Petition for Writ of Certiorari — Port Authority Police Benevolent Association, Inc. v. Port Authority of New York and New Jersey (No. 08-274)
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\0A a) Siomepe C #, US.
08-27 4 AUG 28 2008
No. 07-A1016
Witiam K. Suter, Clerk
IN THE
Supreme Court of the United States
PORT AUTHORITY POLICE
BENEVOLENT ASSOCIATION, INC.,
Petitioner,
Vv.
PORT AUTHORITY OF NEW YORK AND NEW JERSEY,
Respondent.
On Petition for a Writ of Certiorari to the
Supreme Court of New Jersey
PETITION FOR A WRIT OF CERTIORARI
WILLIAM J. JOHNSON JONATHAN G. AXELROD *
317 South Patrick St. HUGH J. BEINS
Alexandria, VA 22314 H. DAVID KELLY, JR.
JUSTIN P. KEATING
BEINS, AXELROD, P.C.
1625 Massachusetts Ave., N.W.
Washington, D.C. 20036
* Counsel of Record 202-328-7222
August 28, 2008
WILSON-EPES PRINTING Co.,INC. — (202) 789-0096 — WASHINGTON, D. C. 20002
QUESTIONS PRESENTED
Whether the Supreme Court of New Jersey was
required by the Compact Clause to apply federal
law when reviewing the decision of an admin-
istrative agency created by the congressionally
sanctioned Compact Agency.
Whether the Supreme Court of New Jersey
improperly applied New Jersey law instead of
federal law to review the decision of the admin-
istrative agency created by the Compact Agency.
Whether the decision of the Supreme Court of
New Jersey is compatible with federal law.
(i)
il
PARTIES TO THE PROCEEDING
The following were parties to the proceeding in the
Supreme Court of New Jersey:
Port Authority of New York and New Jersey
Port Authority Empioyment Relations Panel
Port Authority Police Benevolent Association, Inc.
CORPORATE DISCLOSURE
The Port Authority Police Benevolent Association,
Inc., is a New York not-for-profit corporation with
membership limited to sworn law enforcement. per-
sonnel employed by the Port Authority of New York
and New Jersey.
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ......................ccceeeseeee i
PARTIES TO THE PROCEEDING .................... il
CORPORATE DISCLOSURE ............................. il
TABLES OF AUTHORITIBG ...00:..ccccccccssssscccessocess v
I sins nncvceneddnbsenonnisssccetonserss 2
il cccilidnnnisedisnbonaeeinmnnenee 2
RELEVANT STATUTORY PROVISIONS ......... 2
STATEMENT OF THE CASE ..................ccceeeeees 2
REASONS FOR GRANTING THE PETITION.. 13
A. Federal Law Governs the Scope of
I citinincininnithsiiishnsniasncniniotaninens 17
B. As the Creation of the Compact, the
Instruction Must Be Interpreted
According to Federal Law......................00. 21
2 cctsieemsepinconainiiins 26
APPENDICES
i i did ciaeiatsnemanninniocenedties la
Supreme Court of New Jersey...................000005 la
EES a 39a
TED 39a
EEN On ee 8la
Port Authority Employment Relations Panel. 8la
aa anadeaionsdl 102a
Superior Court of New Jersey ...................00004- 102a
(iii)
iv
TABLE OF CONTENTS—Continued
Page
ITI Tl ciciiniciningoinesiatinncimenenionnenbenvaielitines 117a
Superior Court of New Jersey - Appellate
as eltalaipeteaseiapelaipeialaniaile 117a
STRESS RENO Hw! Cn ERED ie coc EON EN 120a
Pertinent Constitutional and Statutory
EASE SN Pe a 120a
iia rsemscgatiniisiisisaniiviintin’ 120a
I III sc sicnscstitantutisiadvntioninsdennbuesoves 120a
McKinney Unconsolidated Laws §7141....... 12la
, —«_—«d— SERRE | sz MCE NE Sane 123a
Port Authority Police Decent Benevolent
Association v. Port Authority of New York
NN eitasiciti da cnstnielinniviasenndivitanicucnnninanatiocal 123a
Vv
TABLE GF AUTHORITIES
CASES Page
Agesen v. Catherwood, 260 N.E.2d 525
tsk SaP TD cnceinstinniccikeinivcitiiinicvicnailinaainiaiiliceige 22
Auto Workers v. NLRB (General Motors),
381 F.2d 265 (D.C. Cir.), cert. denied,
ait & 6g. Ee See 24
Baron v. Port Authority of New York and
New Jersey, 968 F.Supp. 924 (S.D.N.Y.
ND dcisinesiecbiiaiaitlpahpediacddumiedaliastabidinaninices 22
Beebe v. Washington Metropolitan Area
Transit Authority, 129 F.3d 1283 (D.C.
ta SEIT De deciieichechcsaiechinoasiluiaitsdieihdbnandsadiihaidiniagen 17, 18
Beth Israel Hospital v. NLRB, 437 U.S.
tiniest sass istaiiitehaininiiaiinikeniiabab lata 19, 20
Blanchette v. Cataldo, 734 F.2d 869 (1st
ATE iediiinsistiinicacsistiiundiahipeiditidladadbiieniiionititelniosee 25
Brooklyn Bridge Park Coalition v. Port
Authority of New York and New Jersey,
951 F.Supp. 383 (E.D. N.Y. 1997)............ 14
Bunk v. Port Authority of New York and
New Jersey, 676 A.2d 118 (N.J. 1996)...... 16
City of Jersey City v. Jersey City Police
Officers Benevolent Association, 713
PS Fd) * | nee 12, 13, 22
City of Poughkeepsie v. Newman, 466
N.Y.S.2d 752 (1983), leave to appeal
denied, 467 N.Y.S.2d 1026 (1984) ............ 9
Curtin-Matheson Scientific v. NLRB, 494
rs NN Ned cicada 19, 20
Cuyler v. Adams, 449 U.S. 433 (1981)......... 13
Delaware River and Bay Authority v.
Operating Engineers Local 68, 688 A.2d
569 (N.J. 1996), cert. denied, 522 US.
a niebinisicserenisisnsinnasitbiiiaiaiahpmcdabbiiezets 21
vi
TABLE OF AUTHORITIES—Continued
Page
Delaware River Port Authority v. Fraternal
Order of Police, Penn-Jersey Lodge 30,
290 F.3d 567 (3rd Cir. 2002)..................... 21
Dezaio v. Port Authority of New York and
New Jersey, 205 F.3d 62 (2nd Cir.), cert.
denied, 531 U.S. 818 (2000) ..................04. 22
Doe v. Pennsylvania Board of Probation
and Parole, 513 F.3d 96 (3rd Cir. 2008)... 25
Eastern Paralyzed Veterans Assoc., Inc. v.
City of Camden, 545 A.2d 127, 131 (N.J.
ELS RS SES oot ae 16
Energy Arkansas, Inc. v. Nebraska, 210
F.3d 887 (8th Cir. 2000)...............::eeseeeeeeee 17
Energy Arkansas, Inc. v. Nebraska, 358
F.3d 528 (8th Cir.), cert. dismissed, 542
oi a eceniasasenhubsbacenes 17, 25
Fibreboard Paper Prods. Corp. v. NLRB,
379 U.S. 203 (1964)............. 6, 7,9, 10, 13, 22-24
First National Maintenance Corp. v.
NLRB, 452 U.S. 666 (1981) ............cseeeeeees 24
Hess v. Port Authority Trans-Hudson
Corp., 513 U.S. 30 (1994).....c.ccccccesescseeeeeee 14, 15
Hunterdon County Bd. of Chosen Free-
holders and Communications Workers,
a 18
In re Local 195, IFPTE, 443 A.2d 187
ESE LE STE SES ee, ea 9,11, 22
Kansas v. Colorado, 514 U.S. 673 (1995) .... 21
Kiska Construction Corporation-U.S.A. v.
Washington Metropolitan Area Transit
Authority, 167 F.3d 608 (D.C. Cir. 1999). 18
vil
TABLE OF AUTHORITIES—Continued
Page
Lieberman v. Port Authority of New York
and New Jersey, 622 A.2d 1295 (N.J.
EES SERS EAE ESTE eee 16, 19
New York v. Hill, 528 U.S. 110 (2000)......... 13
New York v. O’Neill, 359 U.S. 1, 9 (1959)... 25
Niagara Frontier Transportation Authority,
og | EE aR 23
NLRB v. Borg-Warner, 356 U.S. 342 (1958)... 13
Operating Engineers Local 542 v. Dela-
ware River Joint Toll Bridge Commis-
sion, 311 F.3d 273 (3rd Cir. 2002)............ 21
Pagano v. Port Authority, 705 N.Y.S.2d
230 (N.Y. App. Div. 2000)......................... 18
Pell v. Bd. of Educ., 313 N.E.2d 321 (N.Y.
IRIS RRS Ze ee 19
Petty v. Tennessee-Missouri Bridge Com-
mission, 359 U.S. 275 (1959)..............00060 13, 14
Port Authority Police Sergeants Benevolent
Association v. Port Authority of New
York and New Jersey, C.A. No. 97-1651
CUP UE, BPE Passtossscsccscosesesceressoscece 22
Port Authority Trans-Hudson Corp. ov.
Feeney, 495 U.S. 299 (1990)...................... 14
Textile Workers v. Darlington Mfg. Co.,
eee ee icddnesasstasetsisnccnsnsessesceses 24
The Lieutenant’s Case, 77 PAERP 6 (1978). 24
United Capitol Ins. Co. v. Kapiloff, 155
F.3d 488 (4th Cir. 1998)......................00006. 25
Vaca v. Sipes, 386 U.S. 171 (1967) .............. 15
Washington-Dulles Transportation, Ltd.,
v. Metropolitan Washington Airports
Authority, 263 F.3d 371 (4th Cir. 2001)... 21
vill
TABLE OF AUTHORITIES—Continued
Page
West Virginia ex rel. Dyer v. Sims, 341
ini decditnasnialiaitnteanatind 3, 14, 15
STATUTES
iin 19
McKinney’s Unconsolidated Laws
LASTEST SEO eee 3
McKinney’s Unconsolidated Laws
SOR ae 3
McKinney’s Unconsolidated Laws
EN AT Sa 4,9,17, 21
a camennseniaiingl 4,17,21
Pee PE GP INO. ccccccccosscccsccesccoceccese 18
a sascnmeabiinnenniies 3
in cea caincdenceninniinpsiincecensunals 10
RE ae ee aH 3
MISCELLANEOUS
Pees 2s ©’ fh, 5 eee 6, 25
49 C.P.R. Part 1642 (2006)........................000 6
kT a 3,14
Constitution of the United States (Art. I,
ECU i ichlsidiichaikists dactieadatacdibaanidishadnicidia 2, 3, 14, 25
Council of State Governments http://ssl.
csg.org/compactlaws/comlistlinks.html.... 14
RESTATEMENT (SECOND) OF AGENCY §5(1)
See icieiesiscscsletiinsiiidtiensitinnsbticitan caniiibeddhddinieinanas 25
IN THE
Supreme Court of the United States
No. 07-A1016
PORT AUTHORITY POLICE
BENEVOLENT ASSOCIATION, INC.,
Petitioner,
Vv.
PORT AUTHORITY OF NEW YORK AND NEW JERSEY,
Respondent.
On Petition for a Writ of Certiorari to the
Supreme Court of New Jersey
PETITION FOR A WRIT OF CERTIORARI
The Port Authority Police Benevolent Association,
Inc., petitions for a writ of certiorari to review the
decision and judgment of the Supreme Court of
New Jersey in In the Matter of the Alleged Improper
Practice under Section XI, Paragraph A(d) of the Port
Authority Labor Relations Instruction; IP 97-28,
Final Decision and Order of the Port Authority
Employment Relations Panel: Port Authority of New
York and New Jersey, v. Port Authority Employment
Relations Panel and Port Authority Police Benevolent
Association, Inc., Docket No. A-6 September Term
2007.
2
OPINIONS BELOW
The opinion of the Supreme Court of New Jersey
is reported at 194 N.J. 314, 944 A.2d 611 and is
attached as Appendix A, pp. la-39a. The opinion
of the Port Authority Employment Relations Panel
Hearing Officer is unreported and is attached as
Appendix B, pp. 39a-80a. The opinion of the Port
Authority Employment Relations Panel is not offi-
cially reported, but is commonly cited as 97 PAERP
28 (2001) and is attached as Appendix C, pp. 81la-
10la. The Opinion of the Superior Court of New
Jersey is unreported and is attached as Appendix D,
pp. 102a-116a. The opinion of the Appellate Division
is unreported and is attached as Appendix E, pp.
117a-119a.
JURISDICTION
The opinion of the Supreme Court of New Jersey
was entered on April 9, 2008. The jurisdiction of this
Court is invoked under 28 U.S.C. §1257(a).
The Court granted an extension for filing this
Petition until September 6, 2008.
RELEVANT STATUTORY PROVISIONS
Pertinent provisions of the Constitution of the United
States and the laws of New Jersey and New York are
provided in Appendix F, pp. 120a-122a.
STATEMENT OF THE CASE
In establishing a federal Constitution, the Foun-
ders included a mechanism to enable states to ad-
dress regional concerns extending beyond a particu-
lar state’s boundaries without requiring a federal
resolution. This mechanism is the Compact Clause
(Art. I, §10, cl. 3), which, while permitting states to
“3
join together to advance regional interests, is predi-
cated on the requirement of congressional consent.
The Compact Clause has been utilized with Con-
gress’s consent to great effect by states to address
regional issues of enormous importance — including
interstate transportation, waste disposal, and alloca-
tion of natural resources -— as well as to spur
economic development. This ingenious feature of our
federal system has been so effective that this Court
has observed that the interstate “compact is more
than a supple device for dealing with interests con-
fined within a region,” “it is also a means of safe-
guarding the national interest.” West Virginia ex rel.
Dyer v. Sims, 341 U.S. 22, 28 (1951).
Like many states, New York and New Jersey are
separated by a common boundary, the Hudson River
and New York Bay. To administer the common
harbor interests of New York and New Jersey, the
states formed the Port Authority of New York and
New Jersey (“Port Authority”). That Compact -
embodied in virtually identical legislation passed by
each state’ — established the Port Authority as
“a body corporate and politic, having the powers and
jurisdiction hereinafter enumerated, and such other
and additional powers as shal! be conferred upon it
by the legislature of either State concurred in by the
legislature of the other, or by Act or Acts of Congress,
.... 42 Stat. 174, 176 (1921). Among the powers
granted the Port Authority was the ability to hire
employees.’
In 1947, the Port Authority entered into an agree-
ment with the City of New York providing that the
'N.J.S.A. Title 32; McKinney’s Unconsolidated Laws, §6401
et seq.
* N.J.S.A. 32:1-15; McKinney’s Unconsolidated Laws §6415.
4
Port Authority would lease and operate the munici-
pal airports then owned by the City, including what
later became known as JFK. Section 11(c) of the
agreement stipulates that “[t]he Port Authority will
provide police for patrolling, for guarding and for
traffic control in the demised premises [and that tjhe
City will have no responsibility for maintaining .. .
police personnel in the demised premises.” The con-
tract also permitted the Port Authority to enter into
subcontracts and subleases “provided that all such
things shall be done by the Port Authority in its own
name... .” [A. 6a]. Pursuant to its contract with the
City, the Port Authority Police Department began to
patro! JFK.
In 1976 the Port Authority adopted the Port
Authority Labor Relations Instruction (“Instruction”)
governing labor relations with its employees. The
Instruction provides that it would be an improper
practice for the Authority to refuse to negotiate
“salaries, wages, hours, and other terms and condi-
tions of employment in good faith ....” Instruction,
§XI(A)\(d). The Instruction also provides that “organi-
zation, staffing, planning, operating and financial
policies shall not be subjects of negotiations... .”
Instruction, §III(D). [A. 5a]. The Instruction created
the Port Authority Employment Relations Panel
(“Panel”) to resolve disputes between the Port Au-
thority and its employee organizations. [A 5a].
The Compact was amended to approve the Panel’s
creation and to provide for judicial review of its
decisions." The Compact does not specify what law
a court or agency must apply when construing its
provisions.
* N.J.S.A. 32:1-175; McKinney’s Unconsolidated Laws §7141.
5
The Port Authority Police Benevolent Association,
Inc. (“PBA”), became the exclusive bargaining agent
for the Authority’s Police Officers. |A. 6a]. In July
1991, the Port Authority entered into a Memorandum
of Agreement with the PBA (“Memorandum”). In
Section XXXI(1) of the Memorandum, the Port
Authority agreed that there would be
no further or additional transfer and/or reassign-
ment of unit work currently and heretofore
performed by unit employees without negotiation
and all other unit work currently and heretofore
performed by Police Officers shall be maintained.
All existing Police Officer positions and/or as-
signments shall be maintained during the term
of this Memorandum of Agreement in accordance
with the Police Position and/or Assignment List
agreed upon between the parties so long as the
work being performed continues to be performed
by or on behalf of the Port Authority.
[A. 7a (emphasis supplied)].
In 1997, however, the Port Authority accepted a
proposal from JFK International Air Terminal LLC
(“JFKIAT”) that provided for the reconstruction of
the international terminal at an overall cost of $1.2
billion. The Port Authority and JFKIAT entered into
an exhaustive lease that outlined each party’s obliga-
tions with regard to the international terminal. The
lease agreement provided that JFKIAT “shall furnish
adequate security and guard service or such com-
parable means as approved by the Port Authority.”
[A. 3la (emphasis supplied)]. The Port Authority re-
6
mained obligated to provide federally required
security. [A. 9a-10a].*
On May 13, 1997, JFKIAT assu:ned responsibility
for all security operations at the international termi-
nal and for frontage management of pedestrians and
vehicles. JFKIAT hired unarmed civilian guards to
perform work previously done by police officers repre-
sented by the PBA. [A. 10a].
