Board of Education v. Niagara-Wheatfield Teachers Ass'n

Majority

p. 553

Board of Education of Central School District No. 1 of the Towns of Niagara, Wheatfield, Lewiston and Cambria, Respondent, v Niagara-Wheatfield Teachers Association et al., Appellants.

Argued February 15,1979;

decided March 29, 1979

p. 554

POINTS OF COUNSEL

Richard E. Casagrande, Bernard F. Ashe and J. Michael Eadry for appellants.

I. The reviewing court is prohibited from undertaking a relitigation of the merits of the case decided in arbitration. (Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 NY2d 774 ; Matter of Torano [MVAIC], 19 AD2d 356 ; Matter of Professional Staff Congress/City Univ. of

p. 555

N. Y. v Board of Higher Educ., 39 NY2d 319 ; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229 ; Matter of Fayetteville-Manlius Cent. School Dist. [Fayetteville-Manlius Teachers Assn.], 51 AD2d 91 , 41 NY2d 818 .) II. The lower courts’ confirmation of the first three paragraphs of the arbitrator’s award was proper. (Lentine v Fundaro, 29 NY2d 382 ; Matter of National Cash Register Co. [Wilson], 8 NY2d 377 ; Matter of Board of Educ. [Auburn Teachers Assn.], 49 AD2d 35 .) III. The lower courts erred by vacating the arbitrator’s award of damages. (Garrity v Lyle Stuart, Inc., 40 NY2d 354 ; Matter of Feuer Transp. [Local No. 445], 295 NY 87 ; Matter of Staklinski [Pyramid Elec. Co.], 6 AD2d 565 ; Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 NY2d 167 ; Matter of British Overseas Airways Corp. v International Assn. of Machinists & Aerospace Workers, AFL-CIO, 39 AD2d 900 , 32 NY2d 823 ; Matter of Fayetteville-Manlius Cent. School Dist. [Fayetteville-Manlius Teachers Assn.], 51 AD2d 91 , 41 NY2d 818 ; Matter of Bellmore-Merrick United Secondary Teachers v Board of Educ., 51 AD2d 762 ; Randall-Smith, Inc. v 43rd St. Estates Corp., 17 NY2d 99 ; Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578 .) IV. Appellant Brown is entitled to interest accruing from the date of the arbitrator’s award. (Matter of McEntee [MVAIC], 29 AD2d 68 , 28 NY2d 939 ; Matter of Silverglad v Motor Vehicle Acc. Ind. Corp., 56 Misc 2d 289 .) V. Public policy demands that this arbitration award be confirmed in all respects. (Steelworkers v American Mfg. Co., 363 US 564 ; Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122 ; Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 NY2d 167 ; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229 .)

David A. Hoover for respondent.

I. Arbitration awards are subject to limited review and may not be vacated because of the arbitrator’s error of law or fact. (Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229 ; Garrity v Lyle Stuart, Inc., 40 NY2d 354 ; Matter of Publishers’ Assn. of N. Y. City v Newspaper & Mail Deliverers’ Union of N. Y, 280 App Div 500 .) II. The lower courts correctly vacated the arbitrator’s award of money damages. (Walker v Sheldon, 10 NY2d 401 ; Matter of Bellmore-Merrick United Secondary Teachers v Board of Educ., 51 AD2d 762 .) III. The award of $1,500 to Brown was in the nature of punitive damages and was properly vacated by the courts below. (Mat

p. 556

ter of Professional Staff Congress/City Univ. of N. Y. v Board of Higher Educ., 39 NY2d 319 ; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229 .) IV. The arbitrator’s violation of a clear public policy against the award of punitive damages makes vacatur of the fourth paragraph of the award proper in all respects. (Steelworkers v American Mfg. Co., 363 US 564 ; Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122 ; Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 NY2d 167 ; Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509 .)

OPINION OF THE COURT

The issue presented is whether an arbitrator’s award is punitive, and hence unenforceable, when the compensatory damages awarded are deemed to be somewhat speculative. Because we conclude that the award is not punitive in nature, we reverse and direct that the arbitrator’s award be confirmed in its entirety.

