in Lullo v. International Ass’n of Fire Fighters, 55 N.J. 409, 428, 262 A.2d 681 (1970), and Troy v. Rutgers, 168 N.J. 354, 375-76, 774 A.2d 476 (2001), which concluded that when provisions in an individual employment contract conflict with the terms in a CNA, and diminish or interfere with rights provided by the CNA, the language in the individual contract must yield to the collective agreement.

Because we find that Gonzalez’s individual employment contract conflicted with the CNA and diminished its specific terms by depriving him of the right to arbitration, we reverse and remand. That approach is consistent with the Legislature’s recent command that in interpreting the meaning of a grievance arbitration clause, “doubts should be resolved in favor of requiring arbitration.” N.J.S.A. 34:13A-5.3. Accordingly, on remand, Gonzalez is entitled to a hearing before an arbitrator to address the grievance filed.

I.

The relevant facts are not in dispute. Plaintiff Mt. Holly Township Board of Education is a public school board of education and, thus, a public employer within the meaning of the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 to - 39. Defendant Mt. Holly Township Education Association is a public employee representative under the Act, and is the sole representative for collective negotiations about terms and conditions of employment for custodians and certain other school employees.

The Board and the Association entered into a CNA for the period from July 1, 2004 through June 30, 2007. Its provisions applied to all employees in the negotiation unit, including custodians and maintenance workers.

The CNA contains a “just cause” provision at Article IX(B), which states that

[n]o employee shall be discharged, disciplined, reprimanded, reduced in rank or compensation, or deprived of any professional advantage or given an adverse evaluation of his/her professional services without just cause. Any such action asserted by the Board or any agent or representative thereof, shall be subject to the grievance procedure herein set forth.

[ (emphasis added).]

“Grievance” is defined at Article XV(A)(1) as

an allegation that there has been a breach, misinterpretation or improper application of the terms of this Agreement, or a claimed violation, misinterpretation, or misapplication of rules or regulations, existing policies, or administrative decisions that affect the terms and conditions of employment.

Article XV(A)(3) specifically excludes non-renewal of a contract for a non-tenured employee from the definition of grievance. There is no comparable exclusion for the termination or discharge of an employee mid-contract.

Under the CNA, an aggrieved employee is to follow a five-step grievance process outlined in Article XV(C). The process progresses from an initial discussion with an immediate supervisor to binding arbitration.

In addition, Article IX(E)(3) affords all employees who are not renewed or terminated, as well as those who are disciplined, the right to request a statement of reasons and a hearing before the Board. The CNA deals separately with layoffs tied to a reduction in force in Article XII, which we do not address in tins opinion.

The Board hired Juan Gonzalez as a non-tenured custodian/maintenance worker. Before starting in that position, Gonzalez signed a standard, individual contract for employment, prepared by the Board, covering the period from July 1, 2005 through June 30, 2006. The contract expressly stated that it “may at any time be terminated by either party” on fourteen days’ written notice.

Months after he began working, Gonzalez was accused of striking another custodian. The Board held a disciplinary hearing on January 20, 2006, and terminated Gonzalez in a letter that same day. The letter stated: “As per the discipline hearing held this afternoon, your position as custodian/maintenance for the Mt. Holly Township Public Schools is terminated effective February 3, 2006 in accordance with your employment contract.”

The Association filed a timely grievance with the Board, challenging the decision to terminate Gonzalez and claiming it was done without just cause. After the Board denied the grievance, the Association filed a request for binding arbitration, thereby seeking a hearing on the facts of Gonzalez’s discharge.

On April 24, 2006, the Board filed an action in the Chancery Division seeking to restrain arbitration. The Board argued that because Gonzalez was terminated under the fourteen-day notice provision of his individual employment contract, the matter was not arbitrable under the CNA.

The Chancery Division granted the motion to restrain arbitration permanently, noting that the individual employment contract’s termination-on-notice clause did not conflict with the CNA’s just-cause provision.

