WEST ESSEX PBA LOCAL 81, ETC. VS. TOWNSHIP OF WEST CALDWELL (L-7649-17, ESSEX COUNTY AND STATEWIDE) ( 2018 )


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  •                                 NOT FOR PUBLICATION WITHOUT THE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-3228-17T4
    WEST ESSEX PBA LOCAL 81
    (WEST CALDWELL UNIT),
    Plaintiff-Respondent,
    v.
    TOWNSHIP OF WEST CALDWELL,
    Defendant-Appellant.
    __________________________________
    Argued October 16, 2018 – Decided November 26, 2018
    Before Judges Yannotti, Rothstadt and Natali.
    On appeal from Superior Court of New Jersey, Law
    Division, Essex County, Docket No. L-7649-17.
    Angelo J. Genova argued the cause for appellant
    (Genova Burns LLC, attorneys; Angelo J. Genova and
    Joseph M. Hannon, of counsel and on the briefs; Ryann
    M. Aaron, on the briefs).
    Leonard C. Schiro argued the cause for respondent
    (Mets, Schiro & McGovern, LLP, attorneys for
    respondent; Leonard C. Schiro, of counsel and on the
    brief; Julian N. Krol and Ryan E. Ross, on the brief).
    PER CURIAM
    The Township of West Caldwell appeals from an order entered by the Law
    Division on February 21, 2018, which vacated an arbitration award and found
    that Sergeant Daniel Gorman was entitled to an additional $14,185.61 in
    terminal leave payments for vacation and sick leave. We affirm.
    I.
    The Township and West Essex PBA Local 81, West Caldwell Unit (PBA),
    are parties to a collective negotiations agreement (CNA), which is effective from
    January 1, 2015, through December 31, 2019. Article V of the CNA governs
    vacation and holiday time. It states, in pertinent part, that an employee covered
    by the agreement "shall receive vacations" based on the length of the employee's
    service. An employee who has served between fifteen to nineteen years receives
    200 hours of vacation time. The CNA does not, however, address how an
    employee accumulates vacation leave if the employee retires or is separated
    before the end of a calendar year.
    Article XIII of the CNA governs sick leave. It provides that an employee
    covered by the agreement shall receive a specified number of hours of sick leave,
    based upon the date the employee was hired. Section A of Article XIII states
    that "[a]ny unused sick leave days will be accumulated and compensated to the
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    2
    [e]mployee at the rate of fifty percent (50%) as terminal leave at the time of
    retirement or by virtue of work-connected disability-causing separation."
    Section C of Article XIII permits an officer to use as personal days up to two
    eight-hour shifts or two twelve-hour shifts from his or her total annual sick leave
    allotment. Section C also states that "[a]t the time of separation or retirement,
    the accumulated terminal leave to which an [o]fficer is entitled pursuant to
    Section A herein shall be reduced by one-half . . . day for each personal day
    used."
    It is undisputed that from at least 2006 until January 2015, the Township
    did not prorate the vacation time earned if an employee retired or was separated
    before the end of the calendar year. It is also undisputed that before January
    2015, the Township calculated the employee's terminal sick leave payment by
    first determining the total accumulated sick leave hours, and deducting one-half
    of the hours of the personal sick leave the employee used during his or her
    employment. The Township then reduced that number by fifty percent and
    applied the employee's final hourly rate of pay to arrive at the terminal sick leave
    payout.
    On January 15, 2015, the Township adopted and issued a "Personnel
    Policies and Procedures Manual/Employee Handbook" (Handbook), which
    A-3228-17T4
    3
    provides in pertinent part that "[v]acation time is credited at the beginning of
    the calendar year, in anticipation of continued employment for the remainder of
    the year (it shall be accrued proportionally throughout the year)."           The
    Handbook states that "[d]uring the final year of employment, an employee may
    take his/her full (or prorated share) vacation entitlement or may elect to receive
    payment in lieu of time off."
    In January 2015, Township Administrator Adam W. Brewer held a
    meeting with all municipal staff, including members of the police department,
    and explained certain provisions of the Handbook. Brewer addressed the change
    in the manner in which vacation time accrues in the last year of employment.
    Brewer testified that at the meeting, Gorman asked him whether the Handbook
    applied to all of the Township's employees. Brewer responded by saying the
    Handbook applied to all employees, but the CNA would apply to all employees
    covered by the agreement in the event of a conflict.
