HOBOKEN MUNICIPAL EMPLOYEES' ASSOCIATION v. CITY OF HOBOKEN (L-0944-21, HUDSON COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE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-0143-21
HOBOKEN MUNICIPAL
EMPLOYEES' ASSOCIATION,
Plaintiff-Respondent,
v.
CITY OF HOBOKEN,
Defendant-Appellant.
____________________________
Submitted June 2, 2022 – Decided July 8, 2022
Before Judges Mitterhoff and Alvarez.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-0944-21.
Lite Depalma Greenberg & Afanador, LLC, attorneys
for appellant (Victor A. Afanador, on the briefs).
Limsky Mitolo, attorneys for respondent (Marcia J.
Mitolo, on the brief).
PER CURIAM
In this labor dispute, defendant-appellant City of Hoboken (the City)
appeals from an August 5, 2021 order that vacated a January 15, 2021 arbitrator's
award sustaining in part and denying in part respondent Hoboken Municipal
Employees' Association's (HMEA) grievance against the City. We affirm,
substantially or the reasons set forth in Judge Anthony V. D'Elia's well-reasoned
oral and written opinions. We add the following.
HMEA represents civilian municipal employees of the City of Hoboken.
The City and HMEA entered into a collective bargaining agreement (CBA) for
the period of July 1, 2002 through June 30, 2005. Since the expiration of that
agreement, the parties have used a series of memorandums of agreement (MOA)
to maintain their labor agreement. The most recent MOA expired in 2017, and
since then, the parties have been trying to negotiate a new agreement, which
would cover 2018-2020 or another agreed-upon period. The parties' agreement
contains a multi-step grievance process for resolving disputes, which terminates
in binding arbitration in accordance with the rules and regulations of the New
Jersey Public Employment Relations Commission (PERC).
By the end of 2019, the City was facing significant budgetary problems.
According to the City's Director of Finance, when budgeting for 2020, it was
clear that "anticipated increases in the spending for 2020 would lead to a
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significant budget gap, if not addressed urgently." The total budget shortfall
was estimated to be $7,420,795. The City was also limited in its ability to
compensate for the budget shortfall by taxing residents since it could only raise
property taxes to a level of $6,865,203 per year without a referendum. The onset
of the COVID-19 pandemic made the City hesitant to raise taxes out of fear of
overburdening the taxpayers.
In January 2020, the City submitted a layoff plan to the Civil Service
Commission. Pursuant to the plan, on or about May 1, 2020, layoff rights
notices were given to the employees facing layoffs. Some of these employees
were in the bargaining unit represented by HMEA. Affected employees with
sufficient seniority were offered "lateral" or "demotional" bumping rights and
were asked to promptly advise whether they would exercise those rights instead
of being laid off. When exercising lateral bumping rights, grievants bumped
employees who were in a different position but who held the same title. When
exercising demotional bumping rights, grievants bumped employees who were
in a different title with a lower pay range. The City unilaterally set salaries for
all employees who exercised their bumping rights at $35,000 per year, and they
were provided an additional $1,000 for every year of service since 2012, even if
they were hired long before that time. Many of these employees remained in
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their own titles or positions and still received a reduced salary. The City set
these salaries without negotiation with the Union.
On May 1, 2020, HMEA filed a grievance against the City. On or about
May 18, 2020, HMEA submitted a request for a panel of arbitrators to PERC.
At the arbitration hearing, HMEA argued the City violated the CBA by
establishing salaries for the displaced employees without engaging in a proper
negotiations process. The City contended that it followed the CBA and set
salaries for the newly created positions in accordance with previously negotiated
salary ranges already in place.
On January 15, 2021, the arbitrator issued an opinion and award sustaining
in part and denying in part HMEA's grievance against the City. He found that
the City violated the CBA with respect to employees' lateral bumping rights but
found no violation regarding the demotional bumping. The arbitrator concluded
that because the City had unilaterally established starting salaries for newly
hired and promoted employees, a "past practice" existed that allowed the City
to likewise fix salaries for employees who were demoted.
HMEA filed an order to show cause in the Law Division seeking to vacate
the arbitrator's decision. On May 26, 2021, Judge D'Elia reversed the arbitrator's
decision, concluding it lacked factual support to extend a past practice dealing
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with new hires and promotions to employees who are demoted to a lower title.
