SOUTH JERSEY TRANSPORTATION AUTHORITY VS. IFPTE, LOCAL 196, CHAPTER 2 (C-000015-16, ATLANTIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-3898-15T3
SOUTH JERSEY TRANSPORTATION
AUTHORITY,
Plaintiff-Respondent,
v.
IFPTE, LOCAL 196, CHAPTER 2,
and JOHN SEGARS,
Defendants-Appellants.
_______________________________
Argued October 23, 2017 – Decided November 20, 2017
Before Judges Sabatino, Ostrer and Rose.
On appeal from Superior Court of New Jersey,
Chancery Division, General Equity, Atlantic
County, Docket No. C-000015-16.
Leonard C. Schiro argued the cause for
appellants (Mets Schiro McGovern & Paris, LLP,
attorneys; Mr. Schiro, of counsel and on the
briefs; Shawn M. Lopez, on the briefs).
Benjamin S. Teris argued the cause for
respondent (Brown & Connery, LLP, attorneys;
Eric D. Milavsky and Mr. Teris, on the
briefs).
PER CURIAM
In this labor arbitration case, appellants, IFPTE, Local 196,
Chapter 2 ("the Union"), and John Segars, seek reversal of the
Chancery Division's order dated May 2, 2016. The court's order
modified an arbitrator's award concerning Segars, who had been
accused of engaging in inappropriate conduct during his employment
with respondent, South Jersey Transportation Authority ("SJTA").
The arbitrator concluded the SJTA had proven that Segars had
committed some, but not all, of the charged conduct, and suspended
him from his employment for forty-five days. After independently
examining the evidence in the record, the trial court determined
that Segars' conduct was more severe and wrongful than the
arbitrator had found. The court also determined that
considerations of public policy required the imposition of a much
stronger sanction. Consequently, the trial court modified the
arbitrator's award and ordered the termination of Segars'
employment, as the SJTA had requested.
For the reasons that follow, we reverse the trial court's
decision and remand for further proceedings. We do so because the
court's analysis — although it has considerable evidentiary
support in the record — substantially rests upon findings of
specific violations, including drug dealing, which were not
charged against Segars and which were not adjudicated before the
arbitrator. As such, the trial court's decision strays from the
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strict constraints imposed upon judicial review of arbitration
awards under the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to
-11.
I.
Segars was a parking lot attendant employed by the SJTA. He
worked at a parking garage in Atlantic City. Segars is a member
of the Union.
On June 8, 2015, a patron complained about Segars to the
SJTA's Parking Division Manager. The patron reported that three
days earlier, on the evening of June 5, 2015, no one was at the
booth to validate her ticket. Segars had been on duty that
evening.
The Manager instructed the SJTA Parking Supervisor to review
the video surveillance footage of the garage from June 5.
Inadvertently, the Supervisor retrieved surveillance footage
instead from June 12, 2015, a different night on which Segars was
on duty.
As described by the trial court, the June 12 footage shows
that Segars left his post at the booth that night around 9:40 p.m.
to retrieve an item from the garage's secure office. An
unidentified young man arrived at the garage to meet with Segars.
The man searched the abandoned booth and removed an envelope,
presumably one that contained petty cash. Segars returned around
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9:59 p.m. to meet with the visitor. Segars then seemed to realize
the envelope was missing, confronted the visitor, and made a
telephone call. A vehicle then arrived. A person in that vehicle
handed what is claimed to be the missing envelope back to Segars.
The video shows that Segars then had several heated exchanges
with the visitor who had taken the envelope. A physical
altercation ensued. The visitor can be seen on the video grabbing
Segars at 10:26 p.m. During another exchange at 11:32 p.m., Segars
grabbed the visitor by the arm. Segars later pulled out a long
stick from his booth, waving it at the visitor to fend him off.
Having discovered this recorded incident, the SJTA retrieved
additional surveillance footage from Segars' shifts for the
preceding sixty days, a time frame as far back as such footage is
saved. A review of that extra footage revealed at least fifteen
similar interactions Segars had with other people. The footage
depicts Segars going in and out of the garage's secure office
space, often accompanied by as many as fifteen unknown individuals,
and exchanges of various envelopes with those persons.
