TEACHERS FEDN v. BD OF EDUC

• Decision Date: 20 November 2003
• Parties: In the Matter of UNITED FEDERATION OF TEACHERS, LOCAL 2, AFT, AFL-CIO, Appellant, v. BOARD OF EDUCATION OF THE CITY SCHOOL DISTRICT OF THE CITY OF NEW YORK, Respondent.
• Court: New York Court of Appeals Court of Appeals

1 N.Y.3d 72

801 N.E.2d 827

769 N.Y.S.2d 451

In the Matter of UNITED FEDERATION OF TEACHERS, LOCAL 2, AFT, AFL-CIO, Appellant, v. BOARD OF EDUCATION OF THE CITY SCHOOL DISTRICT OF THE CITY OF NEW YORK, Respondent.

Court of Appeals of the State of New York.

Argued October 21, 2003.

Decided November 20, 2003.

Stroock & Stroock & Lavan LLP, New York City (Charles G. Moerdler, Alan M. Klinger and Faith A. Kaminsky of counsel), James R. Sandner, Lena M. Ackerman and Carol L. Gerstl, for appellant.

Michael A. Cardozo, Corporation Counsel, New York City (Scott Shorr and Barry P. Schwartz of counsel), for respondent.

Chief Judge KAYE and Judges G.B. SMITH, CIPARICK, ROSENBLATT and GRAFFEO concur.

OPINION OF THE COURT

READ, J.

In this appeal we are asked whether an arbitrator acted properly when she determined that respondent Board of Education of the City of New York (the Board) arbitrarily selected teachers for an after-school reading program, and ordered the Board to provide a position to a qualified applicant whom the principal had passed over. We conclude that the award did not violate public policy and the arbitrator did not exceed her authority under the collective bargaining agreement.

I.

In September 1998 New York City School District 26 posted an announcement for anticipated vacancies in the position of "Per Session Teacher—Project Read After-School Program" in its elementary schools. The announcement set forth selection criteria, including a preference for teachers holding "Early Childhood/Reading License[s]."

Linda Feil applied for this position. While she did not hold either of the preferred licenses, she did have a "common branch" license and 26 years of primary school teaching experience, most recently as a third-grade teacher at PS 173. In addition, she had taught as a substitute teacher in Project Read and another reading program at PS 173.

The principal of PS 173 filled six openings in Project Read from the pool of applicants who responded to the posting. He did not select Feil, instead offering her work as a "primary substitute." He also advised her that other district schools had inquired "if any of our excellent teachers would be available to teach Project Read in those schools." He asked her to let him know right away if she was interested in this possibility. Of the six teachers whom the principal selected for a position in Project Read, two had the preferred licenses and less seniority than Feil. The remaining four did not have the preferred licenses; two had more seniority than Feil, two had less. The parties do not dispute that the six selected teachers are qualified; the parties do not dispute that Feil is qualified.

Feil's union, appellant United Federation of Teachers (UFT), filed a grievance in Feil's behalf under articles fifteen and twenty of the collective bargaining agreement (CBA). Article twenty-two of the CBA prescribes a four-stage grievance process, culminating in arbitration if the grievance is not otherwise resolved.

During a Step 2 grievance conference, UFT argued that Feil had been improperly denied a position in Project Read because she was qualified and more senior than two of the successful applicants. The principal replied that while he believed that Feil was a satisfactory teacher, the teachers he selected had, in his judgment and based on their applications, a greater level of specific teaching experience, which he detailed. He acknowledged that he took into consideration his personal observations of the various applicants in the classroom during his 15 years as principal. The deputy superintendent denied the grievance. He found that while satisfactory teaching and seniority were compelling selection criteria, they were not required by the posting and did not control the selection process for Project Read, a specialized program.

After a Step 3 hearing, the Chancellor's representative found that the applicants were not equally qualified for the positions, and denied the grievance. UFT filed a demand for arbitration. The Board did not move to stay the arbitration, and so the grievance was submitted to an arbitrator jointly selected by UFT and the Board pursuant to the CBA.

The arbitrator accepted UFT's formulation of the issue:

"Did the Board violate Articles Fifteen and Twenty of the 1995-2000 collective bargaining agreement when it denied Grievant Linda Feil, a teacher at P.S. 173, the per session position of After-School Project Teacher at P.S. 173? If so, what shall be the remedy?"

