The Doctrine of Sovereign Immunity held to have been waived with respect to litigation challenging an arbitration award

The Doctrine of Sovereign Immunity held to have been waived with respect to litigation challenging an arbitration award

In Re: The Arbitration Between Hawai'i State Teachers Association and the State of Hawai'i, Department of Education, Hawai'i Supreme Court, SCWC-11-0000065

In the United States the Doctrine of Sovereign Immunity stands for the proposition that the Federal government or a State government cannot be sued without its permission.* This doctrine was tested in a case decided by Hawai'i's highest court ... In Re: Arbitration Between Hawai'i State Teachers Association and the State Of Hawai'i, Department Of Education [DOE].

The genesis of this case was the termination of a public school teacher for allegedly smoking marijuana and possessing alcohol while in her classroom.  The Hawai'i State Teachers Association [HSTA] filed a grievance on behalf of the teacher pursuant to the relevant collective bargaining agreement [CBA]. Article V.G.2.f of the agreement provided that the arbitrator could enter an award in favor of the grievant if he or she determined that Employer's actions were improper. Here the arbitrator sustained the grievance, ruling that the State lacked just cause to terminate the teacher and awarded the teacher back pay and benefits.

The arbitrator ordered that Morita be restored to her position with back wages “with interest at the rate of ten (10) percent per annum on any unpaid amounts that are due and owing.” Ultimately HSTA sued DOE seeking the award of 10% interest on the back pay in the arbitration award and its fees.

The Supreme Court said that the "State was a party to the collective bargaining agreement, which explicitly provided for disputes to go to arbitration and stated that '[t]he arbitrator may award back pay to compensate the teacher wholly or partially for any salary lost' [and] [t]his court has recognized that 'arbitrators have the authority to make an award of interest as part of the determination of the total amount of compensation to which the prevailing party is entitle'” and that prejudgment interest is 'an element of complete compensation.'”

Among the issues raised by DOE's was its contention that the doctrine of sovereign immunity protected it from an arbitrator's award of prejudgment interest, the Supreme Court affirmed the Intermediate Court of Appeals [ICA] conclusion that the State waived its sovereign immunity in the arbitration proceedings.

In the words of the Supreme Court, "We hold that, under the facts of this case, it does not. Because judicial review of an arbitration award is confined to the strictest possible limits, and because the arbitrator in this case reasonably interpreted the arbitration agreement in fashioning the award, we hold that the arbitrator did not exceed his authority in awarding prejudgment interest against the [DOE]. We also hold that the award of attorneys' fees and costs on appeal was proper."

* The Doctrine is reflected in the Eleventh Amendment to the United States Constitution which provides that "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." Thus a State cannot be sued in federal court without its consent or an expressed waiver of its immunity. Such immunity, however, is not viewed as being available to a political subdivision of a State.

The decision is posted on the Internet at:

http://caselaw.findlaw.com/hi-supreme-court/1870779.html

Determining if a grievance alleging a violation of a provision in a collective bargaining agreement may be submitted to arbitration

Determining if a grievance alleging a violation of a provision in a collective bargaining agreement may be submitted to arbitration

City of Yonkers v Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 2017 NY Slip Op 06073, Appellate Division, Second Department

Yonkers Fire Fighters Local 628, IAFF, AFL-CIO [Local 628] filed a grievance alleging that the City of Yonkers [Yonkers] engaged in a continuing practice of delaying and denying medical care and treatment claimed by its members pursuant to General Municipal Law §207-a after suffering an alleged line of duty injury. Yonkers denied the grievance and the Local demanded arbitration of its grievance.* 

Yonkers filed a petition pursuant to CPLR Article 75 seeking a court order permanently staying arbitration while the Local 628 cross-moved seeking an order compelling that the grievance be submitted to arbitration. Supreme Court denied Yonkers' petition and granted the Local 628's cross-motion. The Appellate Division affirmed the Supreme Court's actions.

The Appellate Division explained that public policy in New York favors arbitral resolution of public sector labor disputes if the demand for arbitration meets a two-prong test. The first test: the court must determine if there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance. If it finds no such barrier, the court then must determine whether the parties agreed to arbitrate the particular dispute by examining their collective bargaining agreement.

Noting that Yonkers did not claim any statutory, constitutional, or public policy prohibition to arbitration of this grievance, the Appellate Division said that the second test may be satisfied if the court finds that "there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the [collective bargaining agreement (CBA)]."

Finding that the relevant arbitration provisions set out in the CBA provide for arbitration of any grievance "involving the interpretation or application of any provision of this Agreement," and there was a reasonable relationship between the subject matter of the dispute, which involves the processing of General Municipal Law §207-a benefits to firefighters injured in the line of duty, the Appellate Division concluded that the grievance was arbitrable.

Addressing Yonkers' claim that the Local's grievance was untimely, the Appellate Division pointed out that the "threshold determination of whether a condition precedent to arbitration exists and whether it has been complied with, is for the court to determine."

In contrast, said the court, "[q]uestions concerning compliance with a contractual step-by-step grievance process have been recognized as matters of procedural arbitrability to be resolved by the arbitrators, particularly in the absence of a very narrow arbitration clause or a provision expressly making compliance with the time limitations a condition precedent to arbitration."

