Literal Reading of Police and Fire Public Interest Arbitration Reform Act on Applicability of Cap on Arbitration Awards Would Yield Absurd Results, so the Appellate Division Rejects That Outcome

In re State of New Jersey and Fraternal Order of Police Lodge 91, 450 N.J. Super. 286 (App. Div. 2017).  In her opinion for the Appellate Division today, Judge Reisner entered the competition for the most concise opinion of the current term, rivaling Judge Espinosa’s opinion in Jiwungkul v. Director, Div. of Taxation, 450 N.J. Super. 257 (App. Div. 2017), discussed here, and Judge Fisher’s opinion in Matejek v. Watson, 449 N.J. Super. 179 (App. Div. 2017), for example.  The case involved an appeal by a Fraternal Order of Police (“FOP”) lodge and a cross-appeal by the State from a decision of the Public Employment Relations Commission (“PERC”) adopting, in large part, an interest arbitration award that decided the terms of an initial collective negotiations agreement(“CNA”) between the State Division of Criminal Justice and a newly certified bargaining unit representing that Division’s investigators.

The State’s cross-appeal related to some non-salary items.  Judge Reisner found that PERC’s decision was not arbitrary and capricious, the applicable standard of review, and concluded that the State’s arguments were “without sufficient merit to warrant further discussion.  R. 2:11-3(e)(1)(E).”

The FOP’s appeal fared no better, though the arguments on that appeal were worthy of discussion and publication of Judge Reisner’s opinion.  The FOP contended that PERC had erred in an interlocutory ruling that directed the arbitrator to apply the 2% cap on salary increases contained in the Police and Fire Public Interest Arbitration Reform Act, N.J.S.A. 34:13A-16.7 (“the Act”).  The panel gave deference to PERC’s reasonable interpretation of that statute.  “We agree with PERC that the two percent cap applies where, as here, a newly certified bargaining unit is negotiating its first CNA with the public employer.”

Judge Reisner observed that were the statute read literally, it would not permit interest arbitration or a cap on awards in cases involving newly created bargaining units, since the relevant statutory sections “apply by their terms to situations in which an existing CNA is expiring.”  But that was an absurd result, which the panel declined to endorse.  The result furthered the statutory purpose of liberally construing the right to arbitration, while advancing another purpose, that of reducing the economic burden on public employers.  The FOP could not “obtain the Act’s benefits without also accepting its burdens.”