Rare Arbitration Decision Vacated By NYS Court of Appeals

Matter of Kowaleski, ____N.Y.3d___(December 21, 2010), is a rare, very rare, NYS Court of Appeals decision vacating an arbitration. Here, the disciplinary arbitrator did not separately consider, the asserted statutory violation-Civl Service Law Sec. 75-b. CLS Section 75-b express states that an arbitrator shall adjudicate such claims. The Court states:

Here, the arbitrator clearly exceeded a "specifically enumerated limitation" on his power. As the courts below found, and DOCS concedes, the arbitrator not only had authority to consider Kowaleski's retaliation defense, but was required to do so. Civil Service Law § 75-b prohibits a public employer from taking disciplinary action to retaliate against an employee for reporting "improper governmental action" (Civil Service Law § 75-b [2] [a]). If "the employee reasonably believes dismissal or other disciplinary action would not have been taken but for" the whistleblowing, the employee "may assert such as a defense before the designated arbitrator or hearing officer" (Civil Service Law § 75-b [3] [a]). Whatever the terms of the CBA, "[t]he merits of such defense shall be considered and determined as part of the arbitration award or hearing officer decision" (id. [emphasis added]). In short, the statute requires the arbitrator to consider and determine the merits of an employee's retaliation defense where such a defense is raised (cf. Matter of Obot (New York State Dept. of Correctional Servs., 89 NY2d 883, 885-886 [1996] [award not vacated where an employee failed to raise the retaliation defense in the arbitration and the arbitrator did not consider it]). If the arbitrator or hearing officer finds that "the dismissal or other disciplinary action is based solely" on the employer's desire to retaliate, the disciplinary proceeding must be dismissed (Civil Service Law § 75-b [3] [a]). Therefore, the arbitrator's finding here that he did not have authority under the CBA to consider Kowaleski's retaliation defense was not only incorrect as a matter of law, but also in excess of an explicit limitation on his power. Because he failed to consider and determine the defense, the award must be vacated.

Contrary to DOCS position, it was not enough for the arbitrator to hear evidence of retaliation in the context of making determinations as to witness credibility and deciding Kowaleski's guilt. A disciplinary action may be retaliatory even where an employee is guilty of the alleged infraction. Under Civil Service Law § 75-b (3), an arbitrator is required to dismiss a disciplinary action based solely on retaliatory motive, regardless of the employee's guilt or innocence (see Civil Service Law § 75-b [2] [a], [3] [a]). This separate retaliation inquiry is critical. In order to be effective, whistleblower protections like those embodied in Civil Service Law § 75-b must shield employees from being retaliated against by an employer's selective application of theoretically neutral rules. Thus, a separate determination regarding the employer's motivation in bringing the action is necessary if § 75-b is to truly "establish[] a major right for employees — the right to speak out against dangerous or harmful employer practices" (Mem filed with Senate Bill, Bill Jacket, L 1984, ch 660, at 5).

My view is that the Court is simply wrong. The arbitrator was picked and his power stems from the CBA. If he failed to consider a statutory defense, which I am not even sure that he did, then at most what you have is a violation of law and that is not enough to vacate an award. 

Mitchell H. Rubinstein