PAUL BARILA VS. BOARD OF EDUCATION OF CLIFFSIDE PARK, BERGEN COUNTY (C-000161-16, BERGEN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: July 10, 2018
• Docket: A-4234-16T4
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-4234-16T4

PAUL BARILA, WILLIAM J. LUDWIG, CANDACE R. KANTOR, and DENNIS ENRICO,

Plaintiffs-Respondents,

v.

BOARD OF EDUCATION OF CLIFFSIDE PARK, BERGEN COUNTY,

Defendant-Appellant. ______________________________________

Argued June 5, 2018 – Decided July 10, 2018

Before Judges Reisner, Mayer, and Mitterhoff

On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-000161-16.

Robert D. Lorfink argued the case for appellant (Fogarty & Hara, attorneys; Stephen R. Fogarty, of counsel and on the briefs; Robert D. Lorfink, on the briefs).

Richard A. Friedman argued the cause for respondent (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, PC, attorneys; Richard A. Friedman and Genevieve M. Murphy-Bradacs, of counsel and on the brief). PER CURIAM

Defendant Board of Education of Cliffside Park (Board)

appeals from a September 19, 2016 order denying defendant's

motion to dismiss and May 16, 2017 orders denying defendant's

motion for summary judgment and granting summary judgment in

favor of plaintiffs Paul Barila, William J. Ludwig, Candice R.

Kantor and Dennis Enrico's (plaintiffs) as to Count I of

plaintiffs' Amended Complaint. We affirm.

This matter arises from a collective bargaining agreement

negotiated by the Board and the Cliffside Park Education

Association (Association) for all teaching staff members

employed by the District. The parties stipulate to the facts as

follows. Plaintiffs are current and former teachers employed by

the Board. Plaintiffs were employed by the Board prior to July

1, 2015, and each had worked for the Board for at least ten

years as of July 1, 2015. Plaintiffs are in the bargaining unit

and are also members of the Association, which is the exclusive

collective bargaining representative for all teaching staff

members employed by the District.

Plaintiffs, the Board, and the Association were all parties

to a collective bargaining agreement that was in effect from

July 1, 2012, through June 30, 2015 (the 2012 Agreement).

Article VIII of the 2012 Agreement, which addressed sick leave,

2 A-4234-16T4 provided: "In accordance with the provisions of N.J.S.A.

18A:30-2, each Teacher shall be entitled to ten (10) sick leave

days with full pay in each school year. Unused sick leave days

shall, in accordance with the provisions of N.J.S.A. 18A:30-3,

be accumulated from year to year with no maximum limit."

Article VIII of the 2012 Agreement provided further:

Any teacher, who, as of the end of any school year beginning with 09-10, has either served the District at least ten (10) years and has retired under the Teachers' Pension and Annuity Fund upon such retirement or has served the District at least twenty-five (25) years and leaves the employ of the Board for any reason, shall be paid according to the table:

Formula for unused sick leave: First 100 days x $125.00/day Second 100 days x $0.00/day Up to next 72 days x $1.75/day Maximum is $25,000.00

Accordingly, any teacher who had either been employed by

the Board for at least ten years and retired under the Teachers'

Pension and Annuity Fund, or who had been employed by the Board

for twenty-five years and left the employ of the Board for any

reason, was entitled to compensation, as calculated by a

specific formula, for accumulated but unused sick leave, up to a

maximum amount of $25,000. Although the 2012 Agreement

specified that compensation for accumulated unused sick leave

was to begin with the 2009-2010 school year, the parties agree

3 A-4234-16T4 that an identical provision has appeared in previous collective

negotiations agreements for the past twenty years.