On June 26, 2015, the SJTA brought disciplinary charges
against Segars, seeking to terminate him in accordance with the
terms of the Collective Negotiations Agreement ("CNA") between the
SJTA and the Union. Specifically, the charges accused Segars of
the following:
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You are being charged with neglect of
duty and unbecoming conduct. These charges
are for misconduct that occurred during your
shifts in the parking garage on 4/24, 4/25,
5/8, 5/9, 6/5, 6/6, and 6/12. Your misconduct
on those dates includes but is not limited to:
neglecting your post, repeatedly permitting
unauthorized persons to loiter on SJTA
property, engaging in non-work-related
activity/transactions with such persons,
failing to report theft of [SJTA] property,
participating in physical altercations on SJTA
property, and failing to report those
altercations.
An internal disciplinary hearing to address these charges was
conducted in August 2015. The hearing officer recommended that
Segars be terminated, subject to the approval of the SJTA Board
of Commissioners, for "unbecoming conduct and neglect of duty."
On behalf of Segars, the Union then requested the dispute be
submitted to arbitration, pursuant to the CNA. Among other things,
the Union contended that the sanction of termination was unjust.
The arbitration took place on November 9, 2015. As a
preliminary matter, the Union argued to the arbitrator that any
conduct of Segars occurring prior to June 5, 2015, could not be
considered as grounds for dismissal under Article X of the CNA.
Article X, entitled "Disciplinary Action," provides that "[a]ny
employee charged with misconduct shall be served a written notice
specifying the offense charged within ten (10) working days of its
occurrence or within ten (10) working days of the [SJTA] becoming
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aware of its occurrence [.]" The Union asserted that the SJTA
failed to meet this ten-day notice deadline with respect to the
earlier surveillance footage.
The SJTA's Supervisor reviewed the videotapes and discovered
Segars' conduct on June 14, 2015. Ten working days before that
date of discovery was June 1, 2015. As we have noted, the SJTA
did not bring disciplinary charges against Segars until June 26,
2015. The Union argued that the SJTA should have noticed Segars'
improper behavior depicted on the surveillance videos sooner, and
either corrected the behavior, or imposed progressive discipline
upon him over time, rather than seeking his termination.
The arbitrator largely concurred with the Union's position
about these timing issues. He directed his attention to the later
chronological portion of the surveillance videos, and gave little
weight to the earlier footage from April 24 through May 9, 2015.
The arbitrator particularly focused his decision upon the
footage from the evening of June 12, 2015. He recognized that the
footage showed Segars abandoning the booth, an unknown individual
retrieving an envelope from the booth and walking away, and a
subsequent interaction between Segars and the unknown individual.
Even so, the arbitrator noted no SJTA property was stolen or ever
reported missing. He therefore concluded the SJTA failed to
establish the most serious charge, theft of SJTA property.
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However, the arbitrator was satisfied the SJTA had proven the
charges of unbecoming conduct and neglect of duty.
In calibrating the sanction, the arbitrator found it
significant that Segars' disciplinary record at work was
relatively unblemished. Consequently, the arbitrator reasoned
that principles of progressive discipline, as endorsed within the
terms of the CNA, applied here. The arbitrator therefore ordered
that Segars be reinstated, but subject to a forty-five-day
suspension. The arbitrator explained his reasoning as follows:
As the Authority has failed to carry its
burden on the most serious charges of theft
of Authority property, the penalty of
termination is not warranted. Article X,
Section 1.c notes that "when applicable",
"progressive discipline" is to be considered.
However, while Mr. Segars discipline record
contains nothing more than written warnings
and a verbal warning for an incident that
occurred six months prior, his actions as
noted herein do not warrant a short suspension
which is normally the next step in a
progression of discipline, meant to alert an
employee to change behavior before a more
severe penalty is imposed. Mr. Segars[']
failure secure the area around his booth and
his failure to secure the booth when not in
his direct vision as well as his failure to
report the breaking into the booth and
altercation on June 12, 2015 call for a more
severe penalty short of termination.
The Authority had Just Cause to
discipline the grievant for the events noted
above, but failing to prove the theft of
Authority property, the penalty of termination
is excessive. Mr. Segars is to be reinstated
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and made whole after a forty-five day
suspension.
On March 7, 2016, the SJTA filed a verified complaint in the
Chancery Division seeking to vacate the arbitration award. The
SJTA argued the award violated public policy (count one); the
arbitrator "so imperfectly executed his powers that a mutual,
final and definite award" was not made, N.J.S.A. 2A:24-8(d) (count
two); and the arbitrator failed to consider "material and pertinent
evidence," N.J.S.A. 2A:24-8(c) (count three). The trial court
reviewed the surveillance footage submitted to the arbitrator.
After briefing and oral argument, the court issued an oral opinion.