The PBA filed an unfair labor practice charge
against the Port Authority alleging that the Port
Authority had unilaterally subcontracted bargaining
unit airport police work to JFKIAT without bargain-
ing. After the Port Authority denied the charge, the
Panel assigned the matter to a hearing officer. [A.
lla).
In its post-hearing brief, the PBA cited extensively
to decisions of the Panel, of the National Labor
Relations Board (“NLRB”), and to Fibreboard Paper
Prods. Corp. v. NLRB., 379 U.S. 203 (1964).° In its
post-hearing brief, the Port Authority relied upon
Panel decisions and upon Fibrehoard, without refer-
ring to any New Jersey authority.°
Relying exclusively on Panel and National Labor
Relations Act precedent, the Hearing Officer found
that work previously performed by bargaining unit
police officers had been transferred to civilian guards,
but that the Port Authority did not transfer the
‘At the time, Federal Aviation Administration regulations
applied. 14 C.F.R. Part 107 (1997). The current regulation of
the Department of Homeland Security is 49 C.F.R. Part 1542
(2006).
* PBA Brief at 24-31, 33-43.
* Port Authority Brief at 8-9, 12, 24-25, 27-30.
7
disputed work and no longer had “the requisite
authority to dictate” which employees would perform
the disputed work. [B. 73a]. Ostensibly applying
Panel precedent, he found that (1) the Port Authority
had altered its basic operation by “remov(ing) itself
from the business of managing and operating the
[International Arrivals Building] LAB”; (2) the Port
Authority had “not only ceded operational manage-
ment and day-to-day traffic control to [JFKIAT] but
the decision to privatize also included a $1.2 billion
lease agreement with JFKIAT to rebuild and operate
the IAB .. .”; (3) the PBA had failed to show that the
decision was based on factors amenable to collective
bargaining; and (4) the police officers suffered an
adverse impact, both qualitatively and quantita-
tively, from the decision, because they had lost
overtime opportunity. [B. 73a-79a]. He recommended
dismissing the charge.
The PBA filed Exceptions and a supporting brief,
again citing Panel and NLRB authority and Fibre-
board.’ Given the opportunity to comment on the
Panel’s tentative decision, the Port Authority did
not rely on New Jersey authority. Instead, the Port
Authority relied on Panel decisions, upon NLRB
decisions, and upon Fibreboard.*
Although it accepted the Hearing Officer’s factual
findings, the Panel concluded that the Port Authority
had violated the Instruction and the Memorandum
by transferring unit work without bargaining. The
Panel found that
(1) the PBA was attempting to preserve the dis-
puted work for its police officers;
." PBA Exceptions at 24-26, 28-30, 32-43.
* Port Authority Comments at 7-9, 13, 16-27, 29-32.
8
(2) the Port Authority did not, and could not
without violating its agreement with New
York City, go out of the business of providing
security at JFK;
(3) the Port Authority did not alter its basic
operation because it continues to provide law
enforcement functions at the LAB;
(4) the Port Authority “made no capital invest-
ment with respect to how security functions
are performed within the JAB or in the
frontage areas”;
(5) the “financing arrangements which the Port
Authority utilized to construct a new IAB
are irrelevant to the unit work issues in
dispute.”
(6) the impact of competing wage rates for
different classifications of employees was
“peculiarly suitable” for collective bargain-
ing; and
(7) the transfer of work had a substantial im-
pact on wages, hours, and working condi-
tions because positions were eliminated and
employees lost overtime opportunity.
[C. 88a-99a]. The Panel concluded that “The Port
Authority clearly and definitively required in the
JFKIAT lease that the work of patrolling, guarding
and traffic control be performed, . . . and we find that
it continues to be performed on the Port Authority’s
behalf.” [C. 93a].
The Panel therefore ordered the Port Authority to
restore the disputed work and to negotiate before
unilaterally changing terms and conditions of em-
ployment. [C.100a]. In reaching this conclusion, the
9
Panel relied exclusively upon its own precedent, in-
cluding its “Fibreboard plus” test.
Given the choice of seeking review of the Panel
decision in the Superior Court of New Jersey or the
New York Supreme Court,” the Port Authority filed
in New Jersey.
At this point, the Port Authority changed its focus.
Although it expressly conceded that neither New
Jersey nor New York law is applicable to the Port
Authority, in its brief to the Superior Court the Port
Authority relied exclusively on New Jersey authority
and on the New Jersey Supreme Court’s application
of Fibreboard to New Jersey state employees. The
Port Authority did not mention Panel or NLRB
decisions.”
As the nominal Respondent, the Panel reminded
the Superior Court that neither New Jersey nor New
York statutes or decisions controlled the interpreta-
tion of the Instruction and review of Panel decisions.
The Panel argued that its decision was entitled to
deference and correctly applied the Instruction and
Panel authority to the facts of the case. The Panel
cited the conflict between decisions of New Jersey
and New York public employee relations boards on
the negotiability of subcontracting to explain why it
had taken an independent approach:
Contrast Local 195, IFPTE v. State, 88 N.J. 393
(1982) (subcontracting is not mandatorily nego-
tiable in the New Jersey public sector) with city
[sic] of Poughkeepsie v. Newman, 95 A.D.2d 101,
466 N.Y.S.2d 752 (1983), leave to appeal denied,
* N.J.S.A. 32:1-175; McKinney’s Unconsolidated Laws §7141.
Port Authority Brief at 13-21
10
62 N.Y.2d 608, 467 N.Y.S.2d 1026 (1984) (sub-
contracting is mandatorily negotiable in the New
York public sector).
The Panel asserted that it had considered, and
reasonably rejected, the Port Authority’s position.”
As Intervenor, the PBA’s brief cited Fibreboard,
New Jersey and New York authority. The PBA
argued that
neither creator state may unilaterally impose its
legislative will on the bi-state entity. ... It is
inappropriate for either compacting state to seek
to impose its legislative policy on any issue,
including issues of public labor law, without
joint legislative action by the compacting states.
[citation omitted].
The PBA expressly argued that “the law that must be
applied is the . . . Instruction, not New Jersey’s Title
34.” Furthermore, the PBA argued that New York
courts “would assuredly endorse the findings of the
Panel under these facts.” The PBA argued that
Panel decisions and Fibreboard required affirmance
of the Panel decision.”
Applying the New Jersey standard of review, the
Superior Court found that the Panel’s findings of
fact were supported by substantial evidence, that the
Panel’s decision was neither arbitrary, capricious, or
unreasonable, and deferred to the Panel’s expertise.
“It is an uncontested fact that when the operation of
the [AB was turned over to [JFKIAT] in May 1997,
the PAPBA officers who had been previously sta-
tioned outside for the management of pedestrians
“ Panel Brief at 2-5, 7-14, 16-17.
* PBA Brief at 13-16, 19-26.
11
and vehicles were removed, assigned elsewhere, and
replaced by non-unit civilian security personnel”
in violation of the Memorandum. Applying Panel
precedent, the Superior Court found that the Port
Authority had subcontracted the disputed work with-
out the negotiation required by the Panel’s “Fibre-
board Plus Substantial Impact” test. [D. 110a-115a].
In its brief to the Appellate Division, the Port
Authority again acknowledged that neither New
Jersey nor New York law was controlling in Port
Authority cases. Nevertheless, the Port Authority
relied extensively upon New Jersey and New York
authority to support its position. The Port Authority
did not cite a single Panel decision in its opening
brief and only one in its reply brief. It relied on New
Jersey law."*
The Panel argued that its decision was consistent
with the Instruction and its prior decisions. It
argued that labor law decisions of New Jersey were
not controilling because such cases “may involve
different standards that may lead to different
results.” It reiterated the contrast between New
Jersey’s Local 195 decision and New York authority
on the duty to negotiate over subcontracting." It
repeated its conclusion that police work at the IAB
was performed “on behalf of” the Port Authority.”
The PBA opposed the Port Authority’s “attempts to
directly apply the legislative policy of New Jersey
applicable to public employers ....” The PBA
* Port Authority Brief at 15-27; Reply Brief at 2-3, 10-11, 16,
18.
* Panel Brief at 10-16.
Panel Brief at 19.
12
reiterated that the Instruction provided that New
Jersey and New York authority did not bind the
Panel or reviewing courts. The PBA argued, there-
fore, that the Port Authority’s reliance on New Jersey
cases “misses the point because the law that must be
applied in this matter is the Port Authority Labor
Relations Instruction, not New Jersey’s Title 34.”
The PBA argued that the Panel had properly applied
the Instruction and its precedent to the facts.”
The Appellate Division applied New Jersey’s stan-
dard of review and the Panel’s “Fibreboard plus”
analysis. The Appellate Division found that “the
decision of the Panel, their findings of facts, and
conclusions of law are well supported in the record
and reflect the opinion of this Court.” [E. 118a-119a).
In its Petition for a Writ of Certiorari to the
Supreme Court of New Jersey, the Port Authority
relied on New Jersey and National Labor Relations
Act authority concerning the scope of judicial review.
The Port Authority argued that in City of Jersey City
v. Jersey City Police Officers Benevolent Association,
713 A.2d 472 (N.J. 1998), the court had rejected an
order of the New Jersey Public Employment Rela-
tions Commission in a factually analogous situation.”
The PBA and the Panel opposed the Petition. The
PBA again argued that because neither New Jersey
nor New York law controlled, the Port Authority’s
reliance on Jersey City was improper. The Appellate
Division, wrote the PBA, “gave deference to the Panel
decision, which . . . was appropriately based upon
Panel precedent and not unilateral laws of either
‘* PBA Brief at 16, 19-36.
" Petition at 3-5.
13
New Jersey and/or New York.”"* The Panel argued
for a limited standard of review and rejected the Port
Authority’s reliance on City of Jersey City.”*
The Supreme Court of New Jersey granted the
Writ. Relying on the briefs submitted to the Appel-
late Division, the court applied the New Jersey
Administrative Procedure Act and New Jersey case
law to establish the standard of review of Panel
decisions. [A. 18a-2la]. The court then concluded
that Jersey City, a decision interpreting New Jersey
law, had “refined” this Court’s analysis in NLRB v.
Borg-Warner, 356 U.S. 342 (1958), and Fibreboard.
[A. 24a]. Applying that “refined analysis,” the major-
ity rejected the Panel’s conclusions. [A. 24a-28a].
Having determined that the law of New Jersey
governed the matter, the New Jersey Supreme Court
failed to consider whether other law might govern the
matter. :
Also applying a New Jersey standard of review [A.
33a], the dissent concluded that the Panel decision
was not “arbitrary, capricious, or unreasonable”
under New Jersey or NLRB authority. [A. 36a-38a].
Like the majority, the dissent did not mention the
PBA’s argument that the court could not apply New
Jersey law.
REASONS FOR GRANTING THE PETITION
As a congressionally sanctioned interstate compact,
the Port Authority Compact is a federal law subject
to federal construction. See, e.g., New York v. Hill,
528 U.S. 110, 111 (2000); Cuyler v. Adams, 449 U.S.
433, 438 (1981); Petty v. Tennessee-Missouri Bridge
PBA Brief at 10-13.
” Panel Brief at 6-9.
oil
14
Commission, 359 U.S. 275, 278-279 (1959) (“we must
treat the compact as a living interstate agreement
which performs high functions in our federalism,
including the operation of vast interstate enter-
prises.”).*” While the Court shows “deference to state
law in construing a compact, state law as pronounced
in prior applications and rulings is not binding.”
Petty, 359 U.S. at 278, n. 4. Furthermore, such defer-
ence cannot be transformed into “submission to a
State’s own determination of whether it has under-
taken an obligation, what that obligation is, and
whether it conflicts with a disability of the State to
undertake it... .” West Virginia ex rel. Dyer v. Sims,
341 U.S. 22, 28 (1951).
Because the Compact establishing the Port Author-
ity of New York and New Jersey” is but one of at
least 195 interstate compacts” authorized by Con-
gress under the Compact Clause of the Constitution,
the impact of this case extends well beyond the
subcontracting dispute between the Port Authority
and its Police Officers.
This Petition asks the Court to determine whether
the Instruction adopted by the Port Authority is also
a federal law subject to review under federal law and,
*” The Port Authority has conceded that amendments to the
Compact authorized by the legislatures of both states are
properly viewed as federal law. Brooklyn Bridge Park Coalition
v. Port Authority of New York and New Jersey, 951 F.Supp. 383,
390 n. 5 (E.D. N.Y. 1997). Both states have approved the
adoption of the Instruction and the creation of the Panel. [A. 3a
n.1).
*" 42 Stat. 174 (1921). See also Hess v. Port Authority Trans-
Hudson Corp., 513 U.S. 30, 35-36 (1994); Port Authority Trans-
Hudson Corp. v. Feeney, 495 U.S. 299, 301 (1990).
* http//ssl.csg.org/compactlaws/comlistlinks.htm]
15
if so, whether the Supreme Court of New Jersey
erred by applying New Jersey authority instead of
federal law when reviewing the Panel decision.
The questions presented are not abstract, for
throughout the New Jersey proceedings the PBA
consistently argued that a New York court would
affirm the Panel decision. If the Panel rules against
the PBA in another subcontracting case, the PBA
could, indeed, should and would, seek review in the
New York courts. The conflict between the courts of
the two states on the interpretation of the Compact
(and of the Instruction) is not hypothetical; the
conflict exists today and will continue to surface in
future cases unless resolved.
But the choice of forum should not control either
the choice of law or the result of judicial review of a
Compact Agency’s actions. Avoiding strategic forum
shopping is one reason interstate Compacts must be
governed by a uniform federal law, subject to review
by this Court.”* As this Court has already held in a
case involving the Port Authority, “bistate entities
created by compact .. . are not subject to the unilat-
eral control of any one of the States that compose
the federal system.” Hess v. Port Authority Trans-
Hudson Corp, 513 U.S. at 42. Yet that is precisely
what the New Jersey Supreme Court did here.
Despite the PBA’s repeated assertions that neither
New York nor New Jersey law controlled, and despite
the Port Authority’s implicit agreement or failure to
“Even where, as here, the Compact permits litigation in
state courts, federal law applies. This Court has jurisdiction to
review state court decisions misapplying federal law. Vaca v.
Sipes, 386 U.S. 171, 174 (1967); West Virginia ex rel. Dyer v.
Sims, 341 U.S. at 30.
16
dispute that point, and despite the PBA’s claim that
New York law would require affirmance of the Panel
decision, the Supreme Court of New Jersey applied
only New Jersey precedent concerning both the scope
of appellate review and the substantive claim by the
Port Authority.
Contrary to its own precedent, the New Jersey
Supreme Court made no pretense of considering
either New York or federal authority.** In Lieberman
vu. Port Authority of New York and New Jersey, 622
A.2d 1295, 1299 (N.J. 1993), the court explained that
“although we are not bound by New York law, we
deem it to be an influential precedent because of the
bi-state nature of the Port Authority.” In other cases,
the court had held that the interpretation of bi-state
compacts is a matter of federal law and that neither
of the signatory states may impose its law on the
entity without permission in the compact itself.
Bunk v. Port Authority of New York and New Jersey,
676 A.2d 118, 122 (N.J. 1996); Eastern Paralyzed
Veterans Assoc., Inc. v. City of Camden, 545 A.2d 127,
131, 136 (N.J. 1988). Bunk and Camden applied the
doctrine of “complementary or parallel state legisla-
tion,” thereby requiring consideration of New York
law.
Although this case presents the question in the
context of labor relations, federal courts have consid-
ered the law governing compacts in a number of
“ Although the PBA did not label its argument below as a
contention that federal law applied, it did argue that the New
Jersey courts must consider New York as well as New Jersey
authority. The amalgam of these state authorities, combined
with the Panel’s authority and its Fibreboard plus standard,
constitutes a federal common law and is a model applicable in
litigation involving all compacts.
ee
17
substantive areas. The Eighth Circuit has held that
a compact agency was enforcing a federal right
created by the compact when it sued Nebraska for
refusing to permit the construction of a nuclear waste
facility. Energy Arkansas, Inc. v. Nebraska, 210 F.3d
887, 898 (8th Cir. 2000). The Eighth Circuit later
held that in the absence of federal common law on
the meaning of compact language, the district court
properly sought guidance from the Restatement of
Contracts, not state law. Energy Arkansas, Inc. v.
Nebraska, 358 F.3d 528, 547 (8th Cir.), cert. dis-
missed, 542 U.S. 960 (2004). The District of Colum-
bia Circuit has similarly applied the “federal common
law standard” to determine whether employees of a
compact enjoy immunity in tort actions even where
the compact provides that state law applies to the
tort itself. Beebe v. Washington Metropolitan Area
Transit Authority, 129 F.3d 1283, 1289 (D.C. Cir.
1997).
A. Federal Law Governs the Scope of
Judicial Review
Although the Compact provides a choice of forum
for seeking review of a Panel decision,” the New
Jersey courts violated the well-established principle
that the construction of an interstate compact approved
by Congress presents a federal question. Unlike the
compact provisions discussed in Beebe, which ex-
pressly specify that the law of the forum state will
apply to certain claims against the bi-state compact,
the pertinent New Jersey and New York statutes
that form the Compact do not provide that the law of
the forum controls. Where the compact does not
provide that state law controls, “federal law governs
* N.J.S.A §32:1-175; McKinney’s Unconsolidated Laws §7141.
“*
:.
18
....” Beebe v. Washington Metropolitan Area Transit
Authority, 129 F.3d at 1288
The Supreme Court of New Jersey’s decision to
apply its State Administrative Procedure Act stan-
dard of review conflicts with Kiska Construction
Corporation-U.S.A. v. Washington Metropolitan Area
Transit Authority, 167 F.3d 608, 611-612 (D.C. Cir.
1999), which held that WMAA, as a compact, was not
an “agency” within the meaning of the District of
Columbia Administrative Procedure Act.
