The past term of labor and employment decisions was characterized not by major shifts of policy or changes in the law, but by refinement and clarification of prior decisions, and useful practical guidance for employment litigators and trial courts conducting employment law trials.
Battaglia v. United Parcel Service
The court’s decision in Battaglia v. United Parcel Service, No. 069405 (N.J. July 17, 2013), has been widely reported for its holding that protected activity for a retaliation claim under the New Jersey Law Against Discrimination (LAD) need not constitute an LAD violation in itself. But three other holdings of Battaglia will perhaps be even more significant in their impact on the conduct of trials of LAD and Conscientious Employee Protection Act (CEPA) claims.
As described in more detail in the following, the Battaglia court held that: (1) claims of damages for future emotional distress require proof of permanency; (2) jury charges under CEPA require a “precise” focus on the statutory requirements and the specific conduct alleged to be in violation of same, while nonspecific references to generalized workplace complaints will constitute error; and (3) counsel who made repeated specific objections to jury charges on the record during a charge conference did not waive those objections by failing to repeat them after the disputed charge was read to the jury.
Plaintiff Michael Battglia was a long-term employee of UPS, beginning as a package car driver and working his way up through management. While in a supervisory position in Bridgewater, the plaintiff had occasion to discipline a subordinate named DeCraine for allegedly making various derogatory comments about female employees. The plaintiff later transferred to the position of Baltimore division manager, but because of an illness was unable to perform those duties and eventually accepted a demotion to return to New Jersey. Sometime thereafter, his former subordinate, DeCraine, became his direct supervisor.
The plaintiff alleged that while in a supervisory role, DeCraine again made various derogatory and highly inappropriate comments about female employees, including the use of crass and profane language. The plaintiff said that he complained to DeCraine about this conduct, about an affair that DeCraine was rumored to have had and about “improprieties on the … credit card usage in the Bound Brook facility.” Specifically, the plaintiff testified that he had heard that various managers were going out for liquid lunches charged to company credit cards and not returning. He conceded that he did not tell DeCraine that there was credit card “fraud” and that in fact he did not believe that the conduct he complained of constituted fraud. DeCraine denied that the plaintiff had ever spoken with him about employee abuse of credit cards.
Thereafter, in 2005, the plaintiff sent an anonymous letter to a UPS corporate HR professional, alleging in nonspecific terms a wide variety of activities he alleged were inappropriate. The letter claimed that “leaders of the district used language you wouldn’t use in your worst nightmare,” and referred to “so many examples [of] poor and unacceptable, unethical behavior.” The letter did not refer specifically to UPS credit cards or to DeCraine. The HR professional assigned to investigate the letter found it difficult to perform that task because of the letter’s generality. She concluded that nothing in the letter suggested the use of inappropriate sexual language; she did not understand the letter to assert the improper use of credit cards.
Meanwhile, the plaintiff was involved in several incidents of alleged poor performance. Among other things, a subordinate employee filed a grievance against him in connection with his attempt to discipline her, alleging that he had created a hostile work environment. DeCraine documented that the plaintiff was belligerent in the grievance meeting and reduced the employee to tears. And, more seriously, the plaintiff leaked a confidential discussion of employee performance to the bargaining unit employee involved. After an investigation of these and other incidents, it was determined that the plaintiff had engaged in a pattern of poor behavior, and it ultimately was decided that the plaintiff should be demoted. DeCraine did not participate in that decision, but he was assigned to communicate the decision to plaintiff.
The plaintiff alleged that his demotion was retaliation in violation of CEPA and the LAD. He also alleged that it was a breach of contract because it violated nonretaliation provisions in the employee handbook. The trial court dismissed the breach-of-contract claim, and the jury found for the plaintiff on both the CEPA and LAD retaliation claims, awarding $500,000 in economic damages and $500,000 for emotional distress. In connection with post-trial motions, the trial court remitted the emotional distress damages to $205,000. Both parties appealed.
• LAD Retaliation
The plaintiff’s LAD claim alleged that he had been retaliated against for complaining about DeCraine’s use of offensive, vulgar and derogatory language when referring to women and about DeCraine’s rumored affair with a co-worker. The Appellate Division granted the defendant judgment on this claim, finding that the plaintiff’s complaints did not constitute protected activity under the LAD because no female employee had been impacted by the alleged misconduct. The Appellate Division panel reasoned that since the LAD prohibits discrimination, and its retaliation provision prohibits reprisals for opposing practices forbidden under the LAD, then a retaliation claim must be grounded on either an alleged act of discrimination or a hostile work environment.
The Supreme Court reversed. The court explained its conclusion as based on three separate findings of law. First, it held that protected activity is not limited to complaints about directly demonstrable acts of discrimination. Second, when an employee complains about activity that he believes is discriminatory,
[the courts] do not demand that he or she be able to prove that there was an identifiable discriminatory impact upon someone of the requisite protected class. On the contrary, as long as the complaint is made in a good faith belief that the conduct complained of violates the LAD, it suffices for purposes of pursuing a cause of action.
Third, requiring proof of a specific victim of the conduct complained of would lose sight of the fact that the LAD was designed not just to vindicate individual employee rights, but also to protect the public interest in maintaining a discrimination-free work environment.
In so holding, the court stated the specific caveat that: “We do not suggest that the LAD has created a sort of civility code for the workplace where only language fit for polite society will be tolerated.” And it emphasized that the comments at issue were neither isolated nor made by a rogue, low-level employee. Rather — crediting the plaintiff’s evidence as required on appeal — the obscene slurs represented a pattern of offensive speech by a supervisor, made in meetings and in front of other managerial personnel.
It is important to keep in mind in discussing this aspect of Battaglia what the court was and was not doing. The court was defining protected activity for a retaliation claim. The court was not defining what constitutes actionable discrimination. As such, the Battaglia ruling is neither surprising nor novel, but an application of its holding in Carmona v. Resorts Int’l Hotel, 189 N.J. 354 (2007), that a retaliation plaintiff under the LAD must demonstrate that his original complaint was based on a reasonable belief that there had been a violation of the LAD, and that the complaint was made in good faith.
• Emotional Distress Damages
The court also considered the defendant’s argument that the emotional distress award could not stand because it included damages for future emotional distress, despite the lack of expert testimony of permanence. The court began its analysis of this issue with reference to the established rule that damages are not recoverable unless they are reasonably probable to occur, and the established rule in personal injury cases that the plaintiff has the burden of proving the permanency or other likely duration of his injuries. Noting, and apparently approving, the Appellate Division decision in Quinlan v. Curtiss-Wright Corp., 425 N.J. Super. 335 (App. Div. 2012), that this principle is equally applicable in LAD cases, the court concluded that any future award must be supported by evidence of permanency, and cited the Appellate Division holding in Lockley v. Turner, 344 N.J. Super. 1 (App. Div. 2001), that “the jury was not allowed to award damages for future emotional suffering and distress because plaintiff presented no expert testimony to prove permanency.”
Thus, although the court does not hold that the expert testimony is an absolute requirement, the court’s analysis suggests that while adhering to its historical aversion to bright-line rules, it has not conjured a situation where expert testimony would not be required to prove permanency.
[A]lthough the humiliation, embarrassment and indignity suffered by the LAD plaintiff during the events complained of is obvious, once remedied through a verdict, any claim that those effects will endure so as to support a future award must be proven by credible, competent evidence lest that verdict be the product of speculation.
Because the plaintiff’s counsel referred to age and life expectancy in her summation, the jury was permitted to include a future award for emotional distress, and was improperly permitted to speculate. As a consequence, the award of emotional distress damages could not stand.
