CITY OF SOUTH AMBOY VS. MUNICIPAL EMPLOYEES UNION OF SOUTH AMBOY (L-7343-16, MIDDLESEX COUNT ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-5087-17T1
CITY OF SOUTH AMBOY,
a Municipal Corporation of
New Jersey,
Plaintiff-Appellant,
v.
MUNICIPAL EMPLOYEES
UNION OF SOUTH AMBOY,
Defendant-Respondent.
___________________________
Argued May 22, 2019 – Decided June 20, 2019
Before Judges Reisner and Mawla.
On appeal from Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-7343-16.
John R. Lanza argued the cause for appellant (Lanza &
Lanza, LLP, attorneys; John R. Lanza and Monica A.
Hoopes, on the briefs).
William P. Hannan, II, argued the cause for respondent
(Oxfeld Cohen PC, attorneys; William P. Hannan, II, of
counsel and on the brief).
PER CURIAM
Plaintiff City of South Amboy (the City) appeals from two orders dated
March 28, 2018, denying its summary judgment motion seeking to vacate
portions of an arbitration award, and granting summary judgment in favor of
defendant Municipal Employees Union of South Amboy (MEUSA), confirming
the award. Plaintiff also appeals from a June 22, 2018 order denying its motion
for reconsideration. We affirm for the reasons stated by the trial judge in his
oral opinions issued March 28 and June 22, 2018, and for the reasons stated
below.
I
Because we are writing this opinion primarily for the benefit of the parties,
who are fully familiar with the facts, a short background summary will suffice
here. The dispute centers around health care issues addressed in paragraphs 1
and 2 of Article II of the 2014-2018 collective bargaining agreement (CBA). In
the first sentence of paragraph 1, the City agreed, without any stated
qualifications, that it would pay the full cost of providing employees and their
families with health benefits. Next, subsections A through D listed the four
types of coverage the City would provide. Finally, subsection E stated that the
City could provide those four listed types of coverage through the New Jersey
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State Health Benefits Program (SHBP). In 2015, the City made the switch to
the SHBP, as the CBA permitted. However, the SHBP imposed a two-month
waiting period for new employees and their families to obtain coverage.
The arbitrator determined that, because Article II, paragraph 1 did not
include any specific provision permitting the City to delay providing coverage,
the City was required to provide the coverage, even if that meant paying fo r
separate coverage for the first two months. Among other things, the arbitrator
considered that the most recent previous CBA contained a specific provision
permitting the City to delay providing coverage for new employees' families.
He reasoned that the parties knew how to provide for such a delay if they agreed
to it, and inferred that they reached no such agreement here.
The second issue focused on paragraph 2A of Article II, which provided
that "[u]pon retirement of an employee covered by this Agreement, the City shall
continue to provide medical coverage as set forth in Appendix B." Appendix B
of the CBA was a copy of City Ordinance #2-2010, providing that the City would
extend paid health benefits to certain employees "who retire" with defined
amounts of service credit. The ordinance also provided that on reaching age
sixty-five, a retired employee who is receiving employer-provided health
coverage and who qualifies for Medicare "shall be entitled to receive Medicare
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as primary coverage and City health insurance as secondary coverage." The
next sentence provided: "Employee shall be responsible for the payment of
Medicare Part B premiums." Based on that specific ordinance language, which
was incorporated by reference and attached to the contract, the arbitrator
concluded that employees who retire under the 2014-2018 CBA must pay their
own Part B premiums. However, the arbitrator concluded that the 2014-2018
CBA did not apply to employees who had retired under the auspices of prior
contracts, that is, employees who retired before the 2014-2018 CBA was
ratified. He reasoned that the rights of those retirees were governed by the terms
of whichever contract governed their employment at the time they retired.
MEUSA accepted the arbitration award, including provisions unfavorable
to the union, while the City sought to vacate award provisions it found
unfavorable. The trial judge concluded that the arbitrator's interpretation of the
contract was reasonably debatable and the City did not satisfy any of the limited
grounds set forth in N.J.S.A. 2A:24-8 for overturning an arbitration award. The
judge later denied the City's reconsideration motion, noting that the City was
largely recycling arguments the judge considered and rejected on the original
motion. The judge also rejected the City's attempt to raise new substantive
issues on the reconsideration motion.
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II
On this appeal, the City contends that the arbitrator exceeded the scope of
his authority in addressing the rights and obligations of retirees, the trial court
should have considered the City's reconsideration arguments based on M & G
Polymers USA, LLC v. Tackett, __U.S.__, 135 S. Ct. 926 (2015), and the
arbitrator effectively rewrote the contract as it applied to "gap coverage" for new
employees. Our review of the trial court decision is de novo. Minkowitz v.
Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013). By contrast, neither the trial
judge nor this court may second-guess the arbitrator's interpretation of the CBA,
so long as his construction of the contract is reasonably debatable . Middletown
Twp. PBA Local 124 v. Twp. of Middletown, 193 N.J. 1, 11 (2007). "Consistent
with the reasonably debatable standard, a reviewing court may not substitute its
own judgment for that of the arbitrator, regardless of the court's view of the
correctness of the arbitrator's interpretation." Linden Bd. of Educ. v. Linden
Educ. Ass'n ex rel. Mizichko, 202 N.J. 268, 277 (2010) (citation omitted). After
reviewing the record with that standard in mind, we find no merit in any of the
City's arguments.