Here the CBA did not specify that "timely commencement of the grievance is a condition precedent to arbitration." Accordingly, the Appellate Division ruled that the question of whether the Local timely initiated its grievance ... must be resolved by the arbitrator, not the court.

* A third-party administrator, Pomco, Inc., processed GML §207-a claims filed by Yonkers firefighters on behalf of Yonkers.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_06073.htm

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New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending August 19, 2017

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending August 19, 2017

Source: Office of the State Comptroller

Click on text highlighted in color to access the full report

Municipal Audits released

New York State Comptroller Thomas P. DiNapoli announced his office completed audits of the 

Village of Painted Post – Board Oversight (Steuben County)
The board did not adopt policies and procedures for cash receipts and disbursements, processing of user charges, payroll and information technology. The board also did not make budget transfers on a timely basis to control spending during the year. 

Town of Schaghticoke – Water Operations (Rensselaer County)
Duties related to billings, collections, deposits and recordkeeping were not adequately segregated. The board also did not approve water billings and customer account adjustments, and did not perform an annual audit of the clerk’s records and reports. 

City of Yonkers – Information Technology (Westchester County)
The IT department’s acceptable computer use policy was not signed or acknowledged by all employees and city officials have also not classified personal, private and sensitive information based on its level of sensitivity and the potential impact should that data be disclosed, altered or destroyed without authorization. In addition, city officials have not ensured that employees received adequate cyber security training and have not adopted a breach notification policy or a disaster recovery plan. 

Unregistered Auto Repair Shops 

The Department of Motor Vehicles has not done enough to prevent automotive repair shops and inspection stations from operating without valid registrations, putting consumers at an increased risk to be scammed by dishonest businesses, according to an auditby New York State Comptroller Thomas P. DiNapoli.

Applying the substantial evidence test rather than the arbitrary and capricious test in the course of litigation

Applying the substantial evidence test rather than the arbitrary and capricious test in the course of litigation

2017 NY Slip Op 06077, Appellate Division, Second Department

The Petitioner filed a grievance with the Unified Court System [UCS] alleging that Court Office Assistants had been given responsibilities constituting out-of-title work. After a grievance meeting, the Acting Deputy Director of Labor Relations of the UCS issued a determination denying the grievance.

Petitioner challenged the Acting Director's determination by filing a CPLR Article 78 action in Supreme Court. Supreme Court concluded that the challenged duties did not constitute out-of-title work and that the administrative determination was not arbitrary or capricious. The court denied the petition and dismissed the proceeding.

Contending that Supreme Court erred in failing to apply the "substantial evidence" standard of review in deciding the petition,* Petitioner appealed.

The Appellate Division, sustaining the lower court's ruling, explained that "a substantial evidence question is presented only where a quasi-judicial evidentiary hearing has been held." Notwithstanding the fact that Petitioner had the "right to be heard . . . and to present facts in support of [his] position" at the grievance meeting," this did not render the grievance meeting "a quasi-judicial proceeding involving the cross-examination of witnesses and the making of a record within the meaning of Civil Practice Law and Rules §7803(4)."

As the administrative determination in this case was made after a grievance meeting, in contrast to having been made after a quasi-judicial evidentiary hearing, the Appellate Division ruled that Supreme Court "properly concluded that the relevant standard of review was whether the Acting Director's "determination was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion."

Addressing Petitioner's alternative contention -- that the Deputy Director's determination was arbitrary and capricious -- the Appellate Division said that "[a]n action is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts" and "[i]n applying the arbitrary and capricious' standard, a court inquires whether the determination under review had a rational basis." Here, said the court, the Deputy Director's determination that the challenged duties did not constitute out-of-title work was not arbitrary and capricious as work is not considered out-of-title if it is related to, similar in nature to, or a reasonable outgrowth of, the employee's in-title work."

Finding that Petitioner failed to identify any duty that has been assigned to Court Office Assistants that is not related to the types of general tasks enumerated in the relevant title standard, the Appellate Division concluded that the Deputy Director's ruling that the challenged duties were reasonably related to the duties described in the Court Office Assistant title standard was not arbitrary or capricious.

* CPLR §7804 provides, in pertinent part, "(g) Hearing and determination; transfer to appellate division. Where the substantial evidence issue specified in question four of §7803 is not raised [i.e., whether a determination made as a result of a hearing held, and at which evidence was taken, pursuant to direction by law is, on the entire record, supported by substantial evidence], the court in which the proceeding is commenced shall itself dispose of the issues in the proceeding. Where such an issue is raised, the court shall first dispose of such other objections as could terminate the proceeding, including but not limited to lack of jurisdiction, statute of limitations and res judicata, without reaching the substantial evidence issue." [Emphasis supplied.]

 

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_06077.htm

Employment Law News from WK WorkDay

Employment Law News from WK WorkDay 

Source: Wolters Kulwer

Selected reports posted by WK Workday distributed August 17, 2017

Click on text highlighted in color  to access the full report

No error in refusing to ‘look through’ arbitration petition to defeat subject matter jurisdiction 

Minnesota whistleblower need not suspect illegal conduct to bring retaliation claim  

American workplace ‘physically, emotionally taxing,’ Rand Corp survey find

Reconsidering, DC Circuit holds that denying lateral transfer can be Title VII adverse action