• CEPA Retaliation
The court next addressed the defendant’s challenge to the CEPA award, beginning with the question of whether the plaintiff’s complaints about the misuse of company credit cards for drinks and dining constituted whistleblowing about fraudulent conduct as defined by the statute. The court reiterated that actual fraud need not be shown and that “the question is whether the complaining employee had a reasonable belief that the activity was fraudulent and complained about it for this reason.” But, it also repeated its prior caution that courts must be alert to sufficiency of evidence, and that CEPA “does not protect employees whose complaints are directed to minor or trivial matters.” The courts must take care to ensure that this threshold is met, “lest CEPA be diverted from its true remedial purpose.” Based upon these principles, the court continued,
[I]t is critical to identify the evidence that an aggrieved employee believes will support the CEPA recovery with care and precision. Vague and conclusory complaints, complaints about trivial or minor matters, or generalized workplace unhappiness are not the sort of things that the Legislature intended to be protected by CEPA.
To achieve that goal, jury instructions must be “precise” and trial courts must be “vigilant” in identifying the essential complaint made by the employee so the jury may properly focus on the standards the law imposes.
Applying these standards to the record before it, the court concluded both that the plaintiff’s evidence in support of his CEPA claim was insufficient and that the jury charge was in error. The evidence was found lacking for three reasons. First, the anonymous letter made no reference to credit cards or business lunches. Second, the plaintiff’s alleged oral complaint was a single comment about improprieties on the credit card usage or liquid lunches, and the co-employee who was allegedly the plaintiff’s source of information denied making any such statement to the plaintiff or even having knowledge of any such wrongful practices. Significantly, the court found that trial court testimony about possibly fraudulent activities of which the plaintiff was not aware and about which he did not complain was irrelevant to this inquiry. Finally, the plaintiff’s oral complaint did not suggest, and the plaintiff did not believe, that the employees using the credit cards were engaged in fraudulent behavior. The court agreed with the Appellate Division that complaints about employees drinking at lunch, taking long lunch breaks or minor violations of internal policies on credit card usage would not rise to the level of a CEPA claim.
With regard to the jury charge, the court disagreed with the Appellate Division that the defendant had waived any objection. In a practical holding that will be welcomed by plaintiff and defendant trial lawyers alike, the court held that in light of the defendant’s repeated objections to the charge in colloquy with the court during the charge conference, it was not a waiver to fail to repeat those objections after the court formally delivered the charge. As to the substance of the charge, the court found that its message to the jury that it could find a CEPA violation based upon complaints that “dealt with credit cards, dealt with meal practices[,] and other things” was error. First, this vague and open-ended description of the alleged whistleblowing failed to properly define the activity that could support a CEPA claim. Second, the charge failed to focus the jury on the plaintiff’s actual complaint, as opposed to testimony about other alleged improper activities of which the plaintiff was not even aware.
The court also addressed jury charge issues in Longo v. Pleasure Productions, No. 069257 (N.J. July 24, 2013). Reiterating that the standards it established for awards of punitive damages under the LAD are applicable under CEPA as well, the court made clear that the specific elements of a punitive damages award, including the requirement of participation by upper management, must be detailed for the jury.
The plaintiff in Longo alleged that she was terminated in violation of CEPA after she made claims of intimidation and harassment by a former co-employee, Mark Kercheval. She sued Kercheval, her former employer and several other employees, including one of the company’s co-presidents and owners. The employer was in the adult entertainment business.
Although the work environment included sexual content (including photographs of the plaintiff’s supervisor receiving oral sex at a company function), the plaintiff testified that it did not bother her and that she thought it was “funny.” Only after Kercheval had been working with her in sales for some period of time did she begin to complain. Among other things, she testified that Kercheval had suggested that she trade sexual favors for business and that he put a fork on her face and threatened to gouge her eyes out. She expressed her fear to a supervisor on several occasions, but nothing was done. She then escalated her complaint to the general manager.
Shortly thereafter, the plaintiff and Kercheval were both called into a meeting with management and human resources. They were orally reprimanded and issued warnings for poor sales performance and inappropriate remarks about the company and its employees. Kercheval signed his notice and apologized; the plaintiff wrote a rebuttal, alleging retaliation for her complaints. Kercheval was soon fired and then the plaintiff was fired as well. She said that she was told that her complaints had “caused a commotion and we like a nice, laid back environment around here.”
