DELAWARE RIVER PORT AUTHORITY VS. FRATERNAL ORDER OF POLICE PENN-JERSEY LODGE NO. 30, ETC. (C-000074-16, CAMDEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4473-16T2

DELAWARE RIVER PORT
AUTHORITY,

Plaintiff-Appellant/
Cross-Respondent,

v.

FRATERNAL ORDER OF POLICE
PENN-JERSEY LODGE NO. 30
IN THE MATTER OF EZ-PASS
ARBITRATION,

Defendant-Respondent/
Cross-Appellant.
______________________________

Argued September 18, 2018 – Decided October 3, 2018

Before Judges Hoffman, Suter and Geiger.

On appeal from Superior Court of New Jersey,
Chancery Division, Camden County, Docket No. C-
000074-16.

William F. Cook argued the cause for appellant/cross-
respondent (Brown & Connery, LLP, attorneys;
William F. Cook, on the briefs).
 Charles T. Joyce argued the cause for respondent/cross-
appellant (Spear Wilderman, PC, attorneys; Charles T.
Joyce, on the brief).

PER CURIAM

The Delaware River Port Authority (DRPA) appeals from a May 22, 2017

Chancery Division order confirming an April 26, 2016 supplemental arbitration

award in favor of the Fraternal Order of Police Penn-Jersey Lodge No. 30 (FOP),

the union representing patrol officers, corporals, and sergeants employed by the

DRPA. The FOP cross-appeals from the denial of its application for an award of

attorney's fees. For the reasons that follow, we affirm.

The DRPA and the FOP were parties to a collective bargaining agreement

(CBA). The CBA expired on December 31, 2009. The parties agreed to a successor

CBA with a term of January 1, 2010 to December 31, 2017. Article XXIII of the

CBA provides:

During the period of this Agreement, the DRPA will make
available the following items, including any limitations or
conditions that now exist:

....

Section 4. The allotment of passes for free bridge
trips via EZ Pass that was in effect during the prior
Collective Bargaining Agreement (that terminated as of
December 31, 2004); specifically passes for 100 free
bridge trips and 10 free PATCO trips each year.

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 In July 2010, then-Governor Chris Christie demanded the "immediate"

elimination of "all free toll fare perks for employees and retirees" of the DRPA. 1

After the DRPA adopted a resolution to eliminate these benefits, the FOP grieved

the elimination of the benefit. The dispute was ultimately submitted to binding

arbitration through the American Arbitration Association (AAA).

On January 24, 2011, the arbitrator ruled the DRPA could not unilaterally

discontinue the practice of providing the EZ-Pass benefit to FOP members, and

ordered it to immediately restore the contractually negotiated benefit, and to

reimburse employees "for any verified out-of-pocket expenses" (the 2011 Award).

The arbitrator retained jurisdiction regarding the enforcement of the 2011 Award.

The DRPA did not seek to vacate or disturb the 2011 Award.

Following the arbitration, the DRPA restored the EZ-Pass benefit to FOP

members, but required FOP members to pay a $1 per month service fee for each EZ-

Pass account, a fee it had not imposed prior to Governor Christie's directive that free

bridge passes be discontinued. The fee is charged by Xerox, an outside entity who

administers the EZ-Pass system, and is not charged by the DRPA itself.

The FOP referred the service fee issue back to the arbitrator. The FOP argued

its members should not have to pay the service fee in light of the 2011 Award and

1
The demand was made in a letter to the DRPA's Chairperson and Vice-
Chairperson. Pennsylvania Governor Rendell issued a similar letter.
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sought reimbursement for its members who paid the service fee since August 2010.

On October 13, 2015, a hearing was conducted by the same arbitrator who issued

the 2011 Award. The parties could not agree on the primary issue to be arbitrated.

As a result, the arbitrator framed the issue to be: "Does the [CBA] obligate the

[DRPA] to waive the $1.00 per month service fee for EZ Pass trips? If so, what shall

be the remedy?" During the hearing, the arbitrator heard testimony from FOP

President, Charles Price, and DRPA Manager of Revenue Audit, Patricia Griffey.

