State Troopers Fraternal Ass'n of New Jersey, Inc. v. State

• Decision Date: 24 April 1997
• Citation: 692 A.2d 519,149 N.J. 38
• Parties: , 156 L.R.R.M. (BNA) 2824 STATE TROOPERS FRATERNAL ASSOCIATION OF NEW JERSEY, INC., a Corporation of the State of New Jersey, William M. Smith, Scott D. Fina, Michael D. Cofield, David D. Mattei, David S. Giordano, Blane K. Elmer, Stephen M. Mayo, Michael W. Federico, Michael J. Davis, Donald E. Merker, Theresa M. Foster, Michael J. Gore and Dennis C. Hilbert, Michael L. Frey, Jeffrey T. Lukawski, Barry Hodge, Raymond Lopez, Frank Garcia and Wesley Robinson, Plaintiffs-Respondents, v. The STATE of New Jersey, Robert J. Del Tufo, Attorney General of New Jersey, New Jersey Division of State Police and Justin J. Dintino, Superintendent of State Police, Defendants-Appellants.
• Court: New Jersey Supreme Court

Page 38

149 N.J. 38

692 A.2d 519, 156 L.R.R.M. (BNA) 2824

STATE TROOPERS FRATERNAL ASSOCIATION OF NEW JERSEY, INC., a

Corporation of the State of New Jersey, William M. Smith,

Scott D. Fina, Michael D. Cofield, David D. Mattei, David S.

Giordano, Blane K. Elmer, Stephen M. Mayo, Michael W.

Federico, Michael J. Davis, Donald E. Merker, Theresa M.

Foster, Michael J. Gore and Dennis C. Hilbert, Michael L.

Frey, Jeffrey T. Lukawski, Barry Hodge, Raymond Lopez, Frank

Garcia and Wesley Robinson, Plaintiffs-Respondents, v. The STATE of New Jersey, Robert J. Del Tufo, Attorney

General of New Jersey, New Jersey Division of

State Police and Justin J. Dintino,

Superintendent of State

Police, Defendants-Appellants.

Supreme Court of New Jersey.

Argued Jan. 6, 1997.

Decided April 24, 1997.

Jaynee LaVecchia, Director, Division of Law, for appellants (Peter G. Verniero, Attorney General; Mary C. Jacobson, Assistant Attorney General, of counsel; Carol Johnston, Deputy Attorney General, on the brief).

Joseph Licata, Dumont, for respondents (Loccke & Correia, attorneys).

The opinion of the Court was delivered by

HANDLER, J.

In this case, a group of former state troopers seeks to recover a retroactive pay adjustment under a collective-negotiations agreement that was reached with the State after the troopers had resigned in good standing. The agreement covered a period during which the troopers still had been employed. The former troopers claim that, because of an unwritten past practice of the State Police, the agreement provided for the retroactive pay adjustment, even to troopers who had resigned prior to the actual execution of the agreement. The State, however, asserts that such a pay adjustment is prohibited under a regulation promulgated during the course of the collective negotiations. The regulation generally prohibits retroactive pay increases to all state employees who resign from state employment before the execution of a collective-negotiations agreement.

The major issues posed by this appeal are (1) whether the collective-negotiations agreement incorporated the prior practice of the State Police that authorized retroactive pay adjustments to troopers who had resigned in good standing; (2) whether the regulation denying retroactive pay adjustments constitutes an unfair practice because it effects an impermissible unilateral change of a negotiable term and condition of employment; and (3) if the regulation is otherwise enforceable, whether it can be applied retroactively.

I

The collective-negotiations agreement ("the agreement") under which New Jersey state troopers worked expired on July 1, 1987. When the agreement expired, the State Troopers Fraternal Association ("STFA"), which represents the troopers in employment matters, and the New Jersey Division of State Police ("State Police") had not yet reached an accord on a successor agreement. While the parties negotiated, the troopers continued to work under the old pay scale. Nearly three years later, on April 26, 1990, the parties arrived at an understanding and duly executed an agreement to cover the period from July 1, 1987 to June 30, 1990. Significantly, the parties predated the agreement as having taken effect on July 1, 1987.

Because of the retroactive effect of the agreement and the fact that the troopers had continued to work under the prior pay scale, the issue of retroactive pay adjustments for the three-year period arose. Article X of the agreement stated that "[a]ll salary adjustments will be made consistent with the provisions, practices and policies of the State and in accordance with the State Compensation Plan effective at the time." The unwritten practice of the State Police as of July 1, 1987 (actually, since 1970) had been to provide retroactive pay adjustments not only to current troopers, but to troopers who had died, retired, or resigned in good standing during the adjustment period.

