Two Arbitration Decisions by the Appellate Division

This week, the Appellate Division decided two very different kinds of arbitration matters. Yesterday, Judge Sabatino issued an opinion in Morison v. Willingboro Bd. of Educ., ___ N.J. Super. ___ (App. Div. 2024). That case involved efforts of school districts to discipline or remove tenured teachers or administrators for improper conduct. Until 2012, such matters were handled in administrative hearings. But in 2012, the Legislature replaced that system with an arbitration procedure instead. The “novel issue” before the Appellate Division was “whether, under this revised system, a tenure arbitrator’s determination of discipline through the procedures set forth in N.J.S.A. 18A:6-17.1 prevents the State Board of Examiners and Commissioner from imposing a more severe sanction of suspending or revoking the licensee’s certificate to teach within this State, under the procedures set forth in N.J.S.A. 18A:6-38 to -39.” Affirming the Law Division, the panel held that the more severe sanction was permissible.

Morison, a tenured teacher, had been charged with conduct unbecoming, the details of which the Appellate Division omitted from its opinion. The Board sought to discharge him. The arbitrator found that Morison had engaged in the conduct alleged but declined to terminate his employment. Instead, the arbitrator imposed only a one-year suspension. The Board then successfully sought to revoke Morison’s teaching license based on the same alleged conduct.

Morison appealed. He argued that the State Board of Examiners and the Commissioner of Education had no power to revoke his teaching certificate because the arbitrator had stopped at suspending him. He claimed “industrial jeopardy” and asserted violations of his civil and constitutional rights.

Applying de novo review, Judge Sabatino rejected those arguments, all of which were based on the idea that if an arbitrator acts in a disciplinary matter under the applicable revised statute, the State is precluded from acting in regard to a teaching certificate under a different statutory regime. “The statewide teacher certificate revocation process authorized in N.J.S.A. 18A:6-38 and -39 operates separately from the teacher tenure arbitration process under N.J.S.A. 18A:6-17.1. The manifest legislative intent is for the two statutes to be administered independently of one another. The proceedings involve non-identical parties, and also different stakes, procedures, and the avenues and standards of appellate review.” That summary encapsulated an extensive discussion of the history and frameworks of the respective statutory sources.

Neither res judicata nor collateral estoppel barred the second proceeding, Judge Sabatino said. The Board of Examiners was not a party to the arbitration and the local Board was not authorized to participate in the subsequent certificate revocation proceeding. In short, “[t]he Board of Examiners, a state regulatory body, is neither the same entity, nor in privity with, the Willingboro Board of Education, an agency of local government.”

Nor was there any violation of Morison’s due process rights. He disclaimed any reliance on procedural due process and argued instead that the Board of Examiners proceeding “unconstitutionally transgresses his fundamental interest in his continued employment as a teacher,” an alleged substantive due process violation. Judge Sabatino disagreed. “The separate regulatory action of the Board of Examiners with respect to appellant’s continued ability to serve as a teacher within this state does not amount to ‘an egregious governmental abuse'” nor does it ‘shock the conscience’ [or] offend ‘judicial notions of fairness’ or ‘human dignity,” as required for a substantive due process violation. “The Board is lawfully acting to carry out its responsibility to protect schoolchildren from improper teacher conduct, and thereby promote their own ability to receive a public education under our laws. See, e.g., N.J. Const. art. VIII, § IV, ¶ 1. The statutory licensure system for teachers embodied in N.J.S.A. 18A:6-38 and 38.1 has a clearly rational foundation, and its co-existence with the teacher tenure laws is complementary, not deleterious.”

The argument about “industrial double jeopardy,” a concept drawn from some out-of-state cases and labor law publications that does not rest on federal or New Jersey constitutional guarantees against double jeopardy, also did not avail. The idea had not previously been adopted in New Jersey. And Morison’s cited cases all involved “whether the worker’s employer could impose additional sanctions upon its employee” in various contexts (emphasis by Judge Sabatino). Here, the Board of Examiners was not Morison’s employer. Morison’s reliance on a 1965 Appellate Division case failed for the same reason.

Earlier this week, in Ogunyemi v. Garden State Med. Center, ___ N.J. Super. ___ (App. Div. 2024), a case under the Law Against Discrimination (“LAD”),Judge Smith authored an arbitration opinion of a more common type. The issue was whether an arbitration clause in an employment agreement between plaintiff, a doctor, and defendant was ambiguous and therefore unenforceable. The Law Division had compelled arbitration, finding the arbitration provision to be clear. On de novo review, the Appellate Division reversed.

After summarizing the general background law regarding arbitration clauses, Judge Smith noted that “to the extent there exists any ambiguity in the arbitration provision, that ambiguity should be construed against [the drafter],” citing prior cases. Here, there were “a series of difficult to decipher and contradictory sentences contained in a single arbitration clause. The clause contains 887 words in thirty-six unbroken lines. A closer reading shows that the run-on paragraph harbors within it mutually inconsistent means for dispute resolution,” as Judge Smith went on to explicate in great detail.

“The confusing and poorly drafted paragraph proposes no fewer than three distinct avenues for dispute resolution between the parties. These separate avenues defy any way to credibly reconcile them.” Accordingly, the clause was unenforceable. This was despite the fact that the end of that lengthy and convoluted provision said that “YOU UNDERSTAND AND AGREE THAT THIS ARBITRATION PROVISION WAIVES YOUR RIGHT TO A JURY TRIAL FOR ANY AND ALL CLAIMS, INCLUDING STATUTORY EMPLOYMENT CLAIMS.” The Law Division had relied on that language, but the Appellate Division held that it did not dispel the confusion engendered by the rest of the arbitration clause.

Judge Rose wrote a separate concurring opinion. She would have reversed for a different reason. She did not find the clause ambiguous, but she believed that it violated section 12.7 of the LAD, which states that “[a] provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable.” On that basis, Judge Rose, too, would have had the case proceed in Superior Court rather than in arbitration.