ATLANTIC CITY BOARD OF EDUCATION VS. ATLANTIC CITY EDUCATION ASSOCIATION (L-2497-18, ATLANTIC COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-0370-19T3
ATLANTIC CITY BOARD OF
EDUCATION,
Plaintiff-Respondent,
v.
ATLANTIC CITY EDUCATION
ASSOCIATION,
Defendant-Appellant.
____________________________
Argued telephonically August 25, 2020 –
Decided September 14, 2020
Before Judges Geiger and Mitterhoff.
On appeal from Superior Court of New Jersey, Law
Division, Atlantic County, Docket No. L-2497-18.
Steven R. Cohen argued the cause for appellant
(Selikoff & Cohen, PA, attorneys; Steven R. Cohen, of
counsel and on the briefs; Hop T. Wechsler, on the
briefs).
Michael E. Riley argued the cause for respondent
(Riley & Riley, attorneys; Tracy L. Riley, on the brief).
PER CURIAM
Defendant Atlantic City Education Association (Association) appeals
from a Law Division order vacating an arbitration award and holding that the
Collective Negotiations Agreement (CNA or Agreement) between the
Association and plaintiff Atlantic City Board of Education (Board) included the
right to deduct dental insurance premium contributions from employees'
salaries. For the reasons that follow, we reverse.
I.
We derive the following facts from the record. The Association is the sole
and exclusive labor representative for certain school employees of plaintiff,
including teaching staff and support personnel.
The prior CNA expired on June 30, 2016. The parties engaged in
collective negotiations for a successor agreement until February 2017. On
February 13, 2017, Association President Marcia Genova sent an email to
Association members announcing a general meeting and ratification vote
scheduled for February 28, 2017, allowing members to become familiar with
State School Employee's Health Benefit Program (SEHBP) plans and related
salary deductions. Two days later, President Genova sent a follow-up email to
all twelve building representatives with an attached PowerPoint prepared by the
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Board to be shared with members. The PowerPoint identified the amounts to be
deducted from salaries for medical and dental insurance, based on the plans
chosen by the member.
The ratification vote was to approve a proposed three-year CNA for the
period July 1, 2016 through June 30, 2019. The membership ratified the CNA
on February 28, 2017. The parties dispute whether the CNA authorized the
Board to deduct dental insurance contributions from members' salaries.
Article XVI of the CNA governs health care insurance. Paragraph 16.1
provides:
In accordance with applicable law, all
employees, with the exception of those who "opt out,"
shall pay at least the legislated contribution
requirements provided by P.L. 2011, c. 78 towards their
health insurance premium which equates to Step 4 on
the existing scale where it shall remain unless
renegotiated at a later time.
No employee's health care contribution shall be
less than 1.5% of his or her base salary. The Board will
assume the remaining costs for health benefits [with]
co-pays of ten dollars ($10.00) and a deductible of two
hundred dollars ($200.00) per individual and four
hundred dollars ($400.00) per family. The prescription
co-pay is fifteen dollars ($15.00) for branded drugs and
five dollars ($5.00) for generic drugs. All mail order
prescriptions shall be zero ($0.00) co-pay. The medical
plan in existence as of June 30, 2016 shall remain in
place for the 2016-2017 school year. Effective July 1,
2017 the coverage shall be available through the School
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Employees' Health Benefits Program
("SHBP/SEHBP") for medical, prescription, dental and
vision.
The CNA contains no other language addressing employee contributions
to dental insurance premiums. Nor was any memorandum of agreement, side
agreement, contribution rate summary, or PowerPoint pertaining to employee
contribution to dental insurance premiums incorporated into or appended to the
CNA.1
In July 2017 as to twelve-month employees and September 2017 as to ten-
month employees, the Board began deducting a percentage of the insurance
premiums for dental and vision health care from their salaries.2 The amount of
the deductions purportedly mirrored those contained in the Board's contract
1
During oral argument before this court, the parties acknowledged that they did
not enter into any such memorandum of agreement or side agreement. They
further acknowledged there were no letters, emails, or other written
communications confirming any verbal agreement regarding employee dental
insurance contributions.
2
The Association ultimately waived any claim regarding amounts deducted for
vision care benefits, leaving the deduction for dental benefits as the sole issue.
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proposal and the PowerPoint conveyed to the Association.3 The Association
filed a grievance disputing the new deductions.
Paragraph 28.1 states the "Agreement constitutes the entire Agreement
between the parties and encompasses all matters that were the subject of
negotiations or could have been the subject of negotiations. Neither party shall
be required to negotiate on any matters except as provided for negotiations of a
successor Agreement." In turn, Paragraph 2.3 states the "Agreement shall not
be modified in whole or in part by the parties except by an instrument in writing
duly executed by both parties."
