Title: In the Matter of New York State Office of Alchoholism and Substance Abuse Services v. Victor Ortiz In the Matter of New York State Office of Children and Family Services v. Lauren Lanterman

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 31  
In the Matter of New York State
Office of Children and Family 
Services, et al.
            Respondents,
        v.
Lauren Lanterman, et al.
            Appellants.
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No. 32  
In the Matter of New York State 
Office of Alcoholism and 
Substance Abuse Services et al., 
            Appellants,
        v.
Victor Ortiz et al.,
            Respondents.
Case No. 31:
Edward J. Aluck, for appellants.
Julie M. Sheridan, for respondents.
Civil Service Employees Association; New York State
United Teachers, amici curiae.
Case No. 32:
Julie M. Sheridan, for appellants.
Edward J. Aluck, for respondents. 
Civil Service Employees Association, amicus curiae.
SMITH, J.:
In these two cases, state employees who were dismissed
because they lacked the credentials required for their jobs seek
to arbitrate the question of whether their dismissals were
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Nos. 31 and 32 
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disciplinary actions.  Under our decision in Matter of Felix v
New York City Dept. of Citywide Admin. Servs. (3 NY3d 498
[2004]), the dismissals clearly were not disciplinary, and the
employees' assertion that they were does not have a relationship
with their collective bargaining agreement sufficient to justify
arbitration of the issue.
I
Lauren Lanterman was a teacher employed by the Office
of Children and Family Services (OCFS); Victor Ortiz was a
counselor employed by the Office of Alcoholism and Substance
Abuse Services (OASAS).  Though they worked for different
agencies, Lanterman and Ortiz belonged to the same union, the New
York State Public Employees Federation (PEF), and their rights
were governed by the same collective bargaining agreement (CBA).  
Both Lanterman and Ortiz needed credentials for the
jobs they held.  A civil service classification standard,
promulgated pursuant to Education Law § 112 (1) and 8 NYCRR 116.3
(b), required Lanterman to have a teaching certificate
appropriate to her specialty.  OASAS regulations, promulgated
pursuant to Mental Hygiene Law § 19.07 (d), required Ortiz to
have a credential as a Credentialed Alcoholism and Substance
Abuse Counselor (CASAC).  Before the events leading to this
litigation, Lanterman had a provisional teaching certificate, and
Ortiz had a CASAC credential good for three years.  Both of these
credentials expired, and both Lanterman and Ortiz failed to
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Nos. 31 and 32 
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obtain new ones.  As a result, both were dismissed.
PEF filed grievances for Lanterman and Ortiz, claiming
that their dismissals violated their rights under Article 33 of
the CBA.  That article is entitled "DISCIPLINE" and begins with
the following words:
   "33.1   Applicability
   
   "The disciplinary procedure set forth in
this Article shall be in lieu of the
procedure specified in Sections 75 and 76 of
the Civil Service Law and shall apply to all
persons currently subject to Sections 75 and
76 of the Civil Service Law." 
The stated purpose of Article 33 is "to provide a
prompt, equitable and efficient procedure for the imposition of
discipline for just cause."  It prescribes a detailed
"disciplinary procedure," beginning with a "notice of
discipline," which may be followed by a "disciplinary grievance,"
which, if not otherwise resolved, may in turn become the subject
of a "disciplinary arbitration."
OCFS and OASAS rejected the grievances and the
Governor's Office of Employee Relations upheld the rejections. 
The position of these agencies is that the grievances are not
subject to arbitration because Lanterman's and Ortiz's dismissals
were not for disciplinary reasons, but for the employees' failure
to have the qualifications necessary for their jobs.  PEF,
Lanterman and Ortiz respond, in substance, that this itself is an
arbitrable question.  Under Article 34 of the CBA, a "contract
grievance," defined as "a dispute concerning the interpretation,
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Nos. 31 and 32 
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application or claimed violation of a specific term or provision
of this Agreement," is an arbitrable dispute.  PEF, Lanterman and
Ortiz argue that, since they say that Article 33's disciplinary
procedures are available in their case, and the employers say
they are not, a "dispute concerning the interpretation,
application or claimed violation" of a provision of the CBA
exists.  They thus seek an arbitration about what the contract
means, to be followed, if they prevail, by a disciplinary
procedure and perhaps a second, disciplinary, arbitration.
PEF filed notices of intention to arbitrate on
Lanterman's and Ortiz's behalf, and the state agencies brought
these proceedings under CPLR Article 75 to stay the arbitrations. 
Both employees prevailed in Supreme Court.  In the Appellate
Division, the cases were decided by the same panel on the same
day (Matter of New York State Off. of Children & Family Servs.
[Lanterman], 62 AD3d 1109 [3d Dept 2009]; Matter of New York
State Off. of Alcoholism & Substance Abuse Servs. [Ortiz], 62
AD3d 1118 [3d Dept 2009]).  The judgment in Lanterman's favor was
reversed, but that in Ortiz's favor was affirmed, with two
Justices dissenting in each case.  The reason for the contrasting
results is that one Justice was persuaded by the state agencies'
argument, made as to Lanterman but not as to Ortiz, that the
proposed arbitration would violate public policy.
In each case, the unsuccessful parties appeal to us as
of right, pursuant to CPLR 5601 (a).  We affirm in Lanterman and
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Nos. 31 and 32 
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reverse in Ortiz.  Because we conclude that neither grievance is
arbitrable under the CBA, it is unnecessary for us to decide the
public policy issue raised in Lanterman. 
II
The question Lanterman and Ortiz seek to arbitrate is
essentially the same question we decided in Felix.  There, a New
York City employee was dismissed for failing to establish City
residence, which was a prerequisite to his employment under a
local law.  The employee sought a hearing under Civil Service Law
§ 75 ("Removal and other disciplinary action"), but we rejected
his claim, holding that the disciplinary provisions of the Civil
Service Law did not apply to him.  We explained that "while an
act of misconduct invokes Civil Service Law § 75 disciplinary
procedures," an employee's failure to meet a residence
requirement "is separate and distinct from an act of misconduct"
(3 NY3d at 505).  We approved the distinction made in Mandelkern
v City of Buffalo (64 AD2d 279, 281 [4th Dept 1978] [Simons, J.])
between issues of "job performance, misconduct or competency,"
which are subject to Civil Service Law disciplinary procedures,
and "a qualification of employment," which is not.
In Felix's terms, the dismissals of Lanterman and Ortiz
were plainly not disciplinary, but were for failure to meet
qualifications of employment -- a teaching certificate in
Lanterman's case, a CASAC credential in Ortiz's.  The State does
not claim that the employees have forfeited their jobs by
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Nos. 31 and 32 
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misconduct.  It claims that they do not have the qualifications
that they must have to hold those jobs.
PEF, Lanterman and Ortiz try to distinguish Felix by
arguing that these cases involve contractual, not statutory,
disciplinary procedures.  The argument is without merit, because
the relevant contract clause, on its face, is made applicable to
exactly those cases to which the statute would otherwise apply:
the contractual disciplinary procedure is "in lieu of the
procedure specified in Sections 75 and 76 of the Civil Service
Law" and is applicable "to all persons currently subject to
Sections 75 and 76 of the Civil Service Law."  Felix squarely
holds that Sections 75 and 76 are inapplicable to the grievances
of Lanterman and Ortiz.  
PEF, Lanterman and Ortiz argue, in substance, that
however weak their claim to be accorded disciplinary hearings may
be, the claim is for an arbitrator, not a court, to decide.  It
is generally true that we distinguish "between the merits of
grievances and the threshold question of whether courts or
arbitrators have the authority to decide the merits" (Matter of
City of Johnstown [Johnstown Police Benevolent Assn.], 99 NY2d
273, 279 [2002]) and that "[e]ven an apparent weakness of the
claimed grievance is not a factor in the court's threshold
determination" (Matter of Board of Educ. of Watertown City School
Dist. [Watertown Educ. Assn.], 93 NY2d 132, 142 [1999]).  These
rules are applicable as long as a contractual interpretation is
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Nos. 31 and 32 
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at least colorable, but it is not true that any claim, no matter
how insubstantial, may be arbitrated.  Under Watertown, the test
is "whether there is a reasonable relationship between the
subject matter of the dispute and the general subject matter of
the CBA" (93 NY2d at 143).  We hold here, as we did in Matter of
Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City
of Cohoes (94 NY2d 686, 694-695 [2000]) that the "reasonable
relationship" test is not met: "despite the breadth of the
arbitration clause in the CBA, it cannot be construed to extend
to arbitration of grievances which, as a matter of law, do not
effectively allege any breach of the collective bargaining
agreement."  
Accordingly, in Lanterman, the order of the Appellate
Division should be affirmed with costs.  In Ortiz, the order of
the Appellate Division should be reversed with costs and the
petition to stay arbitration granted.    
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M/O New York State Office of Children and Family Services 
v Lanterman
M/O New York State Office of Alcohol and Substance Abuse 
v Ortiz
Nos. 31 & 32
CIPARICK, J.(dissenting):
Because the parties' collective bargaining agreement
(CBA) may be interpreted to manifest a clear intent to arbitrate
the question of whether an employee who lacks the requisite
credentials for employment can be terminated under the CBA's
contract grievance and discipline procedures, I respectfully
dissent and would compel arbitration.
In both of these cases the majority permanently stays
arbitration, holding that the parties to the CBA did not agree to
arbitrate their disputes involving termination of employees who
did not maintain professional credentials.  The effect of this
ruling is to deny the employees disciplinary due process, as
established in the CBA, and permit their summary termination.  It
has long been settled that a dispute is arbitrable if the
arbitration is not barred by "any statutory, constitutional or
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No. 31 & 32
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public policy" and the parties "in fact agreed to arbitrate the
particular dispute" (Matter of County of Chautauqua v Civil Serv.
Empls. Assn., Local 1000, AFSCME, AFL-CIO, County of Chautauqua
Unit 6300, Chatauqua County Local 807, 8 NY3d 513, 519 [2007]
[internal quotations omitted]).  We have read the second of these
requirements broadly; if there is a "reasonable relationship
between the subject matter of the dispute and the general subject
matter of the CBA," the dispute is arbitrable (Matter of Board of
Educ. of Watertown City School Dist. [Watertown Educ. Assn.], 93
NY2d 132, 143 [1999]).  The arbitrator can then "make a more
exacting interpretation of the precise scope of the substantive
provisions of the CBA, and whether the subject matter of the
dispute fits within them" (id.). 
Under the CBA at issue here between New York State and
the New York State Public Employees Federation (PEF), it would
not be unreasonable for an arbitrator to conclude that the
parties agreed to arbitrate this dispute.  As the majority notes,
Article 34 of the CBA defines a "contract grievance" as "a
dispute concerning the interpretation, application, or claimed
violation of a specific term or provision of this Agreement." 
Because PEF, Lanterman, and Ortiz claim that the employers
violated the procedural mandates of Article 33 of the CBA, their
claims fall under this definition.  Notably, prior to these two
matters, the state and PEF had a long-standing practice of
following the disciplinary process set forth in Article 33
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No. 31 & 32
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whenever state agencies sought to terminate employees for lack of
credentials.  Whether Article 33's disciplinary procedure applies
here is undoubtably a dispute over the application of a term of
the CBA and, therefore, it should be resolved by the arbitrator,
not a court.
This result is buttressed by our traditionally
expansive reading of CBA arbitration clauses as a means of
resolving public sector labor disputes.  Generally, if a court
"determine[s] that the arbitration clause is broad enough to
encompass the subject matter of the dispute, '[t]he question of
the scope of the substantive provisions of the contract is itself
a matter of contract interpretation and application, and hence it
must be deemed a matter for resolution by the arbitrator'"
(Matter of Board of Educ. of Watertown City School Dist. v.
Watertown Educ. Assn., 74 NY2d 912, 913 [1989], quoting Board of
Educ. of Lakeland Cent. School Dist. of Shrub Oak v Barni, 49
NY2d 311, 314 [1980]).  This is true even where the substantive
merits of a claim are weak (Matter of Franklin Cent. School
[Franklin Teachers Assn.], 51 NY2d 348, 357 [1980]).  
The Office of Alcoholism & Substance Abuse Services
(OASAS), the Office of Children and Family Services (OCFS), and
the Governor's Office of Employee Relations (GOER) argue that
Ortiz and Lanterman's terminations were not based on "misconduct
or incompetence" and, thus, were not disciplinary actions. 
However, this "incompetency or misconduct" language comes from
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No. 31 & 32
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Civil Service Law § 75, which article 33 of the CBA supplants. 
Instead, the CBA provides that discipline may be imposed for
"just cause."  It would certainly be reasonable for an arbitrator
to determine that, as Lanterman and Ortiz argue, failure to
maintain a license constitutes "just cause" for discipline under
the CBA.  Because addressing this claim requires an
interpretation of the CBA and the arbitrator alone has the power
to determine the scope of the contract provisions, the dispute
should be arbitrable.
In holding otherwise, the majority's reliance on Matter
of Felix v New York City Dept. of Citywide Admin. Servs. (3 NY3d
498 [2004]) is misplaced, since that case did not involve a CBA
or any language of comparable breadth to that used in Article 34.
In Felix, we interpreted a provision of the Administrative Code
of the City of New York requiring a municipal employee to
maintain a residence within the City and the statutory language
of Civil Service Law § 75.  The majority asserts that because
Article 33 replaces the procedure of Civil Service Law § 75, the
contract language should be interpreted as we interpreted section
75 in Felix, where we distinguished between failure to comply
with requirements that define eligibility and acts of misconduct
or incompetence.  In these cases, however, we are interpreting
contractual language, including a provision specifying that any
disputes regarding the interpretation of that language are
themselves arbitrable.  Moreover, section 12-120 of the New York
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No. 31 & 32
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City Administrative Code -- the employment requirement at issue
in Felix -- expressly provides that failure to maintain residency
constitutes a forfeiture of employment (id. at 502, quoting New
York City Administrative Code § 12-120).  Here, because no
specific statutory provision calls for automatic forfeiture of
employment upon the loss of certification, the arbitrator would
have discretion to fashion a remedy.  Furthermore, the notice and
opportunity to contest procedures contained in the Administrative
Code satisfied due process concerns in Felix, but are not
available here. 
Since I believe that the parties agreed to arbitrate
these disputes, it is necessary to consider whether any public
policy precludes the arbitration.  I know of no such policy and,
contrary to the Appellate Division's dispositive finding in
Lanterman, do not think that the public policy of having well
qualified, certified teachers precludes arbitration here.  A
dispute is nonarbitrable if a court can "conclude, without
engaging in any extended factfinding or legal analysis that [a
law or policy] prohibits, in an absolute sense, the particular
matters to be decided" by arbitration (County of Chautauqua, 8
NY3d at 519, quoting Matter of New York City Tr. Auth. v
Transport Workers Union of Am., Local 100, AFL-CIO, 99 NY2d 1,
8-9 [2002] [internal quotations omitted]).  "Put differently, a
court must stay arbitration where it can conclude, upon examining
the parties' contract and the implicated statute on their face,
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No. 31 & 32
1 OASAS and GOER do not press a public policy argument in
the Ortiz case, but merely contend that the dispute is not
arbitrable as a contract grievance under Article 34 of the CBA.  