We first address the City's argument about the scope of the arbitration,
and whether it included the issue of retirees' right to payment for their Medicare
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Part B benefits (the retiree issue). We were not provided with a transcript of the
arbitration, presumably because no verbatim record was made. In addition,
other than the list of issues to be arbitrated, the CBA, and a previous arbitration
award, the parties have not placed before us any relevant documents submitted
to the arbitrator, including their post-hearing briefs.
As a result, we are limited in our ability to determine what arguments the
parties actually presented to the arbitrator or whether either side waived
objection to the arbitrator considering those arguments. In the award, the
arbitrator characterized the union's argument about payment of Medicare Part B
premiums as having two parts, one applying to current employees and one
applying to employees who retired before this CBA was ratified. Without a
verbatim record of the arbitration, or copies of the post-arbitration briefs, we
cannot meaningfully evaluate the City's argument that the arbitrator
unexpectedly addressed the retiree issue sua sponte when neither side had raised
the issue. See R. 2:6-1(a)(1); State v. Cordero, 438 N.J. Super. 472, 489 (App.
Div. 2014). However, we will briefly address the issue.
We agree with the trial judge that the arbitrator had the authority to
construe the CBA that was before him, and that the CBA clearly referred to
retirees as well as current employees. The wording of the union's arbitration
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issue was broad enough to encompass the issue of which retirees were covered
by the Medicare Part B language of the CBA. That said, we conclude that the
City's argument on the merits of the Medicare issue is based on a misreading of
the arbitrator's award.
In his decision, the arbitrator did not state that all retirees who retired
before this CBA was ratified (prior retirees) were entitled to have the City pay
for their Medicare Part B premiums. Rather, the arbitrator merely stated the
general legal proposition that the rights of prior retirees to specific retirement-
related contractual benefits are controlled by the terms of the contracts that were
in effect at the time they retired. Those prior CBAs were not before the
arbitrator, and he was not called upon to construe their terms. The 2014-2018
CBA was before him, and he reasonably construed that CBA as applying to
future retirees (those who retire after the contract was ratified), not prior retirees.
In fact, at oral argument on the reconsideration motion, the City's counsel
agreed that "the retirees referred to [in the CBA] are the . . . employees who
retire under this contract." By logical extension, that concession means that the
contract does not require prior retirees to pay for their own Part B premiums,
because it simply does not address the rights or obligations of prior retirees. On
the flip side, in response to a question from the trial judge, MEUSA's counsel
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conceded that if a prior employee had retired under a previous contract that
required retirees to pay their own Part B premiums, the arbitrator's decision
would not require the City to now pay that retiree's premiums. However, counsel
also conceded that the arbitration record did not include all of the prior contracts.
Based on the record discussed above, we affirm the trial judge's decision
to confirm the arbitration award relating to Medicare Part B premiums. We also
find no abuse of the trial judge's discretion in denying the motion for
reconsideration. See In re Belleville Educ. Ass'n, 455 N.J. Super. 387, 405
(App. Div. 2018). In particular, we find no abuse of discretion in the judge's
refusal to consider legal issues the City raised for the first time on
reconsideration. Those issues include the substantive effect of the City's
healthcare ordinance on the existing contract rights of prior retirees, the impact
of State legislation concerning health benefits on the rights of prior retirees, and
the substantive impact of M & G Polymers, 135 S. Ct. at 937, on prior
employees' rights under previous contracts. None of those issues were timely
raised in the trial court, and they are not properly before us on this appeal.
III
We next address the issue of a waiting period for new employees and their
families. In the trial court, the City conceded that the SHBP sets a floor, not a
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ceiling, on what the City must provide. That is, the City was free to agree to
provide benefits beyond those set forth in the SHBP. 1 The arbitrator determined
that the City had, in fact, committed to provide such additional benefits when it
agreed to provide healthcare to new employees and their families without
specifying any waiting period. In making that determination, the arbitrator was
not construing the SHBP or purporting to change its provisions. Rather, he was
construing the CBA, the very function he was authorized to perform. We agree
with the trial judge that the contract was ambiguous as to the timing of the
benefits, and the arbitrator's interpretation was reasonably debatable.2 See
Linden Bd. of Educ., 202 N.J. at 276-77. That ends the inquiry.
Affirmed.
1
The trial judge indicated in his opinion that, at oral argument of the motion,
the City conceded that the SHBP "only sets minimum coverage standards and
that South Amboy is free to provide benefits in excess of the minimum standards
provided for [by] the SHBP." Because the City did not provide us with the
transcript of the summary judgment motion argument from November 17, 2017,
we rely on the judge's characterization of the argument record.
2
In response to our question at oral argument, counsel advised that the SHBP
plan documents, which stated that there was a waiting period for benefits, were
not appended to the CBA. By contrast, the City ordinance, providing that the
City would not pay for Medicare Part B premiums, was included in the CBA as
Appendix B and was referenced in the body of the contract. Thus, the CBA by
its terms clearly incorporated the non-payment for Medicare Part B premiums,
but contained no such clear notice of, or agreement to, the time delay for
receiving health benefits.
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