The New Jersey Supreme Court applied the State’s
Administrative Procedure Act, N.J.S.A. 52:14B-1 to -
25. [A. 18a-20a]. Citing Hunterdon County Bd. of
Chosen Freeholders and Communications Workers,
561 A.2d 597, 600 (1989), the court concluded “There-
fore, it is only ‘in situations where agency expertise is
essential towards understanding the proper context
of a dispute [that] a deferential standard of review is
appropriate.” [emphasis supplied} [A. 21a]. In this
case, however, the court was less deferential than in
Hunterdon, where it had stated that it would defer
“particularly” in such situations. Id.
Interestingly, Hunterdon involved review of a deci-
sion of the New Jersey Public Employee Relations
Committee (“PERC”). For no rational reason, the
Supreme Court of New Jersey now accords less defer-
ence to Punel decisions than to PERC decisions.
At the same time, the New Jersey court conceded
that New York courts would apply a more deferential
standard:
In its reported case law, New York has applied a
deferential standard of review to Panel decisions.
See Pagano v. Port Authority, 270 A.D.2d 206,
705 N.Y.S.2d 230 (N.Y. App. Div. 2000) (applying
19
standard that Panel determination “may not
be disturbed since substantial evidence supports
lit)”); Pell v. Bd. of Educ., 34 N.Y.2d 222, 313
N.E.2d 321, 356 N.Y.S.2d 833, 839 (N.Y. 1974)
(explaining that administrative tribunal’s factual
determinations are sustained if supported by
substantial evidence, and exercise of discretion
by administrative tribunal will be sustained
“unless there is no rational basis for the exercise
of discretion or the action compiained of is
‘arbitrary and capricious.”).
[A. 18a n. 10]. The court did not explain why this
“influential precedent” could be ignored or distin-
guished. Lieberman, 622 A.2d at 1299.
Although Section 10(e) of the. National Labor Rela-
tions Act, 29 U.S.C. §160(e), mandates the “substan-
tial evidence” standard for judicial review of the
NLRB’s findings of fact, the degree of deference
accorded to NLRB statutory interpretations has been
developed by the Court. In Beth Israel Hospital v.
NLRB, 437 U.S. 483, 500-501 (1978), the Court
stressed that such judicial review must be “limited,”
for it “is the Board on which Congress conferred the
authority to develop and apply fundamental national
labor policy. . . . The function of striking [the
balance between competing interests] to effectuate
national labor policy is often a difficult and delicate
responsibility, which the Congress committed pri-
marily to the [Board], subject to limited judicial
review.” More recently, the Court said that it would
uphold the NLRB’s construction of the Act when it is
“rational and consistent with the Act. . . even if we
would have formulated a different rule had we sat on
the Board.” Curtin-Matheson Scientific v. NLRB, 494
U.S. 775, 787 (1990).
20
This Court’s standard is compatible with the New
York standard rejected by the New Jersey Supreme
Court. It is not compatible with the New Jersey
standard applied in this case. This conflict makes
this issue appropriate for review by the Court.
Both the New Jersey Superior Court and the Ap-
pellate Division deferred to the Panel’s interpretation
of the Instruction. The New Jersey Supreme Court
did not. It concluded that the Panel decision
is not entitled to any special deference and
should be rejectea. This is because the Panel
neither followed the law nor relied on any par-
ticularized expertise in reaching its conclusion.
|A. 22a].
To the contrary, the Panel clearly explained its ad-
herence to the Instruction, to the Memorandum of
Agreement,”° and to Panel Precedent.
The less deferential standard of review erroneously
chosen by the Supreme Court of New Jersey man-
dated its wrongful rejection of the Panel’s decision.
For example, the Hearing Officer and the Panel
accepted the admission of the Port Authority Police
Chief that subcontracting reduced police officer over-
time. [B. 78a-79a; C. 84a]. The Supreme Court
rejected the Police Chief's “unsubstantiated opinion.”
[A. 28a]. Neither Beth Israel nor Curtin-Matheson
permit such cavalier rejection of uncontradicted testi-
mony.
* After the Panel adopted the “Fibreboard plus substantial
impact test,” the Port Authority and PBA agreed that the Panel
would have exclusive jurisdiction for unit work disputes. Prior
to this explicit contractual agreement [C: 86a,88a-89a and n. 2],
unit work disputes were brought before the Panel and also arbi-
trated as contractual violations.
21
B. As the Creation of the Compact, the
Instruction Must Be Interpreted Accord-
ing to Federal Law
The Supreme Court of New Jersey’s decision con-
flicts with Kansas v. Colorado, 514 U.S. 673 (1995),
in which the Court held that a violation of the
Trinidad River Operating Principles promulgated
by the Arkansas River Compact would constitute a
violation of the compact. See also Washington-Dulles
Transportation, Lid., v. Metropolitan Washington
Airports Authority, 263 F.3d 371 (4th Cir. 2001)
(federal court has jurisdiction to require adherence to
compact’s published competitive bidding procedure).
The Port Authority’s Instruction became part of the
Compact upon its approval by both State legisla-
tures’’ and must be treated as a federal law in the
same way as the Arkansas River Compact’s Operat-
ing Principles in Kansas and the published bidding
procedures in Washington-Dulles Transportation.
The Supreme Court of New Jersey’s decision also
conflicts with Operating Engineers Local 542 uv.
Delaware River Joint Toll Bridge Commission, 311
F.3d 273, 274, 276 (3rd Cir. 2002), in which the Third
Circuit held that neither the New Jersey nor the
Pennsylvania collective bargaining laws applied to an
interstate compact because neither state legislature
had expressed a “clear intent to impose their labor
laws upon the Commission.”
* N.J.S.A. §32.1-175; McKinney’s Unconsolidated Laws §7141.
* But see Delaware River Port Authority v. Fraternal Order of
Police, Penn-Jersey Lodge 30, 290 F.3d 567 (3™ Cir. 2002), where
the Third Circuit reluctantly followed Delaware River and Bay
Authority v. Operating Engineers Local 68, 688 A.2d 56% (NJ.
1996), cert. denied, 522 U.S. 861 (1997), which applied New
22
Indeed, when it suited its purpose, the Port Au-
thority has successfully argued that courts could not
impose aspects of either state’s labor laws. Dezaio
v. Port Authority of New York and New Jersey, 205
F.3d 62, 65 (2nd Cir.), cert. denied, 531 U.S. 818
(2000) (New York anti-discrimination laws); Agesen v.
Catherwood, 260 N.E.2d 525 (N.Y. 1970) (New York
minimum wage law); Baron v. Port Authority of New
York and New Jersey, 968 F.Supp. 924 (S.D.N.Y.
1997) (New York or New Jersey human rights laws);
Port Authority Police Sergeants Benevolent Associa-
tion v. Port Authority of New York and New Jersey,
C.A. No. 97-1651 (WHW) (D.N.J. 1997) (unreported
decision attached at G. 123a) (New York or New
Jersey interest arbitration laws).
In concluding that the Port Authority had no obli-
gation to bargain, the Supreme Court of New Jersey
relied upon two of its earlier decisions, Jn re Local
195, IFPTE, 443 A.2d 187 (1982), and City of Jersey
City v. Jersey City Police Officers Benevolent Ass’n,
713 A.2d 472 (1998), both of which reviewed PERC
decisions interpreting New Jersey law. In Local 195,
the court stated that Fibreboard “is not persuasive
authority” in the public sector. 443 A.2d at 191 n. 8.
Instead, the court formulated its own three-part test
for scope of negotiability decisions. 443 A.2d at 191-
192. In Jersey City, the court applied its own Local
195 test.
Although the New Jersey court might be correct in
refusing to apply Fibreboard in New Jersey public
Jersey law to impose bargaining obligations on a compact
agency. The two Delaware River Port Authority cases demon-
strate that this is a recurring issue meriting review by this
Court.
23
sector cases, the New Jersey Supreme Court was not
considering a New Jersey public sector appeal. Nor
was the court acting in a vacuum when it considered
the Panel decision. It was reviewing a Panel decision
applying the “Fibreboard plus” standard which the
Panel had developed in 1978 [A. 25a n. 12], two years
after its creation, and had applied consistently there-
after. The New Jersey Supreme Court applied New
Jersey precedent contrary to the express directive in
the Instruction:
In all matters relating to this Instruction, includ-
ing determinations as to mandatory and non-
mandatory subjects of negotiation, Panel mem-
bers and other persons appointed by the Panel
shall be guided but not bound by administrative
and judicial interpretations of the public sector
labor law of the states of New York and New
Jersey.
Instruction, Section III, Paragraph D.
Relying upon Niagara Frontier Transportation Au-
thority, 18 PERB 3083 (1985), and New York’s highly
deferential standard of review, the PBA argued that
the New York courts would have affirmed the Panel
decision. Yet the New Jersey Supreme Court did not
consider the views of New York State when it re-
jected the Panel decision.
Because it found Fibreboard was “not persuasive,”
the New Jersey court ignored the requirement in the
Instruction that State law not apply “[iJn all matters
relating to this Instruction, including determinations
as to mandatory and non-mandatory subjects of
negotiation ....” Indeed, pursuant to this directive,
the Panel in 1978 had expressly applied Fibreboard,
not the laws of either State, as the “framework for
24
determining whether a decision made by manage-
ment is a mandatory or non-mandatory subject of
negotiation.” The Panel then created the “Fibreboard
plus substantial impact” test. Citing Auto Workers
vu. NLRB (General Motors), 381 F.2d 265 (D.C. Cir.),
cert. denied, 389 U.S. 857 (1967), and New Jersey and
New York authority, the Panel noted that “even in
the absence of layoffs, a reduction in the size of the
bargaining unit as a result of a decision to subcon-
tract has been held to be a mandatory subject of
bargaining in the private sector... and... in the
public sector.” The Lieutenant’s Case, 77 PAERP 6
(1978) (sl. op. 31, 34-38). The New Jersey Court’s
rejection of Fibreboard colored its rejection of the
Panel’s decision in this case.
Because it found Fibreboard was “not persuasive,”
the New Jersey court did not consider this Court’s
clear distinction between going out of business and
subcontracting an operation. In Textile Workers uv.
Darlington Mfg. Co., 380 U.S. 263 (1965), the Court
held that an employer had an absolute right to termi-
nate its entire business for any reason, but distin-
guished a complete closing from a partial closing. In
First National Maintenance Corp. v. NLRB, 452 U.S.
666 (1981), the Court found no obligation to bargain
over an economically motivated decision to shut down
part of a business. These decisions left unaltered
Fibreboard’s principle that the decision to subcon-
tract is a mandatory subject of bargaining if bargain-
ing unit employees are replaced with those of an
independent contractor to do the same work under
similar conditions of employment. Fibreboard Paper
Prods. Corp. v. NLRB., 379 U.S. at 215.
A major distinction between going out of business
and subcontracting that business is that under gen-
25
erally accepted law the prime contractor remains
responsible for the work performed by the subcon-
tractor. United Capitol Ins. Co. v. Kapiloff, 155 F.3d
488, 498 (4th Cir. 1998); Blanchette v. Cataldo, 734
F.2d 869, 875 (1st Cir. 1984); RESTATEMENT (SECOND)
OF AGENCY §5(1) (1958).” Thus, if the Port Authority
subcontracted IAB security work to JFKIAT, as the
Panel concluded, the Port Authority remained re-
sponsible to New York City for JFKIAT’s work.
However, if the Port Authority terminated its secu-
rity business at LAB, New York City has no claim
against the Port Authority for nonfeasance or malfea-
sance by JFKIAT and/or its subcontractors.
After 9/11, indeed, after the first attack on the
World Trade Center in 1993, is the federal govern-
ment prepared to say, as the New Jersey Supreme
Court did, that a port authority can terminate
its contractually required responsibility for port or
airport security?” The Port Authority’s lease to
JFKIAT expressly provided that the Port Authority
had to review and approve JFKIAT’s security and
guard service. [A. 3la]. Because the Port Authority’s
agreement with New York City provided that “(t]he
Port Authority will provide police for patrolling,
for guarding and for traffic control in the demised
premises,” the Panel [C. 88a-89a, 93a-95a] and the
” Courts rely upon the Restatements to develop federal com-
mon law in Compact Clause litigation. See, e.g., New York v.
O'Neill, 359 U.S. 1, 9 (1959); Doe v. Pennsylvania Board of
Probation and Parole, 513 F.3d 96, 106 (3rd Cir. 2008); Energy
Arkansas, 358 F.3d at 546.
” With its contract with JFKIAT, the Port Authority subcon-
tracted (or terminated) its responsibility for all airport security
except that required by Federal Aviation Administration regula-
tions. 14 C.F.R. Part 107 (1997).
26
Superior Court [D. 105a-106a and n. 1, 111-112]
expressly concluded that JFKIAT was acting “on
behalf of” the Port Authority, which remained ulti-
mately responsible for providing police for airport
security.
Thus the Panel, the Superior Court, and the Appel-
late Division decisions are consistent with federal
principles distinguishing between subcontracting and
“going out of business.” The New Jersey Supreme
Court’s decision is not.
CONCLUSION
The petition for the writ of certiorari should be
granted and the decision of the Supreme Court of
New Jersey should be reversed.
Respectfully submitted,
WILLIAM J. JOHNSON JONATHAN G. AXELROD *
317 South Patrick St. HUGH J. BEINS
‘lexandria, VA 22314 H. DAVID KELLY, JR.
JUSTIN P. KEATING
BEINS, AXELROD, P.C.
1625 Massachusetts Ave., N.W.
Washington, D.C. 20036
* Counsel of Record 202-328-7222
August 28, 2008
APPENDIX
la
APPENDIX A
SUPREME COURT OF NEW JERSEY
A-6 September Term 2007
IN THE MATTER OF THE ALLEGED IMPROPER PRACTICE
UNDER SECTION XI, PARAGRAPH A(d) OF THE
PORT AUTHORITY LABOR RELATIONS INSTRUCTION;
IP 97-28, FINAL DECISION AND ORDER OF THE PORT
AUTHORITY EMPLOYMENT RELATIONS PANEL: PORT
AUTHORITY OF NEW YORK AND NEW JERSEY,
Petitioner-Appellant,
Vv.
PORT AUTHORITY EMPLOYMENT RELATIONS PANEL,
Respondent-Respondent,
and
PORT AUTHORITY POLICE BENEVOLENT
ASSOCIATION, INC.,
Intervenor-Respondent.
February 4, 2008, Argued
April 9, 2008, Decided
On certification to the Superior Court, Appellate
Division.
COUNSEL: Donald F. Burke argued the cause for
appellant.
Christine Carey Lilore argued the cause for respon-
dent Port Authority Police Benevolent Association.
Robert E. Anderson argued the cause for respon-
dent Port Authority Employment Relations Panel
2a
(Mr. Anderson, Genera] Counsel, New Jersey Public
Employment Relations Commission, attorney).
JUDGES: JUSTICE RIVERA-SOTO delivered the
opinion of the Court. CHIEF JUSTICE RABNER
and JUSTICES LaVECCHIA and HOENS join
in JUSTICE RIVERA-SOTO’s opinion. JUSTICE
ALBIN has filed a dissenting opinion, in which
JUSTICE WALLACE joins. JUSTICE LONG did not
participate.
JUSTICE RIVERA-SOTO delivered the opinion of
the Court.
For over a decade, the Port Authority of New York
and New Jersey (Port Authority) and the union
representing its police officers, the Port Authority
Police Benevolent Association, Inc. ‘PBA), have
litigated a discrete issue: whether the May 1997
lease of the international terminal at John F.
Kennedy International Airport (JFK Airport)—and
the resulting redeployment, without any job losses or
terminations, of Port Authority police officers to other
portions of the JFK Airport—gave rise to an obli-
gation on the part of the Port Authority to collectively
bargain that redeployment with the PBA.
Based on an improper practice charge filed by the
PBA, a hearing officer assigned by the Port Authority
Employment Relations Panel (Panel) concluded that
“the Port Authority's unilateral decision to sublease
operational control and management of the [inter-
national terminal] to [a private entity] was not a
mandatory subject of negotiations.” The hearing
officer further concluded that, even if redeployment
of the PBA-represented police officers constituted a
transfer of work covered by the collective bargaining
agreement, the PBA nevertheless had failed to satisfy
3a
the legal requirements necessary to find that such
redeployment was a mandatory subject of negotia-
tions. As a result, the hearing officer recommended
that the PBA’s improper practice charge be “dis-
missed in its entirety.” The Panel rejected the
hearing officer's recommendations, and concluded
instead that “the Port Authority violated the [Port
Authority of New York and New Jersey Labor
Relations} Instruction [that provided for collective
bargaining rights to employees of the Port Authority
and created the Panel] when it transferred PBA unit
work to non-unit employees without negotiating with
the PBA.” Citing to the deference owed to admin-
istrative agencies, both the Law Division and the Ap-
pellate Division sustained the Panel’s determination.
We conclude that, pursuant to the Instruction
governing labor relations at the Port Authority, the
redeployment of Port Authority police officers occa-
sioned by the 1997 lease of the international ter-
minal at JFK Airport was exempt from any collective
bargaining requirement. We further conclude that,
even if the Port Authority was required to collec-
tively bargain the effects of the 1997 lease of the
international terminal at JFK Airport, and even if
the work on the leased premises may well have
constituted “unit work,” the Port Authority was not
obligated to collectively bargain its transfer in any
event.
I.
A.
Recognizing the special legal status of the Port
Authority, we start with an overview of the parties
and their interlocking relationships:
On April 30, 1921, The Port of New York
Authority was established to administer the
4a
common harbor interests of New York and New
Jersey. The first of its kind in the Western
Hemisphere, the organization was created under
a clause of the [United States] Constitution
permitting Compacts between states, with Con-
gressional consent. An area of jurisdiction called
the “Port District,” a bistate region of about 1,500
square miles centered on the Statue of Lib-
erty, was established. In 1972, the organiza-
tion’s name was changed to The Port Au-
thority of New York and New Jersey to more
accurately identify [its] role as a bistate agency.
(http://www.panynj.gov/AboutthePortAuthority/
HistoryofthePortAuthority/.]
