12.17 - C. Huntington And Its Progeny

JurisdictionNew York

c. Huntington and Its Progeny

The Taylor Law provides that public policy will be effectuated by “encouraging . . . public employers and . . . employee organizations to agree upon procedures for resolving disputes.”5509 New York courts originally held that arbitration is the preferred means of resolving disputes arising pursuant to CBAs.5510 In its landmark Huntington decision,5511 the Court of Appeals held that the Taylor Law broadly empowered employers and unions to enter into contracts, and that arbitration was an appropriate vehicle for enforcing those contracts. With a specific reference to the Steelworkers Trilogy, the Court stated that “arbitration is, of course, part and parcel of the administration of grievances.”5512

Huntington did not answer the question of whether parties to a collective bargaining agreement could agree to arbitrate subjects falling into the category of nonmandatory, or permissive, subjects of bargaining. In 1975, the Court of Appeals held that although a public employer was not required to negotiate concerning a permissive subject of bargaining, it was free to negotiate and enter into an agreement about one. Once it chose to agree on a permissive subject, the agreement could be enforced through the contact’s arbitration provision.5513

The Court of Appeals subsequently modified the Huntington rule by dropping the requirement that the prohibition be founded upon an express statutory provision: “[C]ollective bargaining under the Taylor Law has broad scope with respect to the terms and conditions of employment, limited by plain and clear, rather than express, prohibitions in the statute or decisional law.”5514 Huntington was further modified by the Court in its Susquehanna Valley decision, in which it held that “public policy, whether derived from, and whether explicit or implicit in statute or decisional law, or in neither, may also restrict the freedom to arbitrate.5515

In a concurring opinion in Susquehanna Valley, Judge Fuchsberg criticized the majority for encouraging “proliferation of litigation rather than composition of differences in public employment disputes” by raising this undefined “public policy” bar to arbitration.5516 The concurring opinion stated, “Pragmatically, I also believe that the public policy pronouncements made by the majority hold out an ‘open sesame’ of hope to those who would have the courts contravene the well-recognized statutory preference for bargaining and arbitration.”5517

In addition to the development of the “public policy” bar to arbitration, significant decisions followed Huntington with respect to whether a union had the right pursuant to a particular contract to submit a dispute to arbitration. Generally, the lower courts read Huntington as having adopted the private sector rules set forth in the Steelworkers Trilogy and formulated a similar presumption of arbitrability for substantive as well as procedural issues.5518 This proposition was specifically rejected, however, in the Court of Appeals’s 1977 landmark decision in Liverpool.5519

There, the Court of Appeals rejected the notion that there was a presumption of arbitrability and, in doing so, created an analytical framework within which subsequent applications for stays challenging the existence of a valid agreement to arbitrate could be judged.5520

The Court’s first pronouncement was that whether a particular dispute is encompassed by a party’s agreement to arbitrate is a question to be decided by a court rather than by an arbitrator. The Court held that “in making such determinations . . . courts are to be guided by the principle that the agreement to arbitrate must be express, direct, and unequivocal as to the issues or disputes to be submitted to arbitration; anything less will lead to a denial of arbitration.”5521

The Court then formulated a two-tiered test for determining whether there was a valid agreement to arbitrate within the meaning of CPLR 7503(b). The first question was whether the controversy’s subject matter was within the permissible scope of the Taylor Law. The court had to first determine if there was a public policy issue presented. If the court decided that the provision sought to be enforced ran afoul of public policy, the examination ended and arbitration was denied. If the contractual provision passed the public policy test, the inquiry then turned to whether the parties had agreed, by the terms of their arbitration clause, to refer the particular grievance to arbitration. It had to be presumed that, “in the absence of clear, unequivocal agreement to the contrary, [the public employer] did not intend to refer differences which might arise to arbitration.”5522

The Court found there was no public policy problem with the union’s grievance and, hence, the first test was satisfied. However, in finding that the contractual grievance definition was ambiguous, the Court stated that “we cannot conclude that the present dispute falls clearly and unequivocally within the class of claims agreed to be referred to arbitration.”5523

More than two decades and many court decisions later, the Court of Appeals’s consolidated decision in Board of Education of Watertown City School District v. Watertown Education Ass’n and Indian River Central School District v. Passino5524 expressly put to rest any presumption against arbitrability in public sector labor contracts by ruling that the trial and appellate courts had erred when, faced with a close question of whether the collective bargaining agreement authorized arbitration of a dispute, they granted the school districts’ applications for a stay of arbitration.

