C. Enforcement of Contracts

• Jurisdiction: New York

C. Enforcement of Contracts³⁹⁶

1. Common Law

Prior to 1947, the enforceability of collectively bargained agreements was uncertain. The courts of New York and some other states granted enforcement on an agency theory.³⁹⁷ Under this theory, a collectively bargained agreement was a contract between the employer and its employees, with the union merely acting as an agent for those employees. Accordingly, such contracts were enforceable upon suits initiated by individual employees but not by their union.

An alternative theory of enforcement of collectively bargained agreements was that it was a third-party beneficiary contract.³⁹⁸ The most common view, however, was that a collectively bargained agreement was not a contract at all. However, some of its substantive terms might be deemed to have been absorbed into the individual employee's contract of hire.³⁹⁹ This was all changed by the Taft-Hartley Act of 1947.⁴⁰⁰ Labor Management Relations Act § 301 provides: "Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this [Act], or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties."⁴⁰¹

2. Grievance Procedures and Arbitration

Almost all collective bargaining agreements establish grievance procedures for the resolution of disputes, and it is through these grievance procedures that contracts are enforced. In most instances, the final step of the grievance procedure is a binding determination by a third-party neutral. This process is called arbitration.⁴⁰²

The effectiveness of grievance arbitration as the means of enforcing collective bargaining agreements has been enhanced by a series of decisions of the U.S. Supreme Court. Most notably, in Lincoln Mills⁴⁰³ and Steelworkers Trilogy,⁴⁰⁴ the Supreme Court determined that the Labor Management Relations Act § 301 required the application of federal substantive law to the enforcement of collective bargaining agreements, and it fashioned a federal common law to apply to such agreements. The first of the two important features of that common law is that arbitration is the favored procedure for resolving disputes as to the meaning of a collective bargaining agreement. Thus, the Court held that agreements to arbitrate are enforceable and, furthermore, where there is such an agreement but it is not clearly applicable to a particular dispute, there is a presumption that the dispute is arbitrable.

Notwithstanding this presumption, the question of whether a dispute is arbitrable must be answered. If the question is one of substantive arbitrability—whether the parties agreed to arbitrate grievances or whether a particular dispute is subject to this contractual obligation—the answer must be determined by the courts.⁴⁰⁵ A "court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute."⁴⁰⁶ If the question is one of procedural arbitrability—whether the demand for arbitration was timely filed or whether the prerequisites were complied with—the answer must be given by the arbitrator.⁴⁰⁷

Federal courts will generally defer to the decision of an arbitrator if judicial review is sought. An arbitration award can be vacated by a court when it concludes that an arbitrator strayed from interpreting and applying the terms of the parties' agreement and instead tried to dispense her or his own brand of industrial justice or make public policy.⁴⁰⁸ In addition, a court may refuse to enforce an arbitration found to be contrary to public policy.⁴⁰⁹

New York courts apply a two-prong test when determining the arbitrability of a grievance under CPLR Article 75. Under the first prong, the court determines whether the arbitration of the grievance is prohibited by any statute, constitutional law or public policy.⁴¹⁰ If the arbitration is not prohibited, the court will move to the second prong by examining the terms of the collective bargaining agreement to determine whether the parties agreed to arbitrate the dispute at issue.⁴¹¹

The duty to supply information to the other side in negotiations extends to information reasonably needed in the presentation of grievances.⁴¹² This affords some measure of discovery, and even extends to some information that might otherwise be confidential, based on the unions' need for the information.⁴¹³ However, in some instances PERB may direct that the information must to be given to the arbitrator for an in camera review before being released to the union.⁴¹⁴

3. Relationship of Arbitration to Other Forums

Many contract disputes that are subject to arbitration may also raise parallel legal questions that can be determined in other forums. For example, a "no reprisal" contract clause may proscribe conduct prohibited by the "no discrimination" provisions of a labor relations statute. An alleged breach of a "just cause" discipline clause might raise related questions under a federal, state or local anti-discrimination statute. Contract compensation claims may duplicate claims under minimum wage laws, and employer unilateral action might raise issues under both collective bargaining agreement and labor relations statutes compelling "good-faith" negotiations.⁴¹⁵ Often, moreover, a plenary action in court is yet another possibility.⁴¹⁶ The problem of multiple forums is more pronounced in the public sector because civil service–type statutes regulate public employment more strictly than protective labor laws regulate private employment.

Since 1955, the NLRB has declined to conduct...