ARBITRATION

 

COURT'S LIMITED ROLE IN DETERMINING WHETHER A DISPUTE IS ARBITRABLE

 

When faced with a petition to compel (or stay) arbitration, the court's inquiry is severely constrained. The court determines only whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the collective bargaining agreement (CBA). If so, the court must order arbitration without any further inquiry.

 

The precise scope of the substantive provisions in the CBA, and whether the disputed subject matter fits within them, i.e., the merits of the dispute, must be left to the arbitrator.

 

Supreme Court Should Determine Only the Threshold Issue of Whether a Matter Is Arbitrable as Encompassed by the General Subject Matter of the Collective Bargaining Agreement Without Considering the Merits of the Underlying Claim (Which Should Be Left to the Arbitrator)

 

The Fourth Department determined Supreme Court erred when it held that the parties had not agreed to arbitrate the issue (concerning a promotion).  The Fourth Department explained the criteria, noting that Supreme Court should not have been concerned with the merits of the underlying claim, but rather only the threshold issue of arbitrability:

 

The issue is governed by the Court of Appeals' two-prong test to determine "whether a grievance is arbitrable" ... . In the first prong of the test, known as "the may-they-arbitrate' prong," we "ask whether there is any statutory, constitutional or public policy prohibition against arbitration of the grievance" ... . If arbitration is not prohibited, we then in the second prong "examine the CBA [collective bargaining agreement] to determine if the parties have agreed to arbitrate the dispute at issue," which is known as "the did-they-agree-to-arbitrate' prong" ... .

 

...Supreme Court erred in concluding that the parties did not agree to arbitrate this issue. "It is well settled that, in deciding an application to stay or compel arbitration under CPLR 7503, the court is concerned only with the threshold determination of arbitrability, and not with the merits of the underlying claim" ... . ...  "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' collective bargaining agreement, 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 [collective bargaining agreement], and whether the subject matter of the dispute fits within them' " ... . Matter of County of Herkimer v Civil Serv Employees Assn Inc, 2015 NY Slip Op 00125, 4th Dept 1-2-15

 

 

COURTS' POWERS OF REVIEW OF AN ARBITRATOR'S AWARD ARE EXTREMELY LIMITED

 

A Court Will Not Decide Whether the Arbitrator Erred In Applying the Law

 

"It is not for [the court] to decide whether [the master] arbitrator erred [in applying the applicable law]." 

 

Whether Arbitrator Erred In Applying the Applicable Law Is Beyond the Courts' Review Powers

 

In affirming the arbitrator's award re: no-fault benefits, the Second Department explained the courts' limited review powers (re: arbitration awards):

 

"Consistent with the public policy in favor of arbitration, the grounds specified in CPLR 7511 for vacating or modifying a no-fault arbitration award are few in number and narrowly applied" ... . Here, Allstate failed to demonstrate the existence of any of the statutory grounds for vacating the master arbitrator's award. In addition, the determination of the master arbitrator confirming the original arbitration award had evidentiary support and a rational basis ... . "It is not for [the court] to decide whether [the master] arbitrator erred [in applying the applicable law]" ... . Matter of Allstate Ins v Westchester Med Group, 2015 NY Slip Op 00876, 2nd Dept 2-4-15

 

 

GROUNDS FOR VACATING AN AWARD

 

A Court May Vacate an Award Which Is Not "Final and Definite"

 

Criteria for determining whether an award is final and definite within the meaning of CPLR 7511 include: (1) the award leaves the parties able to determine their rights and obligations; (2) the controversy submitted has been resolved; and (3) no new controversy has been created (by the award). An award is final and definite if the computation of the award is so clear and specific that the determination of the amounts owing is merely an accounting calculation.

 

 

Analytical Criteria for Confirmation of an Arbitration Award Described

 

The Second Department explained the analytical criteria for confirmation of an arbitration award.  The court noted that an arbitrator does not have the power to award punitive damages:

 

"The court shall confirm an award upon application of a party made within one year after its delivery to him [or her], unless the award is vacated or modified upon a ground specified in section 7511" (CPLR 7510). "An arbitration award is indefinite or nonfinal for purposes of CPLR 7511 and subject to vacatur 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'" ... . "An award is final and definite if the computation of the award is so clear and specific that the determination of the amounts owing is merely an accounting calculation" ... . Matter of Olidort v Pewzner, 2015 NY Slip Op 01278, 2nd Dept 2-11-15

 

 

Criteria for Vacation of an Arbitration Award Explained (Not Met Here)

 

The Second Department explained the criteria for vacation of an arbitration award:

 