The judge explained:
The arbitrator . . . found that there was a past
practice for new hires and promotional hires. And then
he jumped, and he said, that, therefore, means that . . .
the union agreed that you could always say the salary
in the range when they get put into a new title. And I
asked . . . a couple of times, what factual basis or
reasons did he give to make that jump? Or did he just
make that jump on his own?
And [counsel for the City] pointed to the one
paragraph that was in the briefs, and nothing else. And
I'm just telling you, based on that record, I don't see any
facts to support the arbitrator's decision that that was
the past practice.
. . . I think it's unreasonable based on this record
to conclude that the union would have shut its mouth in
the past if they reduce people's salaries, and . . .
unilaterally pick the salaries that they would get when
. . . they had a bump and go to a lower title.
There's been no . . . factual basis to support that
conclusion at all. That's what I'm saying. So, therefore,
I don't think he had a good reason to make that jump,
based on this record. Because the facts are not in
dispute. The facts are definitely not in dispute. In the
past, the union was very happy to let the City pick the
salaries when somebody was hired new, or got
promoted.
And there's never been one instance where the
union shut its mouth and was happy with someone
getting demoted, and letting the City pick the salary.
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All right? That's my finding on the record
factually on that. And so that's not going to be re-
argued. . . . I find that it is not reasonably debatable. I
think that the arbitrator's decision in that regard was
unreasonable. No factual support in the record to
support a conclusion that . . . there was a past practice
of the union shutting its mouth when . . . an employee
was reduced in salary and demoted to a lower title.
So . . . now we get to managerial prerogative.
That's going to be briefed in three weeks. Everybody
will have ten days to respond. . . .
On July 8, 2021, Judge D'Elia heard arguments on the managerial
prerogative issue. On August 5, 2021, in a written opinion, the judge concluded
that the City did not have a managerial prerogative to unilaterally set salaries
for employees who exercised their "demotional" bumping rights. He reasoned:
[I]n [Robbinsville Twp. Bd. of Educ. v. Washington
Twp. Educ. Ass'n, 227 N.J. 192 (2016)] the [Supreme]
Court specifically found that [Borough of Keyport v.
Int'l Union of Operating Eng'rs, 222 N.J. 314 (2015)]
does not stand for the proposition that any time a
municipal public employer claims an economic crisis,
managerial prerogative allows that employer to throw a
collectively negotiated agreement out the window. It
specifically found ". . . to the contrary, Keyport
painstakingly emphasized the significance of an agency
of state government enacting a temporary emergency
regulation to provide local governmental managers
with enhanced prerogatives in handling the
extraordinary fiscal times in the late 2000['s].[" ]Ibid.
The regulation['s] existence made all the difference in
Keyport as, ". . . it was mentioned by the Court
repeatedly throughout the opinion[.]" Ibid. The
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Robbinsville Court emphasized that "[h]ad the
temporary regulation not provided that extra
managerial authority, the fact patterns in the three
consolidated cases in Keyport would have foundered on
the [third] prong analysis[.]"[] Ibid. (emphasis added).
The parties agree in the instant matter that there
is no regulatory authority for the unilateral actions
taken by the . . . City of Hoboken. Thus, this [c]ourt
finds that the [C]ity did not have the managerial
prerogative to unilaterally set salaries for those
employees who exercised "demotional" bumping rights
into lower titles under the layoff plan.
This [c]ourt agrees with the Supreme Court in
Robbinsville[] when the Court stated ". . . a claimed
need for managerial prerogative to prevail in tight
budgetary times in order for municipal governmental
policy to be properly determined would eviscerate the
durability of collective negotiated agreements.
Collective negotiated agreements – promises on wages,
rates of pay and hours, and other traditional terms and
conditions of employment – would mean nothing in the
wake of any financial setback faced by a local
governmental entity." Robbinsville, . . . at . . . 204.
The City's argument in this case is essentially that
the tight budgetary times of 2019 operated to give
Hoboken a managerial prerogative to ignore the
collective negotiated agreement regarding wages and
rates of pay simply because the [C]ity was facing a
financial setback. This is exactly the type of argument
that was rejected in Robbinsville, as summarized
above.
For the above reasons, the arbitrator's decision is
vacated in its entirety: the [c]ourt finds there was an
insufficient basis for a finding that there was past
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practice justifying the [C]ity's actions in this case and
now finds that the [C]ity did not have a managerial
prerogative to unilaterally set salaries for those
employees who exercised their "demotional" bumping
rights. The parties must now negotiate the appropriate
salaries for those employees who exercised their
"demotional" bumping rights; retroactive to the date
their salaries were reduced.