Implementation of the unwritten State Police practice of allowing retroactive pay under Article X of the agreement was complicated by the promulgation of a statewide regulation on September 6, 1988 (during collective negotiations), N.J.A.C. 4A:3-4.20, that governed retroactive pay adjustments. That regulation, issued by the Department of Personnel ("DOP"), authorized retroactive pay adjustments only for current employees and employees who had retired during the adjustment period, and, by a subsequent amendment, 25 N.J.R. 4064(a) (Sept. 7, 1993); 25 N.J.R. 1916(a) (May 17, 1993), for employees who had died during the adjustment period. Thus, state employees who resigned, even in good standing, would no longer be eligible for retroactive pay adjustments under the regulation.

Between July 3, 1987 and October 20, 1989, nineteen troopers resigned from the force in good standing. After the agreement was executed in 1990, these former troopers requested the retroactive pay adjustment for the covered period during which they had worked. They did so because troopers who had retired or died during the period, as well as those still on the force, had received the pay adjustment. The State, citing the regulation, refused the request. On July 1, 1993, the troopers, through the STFA, brought suit in the Law Division against the State, the Attorney General, the State Police, and the State Police Superintendent (referred to collectively as "the State"). They alleged that, by enacting the regulation, the State had breached the agreement ¹ and that the regulation violated the equal-protection guarantees of the United States and New Jersey Constitutions.

The State moved to dismiss both counts. It argued that the agreement's provision for binding arbitration deprived the Law Division of subject-matter jurisdiction over the breach-of-contract claim. Regarding the constitutional claim, it asserted that plaintiffs had not exhausted their administrative remedies, because they had failed to appeal the denial of their requests to the Administrative Section of the State Police. Moreover, the State argued that even if plaintiffs had exhausted their administrative remedies, jurisdiction to review the administrative determination reposed in the Appellate Division, not the Law Division.

The Law Division agreed with the State and consequently dismissed the contract claim. It also transferred the constitutional claim to the Appellate Division, reasoning that to transfer the claim to the DOP for administrative resolution would result in dismissal for lateness in filing, thus undermining the interests of justice.

The Appellate Division subsequently granted plaintiffs' motion to file a Notice of Appeal nunc pro tunc regarding the dismissal of the contract claim and then consolidated that claim with the transferred constitutional claim. After a remand to the trial court for findings concerning the prior practice of the State Police in awarding retroactive pay adjustments, the Appellate Division, in an unpublished opinion, concluded that the State Police had followed a practice of providing such payments and that the practice had been incorporated into the agreement. It then reasoned that the resulting contractual term was a "vested right" that the State could not abrogate retroactively by invoking the regulation prohibiting retroactive pay adjustments. Accordingly, it ordered that the State provide the troopers with backpay. The court did not reach the equal-protection claim and, because all factual issues had been resolved, declined to require the parties to resort to binding arbitration.

We granted the State's petition for certification. 145 N.J. 373, 678 A.2d 714 (1996).

II

We initially must determine whether the agreement provides the former troopers with a retroactive pay adjustment. As noted, the agreement states that "[a]ll salary adjustments will be made consistent with the provisions, practices and policies of the State and in accordance with the State Compensation Plan effective at the time." Understanding the content and effect of that provision turns on the meaning of the phrases "provisions, practices and policies" and "at the time." In our undertaking of this interpretive task, fundamental canons of contract construction require that we examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and surrounding circumstances. Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282, 633 A.2d 531 (1993); Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N.J. 293, 303, 96 A.2d 652 (1953).

In considering the intended meaning of the term "provisions, practices and policies," the trial court, after a remand hearing ordered by the Appellate Division, found as a matter of fact that the State Police, since 1970, had provided the retroactive pay adjustments to state troopers who had resigned in good standing prior to the formal adoption of salary increases. Because of our traditional deference to trial-level factual findings, we perceive no reason to disturb the trial court's determination in this regard, as confirmed by the Appellate Division. See Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84, 323 A.2d 495 (1974).

Interpretation of the phrase, "at the time" presents a more difficult task, because its definition is not revealed by the history or circumstances surrounding the negotiations. If we interpret the agreement from the perspective of its effective date, July 1, 1987, then the contract incorporates the prior practice of the State Police of awarding backpay to former troopers who resigned in good standing. If, however, we view the contract from the date of execution, April 26, 1990, then the contract incorporates the statewide regulation that denies backpay under these circumstances.

An examination of the terms of the agreement persuades us that the relevant "provisions, practices and policies" are those that were in existence on the effective date of the agreement, namely, July 1, 1987, despite...