The Association appealed. The Appellate Division stayed oral arguments until this Court had the opportunity to issue decisions in Pascack Valley Regional High School Board of Education v. Pascack Valley Regional Support, Staff Ass’n, 192 N.J. 489, 933 A.2d 589 (2007), and Northvale Board of Education v. Northvale Education Ass’n, 192 N.J. 501, 933 A.2d 596 (2007), which involved issues similar to those presented here. On April 21, 2008, the Appellate Division affirmed the trial court’s judgment, relying heavily on the ruling in Pascack Valley.

Pascack Valley also involved a custodian accused of inappropriate behavior at work. 192 N.J. at 493, 933 A.2d 589. After a disciplinary hearing, he was terminated in the middle of his employment contract under a similarly-worded clause that provided for fifteen, rather than fourteen, days’ notice. Id. at 492-94, 933 A.2d 589. As in this case, the custodian’s employment was also governed by a CNA containing a just-cause provision. That clause stated that disciplinary action was subject to a grievance procedure. In a separate sentence, the CNA added that “[a]ny dismissal or suspension shall be considered a disciplinary action and shall at the option of the custodian ... be subject to the Grievance Procedure.” Id. at 492, 933 A.2d 589 (emphasis added). After analyzing the individual and collective agreements and relevant case law, this Court concluded that arbitration was required for dismissal of a custodian under the specific terms of the CNA. Id. at 500, 933 A.2d 589.

In this ease, the Appellate Division found the above underscored language—not present in the Mt. Holly CNA—to be dispositive of the appeal. The panel concluded that the quoted passage was critical to this Court’s holding in Pascack Valley. In the absence of identical or comparable language, the panel found, the Board was entitled to terminate Gonzalez on fourteen days’ notice under the individual employment agreement, without showing just cause or having its termination decision subject to the CNA’s grievance procedure.

The panel went on to note that Gonzalez could nonetheless obtain a statement of reasons for his termination and a hearing under Article IX(E)(3) of the CNA.

We granted the Association’s petition for certification. 196 N.J. 346, 953 A.2d 764 (2008).

II.

The Association argues that Gonzalez has a contractual right to arbitration under the CNA, which cannot be voided by his individual employment contract. The Association contends that the Appellate Division erred in the way it applied Pascack Valley to this case and overlooked the import of the presumption in favor of arbitrability in N.J.S.A. 34:13A-5.3. The Appellate Division ruling, it argues, undermines the constitutional and statutory rights of public employees to negotiate collectively with their employers. In addition, the Association submits that the existence of a procedure for obtaining a statement of reasons and a hearing regarding termination does not eliminate the CNA’s grievance procedures.

The Board urges this Court to affirm the Appellate Division decision. The Board contends that the issue presented has already been resolved by Camden Board of Education v. Alexander, 181 N.J. 187, 854 A.2d 342 (2004), and that the amendment to N.J.S.A. 34:13A-5.3 following that decision—and adding a presumption in favor of arbitrability—is not relevant here. The Board also relies on Northvale, supra, in which an Appellate Division decision restraining arbitration was affirmed by a 3-3 vote. 192 N.J. at 501, 933 A.2d 596. In addition, the Board maintains that there is no conflict between the notice provision of the individual contract and the just-cause language in the CNA.

III.

The interplay between independent employment contracts and CNAs is best understood in the context of the overall framework and historical purpose of collective labor negotiations.

The State Constitution guarantees public employees “the right to organize, present to and make known to the State, or any of its political subdivisions or agencies, their grievances and proposals through representatives of their choosing.” N.J. Const. art. I, f 19. Although they do not have the right to “bargain collectively” like their counterparts in the private sector, id., public employees may instead engage in “collective negotiations.” Camden, supra, 181 N.J. at 194, 854 A.2d 342 (citing N.J. State College Locals v. State Bd. of Higher Educ., 91 N.J. 18, 25-26, 449 A.2d 1244 (1982)). See generally Lullo, supra, 55 N.J. at 436-41, 262 A.2d 681 (discussing distinction between “collective bargaining” and “collective negotiations”).

In addition to the constitutional provision, the Legislature has enacted a body of laws governing labor relations in the public and private sectors. See N.J.S.A. 34:13A-1 to -39 (known as the “New Jersey Employer-Employee Relations Act” and referred to here as the “Act”). Under the Act, public employees may select representatives to act on their behalf as “the exclusive representatives for collective negotiation concerning the terms and conditions of employment of the employees.” N.J.S.A. 34:13A-5.3. Representatives are charged with protecting and advancing the interests of the majority in collective negotiations. Troy, supra, 168 N.J. at 372, 774 A.2d 476. Individual employees retain no separate negotiating rights.¹ Id.

The now-recognized practice of collective negotiations is tied to the origin of the labor union movement. That “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.” Lullo, supra, 55 N.J. at 425, 262 A.2d 681. Banding together in a union, though, provided “strength and a means of achieving an equitable balance of bargaining power with employers.” Ibid. The Act helped achieve that purpose “through the medium of collective agreement,” which was intended “to supersede separate agreements with employees and to substitute a single compact with terms which reflect the strength, negotiating power and welfare of the group.” Id. at 429, 262 A.2d 681.

In supporting collective agreements over individual ones, this Court in Lullo relied heavily on the United States Supreme Court’s decision in J.I. Case Co. v. NLRB, 321 U.S. 332, 64 S.Ct. 576, 88 L.Ed. 762 (1944). Case addressed an employer’s refusal to bargain with a newly certified union representative about matters covered by pre-existing individual contracts. Id. at 334, 64 S.Ct. at 578, 88 L.Ed. at 765. In affirming an order directing the company to negotiate, in the context of the National Labor Relations Act, the Supreme Court noted that individual employment contracts are “subsidiary to the terms of the ... [collective] agreement and may not waive any of its benefits.” Id. at 336, 64 S.Ct. at 579, 88 L.Ed. at 767; see Troy, supra, 168 N.J. at 374, 774 A.2d 476. In short, Case explained that “[individual contracts cannot subtract from collective ones.” Case, supra, 321 U.S. at 339, 64 S.Ct. at 581, 88 L.Ed. at 768.

Case left open the question whether an employee could enforce a more advantageous, individual agreement. Id. at 338, 64 S.Ct. at 580, 88 L.Ed. at 768. This Court turned to that very issue in 2001 in Troy, when it considered whether a CNA superseded individual employment contracts of tenured university professors. The professors were attempting to enforce a more favorable individual contract provision entitling them to calendar-year, rather than academic-year, appointments under the CNA. Troy, supra, 168 N.J. at 358-61, 774 A.2d 476. In upholding the individual agreements, the Court noted they did not conflict with the CNA or diminish any rights it provided. Id. at 376, 774 A.2d 476. In addition, the union had agreed to allow faculty members to enforce the individual contract rights. Ibid. As a result, the Court explained, its holding “undermine[d] neither the fundamental importance nor the function of collective agreements.” Id. at 378, 774 A.2d 476.

We now reaffirm the principles articulated in Lullo and Troy: in general, collective agreements supersede individual contracts. To the extent provisions in an individual employment contract conflict or are inconsistent with terms in a collectively negotiated agreement, and diminish or interfere with rights provided by the CNA, the language in the individual contract must yield to the CNA. That approach properly respects agreements hammered out by both sides at the negotiating table. To proceed otherwise would undermine collective negotiations.

IV.

In applying those principles to the facts of this case, we find that Gonzalez’s individual employment contract conflicts with and diminishes his rights under the CNA and must yield to the collective agreement. He is therefore entitled to an arbitration hearing.

The basis for the Union’s grievance is that Gonzalez was discharged without a showing of just cause, as required by Article IX(B) of the CNA. That alleged violation of the collective agreement satisfies the CNA’s definition of “grievance” in Article XV(A)(1): “a breach ... or improper application of the terms of this Agreement.” The Union therefore grieved the decision to terminate Gonzalez and sought arbitration.

The language in Article IX(B) of the CNA—“[n]o employee shall be discharged ... without just cause”—applies to all covered employees including custodians. Such an action, according to the CNA, “shall be subject to the grievance procedure herein set forth,” which allows for binding arbitration. Gonzalez’s individual employment contract, though, states that it “may at any time be terminated by either party” on fourteen days’ written notice.