On appeal, the City presents the following arguments for our
consideration:
POINT I
THE TRIAL COURT ERRED IN FAILING TO
DEFER TO THE ARBITRATOR'S REASONABLY
DEBATABLE DECISION AND FAILED TO
ANALYZE THE ARBITRATOR'S DECISION
UNDER THE NEW JERSEY ARBITRATION ACT,
N.J.S.A. 2A:24-8.
POINT II
THE TRIAL COURT ERRED IN CONCLUDING
THAT THE CITY DID NOT HAVE A MANAGERIAL
PREROGATIVE TO IMPLEMENT A PERMANENT
LAYOFF PLAN.
A. The Trial Court incorrectly applied
Robbinsville's narrow holding to the facts of this
case.
B. Borough of Keyport supports a finding that
the City had a managerial prerogative to
implement a permanent layoff plan.
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"In the public sector, an arbitrator's award will be confirmed 'so long as
the award is reasonably debatable.'" Linden Bd. of Educ. v. Linden Educ. Ass'n
ex rel. Mizichko, 202 N.J. 268, 276 (2010) (quoting Middletown Twp. PBA Loc.
124 v. Twp. of Middletown, 193 N.J. 1, 11 (2007)). An award is "reasonably
debatable" if it is "justifiable" or "fully supportable in the record." Policemen's
Benevolent Ass'n v. City of Trenton, 205 N.J. 422, 431 (2011) (quoting Kearny
PBA Loc. # 21 v. Town of Kearny, 81 N.J. 208, 223-24 (1979)). "Under the
'reasonably debatable' standard, a court reviewing [a public-sector] arbitration
award '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.'" Borough of
E. Rutherford v. E. Rutherford PBA Loc. 275, 213 N.J. 190, 201-02 (2013)
(alteration in original) (quoting Middletown Twp., 193 N.J. at 11).
N.J.S.A. 2A:24-8 sets forth the limited statutory grounds on which we
may vacate an arbitration award. Pertinent to this appeal, we may vacate an
arbitration award "[w]here 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) and (d).
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"'[U]ndue means' 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 E. Rutherford, 213 N.J. at
203 (alteration in original) (quoting Off. of Emp. Rels. v. Commc'ns Workers of
Am., AFL-CIO, 154 N.J. 98, 111 (1998)). Arbitrators exceed their authority
where they ignore "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). It is fundamental that "an arbitrator
may not disregard the terms of the parties' agreement, . . . nor may he [or she]
rewrite the contract for the parties." Cnty. Coll. of Morris Staff Ass'n. v. Cnty.
Coll. of Morris, 100 N.J. 383, 391 (1985) (citation omitted). Furthermore, "the
arbitrator may not contradict the express language of the contract." Linden Bd.
of Educ., 202 N.J. at 276.
The City argues that the judge did not afford the arbitrator's findings the
proper deference owed under the reasonably debatable standard. We reject this
argument as we agree with Judge D'Elia that the arbitrator made mistakes of
both fact and law that are apparent on the face of the record.
First, we conclude, as did the judge, that the record was devoid of facts to
support of a past practice of unilaterally setting wages that could be extended to
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demoted employees. As the judge observed, new hires and promoted employees
do not have the same expectation of a certain salary within the range. New hires
can either accept or reject the job based on the salary offer. Promoted employees
presumably receive either a more prestigious title, a pay raise, or both. Demoted
employees, in contrast, are required to accept a lesser title and salary than that
which they previously bargained for. The judge was correct that the absence of
a factual basis for extending the City's past practice to demoted employees is
obvious and not subject to debate. Borough of E. Rutherford, 213 N.J. at 203.
Second, we concur with the judge's rejection of the arbitrator's conclusion
that the budgetary crisis conferred upon the City a managerial prerogative to
ignore the CBA and set wages without negotiation. The judge explained:
In Robbinsville, the Supreme Court clearly stated
that its earlier opinion, Borough of Keyport, does not "
. . . support a general proposition that, in times of
economic crisis, a [local public entity] may unilaterally
impose furlough days on staff members in
contravention of a parties' collective negotiation
agreement governing terms and conditions of
employment." Robbinsville, . . . at 194.
In Robbinsville, the local Board of Education
imposed involuntary furlough days on teachers, thereby
negatively impacting those employees' wages. An
unfair labor practice charge was filed with P.E.R.C.
challenging the Board's action as violating the terms of
the collective bargaining agreement and the New Jersey
Employer-Employees Act. N.J.S.A. 34:13A-1 to 43. In
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granting summary judgment to the Board, P.E.R.C.
relied upon the Appellate Division opinion in Keyport.