Price testified he had served as the FOP President for five years. Before his

time at the DRPA and prior to EZ-Pass, Price testified 100 free bridge passes were

given to employees; however, by the time he was employed, EZ-Pass was already

in place. He also testified about the procedure by which officers signed up for EZ-

Pass. Prior to August 2010, officers were required to sign up for an EZ-Pass

transponder and indicate how many transponders were needed. If the officer went

through any of the EZ-Pass toll lanes, the officer would not be charged for up to 100

bridge crossings. Price testified there was no service fee until after the first round

of arbitration and he had not seen the service fee on the officers' billing statements

before.

To support his testimony, Price referred to a forwarded email that he had

received in May 2011 from DRPA Chief of Police David McClintock, which was

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prefaced with the statement "Do not share." The email detailed a discussion between

the DRPA's General Counsel, Richard Brown, and several other DRPA officials.2

Brown's email stated:

I have recently learned that, prior to August of 2010 we
were waiving the [one dollar] Service Fee for E-Z Pass
accounts held by those who are eligible for the 100 free
trip benefit. My view, after discussing this with John
Hanson, is that we should not reinstate this practice. It was
not negotiated by the Unions when they sought the free
100 trips, and is unrelated to those trips. If the unions wish
to return to arbitration they can attempt to do so.

Counsel for the DRPA objected to its submission, claiming the email was "an

attorney/client communication which clearly was intended for attorney/client

purposes only." He argued McClintock was not vested with any authority to waive

this privilege. Counsel for the FOP argued, even if such privilege attached to the

document, McClintock voluntarily waived the privilege by his intentional disclosure

of the email thread to Price. The arbitrator admitted the email thread into evidence.

Besides the admitted email, Price conceded neither the 2011 Award nor the

DRPA's pre-hearing interest arbitration statement expressly addressed the

administrative EZ-Pass fee. Griffey explained Xerox is the entity that actually

collects the money received through EZ-Pass and arranges for the issuance of EZ-

Pass transponders and Xerox had been doing so prior to 2010. She stated every

2
The other DRPA officials included the DRPA's CEO and CFO.
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person who is in the New Jersey EZ-Pass system is charged the monthly account fee

by Xerox, whether or not they work at the DRPA. Griffey testified the DRPA had

never paid the service charge for anyone and had also never waived the fee. Griffey

also noted the monthly fee is an account fee, not a "transponder" fee, meaning if an

individual had multiple transponders, that individual would only be charged under a

single account.

On April 26, 2016, the arbitrator issued a supplemental award requiring the

DRPA to reimburse FOP officers for the monthly service fee retroactive to August

18, 2010, and to continue to pay the administrative fee for the duration of the term

of the agreement. The arbitrator determined the DRPA was reimbursing the fee prior

to Governor Christie's 2010 directive and, per the prefatory paragraph of Article

XXI, Section 4, should be required to reinstate that practice. The arbitrator relied on

the polarizing email communication to support this finding. In addressing why he

allowed the email into evidence, the arbitrator stated: "I determined that Chief of

Police McClintock was communicating with a subordinate, who also happens to be

the President of the [FOP] and, therefore, on those grounds, it was allowed in." The

arbitrator also found the service fee to be "a verified out-of-pocket expense" and, for

that reason, it should also be paid by the DRPA because the CBA obligated the

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DRPA to provide the benefit at no cost to the employees. He concluded that

assessing the service fee violated the contract and past practice.

The arbitrator rejected the DRPA's claim the grievance was time barred,

concluding the DRPA had engaged in a continuing violation by assessing the

monthly service fee, with each monthly assessment being a separate violation, citing

Alpha Board of Education v. Alpha Education Association, 190 N.J. 34, 43 (2006),

which held it inappropriate to apply the strict time limitations in a CBA for the filing

of a grievance to an ongoing violation of a contractual right.

The arbitrator also noted the DRPA's final offer during a 2015 interest

arbitration included eliminating the EZ-Pass free bridge benefit. The interest

arbitrator rejected the proposal to eliminate the free bridge benefit, stating:

I do not believe that the record supports the proposal. The
benefit has been part of FOP members' terms and
conditions of employment since the parties['] first
bargaining agreement and it has been a part of their overall
compensation ever since. The significant economic
changes to benefits were wages and healthcare. Having
recommended those changes, I believe a new balance has
been reached on the economic issues and additional
changes are unnecessary.

The DRPA filed this action to vacate the supplemental award and the FOP

counterclaimed to confirm the supplemental award and for an award of attorney's

fees and costs. Following briefing and oral argument, the Chancery judge issued an

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oral decision. She determined she could not justify setting aside the arbitrator's

supplemental award, finding the award to be "arguably debatable." The judge also

concluded the email was not critical to the arbitrator's findings in light of the

arbitrator not accepting Griffey's testimony, which the judge found "speaks

volumes." In her ruling, the judge denied the DRPA's application to vacate the

supplemental award, dismissed the DRPA's complaint with prejudice, confirmed the

supplemental award, required the parties to comply with the award, and denied the

FOP's application for attorney's fees and costs. This appeal followed.

The DRPA argues the supplemental award should be vacated and reversed

because the arbitrator committed a mistake of law in admitting and relying upon

privileged information. It further argues the supplemental award should be vacated

and reversed because it creates a new benefit not provided for under the plain

language of the contract. In its cross-appeal, the FOP argues that because the

DRPA's action to vacate the supplemental award was without justification and had

no reasonable chance of success, the FOP should have been awarded attorney's fees

and costs.

Our role "in reviewing arbitration awards is extremely limited." State v. Int’l

Fed’n of Prof’l & Tech. Eng’rs, Local 195, 169 N.J. 505, 513 (2001) (citing Kearny

PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 221 (1979)). We undertake “an

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extremely deferential review when a party to a collective bargaining agreement has

sought to vacate an arbitrator’s award.” Policemen’s Benevolent Ass’n, Local No.

11 v. City of Trenton, 205 N.J. 422, 428 (2011). “Generally, when a court reviews

an arbitration award, it does so mindful of the fact that the arbitrator’s interpretation

of the contract controls.” Borough of E. Rutherford v. E. Rutherford PBA Local

275, 213 N.J. 190, 201 (2013).

“An appellate court's review of an arbitrator’s interpretation is confined to

determining whether the interpretation of the contractual language is reasonably

debatable.” N.J. Transit Bus Operations, Inc. v. Amalgamated Transit Union, 187

N.J. 546, 553-54 (2006) (citations omitted); see also Policemen's Benevolent Ass'n,

205 N.J. at 428-29. “Under the reasonably debatable standard, a court reviewing [a

public-sector] arbitration award may not substitute its own judgment for that of the

arbitrator, regardless of the court’s view of the correctness of the arbitrator’s

position.” Borough of E. Rutherford, 213 N.J. at 201-02 (alteration in original)

(citations omitted). If the interpretation of the contractual language "is reasonably

debatable in the minds of ordinary laymen[,] . . . the reviewing court is bound by the

arbitrator's decision.” Selected Risks Ins. Co. v. Allstate Ins. Co., 179 N.J. Super.

444, 451 (App. Div. 1981).

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 Consistent with these principles, the New Jersey Arbitration Act, N.J.S.A.

2A:24-1 to -11, provides only four grounds for vacating an arbitration award:

a. Where the award was procured by corruption, fraud or
undue means;

b. Where there was either evident partiality or corruption
in the arbitrators, or any thereof;

c. Where the arbitrators were guilty of misconduct . . .;
[or]

d. Where the arbitrators exceeded or so imperfectly
executed their powers that a mutual, final and definite
award upon the subject matter submitted was not made.

[N.J.S.A. 2A:24-8.]

A court may also vacate an award if it is contrary to public policy. Borough of E.

Rutherford, 213 N.J. at 202 (quoting Middletown Twp. PBA Local 124 v. Twp. of

Middletown, 193 N.J. 1, 11 (2007)).

