Pennsylvania Supreme Court Adopts New Public Policy Exception Test for Judicial Review of an Arbitrator's Grievance Award
There has always been tension between the arbitration process and the judicial process, particularly when it comes to judicial review of an arbitrator's decision. In its decision in Westmoreland Intermediate Unit #7 v. Westmoreland Intermediate Unit #7 Classroom Assistants Educational Support Personnel Association, PSEA/NEA, the Pennsylvania Supreme Court reaffirmed Pennsylvania's policy favoring arbitration and the finality of an arbitrators decision. The Court expressly reaffirmed the "essence test" as the proper standard to be employed by a court; adopted a public policy exception to the essence test; and rejected the prior "core functions exception".
If my description is making your head spin, welcome to the world of grievance arbitration. Although the case is set in the context of a grievance arbitration for public employees, it has important instructional value for all unionized employers as well as those employers who are tempted to adopt contractual arbitration agreements to avoid the expense of litigation. The possibility of getting a "crazy" decision reversed in court is remote.
The facts of the Westmoreland Intermediate Unit case demonstrate how an arbitrator's decision can have significant implications for an employer's workforce leaving an employer almost no option when it comes to appealing the award. The case involved a public school's decision to terminate a classroom assistant for a work related substance abuse episode. The employee had twenty-three years experience and no prior disciplinary action. The classroom assistant was under the treatment of a physician who had prescribed several medications. She made the decision to supplement her physician prescribed medications with another prescription medication a friend had given her. The misuse of the friend's prescription medication is a crime for which the classroom assistant was later prosecuted.
On the day she misused the friend's prescription medication, she had an adverse reaction at work resulting in her being found unresponsive in a restroom while she was to be attending to her classroom duties. Emergency personnel were summoned to assist her and the entire school was placed under a "code blue" which is essentially a lock down.
The school terminated the classroom assistant for "immorality" which is one of several statutorily enumerated causes for termination of a school district's professional employees. The union grieved the termination and an arbitrator found that the employee's behavior was "foolish" and "irresponsible" but did not rise to the level of "immorality". The arbitrator determined just cause did not exist under the collective bargaining agreement to terminate the employee. The school appealed the decision into court where the first level of appellate court reversed the decision of the arbitrator finding that the unique nature of the school's function (educating children) allowed for the application of the "core functions" exception to determine whether the arbitrator's award was rationally derived from the collective bargaining agreement.
The Pennsylvania Supreme Court reversed the ruling holding that the "essence test" is the proper standard to be employed by a court when reviewing a grievance or arbitration award and adopting a public policy exception to that test while rejecting the "core functions" exception. Along the way, the court made the following important observations about a court's judicial review of an arbitration award:
- “The General Assembly requires that the decision of the arbitrator shall be final and binding upon the parties. Therefore, final and binding arbitration is not only highly valued in labor relations for its speed, inexpensiveness and efficiency, it is required under the law.”
- “Broad judicial review of an arbitrator's award . . . would undercut these attributes of arbitration, and thus, thwart the Legislature's intentions regarding resolution of labor disputes. Specifically, judicial review that would allow the regular vacating of arbitration awards would not only encourage extended litigation through court review of arbitration awards, but would add time and expense to the process and would take the resolution of disputes from a person chosen by the parties and give it to a court to decide.”
- “An arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may, of course, look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement."
- “The arbitrator's award will be upheld if the arbitrator's interpretation can rationally be derived from the collective bargaining agreement. That is to say, a court will only vacate an arbitrator's award where the award indisputably and genuinely is without foundation in, or fails to logically flow from, the collective bargaining agreement.”
- “The essence test does not permit an appellate court to intrude into the domain of an arbitrator and determine whether the award is ‘manifestly unreasonable.’”
- The Pennsylvania Supreme Court adopts the principles established in federal arbitration that is "courts should not enforce an arbitration award that contravenes public policy." This exception is grounded in the general rule that a court will not enforce a contract which is unlawful or in violation of public policy.
- “The public policy must be well defined and documented and is to be ascertained by reference to the laws and legal precedents and not from general considerations of proposed public interests.”
