The Appellate Division said that an arbitrator’s award may be vacated on the ground that an arbitrator exceeded his or her power "only where the arbitrator's award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power."*
The Court explained that “It is well established that "an arbitrator has broad discretion to determine a dispute and fix a remedy and that any contractual limitation on that discretion must be contained, either explicitly or incorporated by reference, in the arbitration clause itself'," citing Matter of State of New York [Dept. of Correctional Servs.] [Council 82, AFSCME], 176 AD2d 1009, lv denied 79 NY2d 756. Further, the Appellate Division pointed out that "To exclude a substantive issue from arbitration, therefore, generally requires specific enumeration in the arbitration clause itself of the subjects intended to be put beyond the arbitrator's reach."
Specifically the court decided that the underlying collective bargaining agreement [CBA] authorized the arbitrator to determine that the imposed punishment is "unreasonable, arbitrary or capricious" and if so found, the CBA specifically provides that, "where the penalty imposed is found to be unreasonable, arbitrary or capricious," the arbitrator may make a determination "with respect to the penalty imposed upon the grievant . . . ."
The Appellate Division pointed out that while the CBA does not explicitly authorize an arbitrator to substitute an appropriate penalty upon determining that the penalty imposed by the Town is unreasonable, arbitrary or capricious, there is likewise no such "specifically enumerated limitation on the arbitrator's power."
Accordingly, the court conclude that the arbitrator did not exceed his authority in modifying the grievant's penalty from a permanent demotion to a demotion for a term of one year.
* Courts have also vacated an arbitration award where it is determined that the award “violated strong public policy.” See Ford v CSEA, 94 AD2d 262, in which the court addresses the critical question of the power of an arbitrator to render a decision which impacts on or affects a public policy.