The state Supreme Court on Tuesday reaffirmed the public policy that arbitration is the best way to handle contract disputes with public-sector employees and that arbitrators’ awards should be given great deference.
The ruling, in East Rutherford v. East Rutherford PBA Local 275, A-24-11, finds an arbitration award was not contrary to existing law or public policy and was a reasonably debatable interpretation of a collective bargaining agreement between East Rutherford and PBA Local 275.
The borough, like most government agencies, provided health-care benefits through the State Health Benefits Plan, which provided for a $5 co-pay per doctor visit. In 2007, the Legislature amended N.J.S.A. 52:14-17.29(C) to increase the co-pay to $10.
The union claimed the increase violated the terms of the CBA and won the right to arbitrate. An arbitrator ruled that she could not reduce the amount of the co-pay because that is what the statute required, but ordered the borough to reimburse its members for the $5 difference they were charged for each doctor visit between 2007 and 2009.
When the borough challenged the award, Bergen County Superior Court Judge Mark Russello vacated it, saying the arbitrator essentially rewrote the terms of the CBA. The Appellate Division reinstated the award.
Justice Jaynee LaVecchia, writing for a 4-1 majority, found nothing improper about the arbitrator’s award.
The arbitrator merely enforced the CBA’s requirement that union members would be responsible for only a $5 co-pay and that the only way to reinforce the CBA was to require the borough to reimburse the officers for the difference.
The majority rejected East Rutherford’s argument that the arbitrator’s award could be financially burdensome, noting that if that were to be a determinative factor, "the losing party in an arbitration imposing financial damages would almost invariably seek vacation of the award."
LaVecchia said the majority’s decision should not have an effect on amendments the Legislature made to the SHBP in 2010 that specifically called for public-sector workers to pay more toward their health care, including paying higher co-pays, because the amendment says the statutorily based increases trump individual CBAs.
Justice Anne Patterson dissented, saying the arbitrator’s award was not a "reasonably debatable" interpretation of the CBA because it exceeded the arbitrator’s authority and was contrary to other mandates of public policy.
East Rutherford’s attorney, David Corrigan, says he’s disappointed with the ruling but sees some consolation. "The majority did say the 2010 legislative modifications suggest this won’t happen again, and that changes in the SHBP trump anything in the CBA," says Corrigan, who runs a firm in Keyport.
The union’s attorney calls it a "huge decision" for public-sector labor unions. "The court affirmed the well-established standard that courts should give great deference to arbitration awards," says Lauren Sandy, of Loccke, Correia, Limsky & Bukosky in Hackensack.