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ELIMINATION OF A POSITION WAS ALLEGED TO CONSTITUTE AN IMPROPER DISMISSAL UNDER THE GUISE OF RETRENCHMENT, ALTHOUGH RETRENCHMENT IS NOT ARBITRABLE UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT, THE CLAIM THAT THE EMPLOYEE WAS IMPROPERLY DISMISSED UNDER THE GUISE OF RETRENCHMENT WAS DEEMED ARBITRABLE (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined the petition seeking a permanent stay of arbitration of an employment dispute should not have been granted. The Fourth Department found that the dispute concerned whether an employee of a community college was improperly dismissed (by eliminating the position). The matter was deemed arbitrable based upon the language of the collective bargaining agreement (CBA) and the grievance. Under the CBA, if a position is “retrenched” the action is not arbitrable. Although the term “retrenched” was used in eliminating the position, the grievance alleged the employee was improperly dismissed under the guise of “retrenchment:”

We … agree with respondent that the grievance, as properly construed, should be submitted to arbitration. The CBA defines “grievance,” in relevant part, as “a claimed violation, misinterpretation or inequitable application of this agreement, except as excluded herein.” Pursuant to the CBA, a grievance may be submitted to arbitration if it remains unresolved after the second stage of the grievance procedure. Although the CBA specifies several exclusions from the definition of a “grievance” that are therefore not subject to arbitration, including a decision by petitioner to retrench a position, all other grievances remain subject to arbitration. Contrary to the court’s determination, we conclude that the arbitration clause at issue here is broad, despite the existence of such exclusions … .

Where, as here, “there is a broad arbitration clause and a reasonable relationship between the subject matter of the dispute and the general subject matter of the parties’ [CBA], the court should rule the matter arbitrable, and the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the [CBA], and whether the subject matter of the dispute fits within them”… . The grievance at issue concerns whether the member was improperly dismissed without just cause under the guise of retrenchment, and a reasonable relationship exists between the subject matter of the grievance and the general subject matter of the CBA … . Thus, ” it is for the arbitrator to determine whether the subject matter of the dispute falls within the scope of the arbitration provisions of the [CBA]’ ” … . Matter of Onondaga Community Coll. (Professional Adm’rs of Onondaga Community Coll. Fedn. of Teachers & Adm’rs), 2018 NY Slip Op 04878, Fourth Dept 6-29-18

​ARBITRATION (EMPLOYMENT LAW, ELIMINATION OF A POSITION WAS ALLEGED TO CONSTITUTE AN IMPROPER DISMISSAL UNDER THE GUISE OF RETRENCHMENT, ALTHOUGH RETRENCHMENT IS NOT ARBITRABLE UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT, THE CLAIM THAT THE EMPLOYEE WAS IMPROPERLY DISMISSED UNDER THE GUISE OF RETRENCHMENT WAS DEEMED ARBITRABLE (FOURTH DEPT))/CONTRACT LAW (COLLECTIVE BARGAINING AGREEMENT, ELIMINATION OF A POSITION WAS ALLEGED TO CONSTITUTE AN IMPROPER DISMISSAL UNDER THE GUISE OF RETRENCHMENT, ALTHOUGH RETRENCHMENT IS NOT ARBITRABLE UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT, THE CLAIM THAT THE EMPLOYEE WAS IMPROPERLY DISMISSED UNDER THE GUISE OF RETRENCHMENT WAS DEEMED ARBITRABLE (FOURTH DEPT))/COLLECTIVE BARGAINING AGREEMENT (ARBITRATION, ELIMINATION OF A POSITION WAS ALLEGED TO CONSTITUTE AN IMPROPER DISMISSAL UNDER THE GUISE OF RETRENCHMENT, ALTHOUGH RETRENCHMENT IS NOT ARBITRABLE UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT, THE CLAIM THAT THE EMPLOYEE WAS IMPROPERLY DISMISSED UNDER THE GUISE OF RETRENCHMENT WAS DEEMED ARBITRABLE (FOURTH DEPT))/EMPLOYMENT LAW (ARBITRATION, COLLECTIVE BARGAINING AGREEMENT, ELIMINATION OF A POSITION WAS ALLEGED TO CONSTITUTE AN IMPROPER DISMISSAL UNDER THE GUISE OF RETRENCHMENT, ALTHOUGH RETRENCHMENT IS NOT ARBITRABLE UNDER THE TERMS OF THE COLLECTIVE BARGAINING AGREEMENT, THE CLAIM THAT THE EMPLOYEE WAS IMPROPERLY DISMISSED UNDER THE GUISE OF RETRENCHMENT WAS DEEMED ARBITRABLE (FOURTH DEPT))

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PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP).