The CNA contains a multi-step grievance procedure culminating in
binding arbitration. Paragraph 3.7 states that "[t]he arbitrator shall limit
themsel[f] to the issue(s) submitted to him/her and shall consider nothing else.
He/she can add nothing to nor subtract anything from the Agreement between
the parties or any policy of the Board of Education. The award of the arbitrator
shall be binding."
The grievance remained unresolved and proceeded to binding arbitration.
In January 2018, the Public Employment Relations Commission appointed an
3
Because there are no writings addressing employee contribution to dental
insurance premiums other than the PowerPoint provided by the Board, the
alleged agreement for such contributions must have been verbal.
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arbitrator to hear and decide the stipulated issue of whether the Board "violated
the contract between the parties or applicable law by deducting Chapter 78
premiums for dental[,] and if so[,] what shall be the remedy?"
The arbitration took place on May 1, 2018, with each party relying on the
submitted documentation, oral argument, and the opportunity to submit post-
hearing briefs, without calling any witnesses or submitting any affidavits in
support of their respective positions. As a result, the arbitration record did not
contain evidence of any oral agreement reached by the negotiating teams for
Association members to contribute to dental premiums, much less any proof that
the contract ratified by the Association included employee dental insurance
contributions.
On June 25, 2018, the arbitrator rendered her award and made the
following findings of fact. The arbitrator noted that, after the Legislature enacted
P.L. 2011, c. 78 (Chapter 78), the prior CNA, which expired on June 30, 2016,
began Chapter 78 deductions. The parties engaged in collective negotiations for
a successor agreement until early Spring 2017. The CNA incorporated the
provisions of Chapter 78 by reference. Chapter 78, in turn, provides: "As used
in this section, 'cost of coverage' means the premium or periodic charges for
medical and prescription drug plan coverage, but not for dental, vision, or other
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health care, provided under the State Health Benefits Program or the School
Employees' Health Benefits Program . . . ."
Regarding ratification of the new CNA and payroll deductions, the
arbitrator found:
The Association was either informed of or agreed to
enrollment in the State School Employees Health
Benefits Program ("SEHBP" or "SHBP") as of July 1,
2017. On February 13, 2017, Association President
Marcia Genova sent an email announcing a general
meeting of the unit membership, and advising the
ratification vote would occur on February 28, 2017, to
give Association members time to become familiar with
the SEHBP plans and required deductions.
On February 15, 2017, Genova forwarded
another email to all [twelve] building representatives,
with an attached PowerPoint presentation to be shared
with members. Exhibit B-4 is the PowerPoint
document, identifying the amounts to be deducted from
salaries, depending on the plan chosen by the employee,
for both medical and dental insurance. On February 28,
2017, the [Association] members ratified the proposed
contract by a vote of 686 to 101. It is not clear from the
record what specific terms the Association members
ratified.
The Board acknowledges that beginning in the
2017-2018 school year, it included the costs of dental
premiums when calculating the Chapter 78
contributions each unit member would make. The new
dental deductions began on July 1, 2017 for 12-month
employees and on September 1, 2017 for 10-month
employees.
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[Footnotes and citations omitted.]
The arbitrator determined the issue involved "contract interpretation and,
therefore, the Association has the burden of proof." She noted that the record
contained no evidence regarding "the employees' review of the PowerPoint" or
"the specific terms discussed or voted on during the ratification meeting/vote."
The arbitrator engaged in the following analysis:
I find that Article 16.1 of the Agreement contains the
only reference to health insurance. Article 16 contains
no provision authorizing the payment of employee
contributions toward dental premiums. The
PowerPoint, which does contain the dental deductions
is not referenced in the Agreement nor attached as an
appendix, notwithstanding the fact that the parties have
included several pages of appendices at the end of the
Agreement.
Chapter 78 does not mandate contributions to
dental insurance, but specifically excludes the cost of
dental and vision premiums in the "cost of coverage" -
a key component of the formula for determining
deductions. By excluding these components in the cost
of coverage, I believe the legislature intended parties
covered by collective negotiations agreements to
determine, through collective negotiations, their own
appropriate dental and vision rates. If parties choose to
enroll in the state health benefits programs, they will
have access only to those dental plans provided therein,
but they must still negotiate the specific dental
contribution rates up to the maximum set by regulation.
The Division of Pensions and Benefits' Dental Rates
fact sheet (Exhibit B-1) only identifies the maximum
rates employees may be asked to contribute. The fact
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sheet, by its terms, does not require or authorize the
Board to determine the rates it chose unilaterally.
