New Jersey Supreme Court Reinstates Arbitrator’s Decision Demoting School Official

Under New Jersey’s Tenure Employees Hearing Law, when a school district files tenure charges against an employee, the state commissioner of education must refer the case to arbitration if he or she determines that the charges are “sufficient to warrant dismissal or reduction in salary of the person charged.” Amada Sanjuan, an assistant principal, was charged with “conduct unbecoming” after lying about the cause of a fall she had taken down a flight of stairs, which was caught on a security camera. The commissioner referred the case to arbitration, and, after a hearing, the arbitrator determined that Sanjuan should be demoted and reinstated without back pay.

Sanjuan filed a complaint seeking to vacate the arbitration award against her and to be reinstated as a tenured administrator with back pay. She argued that New Jersey law limited the possible penalties an arbitrator could impose to termination or a reduction of salary. Sanjuan argued that demotion was not an available penalty, and because the arbitrator had already heard and decided against termination, the arbitrator was collaterally estopped from firing her upon rehearing. The trial court ruled against Sanjuan, but the Appellate Division reversed.

On appeal, the New Jersey Supreme Court determined that the law limited the matters that could be referred to an arbitrator to those that could merit termination or a reduction in salary, but the law did not limit the arbitrator’s power to only those two possible remedies. Rather, the court found that arbitrators traditionally had wide-ranging discretion to fashion an appropriate remedy, and nothing in the law changed or limited that discretion. Nor did any contractual agreement relevant to the matter impose any additional limits on the penalties that the arbitrator could impose. As a result, the arbitrator had the authority to order Sanjuan’s demotion. The Supreme Court reversed and ordered that the arbitrator’s decision be reinstated.

Sanjuan v. School District of West New York, No. 087515 (N.J. Feb. 12, 2024).