The present controversy ensued following the filing of a grievance by the Niagara-Wheatfield Teachers Association on behalf of a member, George Brown, alleging that the district violated the collective bargaining agreement when it hired a guidance counselor from outside the district rather than awarding the position to Mr. Brown. Specifically it was alleged that the district had breached a covenant against discrimination on the basis of sex when it announced that female applicants were preferred for the position. It was also alleged that Brown had been deprived of a professional advantage without just cause, that the district had failed to follow the contractually required posting procedures, and that the district had refused to give the position to the most senior of the equally qualified applicants, all in violation of the collective bargaining agreement.

In due course, the matter proceeded to arbitration, and the arbitrator found that the district had in fact breached its agreement with the association. He found that the solicitation of applicants was discriminatory, that the posting procedures mandated by the agreement had not been followed, and that the grievant’s seniority rights may have been neither clearly understood nor properly evaluated by the district.

p. 557

In his decision the arbitrator candidly stated "there is a chance that [Mr. Brown] might not have received the appointment, even. if his contractual rights had been safeguarded although his presumptive right thereto may have been shown. Nonetheless, I do believe that these rights were flagrantly disregarded and that he suffered compensable damages thereby”. The arbitrator then fixed the amount of damages at $1,500, without further .specifically detailing the manner or mode of fixing that amount.

The district moved under CPLR 7511 to vacate the award, alleging that the arbitrator exceeded his powers under the collective bargaining agreement. Special Term agreed, and vacated the award to the extent only that it granted monetary damages. All other provisions of the award, including the arbitrator’s findings that the district had breached the agreement, were confirmed. The Appellate Division affirmed on the opinion of Special Term, adding only that the award of monetary damages was punitive and was subject to vacatur under the rule laid down in Garrity v Lyle Stuart, Inc. ( 40 NY2d 354 ). We reverse.

Merely because an arbitrator’s award is not arrived at by precise mathematical computations does not make it punitive. Indeed, much of the laudatory value of arbitration lies in the arbitrator’s power to construct a remedy best suited to the situation without regard to the restrictions on traditional relief in a court of law (Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578 ). Merely because the computation of damages may be so speculative as to be unsupportable if awarded by a court does not make the award infirm, for, as we have firmly stated, arbitrators are not bound by rules of substantive law or, indeed, rules of evidence (Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229 ).

Here, the arbitrator found that Brown had been discriminated against when the district failed properly to consider his application for a guidance counselor position. Admittedly, there was no certainty or assurance that Brown would have been given the position even if his application had been properly processed. The arbitrator’s pragmatic solution was to select a sum that he thought properly reflected the damages suffered by Brown.^[1]

* In fact the association has suggested that the award was an attempt to compensate Brown for one half the pay differential between the salary at his teaching *558 position and that as guidance counselor, a difference of $3,800. This, of course, adds support to our holding that the damages are compensatory and not punitive.

p. 558

As in many cases, the award was an attempt to arrive at a just solution, despite the association’s inability to prove the damages precisely. Assuming, arguendo, that the arbitrator exceeded the power (or lack thereof) which law courts would have had if the parties had chosen to litigate, this nevertheless is not a ground for vacatur. Having chosen arbitration as their forum, the parties must recognize that an award may differ from that expected in a court of law without being subject to attack for that reason alone (Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578 , 582, supra).

The present case is readily distinguishable from the situation in Garrity v Lyle Stuart, Inc. ( 40 NY2d 354 , supra), which was relied on by the Appellate Division. In that case there was no problem computing compensatory damages, but in addition the arbitrator awarded punitive damages which were expressly labeled as such. We held on the facts in that case, that punitive damages may only be awarded by the State’s courts. That holding should not be interpreted as an indication that whenever compensatory damages are somewhat speculative they are necessarily punitive (cf. Matter of North Colonie Cent. School Dist. [North Colonie Teachers’ Assn.], 60 AD2d 496 , affd 46 NY2d 965 ). Ritualistic incantations of "punitive damages” will not suffice to vacate an arbitration award where discretion is used in the computation of damages. Only where the damages are genuinely intended to be punitive should the courts vacate the award. In all other cases "it is the declared policy of this State to encourage 'public employers and * * * employee organizations to agree upon procedures for resolving disputes’ ” (Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122 , 131), and we should enforce the awards rendered by using those procedures where strong public policy is not violated.

