State v. Local 195, IFPTE

• Decision Date: 02 June 1981
• Parties: STATE of New Jersey, Appellant, v. LOCAL 195, IFPTE and Local 518, SEIU, Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 146

179 N.J.Super. 146

430 A.2d 966

STATE of New Jersey, Appellant, v. LOCAL 195, IFPTE and Local 518, SEIU, Respondents.

Superior Court of New Jersey, Appellate Division.

Argued Oct. 21, 1980.

Decided June 2, 1981.

Erminie L. Conley, Asst. Atty. Gen., for appellant (John J. Degnan, Atty. Gen., attorney).

Sanford R. Oxfeld, Perth Amboy, for Local 195, IFPTE, and Local 518, SEIU (Rothbard, Harris & Oxfeld, Perth Amboy, attorneys).

James F. Schwerin, Deputy Gen. Counsel, Trenton, for Public Employment Relations Commission (Sidney H. Lehmann, General Counsel, attorney).

Before Judges MICHELS, ARD and FURMAN.

The opinion of the court was delivered by

MICHELS, P. J. A. D.

The State of New Jersey (State) appeals from a decision and order of the Public Employment Relations Commission (PERC), (1) holding that it may negotiate with Local 195, IFPTE, and Local 518, SEIU (hereinafter collectively referred to as the "union"), concerning minor disciplinary matters so long as such negotiations do not contravene pertinent Civil Service laws and regulations and that disciplinary disputes may be referred to binding arbitration if the parties so provide in their grievance procedure, and (2) ordering the State to negotiate such issues upon demand of the union. The effect of the decision and order is to compel the State to negotiate (1) the standards for minor disciplinary infractions by union members; (2) a grievance and binding arbitration procedure for resolution of disputes involving the guilt or innocence of such members with respect to both major and minor disciplinary infractions, and (3) a grievance and binding arbitration procedure for resolution of disputes involving the reasonableness of the penalty imposed except in cases of discharge from service.

During the course of negotiations for a collective bargaining agreement between the State and the union a dispute arose as to the negotiability of a contract clause providing for binding arbitration of disciplinary disputes. Although the State had agreed to such a provision with respect to previous contracts, during the negotiations for the 1979 contract the State took the position that a disciplinary grievance procedure was not negotiable. When the parties were unable to reach an agreement the union filed a petition with PERC for a scope of negotiations determination, claiming that the State was disputing the negotiability of matters which had risen during the course of collective negotiations. Specifically, the issues in dispute pertinent to this appeal, both relating to disciplinary determinations, were:

Whether the inclusion of a disciplinary clause in a collective negotiations agreement providing for binding arbitration of disciplinary matters is illegal.

Whether the parties may properly negotiate a disciplinary clause for "minor disciplinary actions," i. e., those which are specifically exempted from the Civil Service Statute.

Article VIII, which generated the dispute, established a four-step grievance procedure for disciplinary matters. The fourth step, in part pertinent here, permitted the union and the aggrieved employer to elect binding arbitration for disputes concerning any suspensions of more than five days, suspensions or fines imposed more than three times, or for an aggregate of more than 15 days in a calendar year, demotions and discharges. With respect to the arbitrator's powers over such disputes, the arbitrator's decision as to guilt, innocence or penalty was final and binding. The arbitrator was empowered to fashion whatever penalty he deemed appropriate to the circumstances, with the one exception that upon a determination of guilt the arbitrator could not substitute a lesser penalty for the penalty of removal from service imposed by the employer. The article further provided that if the employee were found innocent or the penalty was modified, the arbitrator could order reinstatement with back pay for all or part of the period of the imposed suspension, dismissal or reduction in grade.

Additionally, with respect to the review of minor disciplinary actions, that is, actions where the penalty imposed was a suspension of five days or less, the article provided for panel consideration of the grievance. The panel was to consist of two union representatives, two state representatives, and one neutral member mutually selected by the parties. A unanimous decision by the state and union panel members was to be binding. In the event of disagreement between the state and union representatives as to disposition of the grievance, the union could submit the matter to binding arbitration if the neutral member decided that the matter raised issues warranting such submission.

PERC held that a disciplinary decision is a term and condition of employment for which binding arbitration could be negotiated and ordered the State to negotiate upon demand of the union a contractual article providing for binding arbitration of major and minor disciplinary grievances. We disagree and reverse.

