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July 10, 2015

A limitation on an arbitrator’s discretion to fashion a remedy must be contained, either explicitly or incorporated by reference, in the arbitration clause


A limitation on an arbitrator’s discretion to fashion a remedy must be contained, either explicitly or incorporated by reference, in the arbitration clause
Matter of Town of Scriba (Teamsters Local 317), 2015 NY Slip Op 05316, Appellate Division, Fourth Department

Teamsters Local 317 (Union) appealed from an order and judgment of Supreme Court granting the application of the Town of Scriba [Scriba] to vacate an arbitration award. 

The stipulated issue submitted to the arbitrator asked "[w]as the suspension and termination of the [g]rievant, … for just cause? If not, what shall be the remedy?"

Among other things, the arbitrator had determined that, although maintaining a commercial driver's license (CDL) was a minimum standard for employment, the terms of the collective bargaining agreement (CBA) did not mandate the employee's discharge from employment upon forfeiture of his CDL and, thus, Scriba did not have just cause to terminate the grievant.

The arbitrator fashioned a remedy whereby the grievant would be suspended without pay, and Scriba could terminate his employment only if he did not regain a valid CDL on or before a particular date.

Scriba appealed to the Supreme Court seeking an order vacating the arbitration award on the ground that the award exceeded the scope of the arbitrator's power.  Union filed a cross petition seeking to confirm the award pursuant to CPLR 7510. Supreme Court granted the Scriba’s motion to vacate the arbitration award.

Union appealed the Supreme Court’s decision and the Appellate Division agreed with the Union that Supreme Court erred in vacating the arbitration award, concluding that the arbitration award should have been confirmed.

The court said that it agreed with Union that the arbitrator did not exceed a specifically enumerated limitation on his authority, explaining 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."

The Appellate Division said that the relevant part of the collective bargaining agreement [CBA] stated only that "[i]f the dispute [regarding a grievance] cannot be satisfactorily resolved, the issue may be submitted to final and binding arbitration."  The court concluded that the CBA provided no "specifically enumerated limitation on the arbitrator's power" and that "the remedy sought was expressed in open-ended terms that certainly did not limit the arbitrator's power to grant any specific relief."
 
The court also agree with the Union that the award was not irrational, explaining that "An award is irrational if there is no proof whatever to justify the award” and so long as an arbitrator offers “even a barely colorable justification for the outcome reached” the arbitration award must be upheld.

Here, said the Appellate Division, “the language of the CBA is ‘reasonably susceptible of the construction given it by the arbitrator’ and the arbitrator offered a ‘colorable justification for the outcome reached.'”

The decision is posted on the Internet at:

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