A party seeking to overturn an arbitration award on one or more grounds stated in CPLR 7511(b)(1) bears a "heavy burden" ... , and must establish a ground for vacatur by clear and convincing evidence ... . An arbitration award must be vacated if a party's rights were impaired by an arbitrator who "exceeded his [or her] 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]). An arbitrator exceeds his or her power where the "award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power" ... . An award will be vacated as indefinite 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 ... . Matter of Quality Bldg Constr LLC, 2015 NY Slip Op 01643, 2nd Dept 2-25-15

 

 

Arbitrator Failed to Make a "Final and Definite" Award

 

The Third Department determined the arbitrator had exceeded her authority when she did not merely correct a miscalculation, but rather made new findings when modifying an award.  The court further determined that the arbitrator initially did not make a "final and definite" award when she failed to take into account a stipulation between the parties:

 

...[T]he arbitrator's modification of the original award exceeded the narrow grounds set forth in CPLR 7511 (c). A review of the modified award reveals that the arbitrator did not simply correct a "miscalculation of figures . . . in the [original] award" (CPLR 7511 [c] [1]) but, rather, made new factual findings as to the applicability of the parties' apparent stipulation relative to petitioner's counterclaim and its corresponding impact upon the moneys awarded, i.e., the arbitrator impermissibly revisited the merits of the parties' dispute. Under these circumstances, the modified award was properly vacated ... . 

 

We also are persuaded that Supreme Court properly vacated the original arbitration award and remanded the matter to the arbitrator for a rehearing (see CPLR 7511 [d]). CPLR 7511 (b) (1) (iii) permits a court to vacate an arbitration award if the court finds that a party's rights were prejudiced because the arbitrator, in making such an award, either "exceeded his [or her] power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made." Although we find no basis upon which to conclude that the arbitrator exceeded her authority in rendering the initial award, we agree with Supreme Court that, by failing to address the existence and/or content of the parties' purported stipulation, ascertain whether the contested funds were in fact withheld by petitioner prior to the start of the arbitration and assess the corresponding impact, if any, upon petitioner's counterclaim, the arbitrator "so imperfectly executed" her powers that "a final and definite award" was not in fact made (CPLR 7511 [b] [1] [iii]). Matter of Delaney Group, Inc. (Holmgren Enters., Inc.), 2015 NY Slip Op 02174, 3rd Dept 3-19-15

 

 

A Court May Vacate an Award Where the Abitrator Exceeded His or Her Powers (i.e., Where the Award Violates Public Policy, Is Irrational, Or Exceeds Specifically Enumerated Powers)

 

"An arbitration award must be vacated if a party's rights were impaired by an arbitrator who exceeded his [or her] 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]). An arbitrator exceeds his or her power where the award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power."

 

Criteria for Vacation of an Arbitration Award Explained (Not Met Here)

 

The Second Department explained the criteria for vacation of an arbitration award:

 

A party seeking to overturn an arbitration award on one or more grounds stated in CPLR 7511(b)(1) bears a "heavy burden" ... , and must establish a ground for vacatur by clear and convincing evidence ... . An arbitration award must be vacated if a party's rights were impaired by an arbitrator who "exceeded his [or her] 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]). An arbitrator exceeds his or her power where the "award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power" ... . An award will be vacated as indefinite 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 ... . Matter of Quality Bldg Constr LLC, 2015 NY Slip Op 01643, 2nd Dept 2-25-15

 

Arbitrator Failed to Make a "Final and Definite" Award

 

The Third Department determined the arbitrator had exceeded her authority when she did not merely correct a miscalculation, but rather made new findings when modifying an award.  The court further determined that the arbitrator initially did not make a "final and definite" award when she failed to take into account a stipulation between the parties:

 

We also are persuaded that Supreme Court properly vacated the original arbitration award and remanded the matter to the arbitrator for a rehearing (see CPLR 7511 [d]). CPLR 7511 (b) (1) (iii) permits a court to vacate an arbitration award if the court finds that a party's rights were prejudiced because the arbitrator, in making such an award, either "exceeded his [or her] power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made." Although we find no basis upon which to conclude that the arbitrator exceeded her authority in rendering the initial award, we agree with Supreme Court that, by failing to address the existence and/or content of the parties' purported stipulation, ascertain whether the contested funds were in fact withheld by petitioner prior to the start of the arbitration and assess the corresponding impact, if any, upon petitioner's counterclaim, the arbitrator "so imperfectly executed" her powers that "a final and definite award" was not in fact made (CPLR 7511 [b] [1] [iii]). Matter of Delaney Group, Inc. (Holmgren Enters., Inc.), 2015 NY Slip Op 02174, 3rd Dept 3-19-15