2 OCFS maintains that article 33 of the CBA prohibits the
suspension of Lanterman without pay pending the resolution of a
disciplinary proceeding.  Article 33 provides that OCFS may
suspend an employee pending a full hearing before an arbitrator
where OCFS determines that probable cause exists that the
employee's "continued presence on the job . . . would severely
interfere with operations."  Of course, an arbitrator can address
whether the lack of professional certification constitutes
"severe interference" with operations and what, if any, remedy is
appropriate.       
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'that the granting of any relief would violate public policy'"
(id., quoting Matter of City of New York v Uniformed Fire
Officers Assn., Local 854, IAFF, AFL-CIO, 95 NY2d 273, 284
[2000]).  Here, although the law clearly prohibits the parties'
continued employment in their current positions without the
requisite licensing, it does not require their termination; other
remedies may be available.   
In Lanterman's case, OCFS and GOER argue that
arbitration of Lanterman's termination was barred by public
policy,1 but they fail to demonstrate that any relief granted by
the arbitrator would violate public policy (see Matter of
Committee of Interns & Residents [Dinkins], 86 NY2d 478, 484
[1995]; County of Chautauqua, 8 NY3d at 519).  For example, in
keeping with the expansive powers of an arbitrator, Lanterman
could have been suspended without pay2 until she received her
certification or she could have been reassigned to a non-teaching
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No. 31 & 32
3 Article 33 of the CBA contemplates this remedy and
provides that: "Where the appointing authority has determined
that an employee is to be temporarily reassigned pursuant to this
Article, the employee shall be notified in writing of the
location of such temporary reassignments and . . . such
reassignment may involve the performance of out-of-title work."  
4 Similarly, OASAS' automatic dismissal of Ortiz from
service for failure to maintain a required credential may not be
appropriate under the circumstances and there may be other
available remedies for an arbitrator to fashion.
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position.3  Although the regulations of the Education Department
provide that "[a]ll professional instructional personnel shall
have the required certificates as set forth in Part 80 of this
Title" (8 NYCRR 116.3 [b]), the law nowhere expresses that a
lapsed certificate will result in immediate termination.4  
Indeed, in previous cases where we have found that
public policy favors termination of a tenured civil servant
without a hearing, the applicable statute or regulation has made
that policy clear.  For example, the federal Hatch Act expressly
provides that an employee employed in connection with a program
financed by federal funds is subject to discharge if he or she
becomes a candidate for partisan elected office (5 USC §§
1505-1506).  Similarly, Public Officer Law § 30 provides for the
forfeiture by law of employment for conviction of a felony, and
section 12-120 of the New York City Administrative Code expressly
provides that failure to maintain residency constitutes a
forfeiture of employment (see Felix, 3 NY3d 502).  Here, in stark
contrast, no specific statutory provision calls for the automatic
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No. 31 & 32
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forfeiture of employment upon a loss of certification.  Thus, the
public policy exception to arbitrability of a dispute should not
apply here and we should maintain our clear policy of
discouraging judicial interference with public sector
arbitration, as contemplated by the Taylor Law (Civil Service Law
art 14).  
Therefore, in Lanterman, I would reverse the order of
the Appellate Division, dismiss the petition to stay arbitration,
and grant the cross-motion to compel arbitration.  In Ortiz, I
would affirm the Appellate Division order that dismissed the
petition to stay arbitration and granted the cross-motion to
compel arbitration.
*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *
Case No. 31:  Order affirmed, with costs.  Opinion by Judge
Smith.  Judges Graffeo, Read, Pigott and Jones concur.  Judge
Ciparick dissents and votes to reverse in an opinion in which
Chief Judge Lippman concurs.
Case No. 32:  Order reversed, with costs, and petition to stay
arbitration granted.  Opinion by Judge Smith.  Judges Graffeo,
Read, Pigott and Jones concur.  Judge Ciparick dissents and votes
to affirm in an opinion in which Chief Judge Lippman concurs.
Decided March 25, 2010