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March 17, 2011

Compelling arbitration in cases where the grievance is based on the unilateral act or omission of a third party

Compelling arbitration in cases where the grievance is based on the unilateral act or omission of a third party
Remsen CSD v Remsen Teachers Asso., 270 AD2d 796 [Decided with In re Mohawk Central School District, 270 AD2d 798]

In Richfield Springs CSD v Allen, 270 AD2d 734, the Appellate Division, Third Department, held that the fact that a third party provides the employer’s negotiated fringe benefit does not insulate the employer from its duty to negotiate changes in the terms and conditions of employment if third party unilaterally decides to change the benefit.

In Richfield, the union was concerned that a change in a prescription drug plan provided by a new carrier would be inferior to the coverage provided by the old carrier.

The Appellate Division held that the grievance challenging the change in the carrier of the prescription drug plan covering its members was subject to arbitration under the contract grievance procedure set out in the Taylor Law agreement.

A substitute for the carrier of the prescription drug plan specified in the agreement was changed without the Association’s consent. This, said the court, supported the claim of an alleged violation of the Agreement which the parties clearly and unequivocally agreed to arbitrate.

The Appellate Division, Fourth Department, came to the same conclusion in the Remsen case.

Remsen Teachers Association president Nora Revere sued to compel the district to submit a grievance alleging a violation of its collective bargaining agreement. The district said that any change was beyond its control since the alleged violation resulted from the third party replacing its then current insurance carrier for its prescription drug plan with a different carrier.

According to the decision, the fact that the changes were made by an entity that was not a party to the collective bargaining agreement did not justify granting the district’s motion to stay arbitration.

In view of the parties’ broad arbitration agreement and the provisions relating to health insurance benefits, the court ruled that the alleged violation of the collective bargaining agreement resulting from changes in prescription drug benefits presents an arbitrable issue.

The Fourth Department pointed out that whether the district possesses authority or control over the amount or type of health insurance benefits provided to its employees, and whether the district the collective bargaining agreement with respect to maintaining a certain level of benefits, is for the arbitrator to determine.


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