 

Re: Child Support-An Arbitrator's Award May Be Vacated on Public Policy Grounds If it Does Not Comply With the Child Support Standards Act or Is Not In the Best Interests of the Children

 

"An arbitration award concerning child support may be vacated on public policy grounds if it fails to comply with the Child Support Standards Act (Domestic Relations Law § 240[1-b]; hereinafter the CSSA) and is not in the best interests of the children." (not the case here)

 

Custody and Visitation Can Only Be Determined by a Court---Custody and Visitation Arbitration-Award Invalid/However Child Support Can Be the Subject of Arbitration

 

The Second Department determined Supreme Court should not have confirmed the arbitration award to the extent the award dealt with custody and visitation.  Custody and visitation can be addressed only in the courts.  However, Supreme Court properly confirmed the arbitrator's child support award, as there was no showing the award failed to comply with the Child Support Standards Act:

 

Although the parties consented to arbitration of custody and visitation matters, they had no power to do so. "Disputes concerning child custody and visitation are not subject to arbitration as the court's role as parens patriae must not be usurped'" ... . Accordingly, that branch of the petition which was to confirm the custody and visitation provisions of the arbitration award should have been denied, and the matter must be remitted to the Supreme Court, Kings County, for a hearing and determination as to the issues of custody and visitation ... .

 

An arbitration award concerning child support may be vacated on public policy grounds if it fails to comply with the Child Support Standards Act (Domestic Relations Law § 240[1-b]; hereinafter the CSSA) and is not in the best interests of the children ... . Here, the father failed to demonstrate that the award of child support was incompatible with the objectives of the CSSA and that it was not in the best interests of the children. Matter of Goldberg v Goldberg, 2015 NY Slip Op 00539, 2nd Dept 1-21-15

 

 

 

TIME-LIMIT FOR MAKING AN APPLICATION TO STAY ARBITRATION RUNS FROM RECEIPT OF THE NOTICE (IF NOTICE IS BY MAIL)---APPLICATION IS "MADE" WHEN IT IS FILED (CPLR 7503)

 

"Even though CPLR 7503(c) says, An application to stay arbitration must be made by the party served [with a notice or demand for arbitration] within twenty days after service upon him of the notice or demand, case law establishes that, when the notice or demand is mailed — as it was in the case at bar — [t]he notice to arbitrate does not start the time to respond until receipt."

 

An application is made, within the meaning of CPLR 7503, when the petition is filed.

 

 

Twenty-Day Time-Limit for Making an Application to Stay Arbitration Starts When the Notice or Demand for Arbitration Is Received, Not When It Is Mailed/An Application for a Stay of Arbitration Is "Made" When It Is Filed/Appellate Court May Consider a Purely Legal Issue Raised for the First Time on Appeal

 

The First Department determined the twenty-day time-limit for an application to stay arbitration, when the notice or demand for arbitration is sent by mail, runs from the date the notice or demand is actually received.  The court further noted that it can rule on a purely legal question raised for the first time on appeal:

 

Even though CPLR 7503(c) says, "An application to stay arbitration must be made by the party served [with a notice or demand for arbitration] within twenty days after service upon him of the notice or demand" (emphasis added), case law establishes that, when the notice or demand is mailed — as it was in the case at bar — "[t]he notice to arbitrate does not start the time to respond until receipt"... . * * *

 

The issue of whether an application to stay arbitration is "made" (CPLR 7503[c]) when the petition is filed, as opposed to when it is served, is a purely legal one; hence, it "may properly be considered by this Court for the first time on appeal" ... . In fact, an application is made when the petition is filed ... . Matter of Travelers Prop Cas Co of Am v Archibald, 2015 NY Slip Op 00465, 1st Dept 1-20-15

 

 

CHILD CUSTODY AND VISITATION ARE NOT ARBITRABLE

CHILD SUPPORT IS ARBITRABLE

 

"Although the parties consented to arbitration of custody and visitation matters, they had no power to do so."

 

Custody and Visitation Can Only Be Determined by a Court---Custody and Visitation Arbitration-Award Invalid/However Child Support Can Be the Subject of Arbitration

 

The Second Department determined Supreme Court should not have confirmed the arbitration award to the extent the award dealt with custody and visitation.  Custody and visitation can be addressed only in the courts.  However, Supreme Court properly confirmed the arbitrator's child support award, as there was no showing the award failed to comply with the Child Support Standards Act:

 

Although the parties consented to arbitration of custody and visitation matters, they had no power to do so. "Disputes concerning child custody and visitation are not subject to arbitration as the court's role as parens patriae must not be usurped'" ... . Accordingly, that branch of the petition which was to confirm the custody and visitation provisions of the arbitration award should have been denied, and the matter must be remitted to the Supreme Court, Kings County, for a hearing and determination as to the issues of custody and visitation ... .

 

An arbitration award concerning child support may be vacated on public policy grounds if it fails to comply with the Child Support Standards Act (Domestic Relations Law § 240[1-b]; hereinafter the CSSA) and is not in the best interests of the children ... . Here, the father failed to demonstrate that the award of child support was incompatible with the objectives of the CSSA and that it was not in the best interests of the children. Matter of Goldberg v Goldberg, 2015 NY Slip Op 00539, 2nd Dept 1-21-15

 

 

UNLIKE LABOR DISPUTES IN THE PRIVATE SECTOR, THE INTENT TO ARBITRATE IN THE FIELD OF PUBLIC EMPLOYMENT CANNOT BE PRESUMED

 

"Unlike general labor disputes in the private sector involving arbitration, the intent to arbitrate of parties to a collective bargaining agreement in the field of public employment may not be presumed ... . Indeed . . . it must be taken, in the absence of clear, unequivocal agreement to the contrary, that the [parties to a collective bargaining agreement] did not intend to refer differences which might arise to the arbitration forum ...".

 

 

ARBITRATION/EMPLOYMENT LAW/MUNICIPAL LAW/COUNTY LAW/COLLECTIVE BARGAINING AGREEMENT/UNIONS/CONTRACT LAW

 

 

Longevity-Pay Grievance Not Arbitrable Under Terms of Collective Bargaining Agreement/Analytical Criteria Explained

 

The Second Department determined that, under the terms of the collective bargaining agreement (CBA), the grievance (re: longevity pay) was not arbitrable.  The court outlined the analytical criteria:

 

"The determination of whether a dispute between a public sector employer and employee is arbitrable is subject to [a] two-prong test" ... . "Initially, the court must determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance" ... . "If there is no prohibition against arbitrating, the court must examine the parties' collective bargaining agreement and determine if they in fact agreed to arbitrate the particular dispute" ... .

 

Here, the County did not contend that arbitration of the subject matter of the dispute was prohibited by law or public policy. Thus, the only issue is whether the parties agreed to arbitrate the particular dispute ... .

 

"Unlike general labor disputes in the private sector involving arbitration, the intent to arbitrate of parties to a collective bargaining agreement in the field of public employment may not be presumed" ... . "Indeed . . . it must be taken, in the absence of clear, unequivocal agreement to the contrary, that the [parties to a collective bargaining agreement] did not intend to refer differences which might arise to the arbitration forum" ... .

 

Here, contrary to the Union's contention, the CBA did not broadly provide for the arbitration of any grievance that may arise under the CBA ... . Rather, as the Supreme Court correctly concluded, the CBA limited the availability of arbitration to specifically enumerated matters ... .  Matter of County of Rockland v Corr. Officers Benevolent Assn. of Rockland County, Inc. 2015 NY Slip Op 01798, 2nd Dept 3-4-15

 

 

PRE- AND POST- AWARD STATUTORY INTEREST IS A MATTER OF RIGHT NOT DEPENDENT UPON JUDICIAL DISCRETION OR DEMAND

 

"...[P]ursuant to CPLR 5002, the defendant was entitled to prejudgment interest from the date of the arbitration award, April 28, 2009 ... . Interest under CPLR 5002 is a matter of right and is not dependent upon the court's discretion or a specific demand ... . It is simply the cost of having the use of another person's money for a specified period" and is not a penalty on the party owing money ... . Accordingly, the defendant was entitled to prejudgment interest accruing from the date of the arbitration award, and to postjudgment interest pursuant to CPLR 5003."

 

ARBITRATION/CIVIL PROCEDURE

 

Interest Pursuant to CPLR 5002 and 5003 Is a Matter of Right Not Dependent Upon the Court's Discretion or a Demand

 

The Second Department noted that the defendant who had obtained an arbitration award was entitled to interest on the award pursuant to CPLR 5002 and 5003:

 

...[P]ursuant to CPLR 5002, the defendant was entitled to prejudgment interest from the date of the arbitration award, April 28, 2009 ... . "Interest under CPLR 5002 is a matter of right and is not dependent upon the court's discretion or a specific demand" ... . It "is simply the cost of having the use of another person's money for a specified period" and is not a penalty on the party owing money ... . Accordingly, the defendant was entitled to prejudgment interest accruing from the date of the arbitration award, and to postjudgment interest pursuant to CPLR 5003. Dermigny v Harper, 2015 NY Slip Op 02722, 2nd Dept 4-1-15