THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY VS. THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY POLICE BENEVOLENT ASSOCIATION, INC. (L-4541-17, HUDSON COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3104-17T2
THE PORT AUTHORITY OF NEW
YORK AND NEW JERSEY, APPROVED FOR PUBLICATION
May 28, 2019
Plaintiff-Respondent,
APPELLATE DIVISION
v.
THE PORT AUTHORITY OF NEW
YORK AND NEW JERSEY POLICE
BENEVOLENT ASSOCIATION, INC.,
Defendant-Appellant.
__________________________________
Argued March 7, 2019 – Decided May 28, 2019
Before Judges Simonelli, Whipple and Firko.
On appeal from Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-4541-17.
Jason F. Orlando argued the cause for appellant
(Murphy Orlando, LLC, and Law Office of D. John
McAusland, attorneys; W. Michael Murphy, Jr., Jason
F. Orland, John W. Bartlett and D. John McAusland,
on the briefs).
Sharon K. McGahee argued the cause for respondent
(Michael Farbiarz, General Counsel, Port Authority of
New York and New Jersey Law Department, attorney;
Sharon K. McGahee, on the brief).
The opinion of the court was delivered by
WHIPPLE, J.A.D.
Defendant The Port Authority Police Benevolent Association, Inc.
(Association) appeals from the February 7, 2018 order of the trial court
vacating an arbitration award in favor of its member. Although this matter
began with an arbitration award entered pursuant to the collective bargaining
agreement between the Association and plaintiff The Port Authority of New
York and New Jersey (Port Authority), our focus is whether the Port
Authority, as a bi-state public corporate instrumentality, is subject to New
Jersey arbitration law. For the reasons that follow, we reverse the order of the
trial court and reinstate the arbitration award.
We discern the following facts from the record. The Association and
Port Authority are parties to a collective bargaining agreement known as the
Memorandum of Agreement (MOA), which provides for a multi-step grievance
procedure concluding with binding arbitration. The MOA distinguishes
between member benefits for sick and line-of-duty injury leave. In 2011,
Officer Roy Biederman was working the night shift at John F. Kennedy
International Airport when, during a scheduled break, he slipped and fell in the
shower. Biederman sustained a back injury that kept him out of work for
several weeks. The Port Authority classified Biederman's absence from work
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as sick leave rather than injury in the line of duty. He filed a grievance,
pursuant to the MOA, and the matter was referred to an arbitrator. The
arbitrator decided in Biederman's favor and, on July 6, 2017, the arbitrator e -
mailed the award to the parties.
On November 3, 2017, the Port Authority filed a complaint and order to
show cause seeking to vacate the arbitrator's decision. The Port Authority
cited N.J.S.A. 2A:23B-23, which provides the statutory basis upon which an
arbitration award may be vacated, as a basis for the Superior Court to vacate
the award. The Association answered by arguing, pursuant to N.J.S.A. 2A:24 -
7, the Port Authority's order to show cause was time barred because it was not
filed within three months after the award was served. In reply, the Port
Authority argued it was not bound by New Jersey arbitration law because bi -
state entities, like the Port Authority, are not subject to unilateral state
legislation.
At oral argument before the trial judge, the Port Authority argued New
Jersey statutory arbitration law did not apply in actions brought by the Port
Authority and instead sought vacatur under the common law. The trial judge
issued a written decision that addressed the merits of and reversed the
arbitrator's award. At the conclusion of the opinion, the trial judge explained,
"[t]he time bar in the New Jersey Arbitration Act does not apply to the
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arbitration award at issue." The trial court cited Hess v. Port Authority Trans-
Hudson Corp., 513 U.S. 30, 42 (1994), for the proposition that "bi[-]state
entities created by compact, however, are not subject to the unilateral control
of any one of the States that compose the federal system." This appeal
followed.
When we review a motion to vacate an arbitration award, "we owe no
special deference to the trial court's interpretation of the law and the legal
consequences that flow from the established facts." Yarborough v. State
Operated Sch. Dist. of Newark, 455 N.J. Super. 136, 139 (App. Div. 2018).
Indeed, "[a] trial court's interpretation of the law and the legal consequences
that flow from established facts are not entitled to any special deference."
Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378
(1995).
