Case Name: In the Matter of New York City Department of Sanitation et al., Appellants, v. Malcolm D. MacDonald, as Chairman of the New York City Board of Collective Bargaining, et al., Respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1996-03-26
Citations: 87 N.Y.2d 650
Docket Number: 
Parties: In the Matter of New York City Department of Sanitation et al., Appellants, v Malcolm D. MacDonald, as Chairman of the New York City Board of Collective Bargaining, et al., Respondents.
Judges: 
Reporter: New York Reports
Volume: 87
Pages: 650–659

Head Matter:
[664 NE2d 1218, 642 NYS2d 156]
In the Matter of New York City Department of Sanitation et al., Appellants, v Malcolm D. MacDonald, as Chairman of the New York City Board of Collective Bargaining, et al., Respondents.
Argued February 13, 1996;
decided March 26, 1996
POINTS OF COUNSEL
Paul A. Crotty, Corporation Counsel of New York City (Elaine R. Witkoff and Larry A. Sonnenshein of counsel), for appel lants.
The transfer of an employee who has not been served with written charges of incompetency or misconduct pursuant to section 75 of the Civil Service Law is not a disciplinary action under article VI, § 1 (e) of the subject collective bargaining agreement, but rather a proper exercise of the Department’s managerial prerogative to deploy personnel, and absent a clear and unequivocal agreement to arbitrate such a matter, is not arbitrable. (Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509; Matter of Niagara Wheatfield Admr’s Assn. [Niagara Wheatfield Cent. School Dist.], 44 NY2d 68; Matter of South Colonie Cent. School Dist. [South Colonie Teachers Assn.], 46 NY2d 521; Matter, of County of Rockland v Rockland County Sheriff s Deputies Assn., 211 AD2d 787; Matter of Gibson v County of St. Lawrence, 199 AD2d 910; Board of Educ. v Depew Teachers Org., 167 AD2d 906, 907, 77 NY2d 889; County of Monroe v Monroe County Deputy Sheriff’s Assn., 155 AD2d 874; Matter of City of Newburgh v Local 589, 140 AD2d 339, 72 NY2d 808; Matter of Board of Educ. v Levittown United Teachers, 60 AD2d 629; Board of Educ. v Barni, 49 NY2d 311.)
Victoria A. Donoghue, New York City, and Wendy E. Patitucci for Malcolm D. MacDonald and another, respondents.
I. Under the applicable standards of judicial review, the determination of an administrative agency is to be upheld unless it is arbitrary and capricious or contrary to law. (Matter of Levitt v Board of Collective Bargaining, 79 NY2d 120; Matter of City of New York v Plumbers Local Union No. 1, 204 AD2d 183, 85 NY2d 803; Matter of Medical Malpractice Ins. Assn, v Superintendent of Ins., 72 NY2d 753, 490 US 1080; Matter of Board of Educ. v New York State Pub. Empl. Relations Bd., 75 NY2d 660; Matter of West Irondequoit Teachers Assn. v Helsby, 35 NY2d 46; Matter of Incorporated Vil. of Lynbrook v New York State Pub. Empl. Relations Bd., 48 NY2d 398; Uniformed Firefighters Assn. v City of New York, 79 NY2d 236.) II. The Board’s threshold arbitrability test is rationally based and consistent with applicable legal precedent. (Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co., 37 NY2d 91.) III. The "express, direct and unequivocal” standard set forth in Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.) (42 NY2d 509) for determining arbitrability does not apply in the instant case because Administrative Code of the City of New York § 12-302 expresses a policy favoring arbitration of grievances and because, in cases decided subsequent to Liverpool, the Court of Appeals has applied a less stringent standard. (Board of Educ. v Barni, 49 NY2d 311; Matter of Board of Educ. v Watertown Educ. Assn., 74 NY2d 912; Board of Educ. v New York State United Teachers, 51 NY2d 994; Matter of Franklin Cent. School [Franklin Teachers Assn.], 51 NY2d 348; Matter of Deer Park Union Free School Dist. v Deer Park Teachers Assn., 50 NY2d 1011; Matter of Wyandanch Union Free School Dist. v Wyandanch Teachers Assn., 48 NY2d 669; Board of Educ. v Glaubman, 53 NY2d 781; Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 NY2d 167; Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers’ Assn.], 37 NY2d 614.) IV. In Decision No. B-12-93, the Board’s determination that the grievance alleged by the union was within the scope of the arbitration provision was rational. V. The Board’s decision that the grievance alleged by the union was within the scope of the arbitration provision was neither arbitrary and capricious nor contrary to law. (Matter of Board of Educ. v Arlington Teachers Assn., 78 NY2d 33; Matter of Enlarged City School Dist. v Troy Teachers Assn., 69 NY2d 905; Matter of Board of Educ. v New York State Pub. Empl. Relations Bd., 75 NY2d 660; Binghamton Civ. Serv. Forum v City of Binghamton, 44 NY2d 23; Matter of Auburn Police Local 195 v Helsby, 62 AD2d 12, 46 NY2d 1034; Steelworkers v American Mfg. Co., 363 US 564.) VI. An argument not raised in the proceeding before the Board or the lower court may not be the subject of judicial review. (Matter of Hennekens v State Tax Commn., 114 AD2d 599.)
Robin Roach, New York City, and Robert Perez-Wilson for District Council 37, Local 375, AFSCME, respondent.
I. The courts below properly deferred to the Board’s determination in accordance with the appropriate standard of review of administrative decisions. (Matter of West Irondequoit Teachers Assn. v Helsby, 35 NY2d 46; Matter of Incorporated Vil. of Lynbrook v New York State Pub. Empl. Relations Bd., 48 NY2d 398; Matter of Newark Val. Cent. School Dist. v Public Empl. Relations Bd., 83 NY2d 315; Matter of Board of Educ. v New York State Pub. Empl. Relations Bd., 75 NY2d 660; Matter of Levitt v Board of Collective Bargaining, 79 NY2d 120; Matter of City of New York v Plumbers Local Union No. 1, 204 AD2d 183, 85 NY2d 803; Matter of Caruso v MacDonald, 169 AD2d 644.) II. The applicable statute and case law favor the arbitrability of grievances. (Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509; Board of Educ. v Associated Teachers, 30 NY2d 122; Board of Educ. v Barni, 49 NY2d 311; Matter of Board of Educ. v Watertown Educ. Assn., 74 NY2d 912; Board of Educ. v Glaubman, 53 NY2d 781; Matter of South Colonie Cent. School Dist. [South Colonie Teachers Assn.], 46 NY2d 521; Matter of County of Rockland v Rockland County Sheriff’s Deputies Assn., 211 AD2d 787; Matter of Board of Educ. [Connetquot Teachers Assn.], 60 NY2d 840; Matter of Port Wash. Union Free School Dist. v Port Wash. Teachers Assn,, 45 NY2d 411; Matter of Board of Educ. v Yonkers Fedn. of Teachers, 143 AD2d 1010.) III. The Board correctly applied its balancing test that weighs the interest of management against those of the employees and found that a punitive transfer is arbitrable.

Opinion:
OPINION OF THE COURT
Bellacosa, J.
The New York City Board of Collective Bargaining determined that an alleged employee disciplinary grievance was subject to arbitration. The lower courts upheld the Board's determination and concluded that it did not impinge on public policy. The New York City Department of Sanitation appeals to this Court by our grant of leave to appeal. The issue presented is whether the Board's determination of arbitrability offends public policy and whether it is otherwise sustainable.
Richard Diamond was employed by the Sanitation Department as a project manager of a facility in Maspeth, Queens. His civil service title is Civil Engineer, and he is a member of District Council 37, Local 375, AFSCME. In November 1991, Diamond wrote a letter to the Director of Construction complaining about certain personnel assignments and work procedures, which he claimed were being implemented without his approval or consultation. The grievance alleges that the Director responded by calling Diamond an "incompetent" and told him that he would soon be transferred to the Department's facility at the Fresh Kills Landfill on Staten Island (approximately 20 miles from the Maspeth facility). On or about November 19, 1991, Diamond was transferred from Maspeth to Fresh Kills and, subsequently, on November 21, Diamond met with his immediate supervisor and the Director to discuss the transfer. During this conversation, the Director is claimed to have again stated that Diamond was transferred because he was an "incompetent."
Respondent District Council 37 filed a grievance on behalf of Diamond with the New York City Office of Labor Relations, alleging that Diamond's transfer was an "improper and punitive transfer" violating article VI, § 1 (b), (e) and (f) of the collective bargaining agreement between the union and the City. The grievance was denied on the ground that the transfer was a business necessity. The union appealed the decision to the Deputy Chief Review Officer of the Office of Labor Relations, and the grievance was again rejected on the grounds that the transfer was not punitive but an exercise of the Department's prerogative to staff and manage operations and that the union had failed to establish that the transfer had violated any of the Department's rules, regulations or written policies.
The union later filed a Request for Arbitration with the Board of Collective Bargaining. The Board, with two of its seven members dissenting, granted arbitration to the extent of finding that the Union raised a substantial question as to whether Diamond's transfer was a "disciplinary action" under article VI, § 1 (e) of the collective bargaining agreement. The Board determined that the union had demonstrated a sufficient nexus between Diamond's transfer and the asserted punitive motivation of his supervisors and, therefore, established a sufficient predicate for arbitration. Additionally, the Board stated that the absence of written charges of incompetence or misconduct did not bar arbitration of Diamond's claim.
The Sanitation Department initiated this proceeding under CPLR articles 75 and 78 seeking to annul the Board's decision and permanently stay arbitration. It argued that the dispute was not within the scope of the arbitration clause and that arbitration of the dispute would violate public policy by restricting a municipal employer's prerogative to deploy and manage its work force. Supreme Court denied and dismissed the Department's petition, holding that the collective bargaining agreement contained a broad arbitration clause, that it was ambiguous as to whether written charges were a condition precedent to arbitration, and that the issue of the scope of the provision itself was an issue of contract interpretation and, thus, for the arbitrator to decide. The Appellate Division affirmed, holding that the Board's determination was not arbitrary, capricious or an abuse of discretion. We now affirm and agree that the dispute is arbitrable.
The threshold for determining whether a valid, enforceable agreement to arbitrate exists between public employees and a public agency or entity is well established (Matter of Committee of Interns & Residents [Dinkins], 86 NY2d 478, 484; see also, Matter of Blackburne [Governor's Off. of Empl. Relations], 87 NY2d 660). It "must proceed in sequence on two levels by answering the following inquiries: (1) are arbitration claims with respect to the particular subject matter of the dispute authorized and (2) do the terms of the particular arbitration clause include this subject area?" (Matter of Committee of Interns & Residents [Dinkins], supra, at 484.) The determination of the Board of Collective Bargaining in this matter may not be upset unless it is arbitrary and capricious or an abuse of discretion, as the Board is the neutral adjudicative agency statutorily authorized to make specified determinations (Matter of Levitt v Board of Collective Bargaining, 79 NY2d 120, 127-128; see, Administrative Code of City of NY § 12-309 [a] [3]), or unless arbitration of the dispute offends public policy.
While public policy considerations may limit the rights of public employees to arbitrate their disputes (see, Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 NY2d 774, 778), judicial intervention to stay arbitration on public policy grounds is exceptional and itself limited to circumstances specifically identified or rooted in statute or case law (Matter of Enlarged City School Dist. [Troy Teachers Assn.], 69 NY2d 905, 906, citing Matter of Sprinzen [Nomberg], 46 NY2d 623, 631; see also, Board of Educ. v Areman, 41 NY2d 527, 530-531).
We agree with the courts below that no statute or otherwise manifest public policy has been tendered that would bar arbitration of Diamond's wrongful transfer claim. The Department's suggestion, that a transfer decision is a nondelegable management function (see, Administrative Code § 12-307) and that the Department, as a public employer, enjoys a public policy presumption under Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.) (42 NY2d 509, 514) that it did not intend such disputes to be resolved in an arbitration forum, is incorrect. In this case, the relevant public policy considerations are not derived from the Taylor Law (Civil Service Law art 14), but rather are located in the New York City Collective Bargaining Law, under which the applicable collective bargaining agreement was negotiated (Administrative Code § 12-301 et seq.-, contrast, Matter of Blackbume [Governor's Off. of Empl. Relations], 87 NY2d 660, supra).
The Collective Bargaining Law distinctively states that "[i]t is hereby declared to be the policy of the city to favor and encourage on matters within the scope of collective bargaining, the use of impartial and independent tribunals to assist in resolving impasses in contract negotiations, and final, impartial arbitration of grievances between municipal agencies and certified employee organizations" (Administrative Code § 12-302). This express statutory conferral, favoring the arbitration of disputes, invests the Board of Collective Bargaining with the authority to establish and manage dispute resolution proceedings between public employers and public employee organizations (Administrative Code § 12-312). Thus, the most pertinent and manifest public policy applicable here contradicts the Department's argument on this ground.
The Department nevertheless presses the argument that Administrative Code § 12-307, which delineates the powers reserved to the City in its management capacity, precludes arbitration of this dispute. This Court has previously stated, however, that this statute does not "proscribe permissive bargaining of management prerogatives," and that the statute does not declare any public policy that the City is not free to waive (City of New York v Uniformed Firefighters Assn., 58 NY2d 957, 958-959). Further, "[although terms and conditions of employment (subject to bargaining) and management prerogatives (exempt from bargaining) may be neatly separated in principle, the practical task of assigning a particular matter to one category or the other is often far more difficult. Indeed, in many instances a matter may partake of both categories, requiring a balancing of the interests involved" (Matter of Levitt v Board of Collective Bargaining, 79 NY2d, at 127, supra).
Applying these principles to the issues raised concerning the employee's transfer strongly confirms our rejection of the Department's public policy argument. The underlying dispute contains elements relevant both to the Department's right to manage its work force and to the employee's right to be protected from allegedly punitive personnel actions. Public policy derived from the applicable local law favors, rather than bars, the Board's exercise of its particularized statutory duty to balance these competing interests by allowing for resolution of disputes through alternative mechanisms.
We must next turn to another attack by the Department against the Board's determination. It argues that the union's claim is not an arbitrable "grievance" under the terms of the collective bargaining agreement because of a lack of written charges. Article VI, § (1) (e) of the collective bargaining agreement defines an arbitrable "grievance" as a "claimed wrongful disciplinary action taken against a permanent employee upon whom the agency head has served written charges of incompetency or misconduct while the employee is serving in the employee's permanent title or which affects the employee's permanent status." This clause is not a broad arbitration pro vision such as the one we considered in Board of Educ. v Barni (49 NY2d 311), and to that extent we disagree with the reasoning below, though not with the result. The arbitration clause here does not qualify as a broad type and does not expressly grant the arbitrator the power to determine the scope of substantive provisions of the collective bargaining agreement. Therefore, in reviewing the Board's interpretation of the scope of this provision, we must look further to whether the Board's particularized determination comports with the agreed-upon understanding of the parties concerning arbitrability.
The record contains support, based on past practice, for the Board's application of a two-part test to this particular collective bargaining agreement to determine whether a transfer constitutes a grievance under this type of arbitration clause. First, any party seeking arbitration must allege that there is a factual nexus between the transfer and an asserted wrongful disciplinary action. Second, the grievant must introduce sufficient evidence to establish that there is a substantial issue that the transfer was related to a disciplinary or punitive purpose. The Board asserts that this dual threshold balances management's right to transfer employees with an employee's contractual right to arbitrate claimed wrongful disciplinary actions.
In this connection, the Department particularly challenges the Board's finding of arbitrability on the ground that the employee was not served with written charges and, therefore, is not entitled to arbitration by the plain words of the collective bargaining agreement. Such a unilateral power to forestall invocation of the arbitration recourse is dubious at best as applied here. For in interpreting grievance clauses identical to the one in this collective bargaining agreement, the Board has consistently held that written charges are not a prerequisite to an employee's arbitration rights, because the requirement for written charges was intended as a shield to protect employees and not as a sword to cut off arbitration (see, Board of Collective Bargaining, Decision No. B-52-89, at 10; Decision No. B-33-90, at 14-15; Decision No. B-33-88, at 17; Decision No. B-9-81, at 10). During the periods that the Board has rendered these decisions, the City and union have signed four collective bargaining agreements without changing the language of the arbitration clause. While the parties could negotiate the elimination of the written charges feature to clarify the arbitrability route, it is equally telling that "it was not irrational to conclude that the parties' conduct in the past, under similar agreements, demonstrated their intent or expectations. Thus it was not unreasonable to find that by renewing the agreement the parties intended to continue the practice followed in the past" (Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578, 583). As both the union and the City acquiesced in the Board's determinations that disputes involving alleged punitive disciplinary transfers would be arbitrable despite the lack of written charges from the employer, we discern no basis to interfere with the practical implementation of the agreed-upon arbitration remedy and the understanding of the parties.
In sum, the Board's determination to direct this dispute to be resolved by arbitration comports with specifically apt public policy considerations, does not transgress the particular features of the collective bargaining arbitration clause, and is a rationally supportable ruling.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Chief Judge Kaye and Judges Simons, Titone, Smith and Levine concur; Judge Ciparick taking no part.
Order affirmed, with costs.