Arbitrator’s refusal to hear employee’s “whistle blower” defense in the course of disciplinary hearing requires the vacating of the award
Matter of Kowaleski v New York State Dept. of Correctional Servs., 2010 NY Slip Op 09379, Decided on December 21, 2010, Court of Appeals
Barbara Kowaleski, a correction officer employed by the New York State Department of Corrections, was served with disciplinary charges alleging that she violated provisions of the employees' manual on three separate occasions when she "made inappropriate comments of a personal nature about another staff member in the presence of staff and inmates"; argued with a fellow employee; and was "disrespectful and insubordinate" when she ignored a superior's order.
The proposed penalty: termination and the loss of any accrued leave.
Ultimately the matter was submitted to a disciplinary arbitration.
At the outset of the hearing, Kowaleski argued that the disciplinary action was only being brought to retaliate against her for reporting a fellow officer's misconduct and that she was entitled to raise this as an affirmative defense pursuant to Civil Service Law §75-b, contending that §75-b prohibits public employers from retaliating against employees for reporting their coworkers' improper conduct.
The arbitrator determined that because the Collective Bargaining Agreement [CBA] limited his authority "to determinations of guilt or innocence and the appropriateness of proposed penalties," he lacked authority to consider Kowaleski's retaliation defense. The arbitrator, however, indicated that he would consider evidence of retaliation when determining witness credibility and "in the larger context of guilt or innocence."
The arbitrator found Kowaleski guilty of two of the three charges and determined that termination was appropriate and Kowaleski filed a petition pursuant to Article 75 of the CPLR seeking to have the award vacated.
Although Supreme Court and the Appellate Division rejected Kowaleski’s appeal, the Court of Appeals reversed the lower courts’ rulings “[b]ecause we find that the arbitrator's failure to separately consider and determine Kowaleski's affirmative defense of retaliation on the merits requires the award to be vacated”
The Court of Appeals explained that an arbitration award must be vacated if, as relevant here, a party's rights were impaired by an arbitrator who "exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made (see CPLR 7511 [b]  [iii]). Further, said the court, an arbitrator "exceed[s] his power" under the meaning of the statute where his "award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power."
As the lower courts found, and Correction conceded, the arbitrator “not only had authority to consider Kowaleski's retaliation defense, but was required to do so.”
Further, the opinion indicates that Civil Service Law §75-b prohibits a public employer from taking disciplinary action to retaliate against an employee for reporting "improper governmental action" and in the event the employee reasonably believes disciplinary action would not have been taken “but for" the whistle blowing, the employee may assert such as a defense before the designated arbitrator or hearing officer." *
Whatever the terms of the CBA, the Court of Appeals said that "[t]he merits of such defense shall be considered and determined as part of the arbitration award or hearing officer decision." Further, should the arbitrator or hearing officer find that the disciplinary action is based “solely on the employer's desire to retaliate,” the disciplinary proceeding must be dismissed.
Accordingly, the arbitrator's finding that he did not have authority under the CBA to consider Kowaleski's retaliation defense was not only incorrect as a matter of law, but also in excess of an explicit limitation on his power. Because he failed to consider and determine the defense, the court ruled that the award must be vacated.
Finally, the Court of Appeals noted the Kowaleski has requested that any rehearing be before a different arbitrator. That request, said the court, should be ruled on by Supreme Court in the exercise of its discretion.
* Addendum to original posting: A number of e-mails concerning this ruling have been received since the summary of the decision was posted on December 22, 201. Set out below are the relevant provisions of Section 75-b of the Civil Service Law addressing the basic issue before the Court of Appeals:
3. (a) Where an employee is subject to dismissal or other disciplinary action under a final and binding arbitration provision, or other disciplinary procedure contained in a collectively negotiated agreement, or under section seventy-five of this title or any other provision of state or local law and the employee reasonably believes dismissal or other disciplinary action would not have been taken but for the conduct protected under subdivision two of this section, he or she may assert such as a defense before the designated arbitrator or hearing officer. The merits of such defense shall be considered and determined as part of the arbitration award or hearing officer decision of the matter. If there is a finding that the dismissal or other disciplinary action is based solely on a violation by the employer of such subdivision, the arbitrator or hearing officer shall dismiss or recommend dismissal of the disciplinary proceeding, as appropriate, and, if appropriate, reinstate the employee with back pay, and, in the case of an arbitration procedure, may take other appropriate action as is permitted in the collectively negotiated agreement [emphasis supplied].
(b) Where an employee is subject to a collectively negotiated agreement which contains provisions preventing an employer from taking adverse personnel actions and which contains a final and binding arbitration provision to resolve alleged violations of such provisions of the agreement and the employee reasonably believes that such personnel action would not have been taken but for the conduct protected under subdivision two of this section, he or she may assert such as a claim before the arbitrator. The arbitrator shall consider such claim and determine its merits and shall, if a determination is made that such adverse personnel action is based on a violation by the employer of such subdivision, take such action to remedy the violation as is permitted by the collectively negotiated agreement [emphasis supplied].
(c) Where an employee is not subject to any of the provisions of paragraph (a) or (b) of this subdivision, the employee may commence an action in a court of competent jurisdiction under the same terms and conditions as set forth in article twenty-C of the labor law.
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