The Court of Appeals, in a brief memorandum, over a three-judge dissenting opinion, determined that the plain language of the collective bargaining agreement (CBA) limited the right to demand arbitration to the union and not the fired employee:

From the dissent:

The language of CBA clearly grants the employee the right to elect arbitration. Even were the agreement ambiguous in that regard, it must be construed in favor of the employee’s right to demand arbitration. New York has established a policy favoring arbitration … , and the CBA itself provides that “in order to establish a more harmonious and cooperative relationship between the County. . . and its [p]ublic [e]mployees. . . [t]he provisions of this resolution shall be liberally construed.”

The majority’s contrary interpretation — that the CBA gives the right to proceed to arbitration only to the union — would mean that the employee could “elect” to exercise “his/her rights” only where the union agrees to arbitrate — a restriction that does not appear in the agreement. The employee may not know at the time of election whether the union will pursue arbitration, and therefore could not know the scope of “his/her rights” until it is too late. Further, the rights-granting language in the CBA treats the arbitration right and the [Civil Service Law] 75 right in parallel, emphasizing the employee’s right to choose. Matter of Widrick (Carpinelli), 2018 NY Slip Op 04780, CtApp 6-28-18

​ARBITRATION (COLLECTIVE BARGAINING AGREEMENT, PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP))/CONTRACT LAW (COLLECTIVE BARGAINING AGREEMENT, PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP))/EMPLOYMENT LAW (COLLECTIVE BARGAINING AGREEMENT, PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP))/COLLECTIVE BARGAINING AGREEMENT (PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP))/UNIONS (ARBITRATION, COLLECTIVE BARGAINING AGREEMENT, PLAIN LANGUAGE OF THE COLLECTIVE BARGAINING AGREEMENT LIMITED THE RIGHT TO DEMAND ARBITRATION TO THE UNION, NOT THE FIRED EMPLOYEE (CT APP))

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PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT).

The Second Department determined the arbitration clause of the contract between plaintiffs and defendant was enforceable, despite the plaintiffs’ allegation of fraud in connection with the contract:

A party may not be compelled to arbitrate a dispute unless there is evidence which affirmatively establishes that the parties clearly, explicitly, and unequivocally agreed to arbitrate the dispute… . Under both federal and New York law, unless it can be established that there was a grand scheme to defraud which permeated the entire agreement, including the arbitration provision, a broadly worded arbitration provision will be deemed separate from the substantive contractual provisions, and the agreement to arbitrate may be valid despite the underlying allegation of fraud … .

The broad arbitration clause in the 2014 agreement, together with the other provisions of the 2014 agreement, demonstrate that the plaintiffs explicitly and unequivocally agreed to arbitrate the matters that are the subject of this action. In addition, the plaintiffs’ bare conclusory assertions of fraud failed to establish that any alleged fraud was part of a grand scheme that permeated the entire agreement, including the arbitration clause … . Zafar v Fast Track Leasing, LLC, 2018 NY Slip Op 04774, Second Dept 6-27-18

ARBITRATION (CONTRACT LAW, FRAUD, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))/CONTRACT LAW (ARBITRATION, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))/FRAUD (ARBITRATION, CONTRACT LAW, PLAINTIFFS’ CONCLUSORY ALLEGATION OF FRAUD DID NOT DEFEAT THE AGREEMENT TO ARBITRATE (SECOND DEPT))

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ARBITRATION AWARD WAS INDEFINITE AND NONFINAL (FOURTH DEPT).

The Fourth Department determined the arbitrator’s award concerning the transfer of employees was indefinite and nonfinal:

The arbitration proceeding arose from respondent’s plan to transfer certain employees previously assigned to work at a single location to new positions requiring them to alternate between two different work locations. The arbitrator’s opinion and award, among other things, found that respondent involuntarily transferred the grievants in violation of the collective bargaining agreement between the parties, and directed respondent to compensate the grievants “for work performed at more than one location from November 30, 2013 until the end of the 2016 Budget Year.”