After motions to dismiss were decided, the plaintiff’s CEPA claims against her former employer, two supervisors and the co-president/owner went to the jury. The jury found no cause of action against the supervisors, but found the company and the co-president/owner liable under CEPA for economic damages of $120,000 and $30,000 in damages for emotional distress. During a separate punitive-damages phase, the plaintiff’s counsel argued that the employer was “responsible for the behavior of all of it employees.” While the trial court properly charged that punitive damages were designed to punish especially egregious behavior, and that the plaintiff was required to prove entitlement by clear and convincing evidence, it overruled the employer’s three objections to the charge centered on the upper-management requirement developed under the LAD.
Specifically, the employer argued that: (1) the charge did not define upper management; (2) the charge did not state that the jury was required to find that upper management had either participated in or been willfully indifferent to the retaliatory conduct; and (3) the charge did not explain that the jury’s finding against the co-president on compensatory damages was not dispositive of upper-management involvement for punitive damages, because his actions needed to be re-evaluated under a clear and convincing evidence standard. The jury awarded $500,000 in punitive damages against the employer.
A three-judge appellate panel affirmed the compensatory award unanimously, but was split with regard to punitive damages. The majority held that there need only be “some” involvement by upper management. Judge Dorothea Wefing dissented, holding that prior decisions of the Supreme Court made a finding of active participation or willful indifference by upper management mandatory. The employer appealed and the Supreme Court reversed.
The court began its analysis with reference to its decision in Abbamont v. Piscataway Twp. Bd. of Educ., 138 N.J. 405 (1994), which although equally divided on some issues, held unanimously that punitive damages may be awarded against an employer under CEPA only where there has been actual participation in the unlawful conduct by upper management. It then reviewed and reaffirmed its description of “upper management” in Cavuoti v. New Jersey Transit Corp., 161 N.J. 107 (1999), and the fact-sensitive nature of that inquiry. The requirement of an upper-management charge on punitive damages is a concept so essential to a fair trial that the lack of same constitutes plain error. “Any uncertainty about the roles and responsibilities of the upper-management employees who committed the wrongful conduct must be decided as a matter of fact by the jury.” That is especially important when several employees with various levels of power and responsibility are allegedly involved.
Applying those standards to the facts of the case before it, the court found that a new trial was required. The charge was error because no upper-management charge was given, and that error was aggravated by the argument of plaintiff’s counsel in summation that the conduct of any East Coast employee could be the basis of a punitive damages award. The charge was also flawed in its failure to instruct that the findings in the compensatory damages phase, under a preponderance of the evidence standard, did not govern under the clear and convincing punitive damages rule.
Civil Service Disciplinary Proceedings May Bar Subsequent Civil Suit
In Winters v. North Hudson Regional Fire & Rescue, 212 N.J. 67 (2012), a five-one majority of the court took an important and forceful stand against duplicative litigation of the same employment claim. The scope of the rule established by the majority could not be more clear:
We therefore put users of the public employment system of employee discipline on notice that integration of employer-retaliation claims should be anticipated and addressed where raised as part of the discipline review process. It is unseemly to have juries second-guessing major public employee discipline imposed after litigation is completed before the Commission to which the Legislature has entrusted review of such judgments. Findings made as part of the discipline process will have preclusive impact in later employment-discrimination litigation raising allegations of employer retaliation based on the same transactional set of facts.
The plaintiff in Winters had a long history of making workplace complaints while employed by North Hudson Regional Fire and Rescue (“Regional”). His first disciplinary proceeding included charges that he had made false allegations of harassment and sexual misconduct, disseminated false information and documents and failed to follow up on his accusations. After 11 days of hearings, an ALJ concluded that the plaintiff had violated a regulation regarding the treatment of official communications. Because his conduct was found to be reckless and egregious and to have needlessly placed in jeopardy effective operations of Regional, the ALJ determined that demotion and a 60-day suspension were in order. The Civil Service Commission (“the commission”) adopted the ALJ’s conclusions and the Appellate Division affirmed.