"'[U]ndue means' ordinarily encompasses a situation in which the arbitrator

has made an acknowledged mistake of fact or law or a mistake that is apparent on

the face of the record," whereas an arbitrator exceeds his or her "authority by

disregarding the terms of the parties' agreement." Borough of E. Rutherford, 213

N.J. at 203 (alteration in original) (quoting Off. of Emp. Rels. v. Commc'ns Workers

of Am., 154 N.J. 98, 111-12 (1998)). Whether the arbitrator exceeded his authority

"entails a two-part inquiry: (1) whether the agreement authorized the award, and (2)

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whether the arbitrator's action is consistent with applicable law." Id. at 212 (citing

Commc'ns Workers of Am., Local 1087 v. Monmouth Cty. Bd. of Soc. Servs., 96

N.J. 442, 451-53 (1984)).

"[A]n arbitrator may not disregard the terms of the parties' agreement, nor may

he rewrite the contract for the parties." Cty. Coll. of Morris Staff Ass'n v. Cty. Coll.

of Morris, 100 N.J. 383, 391 (1985) (citing State v. State Troopers Fraternal Ass'n

of N.J., 91 N.J. 464, 469 (1982)). Moreover, "the arbitrator may not contradict the

express language of the contract." Linden Bd. of Educ. v. Linden Educ. Ass'n ex

rel. Mizichko, 202 N.J. 268, 276 (2010). "Thus, our courts have vacated arbitration

awards as not reasonably debatable when arbitrators have, for example, added new

terms to an agreement or ignored its clear language." Policemen's Benevolent Ass'n,

205 N.J. at 429-30 (citing Cty. Coll. of Morris, 100 N.J. at 397-98).

The party seeking to vacate an arbitration award bears the burden of

demonstrating wrongdoing on the part of the arbitrator. Tretina Printing, Inc. v.

Fitzpatrick & Assocs., 135 N.J. 349, 357 (1994); Minkowitz v. Israeli, 433 N.J.

Super. 111, 136 (App. Div. 2013). Because a decision to vacate or confirm an

arbitration award is a decision of law, we review the denial of a motion to vacate an

arbitration award de novo. Minkowitz, 433 N.J. Super. at 136 (quoting Manger v.

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Manger, 417 N.J. Super. 370, 376 (App. Div. 2010)); see also Bound Brook Bd. of

Educ. v. Ciripompa, 442 N.J. Super. 515, 520 (App. Div. 2015).

The DRPA contends that since the free bridge program pre-dated the

implementation of EZ-Pass for FOP members, it also pre-dated the existence of the

monthly EZ-Pass service fee charged by Xerox, an outside entity. The DRPA further

contends the parties never contemplated the Xerox monthly service fee, which is

charged to all EZ-Pass account holders, would be borne by the DRPA. The FOP

counters the free bridge pass benefit predates the commencement of the EZ-Pass

program and the DRPA did not levy a $1 per month service charge on FOP members

until Xerox became the DRPA service provider sometime prior to 2010, and even

then, waived the service fee for FOP members until August 2010. The FOP further

contends the decision not to reimburse the cost of the service fee is contrary to the

established past practice, which was to provide the 100 free bridge passes at no cost.

We begin our analysis by noting the issue whether the CBA obligates the

DRPA to waive the monthly service fee is primarily contractual, not factual, in

nature. While the arbitrator did rely on the email to determine the DRPA previously

covered the service fee, the arbitrator also concluded the 2011 Award required the

waiver of the service fee, as the fee was an out-of-pocket expense. The Arbitrator

did not rely on the email to render this part of his 2016 Award. Moreover, the email

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in question was sent to the chief of police, the commanding officer of the DRPA's

police department, not a mid or low level employee. But cf. Hedden v. Kean Univ.,

434 N.J. Super. 1, 11, 15-16 (App. Div. 2013) (holding mid or low level employee

cannot waive the privilege on behalf of a corporation). The chief subsequently

provided the email to the FOP's president. The disclosure to the FOP president was

knowing and intentional, not inadvertent or accidental. Therefore, the attorney-

client privilege in the contents of the email was waived. O'Boyle v. Borough of

Longport, 218 N.J. 168, 186 (2014) ("The attorney-client privilege is ordinarily

waived when a confidential communication between an attorney and a client is

revealed to a third party.").

