August 1, 2019

By failing to seek a stay of arbitration a party to the arbitration runs the risk of the arbitrator finding that the subject matter of the dispute is covered under the controlling collective bargaining agreement


A City School District [District] appealed a Supreme Court's decision that granted the Employee Organization's [Union] petition to confirm an arbitration award and denied District's cross petition to vacate that award.

A member of the Union was terminated by the District because she did not possess a valid registration card required by General Business Law §89-g(1)(a) for employment as a security guard. The Union filed a grievance on behalf of its  member and ultimately filed a demand for arbitration.

The District did not move to stay arbitration and the arbitrator subsequently issued an award that directed the District to rescind the termination of the Union's member and reimburse the member for her loss of pay from the date her registration card as a security guard was renewed. The District then appealed the Supreme Court ruling.

The Appellate Division rejected the District's contention that the arbitration award violated public policy requiring the registration of security guards.  Citing Matter of United Fedn. of Teachers, Local 2, AFT, AFL-CIO v Board of Educ. of City School Dist. of City of N.Y., 1 NY3d 72, the court said that "[T]he public policy exception to an arbitrator's power to resolve disputes is extremely narrow" and the Court of Appeals has promulgated "a two-prong test for determining whether an arbitration award violates public policy."

The first test: a court, "without engaging in any extended fact-finding or legal analysis that a law prohibits, in an absolute sense, the particular matters to be decided ... by arbitration ...," determines that an arbitrator cannot act. If the arbitration award survives this first test, the court is then to determine if the "award itself violates a well-defined constitutional, statutory or common law of this State."

In contrast, the Appellate Division opined that a court "may not vacate an award on public policy grounds when vague or attenuated considerations of a general public policy are at stake. Courts shed their cloak of noninterference [, however,] ... where the final result creates an explicit conflict with other laws and their attendant policy concerns, focusing on the result, the award itself."*

The Appellate Division concluded that the first prong of the public policy exception has not been met here because nothing in General Business Law §89-g prohibits the resolution of this matter by arbitration, particularly considering an arbitrator's " broad power to fashion appropriate relief'.

As to the second prong of the test, the court said that it had not been met either as the arbitration award did not compel the District to employ the union member as a security officer during the period that she did not have the required registration card. Indeed, opined the Appellate Division, the arbitrator ordered that the union member's termination be rescinded and that she be awarded back pay only from the time when she received her renewed registration card.

Also rejected by the court was the District's argument that the arbitrator exceeded his authority by finding that the collective bargaining agreement (CBA) allowed arbitration of this dispute. While couched in terms of the arbitrator exceeding his authority, the Appellate Division held that "in reality [the District] is contending that 'the arbitrator did not have the power to decide the question at issue and, therefore, there was nothing to arbitrate.'"

However, said the court, by submitting to arbitration, the District ran the risk that the arbitrator would find the dispute covered under the CBA, as he did, notwithstanding District's position that the termination of an employee for failing to maintain a required registration card was outside the agreement's scope.

Concluding that the other arguments advanced by the District were "without merit," the Appellate Division sustained the Supreme Court's decision in this matter.

* In support of this observation, the Appellate Division cited Matter of New York State Correctional Officers & Police Benevolent Assn. v State of New York, 94 NY2d 321.

The decision is posted on the Internet at:


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