The Port Authority is a financially self-
supporting public agency that receives no tax
revenues from any state or local jurisdiction and
has no power to tax. It relies almost entirely on
revenues generated by facility users, tolls, fees,
and rents. The Governor of each state appoints
six members to the Board of Commissioners,
subject to state senate approval. Board Mem-
bers serve as public officials without pay for
overlapping six-year terms. The Governors
retain the right to veto the actions of Commis-
sioners from his or her own state. Board meet-
ings are public.
The Board of Commissioners appoints an
Executive Director to carry out the agency’s
policies and manage the day-to-day operations.
(http://www. panynj.gov/AboutthePortAuthority/
Governance’.
See generally, N.J.S.A. 32:1-1 to 2-37; N.Y. Unconsol.
Laws Ch. 151 § 1 (2007).
5a
In 1976, the Port Authority adopted its Labor
Relations Instruction. Among other things, the
Instruction (1) safeguarded the right to collec-
tively bargain via employee organizations for Port
Authority non-managerial employees; (2) created the
Panel to administer disputes between the Port
Authority and its employee organizations; (3) estab-
lished procedures for the processing of those disputes;
and (4) provided for judicial review of any decisions of
the Panel. The grant of authority to the Panel was
subject to a significant exemption: Section III(D) of
the Instruction specifically provides that “[nJot-
withstanding the foregoing, the mission and man-
agement responsibilities of the [Port] Authority,
including its organization, staffing, planning, oper-
ating and financial policies, shall not be subjects of
nego’ iation with employee organizations.” (Emphasis
supplied.)’
Finally, as provided in its collective bargaining
agreement with the Port Authority, the PBA is “the
sole and exclusive representative of [Port Authority]
Police Officers for the purpose of collective negotia-
tions with respect to rates of pay, hours of work and
other terms and conditions of employment.”
Having defined the triangle of parties in this dis-
pute—the Port Authority, the Panel and the PBA—
we turn to the facts underlying this controversy.
' This Instruction was adopted by the Board of Com-
missioners of the Port Authority in 1976 at a public meeting of
the Board; the minutes of that meeting were transmitted to the
Governors of both New Jersey and New York and were
approved, which made the Instruction effective and in force. See
N.J.S.A. 32:2-6; N.Y. Unconsol. Laws Ch. 151-A § 2 (2007).
6a
B.
In April 1947, the Port Authority entered into an
agreement with the City of New York. That
agreement provided that the Port Authority would
lease and operate the municipal airports then owned
by New York City; among them was Idlewild Airport,
now known as JFK Airport. Section 11(c) of the
agreement stipulates that “[t]he Port Authority will
provide police for patrolling, for guarding and for
traffic control in the demised premises [and that t]he
City will have no responsibility for maintaining .. .
police personnel in the demised premises.” Section
37 of the agreement further provides that
the Port Authority shall have full power and
discretion to proceed with the financing, reha-
bilitation, expansion, improvement, develop-
ment, operation and maintenance of the mu-
nicipal air terminals, and to enter into such
contracts, agreements, subleases or other ar-
rangements with respect thereto as it may deem
necessary and desirable, and all matters
connected therewith, including but not limited
to, all details of financing, construction, leasing,
charges, rates, tolls, contracts, and operation
shall be within the sole discretion of the Port
Authority; and the decisions of the Port
Authority in connection with any and all matters
concerning the municipal air terminals shall be
controlling, provided that all such things shall be
done by the Port Authority in its own name and
on its own credit.
C.
In July 1991, the Port Authority entered into a
Memorandum of Agreement with the PBA. That
7a
Memorandum recognized the PBA as the sole and
exclusive representative of the Port Authority police
officers for collective bargaining purposes. Section
XXI(1) of the Memorandum of Agreement explains
that, “[djuring the term of this Memorandum of
Agreement, no Police Officer . . . shall be deprived of
his employment as a Port Authority Police Officer
. . . by reason of the abolition or modification of
the requirements for additional police coverage at
[JFK] Airport, ... pursuant to. . . Federal Aviation
Regulations.” It also states, in Sections XXX(1) and
(7), as follows:
Subject to other provisions herein, and except as
otherwise set forth in this Agreement, during the
term of this Agreement, there will be no further
or additional transfer and/or reassignment of
unit work currently and heretofore performed by
unit employees without negotiation and all other
unit work currently and heretofore performed by
Police Officers shall be maintained.
All existing Police Officer positions and/or as-
signments shal] be maintained during the term
of this Memorandum of Agreement in accordance
with the Police Position and/or Assignment List
agreed upon between the parties so long as the
work being performed continues to be performed
by or on behalf of the Port Authority.
Section II(1) of the Memorandum of Agreement
states that “any such practice, procedure or policy
[governing existing terms and conditions of em-
ployment of Police Officers] pursuant to any...
instruction . . . shall not be limited, restricted,
impaired, removed or abolished unilaterally.” Con-
8a
sistent with that limitation, Section II(2) of the
Memorandum of Agreement makes clear that
{a] charge or complaint that the [Port] Authority
has unilaterally limited, restricted, impaired,
removed or abolished such a practice, procedure
or policy governing an existing term and con-
dition of employment which is not specifically
enumerated or set forth in this Memorandum of
Agreement shall not be subject to or processed
through the _ grievance-arbitration procedure
referred to in Section XXIII of this Memorandum
of Agreement. *
D.
Starting in 1994, the Port Authority embarked on a
process to determine whether to modernize or replace
the international terminal at JFK Airport; among
the proposals to be considered was the solicitation
of private investors. The following year, the Port
Authority did solicit in the private sector and
received four proposals. In 1997, it accepted a
proposal from JFK International Air Terminal LLC
(JFKIAT)* that provided for the construction of a new
international terminal at an overall cost of $1.2
billion.
* Section XXIII of the Memorandum of Agreement specifically
provides that “alleged violation|s}” of Section II(1) of the
Memorandum of Agreement are exempt from the grievance or
arbitration procedures of the Memorandum of Agreement and,
hence, lie outside the Panel's limited jurisdiction.
* JFKIAT is a limited liability company comprised of three
separate business interests: the developer responsible for the
construction of the new terminal, the operator responsible for
the operation of the completed terminal, and the financing
source responsible for the financing of the new terminal,
including the issuance of Port Authority municipal bonds.
9a
The Port Authority and JFKIAT entered into an
exhaustive lease that outlined each party’s obli-
gations in respect of the international terminal at
JFK Airport. Stating that “the Port Authority is
obligated to have in effect and does now have in effect
an airport security plan in accordance with [federal
regulations],” the lease recites that “[t]he Security
Plan outlines law enforcement requirements of the
airport operator and physical barriers and access
procedures to monitor and restrict access[.]” Ac-
knowledging that “the implementation, maintenance
and operation of the Premises pursuant to the
requirements of the Security Plan is essential to the
operation of the Premises and of the Airport(,]”
JFKIAT agreed to “assume and fulfill all of the Port
Authority’s obligations and responsibilities under the
Security Plan and [to] take all measures required,
necessary or appropriate to implement and carry out
the requirements of the Security Plan.”
E.
Approximately one month before entering into the
lease with JFKIAT, the Port Authority met with the
PBA, explained the lease proposal for the inter-
national terminal at JFK Airport, and assured the
PBA that “no Port Authority Police Officers would be
displaced from JFK Airport nor suffer any negative
impact as a result of” the lease. Those assurances
were followed by a Port Authority memorandum
dated May 12, 1997 that advised that, effective at
noon the following day, JFKIAT would “assume
responsibility for the [international terminal, that]
police services commensurate with that provided
other unit terminals at JFK will be maintained|[, and
that flrontage management of pedestrians and
vehicles will become the responsibility of [JFKIAT].”
10a
The lease became effective on May 13, 1997 and,
from that date forward, JFKIAT assumed all security
functions at JFK Airport’s international terminal.
Although those events required the redeployment of
the Port Authority police officers formerly assigned to
the international terminal, no police officer lost his or
her job; the sole record evidence of any possible
impact on the police officers was the unsubstantiated
opinion of the chief of the Port Authority police
department that, “by redeploying [Port] Authority
Police Officers, he was ‘certain’ that their overtime
was reduced.”
Six weeks later, the PBA protested. In a letter
dated June 24, 1997 and addressed to the Port
Authority's director of human resources, the PBA set
forth its view that “the Port Authority Labor
Relations Instruction and the Memorandum of
Agreement between the Port Authority and |[the
PBA] forbid this unilateral action by the Port
Authority.” It also asserted that, “without prejudice
to [its] right to file an improper practice or griev-
ance[, the] PBA requests immediate negotiations
regarding the impact of this decision upon our
members[,]” explaining that “(t]he PBA will take
appropriate action thereafter.” On July 2, 1997,
the Port Authority responded, rejecting any claim
that the Port Authority had acted improperly, but
expressing a willingness to discuss the PBA’s con-
cerns “as part of overall negotiations.” The PBA did
not respond to that invitation. Instead, on July 28,
1997, the PBA filed its improper practice charge
against the Port Authority.
lla
The PBA’s improper practice charge specifically
alleged that
the Port Authority has either hired, subcon-
tracted, permitted or suffered non-unit personnel
to perform PBA unit work. Civilian personnel
are directing and controlling traffic and are
performing security functions at sites at or near
the [international terminal,] which functions
have traditionally and historically been per-
formed by the PBA. This action was taken by the
employer without any prior negotiation with the
PBA in violation of the Labor Relations In-
struction and the Memorandum of Agreement.
The Port Authority submitted a blanket denia! of
those charges, and the Panel assigned the matter to a
hearing officer.*
After reviewing the factual background and the
contentions of the parties, the hearing officer ad-
dressed the issues before him. First, he reasoned that
the Security Plan work transferred via the lease from
the Port Authority to JFKIAT consisted of “functions
previously performed by Port Authority Police
Officers both inside . . . and in the frontage area [of
the international terminal].” He thus concluded that
“the disputed work in issue is unit work, as alleged.”
* The first hearing officer to whom this matter was assigned
conducted two hearing dates, but then resigned his appoint-
ment upon being advised that he was being proposed for
appointment to a federal post; shortly thereafter, he was
appointed to serve as chairman of the National Labor Relations
Board. The matter was reassigned to Hearing Officer Irwin
Kaplin, who reviewed the evidence and transcripts of the first
two hearing dates, conducted further hearings, considered the
parties’ post-hearings submissions, and filed a report and
recommendation in the matter.
12a
However, the hearing officer found that “the rec-
ord supports the [Port Authority’s] contention that
with the takeover by JFKIAT of [the international
terminal], the [Port] Authority went out of the
business of managing and operating that facility[.]”
He therefore also found that “the [Port] Authority did
not transfer the disputed work.” Based on those
findings, he concluded that there was no basis for the
PBA’s improper practice charge.
The hearing officer's analysis did not end there.
After assuming the PBA had made out a case
that the work was “unit work” and that the Port
Authority had transferred it to JFKIAT, he reasoned
that the PBA had failed to establish that “the [Port]
Authority’s decision to do so was a mandatory subject
of negotiations[.)” Applying the “Fibreboard’ plus
substantial impact” test, he determined that the PBA
had failed to satisfy three of the four prongs of that
test and, thus, concluded that “the unilateral decision
that led to the loss of unit work at [the international
terminal] by [Port] Authority Police Officers was not
a mandatory subject of negotiations.” He recom-
mended that the PBA’s improper practice charge be
dismissed in its entirety.°
The PBA filed exceptions with the Panel. Although
the Panel accepted the hearing officer’s factual
findings, it rejected the majority of the hearing
officer's conclusions, concluding instead that “the
* See Fibreboard Paper Prods. Corp. v. Nat'l Labor Relations
Bd., 379 U.S. 203 . . . (1964); City of Jersey City v. Jersey City
Police Officers Benevolent Ass’n, 154 N.J. 555, 575-76, 713 A.2d
472 (1998).
* After the hearing officer rendered his report and rec-
ommiendation, the PBA moved to reopen the hearing. That
motion was denied, and that denial was not appealed.
13a
Port Authority violated the Instruction when it trans-
ferred PBA unit work to non-unit employees without
negotiating with the PBA.” It noted that “[t]he initial
inquiry in a matter involving the alleged unlawful
transfer of unit work is whether the work is, in fact,
unit work, i.e., work which historically has been
performed by the unit.” It cautioned that “[t]he work
need not have been exclusively performed by the unit
to constitute unit work.” It observed that “only the
preservation of unit work is negotiable” and that
“there is no obligation to negotiate over the decision
to eliminate, as opposed to transfer, unit work.”
Consistent with the hearing officer’s conclusions,
the Panel determined that “the work in dispute is
unit work.” It then addressed “the next threshold
inquiry: was the work transferred.” It “conclude[d]
that it was.” Based exclusively on its interpretation of
the lease between the Port Authority and JFKIAT,
the Panel reasoned that “[t]he work has not been
eliminated but rather subcontracted by the Port
Authority. Therefore, pursuant to Panel precedent,
there has been a transfer of unit work.” Because it
had “determined . . . that the work in question is unit
work and that there has been a transfer,” the Panel
applied the “Fibreboard plus substantial impact” test,
explaining that
{t]he Port Authority was obligated to negotiate
about the decision to transfer the work at issue
if:
The Port Authority has not altered its basic
operation;
The Port Authority has not made a capital
investment which, if subject to collective nego-
tiations, would significantly abridge the [Port]
Authority’s freedom to manage its business;
al
l4a
The issues which motivated the decision were
peculiarly suitable for resolution within the
collective negotiations framework; and
The decision substantially impacts upon the
wages, hours, [and] terms and conditions of
employment, either quantitatively or quali-
tatively.
It concluded that (1) “[t]he Port Authority has not
altered its basic operation as a result of its lease
arrangement with JFKIAT{;]” (2) “the issue here did
not involve a capital investment which would, if
collectively negotiated, significantly abridge the Port
Authority’s freedom to manage its business[;]” (3)
“the issues which motivated the decision were
peculiarly suitable for resolution within the collective
bargaining process|;])” and (4) “the decision to have
the work performed by non-unit [personnel] rather
than by Port Authority police officers represented by
the PBA had a substantial impact upon the wages,
hours and working conditions of the PBA bargaining
unit.” It thus determined to sustain the PBA’s im-
proper practice charge because “the Port Authority
violated Instruction Section XI(A)(d) and the Memo-
randum of Agreement when, without prior nego-
tiations, it transferred the work to JFKIAT.” As a
remedy, the Panel ordered that the Port Authority
“cease and desist from unilaterally transferring PBA
unit work to non-unit personnel|[;]” that the Port
Authority “restore the status quo ante by restoring
the unit work at issue to the PBA bargaining unit;”
that the Port Authority “negotiate upon request with
the PBA before unilaterally changing terms and
conditions of employment;” and that the Port
Authority post, “at appropriate places of business[,]”
a specified notice to all employees consistent with the
substantive relief it afforded the PBA.
15a
Seeking a review of the Panel’s determination,’ the
Port Authority filed an action in lieu of prerogative
writs pursuant to R. 4:69-1 to -7.° The trial court
determined that “the Panel is an administrative
agency created to review employment issues under
the Instruction.” From that premise, the trial court
afforded the Panel the deference New Jersey allows
to the determinations of administrative agencies, see
In re Taylor, 158 N.J. 644, 656, 731 A.2d 35 (1999);
Pub. Serv. Elec. & Gas Co. v. N.J. Dept of Envtl.
Prot., 101 N.J. 95, 103, 501 A.2d 125 (1985), and
concluded that “a decision of the Panel will be upheld
if it is supported by substantial evidence in the
record, and is neither arbitrary, capricious, nor
unreasonable.” It concluded that “the Final Order
and Decision of the Panel is supported by sub-
stantial credible evidence in the record and is neither
_ arbitrary, capricious, or unreasonable substantially
for the reasons given by the Panel in its Final
Decision and Order[.]” It affirmed the Panel’s
determination.
The Port Authority pressed its appeal to the
Appellate Division, presenting a two-pronged attack.
First, the Port Authority argued that, under the
Instruction, it is afforded unfettered discretion in
respect of its “mission and management respons-
ibilities” and that these specifically include “its
organization, staffing, planning, operating and finan-
* The Port Authority named only the Panel as a party de-
fendant. The PBA sought, and was granted, intervenor status.
* Both N.J.S.A. 32:1-175 and N.Y. Unconsol. Laws Ch. 599
§ 1 (1977) list several avenues of review from orders from the
Panel, including that such orders “shall be . . . reviewable .. .
by action in lieu of prerogative writis] in the State of New
Jersey[.]”
16a
cial policies[.]” Second, it argued that the Panel’s
analysis of the lease between the Port Authority and
JFKIAT was incorrect as a matter of law, and that
the Panel’s conclusion that the Port Authority
retained a vestigial obligation to provide security to
the international terminal was in error. The Ap-
pellate Division, in an unpublished opinion that also
relied heavily on a deferential standard of review,
declared itself “satisfied that the Panel’s findings and
conclusions of law reached therefrom are unas-
sailable.” It thus affirmed the judgment of the trial
court.
We granted the Port Authority’s petition for
certification, 191 N.J. 317, 923 A.2d 232 ‘2007), and,
for the reasons that follow, we reverse the judgment
of the Appellate Division, and remand the cause for
the entry of an order vacating the Panel’s order and
dismissing the improper practice charge filed by the
PBA against the Port Authority.
II.
The Port Authority initially advanced four grounds
for certification. First, it argued that, because the
Port Authority was created by the exercise of the
sovereign powers of two states which retained a
significant portion of their immunity in the In-
struction, the Appellate Division did not defer to
“established and well recognized governmental pre-
rogatives regarding the manner in which to provide
essential governmental services by disregarding
express limitations imposed on the Panel in deciding
labor disputes.” Closely aligned to that argument is
the Port Authority's contention that the Appellate
Division did not show proper deference to principles
of New Jersey and New York law concerning gov-
ernmental prerogatives in transferring or subcon-
17a
tracting work. Third, the Port Authority urged that
the Appellate Division erred in giving deference to
the Panel’s conclusions of law in respect to the
provisions of the lease between the Port Authority
and JFKIAT. Fourth, the Port Authority claimed
that the Appellate Division failed to properly credit
the hearing officer’s conclusions, that is, that the
Panel, and by extension the Appellate Division, did
not determine that the hearing officer’s conclu-
sions were not supported by substantial credible
evidence or were otherwise arbitrary, capricious or
unreasonable.