N.J.A.C. 17:9-9.1(c)(4), cited by the Board, appears to
require certain dental contributions. That section
provides:
4. If an employer elects to participate in
the Employee Dental Plans, the employee's
share of the cost for the Plans may be
determined by a formula different from
that used to determine the employee's share
of the cost of health coverage. The
employee may pay a share of the cost of
dental coverage for the employee and for
the employee's covered dependents as
required by a collective negotiations
agreement. The employer may establish by
ordinance or resolution, rules for the
employee's share of the cost for those
employees not covered under a collective
negotiations agreement . . . . (emphasis
added)
However, the use of the term "may" in the above
paragraph means bargaining unit employees are
permitted to contribute toward dental premiums, not
that they are required to do so. The rule is consistent
with Chapter 78 which also permits, but does not
mandate, employee contributions toward dental
premiums. The last line of the rule contemplates that
for non-unit employees, the employer may set dental
contribution rates unilaterally, but does not contain the
same authorization for bargaining unit employees.
Their deductions will be negotiated by parties and
included in their collective Agreements.
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The Arbitrator engaged in the following analysis in determining the Board
did not prove the membership approved the dental contributions.
The Board argues the vote was based on
information presented by the [Association] to the
membership, including the dental deductions, and
proves the membership approved the dental deductions.
No witness verified that members who voted for
ratification actually received, reviewed and approved
the dental deduction alleged to have been approved.
The Association argues that the PowerPoint contained
a mistake and the mistake was later corrected. No
witness in this hearing testified about the alleged
mistake, or its correction. No witness verified the
alleged mistake or its correction. In this case, the
Agreement itself is the best evidence and it contains no
reference to dental contributions.
The Association proved that the Board and
Association did not negotiate or agree to the dental
contribution rates asserted by the Board. The
Agreement contains no reference to the alleged rates.
Moreover, the parties did not attach them to the
Agreement nor include them as an appendix. There is
no signed memorandum of agreement or side agreement
in the record demonstrating the parties' agreement to
these rates. I do not find that the PowerPoint
presentation and ratification vote results alone are
sufficient proof of an agreement on dental insurance.
Finally, it is beyond the scope of my authority
under Article 3.7 of the contract "to add to" the terms
of the Agreement. I believe enforcing the Board's
proposed dental contributions would improperly add to
the terms of the Agreement, and I decline to do so.
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The arbitrator determined the Board violated Paragraph 16.1 of the CNA
when it imposed the new dental insurance deductions, concluding that "[n]o
applicable law was shown to have required the deductions." Accordingly, the
arbitrator sustained the grievance and ordered the Board to cease deducting
dental premium contributions from members and to reimburse the amounts
previously deducted by issuing checks or credits to employees toward future
health insurance contributions.
On October 8, 2018, the Board filed this action seeking to vacate the
arbitration award. It alleged the award contained mistakes of fact and law. The
Association opposed the action, moved to dismiss the complaint with prejudice,
and sought an award of attorneys' fees and costs.
The trial court heard oral argument on November 30, 2018 and issued an
August 12, 2019 order and written opinion vacating the arbitration award. It
determined the award was contrary to public policy and not reasonably debatable
given the "undisputed facts." It found the record "establishe[d] that the parties
engaged in negotiations, reached an agreement, and subsequently had a
ratification vote that included the dental premiums." It noted that information
"regarding the medical and dental premiums and contributions by members was
distributed to the Association and members prior to the ratification vote." That
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information included a PowerPoint prepared by the Board, which set forth "the
details of the dental premiums." Accordingly, it concluded "the arbitrator's
interpretation of the CNA regarding dental premiums is not supported by the
facts." Based on its review of the evidence, the court stated it was "left with no
other option other than to vacate the award, enforce the agreement and allow the
Board to continue to deduct dental premiums."
Noting this case involved a grievance arbitration, the court explained that
it must determine if the award is reasonably debatable (i.e., "whether the award
draws its essence from the [CNA]" and "whether the award violates the law or
public policy").
The court emphasized the PowerPoint advised the membership that the
annual cost for dental premiums was $655 for family coverage, $401 for member
and spouse coverage, $486 for parent and child coverage, and $230 for single
coverage. It noted the CNA stated that medical, dental, and vision coverage
shall be available through the SHEBP and that no employee's health care
contribution should be less than 1.5% of their salary.
The court determined that the award "was not drawn from the agreement
between the parties." It found the arbitrator "ignored the undisputed agreement
between the parties regarding dental premiums" and "ignored and gave no
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meaning or weight to the PowerPoint." The court found "the PowerPoint
reflected the true meeting of the minds of the agreement between the parties"
and "is part of the contract." The court was "satisfied that the PowerPoint
contained sufficient detail to inform the members." It noted "[t]he Board
collected dental premiums by applying the same formula as permitted under the
legislative contribution requirements provided by Chapter 78."
