NJ Supreme Court Upholds Arbitration Award as “Reasonably Debatable”

The Supreme Court of New Jersey handed down a decision today upholding a grievance arbitration award requiring the Borough of Carteret to pay lieutenants who act as captain at the captain’s rate of pay. The decision reverses an appellate division that found the arbitrator “engrafted terms” not agreed to by the parties.

The facts as explained in the case syllabus are as follows:

• In 2011, the Borough of Carteret and the Firefighters Mutual Benevolent Association, Local 67 (FMBA) executed a collectively negotiated agreement (CNA) governing the terms and conditions of employment for the Borough’s firefighters.
• As of 2013, the Borough employed four captains and generally staffed each shift with one captain, who was charged with managing subordinate firefighters also on duty.
• Under Article VIII, Section 5 of the CNA, if no captains were scheduled to work a particular shift, the senior firefighter on duty would assume the captain’s responsibilities and be compensated at the captain’s rate of pay.
• Almost two years after the CNA went into effect, the Borough created a new position — fire lieutenant — falling between captain and firefighter in the chain of command.
• After the creation of the lieutenant position, if no captains were scheduled for a given shift, the lieutenant on duty would assume the captain’s responsibilities.
• In those instances, however, the Borough paid lieutenants their regular salary, not the higher rate an acting captain would have been paid.
• In 2017, the FMBA filed a grievance alleging that the Borough’s failure to pay lieutenants at the rate of an acting captain when a lieutenant assumed a captain’s responsibilities violated Section 5 of the CNA.
• At the arbitration hearing, Fire Chief Mark Hruska testified that the FMBA agreed to waive Section 5 if the Borough created the lieutenant position. In contrast, Jason Kurdyla, the FMBA President at the time of the hearing, testified that there was neither an agreement nor a vote by FMBA membership to modify Section 5.
• Kurdyla and another FMBA representative both testified that the duties previously performed by captains had been entirely assumed by lieutenants.
• The arbitrator sided with the FMBA.
• The arbitrator did not credit Hruska’s testimony and held that “the unrebutted testimony . . . that the lieutenants are performing the duties of shift commanders” supports the conclusion that “intentional or not, what the Borough has done is to replace captains with lieutenants, at a lower pay rate” in violation of Section 5 of the CNA.
• The arbitrator therefore awarded back pay at the higher rate.
• The total amount of backpay owed by the Borough was calculated to be $56,065.18.

The union filed suit with the Chancery Division seeking to enforce the arbitrator’s award. When the Chancery Court upheld the award, the Borough appealed claiming “the arbitrator imperfectly executed her powers, misinterpreted [Section 5’s] plain language, ignored, among other things, the parties’ past practice, and improperly disregarded the Fire Chief’s testimony.”

The appellate division agreed with Borough, prompting the union to appeal to the supreme court. Quoting from the supreme court ruling:

• The interpretation of a labor agreement “is a question for the arbitrator. It is the arbitrator’s construction which was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him [or her]” based solely on differences of interpretation.
• Accordingly, an arbitrator’s award resolving a public sector dispute will be accepted so long as the award is “reasonably debatable.”
• Under the reasonably debatable standard, 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 position.”
• However, if an arbitrator adds “new terms to an agreement or ignore[s] its clear language,” the award may be vacated as not reasonably debatable.
• Applying those standards, we are satisfied that the arbitrator’s award in this matter was supported by a plausible interpretation of the CNA and therefore satisfies the “reasonably debatable” standard.
• In reversing the arbitrator’s award, the Appellate Division incorrectly substituted its own judgment and did not afford proper deference to the arbitrator’s interpretation of the CNA.
• A plausible reading of the CNA could lead to the conclusion that Section 5 embodied a negotiated agreement between the FMBA and the Borough that whenever an employee, lower in rank, of the Carteret Fire Department assumes the responsibilities of a captain, the employee is entitled to acting captain’s pay.
• That reasonable reading of the CNA undergirds the arbitrator’s opinion and corresponding award.
• It may be that the Appellate Division disagrees with the arbitrator’s determination, but an appellate court cannot substitute its own judgment for that of the arbitrator because the court believes its interpretation is the better one.
• As our precedent indicates, affirming an arbitrator’s award is not a comment on the viability of opposing interpretations of a disputed labor agreement, “[n]or is it a conclusion that the arbitrator’s interpretation is the best one.
• That is not the standard. What is required is that the arbitrator’s interpretation finds support in the Agreement “
• Here, we find that it does.

Here is a copy of the decision: