E-Z Passes For Retirees Contractually Protected

The Port Authority of New York and New Jersey and the Port Authority Police Sergeants Benevolent Association (SBA) are parties to a collective bargaining agreement. When the Authority eliminated free electronic toll collection system (known as E-Z Pass) privileges for retirees, the SBA challenged the decision in arbitration.

An arbitrator ruled in the Association’s favor, relying on a 1973 Port Authority “Administrative Instruction,” PAI 40–1.01, that provides that retired employees “receive the same allowance to which they would be entitled if their Port Authority service was not interrupted.” The Arbitrator concluded that E-Z Pass privileges were within the scope of the Administrative Instruction.

A New York appeals court upheld the Arbitrator’s decision. The Court found the Arbitrator’s conclusion that the Administrative Instruction “vests retired members of respondent with a lifetime interest in the EZ–Pass privileges they enjoyed while employed did not exceed the Arbitrator’s authority since it is not completely irrational.

“The Authority’s contention that the Arbitrator exceeded his contractual power by failing to apply applicable precedent arises from its misreading of the contract. The contractual phrase ‘in accordance with applicable law’ refers to the extent to which the arbitral award will be binding upon the parties; it does not indicate an intent of the parties to deviate from the basic principle that an arbitral award may not be vacated on the ground that the Arbitrator made a mistake of law.”

Port Authority of New York and New Jersey v. Port Authority Police Sergeants Benevolent Association, 124 A.D.3d 474 (N.Y. 2015).