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Monday, January 04, 2010

Impartiality of arbitrators

Impartiality of arbitrators
Meehan v Nassau Community College, App. Div., 251 A.D.2d 417, Motion for leave to appeal dismissed, 92 N.Y.2d 946

This posting summarizes a number of related decisions involving the same parties considered by the Appellate Division.

Article 75 of the Civil Practice Law and Rules [CPLR] sets out very limited grounds upon which a party who has either participated in an arbitration, or has been served with a notice of intention to arbitrate, may ask the courts to vacate or modify the award. In order to vacate an award, the court must find that the rights of the moving party were prejudiced by:

1. Corruption, fraud or misconduct in procuring the award; or

2. Partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

3. An arbitrator, or agency or person making the award exceeded his or her power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or

4. The failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection.

Nassau County Community College sought to overturn two arbitration awards under Article 75.

The first, referred to by the Appellate Division as the “overload arbitration,” involved a complaint by the Nassau County Community College Adjunct Faculty Association that the college had assigned certain “overload courses” to members of the full-time faculty, rather than employ members of the adjunct faculty to teach these courses.

The second award, the “History Department” arbitration, involved persons who lacked certain academic credentials teaching in that department.

In both cases the college asked the court to vacate the award because one member of a three-person arbitration panel selected by the parties had direct personal knowledge of the disputed facts underlying the grievances and that this arbitrator testified concerning these facts during the arbitration. This conduct by the arbitrator, the College urged, justified overturning the arbitration panel’s award in favor of the Association.

The contract grievance procedure relevant between the parties provided that the arbitration panel would consist of “one member selected by the College Administration, one selected by the Adjunct Faculty Association, and a third selected by mutual consent.”

According to the ruling, the Association’s designated member of the arbitration panel testified at the arbitration that because of “the assignment of various overload courses, more senior adjunct instructors had been `bumped’ by less senior full-time instructors” as well as other matters at issue. The College argued that “[a]rbitrator Loiacono demonstrated partiality and engaged in misconduct when he testified in support of the [union’s] position” at the arbitration.

In “overload courses” award the Appellate Division rejected the college’s argument, holding that “that the CPLR does not authorize vacatur on this ground.” According to the Appellate Division, the terms of CPLR 7511(b)(ii), which specify that the “partiality” of an arbitrator “appointed as a neutral” may be a basis for vacatur, imply that the “partiality” of a party-designated member of an arbitral board may not be the basis for vacatur.

The Appellate Division said “a party-designated arbitrator may in fact be `partial’“ and that by itself this is not grounds for vacating an arbitration award. Nor did the Appellate Division have any problem with a panel member testifying at the hearing.

This ruling may have a significant impact in Section 3020-a disciplinary appeals, which now are processed pursuant to CPLR Article 75 rather than CPLR Article 78 as was the case before Section 3920-a was amended in 1984. Syquia v Harpursville Central School District, 568 NYS2d 263 involved the alleged partiality of members of a disciplinary panel convened under the “old” Education Law Section 3020-a.

The attorney for Harpursville had advanced the argument that “a 3020-a hearing is, and is intended to be, something other than a fully impartial fact finding hearing, and that the panel members selected respectively by the Board of Education and by the teacher are advocates for the party respectively selecting them, with only the Chairman intended to be impartial.” A state Supreme Court justice said that this was a misunderstanding in educational circles, “if such, in fact, exists.”

The court declared that it was a “misapprehension that in 3020-a hearings the panel member selected by the Board is the `Board’s representative,’ and the panel member selected by the teacher is the `teacher’s representative,’ and only the Chairman is expected to be neutral and impartial.” According to the Meehan decision, this is no longer the case.

In the Nassau decision, [decided pursuant to Article 75 of the CPLR, rather than Article 78, the court held that a party-designated arbitrator may, in fact, be partial. Accordingly, said the court, Mr. Loiacono’s participation in the arbitration proceedings in the dual capacity of arbitrator and witness may serve as a basis for vacatur only if his behavior in this regard can be properly characterized as constituting corruption, fraud, or misconduct within the meaning of CPLR Section 7511[b][1][i]. Holding that Loiacono’s behavior could not be so characterized, the court confirmed the award.

Nor was the “overload course” award held to be violative of public policy.

According to the decision, a collective bargaining agreement limiting the college’s ability to assign courses in excess of a specified amount did not interfere with its ability to establish qualifications for its faculty.

In contrast, in the “History Department” aspect of the appeal the Appellate Division decided that the award, “which requires the college to reinstate the grievants, although it is undisputed that they were unqualified to teach courses in the History Department because of their lack of certain academic credentials,” should be vacated. This, however, was not because of Loiacono’s testimony and his participation as an arbitrator in the arbitration proceedings. Rather, said the court, the award had to be vacated because it violates public policy.

The court explained that although not every arbitration under a Taylor Law agreement “that threatens to limit the management prerogatives [of a public employer] is violative of public policy,” here the award’s mandate affected the college’s authority to establish the qualifications of its adjunct faculty and thereby affect the maintenance of academic standards in the classroom.

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