Thereafter, in 2006, the plaintiff went out on leave for panic disorder for more than four months. He collected full pay while he was out, but also worked part time at other public service jobs, earning more than $10,000 additional pay. While the plaintiff was out on leave, another firefighter was killed in the line of duty. The plaintiff complained in various forums, including on CBS, that Regional was partly responsible for the death due to safety issues that plaintiff had raised in the past. After the program aired, it was discovered that the plaintiff was not at home as required by sick leave policy. He was evaluated by a psychologist selected by Regional who found him fit to return to duty. The psychologist also suggested an examination by a psychiatrist. The plaintiff missed a scheduled appointment with a psychiatrist, then missed another and refused to attend on a rescheduled date. Regional served a preliminary notice of disciplinary action seeking his removal, and the plaintiff did not attend the administrative hearing. Regional then served a final notice removing plaintiff effective Nov. 30, 2006. The plaintiff appealed to the commission, which referred the matter to the Office of Administrative Law (OAL).
Discovery in the OAL included requests for depositions, which were granted in part based upon the plaintiff’s claim that his termination was in retaliation for his various complaints. After a hearing was started, Regional moved for partial summary decision on the charge of outside employment while on sick leave. In granting Regional’s application, the administrative law judge (ALJ) found that the plaintiff had raised a defense of retaliation, but had presented no support for it. Rather, it was found that the plaintiff had engaged in egregious misconduct, including misconduct unbecoming a public official, in working the two other public-sector jobs while receiving public benefits. The commission reviewed the penalty de novo and found that removal was required as a consequence of the plaintiff’s breach of public trust. The plaintiff’s appeal from that removal was unsuccessful.
While his appeal from the administrative proceeding was pending, the plaintiff filed an action in Superior Court alleging retaliation in violation of CEPA, the state and federal constitutions and the LAD. Regional moved for summary judgment on estoppel grounds, but that motion was denied, and the denial was affirmed by the Appellate Division. In a per curiam opinion, a five-member majority of the Supreme Court reversed. Noting that “this matter does not present a textbook record for transparent application of the elements of collateral estoppel,” the majority nonetheless concluded that preclusion should apply to the plaintiff’s later-filed CEPA case. That conclusion was grounded in both established precedents pertaining to equitable principles of estoppels, and strong public-policy considerations applicable to the state’s system of discipline of public employees.
In an introductory section to its opinion, the majority outlined the policy considerations supporting its conclusion of law. It first focused on the interplay between the Civil Service disciplinary system and CEPA suits. A litigant should not be permitted to game the system by participating in “the administrative system designed to promote a fair and uniform statewide system of public employee discipline,” raise a retaliation defense and then hold back on proving that defense in favor of saving it for a later civil suit. This is consistent, the majority noted, with the court’s decision in Hennessey v. Winslow Twp., 183 N.J. 593 (2005), that estoppel principles can apply to findings made in administrative proceedings. Because nothing prevented the plaintiff from fully presenting his retaliation defense in the administrative proceeding, it would not be unfair to require him to do so.
Although the parties had focused on collateral estoppel, the majority also reviewed the more general principles applicable to New Jersey’s expansive and flexible approach in the application of equitable defenses. “Equitable estoppel, for example, is a doctrine ‘founded in the fundamental duty of fair dealing imposed by law.’” Equitable estoppel, the majority continued, allows consideration of a range of factors, with the courts applying a close and focused analysis of the interests of the parties and the circumstances giving rise to the claims and defenses, a weighing of the equities. Moreover, in public employee discipline matters, the public interest in the finality of the litigated matter must weigh in the equitable application of estoppel principles, “for it is an unnamed party in interest to the efficient and fair resolution” of such matters.
The fact that the first determination in Winters was in an administrative forum was found insignificant by the majority. It noted that administrative tribunals can and do provide full and fair opportunity for litigation. It reiterated the rule that judgments in administrative proceedings may have collateral estoppel effect, so long as they are rendered in proceedings that merit such deference; that is, that the administrative proceedings have significant procedural and substantive safeguards.