The arbitrator rejected UFT's argument that the Project Read selection process was governed by the seniority provisions in article fifteen of the CBA entitled "Rates of Pay and Working Conditions of Per Session Teachers." Instead, she found that the matter involved the application of article twenty of the CBA, entitled "Matters Not Covered."¹

The arbitrator also found that while the CBA contained no selection criteria for Project Read, "[t]he selection of teachers for positions in programs which are not covered by the Agreement [is] governed by managerial discretion." The arbitrator determined that her power to decide whether the Board's exercise of this discretion was arbitrary or capricious derived from article twenty-two (C) of the CBA.²

The arbitrator emphasized that Feil was well qualified for the position, and had more seniority than two of the teachers who were selected for the program. She recited testimony from another teacher who had been rejected for a position in Project Read the previous year because she was the most junior applicant. She discredited the principal's testimony that the preferred license was a governing factor because four of the successful applicants did not hold this license. She found that there was no documentary evidence supporting the principal's position that the successful applicants were better qualified for the positions than Feil, and concluded that the "selection process was arbitrary in nature."

The award, issued on August 9, 1999, found that the Board violated article twenty of the CBA by acting in an arbitrary manner when selecting teachers for positions in Project Read. The arbitrator directed the Board to place Feil in Project Read at PS 173 for the 1999-2000 school year, and to award her back pay.

The Board appointed Feil to the position, but resisted the back pay award. Pursuant to CPLR article 75, UFT moved in Supreme Court to confirm the award. The Board cross-moved to vacate under CPLR 7511 (b) (1) (iii), arguing that the arbitrator exceeded her authority. Supreme Court confirmed the award and denied the Board's cross motion. The Appellate Division unanimously reversed, vacating the award and holding that "this award violates public policy by impermissibly infringing on the nondelegable responsibility of the public school system to maintain educational standards" (298 AD2d 60, 61-62 [1st Dept 2002]). As an alternative basis for reversal, the Appellate Division found that the award "exceeded the arbitrator's power" under the CBA (id. at 62).

II.

We begin our analysis by determining which of the parties' arguments are subject to our review. We conclude, as the Appellate Division did, that by failing to move to stay and participating in the arbitration, the Board waived its right to seek vacatur of the award on the basis that the parties did not agree to arbitrate disputes arising out of Project Read. We further conclude that the Board's actions did not forfeit its right to seek vacatur of the award on public policy grounds.

The role of public policy in restricting an arbitrator's power to resolve disputes arises at two distinct points on the arbitration continuum. It first appears as a ground for obtaining a stay of arbitration when a party challenges the arbitrability of a dispute. It reappears as a ground for vacating the award as being made in excess of the arbitrator's powers.

In Matter of City of Johnstown (Johnstown Police Benevolent Assn.) (99 NY2d 273 [2002]), we stated a two-part test for determining the arbitrability of a dispute: the "did-they-agree-to-arbitrate" prong, which requires that we examine the agreement to determine what issues the parties agreed to submit to arbitration; and the "may-they-arbitrate" prong, which asks "whether there is any statutory, constitutional or public policy prohibition against arbitration of the grievance" (99 NY2d at 278 [citations omitted]).

Because arbitrability is a threshold question going to the arbitrator's power to resolve the dispute, a party can seek judicial intervention to determine whether the dispute is arbitrable before consenting to arbitration. Moreover, the CPLR requires that in order to raise the "did-they-agree-to-arbitrate" prong of arbitrability in a motion to vacate, a party must move to stay before participating in arbitration (compare CPLR 7511 [b] [1] with CPLR 7511 [b] [2]). Of course, a party may choose not to move to stay arbitration for a variety of legitimate economic or tactical reasons. But with forbearance comes risk: a party that participates in the arbitration may not later seek to vacate the award by claiming it never agreed to arbitrate the dispute in the first place (see Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578, 583 [1977]).

By contrast, a party is not required to raise the "may-they-arbitrate" prong on a motion to stay, and may later seek to vacate an award as violative of public policy. Indeed, while public policy may be raised on a motion to stay, it can also be raised for the first time on a motion to vacate (see Hirsch v Hirsch, 37 NY2d 312, 315 [1975] ["(A) challenge to the arbitrability of an issue on public policy grounds may be made either on an application for a stay of arbitration . . . (or) on a motion to vacate the award" (citations omitted)]; see also Matter of Professional, Clerical, Tech. Empls. Assn. [Buffalo Bd. of Educ.], 90 NY2d 364, 373 [1997]).

We next consider whether the...