Judicial responsibility or a court not understanding what “binding” arbitration means? The characterization of a recent opinion from an appeals court in New Jersey may depend largely on one’s perspective.
The case involved a pay raise ordered by an arbitrator for the firefighters in Camden, New Jersey. There’s no question Camden’s financial situation is as dire as it gets. For fiscal year 2010, the City’s total budget was $185 million, $125 million of which came from State-controlled aid. Local taxes levied by the City accounted for only $20.6 million of the budget. 52% of the City’s real estate is tax exempt. To deal with its financial woes, the City laid off over one-third of the City workforce, including 168 police officers and 67 firefighters.
Camden firefighters had long gone without a raise, and sought one through the binding arbitration process. An arbitrator acknowledged the City’s “fiscal dilemma” and “the harsh realities of decreased state aid under Governor Chris Christie,” and stated that his task was to “objectively balance” that dilemma with “the expectations of its citizens of receiving services and the economic goals of professional firefighters in maintaining a level of compensation equivalent to their unique, ever-dangerous occupation and service to the City and its residents.”
In the end, the Arbitrator granted increases to base wages in the award that totaled 8.5% over four years. However, the Arbitrator harbored no illusion that the City had the ability to pay the increases awarded, ruling that “this Arbitrator does not contend that these increases fit within the City’s ability to pay from its present tax base nor could be funded by greater bargaining unit concessions. Indeed, the City, alone, does not have sufficient funds to meet the modest, but reasonable, increases granted. But, when the record was finalized and the evidence reviewed, this Arbitrator reached three clear and realistic conclusions: 1) The City must continue an appropriate level of fire services, irrespective of budgetary shortages, in order to protect the City of Camden, its residents and property; 2) Firefighters should be granted reasonable increases in base wages, together with the obligation of paying for a portion of their health care coverage, as their responsibilities continue to grow and their duties expand; and, perhaps most important, 3) The State must affirmatively provide for the City of Camden what the City cannot provide for itself.”
The appeals court overturned the Arbitrator’s decision, criticizing the Arbitrator for the assessment of the State’s role: “The State was neither a party to the original CBA nor to the successor agreement the Arbitrator was charged to craft. Therefore, the Arbitrator lacked the authority to render an award that essentially required the State to assume funding responsibilities for the salary increases. Indeed, both the City and the Union agree the Arbitrator lacked the authority to make the State a party and that the award is not enforceable against the State. The net result is that the City is obligated to pay the salary increases awarded, regardless of the amount of aid received and without regard to the effect of the award on its ability to meet other financial demands or to avoid further layoffs.”
The Court’s rationale was: “We recognize that, in light of the City’s financial straits, the challenge to provide both adequate firefighting service to the municipality and reasonable compensation to the firefighters presents a fiscal Gordian knot. But it was not within the Arbitrator’s authority to sever that knot by usurping both the authority granted by the New Jersey Constitution to the Legislature and Governor and governmental policy-making authority.”
The Court also criticized the way the Arbitrator evaluated the evidence: “There was evidence here that the City’s financial straits had already resulted in widespread layoffs of municipal employees and tax increases ‘to the max.’ There was further evidence that the award initially proposed by the Arbitrator would have a significant and adverse impact on the ability of the City to maintain the already reduced staffing level of the fire department. Although the Arbitrator accepted this evidence as credible, the decision failed to give due consideration to the impact of the award on the City in light of this evidence. As a result of this and other errors, the award must be vacated.”
The Court thought so little of the Arbitrator’s opinion that it ordered the dispute to be heard by a new arbitrator. The Court found that “when deficiencies in the arbitrator’s process call into question the arbitrator’s ability to have an open mind regarding the disposition, a remand to a different arbitrator may be appropriate. We are satisfied that the errors here are not mere deficiencies in the analysis of statutory factors that could be remedied by further review.”
In re City of Camden, 2013 WL 322315 (N.J. Super. A.D. 2013).