    In 2015, the Township also changed the method for calculating the
    terminal sick leave payments. According to Nikole Monroig, the Township's
    Chief Financial Officer and Assistant Administrator, certain Township officials
    reviewed the CNA and concluded that the method the Township had been using
    A-3228-17T4
    4
    to calculate the terminal sick leave payments was based on an erroneous
    interpretation of the contract.
    The Township decided to calculate the terminal leave payments for sick
    time by taking the total number of hours of unused sick time the employee had
    accrued, and reducing that number by half. From that number, the Township
    would deduct one-half of the hours of personal sick leave the employee had used
    during his or her employment. The Township then would multiply that number
    by the employee's hourly rate of pay to arrive at the amount of the employee's
    terminal sick leave payout.
    The Township applied its new calculation method for terminal vacation
    leave payouts to John Kopf and William Coughlin, two members of the PBA's
    bargaining unit who submitted retirement papers after January 15, 2015. In
    2015, the Township also applied the new calculation method for the terminal
    sick leave payouts to Kopf, Coughlin, and William Styskal, another member of
    the PBA bargaining unit. The PBA did not object to the terminal leave payments
    for these employees.
    Gorman retired from the Township's police department, effective July 1,
    2016. The Township calculated Gorman's vacation leave for 2016 in accordance
    with the new methodology. The Township prorated his 200 hours of vacation
    A-3228-17T4
    5
    time for 2016, and determined that Gorman was entitled to 100 hours for that
    year, and 37 hours of vacation leave which he carried over into 2016.
    The Township also calculated Gorman's sick leave payout in accordance
    with its new policy.   It determined that as of June 30, 2016, Gorman had
    accumulated a total of 329.50 hours of unused sick time. The Township divided
    that number in half, arriving at 164.75 hours. Gorman had used 444 hours of
    personal sick time during his employment. The Township subtracted half of that
    number, 222 hours, from 164.75 hours, leaving a negative balance of 57.25
    hours.
    The PBA disputed the Township's calculations. It calculated Gorman's
    vacation and sick time payments in accordance with the policies that had been
    in effect until January 2015. The PBA asserted that Gorman was entitled to the
    full allotment of 200 hours for 2016, along with the 37 hours he carried over
    from 2015, for a total of 237 hours of vacation time. In addition, the PBA
    calculated Gorman's sick leave payout by deducting half of his unused personal
    sick leave, 222 hours, from the sick leave balance of 329.50 hours, yielding
    107.50 hours. The PBA asserted that Gorman was entitled to payment for one-
    half of that number, or 53.75 hours.
    A-3228-17T4
    6
    II.
    On June 23, 2016, Gorman filed a grievance with Chief of Police Gerard
    Paris on behalf of himself and the PBA. Gorman alleged the Township violated
    the CNA by calculating his retirement payments for vacation and sick leave in
    accordance with the new policies adopted in 2015. The Chief of Police denied
    the grievance on June 24, 2016. Thereafter, Gorman filed grievances with the
    Township's Administrator, Mayor, and Council. The grievances were denied.
    In August 2016, Gorman and the PBA submitted the grievance to the New
    Jersey Public Employment Relations Commission (PERC) for binding
    arbitration.   An arbitrator was selected and directed to decide whether the
    Township appropriately calculated Sergeant Daniel Gorman's vacation and sick
    leave payouts in accordance with the CNA, Township handbook, and/or past
    practices.
    In January 2017, the arbitrator conducted a hearing in the matter.
    Thereafter, the arbitrator issued a written decision denying the grievance. The
    arbitrator found the CNA did not explicitly address the manner in which
    vacation leave is accumulated in the last year of employment. The arbitrator
    noted that for many years, members of the PBA bargaining unit had received a
    full allotment of annual vacation leave in the final year of employment, even
    A-3228-17T4
    7
    though the employee retired before the end of the calendar year. The arbitrator
    found that the Township had changed that policy on January 15, 2015, when it
    issued the Handbook, and thereafter applied its new policy to Kopf and
    Coughlin. The PBA did not object to the change, and it did not file any
    grievances for the employees whose vacation leave payouts were affected by the
    change.
    The arbitrator also found that the CNA was ambiguous and did not
    expressly require the Township to calculate sick leave payouts for retirees in
    accordance with its past practice. The arbitrator observed that in 2015, the
    Township had changed the manner in which it calculates payouts and applied
    that change to Kopf, Coughlin, and Styskal. The arbitrator noted that the PBA
    did not object to the sick leave payouts for these employees.
    The arbitrator concluded that the Township had appropriately calculated
    Gorman's retirement payments for vacation and unused sick leave.             The
    arbitrator found that when Gorman retired in 2016, the Township's past practices
    of calculating these payments were no longer in effect. The arbitrator also found
    the Township had consistently followed its new policies without any objection
    from the PBA.