In its reply brief, the Port Authority pressed its
overarching claim: that this case requires that the
Court address “the fundamental power and authority
of government to make important decisions regard-
ing the manner in which governmental services are
provided without being shackled by having to engage
in labor negotiations before such decisions are made.”
According to the Panel, the sole issue in this case is
whether the Panel abused its discretion. It claimed
that “[tJhe Panel’s standards under the Instruction
for analyzing transfer of unit work allegations have
been in place and accepted by the parties for over 25
years” and, thus, no abuse of discretion is present.
The PBA asserted that “[t]he issue is not the
manner in which essential governmental services
should be provided” as advanced by the Port
Authority. In the PBA’s view, “[t]he issues in this
case are controlled by the historic obligations
developed by the Port Authority through its own
decision to utilize bargaining unit members to
perform specified and limited work” as well as “its
own decision to require its sub-lessee to perform
that bargaining unit’s work without negotiation|[.]”
18a
It asserts that, viewed thusly, there is no basis to
overturn the Appellate Division’s judgment.”
We address those issues as follows. First, we
determine the appropriate standard of review for
determinations made by the Panel. Next, we con-
sider whether the redeployment of the Port Authority
police officers from the international terminal was a
mandatory subject of collective bargaining at all.
Finally, we discuss whether the performance of
functions under the Security Plan by the inter-
national terminal’s new lessee constituted the
transfer of “unit work” previously performed by Port
Authority police officers and, if so, whether an
obligation to collectively bargain that transfer was
triggered.
Ill.
A.
The standard of review to be applied to decisions by
the Panel has, to date, avoided judicial scrutiny in
New Jersey.” As a preliminary matter, that deter-
* We also received and considered post-argument submis-
sions from the Port Authority and the PBA in respect of whether
the Port Authority offered to negotiate either the redeployment
of the Port Authority police officers or the effects of that
redeployment. Nothing in those submissions added to the facts
already in the record or to the arguments previously advanced
by the parties.
* We recognize that, in addition to the unpublished decision
of the Appellate Division below, two other unpublished deci-
sions of the Appellate Division have addressed the standard of
review applicable to Panel decisions; each has concluded that
decisions by the Panel are to be treated as if they were issued by
an administrative agency. However, we underscore that “[nJo
unpublished opinion shall constitute precedent or be binding
upon any court” and that “no unpublished opinion shall be
19a
mination requires consideration of whether the Panel
qualifies as an “administrative agency.” We conclude
that, for purposes of judicial review, the Panel is an
administrative agency. The Administrative Proce-
dure Act, N.J.S.A. 52:14B-1 to -25, defines an agency
subject to its reach to include “each of the principal
departments in the executive branch .. . and all
boards, divisions, commissions, agencies, depart-
ments, councils, authorities, offices or officers within
any such departments .. . authorized by statute to
make, adopt or promulgate rules or adjudicate
contested cases[.]” N.J.S.A. 52:14B-2(a). Although
the Port Authority is not constituted as or within a
department of the Executive Branch of government,
it is to “be regarded as performing an essential
governmental function|[,]” N.J.S.A. 32:1-35.4, includ-
ing the authority to “make suitable rules and
regulations|[.]” N.J.S.A. 32:1-19."" Additionally, the
cited by any court.” R. 1:36-3. Nevertheless, we note paren-
thetically that each of those decisions reaches the same
conclusion we endorse today in respect of the proper standard of
review for Panel determinations. In its reported case law, New
York has applied a deferential standard of review to Panel
decisions. See Pagano v. Port Authority, 270 A.D.2d 206, 705
N.Y.S.2d 230 (N.Y. App. Div. 2000) (applying standard that
Panel determination “may not be disturbed since substantial
evidence supports [it]”); Pell v. Bd. of Educ., 34 N.Y.2d 222, 313
N.E.2d 321, 356 N.Y.S.2d 833, 839 (N.Y. 1974) (explaining that
administrative tribunal’s factual determinations are sustained if
supported by substantial evidence, and exercise of discretion by
administrative tribunal will be sustained “unless there is no
rational basis for the exercise of discretion or the action
complained of is ‘arbitrary and capricious.’”).
" N.J.S.A. 32:1-19 is the codification of Article XVIII of the
interstate compact between New York and New Jersey dated
April 30, 1921 that created the Port Authority. In contrast, New
York codified the entirety of the compact creating the Port
20a
Instruction—which created the Panel and vested it
with the power to adjudicate labor disputes—was
approved by the Governors of both New Jersey and
New York, respectively, thereby giving it force and
effect. N.J.S.A. 32:2-6; N.Y. Unconsol. Laws ch. 151-A
§ 2 (2007). That Instruction authorizes the Panel to
adjudicate cases. In the aggregate, then, those
considerations lead to the conclusion that Panel
decisions presumptively are worthy of the deference
afforded decisions by administrative agencies.
Having concluded that Panel decisions are to be
measured by the standard applicable to adminis-
trative agency decisions, we shift our focus to de-
fining the appropriate standard of review to be
applied. In that regard, we recently observed that
“(t]he scope of [judicial] review lof administrative
agency actions] is limited.” Jn re Herrmann, 192 N.J.
19, 27, 926 A.2d 350 (2007) (citing Jn re Carter, 191
N.J. 474, 482, 924 A.2d 525 (2007)). We underscored
that “{a]n administrative agency’s final quasi-judicial
decision will be sustained unless there is a clear
showing that it is arbitrary, capricious, or unrea-
sonable, or that it lacks fair support in the record.”
Id. at 27-28, 926 A.2d 350 (citing Campbell v. Dep't of
Civil Serv., 39 N.J. 556, 562, 189 A.2d 712 (1963)).
We cautioned that “[t]hree channels of inquiry in-
form the appellate review function:
(1) whether the agency’s action violates express
or implied legislative policies, that is, did the
agency follow the law; (2) whether the record
contains substantial evidence to support the
findings on which the agency based its action;
Authority—including Article XVIII—in one section. See N.Y.
Unconsol. Laws ch. 151 § 1 (2007).
2la
and (3) whether in applying the legislative
policies to the facts, the agency clearly erred in
reaching a conclusion that could not reasonably
have been made on a showing of the relevant
factors.
Id. at 28, 926 A.2d 350 (quoting Mazza v. Bd. of Trs.,
143 N.J. 22, 25, 667 A.2d 1052 (1995)).
Thus, “[wJhen an agency’s decision meets those
criteria, then a court owes substantial deference to
the agency’s expertise and superior knowledge of a
particular field.” Jbid. (citations omitted). Judicial
respect for proper administrativ> agency action runs
deep: “Deference controls even if the court would
have reached a different result in the first instance.”
Ibid. (citing In re Taylor, 158 N.J. 644, 657, 731 A.2d
35 (1999)).
That said, judicial allegiance to the actions of
administrative agencies is neither unlimited nor
blind. We have “emphasized that the judicial role in
this kind of case must be both sensitive and cir-
cumspect [because wle deal here with the regulatory
determination of an administrative agency that is
invested by the Legislature with broad authority and
wide discretion in a highly specialized area of pub-
lic life.” In re Hunterdon County Bd. of Chosen
Freeholders, 116 N.J. 322, 328, 561 A.2d 597 (1989).
Therefore, it is only “in situations where agency
expertise is essential towards understanding the
proper context of a dispute [that] a deferential
standard of review is appropriate.” Jbid.
B.
The application of this standard of review informs
our conclusion that the Panel's determination that
“the Port Authority violated the Instruction when it
22a
transferred PBA unit work to non-unit employees
without negotiating with the PBA” is not entitled to
any special deference and should be rejected. This is
because the Panel neither followed the law nor relied
on any particularized expertise in reaching its
conclusion. In specific, the same organic document
that created the Panel—the Instruction—also limits
its jurisdiction. In clear and explicit terms, the
Instruction states that “the mission and manage-
ment responsibilities of the [Port] Authority, includ-
ing its organization, staffing, planning, operating and
financial policies, shall not be subjects of negotiation
with employee organizations.” ‘Emphasis supplied).
The lease arrangement in respect of the international
terminal delegated to the lessee all of the Port
Authority’s obligations under its lease with the City
of New York and, hence, relieved the Port Authority
from the day-to-day operational responsibility for
that terminal. For that reason, the Port Author-
ity’s plan to lease to a private party the whole of
the international terminal directly implicated “its
organization, staffing, planning, operating and finan-
cial policies,” a plan that, prior to its implementa-
tion, was presented to and approved by the Port
Authority's Board and, by the submission and
approval of its minutes, by the Governors of both
New Jersey and New York. Furthermore, the Panel’s
decision hinged solely and exclusively on its inter-
pretation of the lease between the Port Authority and
JFKIAT, a matter that does not reside within the
Panel’s unique area of competence. When gauged in
the aggregate, then, the Panel’s determination must
be rejected.
23a
c.
A like result obtains even if one concludes that the
Panel did have the authority to substantively deter-
mine this matter. We agree with the unanimous
determinations of the hearing officer, the Panel,
the trial court and the Appellate Division that the
security personnel “hired by JFKIAT .. . are per-
forming functions previously performed by Port
Authority Police Officers both inside . . . and in the
frontage area to [the international terminal].” How-
ever, we part company with the Panel’s deter-
mination that Port Authority police officer work
at the international terminal was transferred to
JFKIAT in a manner akin to a delegation as opposed
to an outright assignment.
Relying on disparate sections of the lease between
the Port Authority and JFKIAT, the Panel concluded
that the security obligations at the international
terminal “hal[d] not been eliminated but rather
subcontracted by the Port Authority” to JFKIAT.
That conclusion simply is not supported by this
record. On the contrary, the record supports the view
of the hearing officer in respect of the continu-
ing relationship between the Port Authority and
JFKIAT concerning the operation of the international
terminal. That is, that under the lease, the Port
Authority withdrew from any further operational
responsibility for that terminal. In particular, he
noted that, “aside from retaining some _ general
oversight of [the international t]erminal .. . as lessor,
the [Port] Authority no longer maintains and oper-
ates that facility in any cognizable sense.”
24a
D.
Moreover, even if one concludes that the Panel had
the authority to determine this controversy and that
the Port Authority in fact transferred unit work to
JFKIAT, the question whether the Port Authority
was obligated to collectively bargain that transfer
remains. We conclude that, in the circumstances
presented, the Port Authority was not required to
collectively bargain with: the PBA the transfer to
JFKIAT of the Port Authority’s obligations under
the Security Plan in respect of the international
terminal.
It is well-settled that employers and employee
representatives must bargain with each other in
good faith in respect of “wages, hours, and other
terms and conditions of employment|.]” Natl Labor
Relations Bd. v. Wooster Div. of Borg-Warner Corp.,
356 U.S. 342, 348 . . . (1958) (quoting Section 8(d)
of the National Labor Relations Act, 29 U.S.C.
§ 158(d)). For that reason, whether an employer can
“contract out” work has been determined to be “well
within the literal meaning of the phrase ‘terms and
conditions of employment.” Fibreboard Paper Prods.
Corp. v. Nat! Labor Relations Bd., 379 U.S. 203,
210... (1964). That overall rule is subject to a sig-
nificant limitation: “As to other matters, however,
each party is free to bargain or not to bargain, and to
agree or not to agree.” Nat'l Labor Relations Bd. uv.
Wooster Div. of Borg-Warner Corp., supra, 356 U.S. at
349 ....
Our jurisprudence has refined that analysis. Thus,
we have held that, in the context of public employ-
ment, a topic is a proper subject for negotiation
“when (1) the item intimately and directly affects the
work and welfare of public employees; (2) the subject
25a
has not been fully or partially preempted by statute
or regulation; and (3) a negotiated agreement would
not significantly interfere with the determination
of governmental policy.” In re Local 195, IFPTE,
88 N.J. 393, 404, 443 A.2d 187 (1982). Those
refinements are necessary because, “[t]lo decide
whether a negotiated agreement would significantly
interfere with the determination of governmental
policy, it is necessary to balance the interests of the
public employees and the public employer.” Jd. at
404-05, 443 A.2d 187. Thus, “[w]hen the dominant
concern is the government’s managerial prerogative
to determine policy, a subject may not be included in
collective negotiations even though it may intimately
affect employees’ working conditions.” Id. at 405, 443
A.2d 187. See also, City of Jersey City v. Jersey City
Police Officers Benevolent Ass’n, 154 N.J. 555, 568-74,
713 A.2d 472 (1998) (applying Local 195 negotiability
test).
In the line of authority developed by the Panel, the
aggregate of those principles is referred to as the
“Fibreboard plus substantial impact” test." That test
was developed to “balance[] the right of em-
ployees to engage in collective bargaining to preserve
unit work against the right of the Port Authority to
manage its operations.” Jn re an alleged Improper
Practice under Section XI(A)(d) of the Port Authority
Labor Relations Instruction, 94 PAERP 21, at 16
(1998). In disputed matters before the Panel con-
cerning transfers of work, once it is determined that
the work at issue is “unit work” and that the unit
work has been transferred from employees covered by
“ The Panel first developed this test in The Lieutenant's Case,
77 PAERP 6 (1978).
26a
a collective bargaining agreement, “[t]he test requires
the Panel to perform the following four-part analysis:
1. Was there a basic alteration of the employer’s
operation?
2. Was there a capital investment involved,
which would, if collectively bargained, signifi-
cantly abridge the company’s freedom to manage
its business?
3. Were there issues which motivated the deci-
sion[,] such as reducing the work force, decreas-
ing fringe benefits, and eliminating overtime
payments, peculiarly suitable for resolution
within the collective bargaining agreement?
4. Whether the removal of work from the bar-
gaining unit has a significant impact upon the
bargaining unit?
(Ibid. }
In its application, “(t]he test is straight-forward.”
Ibid. “If the answer to either of the first two
questions is ‘yes,’ the transfer of unit work is not a
mandatory subject of negotiations.” Jbid. “On the
other hand, if the answers to the first two questions
are ‘no,’ and the answers to both questions 3 and 4
are ‘yes, the Port Authority must negotiate with
the bargaining unit before it may transfer the work.”
Id. at 16-17. Finally, “[t]he charging party bears the
burden of proving each element of this four-part
framework.” Id. at 17.
Subjecting the record before us to the “Fibreboard
plus substantial impact” test leads to the conclusion
that the transfer of the Security Plan work at the
international terminal from the Port Authority to
JFKIAT was not a mandatory subject of negotiations.
27a
On the first question—whether there was a basic
alteration of the Port Authority’s operations—the
answer must be “yes.” No doubt, by transferring all
obligations in respect of the international terminal to
JFKIAT, thereby freeing itself of the operational
responsibilities for that terminal, the Port Authority
indisputably altered its operations in a most basic
and fundamental manner. Second, the transaction
with JFKIAT involved a $1.2 billion lease agreement
that required an $82 million capital investment by
JFKIAT in lieu of the Port Authority itself having to
replace roadways and parking at the international
terminal; the Port Authority also retained a $15
million soil remediation obligation. Those facts
compel the conclusion that, in the Port Authority-to-
JFKIAT lease transaction, there was a capital
investment involved, which would, if collectively
bargained, significantly abridge the Port Authority's
freedom to manage its business.
According to the Panel’s own precedent, an
affirmative answer to either of the first two questions
resolves the inquiry in favor of ruling that the
transfer of the unit work is not a mandatory subject
of negotiations. Jd. at 16. That conclusion is
buttressed further by applying the third and fourth
parts of the “Fibreboard plus substantial impact”
test. In respect of the third prong, the hearing offi-
cer found that the international terminal “was the
anomaly while the [Port] Authority operated the
facility.” This is so because, of the nine terminals at
JFK Airport, the international terminal was the sole
remaining terminal operated by the Port Authority;
by that point, all others had been leased to third
parties. As the hearing officer succinctly described,
“once operational control passed to JFKIAT, [the
international terminal] became the mirror facility to
28a
the other eight unit air terminals where security and
traffic contro] are also exclusive functions of the unit
air terminal lessee/operators.” Finally, the removal
of the work from the PBA did not have a significant
impact on the PBA. The record is clear that not one
police officer lost his or her position as a result of the
lease of the international terminal. The most the
record contains is the unsubstantiated opinion of the
Port Authority's police chief that the police officers’
overtime somehow was reduced by reason of the
JFKIAT lease.
In sum, we concur with the hearing officer’s well-
supported conclusions that
the PBA failed to satisfy its burden of estab-
lishing that the Port Authority hired, subcon-
tracted, or permitted civilian [personnel] to
perform unit work previously performed by Port
Authority Police Officers at the [international
terminal]. Under a sublease negotiated by the
Port Authority and a consortium known as
JFKIAT, the latter entity assumed operational
control and management of the [international
terminal]. JFKIAT was solely responsible for
hiring and assigning the disputed work to the
[personnel] in issue. It is not alleged nor does the
record reveal that the Port Authority and
JFKIAT are joint employers.
He further found that “the Port Authority’s uni-
lateral decision to sublease operational control and
management of the [international terminal] to
JFKIAT was not a mandatory subject of negotia-
tions” and “that the Port Authority did not violate the
work preservation provision contained in the Memo-
randum of Agreement or Section XI(A\d) of the In-
struction|.]” We adopt those conclusions as our own.
29a
IV.
The judgment of the Appellate Division is re-
versed, and the cause is remanded to the Law
Division for the entry of an order vacating the Panel's
order and dismissing the impeoper practice charge
filed by the PBA.
CHIEF JUSTICE RABNER and JUSTICES
LaVECCHIA, and HOENS join in JUSTICE RIVERA-
SOTO’s opinion. JUSTICE ALBIN filed a separate
dissenting opinion in which JUSTICE WALLACE
joins. JUSTICE LONG did not participate.