As the 2012 Agreement expired at the end of June 2015, the

Association and the Board negotiated a successor collective

negotiations agreement, which became effective on July 1, 2015

(the 2015 Agreement). The 2015 Agreement modified Article VIII

in two significant ways. First, the 2015 Agreement changed the

formula for unused sick leave by providing for up to a maximum

of 100 days at the rate of $150/day. Consequently, the maximum

amount of compensation that a teacher could receive for

accumulated but unused sick leave upon retirement under the

Teachers' Pension and Annuity Fund, or after twenty-five years

of employment, was $15,000. Accordingly, the 2015 Agreement

decreased the maximum amount of compensation from $25,000 to

$15,000, decreased the maximum number of days of accumulated,

but unused, sick days for which teachers could be compensated to

100 days, but increased the rate per day for these 100 days from

$125 to $150.

The parties agree that the Association knowingly bargained

for the modified accumulated sick leave provision in the 2015

Agreement. The parties also agree that the Association did not

seek or secure plaintiffs' permission prior to negotiating the

modification to Article VIII. To the contrary, several

4 A-4234-16T4 teachers, including plaintiffs, objected to the modifications

upon learning of the changes to Article VIII. Notwithstanding

these objections, the Association ratified the 2015 Agreement by

adopting a resolution approving it on April 27, 2016. None of

the plaintiffs voted to ratify the 2015 Agreement and they

continued to object to the new Article VIII.

Additionally, the parties stipulate as to the particular

impact of Article VIII of the 2015 Agreement on each of the

plaintiffs. Prior to July 1, 2015, plaintiff Kantor had accrued

233 sick days, which equated to $18,275 under the 2012

Agreement. Plaintiff Barila had accrued 308.5 sick days, which

equated to $25,000 under the 2012 Agreement. Plaintiff Enrico

had accumulated 282.5 sick days, which equated to $25,000 under

the 2012 Agreement. Likewise, plaintiff Ludwig accumulated 263

sick days, which equated to $25,000 under the 2012 Agreement.

Since this litigation commenced, plaintiffs Kantor and Barila

have retired and were paid for their unused, accumulated sick

leave pursuant to the formula set forth in Article VIII of the

2015 Agreement. The Board has taken the position that when

plaintiffs Enrico and Ludwig retire, they too will be

compensated for their unused, accumulated sick leave pursuant to

the formula set forth in Article VIII of the 2015 Agreement.

5 A-4234-16T4 On June 9, 2016, plaintiffs filed a complaint challenging

the retroactive divestiture of their accumulated but unpaid sick

leave. On July 26, 2016, defendant filed a motion to dismiss in

lieu of an answer. Plaintiffs then filed a cross-motion to file

a supplemental pleading on September 8, 2016. By order dated

September 19, 2016, the trial judge denied the motion to dismiss

and granted the motion to amend the pleading.

Plaintiffs filed a motion for summary judgment on March 21,

2017. The Board filed a cross-motion for summary judgment

seeking to dismiss Count I of plaintiffs' amended complaint

alleging breach of contract. The Board alleged that the trial

court had no jurisdiction to decide the case as N.J.S.A. 34:13A-

5.4(d) of the New Jersey Employer-Employee Relations Act confers

exclusive jurisdiction on the Public Employment Relations

Commission (PERC) to decide scope of negotiations issues. In

addition, the Board argued that it had the right to negotiate

away plaintiffs' right to accumulated sick leave, even if those

rights had vested.

In an extremely detailed and thorough thirty-nine page

opinion, Judge Robert P. Contillo rejected defendant's argument

that plaintiffs' claims involved a scope of negotiation issue.

As a result, the judge found that he had jurisdiction to hear

and decide the merits of the case. On the merits, the judge

6 A-4234-16T4 concluded that compensation for accumulated but unpaid sick

leave was a form of deferred compensation that, once earned,

could not be divested retroactively through negotiated

collective bargaining agreements.

On appeal, defendant challenges the trial court's decision

that plaintiffs' claims did not implicate a scope of

negotiations issue. Defendant also contends that Count I,

although phrased as a violation of contractually vested rights,

is actually a challenge to the ability of the Board and the

Association to negotiate changes to the accumulated sick leave

provisions. We affirm substantially for the reasons articulated

in the judge's opinion, adding the following comments.

In reviewing orders for summary judgment, an appellate

court uses the same standard as the trial court. Globe Motor

Co. v. Igdalev, 225 N.J. 469, 479 (2016); Prudential Prop. &

Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.

1998). We decide first whether there was any genuine issue of

material fact. If there was not, we then decide whether the

trial court's ruling on the law was correct. Walker v. Atl.

Chrysler Plymouth, 216 N.J. Super. 255, 258 (App. Div. 1987).

Because the facts in this case are stipulated, the issues on

appeal are purely legal in nature. Accordingly, our review of

the trial court's rulings are de novo. Estate of Hanges v.

7 A-4234-16T4 Metro. Prop. & Cas. Ins. Co. 202 N.J. 369, 382-83 (2010); see

also Manalapan Realty LP v. Twp. Comm. of Manalapan, 140 N.J.

366, 378 (1995) ("A trial court's interpretation of the law and

the legal consequences that flow from established facts are not

entitled to any special deference.").

I. Subject matter jurisdiction.

Subject matter jurisdiction is the power of the court to

hear and determine "cases of the class to which the proceeding

in question belongs. It rests solely upon the court's having

been granted such power by the Constitution or by valid

legislation . . . ." State v. Osborn, 32 N.J. 117, 122 (1960).

While state courts are generally granted "expansive authority"

to resolve a wide range of disputes, Thompson v. City of

Atlantic City, 190 N.J. 359, 378-79 (2007), subject matter

jurisdiction is not without limits. See, e.g. Bd. of Educ. of

Plainfield v. Plainfield Educ. Ass'n, 144 N.J. Super. 521, 525

(App. Div. 1976).

Our Supreme Court has held that PERC has primary

jurisdiction over scope of negotiations issues: "[U]nder

N.J.S.A. 34:13A-5.4(d) PERC is the forum for the initial

determination of whether a matter in dispute is within the scope

of collective negotiations. PERC's jurisdiction in this area is

primary." State v. State Supervisory Emps. Ass'n, 78 N.J. 54,

8 A-4234-16T4 83 (1978) (citations omitted). "[W]orking hours, compensation,

physical arrangement and facilities and customary fringe

benefits [are considered] the essential components of terms and

conditions of employment." Id. at 67 (citing Bd. of Educ. v.

Englewood Teachers Ass'n., 64 N.J. 1 (1973)). When a

controversy "concerns the propriety of the parties negotiating

and agreeing on the item in dispute, [the trial judge] should

refrain from passing on the merits of the issue," because "PERC

has primary jurisdiction." Ridgefield Park Educ. Ass'n v.

Ridgefield Park Bd. of Educ., 78 N.J. 144, 153-54 (1978).

As the trial court correctly noted, however, the question

of who may initiate such an inquiry is not entirely clear. In

Loigman v. Township Committee of the Township of Middletown, 297

N.J. Super. 287, 303 (App. Div. 1997), we found that N.J.S.A.

34:13A-5.4(d) "allows only public employers and majority

representatives to request scope-of-negotiations decisions."

See also Petersen v. Township of Raritan, 418 N.J. Super. 125

(App. Div. 2011) (holding an individual plaintiff could sue his

employer, the defendant township, alleging that the defendant's

elimination of traditional health care benefits to retirees

violated 1997-1999 collective negotiations agreement).

9 A-4234-16T4 Notwithstanding this ambiguity, as the trial court found,

it is clear that plaintiffs could not file an action with PERC.

Tellingly, neither defendant nor the Association expressed an

interest in obtaining a scope of negotiations determination from

PERC. The judge noted that, "the Association has expressed no

interest in initiating such a process. Nor has it sought to

intervene in this case." That neither the Board nor the

Association sought a determination from PERC, knowing there were

dissenting employees at the time of the negotiations, undercuts

their argument that the trial court was not empowered to resolve

the dispute.