The Appellate Division then affirmed P.E.R.C.'s ruling
based upon the Supreme Court opinion in Borough of
Keyport of July 14, 2015, (which had been rendered
after P.E.R.C. granted the board summary judgment).
In reversing summary judgment, the Robbinsville
Court held that the Appellate Division relied upon an
overly broad and mistaken reading of its earlier
Keyport opinion. In doing so, the Supreme Court
affirmed that [it] is beyond dispute: public employers
have a non-negotiable managerial prerogative to reduce
the work force by laying off employees. Robbinsville
. . . , at . . . 200. The Court emphasized that in Keyport
it recognized that public employers could unilaterally
alter an employee's rate of pay and workdays in
accordance with a duly authorized layoff plan during
times of acute economic crisis. Ibid. [T]he Court also
emphasized that the analytical approach in Keyport
resorted to the well-established three prong analysis
from [(IFPTE, AFL-CIO v. State 88 N.J. 393, 403-05
(1982)] Local 195 to determine negotiability of
furloughs.[1] The Court held that []. . . the critical
question turned on the [third] prong, which required a
balancing of the public employer's interest in "the
determination of governmental policy" and the
employee's interest in their work and welfare. Id. at
. . . 201. The Robbinsville Court emphasized that it had
1
In Keyport, the Court clarified that New Jersey only has two categories of
subjects for public employment negotiation: mandatorily negotiable terms and
conditions of employment and non-negotiable matters of government policy.
222 N.J. at 333. The Court held that a subject is negotiable when "(1) the item
intimately and directly affects the work and welfare of public employees; (2) the
subject has not been fully or partially preempted by statute or regulation; and
(3) a negotiated agreement would not significantly interfere with the
determination of governmental policy." Id., at 334.
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recognized – in Keyport – that the ". . . emergency
regulation (which was then in place) authorizing
temporary layoffs due to the exigent financially
distressing conditions was a clear expression of public
policy authorizing such actions to be taken." Ibid.
(citing to the Keyport opinion). Significantly, the
Robbinsville Court emphasized that it was important to
the Court in Keyport that the municipality there had
acted while the emergency regulation was in effect and
while the municipality faced financial crisis. Id. at . . .
202.
The Court expressly held that []. . . because there
was no statute or regulation in place (in Robbinsville as
there had been in the Keyport matter) authorizing a
local entity to unilaterally negatively affect the salary
of certain employees, the appellate panel had
misapplied the Court's earlier holding in Keyport when
analyzing the [third] prong of the test. The Court found
that the appellate panel had undervalued the lack of an
authorizing temporary emergency regulation that
permitted temporary furloughs – a factor that had the
significant impact of titling the public policy calculus
under the [third] prong of the Local 195 analysis in
favor of non- negotiability. Id. at . . . 203.
Moreover, in Robbinsville, the Court specifically
found that Keyport does not stand for the proposition
that any time a municipal public employer claims an
economic crisis, managerial prerogative allows that
employer to throw a collectively negotiated agreement
out the window. It specifically found ". . . to the
contrary, Keyport painstakingly emphasized the
significance of an agency of state government enacting
a temporary emergency regulation to provide local
governmental managers with enhanced prerogatives in
handling the extraordinary fiscal times in the late
2000['s].[" ]Ibid. The regulation['s] existence made all
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the difference in Keyport as, ". . . it was mentioned by
the Court repeatedly throughout the opinion[.]" Ibid.
The Robbinsville Court emphasized that "[h]ad the
temporary regulation not provided that extra
managerial authority, the fact patterns in the three
consolidated cases in Keyport would have foundered on
the [third] prong analysis[.]"[] Ibid. (emphasis added).
The parties agree in the instant matter that there
is no regulatory authority for the unilateral actions
taken by the . . . City of Hoboken. Thus, this [c]ourt
finds that the [C]ity did not have the managerial
prerogative to unilaterally set salaries for those
employees who exercised "demotional" bumping rights
into lower titles under the layoff plan.
As noted by Judge D'Elia, the City agrees there was no emergency
regulation enacted to permit the City to disregard the CBA and set salaries as a
matter of managerial prerogative. Thus, the arbitrator erred as a matter of law
to the extent he relied on the fiscal crisis alone as the reason why the wages of
the demoted workers were non-negotiable.
Affirmed.
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