The Port Authority "is not the agency of a single state but rather a public
corporate instrumentality of New Jersey and New York." Sullivan v. Port
Auth. of N.Y. & N.J., 449 N.J. Super. 276, 284 (App. Div. 2017) (quoting
Bunk v. Port Auth. of N.Y. & N.J., 144 N.J. 176, 184 (1996)); see also hip
Heightened Indep. & Progress, Inc. v. Port Auth. of N.Y. & N.J., 693 F.3d
345, 356-57 (3d Cir. 2012). "Neither state may unilaterally impose additional
duties, powers, or responsibilities on the Port Authority." Sullivan, 449 N.J.
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Super. at 284. The Port Authority Compact specifically provides the Port
Authority's powers may be altered "by the action of the legislature of either
state concurred in by the legislature of the other." N.J.S.A. 32:1-8. New
Jersey courts interpret "concurred in" to encompass a broader set of
circumstances than the federal and New York courts.
Our courts have said, "[t]he corollary of the proposition that neither state
may individually impose its legislative will on the bi-state agency is that the
agency may be made subject to complementary or parallel state legislation."
Ballinger v. Del. River Port Auth., 172 N.J. 586, 594 (2002) (alteration in
original) (quoting E. Paralyzed Veterans Ass'n, Inc. v. City of Camden, 111
N.J. 389, 400 (1988)); see also Int'l Union of Operating Eng'rs, Local 68 v.
Del. River & Bay Auth., 147 N.J. 433, 445 (1997). "[O]ne compact state's
statute can be applied to the bi-state agency if it is 'substantially similar' to an
enactment of the other state." Santiago v. N.Y. & N.J. Port Auth., 429 N.J.
Super. 150, 157 (App. Div. 2012) (quoting Ballinger, 172 N.J. at 594). "If the
states do not have complimentary legislation, the court must determine
whether the bi-state agency impliedly consented to unilateral state regulation."
Sullivan, 449 N.J. Super. at 285. "In order to be deemed substantially similar,
the two laws at issue must 'evidence some showing of agreement.' In other
words, the New Jersey and [New York] legislatures must 'have adopted a
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substantially similar policy' that is apparent in their respective statutes." Ibid.
(alteration in original) (quoting Ballinger, 172 N.J. at 600).
The United States Court of Appeals for the Third Circuit and New
York's state courts have required evidence of express legislative intent before
unilateral state legislation can be found to modify the powers of a bi-state
agency. See Int'l Union of Operating Eng'rs, Local 542 v. Del. River Joint
Toll Bridge Comm'n, 311 F.3d 273, 276-79 (3d Cir. 2002) (reviewing cases
from New Jersey, New York, and federal courts). A court's "role in
interpreting [a] [c]ompact is, therefore, to effectuate the clear intent of both
sovereign states, not to rewrite their agreement or order relief inconsistent with
its express terms." Id. at 276. When a compact's charter states the powers and
duties of the bi-state agency can only be amended when both states have
"concurred in" the alteration, both state legislatures must make an express
statement to that effect. hip Heightened Indep. & Progress, Inc., 693 F.3d at
357; see Malverty v. Waterfront Comm'n of N.Y. Harbor, 71 N.Y.2d 977, 980
(1988).1
1
In one instance, the Third Circuit applied the complimentary and parallel
principle, but it was only because the parties to the federal case were in privity
with the parties in a case that was resolved in the New Jersey courts, and the
Third Circuit gave preclusive effect to the decision. Del. River Port Auth. v.
Fraternal Order of Police, Penn-Jersey Lodge 30, 290 F.3d 567, 577 (3d Cir.
2002).
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The Port Authority argues we should adopt the Third Circuit's approach
and require evidence of express intent before subjecting a bi-state agency to
unilateral state law. We decline to do so. Although compact construction
presents a federal question, see Cuyler v. Adams, 449 U.S. 433, 438 (1981),
"[n]othing in the 'federal system prevents state courts from enforcing rights
created by federal law.'" Int'l Union of Operating Eng'rs, Local 68, 147 N.J. at
441 (quoting Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 507 (1962)).
"At no time has the United States Supreme Court ruled that state courts do not
have jurisdiction to construe [interstate] compacts." Ibid. Thus, we are
compelled to apply the complimentary and parallel principle until our Supreme
Court or the United States Supreme Court hold otherwise. See, e.g.,
Scannavino v. Walsh, 445 N.J. Super. 162, 172 (App. Div. 2016).
New Jersey has three sets of arbitration laws: N.J.S.A. 2A:23A-1 to -19,2
N.J.S.A. 2A:23B-1 to -32, and N.J.S.A. 2A:24-1 to -11. The legislative history
of N.J.S.A. 2A:24-1 to -11 reveals New Jersey's arbitration rules are far more
entrenched than the Port Authority asserts. In 1923, the Legislature passed the
original arbitration act, now codified at N.J.S.A. 2A:24-1 to -11. L. 1923, c.
