Local 462, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America v. Charles Schaefer & Sons, Inc.

• Decision Date: 02 February 1988
• Parties: LOCAL 462, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Plaintiff-Appellant, v. CHARLES SCHAEFER & SONS, INC., Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 520

223 N.J.Super. 520

539 A.2d 295

LOCAL 462, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, Plaintiff-Appellant, v. CHARLES SCHAEFER & SONS, INC., Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Submitted Jan. 12, 1988.

Decided Feb. 2, 1988.

Schneider, Cohen, Solomon, Leder & Montalbano, Jersey City, for plaintiff-appellant (David Grossman, of counsel and on the brief).

Gerald L. Dorf, Rahway, for defendant-respondent (Gerald L. Dorf, of counsel; Patrick E. Daly, on the brief).

Before Judges MICHELS and ARNOLD M. STEIN.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Plaintiff Local 462, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Union), appeals from a judgment of the Law Division that vacated two prior arbitration awards reinstating six employees of defendant Charles Schaefer & Sons, Inc. (Company), who had been terminated for violations of the parties' collective bargaining agreement.

Defendant Company and plaintiff Union were parties to a collective bargaining agreement commencing on October 13, 1982 and ending on October 12, 1985. Article XIV, Section C, Paragraph 3 of the agreement provided that unresolved grievances be submitted to arbitration in accordance with the Rules and Regulations of the New Jersey State Board of Mediation. This section also provided that "[t]he decision of the arbitrator shall be final and binding upon both Company and Union, but the arbitrator has no power to vary or alter the terms of the contract or to change the context thereof."

Article XIII of the Agreement, entitled "Probationary Period and Discharge," sets forth in Section B the types of employee conduct which "shall be cause for discharge." That section provides as follows:

B. The following shall be cause for discharge:

1. Drinking of alcoholic beverages on the premises or reporting for work intoxicated or otherwise impaired by alcohol;

2. Excessive absenteeism;

3. Two (2) garnishments or wage executions;

4. Arrest or incarceration on any charge by the police or other governmental authority;

5. Insubordination;

6. Any other violation of rules or regulations now or hereafter promulgated by the Company.

On July 24, 1984 and January 23, 1985, the Company posted notices to the employees reiterating the contractual prohibition of the use of alcohol on Company premises and reminding them that any persons "found to be in possession of or drinking alcoholic beverages while on the job or on company property will be subject to immediate discharge." A similar type of notice was posted by the Company on December 4, 1984, with respect to its policy against punching the time card of another employee.

In or around January 1985, the Company suspected that several employees were engaged in theft at its Union, New Jersey plant. Consequently, the Company contracted with Wackenhut Security, Inc. (Wackenhut), an independent security firm, to provide an undercover agent to work as a regular employee in order to investigate this problem. Richard Stancil (Stancil), a Wackenhut agent, worked in the plant from January 28, 1985 through March 25, 1985. During the course of this investigation, Stancil determined that seven Union employees were violating a number of Company rules, particularly the rule prohibiting the use of alcohol on Company premises. Accordingly, as a result of Stancil's weekly reports and meetings with Company management, these seven employees were terminated by the Company effective March 29, 1985. Subsequently, each of the discharged employees received a letter from the Company advising them of the types of improper activities which had led to their dismissal.

All seven employees filed grievances regarding their discharge. When these grievances could not be resolved, the Union demanded arbitration pursuant to Article XIV of the agreement. The Union defined the arbitrable issue as follows:

Were the discharges of the seven grievants for just cause? If not, what shall be the remedy?

The Company framed the issue to be decided by the arbitrator in a somewhat different manner:

Did the Company violate Article 13 Subsection B of the collective bargaining agreement when it discharged the seven grievants? If so, what shall be the remedy?

