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August 24, 2012

Court will not assume that the arbitrator will be unable to fashion an appropriate remedy


Court will not assume that the arbitrator will be unable to fashion an appropriate remedy
Board of Education of City School Dist. of City of Buffalo, 53 AD3d 1071

The Buffalo Fiscal Stability Authority (BFSA) imposed a wage freeze with respect to public employees of the City of Buffalo, including employees of the Buffalo City School District. In accordance with the freeze, the District did not pay wage increases mandated by the parties' collective bargaining agreement (CBA).

The unions initially sued in federal court challenging the constitutionality of the wage freeze under the Contracts and Takings Clauses of the United States Constitution but were unsuccessful [Buffalo Teachers Fedn. v Tobe, 446 F Supp 2d 134, affd 464 F3d 362, cert denied, 127 S Ct 2133].

The unions then filed a demand for arbitration and the District filed a petition pursuant to CPLR Article 75 seeking a permanent stay of arbitration.

The Appellate Division affirmed Supreme Court’s dismissal of the District’s petition, rejecting its argument that “any remedy awarded in the arbitration would violate public policy and thus that the grievance is not subject to arbitration.” The court said while a court may stay arbitration if it "examines an arbitration agreement . . . on its face and concludes that the granting of any relief would violate public policy" it would not “presume in advance of arbitration that the arbitrator will fashion a remedy that will violate public policy.”

Neither was the Appellate Division persuaded by the District’s claim that having litigated the issue in federal court, the union’s demand for arbitration was improper as the issue had already be the subject of a judicial review. It noted that the federal litigation was limited to constitutional challenges to the wage freeze, while the grievance filed by the union concerns is whether there was a violation of the CBA between the parties.

The decision is posted on the Internet at:
http://nypublicpersonnellawarchives.blogspot.com/2008/07/court-will-not-assume-that-arbitrator.html

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