Applying those considerations to the facts before it, the majority first noted that the plaintiff had not challenged the procedural sufficiency of the administrative proceeding. Thus, it defined the essential question as whether the issues in the two proceedings were aligned and litigated. It concluded that essentially they were, and noted that any lack of process was the result of the plaintiff’s own choice. In that respect, it emphasized again that an employee may not take advantage of the tactic of throttling back on a retaliation claim after raising it in the civil service proceedings, only to save it for another later litigation. Retaliation was always the central theme of this plaintiff’s argument, the majority stated. It was his choice not to present it fully in the first instance, and that tactical decision on his part does not warrant his obtaining a second bite of the apple in court. The fact that a ruling on retaliation was not specifically set forth in the ALJ decision was not fatal to this analysis, as the majority was “convinced” that the ALJ had assessed the claim of retaliation when he rendered his decision.
To the one dissenter, Justice Barry Albin, that omission from the ALJ decision was important. Looking at the five factors for application of collateral estoppel, the dissent found several lacking. First, it concluded that the administrative proceeding and the CEPA case were not aligned, because the ALJ and the commission determined only whether there was a legitimate basis for terminating the plaintiff and not whether there was an illegal retaliatory motive as well. If there had been a retaliatory motive in addition to the established legitimate ground for removal, the dissent reasoned, the plaintiff was entitled to proceed in a CEPA action on a mixed motive theory. The dissent also concluded that a retaliation defense was neither fully litigated nor actually decided by the ALJ. Thus, while recognizing the majority’s “well-intentioned goal of attempting to avoid duplicative litigation and inconsistent results when matters are tried in different forums,” the dissent was of the view that, in this particular case, “collateral estoppel has been sacrificed on the altar of judicial economy.”
Deference to Public Service Arbitration Award
The court’s decision in Borough of East Rutherford v. East Rutherford PBA Local 275, 213 N.J. 190 (2013), reminds us, once again, of the broad extent of deference it will accord public employment arbitration awards, even where, as here, there is at least a credible conflict with statutory requirements.
East Rutherford provided benefits to its employees under the State Health Benefits Plan (SHBP). During the term of the collective bargaining agreement (CBA), an amendment to SHBP increased the co-payment for doctor’s visits from five to 10 dollars. The borough passed that increase on to the employees, and the union filed a grievance. The borough denied the grievance, and the PBA demanded arbitration. The borough filed a scope of negotiations petition with the Public Employment Relations Commission (PERC), alleging that the issues of reimbursing members for the increase was pre-empted by statutory provisions governing SHBP. PERC denied the petition, finding that the purchase of insurance from SHBP did not insulate the borough from the requirements of its CBA to maintain a particular level of benefits. “Absent a pre-emptive statute or regulation not present here, an employer must reconcile its contractual obligations with its choice of health insurance providers.” PERC also noted that, should the arbitrator find a contractual violation, the borough could refile its scope petition.
The matter thus proceeded to arbitration on three issues: (1) was the grievance arbitrable; (2) did the borough violate the CBA when it raised the co-payment; and (3) if there was a contractual violation, what was the appropriate remedy. The arbitrator found that the grievance about a change in the negotiated level of benefits was arbitrable because the level of benefits is mandatorily negotiable except “where a statute or regulation pre-empts negotiations over health benefits,” and there was no such statute or regulation in this case. Based on various provisions in the CBA, the arbitrator found that the agreement had been breached. Although she found that she lacked power to order restoration of the lower co-payment, she ordered the borough to reimburse employees for the increased amount for the term of the CBA.
The borough instituted an action in the Law Division to vacate the award, and the union cross-moved to confirm. The trial court agreed with the borough that the decision was contrary to law, in violation of public policy, exceeded the arbitrator’s authority, was procured by undue means and was not reasonably debatable. Among other things, the Law Division found that the CBA provision that it conform to existing law expressly made the parties’ contractual obligations subordinate to the law. The court held that since the commission has sole responsibility and discretion to determine appropriate levels of uniform benefits, especially co-payments, as a local participant the borough was obligated to strictly comply. The Appellate Division reversed, finding that the arbitration decision was not contrary to law or public policy, that it did not undermine the commission’s decision to increase the co-pay, and that it was reasonably debatable. Significantly, the Appellate Division found that the CBA requirement that it conform to existing law did not automatically require that the PBA bear the consequences of future changes in the law.