    A-3228-17T4
    8
    In October 2017, the PBA filed a complaint in the Law Division seeking
    an order vacating the arbitration award. The Township filed an answer and
    sought an order confirming the award. In February 2018, after hearing oral
    arguments, the Law Division judge placed an oral decision on the record.
    The judge decided that the award must be vacated pursuant to N.J.S.A.
    2A:24-8(a) because the award had been procured by "undue means." The judge
    determined that the arbitrator made a mistake of law in failing to apply the
    Township's past practices for calculating Gorman's vacation and sick leave
    payouts. The judge found that the Township's past practices had become part of
    the CNA, and any change in those practices was subject to good faith
    negotiations. The judge determined that the Township had not shown that the
    PBA waived such negotiations by acquiescing in the changes to the past
    practices.
    The judge entered an order dated February 21, 2017, which vacated the
    award and ordered the Township to pay Gorman $14,185.61, which is the
    difference between the amount Gorman claimed and the amount the Township
    had already paid him for terminal vacation and sick leave. This appeal followed.
    A-3228-17T4
    9
    III.
    On appeal, the Township argues that the trial court erred by setting aside
    the arbitrator's award.   The Township contends the award was based on a
    reasonably debatable interpretation of the CNA, and the arbitrator did not exceed
    his power in issuing the award. The Township further argues that the arbitration
    award was based on past practices that the Township had abrogated and the PBA
    had acquiesced in the change. The Township therefore contends that the award
    was not procured by "undue means." In addition, the Township contends the
    award does not violate public policy.
    We review a trial court's decision to affirm or vacate an arbitration award
    de novo. Manger v. Manger, 
    417 N.J. Super. 370
    , 376 (App. Div. 2010). "An
    arbitrator's award 'is entitled to a presumption of validity and the party opposing
    confirmation ha[s] the burden of establishing that the award should be vacated
    pursuant to N.J.S.A. 2A:24-8.'" Twp. of Wyckoff v. PBA Local 261, 
    409 N.J. Super. 344
    , 354 (App. Div. 2009) (alteration in original) (citing Jersey City
    Educ. Ass'n v. Bd. of Educ. of Jersey City, 218 N.J. Super 177, 187 (App. Div.
    1987)).
    N.J.S.A. 2A:24-8 provides that an arbitrator's award shall be vacated in
    any of the following circumstances:
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    10
    a. Where the award was procured by corruption, fraud
    or undue means;
    b. Where there was either evident partiality or
    corruption in the arbitrators, or any thereof;
    c. Where the arbitrators were guilty of misconduct in
    refusing to postpone the hearing, upon sufficient cause
    being shown therefor, or in refusing to hear evidence,
    pertinent and material to the controversy, or of any
    other misbehaviors prejudicial to the rights of any
    party;
    d. Where the arbitrators exceeded or so imperfectly
    executed their powers that a mutual, final and definite
    award upon the subject matter submitted was not made.
    "'Undue means' [under N.J.S.A. 2A:24-8(a)] 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[.]" Borough of East
    Rutherford v. East Rutherford PBA Local 275, 
    213 N.J. 190
    , 203 (2013)
    (quoting State, Office of Emp. Relations v. Commc'ns Workers of Am., 
    154 N.J. 98
    , 111-12 (1998)). Furthermore, in a public sector arbitration, "[a] court may
    also vacate an award if it is contrary to existing law or public policy." State,
    Dept. of Corrs. v. Int'l Fed'n of Prof'l & Tech. Eng'rs, Local 195, 
    169 N.J. 505
    ,
    514 (2001) (citing State, Office of Emp. Relations, 
    154 N.J. at 112
    ; S. Plainfield
    Bd. of Educ. v. S. Plainfield Educ. Ass'n ex rel. English, 
    320 N.J. Super. 281
    ,
    288 (App. Div. 1999)).
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    11
    The court's role "in reviewing [an] arbitration award[] is extremely limited
    and an arbitrator's award is not to be set aside lightly." Int'l Fed'n, 
    169 N.J. at
    518 (citing Kearny PBA Local # 21 v. Town of Kearny, 
    81 N.J. 208
    , 221 (1979)).
    "[I]n public sector arbitration, [a] court[] will accept an arbitrator's award so
    long as the award is 'reasonably debatable.'" N.J. Tpk. Auth. v. Local 196,
    I.F.P.T.E., 
    190 N.J. 283
    , 292 (2007) (citing Bd. of Educ. of Alpha v. Alpha
    Educ. Ass'n., 
    188 N.J. 595
    , 603 (2006)). "A . . . 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." N.J. Transit Bus Operations, Inc.
    v. Amalgamated Transit Union, 
    187 N.J. 546
    , 554 (2006) (citing Int'l Fed'n, 
    169 N.J. at 514
    ).
    Here, the record supports the trial court's determination to set aside the
    award pursuant to N.J.S.A. 2A:24-8(a) because the award was procured by
    "undue means."       The court correctly determined that the arbitrator's
    interpretation and application of the CNA represented a clear mistake of law and
    was not reasonably debatable. As we have explained, the CNA does not address
    how an employee's vacation leave is to be calculated if the employee retires or
    is separated before the end of the calendar year. In addition, the CNA explains
    the factors that will be used to determine the amount of a retiring employee's
    A-3228-17T4
    12
    unused sick leave, but does not detail the specific manner in which that
    calculation will be made.
    It is undisputed that prior to January 15, 2015, the Township had a long -
    standing practice for paying employees the full allotment of vacation leave in
    the last year of employment, regardless of when the employee left employment.
    Moreover, the Township had a long-standing practice for calculating the sick
    leave payouts for employees who retire. It also is undisputed that in January
    2015, the Township changed both practices and applied its new policies when
    deciding the amounts it paid Gorman for terminal vacation and sick leave.
    N.J.S.A. 34:13A-5.4(d) requires the public entity to engage in good faith
    negotiations before changing a policy or past practice on a matter within the
    scope of negotiations. It is undisputed that the terminal payments for vacation
    and sick leave are matters within the scope of negotiations. A bargaining
    representative may waive the right to negotiate, but the waiver "must be clear
    and unmistakable.'" City of Jersey City v. Jersey City Police Officers
    Benevolent Ass'n, 
    154 N.J. 555
    , 577 (1998) (quoting In re North Arlington Bd.
    of Educ., H.E. No. 97-18, 23 N.J.P.E.R. ¶ 28077, 1997 N.J. PERC LEXIS 282
    at 17-18 (1997)).
    A-3228-17T4
    13
    In January 2015, the Township changed its past practices regarding the
    calculation of vacation and sick leave for retiring employees. The Township did
    not, however, engage in negotiations with the PBA on the changes. Moreover,
    neither party sought a determination by PERC that the matter was not subject to
    negotiations under N.J.S.A. 34:13A-5.4(d). See City of Jersey City, 
    154 N.J. at 567-68
     (noting that PERC has "the power and duty" under N.J.S.A. 34:13A-
    5.4(d) to determine if a matter in dispute is within the scope of negotiations).
    Rather, the parties agreed to submit the matter for a decision by an arbitrator.
    The record supports the trial court's determination that the arbitrator made
    a mistake of law which was apparent on the face of the record. As noted, the
    arbitrator found that the Township validly implemented the change in
    calculating the vacation and sick leave payouts because it applied the change to
    employees who retired in 2015. The trial court correctly determined that the
    arbitrator erred by finding this evidence was sufficient to show that the PBA
    acquiesced in altering its long-standing practices.
    As we have explained, the CNA did not expressly address the manner in
    which vacation leave is calculated for a worker's last year of employment , but
    the Township's past practice of allocating a full year of vacation time to such
    employees was well established. In 2015, the Township applied its new policy
    A-3228-17T4
    14
    to two members of the PBA bargaining unit who retired, Kopf and Coughlin,
    without any objection by the PBA.          The record supports the trial court's
    determination that by failing to object to the payments to these two employees,
    the PBA had not clearly and unmistakenly waived its right to negotiate the
    change in the calculation of vacation leave in the final year of employment.
    In addition, the CNA did not expressly detail the manner in which the
    Township would calculate a retiring employee's sick leave payout. However,
    the Township's past practice had been to calculate the payout by first
    determining the employee's total number of hours of unused sick time,
    subtracting one-half of the hours of the employee's used personal sick leave, and
    then applying the employee's salary to half of the remainder.
    As noted previously, in 2015 the Township implemented a new policy of
    calculating sick leave payouts, and the Township applied the new policy to three
    members of the PBA bargaining unit who retired in 2015, without objection by
    the PBA. The record supports the trial court's determination that the Township
    failed to show that the PBA's failure to object to these three payments
    constituted a clear and unmistakable waiver of its right to negotiate the change
    in the manner in which the Township calculates sick leave payouts.
    Affirmed.
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    15