In re Kowaleski (N.Y. State Dept. of Corr. Serv.)

• Decision Date: 21 December 2010
• Citation: 16 N.Y.3d 85,917 N.Y.S.2d 82,942 N.E.2d 291
• Parties: In the Matter of the Arbitration between Barbara KOWALESKI, Appellant, and NEW YORK STATE DEPARTMENT OF CORRECTIONAL SERVICES, Respondent.
• Court: New York Court of Appeals Court of Appeals

917 N.Y.S.2d 82 16 N.Y.3d 85 942 N.E.2d 291 In the Matter of the Arbitration between Barbara KOWALESKI, Appellant, and NEW YORK STATE DEPARTMENT OF CORRECTIONAL SERVICES, Respondent. Court of Appeals of New York. Dec. 21, 2010.

Oliver Law Office, Albany (Lewis B. Oliver, Jr., of counsel), for appellant.

Andrew M. Cuomo, Attorney General, Albany (Frank K. Walsh, Barbara D. Underwood and Andrew D. Bing of counsel), for respondent.

Amanda J. Velazquez, Albany, and Nancy E. Hoffman for Civil Service Employees Association, Inc., Local 1000, AFSCME, AFL-CIO, amicus curiae.

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OPINION OF THE COURT

CIPARICK, J.

Petitioner Barbara Kowaleski began her employment with the State Department of Correctional Services (DOCS) as a correction officer in 1981, and was assigned to the Hale Creek Correctional Facility (Hale Creek) in 1995. In October 2004, she was served with a notice of discipline (Notice) charging her with violating provisions of the employees' manual on three separate occasions in September and October 2004: ¹ (1) in September *89 2004, she allegedly "made inappropriate comments of a personal nature about another staff member in the presence of staff and inmates"; (2) in October 2004, she allegedly argued with a fellow employee; and (3) also in October 2004, she allegedly was "disrespectful and insubordinate" when she ignored a superior's order to stop interrupting another employee. The Notice called for her termination and the loss of any accrued leave. Kowaleski filed a grievance and, pursuant to a collective bargaining agreement (CBA), a hearing was held before an arbitrator.

[917 N.Y.S.2d 84, 942 N.E.2d 293]

At the start of the hearing, Kowaleski argued that the disciplinary action was only being brought to retaliate against her for reporting a fellow officer's misconduct in 2002, and that she was entitled to raise this as an affirmative defense pursuant to Civil Service Law § 75-b, which prohibits public employers from retaliating against employees for reporting their coworkers' improper conduct.² The arbitrator determined that because the CBA limited his authority "to determinations of guilt or innocence and the appropriateness of proposed penalties," he lacked authority to consider Kowaleski's retaliation defense. He noted, however, that he would consider evidence of retaliation when determining witness credibility and "in the larger context of guilt or innocence."

In January 2007, the arbitrator found Kowaleski guilty of two of the three charges and determined that termination was appropriate. He found that Kowaleski had, in the presence of inmates, asked if a fellow officer's son had been shot, potentially endangering the officer and his family, and that she had insubordinately ignored a superior's instructions. The arbitrator noted that, under the CBA, an employee can only be disciplined for "just cause," which requires, among other things, that the employer made a "fair and objective investigation," that "the employer's action was non-discriminatory," and that "the penalty is reasonably related to the seriousness of the *90 offense." After finding Kowaleski guilty, the arbitrator concluded that there was "just cause" for the penalty of discharge, which was not "arbitrary, capricious, unreasonable, or excessive."

Kowaleski filed this CPLR 7511 petition seeking a declaration (1) vacating the arbitrator's opinion and award, and (2) directing that the charges in the Notice be dismissed or remanded for a new hearing before a different arbitrator. DOCS moved to dismiss the petition. Supreme Court found that the arbitrator exceeded his power by ignoring Civil Service Law § 75-b, but concluded that because this was an error of law, the award should not be vacated. The court further reasoned that section 75-b only precludes disciplinary action "taken solely in retaliation," and here witness testimony provided a "separate and independent" basis for the action. Supreme Court found that the arbitrator's findings and award were rational.

The Appellate Division affirmed, with two Justices dissenting. The majority found that although the arbitrator "incorrectly stated that it was beyond his jurisdiction to consider petitioner's claim of retaliation, this error of law does not warrant vacating the award under the circumstances," given the arbitrator's rational and supported finding that Kowaleski was guilty of two of the charges ( Matter of Kowaleski [ New York State Dept. of Correctional Servs.], 61 A.D.3d 1081, 1083, 875 N.Y.S.2d 651 [3d Dept.2009] ). Moreover, the majority reasoned, the arbitrator did consider "evidence of retaliation in weighing witness credibility and assessing petitioner's guilt" ( id.). Two Justices dissented on the grounds that Kowaleski was "deprived of her right to have the arbitrator

[942 N.E.2d 294, 16 N.Y.3d 85]

determine ... the specific factual issue of whether the disciplinary charges were, in the first instance, initiated and pursued to retaliate for the prior matters" ( id. at 1085, 875 N.Y.S.2d 651 [brackets and internal quotation marks omitted] ). Kowaleski appealed as a matter of right pursuant to CPLR 5601(a). We agree with the dissenting Justices and now reverse.

Under CPLR 7511(b) an arbitration award must be vacated if, as relevant here, a party's rights were impaired by an arbitrator who "exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made" (CPLR 7511[b][1][iii] ). It is well-settled that an arbitrator "exceed[s] his power" under the meaning of the statute where his "award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power" (*91 Matter of New York City Tr. Auth. v. Transport Workers' Union of Am., Local 100, AFL-CIO, 6 N.Y.3d 332, 336, 812 N.Y.S.2d 413, 845 N.E.2d 1243 [2005]; see also Matter of Falzone [ New York Cent. Mut. Fire Ins. Co.], 15 N.Y.3d 530, 914 N.Y.S.2d 67, 939 N.E.2d 1197 [2010] ). Outside of these narrowly circumscribed exceptions, courts lack authority to review arbitral decisions, even where "an arbitrator has made an error of law or fact" ( Falzone, 15 N.Y.3d at 534, 914 N.Y.S.2d 67, 939 N.E.2d 1197).

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,...