Borough of Carteret v. Firefighters Mutual Benevolent Ass’n, Local 67, ___ N.J. ___ (2021). Under longstanding Supreme Court of New Jersey precedent, an arbitrator’s interpretation of a labor contract is to be upheld as long as that interpretation is “reasonably debatable.” In today’s ruling by the Court, a unanimous opinion by Justice Pierre-Louis, the Justices reversed a decision of the Appellate Division that had rejected an arbitrator’s interpretation. The Court restored the ruling of the Chancery Division that had upheld the arbitrator’s interpretation.
This was the background. In 2011, the Borough of Carteret and Local 67 (“the FMBA”) entered into a collectively negotiated agreement (“CNA”). The CNA provided for five categories of fire personnel: “chief, fire prevention captain, fire official, captain, and firefighter.”
In December 2012, a Borough ordinance created a new position– fire lieutenant– a “first level supervisory position” that fell between the established categories of captain and firefighter. If no captains were scheduled for a given shift, the duty lieutenant would assume the captain’s duties.
Eventually, due to retirements, demotions, and the fact that no new captains were made after the lieutenant position was created, no captains remained. Thus, lieutenants began to supervise all shifts. The Borough paid supervising lieutenants their regular salary, not a higher pay rate applicable to “acting captains” that was contained in section 5 of the CNA.
The FMBA filed a grievance and prevailed before the arbitrator. As Justice Pierre-Louis summarized, “[t]he arbitrator held that ‘the unrebutted testimony . . . that the lieutenants are performing the duties of shift commanders’ supports the conclusion that ‘intentional or not, what the Borough has done is to replace captains with lieutenants, at a lower pay rate’ in violation of Section 5 of the CNA. In so holding, the arbitrator rejected the Borough’s argument that the parties established a past practice of not paying lieutenants in accordance with the CNA, finding instead that ‘[w]here the contract language conflicts with the parties’ practice, [the FMBA] has a right to enforce its contract rights even if it has not done so before.’” The arbitrator did not accept the Borough’s position that lieutenants were not mentioned in section 5, as there was no lieutenant position when the parties entered into the CNA.
The FMBA asked the Chancery Division to confirm the arbitrator’s ruling. The Borough countered that the court should vacate the arbitrator’s decision. The Chancery Division upheld the arbitrator. The Borough appealed, and the Appellate Division reversed. Today, however, the Supreme Court reversed the Appellate Division and reinstated the Chancery Division’s affirmance of the arbitrator.
The key to today’s ruling was the standard of review. Justice Pierre-Louis emphasized that “an arbitrator’s award resolving a public sector dispute will be accepted so long as the award is ‘reasonably debatable.’” A court may not substitute its judgment for that of the arbitrator, she said, and “if two or more interpretations of a labor agreement could be plausibly argued,the outcome is at least reasonably debatable.”
Here, “[t]he Appellate Division, the Borough,and the FMBA all agree that the creation of the lieutenant position injected ambiguity into Section 5 of the CNA. Specifically, after the lieutenant position was created, a new job title was inserted between captain and firefighter. With Section 5 referring only to the positions of ‘captain’ and ‘firefighter,’ it became unclear whether Section 5 of the CNA was triggered when no captains were on duty and a lieutenant, as the next position down on the chain of command,and therefore the ‘senior firefighter’ on duty, assumed the responsibilities of a captain.”
Justice Pierre-Louis described the competing interpretations of section 5. “Pursuant to the Borough’s interpretation, because Section 5 mentions only ‘senior firefighters,’ lieutenants are not entitled to the benefits of Section 5; namely, acting captain’s pay. But since Section 5 could not have contemplated lieutenants filling in for captains because the CNA was executed before the creation of the lieutenant position, the FMBA argues the opposite: that any lieutenant assuming a captain’s responsibilities is entitled to acting captain’s pay, just as a senior firefighter assuming the captain’s role would be entitled to the higher payrate.” Both interpretations, she said, were “arguably reasonable.” But the arbitrator chose the FMBA’s interpretation, and since that interpretation was “reasonably debatable,” the Appellate Division should not have overridden that choice.