Rutherford Pba Local 300 v. Borough of Rutherford
| Decision Date | 10 September 2018 |
| Docket Number | DOCKET NO. A-2055-16T1 |
| Parties | RUTHERFORD PBA LOCAL 300, Plaintiff-Appellant, v. BOROUGH OF RUTHERFORD, Defendant-Respondent. |
| Court | New Jersey Superior Court — Appellate Division |
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Before Judges Accurso and DeAlmeida.
On appeal from Superior Court of New Jersey, Chancery Division, General Equity Part, Bergen County, Docket No. C-000144-15.
Michael A. Bukosky argued the cause for appellant (Loccke, Correia & Bukosky, attorneys; Michael A. Bukosky, of counsel and on the brief; Corey M. Sargeant, on the brief).
Eric M. Bernstein & Associates, LLC, attorneys for respondent (Eric M. Bernstein, of counsel and on the brief; Stephanie M. Platt, on the brief).
Plaintiff Rutherford PBA Local 300 appeals from a December 9, 2016 judgment of the Chancery Division confirming an arbitration award under a collective negotiated agreement (CNA) with defendant Borough of Rutherford, and an August 29, 2016 Order from that court barring Local 300's claim that the arbitration award violates the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49. We affirm.
Local 300 is the exclusive collective bargaining representative for all full-time, law enforcement personnel employed by the Borough. At the times relevant to this appeal, the parties were operating under a CNA that provided health insurance benefits to active employees and retirees. The CNA provided in relevant part, as follows:
The Bergen Municipal Employee Benefits Fund, a joint insurance plan of which the Borough is a member, requires all Borough employees who are Medicare eligible to enroll in the full Medicare program to be eligible for retiree coverage. A wrap-around plan bridges the difference in benefits between Medicare and the employer's plan so that the total benefits provided by Medicare and the wrap-around plan to retirees equal the benefits provided by the employer's plan to active employees.
In March 2011, a retired Borough employee's wife became eligible for Medicare Part B. She enrolled in the program, and was provided a wrap-around plan at Borough expense. In early 2012, she received a statement from the federal government indicating that $1154 had been deducted from her Social Security benefits for Medicare Part B premiums during 2011. Her spouse thereafter sent a letter to the Borough Administrator seeking reimbursement of the premiums, asserting that pursuant to the CNA, "[m]edical coverage is provided without cost to the retiree and spouse." The Borough declined the reimbursement request.
Local 300 filed a grievance on behalf of the retired employee. The grievance was denied and Local 300 invoked arbitration. On September 20, 2012, the Public Employment Relations Commission (PERC) referred the matter to an arbitrator for a hearing. The parties stipulated that the issue to be decided was "whether the Borough violated the parties' collective negotiated agreement . . . when it declined to reimburse a retiree for a Medicare Part B premium paid by his wife and, if so, what shall the remedy be."
Before the arbitrator, Local 300 argued that the provision in Article XXXII of the CNA defining retiree coverage "as is set forth in this article" must be read in pari materia with the earlier provision in the Article providing that the Borough "shall provide and pay the full cost of" specified types of medical coverage for active employees and their families. In addition, Local 300 argued that the provision of Article XXXII providing that the level of medical and dental benefits for the retiree or his or her spouse "shall be defined as that level of benefits provided to each retiree immediately before said retiree's separation from active police service" obligates the Borough to pay the Medicare Part B premiums of retirees and their spouses, as the cost of coverage for medical insurance is a component of the level of benefits. According to Local 300, because the retiree who filed the grievance was not paying Medicare Part B premiums for his wife when he retired, it is the Borough's contractual obligation to pay those premiums after retirement.
Local 300 also argued that requiring retirees to pay Medicare Part B premiums while active officers pay no premiums for health insurance coverage would violate regulations promulgated under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 623. See C.F.R. 1625.10(d)(4)(ii)(B) (); See Erie Cty. Retiree Ass'n v. Cty. of Erie, 140 F. Supp. 2d 466, 477 (W.D. Pa. 2001) (). Local 300 argued that the CNA should be construed to comport with the ADEA and its implementing regulations.
The Borough, on the other hand, argued that Article XXXII guarantees parity in only the "level of benefits" provided to active officers and retirees, not in the cost of those benefits. According to the Borough, this interpretation of the CNA is evident in the provision of Article XXXII obligating the Borough to pay for a wrap-around plan to fill the gap between the benefits provided by Medicare Part B and the benefits provided to the retiree at the time of separation from active service. That provision does not require the Borough to pay the cost of Medicare Part B premiums. In addition, the Borough argued that the term "level of benefits," as used in the insurance industry, does not encompass the cost of benefits, further supporting its proposed interpretation of the CNA.
The Borough also argued that its position is consistent with the negotiation history of the CNA, and its implementation over many years. The Borough never budgeted for reimbursement of Medicare Part B premiums, and, prior to the present matter, which arose ten years after the relevant provisions became part of the CNA, was never presented with a request for reimbursement of Medicare Part B premiums. This is true despite the fact that four officers, including a member of the CNA negotiating team, who were eligible for Medicare Part B retired after the CNA was executed.
On March 19, 2013, the arbitrator issued a written opinion concluding that Local 300 did not establish by a preponderance of the evidence that the Borough breached the CNA when it declined to reimburse the retiree for his wife's Medicare Part B premiums. The arbitrator found that the provision of Article XXXII obligating the Borough to pay the cost of benefits applies only to the insurance coverage of active employees and their families. He concluded that the provision addressing retirees required the Borough to provide a parity in benefits, not costs, between active employees and retirees, with an obligation on the Borough to bear the cost only of a wrap-around plan to bridge any gap in benefits.
In addition, the arbitrator was persuaded by the fact that Medicare Part B premiums were never discussed during the negotiations that resulted in the CNA, and that the Borough did not budget to pay those premiums. Finally, the arbitrator distinguished the holding in Erie. He found that in that case the Medicare-eligible employees were required to participate in a plan that had lesser benefits than those provided to younger retirees. He also noted that in Erie the employer's plan assumed the government's responsibilities under Medicare for the retirees. Thus, the retiree's Medicare Part B premiums were deemed to be tantamount to paying the premiums of the employer's plan, which resulted in a disproportionate contribution when compared to younger employees.
On June 6, 2013, the Borough filed a complaint in the Chancery Division seeking to confirm the arbitration award pursuant to N.J.S.A. 2A:24-7. On July 11, 2013, Local 300 filed a counterclaim seeking to vacate the arbitration award.
On March 24, 2014, the Chancery Division issued a comprehensive written opinion confirming the arbitrator's interpretation of the CNA. However, the court remanded the matter to the arbitrator to clarify his analysis of whether the CNA violates the ADEA because "older retirees will pay more to receive [the] same level of benefits than . . . younger retirees." See Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349, 353-64 (1994) (...
To continue reading
Request your trial