The trial judge also correctly rejected defendant's

argument that Count I alleges a scope of negotiations issue. We

observe, as did the trial judge, that plaintiffs do not dispute

that the Board and the Association are empowered to negotiate

changes to the accumulated sick leave provisions. See Maywood

Educ. Ass'n v. Maywood Bd. Of Educ., 131 N.J. Super. 551 (Ch.

Div. 1974). The question in Count I was not whether the Board

and the Association could include sick pay benefits as a

negotiable item in their collective bargaining, but more

narrowly whether the Board and the Association could

retroactively divest plaintiff of their vested right to deferred

compensation in an amount that exceeds $15,000. Given the

10 A-4234-16T4 inability of plaintiffs to pursue a PERC determination,

defendant's apparent disinterest in filing a PERC claim, and the

narrow issue under review, the trial court did not err in

determining that it had subject matter jurisdiction to

adjudicate plaintiffs' breach of contract claim.

II. The negotiability of vested sick leave time.

We have recognized that payment for accumulated sick leave,

as a form of deferred compensation, is to be protected. In

Matter of Morris School District Board of Education, 310 N.J.

Super. 332 (App. Div. 1998), we held that although the parties

collectively agreed to be bound by a fact finder's determination

in advance, a retroactive cap on vested or accumulated

compensation could not be upheld absent a knowing and

intentional waiver by the persons adversely affected. The court

in Morris was "satisfied that the Commission's policy barring

divestment absent a knowing waiver was reasonable and within its

statutory powers." Id. at 343. In so holding, we noted that

"our Supreme Court has protected similar rights against

invasion." Ibid. (citing Gauer v Essex Cty. Div. of Welfare,

108 N.J. 140, 144 (1987)). Furthermore, the Supreme Court

opined in Owens v. Press Publishing Co., 20 N.J. 537 (1956) that

the right to severance pay survived the expiration of a

11 A-4234-16T4 collective bargaining agreement. As we recognized in Morris

School Distict, Owens held:

deferred compensation 'was not conditioned upon the employee's discharge from service within the term of the collective bargaining agreement.' The Court reasoned that 'once the right came into being it . . . survive[d] the termination of the agreement.' In contrast, the Court concluded that the plaintiffs' claims for severance pay allegedly earned in the intervening period between expiration of the collective bargaining agreement and their respective discharge was 'ill-founded.'

[Morris School Dist., 310 N.J. Super. at 344 (quoting Owens, 20 N.J. at 348- 49)(alterations in original)].

In the instant matter, the trial court applied similar

reasoning in its opinion noting that the

[B]oard was authorized to negotiate over the accumulated sick leave provisions prospectively, or going forward. In contrast, a board of education is generally not permitted to divest teachers of their vested rights earned under prior collective negotiation agreements.

As did the trial judge, we agree that Morris and Owens

stand for the proposition that compensation for accumulated sick

leave is "earned" during the service performed by the teachers

during the term of any particular collective negotiation

agreement. Once vested, the right to compensation is a form of

deferred compensation that cannot retroactively be negotiated

12 A-4234-16T4 away. Morris School Dist., 310 N.J. Super. at 347-48. In that

regard, New Jersey courts have consistently protected various

forms of deferred compensation from retroactive divestment

through collective bargaining negotiations absent consent of the

affected employees. See e.g. State Troopers Fraternal Assoc. v.

State, 149 N.J. 38 (1997) (retroactive pay adjustments); Gauer,

108 N.J. at 144 (reimbursement of health insurance and Medicare

premiums); Owens, 20 N.J. at 442 (severance pay).

In this case, plaintiffs did not consent to the retroactive

divestment of their vested rights. Accordingly, the trial court

correctly held that the Board and Association impermissibly

applied the 2015 Agreement to retroactively divest plaintiffs'

right to earned compensation. There was no error in the trial

court's decision to deny defendant's motion for summary

judgment.

We affirm the orders on appeal.

13 A-4234-16T4