Determining if the alleged violation of a provision in a collective bargaining agreement is arbitrable

In New York State the court's apply certain tests to determine if an alleged violation of a term set out in a collective bargaining agreement [CBA] entered in by a public entity and a recognized or certified employee organization may be submitted to arbitration. 

1. Initially, the court must determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance; and

2. If there is no prohibition against arbitrating the issue, the court then considers the parties' CBA and determines if the parties, in fact, agreed to arbitrate the particular dispute.

In examining the CBA courts merely determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA. Further, in the event the court rules the matter arbitrable and that the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the CBA, it may not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute.

In this action the Employer  and an Employee Organization [EO1] were parties to a CBA that provided that Employer was to pay members of EO1 in the collective bargaining unit a certain percentage more than the rate of pay of certain employees in a different collective bargaining unit.

Subsequently a different union representing the employees in a different collective bargaining unit [EO2] entered into an agreement with  Employer to increase the salaries of its members in that collective bargaining unit, including salary increases for years past, 2016 and 2017. However, the EO2 CBA also provided for a waiver of the receipt of retroactive pay for those years. 

The EO1 filed a grievance on behalf of its members seeking payment for retroactive salary increases for the years 2016 and 2017 for its members in EO1.

Employer denied the grievance, finding that the CBA did not contain a provision requiring it to pay EO1 members a retroactive salary based on the retroactive pay increases Employer had negotiated with EO2 for the employees in the collective bargaining unit EO2 represented. When EO1 demanded Employer's decision be submitted arbitration Employer commenced a CPLR Article 75 seeking to stay the arbitration. EO1 cross-moved to compel arbitration.

When Supreme Court denied Employer's petition and granted EO1's cross motion, Employer appealed the Supreme Court' ruling to the Appellate Division. 

As Employer did not contend that arbitration of the grievance was prohibited by law or public policy, the Appellate Division ruled that only issue before it was whether the parties agreed to arbitrate this particular grievance. 

The Appellate Division concluded that the arbitration provision of the CBA at issue was broad and that there was a reasonable relationship between the subject matter of the dispute, which involves the EO1's claim that its members are entitled to certain payments for retroactive salary increases, and the general subject matter of the CBA.

Noting that some uncertainty existed as to whether the subject matter of the dispute is encompassed within the salary provisions of EO1's CBA or whether the parties contemplated that a separate agreement would be required for wage increases to be paid retroactively, the Appellate Division, citing Board of Educ. of Watertown City School Dist. v Watertown Educ. Assn., 74 NY2d 912, explained that any alleged ambiguity in the EO1 CBA "regarding the coverage of any applicable provision is ... a matter of contract interpretation for the arbitrator to resolve."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_08845.htm

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Audits issued by New York State on December 30, 2019.

New York State Comptroller Thomas P. DiNapoli issued the audits listed below on December 30, 2019

Department of Agriculture and Markets: Oversight of Industrial Hemp (2018-S-32)

The department’s program has rapidly expanded opportunities for industrial hemp production in the state. However, the department does not always follow established practices when reviewing applications, conducting inspections, and sampling plants. The department inspected only 57 percent of growers in the program and tested plant THC levels for only 58 percent of the growers during 2018. Incomplete records and unreliable data systems further hinder its ability to effectively monitor program requirements.

City University of New York (CUNY): Compliance With Payment Card Industry Standards (2018-S-61)

Auditors found that while CUNY recognizes the importance of compliance with payment card industry standards and is committed to maintaining strong internal controls, it has not provided its colleges with sufficient guidance and direction for addressing and maintaining compliance with data security requirements.

New York City Department of Finance (DOF): Selected Aspects of Parking Violations Operations to Collect Fines and Fees (2017-N-8)

Overall, auditors determined that while DOF identifies parking summonses to be processed, its collection of payments for parking fines needs to be improved. Many parking summonses are dismissed as defective due to errors that occurred when the summonses were issued. Until October 2018, DOF expended minimal effort to collect amounts due for summonses issued to vehicles with diplomatic plates. These amounts due include $15.6 million for summonses issued before Nov. 1, 2002.

Metropolitan Transportation Authority (MTA) - Staten Island Railway (SIR): Operational Training and Medical Assessments of Train Crews (Follow-Up) (2019-F-18)

An audit released in March 2018 found that SIR was not in compliance with the requirements of the induction and refresher training established for its engineers and conductors. In a follow-up, auditors found MTA-SIR officials made progress in addressing the problems identified in the initial audit.

Department of Motor Vehicles (DMV): Allocation, Billing, and Collection of Expenses of Administering the Motor Vehicle Financial Security Act and the Motor Vehicle Safety Responsibility Act (2019-S-5)

In general, DMV is appropriately allocating, billing, and collecting nearly all the expenses related to administering the acts. However, auditors identified areas for improvement.

New York State Health Insurance Program: UnitedHealthcare: Reasonable and Customary Reimbursement Rates for Delayed Claims (2018-S-60)

United's automated claims processing system uses only the two most recent rate periods (i.e., reimbursement rates from the prior 12 months) to process all claims – even claims for services that occurred before those rates took effect. From a sample of 100 claims, auditors calculated a potential cost savings of $214,008 for 84 claims that were paid using a rate period that was not in effect on the date of the service.