On March 13, 1986, after a hearing, the arbitrator ordered that the discharge of six of the seven employees be modified to a disciplinary suspension. Although the arbitrator agreed that "for a very long time the overwhelming majority of bargaining unit employees engaged in some of the activities indicated in the letters of discharge" (there were ten Union employees working at the plant during the investigation), he found it very significant that Company management took no immediate action to enforce the prohibition of alcohol and substance abuse and time card violations after the respective warning notices were posted. Moreover, notwithstanding the fact that the arbitrator found "[t]he violations involved in this case [to be] quite serious ...", he decided, upon review of the individual cases, that reinstatement of the six employees with disciplinary suspensions was justified because:

... the discharge of six individuals was not for just cause based on the evidence involved in this case. The activities of the grievants had been condoned for years and management never gave them a clear, convincing and unequivocal warning that what had been condoned in the past would no longer be acceptable. In fact even after the last notice (which was quite strong), life went on without any changes. This made the notice of January 23, 1985 meaningless.

In addition to modifying the sanction against the six employees to "disciplinary suspension", the arbitrator's award further provided that each of these employees "should be placed in the same status that he would have been as of [August 1, 1985 or September 1, 1985]."

After the Company refused to reinstate the six employees in accordance with the arbitration award, the Union instituted this action to confirm the award and to seek their reinstatement with back pay and other emoluments. The Company in its answer claimed that the arbitrator had exceeded his authority within the meaning of N.J.S.A. 2A:24-8d and that as such, a vacation of the award was warranted. Additionally, the Company contended by way of counterclaim that the six employees could not be returned to the same status they would have had on August 1, 1985 or September 1, 1985 because as of September 1, 1985, it would have laid them off due to overstaffing and a decline in business. The Company claimed that pursuant to Article XV, A(2), it had exercised its "right to contract with any other person" by "engag[ing] the services of an independent contractor to provide temporary part-time employees and employees in different classifications as covered by the collective bargaining agreement on an as-needed basis."

Judge McGrath in the Law Division, relying upon City. Coll. of Morris Staff v. Cty. Coll. of Morris, 100 N.J. 383, 495 A.2d 865 (1985), held that the arbitrator had exceeded his authority by imposing a progressive disciplinary scheme upon the parties which was not contained in the collective bargaining agreement. As such, he vacated the award and remanded the matter back to arbitration. On October 17, 1986 the arbitrator issued a second opinion and award, again reinstating the six employees with disciplinary suspension. In this opinion, the arbitrator concluded that the original award was not inconsistent with Article XIIIB of the collective bargaining agreement. He stated, in part:

The Arbitrator is not attempting to impose a progressive disciplinary program on the parties. The Arbitrator did find that the grievants did engage in certain activities. But the mitigating circumstances involved in this case were of such a nature that the Arbitrator found (except in one case) that the disciplinary action taken by the Company was too severe.

In fashioning their Issues ... both parties included the question of remedy. It is a long established principle in labor arbitration that where a contract does not have specific language limiting the Arbitrator's authority to modify penalties, then inherent in the Arbitrator's authority is the right to change or modify a disciplinary action if it is found to be too severe under all of the circumstances involved in the case.

On December 5, 1986, Judge McGrath again determined that the arbitrator had exceeded his authority in ordering a disciplinary suspension and accordingly vacated the awards of March 13, 1986 and October 17, 1986. This appeal follows.

Arbitration is " 'a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law,' and its object is 'the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.' " Barcon Associates v. Tri-County Asphalt Corp., 86 N.J. 179, 187, 430 A.2d 214 (1981), citing Eastern Engineering Co. v. City of Ocean City, 11 N.J.Misc. 508, 510-511, 167 A.2d 522 (Sup.Ct.1933). Thus, a submission to arbitration is essentially a contract, and the parties are bound to the extent of that contract. Mitchell v. Alfred Hofmann Inc., 48 N.J.Super. 396, 405, 137 A.2d 569 (App.Div.1958), certif. den. 26 N.J. 303, 139 A.2d 589 (1958). Because the arbitration process is not meant to be a "springboard for litigation," Barcon, 86 N.J. at 187, 430 A.2d 214; Chattin v. Cape May Greene, Inc., 216 N.J.Super. 618, 636, 524 A.2d 841 (App.Div.1987), certif. den. 107 N.J. 148, 526 A.2d 209 (1987), the courts of this State have given deference to the arbitrator's decision, as "every intendment is indulged in favor of the award and it is subject to impeachment only in a clear case." Barcon, 86 N.J. at 187, 430 A.2d 214, citing Carpenter v. Bloomer, 54 N.J.Super....