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October 26, 2010

Conforming of the arbitration award

Conforming of the arbitration award
Patry v Vill. of Tupper Lake, 262 AD2d 757, Motion for leave to appeal denied, 94 NY2d 753

The Patry decision by the Appellate Division provides an example of a rather rare event: a court providing relief that the award itself neglected to include.

In this instance, the arbitration panel decided that the employer had acted improperly in discharging Patry, but did not provide him with any remedy such as directing his reinstatement. The court corrected this omission.

The case began after Tupper Lake heavy equipment operator Jacques Patry was terminated from his position because he tested positive for marijuana in a random drug test. Patry filed a grievance under the collective bargaining agreement. Ultimately the “board of arbitrators” ruled that the village had discharged him “without proper reason”. The decision, however, did not indicate what remedial action was to be taken. When the village failed to restore him to his former position, Patry filed an Article 75 action to confirm the award together with an Article 78 action to compel the village to reinstate him. The village objected, citing paragraph 7.09 of the contract, which read as follows:

No Board of Arbitrators shall have power or jurisdiction to modify the Board of Trustees’ action. The Board of Arbitrators shall either find that the Board of Trustee’s action was not without proper reason in which event the suspension, demotion or discharge shall be sustained in full; or that the suspension, demotion or discharge was without proper reason.

A Supreme Court judge dismissed the action “because the arbitrators did not direct that petitioner be reinstated to his former position or awarded back pay and the labor contract did not grant them the authority to do so, there was no “award” to confirm”.

The Appellate Division reversed the lower court’s ruling. It pointed out that in the context of the contract, which established a “hierarchy of penalties that may be imposed under varying circumstances,” paragraph 7.09 merely precluded the arbitrators’ modification of a penalty, e.g., reduction of a penalty of discharge to one of suspension, that has been permissibly imposed by the Board.

In other words, if the arbitrators found that the individual was guilty of the disciplinary charges that were brought, they could not change the penalty imposed by the village.

The construction urged by the village “leads to an irreconcilable and absurd result, with the arbitrators granted the authority to declare that a grievant had been wrongfully suspended, demoted or discharged but denied the power to annul the impermissible penalty ....”

The Appellate Division’s conclusion: the arbitrators were authorized to annul the discharge and restore Patry to his former position. Although there was no indication of the reason why the arbitration board failed to do this, the court said the fact that the arbitrators failed to make a complete award does not mean that it could or should not recognize and confirm the award that they did make.

The Appellate Division apparently found it significant that the village did not contest the arbitrators’ finding that petitioner’s discharge was “without proper reason” nor did it provide any legal basis for vacating or modifying the arbitrators’ award (see, CPLR 7511).

The Appellate Division ruled that “on the merits, given our construction of paragraph 7.09 of the labor contract and the arbitrators’ determination that petitioner’s discharge was without proper reason, we conclude that the Board was required to retroactively restore petitioner to his employment, “less any amounts he received from employment or unemployment insurance benefits.”
NYPPL

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