There is a real conflict between the two documents. Reduced to its essence, under the Board’s view, Gonzalez is entitled only to 14-days’ advance notice before termination and no hearing before an arbitrator. The CNA, however, gives Gonzalez the right to be employed for the full one-year term of his individual contract unless just cause for dismissal exists. He is also entitled to challenge the basis for dismissal before a neutral arbitrator by filing a grievance and requesting a hearing. The two approaches cannot co-exist; the individual agreement interferes with and diminishes Gonzalez’s rights under the CNA.

The Board argues there is no conflict because Gonzalez was terminated under his employment contract and not disciplined under the CNA. Only the latter situation, the Board claims, calls for grievance arbitration. But under the CNA, the act of discharging an employee without just cause entitles an employee to grievance arbitration. See Art. IX(B). The Board’s argument, therefore, reads the word “discharged” out of the contract that both sides agreed to. It also glosses over the reality of what occurred here: Gonzalez was fired in the middle of his contract. Whether one calls that a “discharge” or “termination” of a contract makes little difference. As counsel for the Board conceded at oral argument, the distinction between the terms is, to an extent, a matter of semantics.

The Board also suggests that no conflict is present because employees receive a benefit under the individual contract not called for by the CNA: fourteen days’ notice with pay. In addition, school districts have to notify the State Board of Examiners if a non-tenured employee is dismissed for cause but not if he or she is terminated under an individual employment agreement. See N.J.S.A. 18A:16-1.3. In the case of a for-cause dismissal, the State must also maintain the employee’s name on a list that can be checked by prospective employers. Id. To the extent those differences are considered benefits, they cannot mask the fact that a real conflict nevertheless exists: under the CNA, Gonzalez could not be discharged without just cause and was entitled to grievance arbitration; under the individual contract, he could be fired without cause on 14 days’ notice.

In reaching a contrary result, the Appellate Division placed too much reliance on the specific words used in the CNA involved in Pascack Valley. As discussed previously, Pascack Valley concluded that arbitration was required for a mid-contract dismissal of a custodian who was discharged after a disciplinary hearing. 192 N.J. at 500, 933 A.2d 589. In so ruling, this Court interpreted the CNA before it. Although the employee had an individual employment contract providing for fifteen days’ notice, the CNA declared that “[a]ny dismissal or suspension shall be considered a disciplinary action and shall at the option of the custodian ... be subject to the Grievance Procedure.” Id. at 492, 933 A.2d 589. Among other things, this Court found that the employer’s use of the individual contract was an effort to bypass the protections of the CNA and therefore ordered arbitration. Id. at 499, 933 A.2d 589.

In this case, the Appellate Division reasoned that because the present CNA does not contain the sentence quoted above or a comparable provision, Gonzalez could be terminated on fourteen days’ notice. Such an approach is too restrictive. The proper course is to look at the words agreed to by the parties to see if a conflict exists. See Troy, supra, 168 N.J. at 376, 774 A.2d 476. No special phrases or formulaic words are required. In particular, CNAs need not parrot the language used in the contract in Pascack Valley. Here, the CNA provided certain protections to all discharged employees. Because the termination-on-notiee language in the individual contract diminishes those rights, its conflicting course cannot survive.

The Board mistakenly suggests that Camden requires a different outcome.² Camden, supra, focused on a school board’s decision not to renew custodians at the end of their annual contracts. 181 N.J. at 190, 854 A.2d 342. Unlike Gonzalez, the custodians were not discharged mid-contract. Plus, the CNA in question was silent on whether non-renewal for disciplinary reasons was subject to arbitration. Id. at 196, 854 A.2d 342. Camden therefore does not apply to the facts of this ease: the discharge of an employee in the middle of a contract, when the relevant CNA declares that employees cannot be discharged without just cause.

In addition, the majority opinion in Camden focused on the Board’s right not to renew non-tenured school employees under N.J.S.A. 18A:27-4.1(b) and determined that the CNA did not specifically waive that right. 181 N.J. at 195-203, 854 A.2d 342. The custodians, therefore, were not entitled to arbitrate their claims. In reaching that conclusion, the Court explained that prior decisions had not extended the presumption in favor of arbitrability, stemming from the “Steelworkers Trilogy,”³ from private- to public-sector contracts. Id. at 203-05, 854 A.2d 342.