The Supreme Court granted certification and affirmed four-to-one, with Justice Anne Patterson dissenting. The majority opinion began with a review of the familiar standards of deference to arbitration awards, particularly labor arbitration awards in the public sector. “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.’” A court may vacate an arbitration award, the majority continued, for the four reasons set forth in the New Jersey Arbitration Act: (1) where the award was procured by fraud, corruption or undue means; (2) where there was evident partiality or corruption in the arbitrators; (3) where the arbitrator was guilty of misconduct or misbehavior prejudicial to the parties; and (4) where the arbitrator exceeded or so imperfectly executed his power that a mutual, final and definite award on the matter submitted was not made. In addition, an award may be vacated where it is contrary to existing law or public policy. But “even when the award implicates a clear mandate of public policy, the deferential ‘reasonably debatable’ standard still governs.” Thus, the majority emphasized, if the correctness of the award, including its resolution of the public policy issue, is reasonably debatable, the award should not be disturbed.
Applying these standards to the facts before it, the majority concluded first that the award had not been procured by undue means, i.e., that the arbitrator had not made an acknowledged mistake of fact or law that was apparent on the record. The majority also concluded that the arbitrator had not exceed her powers, i.e., that she had not disregarded the terms of the parties’ agreement. In so holding, it focused on the preservation of rights language of the CBA and not on the “consistent with existing law” language, noting that it did not matter whether the arbitrator had reached the better of two alternative interpretations of the CBA, because “the outcome here was at least reasonably debatable.” The majority similarly rejected a contractual challenge to the remedy ordered, relying on past decisions that arbitrators are not restricted to remedies set forth in the CBA.
With regard to the public policy issue, the majority again afforded the arbitrator great deference.
The Borough’s argument, while plausible, was not the only reasonable conclusion to be reached. The Arbitrator’s analysis of the SHBP co-payment increase and the CBA’s provisions led her to a different conclusion, and her interpretation satisfies the reasonably debatable standard. The framework for reviewing a public-sector arbitration award accounts for the interplay between the SHBP and the CBA by requiring a reviewing court to determine whether the arbitration award actually causes direct contradiction with law or public policy.
Finally, the majority concluded that the arbitration award did not effectively undo the policy reflected in the amendment to SHBP, because its effect was limited to the term of the collective bargaining agreement under which the dispute arose.
Justice Patterson, dissenting, would have vacated the award, finding it in direct contravention of the CBA and the letter and policy goals of the SHBP. With regard to the standard of review applied, Justice Patterson would have accorded less deference to the arbitrator, for several interesting reasons. First, the dissent would have found the reasonably debatable standard inapplicable where the issue on appeal is purely one of law.
The legal determinations of our trial judges, who are constitutionally charged with the responsibility to interpret and apply our laws, are reviewed de novo on appeal. I respectfully submit that an arbitration award premised upon a legal conclusion, such as the award reviewed today, should likewise not be sustained unless the appellate court determines that the arbitrator has correctly applied the law. (Citations omitted.)
Moreover, the dissent continued, even the reasonably debatable standard has meaningful parameters, and where public policy is concerned there must be careful scrutiny of the record to ensure that the interests and objectives of the public policy are not frustrated and thwarted.
Thus, the dissent would have held that the CBA, by its express terms, required conformity with existing laws and prohibited construction of the CBA to deny or restrict the borough of its rights under law. The increased co-payment under SHBP was such a law and, according to the dissent, its legislative history makes clear that the legislature intended that the increase apply without exception. Thus, the dissent concluded that the arbitration award reversed that legislative initiative and violated a clear mandate of public policy. “By compelling the Borough to pay the $5.00 increase in office visit co-payments, the award flouted the Legislature’s unambiguous direction…” The dissent also concluded that the award undermined the policy that prompted the legislature’s reform and upended the effort to shift a portion of the cost of public employee health care from local government to covered public. As a consequence, the dissent found this to be “precisely the type of rare circumstance where this Court should reverse the arbitrator’s decision as contrary to clear mandates of public policy.” •