30a
JUSTICE ALBIN, dissenting.
Until today, the Port Authority Employment
Relations Panel (Panel) was widely recognized as
having both the expertise and authority to determine
the types of labor disputes that are subject to
collective bargaining. In a thorough and thoughtful
opinion supported by its own precedents, the Panel
came to the unremarkable conclusion that the Port
Authority of New York and New Jersey could not
privatize the work of Port Authority police officers
without first engaging in good faith negotiations with
the officers’ bargaining unit. Both management and
the union delegated to the Panel the authority to
resolve the very fact-sensitive labor-management
dispute present in this case. The trial court and
Appellate Division accorded the Panel’s findings the
traditional deference owed to an administrative
agency. The majority has ignored that deference and
substituted its own judgment to reach a different
result. In doing so, and in reversing the decisions of
not only the Panel but also the trial court and
Appellate Division, the majority has swept aside the
obligation of management—pursuant to a collective
negotiations agreement—to bargain in good faith
with its employees for the purpose of reaching an
equitable resolution of a labor dispute. I therefore
respectfully dissent.
I.
In 1947, New York City and the Port Authority
entered into an agreement (1947 Agreement) that
placed what is now known as JFK Airport within the
Port Authority’s jurisdiction. In accordance with the
1947 Agreement, the Port Authority is required to
“provide police for patrolling, for guarding and for
traffic control” at JFK Airport. Jn re an Alleged
ee
3la
Improper Practice under Section XI(A)(d) of the Port
Auth. Labor Relations Instruction, 97 PAERP 28, at
5 (2001).
In a document entitled the Port Authority of New
York and New Jersey Labor Relations Instruc-
tion (Instruction), the Port Authority and the
unions servicing JFK Airport, including the Police
Benevolent Association (PBA), created the Panel to
resolve labor disputes arising from their collective
negotiations agreements. In the Instruction, the Port
Authority and the PBA delegated to the Panel the
authority to make “determinations as to mandatory
and non-mandatory subjects of negotiation.” For over
thirty years, the Panel has used its specialized
expertise to develop a body of law to resolve labor
disputes between the Port Authority and its union
employees. The Instruction states that the Panel is
not bound by either New Jersey’s or New York’s
public sector labor laws. In accordance with the
Instruction, the Panel applied its own case law to
decide the dispute in this case.
That labor dispute involves an allegation that
the Port Authority failed to negotiate replacing two
hundred police officers—staffing the International
Arrivals Building ‘IAB) at JFK Airport—with non-
union employees. The genesis of the dispute is a
long-term lease agreement between the Port Author-
ity and private investors (JFKIAT) to construct
a new IAB. The lease agreement provided that
JFKIAT “sha!l furnish adequate security and guard
service or such comparable means as approved by the
Port Authority . .. .” (Emphasis added).
As noted, pursuant to the 1947 Agreement with
New York City, the Port Authority is duty bound to
provide security at JFK Airport. In view of the 1947
32a
Agreement, no lease with a private entity can strip
the Port Authority of its non-delegable duty to fur-
nish that security. Significantly, the Port Authority
does not dispute that following its lease with
JFKIAT, it remains responsible for security at the
IAB, where the Port Authority’s police officers per-
form “a variety of security functions,” including
traffic control in front of the IAB. Zd. at 6-7. After
the lease agreement went into effect, the Port
Authority transferred PBA police officers to other
areas of JFK Airport while JFKIAT hired non-union
security workers in their place. The Port Authority
claims that it did not have to negotiate with the PBA
before making that move because “mission and
management responsibilities of the [Port] Authority”
are not subject to negotiations.
The Instruction by which the Port Authority must
abide, however, empowers the Panel to decide which
management decisions are “mission and manage-
ment responsibilities.” Here, the Panel focused on
the following language in the collective negotiations
agreement:
[T]here will be no further or additional transfer
and/or reassignment of unit work currently and
heretofore performed by unit employees without
negotiation and all other unit work currently and
heretofore performed by Police Officers shall be
maintained.
All existing Police Officer positions and/or as-
signments shall be maintained .. . so long as the
work being performed continues to be performed
by or on behalf of the Port Authority.
Id. at 10-11.)
33a
That language persuaded the Panel that the Port
Authority was required to engage in good faith
negotiations with the PBA before transferring the
security functions at the IAB from police officers
to non-union workers. Jd. at 24. Ultimately, the
Panel concluded that the Port Authority violated its
collective negotiations agreement with the PBA by
failing to do so. [bid.
This Court is obliged to defer to the Panel’s
interpretation of the collective negotiations agree-
ment so long as that interpretation is “reasonably
debatable.” Pascack Valley Reg’l High Sch. Bd. of
Educ. v. Pascack Valley Reg’l Support Staff Ass’n,
192 N.J. 489, 496, 933 A.2d 589 (2007) (holding
that in public sector labor arbitrations “the scope of
review in matters of interpretation is confined to
determining whether the interpretation of the con-
tractual language is reasonably debatable” (quoting
Bd. of Educ. of Alpha v. Alpha Educ. Ass’n, 190
N.J. 34, 42, 918 A.2d 579 (2006)). I agree with the
majority that the Panel’s ruling must be “sustained
unless there is a clear showing that it is arbitrary,
capricious, or unreasonable, or that it lacks fair
support in the record.” Ante at __ (slip op. at 21)
(quoting Jn re Herrmann, 192 N.J. 19, 27-28, 926
A.2d 350 ‘2007)). Unlike the majority, I conclude that
the record soundly supports the Panel’s decision.
IT.
In reaching its decision, the Panel applied its
own well-established case law developed over three
decades. See 97 PAERP 28, at 11 (listing numerous
prior cases in which Panel articulated and applied
standard). First, the Panel determined that the work
now being performed by the private guards is
“unit work”—that is, work that PBA officers had
34a
customarily performed at the IAB. /d. at 11-12.
Second, the Panel found that through its lease with
JFKIAT, the Port Authority continued to exercise
control over the security functions at the IAB. Id. at
14-15. In other words, by the very terms of the IAB
lease, the Port Authority did not get out of the
business of providing security at the IAB. See ibid.
In place of the police officers, the Port Authority
allowed JFKIAT to hire non-union security guards.
Therefore, the Panel reasoned that the Port Author-
ity transferred unit work without first engaging in
good faith negotiations with the union. Jbid.
The Panel then applied its own standard—a
modified version of the one established in Fibreboard
Paper Products Corp. v. NLRB, 379 U.S. 203 .. .
(1964)—a standard that the Panel has described as
the “Fibreboard plus substantial impact test.” 97
PAERP 28, at 20 (noting that Panel first enunciated
its test in 1978 case, 77 PAERP 6). Under that
test, the Port Authority is required to negotiate the
decision to transfer unit work if:
[1] The Port Authority has not altered its basic
operation;
{2} The Port Authority has not made a capital
investment which, if subject to collective nego-
tiations, would significantly abridge the Author-
ity’s freedom to manage its business;
[3] The issues which motivated the decision
were peculiarly suitable for resolution within the
collective negotiations framework; and
(4) The decision substantially impacts upon the
wages, hours, terms and conditions of employ-
ment, either quantitatively or qualitatively.
(1bid. |
35a
First, the Panel determined that the Port Author-
ity did not alter “its basic operation as a result of its
lease arrangement with JFKIAT.” Jd. at 21. The
Port Authority is obliged pursuant to its 1947
Agreement with New York City to provide security at
JFK Airport—an obligation that did not change
because the Port Authority entered into the lease
with JFKIAT. Jd. at 5, 21. As the Panel noted, the
security work inside and outside the IAB previously
performed by police officers in accordance with the
1947 Agreement was merely reassigned to non-union
personnel. [bid.
Second, the Panel concluded that the Port
Authority did not make “a capital investment which
would, if collectively negotiated, significantly abridge
the Port Authority's freedom to manage its busi-
ness.” Jd. at 21. The Panel reached that conclusion
because the capital investment to construct a new
IAB did not concern the performance of security
functions at the IAB and was “irrelevant to the unit
work issue in dispute.” Jbid. Simply put, the Panel
found that negotiations regarding the transfer of
work to private security guards would not have
impeded the capital investment. /d. at 21 & n.7. In
that regard, the Panel emphasized the narrowness of
its ruling, noting that its decision neither required
the Port Authority to negotiate with the union “over
its financial arrangements under the JFKIAT lease”
nor “prevent[ed] the Port Authority from deciding to
have JFKIAT operate the IAB.” /d. at 21 n.7.
Rather, the Port Authority’s obligation to negotiate
with the union, according to the Panel, arose out of
its continuing duty to provide security inside and
traffic control outside the IAB. Jbid. Thus, the Panel
maintained that collective negotiations with the PBA
would not have “significantly abridge[d] the Port
36a
Authority’s freedom to manage its business.” /d.
at 22 n.7.
Third, the Panel found that the financial consid-
erations motivating the Port Authority’s decision to
transfer the jobs of police officers to private security
guards “were peculiarly suitable for resolution within
the collective bargaining process.” Jd. at 22. Ac-
cording to the Panel, the “impact of competing wage
rates” between union police officers and non-union
security employees is a proper subject “for resolution
within the collective negotiations framework.” IJbid.;
see also ante at (slip op. at 25) (“It is well-settled
that employers and employee representatives must
bargain with each other in good faith in respect of
‘wages, hours, and other terms and conditions of
employment|.]” (quoting NLRB v. Wooster Div. of
Borg-Warner Corp., 356 U.S. 342, 348 . . . (1958))).
Last, the Panel clearly believed that lower paying
non-union security jobs threatened to eventually
drive down the wages of PBA police officers." 97
PAERP 28, at 22-23. From that perspective, the
Panel deduced that “the work performed by non-unit
security guards rather than by Port Authority police
officers . . . had a substantial impact upon the wages,
hours and working conditions of the PBA bargaining
unit.” Jd. at 23.
Applying all of those factors in a highly fact-
intensive analysis, the Panel concluded that the Port
Authority had violated its Agreement with the PBA
by unilaterally transferring unit work without first
'* It is also noteworthy that the hearing officer acknowledged
that “Port Authority witnesses admitted that the redeployment
of the LAB Police Officers to other terminals at JFK Airport
saved the Port Authority in overall overtime payments.”
37a
engaging in good faith negotiations. Jd. at 23-24.
Our Court has observed that “[q)uestions concerning
whether subjects are mandatorily negotiable should
be made on a case-by-case basis.” Troy v. Rutgers,
168 N.J. 354, 383, 774 A.2d 476 (2001). It bears
mentioning that, in its decision-making, the Panel
has served as an nonest broker, finding some Port
Authority decisions to be within managerial prerog-
ative and others subject to negotiations. See 97
PAERP 28, at 12, 13, 17-18, 19-20, 21 n.6.
IIl.
The Panel’s decision simply implemented the long-
held notion that management and labor should sit
across the table and collectively bargain in good faith.
See Fibreboard, supra, 379 U.S. at 211. . . (noting
that “one of the primary purposes” of our national
labor relations policy “is to promote the peaceful
settlement of industrial disputes by subjecting labor-
management controversies to the mediatory influence
of negotiation”). That approach does not imply a pre-
ordained result favoring the union.
In substituting its judgment for that of the Panel,
the majority ignores that the Instruction to which the
Port Authority and the PBA are bound authorizes the
Panel to resolve this very dispute. The majority
submits that the Panel should not have been
accorded deference because it lacks the expertise to
interpret a contract in the form of a lease. Ante at
_ (ship op. at 24). However, in exercising its
jurisdiction over labor disputes, the Panel must
interpret contracts of all types, including collective
bargaining agreements and employment contracts.
Interpreting the JFKIAT lease was integral to
understanding the obligations of the Port Authority
under the collective negotiations agreement with the
38a
PBA. For that reason, the Panel fulfilled its duty by
considering all of the relevant documents, includ-
ing the lease, to determine the Port Authority's
responsibilities pursuant to the collective negotia-
tions agreement. Cf. Band-Age, Inc., 217 N.L.R.B.
449, 449 (1975) ‘interpreting lease as part of
determining obligations under collective bargaining
agreement), enforced, 534 F.2d 1 (1st Cir.), cert.
denied, 429 U.S. 921. . . (1976).
Whether a particular employer decision is the
subject of mandatory bargaining is plainly within the
expertise of the Panel. Here, the Panel made a fact-
sensitive determination consistent with its own
precedents. Recognizing the expertise of the Panel
and the substantial deference owed its decision, both
the Law Division and Appellate Division affirmed the
Panel, finding that its decision was not arbitrary,
capricious, or unreasonable. Indeed, the Appellate
Division deemed the Panel’s “findings and conclu-
sions of law” to be “unassailable.”
The majority’s needless overturning of the Panel’s
holding that the Port Authority was required to
engage in good faith negotiations with the PBA
before transferring work performed by union em-
ployees to non-union employees is completely at
odds with the respect our Court typically gives to
administrative agencies. I agree with the trial court
and Appellate Division that the Panel's decision is
amply supported by the record.
For that reason, I respectfully dissent.
Justice Wallace joins in this opinion.
39a
APPENDIX B
PORT AUTHORITY
EMPLOYMENT RELATIONS PANEL
Hearing Officer’s Report
Case No. I P-97-28 (PBA)
IN THE: MATTER OF AN ALLEGED IMPROPER PRACTICE
UNDER SECTION XI, PARAGRAPH A(d) OF THE PORT
AUTHORITY LABOR RELATIONS INSTRUCTION, PORT
AUTHORITY POLICE BENEVOLENT ASSOCIATION, INC.,
Charging Party,
-and-
THE PORT AUTHORITY OF NEW YORK
AND NEW JERSEY,
Respondent.
REPORT AND RECOMMENDATIONS OF
HEARING OFFICER IRWIN KAPLAN
APPEARANCES
For the Charging Party Alfred Osterwald, Esq.,
and John McAusland, Esq.
For the Respondent Harry M. Agnostak, Esq.
On November 7, 1997, John C. Truesdale was se-
lected by the Port Authority Employment Relations
Panel (“the Panel”) to serve as Hearing Officer, pur-
suant to Article XI, Paragraph D(3) of the Port Au-
40a
thority Labor Relations Instruction (“the Instruc-
tion”), to hear and issue a Report and Recommenda-
tions in the above-captioned improper practice charge
filed by the Port Authority Police Benevolent Associa-
tion (also “Union” or “PBA”). (Joint Exhibit “Jt Exh” 2).
Subsequent to a request by the Port Authority (also
“Authority” “Charging Party” or “Respondent”) for
certain particulars and compliance therewith. by the
PBA, the Respondent filed its answer on February
13, 1998. (Jt Exh 3). After two hearing sessions (Oc-
tober 1 and October 28, 1998), Hearing Officer Trues-
dale learned that the President of the United States
intended to appoint him as a Member of the National
Labor Relations Board (“NLRB”). The Panel by letter
to the parties dated November 10, 1998 noted “A
Presidential Appointee in such a full time position
cannot engage in outside employment.” There, the
Panel also notified the parties of the appointment of
the undersigned as a replacement hearing officer for
Mr. Truesdale.’ (Jt Exh 12). Further hearings on the
instant improper practice charge were held before the
undersigned, without objection, on November 24,
1998 at the offices of the PBA, in Englewood Cliffs,
New Jersey, and February 11 and 12, 1999, and
March 24, 1999, at the Newark Airport, Building #10,
third floor conference room.
The parties adduced testimony, cross-examined
witnesses and introduced exhibits. Post-hearing
briefs were scheduled to be post-marked by the close
' The Panel in doing so noted, inter alia, that Mr Truesdale
had turned over to the undersigned the transcripts and exhibits
from the first two hearing dates (October 1 and October 20,
1998) and that the case would be permitted to go forward with-
out interruption. (Jd.). Mr Truesdale was appointed to serve as
chairman of the NLRB on December 4, 1998.
4la
of business on Friday, May 14, 1999 and reply briefs,
by the close of business on Monday, May 31, 1999.
These dates were subsequently extended to June 9,
1999 and June 25 1999, respectively, at the request of
the parties due to their late receipt of the record
(transcripts). The hearing was closed on June 27,
1999. upon receipt of the reply briefs.
FINDINGS OF FACT
Pleadings:
1 The underlying charge was filed on July 28,
1997, alleging that the employer violated Section XI
(A) (d) of the Instruction and the Past Practice Clause
of the Collective Bargaining Agreement (herein the
“CBA” or the “Agreement”). (Jt Exh I). In a Rider
attached to said charge, the PBA noted as follows
The PBA has learned that the Port Authority has
either hired, subcontracted, permitted or suffered
non-unit personnel to perform PBA unit work.
Civilian personnel are directing and controlling
traffic and are performing security functions at
sites at or near the International Arrival Build-
ing which function have traditionally and histori-
cally been performed by the PBA. This action
was taken by the employer without any prior ne-
gotiation with the PBA in violation of the Labor
Relations Instruction and the Memorandum of
Agreement. (/d.).
2 By letter dated November 19, 1997, counsel for
the Respondent filed a request to then hearing
Officer Truesdale for an order directing the PBA to
supply certain Particulars of the instant charge pur-
suant Rule 304 (B) of the Panel’s Rules of Procedure.
42a
There, counsel for the Respondent asked for, inter
alia, the following Particulars:’
1
On what specific day(s) and at what time(s)
have civilian personnel directed and con-
trolled traffic at sites near or at the Kennedy
International Arrivals Building (LAB)?
In what specific manner were civilian person-
nel directing or controlling traffic at the IAB
on the specific day(s) referenced above in Ques-
tion 1?
Who are the specific civilian personnel who
are controlling or directing traffic at the LAB?
On which specific streets, roadways ramps or
other areas at or near the IAB have the civil-
ian personnel referenced above controlled or
directed traffic on the dates referenced above?
What specific security functions have civilian
personnel performed?
On what specific days and at what specific
sites at or near the IAB have civilian person-
nel performed security functions[?]
In which specific manner have civilian per-
sonnel performed security functions at or near
the LAB?