In the aftermath of Camden, the Legislature amended N.J.S.A. 34:13A-5.3, effective January 12, 2006, and adopted the following presumption of arbitrability for public employees: “In interpreting the meaning and extent of a provision of a collective negotiation agreement providing for grievance arbitration, a court or agency shall be bound by a presumption in favor of arbitration. Doubts as to the scope of an arbitration clause shall be resolved in favor of requiring arbitration.” The Legislature, thus, overruled Camden on this issue. Bd. of Educ. of Alpha v. Alpha Educ. Ass’n, 190 N.J. 34, 48, 918 A.2d 579 (2006).

Requiring arbitration in this case is consistent with the Legislature’s amendment to N.J.S.A. 34:13A-5.8 extending a presumption in favor of arbitration to public employees. That statutory presumption also reaffirms the principle that “[alrbitration is a favored means of resolving labor disputes.” Pascack Valley, supra,, 192 N.J. at 496, 933 A.2d 589 (citations and internal quotation marks omitted).

Y.

We address briefly Article IX(E)(3) of the CNA, which entitles employees to a statement of reasons and a hearing. Because it supplements the grievance arbitration process, the clause does not alter the outcome in this case.

Article IX(E)(3) provides that “[a]ny employee who does not receive a new contract or whose services are terminated or suspended or who is disciplined or reprimanded or who is reduced in rank or compensation” is entitled to a statement of reasons and a hearing before the Board on request. The clause mirrors language contained in N.J.S.A. 18A:27-4.1(b), which is designed to permit employees whose contracts are not renewed an opportunity “to convince the members of the board to offer reemployment.”

The additional language in the CNA neither expressly nor by implication supersedes an employee’s right to pursue grievance arbitration under Article IX(B). For some employees, like those whose contracts are not renewed and cannot file a grievance under the CNA, Article IX(E)(3) is their only recourse. Others, like Gonzalez, may choose either or both options. Article IX(E)(3), though, viewed in its entirety, cannot be read to bar grievance arbitration. It provides for a statement of reasons and a hearing for the full range of events covered by Article IX(B)’s just-cause provision. In other words, not only discharged employees, but also those disciplined, reprimanded, or reduced in rank or pay, may seek a statement of reasons and a hearing. Surely, the latter employees are entitled to file a grievance under the plain language of Article IX(B). The same holds true for an employee who is discharged or terminated. The opportunity for a statement of reasons and hearing therefore supplements, but does not replace, the right to grievance arbitration.

VI.

For the reasons set forth above, we reverse the judgment of the Appellate Division and remand for arbitration.

1 Public school employees are also subject to the provisions of the Education Law, N.J.S.A. 18A: 1—1 to :76-4, which authorizes school boards to "make such rules and regulations ... as may be necessary for the employment, discharge, management and control of the public school janitors, janitor engineers, custodians or janitorial employees of the district," NJ.S.A. 18A:17-41.

2 The Board also relies on this Court's 3-3 decision in Northvale. 192 N.J. at 501, 933 A.2d 596. Northvale addressed the termination of a part-time teacher and part-time secretary in the middle of a one-year contract. The school board terminated the employee on sixty days’ notice pursuant to her individual employment contract. Ibid. She, in turn, sought grievance arbitration under a CNA that had a just-cause provision similar to the one in the Mt. Holly CNA. Id. at 509, 933 A.2d 596. Because this Court was equally divided, its concurring and dissenting opinions are not precedential. See Abbamont v. Piscataway Twp. Bd. of Educ., 314 N.J.Super. 293, 301, 714 A.2d 958 (App.Div.1998), aff'd, 163 N.J. 14, 746 A.2d 997 (1999). The Appellate Division's unpublished opinion is likewise not precedential. R. 1:36-3. As a result, we do not address Northvale at length, even though we consider a number of issues relevant to both cases in this opinion.

3 United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960); United Steelworkers of Am. v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960),