The DRPA also complains the arbitrator erred by considering hearsay

evidence. "[T]he formal Rules of Evidence do not apply in arbitration proceedings."

Fox v. Morris Cty. Policemen's Ass'n, 266 N.J. Super. 501, 506 (App. Div. 1993).

The CBA provides grievances submitted to the AAA would proceed in accordance

with the AAA's rules and regulations. Under the AAA's Labor Arbitration Rules,

"[t]he arbitrator shall determine the admissibility, the relevance, and materiality of

the evidence offered . . . and conformity to legal rules of evidence shall not be

necessary." AAA Labor Arb. R. 27. The arbitrator may also receive and consider

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the evidence of witnesses by affidavit. AAA Labor Arb, R. 28. Accordingly, the

arbitrator was permitted to consider the hearsay evidence.

The DRPA further complains the FOP did not provide discovery of the email

until the day of the arbitration hearing. The AAA's Labor Arbitration Rules "do not

require that the parties exchange exhibits or otherwise engage in pre-hearing

discovery." Paper, Allied-Indus., Chem. & Energy Workers Int'l Union, Local 1-9

v. S.D. Warren Co., 382 F. Supp. 2d 130, 132 (D. Me. 2005). Instead, "[t]hose rules

accord only a right to subpoena witnesses and documents for the hearing." Zamora

v. Lehman, 111 Cal. Rptr. 3d 335, 347 (Ct. App. 2010) (citing former AAA Labor

Arbitration R. 28). Accordingly, the FOP was not under a duty to disclose its

intention to utilize the email. Moreover, the DRPA already had knowledge of and

access to the email.

"Arbitration is 'a vehicle by which meaning and content are given to the

collective bargaining agreement.'" Local No. 153, Office & Prof'l Emps. Int'l Union

v. Tr. Co. of N.J., 105 N.J. 442, 452 (1987) (quoting United Steelworkers of Am. v.

Warrior & Gulf Navigation Co., 363 U.S. 574, 581 (1960)). "Although the arbitrator

may not contradict the express language of the contract, 'it is the arbitrators

construction that is bargained for[,]' and '[i]t is the arbitrator's role to fill the gaps[.]'"

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Linden, 202 N.J. at 276 (alterations in original) (quoting Local No. 153, 105 N.J. at

452).

Here, the arbitrator clarified the language of the CBA in his 2011 Award. That

award, which the DRPA did not attempt to vacate, is binding and must be applied to

subsequent grievances. In making the supplemental award, the arbitrator properly

relied upon the earlier award. We conclude it is reasonably debatable whether the

service charge constitutes an out-of-pocket expense that the DRPA is responsible for

in light of the 2011 Award. Accordingly, the award must be confirmed.

We next address the denial of the FOP's application for an award of attorney's

fees and costs. The FOP argues it was error to deny an award of attorney's fees and

costs because the DRPA's action to vacate the supplemental award was without

justification and had no reasonable chance of success. Ostensibly, the FOP claims

the DRPA's appeal was frivolous. We are unpersuaded by this argument.

Initially, we note the arbitrator also denied the FOP's request for an award of

attorney's fees and costs. The FOP did not seek to vacate that aspect of the

supplemental award in its counterclaim to confirm the award. Nor did the FOP

comply with the mandatory procedural requirements imposed by Rule 1:4-8(b)(1)

for an award of fees and costs for frivolous litigation. See Trocki Plastic Surgery

Ctr. v. Bartkowski, 344 N.J. Super. 399, 406-07 (App. Div. 2001). Failure to comply

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with the notice requirements imposed by the rule bars an award of frivolous litigation

fees and costs. Id. at 406.

We further note the FOP is not entitled to an award of attorney's fees under

the terms of the CBA or any other court rule or statute. Therefore, the FOP must

bear the cost of its own attorney's fees. The application for an award of attorney's

fees was properly denied. See R. 4:42-9(a); Pressler & Verniero, Current N.J. Court

Rules, cmt. 1 on R. 4:42-9 (2019).

Affirmed.

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