* Hearing officer Trusdale issued an Order to Show Cause
dated February 5, 1998, noting, inter alia, that he had
previously directed the PBA to supply the information specified
in the requested Particulars with the exception of Items 2, 8,
and 11 (See Order to Show Cause, n.3).
43a
10 What specific police Officer traffic control
and/or direction work and what specific Police
Officer security function work at the IAB
have civilian personnel performed?
11
3 By facsimile and mail regular dated February
10, 1998, counsel for the PBA filed Particulars as
follows:
1 The PBA believes that civilian personnel have
performed PBA unit work since the Port
Authority transferred operation of the LAB to
a private company as discussed in the Port
Authority Memorandum previously released
in answer to this inquiry. Specifically, on
May 14, 1997 and again on May 20, 1997,
Delegates at Kennedy International Airport
observed civilian security personnel guarding
the frontage at the International Arrivals
Building. To our knowledge, this has contin-
ued on a round-the-clock daily basis, since this
time.
2 Stricken, by order of the Hearing Officer.
In the same manner in which Port Authority
Police Officers had formerly done so.
4 This information in the possession of the Port
Authority. We have sought this information by
letter dated November 11, 1997.
5 Roadways adjacent to the International Arri-
vals Building, including but not limited to Air
termina] highway, “A” Road, Terminal Road,
West Courtyard, restricted mall for busses and
taxis, and the Passenger Pickup Areas A, B,
C, D, E, and F.
44a
6 Civilians have been seen performing former
Police security functions, including but not lim-
ited to Police Post 10, Interior security at the
arrivals Area, performing deterrence and
security function for arriving passengers Post
11 and 17 East and West Courtyard General
Security, securing vehicles and patrolling
parking lot in West Courtyard. Security func-
tions, including deterrence, on terminal front-
age for arriving departing/ passengers.
7 See #1.
8 Stricken by order of the Hearing Officer.
9 In the same manner in which Port Authority
Police Officers had formerly done so.
10 See answers to the above inquires.
11 Stricken by order of the Hearing Officer.
4 The Respondent filed its Answer on February
13, 1998 “den[ying] each and every allegation” in the
Charge and the Responses to the Authority’s Motion
for Particularization of the Charge. As a separate de-
fense, the Respondent maintains that the work in ques-
tion is performed for an entity which is not the Au-
thority and, as such, cannot serve as a basis for an
actionable claim of unit work transfer under the
Instruction. (Jt Exh 3).
Background and Sequence of Events:
5 John F. Kennedy International Airport (*JFK”
or “Airport”), is under a long-term lease by the Port
Authority from the City of New York. (PBA Exh 7).
In ]994, the Port Authority approached the Board of
Commissioners (“Board”) to seek planning authoriza-
tion to determine whether “modernization” or “re-
placement” was the appropriate vehicle for changes at
45a
Terminal 4 (“IAB”).° (Tr 444). The Board approved
such planning but suggested that the Authority so-
licit private investors and allow them to develop Ter-
minal 4 in accordance with the Authority’s projec-
tions vis-a-vis traffic and building usage. (/d.). In
1995, the Authority solicited private sector interest
and received four proposals. In 1997, after a period
of evaluation of the various proposals, the process
was completed with the work in question leased to a
consortium of airport developers and operators known
as JFK International Air Terminal LLC (*JFKIAT”).
(Tr 477-478, PBA Exh 9, p 10). JFKIAT is a partner-
ship comprised of three business entities LCOR,
Schiphol and Lehman Brothers. (Tr 478). LCOR was
to be the developer responsible for the construction
and to raise funding for the LAB and Schiphol was to
be responsible for the actual operation of the termi-
nal. (Tr 446). Lehman Brothers would provide fi-
nancing for the undertaking, including the issuance
of Port Authority municipal bonds. JFKIAT would
construct the new terminal at a cost of $1.2 billion.
(Tr 467).
6 The expenditures for the foregoing redevelop-
ment of the IAB included $82 million for demolishing
and rebuilding roadways leading to the terminal as
well as improving the public parking area in front of
Terminal 4. (Tr 450, 482-483). In addition, the
Authority had a remediation obligation of $15 million
to JFKIAT to remove contaminated soil from the
Terminal 4 leasehold. (Tr 449-450).
7 Prior to the IAB leasehold passing to JFKIAT
in May 1997, the Authority had long managed and
* At JFK there are nine air terminals. (Transcript “Tr” 479-
480).
46a
operated the terminal. As such, the Authority pro-
vided all maintenance and cleaning services within
the building, either with its own employees or with
contract employees. (Tr 329, 476). In addition, the
Authority had a contract with FJC Security, a private
sector security company, to provide certain ancillary
security functions, such as, responding to door breaches
and alarms. (Tr 126-130, 476-477). The Authority
also had its own police officers (PBA members) han-
dle a variety of security functions within the terminal
and traffic direction and control in front of said ter-
minal, sometimes referred to as “frontage.” (Tr 34-35).
In all, the Authority employed approximately 200 em-
ployees at the LAB. (Tr 337). The tenants at the IAB
included approximately 40 airlines and a number of
retail operations and restaurants for which said ten-
ants paid rent to the Authority. (Tr 329). These
tenants were responsible for cleaning and maintain-
ing their own space. However, if electrical, flooding
or other physical or maintenance problems of a sub-
‘In principal part, it is the traffic direction and control that
was performed by the PBA members stationed at the frontage to
the IAB that was allegedly “transferred” to JFKIAT or more
particularly, to Schiphol that is in dispute in the instant case.
According to the PBA, the frontage is also an “air terminal
highway,” as characterized by the statutes of the States of New
York and New Jersey. As such, it is part of a roadway system
under the control and jurisdiction of the Port Authority Police
Department. (PBA Brief, at p 7). The Respondent contends that
the frontage at the LAB is part of JFKIAT’s leasehold and under
the latter’s control. According to Respondent, “[rjoadways
which are contained within terminal leaseholds are never
designated as air terminal highways.” (Respondent Brief, at
p 6). The frontages at the other terminals at JFK are part of
private leaseholds. (Tr 480, 530). There, private security guards
are utilized to direct traffic and to direct patrons to parking.
(Tr 530). This issue will be discussed more fully infra.
47a
stantial nature were involved, such matters were
within the province of the Authority to remedy. Also,
common areas shared by tenants were the respon-
sibility of the Authority. (Tr 330-333). As for secu-
rity, the airline tenants had responsibility at the
screening points where passengers and their hand-
held luggage were monitored through an x-ray ma-
chine and magnetometers. (Tr 333-334, 109-110).°
8 As noted above, prior to May 1997, police
officers were employed both within the interior of the
IAB as well as stationed at the frontage of the build-
ing. The job functions of police officers arc spelled out
in pertinent part, in the Memorandum of Agreement
(“MOA”) between the Authority and PBA. (Jt Exh 11,
Document A, Specification 2600, pp 205-208). There,
inter alia, the following is noted:
TYPICAL DUTIES
1 Patrols assigned posts by foot or automobile,
either in uniform or plainclothes. Observes
the flow of vehicular traffic and takes appro-
priate actions to prevent violations of traffic
regulations. Patrols assigned areas to pro-
tect property, to prevent unlawful conduct and
incidents, and to caution or apprehend viola-
tors.
2 Directs the movement of vehicular and pe-
destrian traffic at or in the vicinity of a facil-
ity. Controls and expedites traffic movement
*Under Federal Aviation Administration (“FAA”) regulations,
the, airport operator (here, the Authority) is required to have a
law enforcement response at each screening point (also referred
to as FAR posts) within a specified time. It is undisputed that
the FAR post function was and continues to be performed by a
PBA member. (Tr 109-110).
48a
in accordance with established patterns of
traffic flow and routing under normal condi-
tions, but in unusual circumstances devise
temporary traffic regulation methods.
4 Enforces traffic regulations as a peace officer
in the State of New Jersey and a Police Offi-
cer in the State of New York. Issues sum-
monses, and prefers charges against viola-
tors of municipal and state statutes, and
gives testimony as required.
5 May perform duties such as the following on
specific assignments
d Performs plainclothes operations, includ-
ing Tactical Patrol/anti-crime unit opera-
tions currently and heretofore performed
by Police Officers.
6 Is responsible for the protection of life and
property at a facility on an assigned tour. Supervises
and participates in patrolling areas, observing ve-
hicular and pedestrian traffic, preventing crime, an-
swering inquires and performing related police du-
ties.
* * *
9 In March or April 1997, representatives of the
Port Authority Police Headquarters met with PBA
representatives to assure them that no Port Author-
ity Police Officers would be displaced from JFK Air-
port nor suffer any negative impact as a result of
privatization at the LAB. (Tr 528-529).
10 By Memorandum dated May 12, 1997 to “All
[Police Officer] Members of the Command,” and the
PBA were notified of “Privatization of International
Arrivals Building Complex.” (Tr 36, PBA Exh 2).
49a
There, the notification, in pertinent part, stated as
follows:
Effective 1200 hours, Tuesday, May 13, 1997, the
International Arrivals Building Complex (“Ter-
minal 4”) will be turned over to private enter-
prise. Schiphol USA, Inc, doing business as
“JFKIAT” (International Arrivals Terminal), will
assume responsibility for the International Arri-
vals Building, East and West Wing Departure
Buildings, the IAB ramp and associated gates and
hardstands, and JAB roadway system.
Terminal 4 becomes a unit terminal building and
police services commensurate with that provided
other unit terminals at JFK will be maintained.
Frontage management of pedestrians and vehi-
cles will become the responsibility of the termi-
nal operator. This includes the TR Road the
Courtyards, the restricted malls and the A Road
along the entire length of the Terminal 4 com-
plex.
New roll calls are being prepared to reflect the
change in status of Terminal 4. These will be-
come effective with 3x11 tour on Tuesday, May
13, 1997.
Courtyard passes will no longer be issued by Port
Authority Police for parking in the west and east
courtyards. (Jd).
11 As testified by PBA Executive Director, Dom
Evangelista, police officers who formerly maintained
posts inside the LAB (except for FAR posts), as well
as those stationed outside in frontage management of
pedestrians and vehicles, were removed and replaced
50a
by non-unit or civilian security personnel.’ (Tr 39-43,
Tr 109-110). To accomplish this, Schiphol contracted
with FJC Security, the same company which had pro-
vided civilian guards for the Authority prior to May
13, 1997. (Tr 126-129). None of the police officers
were terminated but were redeployed within Ken-
nedy Airport. (Tr 118-119, 528-529). In a letter to
Louis LeCapra, Respondent’s Director of Human Re-
sources, dated June 24, 1997, PBA’s President, Gus
Danese responded to Respondent’s notice of pri-
vatization at the IAB, as follows:
We have received a copy of a memorandum an-
nouncing the privatization of the International .
Arrivals Building. This memorandum also indi-
cates that elements of our unit work are being
subcontracted. We believe that the Port Author-
ity Labor Relations Instruction and the Memo-
randum of Agreement between the Port Author-
ity and our organization forbid this unilateral
action by the Port Authority.
Beyond our right to participate through negotia-
tions in the decision made by the Port Authority,
this decision has a separate and negotiable im-
pact upon the terms and conditions of employ-
ment of our members. Thus, without prejudice to
our right to file an improper practice or grievance
regarding the unilateral decision of the Port Au-
thority, the Port Authority PBA requests im-
mediate negotiations regarding the impact of this
“In March 1998, Evangelista also visited the LAB and took a
series of photographs that captured civilian security guards
engaged in various pedestrian and vehicular traffic control
function that had [been] performed by Officers prior to May 13,
1997. (Tr 94-95, PBA Exh’s 10-29).
5la
decision upon our members. The PBA will take
appropriate action thereafter.
Please advise us regarding the Port Authority’s
position with respect to negotiations forthwith.
(PBA Exh 3).
12 Director LaCapra responded by later dated July
2, 1997. (PBA Exh 4). There, Director LaCapra
stated that he was unaware of any impact upon terms
and conditions of PBA members flowing from the de-
cision in question but indicated a willingness to dis-
cuss the matter with the Union “as part of overall
negotiations.” (PBA Exh 4).
13 The Port Authority negotiated the effects of its
decision to sublease the IAB to JFKIAT with repre-
sentatives of the Transport Workers Union (“TWU”)
and the Building Trades Union (“BTU”). (Tr 452-454).
The union members were given the option of a buyout
(severance pay) or to work somewhere else within the
Port Authority. (Tr 344-346). Some of the union
employees also accepted employment at Schiphol. (Tr
346-346). Such negotiations did not take place with
the PBA.’
14 The work preservation provision relied on by
the PBA in support of its contention that the alleged
transfer of unit work performed by Police Officers to
* Counsel for the PBA noted that the Port Authority never
adequately explained why it was obligated to negotiate with the
TWU and BTU but was not obligated to negotiate with the PBA
as a result of the same transaction. (PBA Brief. at 23). Counsel
for the Port Authority counters, noting, inter alia, that the PBA
had not demanded to bargain over the effect, if any, of its
decision to cease operating Terminal 4. (Respondent Reply Brief
at 2).
52a
non-unit employees was in violation of the MOA and
the Instruction states, in pertinent part, as follows:
XXX Transfer of Unit Work
1 Subject to other provisions herein, and except
as otherwise set forth in this Agreement,
during the term of this Agreement, there will
be no further or additional transfer and/or
reassignment of unit work currently and here-
tofore performed by unit employees without
negotiation and all other unit work currently
and heretofore performed by Police Officers
shall be maintained. (Jt Exh 11, at 63).
PRINCIPAL CONTENTIONS OF THE PARTIES
PBA’S CONTENTIONS
In essence, the PBA maintains that when the Port
Authority determined to sub-contract the operation of
the LAB, it was required under the Instruction to ne-
gotiate with the PBA concerning the sub-contracting
of PBA unit work to non-unit employees of the
sub-contractor. (PBA Brief at 1).
A The Unit Work in Question prior to May 13,
1997
1 According to the PBA, “the evidence and testi-
mony adduced at the hearing in this matter clearly
demonstrated that members performed unit work at
the LAB at all times prior to May 13, 1997.” (PBA
Brief, at 9). In this connection, Dominick Evangel-
ista, former President of the PBA and long-time
member of the Port Authority Police Department
testified to the variety of unit work performed by Port
Authority Police Officers both inside the LAB and on
the roadways outside (the frontage area), which
duties are also listed in the PBA’s job specification.
53a
The unit work so performed by Police Officers at the
IAB included foot and vehicle patrol to control the
flow of pedestrian and vehicular traffic. Police Offi-
cers performed foot patrol in the interior and exterior
of the IAB to also protect property and deter unlawful
conduct and caution or apprehend violators (/d.). In-
dividuals referred to as “hustlers,” persons seeking to
defraud travelers by various scams or providing
illegal taxi rides to Manhattan were frequently
monitored and eliminated by Police Officers at the
IAB. (PBA Brief, at 10). Counsel for the PBA noted
that in material part, the testimony of Evangelista
was variously confirmed by Authority management
Chief James Romito, Chuck Seliga, the General
Manager of Kennedy Airport, Robert Kelly, Director
of Aviation of the Port Authority, and Police
Inspector Joseph Morris. (PBA Brief, at 11-13).
2 Prior to May 13, 1997, Police Officers were de-
tailed to work at the IAB every day to perform the
various traffic and traffic-related tasks set forth above.
As testified by Sergeant Schaffer, as many as sixteen
Police Officers might be scheduled to work at IAB to
fulfill such responsibilities. (PBA Brief, at 10).
In sum, the PBA maintains that the record clearly
established that Port Authority Police Officers pa-
trolled the frontage and interior of the IAB prior to
May 1997. The record also disclosed that in doing so
and in carrying out other functions listed in their job
specification, the functions performed by PBA mem-
bers at the IAB were “unit work and subject to the
Panel’s Unit work transfer decisions. (PBA Brief, at
13).
B’ The IAB Following May 13, 1997
1 The sublease with Schiphol to operate the IAB
complex was effective as of May 13, 1997. Under the
54a
terms of the sublease. Schiphol was required to hire
the Port Authority’s own guard service to patrol the
frontages and the interior of the IAB. (PBA Exh 9, at
340). As for controlling traffic on the frontage (PBA
Exh 9, at 121), Schiphol was required to comply with
and enforce the Rules and Regulations of the Port
Authority at the IAB. (PBA Exh 9, at 116, PBA Brief,
at 14). According to the PBA, the unrefuted testi-
mony of Evangelista disclosed that the civilian secu-
rity guards hired by Schiphol to perform the pedes-
trian and vehicular traffic control in question, are
performing unit work previously performed by Port
Authority Police Officers at the LAB. (PBA Brief, pp
15-16).
2 Evangelista observed civilian guards perform-
ing unit work at the IAB after the transfer of opera-
tions to Schiphol and presented photographic evi-
dence of such observations. (See PBA Exh’s 10-29, PBA
Brief, at 16). He noted, inter alia, that the civilian
guards wore blue uniforms, with badges, similar to
Port Authority Police uniforms and observed said
guards directing and controlling traffic in the front- -
age area of the IAB, as Police Officers had done prior
to May 13, 1997. With regard to the interior of the
building, particularly at Post 10 and Post 10 Alpha,
Evangelista noted, inter alia, that the civilian guards
patrolled the area in a similar manner that was
performed by Post 10 Police Officers. In this connec-
tion, the PBA also noted Chief Romito and Inspector
Morris proyided corroboration that the civilian guards
were performing unit work. For example, Chief
Romito admitted that the security guards acted as a
“general deterrent” to criminal activity just as Port
Authority Police had before the guards. Inspector
Moms testified to other activities performed by
|
.
55a
guards that was formerly the work of the PBA at the
LAB. (PBA Brief, at 17).
In short, the PBA asserts that the record compels
the conclusion that the security guards working for
Schiphol are performing what was formerly the work
of the PBA at the LAB.