134. The 1923 arbitration law has been amended several times, see L. 2003, c.
2
The New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A.
2A:23A-1 to -19, is not implicated here.
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95, § 34; L. 1991, c. 91, §§ 79-80; L. 1984, c. 187, § 1, but its essential
provisions, such as filing periods and grounds for vacatur, have remained
unchanged. Compare L. 1923, c. 134, § 9 (providing four grounds for vacation
of an arbitration award), with N.J.S.A. 2A:24-8 (listing the same four
grounds).
In 2002, the Legislature sought to update New Jersey's arbitration
framework and passed a bill modeled on the Uniform Arbitration Act.
Judiciary Comm. Statement to S. 514 1 (May 9, 2002). The bill's original draft
specifically repealed the 1923 arbitration act, N.J.S.A. 2A:24-1 to -11, and
intended for all arbitrations to be governed by the modernized arbitration act.
S. 514/A. 2847 § 34 (2002). However, then-Governor James McGreevy
vetoed the bill on the condition that N.J.S.A. 2A:24-1 to -11 be preserved as it
applied to arbitrations arising from collective bargaining agreements.
Governor's Veto Statement to S. 514 1-3 (Mar. 10, 2003). The governor
expressed concern that the updated arbitration regime would disrupt labor
relations. Ibid. In response, the Legislature passed a new bill, codified at
N.J.S.A. 2A:23B-1 to -32, that explicitly preserved N.J.S.A. 2A:24-1 to -11 as
it applies to disputes arising from collective bargaining agreements. L. 2003,
c. 95, § 34; see N.J.S.A. 2A:24-1.1 ("N.J.S.[A.] 2A:24-1 through N.J.S.[A.]
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2A:24-11 shall only apply to an arbitration or dispute arising from a collective
bargaining agreement or a collectively negotiated agreement.").
As a result, N.J.S.A. 2A:24-1 to -11 applies to all arbitrations arising
from collective bargaining agreements; whereas, N.J.S.A. 2A:23A-1 to -19
applies to all other arbitrations, unless the parties' contract states otherwise.
Here, because the dispute over the classification of Biederman's injury arose
under a collective bargaining agreement, we now must determine whether
N.J.S.A. 2A:24-1 to -11 is complimentary and parallel to New York's
arbitration rules. This distinction matters because the arbitration rules at issue
were not modeled, as the Port Authority argues, on the Uniform Arbitration
Act. Moreover, we consider it relevant that the rules the Port Authority seeks
to exempt itself from have been consistently applied to collective bargaining
agreements for nearly a century.
Neither the 1921 Port Authority Compact, which created the Port
Authority, nor the 1951 amendments to the compact expressly provide for
application of the 1923 arbitration act against the Port Authority.
Nevertheless, we must consider whether New Jersey's arbitration rules are
substantially similar to New York's so as to alter the compact and allow
application of the arbitration rules against the Port Authority. See Sullivan,
449 N.J. Super. at 285. "Factors to be considered in determining whether laws
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are substantially similar include: (1) the scope of the comparative laws; (2) the
filing limitations period; (3) the types of remedies and damages available; and
(4) the right to trial by jury." Id. at 285-86.
New Jersey's and New York's arbitration rules have significant overlap:
both allow for confirmation or vacatur of arbitration awards, compare N.J.S.A.
2A:24-7, and N.J.S.A. 24-8, with N.Y. C.P.L.R. 7510, and N.Y. C.P.L.R.
7511; list similar grounds for vacatur, compare N.J.S.A. 2A:24-8, with N.Y.
C.P.L.R. 7511; afford the power to stay a proceeding pending arbitration,
compare N.J.S.A. 2A:24-4, with N.Y. C.P.L.R. 7503; and provide that awards
confirmed, modified, or corrected under either set of rules are enforceable
judgments, compare N.J.S.A. 2A:24-10, with N.Y. C.P.L.R. 7514. The New
Jersey rules permit parties three months to file for vacatur; whereas the New
York rules afford ninety days. Compare N.J.S.A. 2A:24-7, with N.Y. C.P.L.R.
7511. A party has three months to confirm an award in New Jersey but one
year to do the same in New York. Compare N.J.S.A. 2A:24-7, with N.Y.
C.P.L.R. 7510. Neither set of rules affords a right to trial by jury.
To satisfy the complimentary and parallel test, the respective laws need
only advance "a substantially similar policy[.]" Sullivan, 449 N.J. Super. at
285 (quoting Ballinger, 172 N.J. at 600). Here, both sets of arbitration rules
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encourage alternative dispute resolution and employ the same type of
mechanisms, i.e., filing periods and remedies, to promote efficiency.
The Port Authority argues New Jersey's differentiation between
arbitrations arising from disputes under collective bargaining agreements and
all other arbitrations is dispositive. We disagree and view the distinction as
little more than a quirk in the legislative history. Our courts have recognized
the Legislature bifurcated the arbitration rules by preserving the 1923
arbitration law. Van Duren v. Rzasa-Ormes, 394 N.J. Super. 254, 257 n.1
(App. Div. 2007); Kimm v. Blisset, LLC, 388 N.J. Super. 14, 28 (App. Div.
2006). Yet, this has not prevented courts from applying N.J.S.A. 2A:24 -1 to -
11 to disputes arising under collective bargaining agreements as the
Legislature intended. See, e.g., Amalgamated Transit Union, Local 880 v. N.J.
Transit Bus Operations, Inc., 200 N.J. 105, 120 (2009).
As a practical matter, both states' respective arbitration rules have been
applied to arbitrations arising under collective bargaining agreements. See,
e.g., Borough of E. Rutherford v. E. Rutherford PBA Local 275, 213 N.J. 190,
201-02 (2013); Yates v. Cty. of Nassau, 93 N.Y.S.3d 681, 682 (App. Div.
2019); Wright v. N.Y.C. Transit Auth., 86 N.Y.S.3d 820, 830 (Sup. Ct. 2018).
This includes actions brought by the Port Authority to vacate an award. See,
e.g., Port Auth. of N.Y. & N.J. v. Local Union No. 3, 117 A.D.3d 424, 424
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(N.Y. App. Div. 2014). Moreover, the Port Authority has previously invoked
N.J.S.A. 2A:24-1 to -11 as grounds to vacate an arbitration award, yet, up and
until this point, it did not raise the unilateral state legislation argument
currently advanced. Port Auth. Police Sergeants Benevolent Ass'n, Inc. v. Port
Auth. of N.Y. & N.J., 340 N.J. Super. 453, 458 (App. Div. 2001).
We consider New Jersey's and New York's respective arbitration rules
"substantially similar" such that the Port Authority is subject to New Jersey's
arbitration law. In so concluding, the Port Authority's order to show cause is
time barred, pursuant to N.J.S.A. 2A:24-7, because it was filed more than three
months after the arbitrator served his award. Even if, as the Port Authority
suggests, the common law governs our analysis, the Port Authority's complaint
was still filed out of time. Indeed, our Supreme Court has held, unless a
contract provides otherwise, "the prevailing party retains the common -law
right to seek confirmation in a plenary proceeding within the six-year statute
of limitations applicable to contracts. Although the losing party may not
institute an action to vacate an award after the expiration of three months . . . ."
Policeman's Benevolent Ass'n, Local 292 v. Borough of N. Haledon, 158 N.J.
392, 403 (1999) (citation omitted). The Port Authority lost the arbitration but
did not seek vacatur within the three months after the arbitrator e-mailed the
award.
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We also reject the Port Authority's argument that we should relax the
time bar because the arbitrator e-mailed rather than served the award
consistent with N.J.S.A. 2A:24-7. The statute provides, "[t]he award must be
in writing and acknowledged or proved in like manner as a deed for the
conveyance of real estate and delivered to one of the parties or his [or her]
attorney." N.J.S.A. 2A:24-7. Awards issued pursuant to N.J.S.A. 2A:23B-19
need only be signed by the arbitrator and given to the parties, which was the
case here. Neither the 1923 nor the 2003 laws require that an arbitrator serve
an award on the parties consistent with Rule 1:5-1, and we decline to read such
a requirement into N.J.S.A. 2A:24-7. Moreover, the Port Authority does not
dispute it received the award on July 6, 2017, and fails to identify the date on
which it considers the three-month filing period to have begun. As a result, we
consider this argument meritless.
Because it was error for the trial court to address the Port Authority's
complaint on its merits, it is unnecessary for us review the trial court's decision
to vacate the arbitration award. Instead, we reverse the trial court's order and
reinstate the arbitration award.
We do not address the remaining arguments as they lack sufficient merit
to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Reversed.
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