We agree with respondent that Supreme Court erred in granting the petition and in denying the cross petition. An arbitration award “shall be vacated” where the arbitrator “so imperfectly executed [the award] that a final and definite award upon the subject matter submitted was not made”… . “An award is indefinite or nonfinal within the meaning of the statute only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy’ ” … . Vacatur is appropriate where the award failed to set forth the manner of computing monetary damages… .

… The award does not explain the basis for the compensation allegedly owed to the grievants, nor does it detail how that compensation should be calculated.  Matter of The Professional, Clerical, Tech. Empls. Assn. (Board of Educ. for Buffalo City Sch. Dist.), 2018 NY Slip Op 04128, Fourth Dept 6-8-18​

ARBITRATION (ARBITRATION AWARD WAS INDEFINITE AND NONFINAL (FOURTH DEPT))/EMPLOYMENT LAW (ARBITRATION AWARD WAS INDEFINITE AND NONFINAL (FOURTH DEPT))/EDUCATION-SCHOOL LAW (EMPLOYMENT LAW, ARBITRATION AWARD WAS INDEFINITE AND NONFINAL (FOURTH DEPT))

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ARBITRATOR’S RULING WAS IRRATIONAL AND VIOLATED CPLR 1209 IN THIS NO-FAULT INSURANCE ACTION, HEALTH CARE PROVIDER, AS AN ASSIGNEE, WAS ENTITLED TO ARBITRATE ITS CLAIM FOR CARE PROVIDED TO THE INJURED INFANT (SECOND DEPT).

The Second Department determined the arbitrator’s award was irrational and violated CPLR 1209 in this no-fault insurance action. The injured child and his mother had assigned their rights to payment for health care services to the petitioner, Fast Care. Contrary to the arbitrator’s finding, arbitration was not sought by the injured child, which would have required a court order under CPLR 1209, but rather was sought by the assignee, Fast Care:

An arbitration award may be vacated if the court finds that the rights of a party were prejudiced by (1) corruption, fraud, or misconduct in procuring the award; (2) partiality of an arbitrator; (3) the arbitrator exceeding his or her power; or (4) the failure to follow the procedures of CPLR article 75 … . In addition, an arbitration award may be vacated “if it violates strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator’s power”… . An arbitration award may also be vacated where it is in ” explicit conflict'” with established laws and “the strong and well-defined policy considerations’ embodied therein”… .

We agree with the Supreme Court that the arbitrator’s award was irrational and in conflict with CPLR 1209, which applies “only where an infant is a party” to an arbitration proceeding … . The infant patient was not a party to the arbitration; rather, Fast Care, as the infant’s assignee, was the party that brought the arbitration … . Matter of Fast Care Med. Diagnostics, PLLC/PV v Government Employees Ins. Co., 2018 NY Slip Op 03831, Second Dept 5-30-18

​INSURANCE LAW (NO-FAULT, ARBITRATOR’S RULING WAS IRRATIONAL AND VIOLATED CPLR 1209 IN THIS NO-FAULT INSURANCE ACTION, HEALTH CARE PROVIDER, AS AN ASSIGNEE, WAS ENTITLED TO ARBITRATE ITS CLAIM FOR CARE PROVIDED TO THE INJURED INFANT (SECOND DEPT))/ARBITRATION (NO-FAULT INSURANCE, ARBITRATOR’S RULING WAS IRRATIONAL AND VIOLATED CPLR 1209 IN THIS NO-FAULT INSURANCE ACTION, HEALTH CARE PROVIDER, AS AN ASSIGNEE, WAS ENTITLED TO ARBITRATE ITS CLAIM FOR CARE PROVIDED TO THE INJURED INFANT (SECOND DEPT))/CIVIL PROCEDURE (NO-FAULT INSURANCE, ARBITRATION, ARBITRATOR’S RULING WAS IRRATIONAL AND VIOLATED CPLR 1209 IN THIS NO-FAULT INSURANCE ACTION, HEALTH CARE PROVIDER, AS AN ASSIGNEE, WAS ENTITLED TO ARBITRATE ITS CLAIM FOR CARE PROVIDED TO THE INJURED INFANT (SECOND DEPT))/CPLR 1209 (NO-FAULT INSURANCE, ARBITRATION, ARBITRATOR’S RULING WAS IRRATIONAL AND VIOLATED CPLR 1209 IN THIS NO-FAULT INSURANCE ACTION, HEALTH CARE PROVIDER, AS AN ASSIGNEE, WAS ENTITLED TO ARBITRATE ITS CLAIM FOR CARE PROVIDED TO THE INJURED INFANT (SECOND DEPT))

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CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT).