In its opinion, the court concluded the arbitrator's award
was contrary to public policy. Although recognizing the "quite
limited" scope of judicial review of arbitration awards, the court
observed the arbitrator in this case mishandled his assignment.
The court found the surveillance tapes showed conduct that
"was so severe of a public employee sitting in a public garage and
engaging [in] the activities, illicit activities," to such an
extent that the court was "willing to cross the rubicon in terms
of overturning an arbitrator's award."
During the course of its bench ruling, the court specifically
found the evidence showed that Segars was "selling drugs when he's
on the job," and that he was "having a business selling illegal
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drugs and dealing with all sorts of . . . disreputable people and
walking in and out in the course of the evening." The court
criticized the arbitrator because he "ignored all the instances
of the drug transactions" depicted on the videos, and he failed
to appreciate that, in contrast to the offense of stealing parking
receipts, "doing a drug deal in a public garage could end up
killing someone."
Accordingly, the court determined it was "against public
policy" to only suspend Segars for forty-five days. In fact, the
court stated it would not find "any [period of] suspension would
be appropriate," given what it characterized as "the level of
[Segars'] misconduct while on duty."
The court added that the arbitrator "inappropriately focused
on the fact that the [SJTA] did not prove the most serious charge
of theft of Authority property." The court "more than disagree[d]"
with that finding. Consequently, the court concluded the
arbitrator "inappropriately exercised his discretion," and that,
"as a public policy matter," the court was obligated to overturn
the arbitrator's decision. The court therefore greatly increased
the sanction by ordering the termination of Segars.
This appeal followed. Among other things, the Union asserts
the trial court improperly concluded from its own independent
review of the video evidence that Segars was selling drugs while
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on the job, an allegation that his employer never made against
him. The Union further contends that the court violated the
Arbitration Act by substituting its own judgment and perceptions
of the evidence for those of the arbitrator.
The SJTA counters that the trial court had a sound evidential
basis for its interpretation of the surveillance videos. The SJTA
maintains that the court did not veer from its proper role in
reviewing arbitral awards under the statute, and that the court
rightly invoked here the "public policy" exception to the general
approach of deference. The SJTA further asserts that an adverse
inference should be applied against Segars, because he failed to
testify at the arbitration and explain his workplace conduct.
II.
Given New Jersey's "'strong preference for judicial
confirmation of arbitration awards,'" New Jersey Turnpike
Authority v. Local 196, I.F.P.T.E., 190 N.J. 283, 292 (2007)
(quoting Weiss v. Carpenter, Bennett & Morrissey, 143 N.J. 420,
442 (1996)), the Judiciary "may not substitute its judgment for
that of a labor arbitrator and must uphold an arbitral decision
so long as the award is 'reasonably debatable.'" Id. at 301
Under the New Jersey Arbitration Act, N.J.S.A. 2A:24-1 to -
11, which applies to disputes arising from a collective negotiating
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agreement, a court may modify an arbitration award in only the
following circumstances:
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.
[N.J.S.A. 2A:24-8.]
In W.R. Grace & Co. v. Local Union 759, Int'l Union of the
United Rubber, Cork, Linoleum & Plastic Workers of Am., 461 U.S.
757, 766, 103 S. Ct. 2177, 2183, 76 L. Ed. 2d 298, 307 (1983), the
United States Supreme Court articulated a "public policy
exception" whereby "courts may not enforce collective bargaining
agreements that are contrary to 'well defined and dominant' public
policy," which the New Jersey Supreme Court adopted in Local 196.
Local 196, supra, 190 N.J. at 293 (quoting W.R. Grace, supra, 461
U.S. at 766, 103 S. Ct. at 2183, 76 L. Ed. 2d at 307).
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The public policy exception supplies a narrow mechanism
through which a court may modify an arbitrator's award, other than
by the four statutory criteria enumerated in N.J.S.A. 2A:24-8.
Id. at 294 ("Reflecting the narrowness of the public policy
exception, that standard for vacation will be met only in 'rare
circumstances.'") (citing Tretina Printing, Inc. v. Fitzpatrick &
Assocs., Inc., 135 N.J. 349, 360 (1994)).
The Court's opinion in Local 196 concluded with the following
instructive observation: "We hold that the public policy exception
to the review of labor arbitration awards and . . . heightened
judicial scrutiny are triggered only when the arbitrator's award-
-not the grievant's underlying conduct--violates a clear mandate
of public policy embodied in statute, regulation, or legal
precedent." Id. at 304 (citing Weiss v. Carpenter 143 N.J. 420(1996)). The "public policy" to be applied by judges in these
rare instances "must be embodied in legislative enactments,
administrative regulations, or legal precedents, rather than based
on amorphous considerations of the common weal." Id. at 295.