C The Control Retained by the Port Authority
Since the Takeover by Schiphol and the
Transfer of Unit Work
1 The PBA contends that since the takeover by
Schiphol, in May 1997, the IAB has not changed its
basic operations. As testified by Chuck Seliga, Gen-
eral manager of Kennedy Airport, the IAB served as
a terminal for approximately 40 international carn-
ers and as the only 24 hour a day federal inspection
facility at the airport. To Seliga, the LAB continue to
serve in the same manner. The PBA maintains that
the only difference is that since May 13, 1997, the
Port Authority does not “directly” run the IAB any-
more. Such responsibility under the sublease is with
Schiphol. (PBA Brief, at 18).
2 According to the PBA, under the terms of the
lease, and the management functions retained by the
Authority at the IAB after the takeover, it is “per-
fectly clear” that the Authority remains in “active
control” of any activities it deemed important at the
IAB. For example, the Authority has the right to
control who the lessee rents to and to approve the
form of the contract between Schiphol and the sub-
lease of Schiphol. (See PBA Exh 9, at 73, PBA Brief,
at 18). Also noted is that the Port Authority has the
independent right to enforce the terms of either the
lease [or] the sublease against the tenant. (PBA Exh
9, at 76-7). Still further, the Authority has the
56a
absolute right to retake operation and control of the
LAB at any time. (PBA Exh 9, at 171).
3 The Authority also retained control over other
functions at the IAB, including the taxi dispatch
service and provides, inter alia, a ground transporta-
tion desk inside the IAB for travelers. According to
the PBA, these factors and the record as a whole
indicate that the Port Authority retained any func-
tions that it wanted to and that it merely transferred
to Schiphol those functions that it did not want to
manage directly. This enabled the Authority to re-
tain effective control over traffic management and at
the same time escape the relatively expensive method
of using Police Officers. Under the sublease the
Authority allowed Schiphol to provide traffic manage-
ment but required Schiphol to use the Authority’s
private security guard service. Of greater signifi-
cance, is that the Authority remains in active control
over any of the activities it deemed important at the
IAB. (PBA Brief, pp 18-20). The Port Authority still
derives the same benefits vis-a-vis traffic flow and
passenger protection, after the sublease as it had
enjoyed previously only now those benefits flow from
the work performed by Schiphol security guards
rather than Port Authority Police. In the total cir-
cumstance of this case it must he deemed a transfer
of unit work. (PBA Brief, at 27-28).
[4] The Union is entitled to a Cease and Desist
Order and an Order to Return to the Status Quo Ante.
As maintained by the PBA, as the record established
that the Port Authority violated the Instruction by
transferring unit work of its members to non-unit
personnel, without negotiations, the Union is entitled
to the aforenoted Orders under prior Panel decisions.
(PBA Brief, at 43, citations omitted).
57a
D_ Fiberboard plus Substantial Impact test
|
As the PBA contends that it established that the |
work in question has historically been unit work of |
its members at the IAB and that said work has been ;
transferred to non-unit personnel, it turned next to
demonstrate that the decision to transfer the dis-
puted work was a mandatory subject for negotiations |
under the principles of the Panel’s Fiberboard plus ;
Substantial Impact test.
1 No basic alteration of the Port Authority’s op-
eration has occurred. In support of this conclusion,
the PBA noted, that all the testimony at the hearing
shows that the Port Authority has not made any
changes allowing the Employer to eliminate bargain-
ing unit work without prior negotiation. What has
occurred is that the Port Authority made a unilateral
decision to sublet the operation of the LAB to non-Port
Authority personnel. The Port Authority still oper-
ates and manages JFK Airport, still provides an
international terminal for 40 smaller airlines for the
benefit of airport patrons, and, through its sublease
requires that Schiphol provide the same services to
airport patrons at the LAB that were previously pro-
vided by Police Officers and in the same manner. All
that is changed is the employer of persons performing
the traffic control and law enforcement patrol func-
tions at the IAB and interior areas. The PBA noted
that the Panel has held that what is done and how it
is done remain essentially unchanged, no basic al-
teration of the Employer’s operation has occurred.
- (PBA Brief, at 34, citation omitted).
2 No capital investment was involved, which if
collectively bargained, would significantly abridge
the Port Authority’s freedom to manage its business.
In this connection, the PBA noted that in fact, such
ete eaneeele
58a
negotiations took place with two other unions, the
TWU and the BTU and agreements were reached
without any evidence that said negotiations abridged
the Authority’s freedom to conduct business. Also
noted was the fact that the Authority retained many
IAB functions (Taxi functions, Ground Transporta-
tion, Patron Aides, etc) tending to indicate that it
could have similarly retained the functions of the
Police Officers and still have been able to complete
the sublease transaction. (PBA Brief, at 38-7).
Finally noted was that the Schiphol deal developed
over a period of several years tending to militate
against the notion that the Authority needed flexibil-
ity or that time was of the essence to make said
sublease. In these circumstances, the PBA contends
that the finding must be in its favor on this element.
(PBA Brief, at 37).
3 The decision of the Port Authority was clearly
motivated by issues suitable for resolution within the
collective bargaining framework. According to the
PBA, it should be presumed that the kind of civiliza-
tion or subcontracting involved herein, by its nature,
will lead to cost savings for the Port Authority. In
any event, the PBA maintains that the evidence es-
tablished that the civilian guards employed by Schiphol
at the LAB are less expensive than the continued use
of Police Officers to perform the unit work in question.
(PBA Brief, at 38). The PBA noted that the Panel
has held that economic reasons, as here, the transfer-
ring of work to avoid payment of overtime, are motiva-
tions particularly suited to negotiated settlement. (Jd,
citation omitted). In this regard, it should be noted
that the Port Authority witnesses admitted that the
redeployment of the LAB Police Officers to other ter-
minals at JFK Airport saved the Port Authority in
overall overtime payments. (/d.).
;
59a
4 ‘The transfer of unit work from Port Authority
Police Officers to private security guards at the LAB
has had a substantial adverse impact on the mem-
bers of the PBA. Here too, the PBA maintains that
the record supports the finding that this final ele-
ment of the Panel test has been satisfied. In dealing
with this element, the PBA must satisfy its burden
either quantitatively or qualitatively. (PBA Brief. at '
39, citations omitted). The PBA contends that in the
|
te ott ed eS
instant case, the record supports a finding of both
quantitative and qualitative impact. U/d.). With regard
to quantitative impact, the PBA pointed noted [sic|
the testimony of Evangelista, with some corrobora-
tion from Inspector Romito. Thus, the PBA noted,
inter alia, that Evangelista testified that Police Offi-
cers lost overtime opportunities and transfer oppor- |
tunities at JFK Airport, a desirable assignment. As
for the qualitative impact, this occurred when the
core or prime functions of Police Officers were reas-
signed or transferred to non-unit personnel. (PBA
Brief, at 41).
THE PORT AUTHORITY'S CONTENTIONS
Point I
The PBA has not shown that the work in question
is unit work, or, assuming arguendo, that it has, the
Port Authority did not transfer such unit work. In
addressing the unit work allegation, the Authority
noted certain testimony showing that the Guards
have no authority to issue summonses, enforce
vehicle, traffic or criminal laws, nor to effectuate any
police action whatsoever. With regard to traffic
regulations, the Guards merely direct drivers where ;
to go and where to park a vehicle. On the other
hand, the Police Officers possess these prime enforce-
ment and arrest powers in conjunction with directing
)
60a
and controlling pedestrian and vehicular traffic, as
set forth in Job Specification 2600. The Authority :
noted that only one sentence of said Job Specification
tangentially relates to what Guards do (“Directs
movement of vehicular and pedestrian traffic at or in
the vicinity of a facility”). In contrast, the predomi-
nant part of said Job Specification speaks of “control-
ling and expediting traffic movement in accordance
with established patterns of traffic flow” and of “en-
forcing traffic regulations.” (Jt Exh, 11, pp 295, 208,
Respondent Brief at 11). Given such differences in
the scope of functions performed by Police Officers as
compared to Guards, the motorist instruction and the
wor performed by the latter group is not the traffic
control and enforcement duties of Police Officers, nor
is it the work Police Officers routinely do or have
done. (/d.). As for the work performed by Guards in
the interior of the LAB, said Guards were already In
that facility prior to May 13, 1997 and JFKIAT merely
continued their usage after the takeover. The Re-
spondent maintains that as the same Guards were re-
tained to perform the same functions they had been
performing, for an entity not the Port Authority, the
PBA’s allegations that Guards performed unit work
are spurious, disingenuous and patently without
merit. (Respondent’s Brief, at 12).
As noted above, the Authority refutes the PBA’s
contention that the work in question is unit work.
However, the Authority maintains that if the finding
is otherwise, it still could not have violated the In-
struction because it has not transferred, and cannot
transfer, such work. (/d.). According to the Author-
ity, it has no control over the performance of such
work because it is no longer the operator nor the
manager of Termina] 4. In such circumstances, the
Respondent asserts, it is both de facto and de jure
teat nena et at tiie
6la
incapable of transferring said work. (Respondent
Brief, at 13).
To support the conclusion that the Port Authority
no longer had the requisite contro] and authority over
the disputed work at Terminal 4 after the takeover
by JFKIAT, the Respondent relies largely on the
testimony of Manager Andrew Kreek, with corrobora-
tion from other management officials, including the
testimony of Robert Kelly, Thomas Maher and
Charles Seliga. As to conditions prior to May 13,
1997, Kreek testified to various services provided by
the Authority for the 40 airlines and other retail
tenants at the IAB, with the use of its (the Author-
ity’s) own employees or contract employees. These
Services included security, and various forms of
maintenance, such as, carpentry, plumbing electrical,
painting and cleaning services. In all, of the approxi-
mately 200 Authority employees performing work in
the IAB before the takeover by JFKIAT, the only
Authority employees that remained in the building
after the takeover “are Port Authority police officers
for FAR response.” (Tr 336-337). Following said
takeover, aside from the FAR response, the aforenoted
operational functions were taken over by JFKIAT
with its own employees through the various building
trades or other contractors. Or, as testified by
Director of Aviation Robert Kelly, subsequent to the
assumption of the operation by Schiphol “[wle have
removed all Port Authority staff from the building
[LAB] and we currently have no responsibility.” (Tr 44
7). According to management witnesses, the respon-
sibility for these operational functions passed from
the Authority to JFKIAT under he sublease. (Re-
spondent Brief pp 13-23, 26).
62a
The Respondent asserted that it had ceded all au-
thority over the decision-making apparatus and the
business, maintenance, service and aviation opera-
tions to JFKIAT at the IAB, on May 13, 1997. (Re-
spondent Brief at 23). In this regard the Respondent
points out that the record is devoid of any evidence
tending to show that the Authority played any role in
the decision to place guards in the frontages or to
replace any of the Police officers inside or outside the
1AB. According to the Respondent, the decision to
use Guards in the interior of the building and in the
frontage area belongs to the privately operated lease-
holder (here, JFKIAT), as is done at the other eight
terminals at the JFK Airport. What was formerly
considered air terminal highway (the roadways adja-
cent to and annexed to Terminal 4), also became part
of the privately operated leasehold and became collo-
quially known as “frontages.” (Respondent Brief at
26-7). Here, the Respondent contends, that the PBA’s
effort to acquire such non-unit work that was gener-
ated by a privately operated leasehold, is an attempt
to acquire new work. This attempt by the PBA is con-
trary to the provisions of the Instruction and must be
rejected. (Respondent Brief, at 29). In short, the
Respondent denies that it transferred unit work as
alleged.
Point II
Even assuming arguendo, that the work in ques-
tion is unit work and was transferred to non-unit
personnel, the Port Authority still has no obligation
to negotiate over the decision because the PBA has
not satisfied its burden under, the principles of
Panel’s Fiberboard plus Substantial Impact test. To
satisfy the burden depends on the answers to four
questions. As to the first question, whether the Port
63a
Authority altered its basic operations, the Authority
contends that it has and that the PBA has failed to
show otherwise. According to the Authority, the
record demonstrated that it has not only “conclu-
sively altered basic operations by not only no longer
running and managing Terminal 4, but also by ‘get-
ting out of the business’ of operating an international
arrival facility at JFK Airport.” (Respondent Brief, at
30). The Respondent maintains that in leasing Ter-
minal 4 to JFKIAT, “it is not subcontracting, a func-
tion which it still controls and has given to another
entity to perform, but rather the Port Authority has
ceded and abrogated its operational and managerial
functions to a new entity and has thus altered its
basic operations.” (Respondent Brief, at 30-31).
As to the second question, whether the Authority
made a capital investment which, if subject to collec-
tive negotiations, would significantly abridge its
freedom the to manage its business, here too, the
Respondent contends that the PBA cannot refute that
such was the case. In this connection, the Respon-
dent noted that the record disclosed that the lease
and reconstruction of Terminal 4 constitutes a $1.2
billion endeavor on the part of JFKIAT, with an
additional contribution by the Port Authority of $82
million for roadway and parking lot renovations and
reconstruction, as well as $15 million for contami-
nated soil removal. In addition, the Respondent
invested $97 million in effectuating its decision to
lease Terminal 4 in order to have some entity other
that the Port authority spend $1.2 billion to construct
a new Terminal. The Respondent contends that
given the nature of the capital expenditure, the PBA
failed to show how the Authority’s decision to lease to
a private sector entity to construct and operate Ter-
minal 4, which, if subject to collective negotiations,
64a
would not have abridged its freedom to do business.
According to the |A)uthority, to permit the PBA to
negotiate over the decision strikes at the very heart
of its administrative authority. (Respondent Brief, at
32-33).
The Respondent also contends that the PBA failed
to demonstrate that the factors that motivated the
disputed decision, to utilize guards at [T]erminal 4 to
instruct and direct motorists are suitable for resolu-
tion within the collective negotiations framework,
another requirement under the Panel’s test. Accord-
ing to the Authority, the decision to use Guards
instead of Port Authority [Police Officers] was solely
that of JFKIAT. In this connection, the record does
not disclose that JFKIAT considered any factors
related to Port Authority Police Officers. In any
event, according to the Authority, any negotiations
between the Port Authority and the PBA would not
be binding on or material to JFKIAT. (Respondent
Brief, at 32-33).
Finally, the Authority contends that PBA failed to
show that the disputed decision that resulted in
Guards doing the work in question had any substan-
tial impact upon its members wages, hours and terms
and conditions of employment. First, as testified by
Chief Romito, no Police Officers from JFK Airport
have been displaced as a result of the decision. (Tr
529). Nor have they been otherwise been negatively
impacted as a result of privatization. (/d.). The
Authority also rejects the notion that Police Officers
have lost certain opportunities to transfer to JFK
Airport that allegedly flowed from the decision to use
Guards. According to the Authority, the “opportunity
for transfer, and the temporal issues attendant
thereto, is a function of staffing levels, which the
65a
Panel has repeatedly held is a _ non-negotiable
managerial prerogative. (Respondent Brief, at 33,
Citation omitted). Moreover, the number of Police
Officers at all Port [A]uthority Commands is below
authorized strength. Thus, there was no impact on
transfers as the JFK Airport Police Command did not
have “extra” Police Officers available. In sum, the
Respondent maintains that there is no credible evi-
dence that any of the Police [OJfficers have been
negatively impacted by the decision to utilize Guards.
The Respondent contends that on this issue, and with
regard to the case as a whole, the allegations are
without merit.
DISCUSSION AND CONCLUSIONS
I Whether the Disputed Work was Unit work and,
if so, was said Unit Work Transferred to Non-Unit
Persunnel
In essence, the PBA alleged that the Port Authority
has unilaterally subcontracted or otherwise permit-
ted unit work that was performed by Port Authority
Police Officers both in the interior of the Interna-
tional Arrivals Building (“IAB”) at JFK Airport and
in the “frontage” area outside the IAB, to be trans-
ferred to non-unit personnel, to wit, civilian Security
Guards. In doing so, without prior negotiations with
the Union, the PBA maintains that the Authority
thereby violated the work preservation provision
contained in the Memorandum of Agreement between
the parties (Jt Exh 11, at 63, see page 10 supra) and
Section XI(A) (d) of the Instruction.
The Port Authority denies that the work in ques-
tion is unit work or that transferred said work. Ac-
cording to the Authority, when it subleased the IAB
(Terminal 4) to JFKIAT, effective May 13, 1997, the
66a
Respondent got out of the business of managing and
operating said terminal, the responsibilities were
assumed by JFKIAT, with the Authority providing
simple oversight, as it does for the other private unit
terminal operator at JFK Airport. (Respondent Brief,
at 5-6). As such, the Authority maintains that it no
longer had control over the work in question and was
therefore incapable of transferring said work. (Re-
spondent Brief, at 12-13). Moreover, the Authority
denies that it played any role in JFKIAT’s decision,
as the new terminal operator, to use civilian Guards
rather than Fort Authority Police Officers. (Respon-
dent Reply Brief, at 1-2). Finally, the Respondent
contends, assuming arguendo, that the Panel deter-
mines that a transfer of unit work occurred, the Port
Authority was not under any obligation to negotiate
over the decision to make such a transfer. (Respon-
dent Brief, at 30). Initially, I will address whether
the disputed work is unit work and whether such
work was transferred, as alleged by the PBA. The
Panel has long held that such inquires are threshold
issues. Port Authority Detectives Endowment Associa-
tion and Port Authority, 92 PAERP 25 (DEA), at 4
(1995).
(a) The Unit Work Issue
First, I find that the record clearly supports the
allegation that the Guards hired by JFKIAT or, more
particularly by Schiphol, are performing functions
previously performed by Port Authority Police
Officers both inside the IAB and in the frontage area
to Terminal 4. The record disclosed that prior to the
effective date of the Schiphol leasehold, the Port Au-
thority Police Officers at the IAB historically per-
formed, inter alia, foot and automobile patrol to
direct the movement of vehicular and pedestrian traf-
67a
fic in accordance with established patterns of traffic
flow. In doing so, the Authority Police Officers could
issue summonses and otherwise enforce traffic regu-
lations. In addition, Authority Police Officers per-
formed f
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