The Second Department, modifying Supreme Court, determined the city’s decision to layoff firefighters was not arbitrable under a collective bargaining agreement. The Civil Service Law vests nondelegable discretion to hire and fire in the public corporation:

… [A] dispute is nonarbitrable if a court can conclude, without engaging in any extended factfinding or legal analysis, that a law prohibits, in an absolute sense, the particular matters to be decided by arbitration … . Put differently, a court must stay arbitration where it can conclude, upon the examination of the parties’ contract and any implicated statute on their face, “that the granting of any relief would violate public policy” … .

Addressing the union’s claim regarding the layoffs of the firefighters, Civil Service Law § 80(1) provides that a public employer has the nondelegable discretion to determine—for reasons of economy, among others—what its staffing and budgetary needs are in order to effectively deliver uninterrupted services to the public … . In the absence of bad faith, fraud, or collusion, that discretion “is an undisputed management prerogative” for the public’s benefit, and cannot be altered or modified by agreement or otherwise… . Thus, arbitration of the claim regarding the layoffs of the firefighters would violate public policy. Matter of City of Long Beach v Long Beach Professional Fire Fighters Assn., Local 287, 2018 NY Slip Op 03356, Second Dept 5-9-18

​EMPLOYMENT LAW (CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/MUNICIPAL LAW (FIREFIGHTERS, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/CIVIL SERVICE LAW (FIREFIGHTERS, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/ARBITRATION (MUNICIPAL LAW, CIVIL SERVICE LAW, FIREFIGHTERS, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/UNIONS (MUNICIPAL LAW, FIREFIGHTERS, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/COLLECTIVE BARGAINING AGREEMENTS (MUNICIPAL LAW, CIVIL SERVICE LAW, FIREFIGHTERS, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/FIREFIGHTERS (EMPLOYMENT LAW, COLLECTIVE BARGAINING AGREEMENT, ARBITRATION, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))/PUBLIC POLICY (MUNICIPAL LAW, ARBITRATION, CITY’S DECISION TO LAYOFF FIREFIGHTERS IS NOT ARBITRABLE UNDER A COLLECTIVE BARGAINING AGREEMENT, PUBLIC POLICY VESTS NONDELEGABLE DISCRETION TO HIRE AND FIRE IN THE PUBLIC CORPORATION (SECOND DEPT))

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ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the arbitration award by a Rabbinical Court in this divorce proceeding should not have been vacated. The fact that the Equitable Distribution Law was not followed did not warrant vacation of the award because parties can elect to deviate from the Domestic Relations Law (no violation of public policy). The Second Department further held that unconscionability is not a statutory ground for reviewing or setting aside an arbitration award:

Judicial review of an arbitration award is extremely limited (see CPLR 7510, 7511…). “Outside of the narrowly circumscribed exceptions of CPLR 7511, courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact'” … .

“An award is irrational only where there is no proof whatever to justify the award” … . Moreover, that showing must be made by clear and convincing evidence … . Here, the very limited record does not even reveal what evidence was submitted to the arbitrators regarding, among other things, the parties’ assets and financial condition. Therefore, the Supreme Court lacked any basis upon which to conclude that the award was irrational.

“An arbitration award violates public policy only where a court can conclude, without engaging in any extended fact-finding or legal analysis, that a law prohibits the particular matters to be decided by arbitration, or where the award itself violates a well-defined constitutional, statutory, or common law of this state” … . …

… [W]e disagree with the Supreme Court’s determination that the … award was unconscionable on its face. Unconscionability is a doctrine grounded in contract law, which can be applied to invalidate an agreement to arbitrate …  or a marital agreement entered into before or during the marriage … . The doctrine, which requires proof of both procedural unconscionability in the formation of the contract, as well as substantive unconscionability in the terms of the contract  … , is not a statutory ground upon which an arbitration award may be reviewed, let alone set aside… . If the arbitral procedure was tainted by corruption, fraud, or misconduct, or the partiality of an arbitrator appointed as a neutral, the proper remedy is to move to vacate the award pursuant to CPLR 7511(b)(1)(i) or (ii).  Zar v Yaghoobzar, 2018 NY Slip Op 03170, Second Dept 5-2-18