New York State Health Insurance Program: Empire BlueCross: Improper Payments for Special Items Billed by Hospitals Within Long Island Health Network (LIHN) (2017-S-43)

Auditors found Empire did not pay for special item claims according to the terms of its contract with LIHN. From a sample of 874 claims, Empire overpaid LIHN hospitals $3,597,688 for 722 special item claims (83 percent of the claims sampled). As of July 23, 2019, Empire had recovered $262,467.

Niagara Frontier Transportation Authority (NFTA): Use of Vendor-Supported Technology (2019-S-40)

NFTA officials have not developed policies and procedures to ensure that its systems are regularly reviewed and kept up to date. Auditors identified unsupported systems used by NFTA on 66 devices.

Homes and Community Renewal: Office of Rent Administration (ORA): Collection of Fines Related to Tenant Complaints (2018-S-58)

Auditors found ORA lacks proper fiscal controls over fines and settlements. There is limited assurance that all monies due the state are received and accounted for because of system, process, and policy weaknesses. ORA does not exercise its full authority to collect outstanding fines more timely. As of April 2019, there were at least $346,000 in outstanding fines. Harassment fines were imposed in only 12 out of the 684 harassment cases (2 percent) filed during the audit scope.

New York City Department of Social Services: Oversight of Security Expenses in Single Adult and Adult Family Homeless Shelters (Follow-Up) (2019-F-31)

An audit issued in May 2018 found that DHS lacks strong internal controls – most notably DHS-specific standard operating procedures. A review of four sampled providers’ security expenditures alone identified nearly $2.2 million in insufficiently documented or questionable security expenses, indicating that significant monitoring gaps exist. In a follow-up, auditors found DHS officials have made progress in addressing the issues identified in the initial report.

Department of Health (DOH): Oversight of Obesity and Diabetes Prevention Programs (Follow-Up) (2019-F-43)

An audit issued in September 2018 identified opportunities for improved oversight, particularly regarding contractor performance, of the state’s obesity and diabetes prevention programs. In a follow-up, auditors found DOH officials have made significant progress in correcting the problems identified in the initial report.

Department of Health: Wadsworth Center Environmental Laboratory Approval Program (ELAP) (2018-S-1)

Auditors identified opportunities to improve documentation of on-site assessments, for which Wadsworth has taken corrective action. However, auditors did not find a significant amount of other non-compliance with ELAP procedures and protocols in the areas reviewed that would cause us to question the sufficiency of Wadsworth’s processes for certifying, monitoring, and enforcing regulations over environmental laboratories.

Guidelines controlling the judicial review of an arbitrator's ruling

A labor union [Union] representing employees of a public library [Union] filed a grievance, alleging that the Board of Trustees of the library [Board] violated an article of the parties' collective bargaining agreement [CBA] by failing to retroactively correct a salary inequality between the library employees and certain employees of the city. The CBA article in question, refer to as the "pay parity provision," required the Board to "actively pursue" funding "to maintain the historic link between the salaries of the library employees and the relevant employees of the city represented by the Union and such funding was to be applied retroactively if necessary "to correct an inequality."

The grievance procedure set out in the CBA did not resolve the dispute and the parties submitted to an arbitrator to determine if the Board violated the pay parity provision of the CBA, as well as the question of, if a violation was found, what was the appropriate remedy. After a hearing, the arbitrator determined that the Board had violated the provision of the CBA relied on by the Union, and that the Library employees were therefore entitled to a retroactive salary increase. The arbitrator then directed that the retroactive salary increase would be conditioned upon excision of the pay parity provision from the CBA going forward.

The Board initiated a CPLR Article 75 to vacate the portion of the arbitration award which called for excision of the pay parity provision from the CBA. Supreme Court granted the petition and remitted the matter to a different arbitrator for a new hearing and determination of the manner and timing of the "parity payments." The Board then appealed the Supreme Court's ruling.

The Appellate Division, affirming the lower court's ruling, explained that "[J]udicial review of arbitration awards is extremely limited", citing Wien & Malkin LLP v Helmsley-Spear, Inc., 6 NY3d 471, and courts may only vacate an arbitrator's award on the grounds specified in CPLR §7511(b). As the Board had advanced as its ground for vacatur under that statute "an excess of power," the court further explained that an arbitrator's award may only be vacated where it "violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power," citing Matter of New York City Tr. Auth. v Transport Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d 332.

Supreme Court had concluded:

1. The Union's interpretation of the pay parity provision was correct;

2. The CBA provision had been violated;

3. A retroactive salary increase for employees in the Union's collective bargaining unit was warranted; but

4. The arbitrator exceeded his power by essentially rewriting the parties' contract by eliminating the "pay parity provision going forward."

As the Appellate Division agreed with the lower court's findings and its determination vacating the portion of the arbitration award that conditioned relief upon excision of the pay parity provision from the CBA and remitting the matter to a different arbitrator for a new hearing and determination on limited issues, it sustained the lower court's rulings.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_09262.htm