Applying these principles to the present case, we conclude
that the trial court erred in its reanalysis and alteration of the
arbitrator's award. We reach that conclusion for several
compelling reasons.
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First, the court improperly went beyond the charges issued
by the employer in this case, by finding that Segars was engaged
in illegal drug transactions while on the job. No such charge of
drug-dealing was set forth in the employer's disciplinary notice
it served on Segars pursuant to the CNA. The arbitrator was not
asked to decide if Segars had been selling or buying drugs.
Because a charge of drug-dealing was outside the designated scope
of the arbitration, a decision about Segars' discipline could not
rest on that ground. See, e.g., Bound Brook Bd. of Educ. v.
Ciripompa, 228 N.J. 4, 17-18 (2017) (analogously deeming it
erroneous for an arbitrator to redefine the substance of charges
that had been levied against a tenured teacher).1
To be sure, we agree with the trial court that the video
proof in this record is consistent with a perception that Segars
was engaged in drug transactions while on duty. However, it is
inappropriate to impute such an accusation into the notice of
disciplinary charges that the SJTA chose to issue in this case.
The generic reference to "engaging in non-work-related
activity/transactions" in the charges did not suffice as proper
notice of a claim of illegal narcotics transactions. Moreover, as
1
We note that, at our request, the parties provided helpful
supplemental briefs addressing the Court's opinion in Ciripompa,
a decision issued after the trial court's ruling and the merits
briefs on appeal.
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the arbitrator noted, the video footage does not reveal what items
were actually in the envelopes.
Second, the trial court erred in rejecting the arbitrator's
finding that the most serious charge of theft, or a failure to
report a theft, was not proven. The video evidence on the key
date of June 12 shows that the envelope that was removed from the
garage appears to have been returned to Segars later that evening.
No proof was presented of any missing funds. As such, the court
is bound by the arbitrator's factual findings. We are mindful
that the Supreme Court has similarly cautioned this appellate
court to refrain from unduly second-guessing a fact-finder's
interpretation of video evidence based on our own independent
viewing of those videos. See State v. S.S., 229 N.J. 360, 374
(2017).
Third, in light of the charges against Segars that were
actually charged and were actually proven, we are unpersuaded that
this case presents the "rare instance" in which an arbitrator's
findings should be cast aside on public policy grounds. We
certainly agree with the trial court with the general proposition
that untoward behavior by an employee who works alone in the night
shift at a public parking garage and who handles public funds
ought to be punished and deterred.
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On the other hand, the arbitrator's determination to impose
a punishment short of termination – consistent with the progressive
discipline policies agreed upon by the SJTA and the Union in the
CNA — is not manifestly against public policy, again bearing in
mind that drug dealing was not charged and theft was not proven.
For these reasons, the trial court's decision must be vacated
and the matter remanded for further proceedings. The remand should
not stop, however, at the trial court level. Because we share the
court's misgivings about the relatively short forty-five-day
length of the suspension the arbitrator selected as a sanction,
we believe it is appropriate in these distinctive circumstances
to: (1) uphold the arbitrator's factual findings, but (2) remand
the case to the arbitrator to reconsider whether a longer period
of suspension would be more consonant with the proven facts and
the applicable public policies. See, e.g., Kimba Med. Supply v.
Allstate Ins. Co., 431 N.J. Super. 463 (App. Div. 2013), certif.
granted, 217 N.J. 286, and certif. dismissed as improvidently
granted, 223 N.J. 347 (2017) (noting that, in limited situations,
a judicial remand to an arbitrator or dispute professional to give
further consideration to a case may be an appropriate course of
action under the overall statutory scheme).2
2
As a side point, we agree with the arbitrator's rejection of the
SJTA's request to impose an adverse inference against Segars for
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Vacated and remanded for further proceedings consistent with
this opinion. We do not retain jurisdiction.
choosing to exercise his right to refrain from testifying in his
own defense at the hearing. Such testimony that possibly could
have incriminated Segars may well have implicated Fifth Amendment
concerns. See State, Dep't of Law & Public Safety, Div. of Gaming
Enforcement v. Merlino, 216 N.J. Super. 579, 587 (App. Div. 1987);
see also Lefkowitz v. Turley, 414 U.S. 70, 77, 94 S. Ct. 316, 322,
38 L. Ed. 2d 274 (1973).
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