​ARBITRATION (FAMILY LAW, RELIGION, ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/FAMILY LAW (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/CONTRACT LAW (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/RELIGION (RABBINICAL COURT, ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))/RABBINICAL COURT (ARBITRATION AWARD BY A RABBINICAL COURT IN THIS DIVORCE PROCEEDING SHOULD NOT HAVE BEEN VACATED, FAILURE TO FOLLOW THE EQUITABLE DISTRIBUTION LAW DID NOT VIOLATE PUBLIC POLICY, UNCONSCIONABILITY IS NOT A STATUTORY GROUND FOR VACATING AN ARBITRATION AWARD (SECOND DEPT))

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ARBITRATOR’S DETERMINATION THAT THE ACKNOWLEDGED SEXUAL HARASSMENT DID NOT RISE TO THE LEVEL OF A DISCHARGEABLE OFFENSE VIOLATED PUBLIC POLICY AND WAS IRRATIONAL (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, reversing Supreme Court, determined the arbitrator’s ruling in this sexual harassment action violated public policy and was irrational. The arbitrator agreed with the findings of fact made by the Equal Employment Opportunity (EEO) investigation (which supported the sexual harassment allegations made by Melendez against Aiken) but determined the behavior did not rise to the level of a dischargeable offense:

The arbitrator’s decision fashions a remedy that violates public policy. Moreover, it contains language maligning victims in an entirely inappropriate manner, including statements that it was incumbent on Melendez to take appropriate action if she felt Aiken’s comments were inappropriate. Such a “blame the victim” mentality inappropriately shifts the burden of addressing a hostile work environment onto the employee. The arbitrator’s decision belies the realities of workplace sexual harassment. The fact that the victim did not earlier report Aiken’s behavior is not atypical and should in no way be construed as absolving Aiken of his misconduct.

The arbitrator’s decision effectively prevents petitioners from following their policies and fulfilling their legal obligations to protect against workplace sexual harassment. It is the employer’s responsibility to implement appropriate policies to protect against workplace harassment, including the institution of appropriate complaint procedures that encourage victims to come forward, and the implementation of appropriate sanctions that are designed to deter offensive behavior. …

Accordingly, public policy prohibits enforcement of the arbitration award in this case … . …

Further, the arbitrator’s decision is irrational as it purports to adopt the findings of the EEO in all respects, and yet arrives at the unsustainable conclusion that Aiken did not violate the workplace sexual harassment policy … . Matter of New York City Tr. Auth. v Phillips, 2018 NY Slip Op 02442, First Dept 4-10-18

​EMPLOYMENT LAW (SEXUAL HARASSMENT, ARBITRATION, ARBITRATOR’S DETERMINATION THAT THE ACKNOWLEDGED SEXUAL HARASSMENT DID NOT RISE TO THE LEVEL OF A DISCHARGEABLE OFFENSE VIOLATED PUBLIC POLICY AND WAS IRRATIONAL (FIRST DEPT))/ARBITRATION (EMPLOYMENT LAW, SEXUAL HARASSMENT, ARBITRATOR’S DETERMINATION THAT THE ACKNOWLEDGED SEXUAL HARASSMENT DID NOT RISE TO THE LEVEL OF A DISCHARGEABLE OFFENSE VIOLATED PUBLIC POLICY AND WAS IRRATIONAL (FIRST DEPT))/SEXUAL HARASSMENT (EMPLOYMENT LAW, SEXUAL HARASSMENT, ARBITRATOR’S DETERMINATION THAT THE ACKNOWLEDGED SEXUAL HARASSMENT DID NOT RISE TO THE LEVEL OF A DISCHARGEABLE OFFENSE VIOLATED PUBLIC POLICY AND WAS IRRATIONAL (FIRST DEPT))/DISCRIMINATION (EMPLOYMENT LAW, SEXUAL HARASSMENT, ARBITRATOR’S DETERMINATION THAT THE ACKNOWLEDGED SEXUAL HARASSMENT DID NOT RISE TO THE LEVEL OF A DISCHARGEABLE OFFENSE VIOLATED PUBLIC POLICY AND WAS IRRATIONAL (FIRST DEPT))

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THE AGREEMENT TO ARBITRATE WAS NOT A DEFENSE TO THE COMPLAINT, THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED, RATHER, THE ACTION SHOULD HAVE BEEN STAYED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined the action on the complaint should have been stayed, not dismissed, based upon the agreement to arbitrate. The Third Department further held that the complaint, augmented by affidavits, stated causes of action and should not have been dismissed:

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Supreme Court improperly dismissed the action against [defendant], rather than staying the action. Initially, there is no dispute on this record that plaintiff and [defendant], in the settlement agreement, consented to arbitrate any and all disputes regarding, among other things, the subject property. However, under established law, “[a]n agreement to arbitrate is not a defense to an action” and, thus, “may not be the basis for a motion to dismiss” … . [Defendant’s] cross motion to dismiss based upon CPLR 3211 (a) (1), premised upon the agreement to arbitrate, does not entitle him to dismissal of this action… . Rather, where, as here, there is a valid arbitration clause in an agreement and the party sued … moves to compel arbitration, the court should stay the judicial action rather than dismiss it (see CPLR 7503 [a]…). By statute, the order granting [defendant’s] motion to compel arbitration “operate[s] to stay [the] pending or subsequent action” (CPLR 7503 [a]). …

We further find that Supreme Court improperly dismissed the complaint against the remaining defendants … . Importantly, on the remaining defendants’ pre-answer cross motions to dismiss the complaint pursuant to CPLR 3211, the court was bound to “accept the facts as alleged in the complaint as true, accord plaintiff[] the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory” … . The court was also authorized to “consider affidavits submitted by plaintiff[] to remedy any defects in the complaint” … . Piller v Tribeca Dev. Group LLC, 2017 NY Slip Op 09209, Third Dept 12-28-17

ARBITRATION (THE AGREEMENT TO ARBITRATE WAS NOT A DEFENSE TO THE COMPLAINT, THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED, RATHER, THE ACTION SHOULD HAVE BEEN STAYED (THIRD DEPT))/CIVIL PROCEDURE (THE AGREEMENT TO ARBITRATE WAS NOT A DEFENSE TO THE COMPLAINT, THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED, RATHER, THE ACTION SHOULD HAVE BEEN STAYED (THIRD DEPT))/CPLR 7503  (THE AGREEMENT TO ARBITRATE WAS NOT A DEFENSE TO THE COMPLAINT, THE COMPLAINT SHOULD NOT HAVE BEEN DISMISSED, RATHER, THE ACTION SHOULD HAVE BEEN STAYED (THIRD DEPT))

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PLAINTIFF ENTITLED TO CONSIDERATION WHETHER ENFORCING THE AGREEMENT TO ARBITRATE THIS EMPLOYMENT DISPUTE WOULD, BECAUSE OF THE COSTS INVOLVED, EFFECTIVELY PRECLUDE PLAINTIFF FROM PURSUING HIS CLAIM (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff was entitled to consideration whether compliance with the agreement to arbitrate would, because of the costs involved, effectively prohibit plaintiff from pursing his claim alleging untimely payment of wages:

… [T]he court erred in failing to address plaintiff’s contention that, because of his financial circumstances, requiring him to arbitrate, and to do so in Florida, would preclude him from pursuing his claims (Matter of Brady v Williams Capital Group, L.P., 14 NY3d 459 [2010]). Acknowledging the “strong state policy favoring arbitration [] and the equally strong policy requiring the invalidation of such agreements when they contain terms that could preclude a litigant from vindicating his/her statutory rights in the arbitral forum” … , the Court of Appeals in Brady held, as here relevant, that,

“in this context, the issue of a litigant’s financial ability [to arbitrate] is to be resolved on a case-by-case basis and that the inquiry should at minimum consider the following questions: (1) whether the litigant can pay the arbitration fees and costs; (2) what is the expected cost differential between arbitration and litigation in court; and (3) whether the cost differential is so substantial as to deter the bringing of claims in the arbitral forum. Although a full hearing is not required in all situations, there should be a written record of the findings pertaining to a litigant’s financial ability” … .

Applying the foregoing standard, we hold that plaintiff has made a preliminary showing that the fee sharing and venue provisions in the arbitration agreement have the effect of precluding him from pursuing his statutory wage claim in arbitration …

… While Brady did not expressly address this issue, by extension of its logic, the risk of plaintiff having to pay defendant’s attorneys’ fees, if it prevails, may be taken into account in considering whether the total costs associated with arbitration preclude plaintiff from pursuing his claim in the arbitral forum. Adams v Kent Sec. of N.Y., Inc., 2017 NY Slip Op 09274, First Dept 12-28-17

 

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