The New Jersey Employer Employee Relations Act (N.J.S.A. 34:13A-1 et seq.) requires collective negotiation with respect to the terms and conditions of public employment. N.J.S.A. 34:13A-5.3. Since the Legislature has not defined the phrase "terms and conditions of employment," our courts have undertaken to do so. In Dunellen Bd. of Ed. v. Dunellen Ed. Ass'n, 64 N.J. 17, 311 A.2d 737 (1973), the Supreme Court stated that our Legislature

... (contemplated) that to the extent that it could fairly be accomplished without any significant interference with management's educational responsibilities, the local boards of education would have the statutory responsibility of negotiating in good faith with representatives of their employees with respect to those matters which intimately and directly affect the work and welfare of their employees. (at 25, 311 A.2d 737)

In Englewood Bd. of Ed. v. Englewood Teachers, 64 N.J. 1, 311 A.2d 729 (1973), the companion case to Dunellen, the definition of the scope of mandatory negotiation was refined. Therein the Court stated that ... major educational policies which indirectly affect the working conditions of the teachers remain exclusively with the Board and are not negotiable whereas items which are not predominantly educational policies and directly affect the financial and personal welfare of the teachers do not remain exclusively with the Board and are negotiable. The lines are obscure and, pending further definitive legislation, they must be drawn case by case. (at 7, 311 A.2d 729)

More recently, in State v. State Supervisory Employees Ass'n, 78 N.J. 54, 393 A.2d 233 (1978), the court explained that:

... negotiable terms and conditions of employment are those matters which intimately and directly affect the work and welfare of public employees and on which negotiated agreement would not significantly interfere with the exercise of inherent management prerogatives pertaining to the determination of governmental policy. (at 67, 393 A.2d 233)

See, also, W'dst'n-Pilesgr. Sch. Bd. of Ed. v. W'dst'n-Pilesgr. Ed. Ass'n, 81 N.J. 582, 590-591, 410 A.2d 1131 (1980).

It is clear that the right of public employees and the corresponding obligation of public employers to negotiate terms and conditions of public employment are not unlimited and do not extend to matters of significant managerial prerogative or policy. See, e. g., Bernards Tp. Bd. of Ed. v. Bernards Tp. Ed. Ass'n, 79 N.J. 311, 321, 399 A.2d 620 (1979); Ridgefield Park Ed. Ass'n v. Ridgefield Park Bd. of Ed., 78 N.J. 144, 156, 393 A.2d 278 (1978); West Windsor Tp. v. Public Employment Rel. Comm'n, 78 N.J. 98, 108-109, 393 A.2d 255 (1978); State v. State Supervisory Employees Ass'n, 78 N.J. 54, 86-87, 393 A.2d 233 (1978); Bethlehem Tp. Bd. of Ed. v. Bethlehem Tp. Ed. Ass'n, 177 N.J.Super. 479, 427 A.2d 80 (App.Div.1981); Demarest Bd. of Ed. v. Demarest Ed. Ass'n, 177 N.J.Super. 211, 220, 426 A.2d 63 (App.Div.1980); Local 195, IFPTE, AFL-CIO v. State, 176 N.J.Super. 85, 97, 422 A.2d 424 (App.Div.1980); Ramapo-Ind., etc. v. Ramapo-Ind., etc., Bd. of Ed., 176 N.J.Super. 35, 47, 422 A.2d 90 (App.Div.1980). For example, in the Ridgefield Park case the court rejected PERC's claim that the public employment negotiations process encompassed a category of permissive subjects of negotiations, stating that:

... the very foundation of representative democracy would be endangered if decisions on significant matters of governmental policy were left to the process of collective negotiation, where citizen participation is precluded. This Court would be most reluctant to sanction collective agreement on matters which are essentially managerial in nature, because the true managers are the people. Our democratic system demands that governmental bodies retain their accountability to the citizenry.

Our concern is with the very function of government. Both state and federal doctrines of substantive due process prohibit delegations of governmental policy-making power to private groups where a serious potential for self-serving action is created thereby. Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116, 121-122, 49 S.Ct. 50, (51-52) 73 L.Ed. 210 (1938); Humane Soc. of U. S. v. N. J. State Fish and Game Comm., 70 N.J. 565, 578-579 (362 A.2d 20) (1976); Group Health Insurance v. Howell, 40 N.J. 436, 446-447 (193 A.2d 103) (1963), after remand 43 N.J. 104 (202 A.2d 689) (1964). See also Ind. Elec. Ass'n of N. J. v. N. J. Bd. of Exam., 54 N.J. 466, 482-483 (256 A.2d 33) (1969). To be constitutionally sustainable, a delegation must be narrowly limited, reasonable, and surrounded with stringent safeguards to protect against the possibility of arbitrary or self-serving action detrimental to third parties or the public...