On this appeal the Teachers Association also urges that it is entitled to interest on the monetary damages from the date of the arbitrator’s award. This was clearly the rule under the Civil Practice Act (Matter of Durant [MVAIC], 15 NY2d 408 , mot for rearg den 16 NY2d 716 ), and it was not changed by the adoption of the CPLR (Matter of McEntee [MVAIC], 29 AD2d 68 , affd 28 NY2d 939 ). Hence, upon confirmation of an arbitrator’s award, interest should be provided from the date of the award.

p. 559

Accordingly, the order of the Appellate Division should be reversed, with costs, and the arbitrator’s award of damages reinstated and confirmed.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler and Fuchsberg concur with Judge Gabrielli.

Order reversed, etc.

Cases cited

Cohoes City School District v. Cohoes Teachers Ass'n 40 NY2d 774 N.Y. 1976-12-02 p. 554
In re the Arbitration between Torano & Motor Vehicle Accident Indemnification Corp. 19 AD2d 356 N.Y. App. Div. 1963-10-17 p. 554
Professional Staff Congress/City University of New York v. Board of Higher Education 39 NY2d 319 N.Y. 1976-03-30 p. 555, p. 556
Associated Teachers of Huntington, Inc. v. Board of Education 33 NY2d 229 N.Y. 1973-12-27 p. 555, p. 556, p. 557
In re the Arbitration between Fayetteville-Manlius Central School District & Fayetteville-Manlius Teachers Ass'n 51 AD2d 91 N.Y. App. Div. 1976-02-24 p. 555
Lentine v. Fundaro 29 NY2d 382 N.Y. 1972-01-12 p. 555
In re the Arbitration between National Cash Register Co. & Wilson 8 NY2d 377 N.Y. 1960-11-30 p. 555
In re Arbitration between the Board of Education & Auburn Teachers 49 AD2d 35 N.Y. App. Div. 1975-07-18 p. 555
Garrity v. Lyle Stuart, Inc. 40 NY2d 354 N.Y. 1976-07-06 p. 555, p. 557, p. 558
In re Feuer Transportation, Inc. 295 NY 87 N.Y. 1946-01-17 p. 555
In re the Arbitration between Staklinski & Pyramid Electric Co. 6 AD2d 565 N.Y. App. Div. 1958-11-25 p. 555
Board of Education v. Bellmore-Merrick United Secondary Teachers, Inc. 39 NY2d 167 N.Y. 1976-04-06 p. 555, p. 556
British Overseas Airways Corp. v. International Ass'n of Machinists & Aerospace Workers 39 AD2d 900 N.Y. App. Div. 1972-06-29 p. 555
British Overseas Airways Corp. v. International Ass'n of Machinists & Aerospace Workers 32 NY2d 823 N.Y. 1973-05-04 p. 555
Randall-Smith, Inc. v. 43rd Street Estates Corp. 17 NY2d 99 N.Y. 1966-02-24 p. 555
In re the Arbitration between Kavares & Motor Vehicle Accident Indemnification Corp. 29 AD2d 68 N.Y. App. Div. 1967-12-21 p. 555, p. 558
In re the Arbitration between McEntee & Motor Vehicle Accident Indemnification Corp. 28 NY2d 939 N.Y. 1971-05-26 p. 555, p. 558
United Steelworkers v. American Manufacturing Co. 363 US 564 SCOTUS 1960-06-20 p. 555, p. 556
Board of Education of Union Free School District No. 3 of Huntington v. Associated Teachers of Huntington, Inc. 30 NY2d 122 N.Y. 1972-03-16 at 131 p. 555, p. 556, p. 558
Walker v. Sheldon 10 NY2d 401 N.Y. 1961-12-07 p. 555
In re the Arbitration between the Acting Superintendent of Schools of Liverpool Central School District v. United Liverpool Faculty Ass'n 42 NY2d 509 N.Y. 1977-10-18 p. 556
In re the Arbitration between North Colonie Central School District & North Colonie Teachers' Ass'n 60 AD2d 496 N.Y. App. Div. 1978-01-26 p. 558
In re the Arbitration between North Colonie Central School District & North Colonie Teachers' Ass'n 46 NY2d 965 N.Y. 1979-03-20 p. 558
In re the Arbitration between Durant & Motor Vehicle Accident Indemnification Corp. 15 NY2d 408 N.Y. 1965-04-22 p. 558