December 04, 2013

Powers of the arbitrator set out in a collective bargaining agreement may not be enlarged without the informed agreement of the parties

Powers of the arbitrator set out in a collective bargaining agreement may not be enlarged without the informed agreement of the parties
Town of Babylon v Carson, 2013 NY Slip Op 07980, Appellate Division, Second Department

In this Article 75 action, the Appellate Division reversed a Supreme Court ruling that vacated an arbitration award that provided a lesser penalty than the penalty imposed by the appointing authority, granting the union’s motion to confirm the arbitration award.

Following a “workplace incident,” the Town of Babylon told one of its employees [Employee] that she was suspended without pay for up to 30 days, pending a disciplinary hearing on four charges of alleged misconduct. The hearing officer sustained all four charges and recommended that Employee be suspended for 30 days without pay and placed on probation for a period of six months.

Employee’s union filed a grievance and demand for arbitration. At the initial meeting of the parties the arbitrator stated that "the first item of business is to stipulate the issue." The Town's attorney and the union’s attorney agreed that the issue to be determined was:

1. Was there just cause to suspend [Employee] for 30 days and to impose a six-month probationary period for her conduct …and 30-day suspension is without pay? and

2. Was progressive discipline considered when imposing that sanction?

3. And if not, what shall the remedy be?

The parties then proceeded with the arbitration. Ultimately the arbitrator concluded that the hearing officer properly determined that although there was just cause to impose a penalty upon Employee, the Town did not apply the principles of progressive discipline.

Accordingly, the arbitrator concluded that the imposition of a less severe disciplinary penalty was warranted and directed that 10 days' pay be restored to Employee, and that the term of probation be reduced to three months.

The Town filed a petition pursuant to Article 75 of the CPLR seeking to vacate so much of the arbitration award as reduced the penalty imposed upon Employee by the Town while the union and Employee cross-petitioned to confirm the arbitration award providing for a lesser penalty..

Supreme Court decided that, "notwithstanding the restrictive language of the [collective bargaining agreement] which would seem to preclude the arbitrator from reducing a penalty absent a finding that the discipline imposed was not for just cause,'" it was "evident from the terms of the parties' submission to the arbitrator that the parties intended to confer a broader authority on him." The Supreme Court then denied the Town’s the petition and granting the cross petition.

The Appellate Division commenced its review of the Supreme Court’s ruling by noting that "Judicial review of an arbitrator's award is extremely limited" and that a court may vacate an arbitration award pursuant to CPLR 7511(b)(1)(iii) "only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power."

Further, said the court, “A party can only waive its contention that an arbitrator acted in excess of his or her power ‘by participating in the arbitration with full knowledge’ of the alleged error that is being committed and ‘by failing to object until after the award’ is issued.”

Citing Article X(E)(6) of the collective bargaining agreement [CBA] between the parties, which provided that "[t]he arbitrator shall have the power to restore any fine, any penalty including loss of vacation or personal days, reinstate any discharged employee, with or without back pay or remove any written reprimand in the event he [or she] finds the discipline imposed was not for just cause", the Appellate Division decided that the Town had not consented to the arbitrator having authority to modify the penalty imposed upon Employee in the event that he made a finding that the Town had just cause to discipline her.

The Appellate Division, noting that at the beginning of the arbitration, the issue to be determined was defined as whether there was just cause to punish Employee and, "if not," what the remedy should be, explained that “As framed in this manner, the issue to be determined by the arbitrator was in accordance with his powers, as set forth in Article X(E)(6) of the CBA, which only empowered the arbitrator to provide [Employee] with a remedy upon a finding that the imposition of discipline was not founded on just cause.

As the arbitrator found that there was just cause for the discipline imposed, the Appellate Division held that the arbitrator had exceeded his authority in reducing the penalty imposed. Further, said the court, “Contrary to the contention of the Union and [Employee], the stipulation that the arbitrator would determine whether the hearing officer had considered progressive discipline in the course of imposing the initial penalty upon [Employee] did not confer upon the arbitrator an independent power to reduce the penalty imposed.”

Commenting that the record reflects that the Town did not participate in the arbitration with full knowledge that the arbitrator intended to render a determination in excess of the powers set forth in the CBA, the Appellate Division ruled that that “Supreme Court erred in denying the petition to vacate so much of the arbitration award as reduced the penalty imposed upon [Employee] and erred in granting the cross petition of [Employee] and the Union to confirm the award.”
The decision is posted on the Internet at: