An individual [Employee] employed by Petitioner [Employer] was suspended without pay following an investigation and shortly thereafter was served with a notice of discipline [NOD]. The Employer's NOD's recommended the Employee's termination as the disciplinary penalty to be imposed.
Pursuant to the collective bargaining agreement [CBA] and an incorporated separate memorandum of agreement [MOA] between the State of New York and Employee's collective bargaining unit representative, the New York State Public Employees Federation, AFL-CIO [PEF], PEF and Employee filed a grievance seeking judicial review of the NOD disciplinary arbitrator's [DA] decision. Employee also exercised his contractual right to challenge his immediate suspension without pay by Employer before a "triage" arbitrator [TA]*.
A multiday virtual NOD hearing was held and the DA thereafter issued a decision denying Employee's grievance after finding Employee guilty of one of the three misconduct charges served upon him. The disciplinary penalty imposed: a three-month suspension without compensation and restitution of funds for Employee's "time theft".
Employee then commenced the instant CPLR Article 75 proceeding seeking a court order vacating the arbitration award, alleging that the DA exceeded his authority under the MOA by considering the TA's determination in fashioning the penalty imposed. Supreme Court agreed and granted the Employee's petition, in part, by vacating the penalty and remitting the matter to the same DA to reconsider the disciplinary penalty imposed in light of the Supreme Court's rulings. Supreme Court also stayed the deduction of restitution payments from Employee's paychecks pending the DA's reconsideration of the penalty imposed. Employer appealed.
Citing Matter of Falzone [New York Cent. Mut. Ins. Co.], 15 NY3d 530 and other decisions, the Appellate Division observed that:
1. "It is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power"; and
2. "Aside from those circumstances, courts may not vacate an award based on their disagreement with the reasoning or outcome, even if the arbitrator made errors of law or fact.
The Appellate Division's decision then noted that "... although an arbitrator's interpretation of contract language is generally beyond the scope of judicial review, where a benefit not recognized under the governing [collective bargaining agreement] is granted, the arbitrator will be deemed to have exceeded his or her authority".
The Appellate Division explained that "without passing on the appropriateness of the penalty" imposed on Employee, it agreed with Supreme Court that the DA "consider[ed]" the TA's finding "in determining an appropriate penalty," thus exceeding an enumerated limitation on the TA's authority.
The Appellate Division said it found no error in Supreme Court's decision to partially vacate the arbitration award and remit the matter to the DA for a redetermination of the penalty to be imposed, ordering that Supreme Court's ruling "modified, on the law, without costs, by reversing so much thereof as stayed paycheck deductions related to restitution" and vacated the penalty imposed by the DA "in all respects".
* A negotiated procedure between PEF and the State of New York as the employer provided for an independent "triage arbitrator" [TA] examining such a pending suspension without pay before it can be implemented and should the TA determines that such a suspension without pay is not warranted, then one cannot be imposed at that time. In the instant appeal such an examination was held and the TA found that a suspension without pay was not warranted.
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