NJ Supreme Court Gives Deference to Arbitration Award in Public-Sector Labor Dispute

The New Jersey Supreme Court recently upheld an arbitration award in a dispute between a municipality and local labor union. In doing so, it highlighted that courts should give great deference to arbitration awards in New Jersey public-sector labor disputes so long as they are reasonably debatable.

The Facts of the Case

The dispute in East Rutherford v. East Rutherford PBA Local 275, A-24-11, involved the provision of health benefits under a collectively bargained agreement (CBA) between the Borough of East Rutherford (Borough) and the East Rutherford Policemen’s Benevolent Association, Local 275 (PBA). The Borough provided healthcare coverage for its employees through the State Health Benefits Plan (SHBP), which required a $5.00 co-payment for doctor’s office visits. Effective January 1, 2007, the State Health Benefits Commission increased the co-payment to $10.00 per office visit, and the Borough passed along the increase to members covered by the CBA.

The PBA filed a grievance disputing the increase, claiming that the CBA precluded imposition of the higher co-payment. An arbitrator found that employees covered by the CBA were required to comply with the increased co-payment instituted by the Commission. However, she also found that the CBA required the employer to maintain the past practice that required employees to pay only a $5.00 co-payment per doctor visit.

Accordingly, the award ordered the employer to reimburse employees for the incremental increase in co-payments through the end of the contract period. On appeal, the Appellate Division held that the Arbitrator’s construction of the CBA was reasonably debatable and rejected the Borough’s additional claims that the award was illegal.

The Court’s Decision

The New Jersey Supreme Court upheld the Appellate Division judgment, finding that “because judicial review of an arbitration award is deferential to an arbitrator’s conclusions, the award must be sustained.”

As explained by the Court, “[t]he interpretation reached by the Arbitrator of this contract was within the range of what is reasonably debatable. Furthermore, the remedy ordered by the Arbitrator to effectuate her interpretation was neither contrary to existing law nor beyond the scope of what was reasonably debatable.”

The Court further emphasized that arbitration should not be viewed as a “gateway to the courthouse,” particularly in public-sector labor disputes.  The Court stated that when parties agree to arbitration, they “must recognize that courts give arbitrators significant discretion to make reasoned conclusions based on interpretations of the contractual language and the relevant law. “  As such, the mere fact that a court may disagree with an arbitrator’s decision is not a sufficient basis to overturn an arbitration award.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Public Law Group.

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