The Appointing Authority [Agency] served disciplinary charges on an individual [Employee] alleging Employee was guilty of three acts involving sexual misconduct.
The arbitrator found the Respondent guilty of Disciplinary Charge 1 but not guilty with respect to Disciplinary Charges 2 and 3. The arbitrator imposed a penalty of a six-month suspension without pay and, because Employee had already been suspended in excess of six months of suspension without pay, ordered that Employee be reinstated to his position with back pay.
Employee initiated a CPLR Article 75 action to confirm the arbitration award after Agency failed to reinstate him to his position. The Agency's answer to Employee's petition sought to vacate the arbitration award as to Charges 2 and 3 and impose termination of the penalty with respect to Charges 2 and 3.
Supreme Court confirmed the arbitration award with respect to Charge 1 but vacated the awards of not guilty with respect to charges 2 and 3 as "irrational and against public policy". Supreme Court and found Employee "guilty of these charges and remitted the matter to a different arbitrator for the imposition of a new penalty.
Employee appealed the Supreme Court's rulings.
The Appellate Division, referring to the provisions of CPLR §7511[b][1][iii], explained that judicial review of arbitral awards is extremely limited and may only be vacated in limited circumstances, including where the arbitrator "... exceeded his [or her] power", citing American Intl. Specialty Lines Ins. Co. v Allied Capital Corp., 35 NY3d 64 and other cases. The Appellate Division observed that "[A]rbitrators exceed their power within the meaning of the CPLR only when they issue an award that violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power".
Further, the Appellate Division pointed out that "An arbitrator that 'imposes requirements not supported by any reasonable construction of the [contract]' has, 'in effect, made a new contract for the parties,' rendering the award subject to vacatur as irrational", citing Matter of Livermore-Johnson [New York State Dept. of Corr. & Community Supervision], 155 AD3d 1391, and other decisions.
The Appellate Division then addressed the arbitrator's evaluation of the charges served on Employee and concluded that the arbitrator "impermissibly exceeded her authority as she 'effectively modified the terms' of the sexual harassment policies in the manual and the handbook."
Explaining courts can neither "substitute judicial opinion for the arbitrator's decision" nor "rule on either the merits of the underlying allegations or impose a remedy [that the court feels] is appropriate", the Appellate Division reversed those aspects of Supreme Court's order that did both and vacated the portions of the award that found Employee not guilty of disciplinary Charges 2 and 3.
In the words of the Appellate Division, "we simply vacate the portions of the award finding [Employee] not guilty of sexual harassment under charges 2 and 3 and remit the matter to a new arbitrator for a new determination as to those charges and the imposition of an appropriate penalty".
Click HERE to access the decision of the Appellate Division posted on the Internet.