The Court first reiterated the efficacy of Liverpool’s familiar two-step test for determining whether and when a particular public sector grievance is arbitrable; i.e., as the Watertown Court stated it, “[M]ay they [the parties] do so [agree to arbitrate] and, if yes, did they do so.”5525 Acknowledging that this standard had been construed subsequent to Liverpool as essentially creating a presumption against arbitrability in the public sector, the Court explained that the first step had been established in response to the Liverpool Court’s acknowledgment that public policy, statutory and constitutional restrictions had sometimes precluded issues from being submitted to arbitration. In the 22 years since Liverpool had been decided, however, the Court noted that it had “overwhelmingly rejected contentions by public employers that particular issues fall outside the scope of permissible grievance arbitration.”5526

The Court emphasized, though, that it was not sounding the death knell for these contentions. It noted that there indeed remained instances in which arbitration might be prohibited on constitutional, statutory or public policy grounds.5527 These situations would be limited, however, because “the decisional law reflects the reality of greatly increased public sector arbitration, and its acceptance, compatible with the government’s public policy concerns.”5528

The Court then analyzed the second (“did they do so”) part of the Liverpool test. It explained that, in performing this inquiry, the courts must refer to the language of the CBA to determine whether the arbitration clause’s terms indicated the parties’ intent to refer their specific dispute to arbitration. As it had done in analyzing the Liverpool test’s first step, the Watertown Court reviewed the case law to analyze how the second step had been interpreted and applied by the courts. In doing so, the Court found that “in the vast majority of post-Liverpool cases, this Court has determined that the public sector parties had, by the broad arbitration clause language of the collective bargaining contracts, agreed to arbitrate the particular grievances involved.”5529

The Watertown Court then proceeded to address the presumption against arbitrability that had been seemingly created in Liverpool. That was 1977, the Watertown Court noted. This was 1999. The Court observed that parties now had much experience in drafting arbitration clauses and negotiating contract provisions which carried with them a wealth of common-law interpretation. Liverpool had “epitomized a wait-and-see attitude. We have waited, and we have seen. Arbitration in the public arena is no longer unfamiliar or unaccepted. It is a reality, and it is widespread.”5530

The Court concluded that, for these reasons, the Liverpool Court’s restrictive view on public sector arbitrability was no longer necessary or appropriate. Thus, to the extent that Liverpool could have been read to have implicitly created a presumption against public sector arbitrability, the Court unequivocally stated that “an anti-arbitrational presumption is no longer justified either in law, or in the public sector labor environment.”5531 The Court declined, though, to explicitly adopt the opposite, pro-arbitrability standard, even while citing to the Steelworkers Trilogy’s5532 endorsement of a presumption of arbitrability in the private sector. The Court chose instead to hold that the Liverpool two-step test should continue to be applied “free of any presumptions.”5533

Turning to the cases before it and applying its presumption-free Liverpool test, the Court concluded that the lower courts had erred in holding that the health insurance co-pay grievances were not arbitrable. The parties had stipulated that the grievances’ subject matter was arbitrable, thereby satisfying the Liverpool test’s first prong. The Court thus focused exclusively on the second question: whether the parties had agreed to arbitrate the grievances.

Rejecting what it perceived to be the lower courts’ substantive, arbitrator-like review of the underlying CBAs, the Court concluded that the lower courts should instead have merely applied a “reasonable relationship” test to determine whether the parties had agreed to arbitrate their dispute.5534 Pursuant to this test, a court must determine whether there is a reasonable...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT