Opinion ID: 1297060
Heading Depth: 2
Heading Rank: 2

Heading: compulsory arbitration of school-employment disputes

Text: As just indicated, Harrell mounts his due-process challenge to Section 22-10-17.1 on two distinct grounds: that the procedures in the arbitration proceeding itself are deficient, and that the judicial-review provision in the statute improperly limits review. The Board correctly recognizes that this appeal involves the same two basic issues: the constitutionality of compulsory arbitration as the exclusive method by which a certified school employee may obtain review of his or her discharge from employment and the constitutionality of restricting judicial review to issues involving corruption, fraud, deception or collusion. We discuss the first of these issues in Part III of this opinion and the second in Part IV. Before proceeding with that discussion, we think it helpful to trace briefly the legal history of school-employment disputes in New Mexico and to discuss, in general, the procedure currently provided by New Mexico law for resolving those disputes: compulsory arbitration.
School-employment disputes in New Mexico have historically been resolved by the State Board of Education (the State Board). The legislature first defined the extent of the State Board's power to resolve grievances of discharged school teachers in 1925, when it amended a 1923 law to require that no teacher could be discharged without full hearing and the right of appeal to the state board of education. NMSA 1929, § 120-1105. The State Board was given the power to institute legal proceedings, at which it was required to explain the true intent and meaning of the law, and [to] decide without expense to the parties concerned, all controversies and disputes that arise under it, and their decision shall be final. NMSA 1929, § 120-101. When a teacher was discharged, he or she had a right to appeal to the State Board, but the State Board's decision was final. The constitutionality of this statute (then compiled as NMSA 1941, § 55-101) was challenged in McCormick v. Board of Education, 58 N.M. 648, 274 P.2d 299 (1954). The appellants argued in McCormick that the State Board, as a part of the executive branch of government, had been given judicial powers under Section 55-101 in violation of Article III, Section 1, of the Constitution. They further contended that the statute was unconstitutional because it failed to provide for judicial review of the Board's decision. This Court held that the judicial powers conferred upon the State Board by the legislature fall clearly within the constitutional authority conferred upon the State Board of Education for `the control, management and direction of all public schools,' and that within the area prescribed by Article XII, Section 6, of the Constitution (creating the State Board and defining its powers) the decisions of the State Board of Education are final and conclusive as between the parties, and not subject to review. McCormick, 58 N.M. at 660-61, 274 P.2d at 307. This holding was qualified, however, by the Court's recognition that the judiciary retained jurisdiction over purely legal questions and that the State Board's action would be subject to review on the ground that it was wholly arbitrary, unlawful, unreasonable or capricious. Id. at 661, 274 P.2d at 307. The statutory scheme governing appeals from decisions of local school boards to discharge certified employees evolved from the time of McCormick to provide specifically for review by the New Mexico Court of Appeals of an employee's appeal to the State Board for a determination of whether the State Board had acted arbitrarily, unreasonably, unlawfully, or capriciously. See NMSA 1953, § 77-8-17 (Supp.1973); NMSA 1978, § 22-10-20. This scheme was replaced by N.M. Laws 1986, Chapter 33, Section 25, the current version of which is compiled as Section 22-10-17.1. The hearing on review of a local school board's decision is now held before an independent arbitrator instead of before the State Board, and judicial review of the arbitrator's decision is limited to whether the decision was procured by corruption, fraud, deception or collusion. See §§ 22-10-17.1(A), (M). The questions before us are whether an independent arbitrator (in place of the State Board) may review a local board's decision and issue an arbitration award and whether that award may properly be subjected to the limited review contemplated by Subsection 22-10-17.1(M).
Normally, arbitration is a process in which parties voluntarily contract to select an impartial third personan arbitratorto whom they refer their dispute for a decision based on evidence and arguments before the arbitration tribunal, in order to obtain a speedy and inexpensive final resolution of the dispute. 1 Martin Domke & Gabriel M. Wilner, Domke on Commercial Arbitration § 1:01 (rev. ed. 1993); see also Fernandez v. Farmers Ins. Co., 115 N.M. 622, 625, 857 P.2d 22, 25 (1993). Judicial review of voluntary, consensual arbitration is generally limited to allegations of fraud, partiality, misconduct, excess of powers, or technical problems in making the award, see NMSA 1978, §§ 44-7-12 and -13 (provisions governing review under Uniform Arbitration Act); the district court does not have the authority to review arbitration awards for errors as to the law or the facts, Fernandez, 115 N.M. at 625-26, 857 P.2d at 25-26. The limited scope of judicial review of arbitration awards is appropriate when the parties have voluntarily bargained for the decision of an arbitrator and, presumably, have assumed the risks of and waived objections to that decision. American Universal Ins. Co. v. DelGreco, 205 Conn. 178, 530 A.2d 171, 176 (1987). Arguably, Harrell voluntarily consented to submit his employment discharge grievance to binding arbitration. His contract of employment with the Carlsbad Board of Education contained a clause stating: This contract may be canceled by the Board for cause, including unsatisfactory work performance, incompetency, insubordination, physical or mental inability to perform the required duties or for any other good and just cause, provided, that any such cancellation may be effected only in accordance with the New Mexico Statutes and any applicable rules and regulations of the State and Local Boards of Education. The terms of Harrell's contract thus implicitly provided that it could be canceled in accordance with the applicable New Mexico statute, Section 22-10-17.1, which requires that any appeal from the local board's decision be submitted to final and binding arbitration. When Harrell agreed to the terms of the contract, he arguably agreed to the arbitration procedure contained in the statute. See, e.g., Paine, Webber, Jackson & Curtis, Inc. v. Chase Manhattan Bank, N.A., 728 F.2d 577, 580 (2d Cir.1984) (holding membership in New York Stock Exchange, with concomitant obligation to be bound by arbitration provisions of its constitution and rules, sufficient to constitute consent to arbitration of covered disputes, whether or not arbitration provisions are specifically incorporated in contract). We hold, however, that Harrell's putative agreement to arbitrate was in reality a nonconsensual submission to a statutorily imposed requirement of mandatory arbitration. The term of his employment agreement subjecting him to arbitration was not negotiable, see Wilson v. Security Ins. Group, 199 Conn. 618, 509 A.2d 467, 471 (1986) (legislative interference with contractual freedom, restricting party's choice of judicial forum, renders arbitration compulsory rather than voluntary); and Harrell, as the weaker party in the transaction, had no power to alter the employment relationship, see Moore v. Fragatos, 116 Mich.App. 179, 321 N.W.2d 781, 785 (Ct.1982) (party in civil proceeding seeking to assert waiver of constitutional right of access to courts must establish that waiver was made knowingly, voluntarily, and intelligently). When arbitration is statutorily mandated as the sole method for resolution of a particular dispute, the arbitration is not consensual even if a provision for such arbitration is incorporated into a contract. Arbitration required by statute is compulsory; arbitration freely entered into by contract is voluntary. Bodner v. United Servs. Auto. Ass'n, 222 Conn. 480, 610 A.2d 1212, 1216-17 (1992); Nelsen v. Colleary, 152 Misc.2d 81, 574 N.Y.S.2d 912, 914 (App.Div. 1991). Because of the compulsory aspect of the procedure, the person whom the statute calls an independent arbitrator is more like an independent hearing officer resolving disputes within an administrative agency than a true arbitrator consensually chosen by the parties to an agreement. The commentary to the Restatement of Judgments notes this distinction: Arbitration is a method of determining legal disputes that is authorized by contract between the parties to the dispute. There are forms of dispute-resolution procedure that are called arbitration but which are made obligatory by law instead of being prescribed by contract, for example, some proceedings in no fault insurance schemes. These procedures might perhaps better be regarded as adjudication before specialized tribunals. See § 83 [(discussing preclusive effect of adjudicative determination by administrative tribunal)]. Restatement (Second) of Judgments § 84 cmt. a (1982) (discussing preclusive effect of arbitration award). The similarity between compulsory arbitration and an administrative adjudication thus makes caselaw on the constitutional validity of administrative adjudications instructive in assessing the validity of Section 22-10-17.1. As noted by the New York Court of Appeals, [T]he device of arbitration is a substitute for a determination of the dispute by an administrative or regulatory agency. As a substitute device, however, its objective may not be accomplished under lower constitutional standards than would be required of an administrative or regulatory agency. Mount St. Mary's Hosp. v. Catherwood, 26 N.Y.2d 493, 311 N.Y.S.2d 863, 260 N.E.2d 508, 516 (1970).