Regarding public policy, the court stated "Chapter 78[] increased the
amount that all public employees must contribute to their pension and health
care insurance plans," by requiring "that all employees contribute at least one-
and-one-half percent of compensation toward the cost of health coverage."
The court held the public policy of this State "envisions contribution by
public employees towards their benefits including[] dental benefits." It
concluded Chapter 78 was intended "to establish a mandatory minimum
contribution standard that all state employees must pay for their health insurance
benefits, based on a sliding scale tied to income level," with "employees paying
at least 1.5% of the cost of coverage for all types of insurance." The court found
this was "precisely the formula used the Board."
The court noted the award allows Association members to enjoy dental
benefits without contributing to its cost, contrary to public policy and the
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agreement of the parties. It held the Board did not violate the CNA when it
imposed payroll deductions for dental insurance premiums because the CNA
included employee contributions towards those premiums.
On appeal, the Association argues the trial court misconstrued the narrow
statutory exceptions for vacating an arbitration award by holding the award was
not reasonably debatable because the award did not consider evidence extrinsic
to the CNA. In addition, the Association contends the court misinterpreted
Chapter 78 as requiring mandatory minimum employee dental contributions of
1.5 percent, notwithstanding express statutory language excluding dental
benefits from the cost of coverage under SEHBP. It further contends the court
ignored long-recognized public policy that employee health care contributions
are negotiable unless preempted by statute.
Notably, the Board does not argue that the omission of dental insurance
premium contribution in the CNA was due to mistake or that the CNA should
be reformed to include such contributions by bargaining unit members.
II.
Our review of a trial court decision vacating a labor arbitration award is
guided by certain well-established principles. We review a trial court's decision
on a motion to vacate an arbitration award de novo. See Yarborough v. State
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Operated Sch. Dist. of City of Newark, 455 N.J. Super. 136, 139 (App. Div.
2018) (citing Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013)).
However, "[j]udicial review of an arbitration award is very limited." Bound
Brook Bd. of Educ. v. Ciripompa, 228 N.J. 4, 11 (2017) (quoting Linden Bd. of
Educ. v. Linden Educ. Ass'n ex rel. Mizichko, 202 N.J. 268, 276 (2010)). "The
public policy of this State favors arbitration as a means of settling disputes that
otherwise would be litigated in a court." Badiali v. N.J. Mfrs. Ins. Group, 220
N.J. 544, 556 (2015) (citing Cty. Coll. of Morris Staff Ass'n v. Cty. Coll. of
Morris, 100 N.J. 383, 390 (1985)). To ensure the finality and the expeditious
and inexpensive nature of binding arbitration, there is "a strong preference for
judicial confirmation of arbitration awards," particularly in public-sector labor
disputes. Borough of E. Rutherford v. E. Rutherford PBA Local 275, 213 N.J.
190, 201 (2013) (quoting Middletown Twp. PBA Local 124 v. Twp. of
Middletown, 193 N.J. 1, 10 (2007)).
We apply "an extremely deferential review when a party to a collective
bargaining agreement has sought to vacate an arbitrator's award." Policemen's
Benevolent Ass'n, Local No. 11 v. City of Trenton, 205 N.J. 422, 428 (2011).
"In the public sector, an arbitrator's award will be confirmed 'so long as the
award is reasonably debatable.'" Linden Bd. of Educ., 202 N.J. at 276 (quoting
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Middletown Twp. PBA Local 124, 193 N.J. at 11). An award is "reasonably
debatable" if it is "justifiable" or "fully supportable in the record." Policemen's
Benevolent Ass'n, 205 N.J. at 431 (quoting Kearny PBA Local No. 21 v. Town
of Kearny, 81 N.J. 208, 223-24 (1979)). Under this 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 position." N.J. Transit Bus
Ops., Inc. v. Amalgamated Transit Union, 187 N.J. 546, 554 (2006) (citing State
v. Int'l Fed'n of Prof'l & Technical Eng'rs, Local 195, 169 N.J. 505, 514 (2001)).
N.J.S.A. 2A:24-8 sets forth the grounds for vacating an arbitration award.
Pertinent to this appeal, a court must vacate an arbitration award: "Where the
award was procured by corruption, fraud or undue means; . . . [or] [w]here the
arbitrators exceeded or so imperfectly executed their powers that a mutual, final
and definite award upon the subject matter submitted was not made." N.J.S.A.
2A:24-8(a), (d).
Additionally, when reviewing an arbitrator's interpretation of a public-
sector contract, "a court 'may vacate an award if it is contrary to existing law or
public policy.'" Middletown Twp. PBA Local 124, 193 N.J. at 11 (quoting N.J.
Tpk. Auth. v. Local196, Int'l Fed'n Prof. Tech. Eng'rs, 190 N.J. 283, 294 (2007)).
Heightened scrutiny is required "when an arbitration award implicates 'a clear
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mandate of public policy.'" Int'l Fed'n Prof. Tech. Eng'rs, 190 N.J. at 294
(quoting Weiss v. Carpenter, Bennett & Morrissey, 143 N.J. 420, 443 (1996)).
An arbitrator exceeds her authority where she ignores "the clear and
unambiguous language of the agreement." City Ass'n of Supervisors & Adm'rs
v. State Operated Sch. Dist. of City of Newark, 311 N.J. Super. 300, 312 (App.
Div. 1998). "Thus, an arbitrator may not disregard the terms of the parties'
agreement, nor may [s]he rewrite the contract for the parties." Cty. Coll. of
Morris, 100 N.J. at 391 (citation omitted).
"Although arbitrators may not look beyond the four corners of a contract
to alter unambiguous language, where a term is not defined, it may be necessary
for an ‘arbitrator to fill in the gap and give meaning to that term.'" Policemen's
Benevolent Ass'n, 205 N.J. at 430 (quoting Linden Bd. of Educ., 202 N.J. at
277). If contract terms are unspecific or vague, "extrinsic evidence may be used
to shed light on the mutual understanding of the parties." Hall v. Bd. of Educ.
of Twp. of Jefferson, 125 N.J. 299, 305 (1991).
Although the arbitrator is not free to contradict the express language of a
contract, "an arbitrator may 'weav[e] together' all those provisions that bear on
the relevant question in coming to a final conclusion." Policemen's Benevolent
Ass'n, 205 N.J. at 430 (alteration in original) (quoting N.J. Transit Bus
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Operations, 187 N.J. at 555). "[S]o long as the contract, as a whole, supports
the arbitrator's interpretation, the award will be upheld." Ibid.
Here, the express terms of the CNA are clear and unambiguous and do not
require employees to contribute to the cost of dental benefits. Moreover, there
was no past practice of employees contributing to the cost of dental benefits.
The award was not contrary to existing law. Chapter 78 does not mandate
employees to contribute to dental insurance premiums. On the contrary, the
statute excludes "premium or periodic charges" for dental care "provided under
the [SEHBP]" from the definition of cost of medical coverage provided pursuant
to Chapter 78. N.J.S.A. 52:14-17.28(c). Instead, employee contributions to
dental insurance premiums is subject to negotiation and agreement. To that end,
N.J.A.C. 17:9-9.1(c)(4) provides:
If an employer elects to participate in the Employee
Dental Plans, the employee's share of the cost for the
Plans may be determined by a formula different from
that used to determine the employee's share of the cost
of health coverage. The employee may pay a share of
the cost dental coverage for the employee and for the
employee's covered dependents as required by a
collective negotiations agreement.
The CNA reflects no such agreement.
The Arbitrator correctly concluded that N.J.S.A. 52:14-17.28(c) and
N.J.A.C. 17:9-9.1(c)(4) do not mandate employee contributions to dental
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insurance. Accordingly, neither the CNA as written nor the arbitration award
violate public policy.
While the Board and the Association apparently engaged in unspecified
negotiations regarding employee contributions to dental insurance premiums,
the Board produced no evidence of the substance of such negotiations and any
resulting agreement because it elected not to present any testimony, affidavits,
or exhibits, other than the PowerPoint, at the arbitration hearing. Absent this
proof, the arbitrator correctly concluded that the record did not support imposing
salary deductions for dental benefits. Moreover, the Board drafted the CNA. If
an agreement as to contribution to dental benefits was reached, it was incumbent
on the Board to include those terms in the CNA through express language or
appendices. It did not.
We reiterate that the Board did not argue before the arbitrator, the trial
court, or this court that dental benefit contribution language was inadvertently
omitted from the executed CNA or that the contract should be reformed to
correct that error. In the absence of such argument, neither the arbitrator nor the
trial court was free to add additional language to the CNA imposing such
contributions where the CNA was not ambiguous and there was no past practice
of contributing to those premiums. The trial court erred in doing so.
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In sum, we are satisfied that the arbitrator's award is reasonably debatable
and did not violate existing law or public policy. We reverse the order that
vacated the arbitration award and reinstate the remedy the award imposed.
Reversed.
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