Opinion ID: 2464549
Heading Depth: 4
Heading Rank: 1

Heading: The public policy exception to the enforcement of arbitration awards

Text: We have not previously recognized the existence of a public policy exception to the enforcement of arbitration awards. In 1996, the State argued that an arbitrator's reinstatement of a demoted public employee was unenforceable as a violation of public policy. [5] But we disposed of the case on other grounds and did not address the State's argument. [6] In 2003, we vacated an arbitrator's reinstatement of a terminated public employee, where the employee worked in a position of public trust and was convicted of felony theft of public money. [7] But we based our decision on the arbitrator having committed gross error in her application of her chosen standard of just cause, [8] not on the reinstatement being unenforceable as against public policy. More recently, in PSEA 2010, the State advocated the adoption of a judicially created exception to enforcing arbitration decisions where doing so would violate an `explicit, well defined, and dominant' public policy. [9] We noted in dicta that the State's argument was compelling, but refrained from reaching the issue because the State did not raise it before the arbitrator or the superior court. [10] In the present case, the State properly raised the issue of the public policy exception in its complaint to vacate the arbitrator's award and in its opening brief on appeal. The present case thus offers an appropriate occasion to adjudicate the issue left unreached in PSEA 2010.
The U.S. Supreme Court first recognized the applicability of the public policy exception to the enforcement of arbitration awards in W.R. Grace & Co. v. Local Union 759. [11] In that case, the Court imported the public policy exception from general contract law. As with any contract, the Court stated, a court may not enforce a collective bargaining agreement that is contrary to public policy. [12] If the enforcement of an arbitrator's interpretation of a contract violates some explicit public policy, we are obliged to refrain from enforcing it. [13] Such a public policy, however, must be well defined and dominant, and is to be ascertained `by reference to the laws and legal precedents and not from general considerations of supposed public interests.' [14] The U.S. Supreme Court reaffirmed this approach in a 2000 decision upholding an arbitrator's reinstatement of an employee who failed a drug test. [15] Quoting from W.R. Grace & Co., the Court concluded: We cannot find in . . . any . . . law or legal precedent an `explicit,' `well defined,' `dominant' public policy to which the arbitrator's decision `runs contrary.' [16] The Court also clarified that [i]n considering this claim, we must assume that the collective-bargaining agreement itself calls for [the employee's] reinstatement, [17] because both employer and union have granted to the arbitrator the authority to interpret the meaning of their contract's language. . . . They have `bargained for' the `arbitrator's construction' of their agreement. [18]
Other state courts have followed the U.S. Supreme Court in adopting a public policy exception to the enforcement of arbitrators' reinstatements of employees discharged for misconduct. In fact, [i]t has become increasingly common for parties seeking to vacate arbitration awards to argue that the award should be vacated on the grounds that enforcement of the award would violate public policy. This trend has been most pronounced in labor arbitrations, particularly when employers challenge awards reinstating discharged employees. [19] Not surprisingly, awards reinstating law enforcement personnel are often challenged on public policy grounds. [20] In its briefing before the superior court, the State pointed to a Washington Court of Appeals case in which the court vacated an arbitrator's reinstatement of a Sheriff's Deputy who was terminated based on 29 instances of misconduct, including lack of candor. [21] The Washington Court of Appeals concluded that the Deputy's proven record of dishonesty prevents him from useful service as a law enforcement officer. To require his reinstatement to a position of great public trust in which he cannot possibly serve violates public policy. [22] But by the time the State filed its brief before this court, the Supreme Court of Washington had reversed the court of appeals's decision, holding that [e]ven if we were to agree that the arbitrator's decision was not good public policy and thought [the Deputy's] reinstatement distasteful, the County has failed to cite any explicit, well defined, and dominant public policy that requires vacating this award. [23] The other cases cited by the State as persuasive authority for vacating the reinstatement of a dishonest police officer involved substantially more egregious misconduct than the dishonesty alleged in the present case. In City of Boston v. Boston Police Patrolmen's Ass'n, the Massachusetts Supreme Court vacated the reinstatement of a police officer who insulted the occupants of a double-parked car, arrested two of them for disorderly conduct, handcuffed one to a wall and threatened him with violence, needed to be physically restrained by a sergeant, filed a knowingly untrue incident report alleging assault by the occupants of the car, then carried forward his deliberately distorted version of the event during the department's two-year internal investigation. [24] To have falsely arrested two individuals on misdemeanor and felony charges, lied in sworn testimony and over a period of two years about his official conduct, and knowingly and intentionally squandered the resources of the criminal justice system on false pretexts, [25] is misconduct of a different order of magnitude than the Trooper's dishonesty in the present case. Similarly, in Town of Bloomfield v. United Electrical Radio & Machine Workers of America/Connecticut Independent Police Union Local No. 14, which was later reversed on other grounds, a superior court in Connecticut vacated the reinstatement of a police officer where the arbitrators found [the officer] was untruthful in the statements he made during the course of his internal affairs interviews. [26] According to the arbitrators, the officer conducted a seriously flawed investigation and attempted to cover up his incompetence by fabricating the testimony of key witnesses. [27] The panel also found that [the officer] had not only been untruthful during the internal affairs investigation and disciplinary proceedings, but he was also untruthful in his testimony before the arbitration panel. [28] Again, this is dishonesty on a significantly different scale than the dishonesty of the Trooper in the present case. [29] In a more closely analogous case, a Florida District Court of Appeal upheld the arbitrator's reinstatement of the dishonest police officer. City of Tallahassee v. Big Bend Police Benevolent Ass'n involved a police lieutenant who lied to his chief regarding the existence of a romantic relationship with another police officer. [30] The court found without merit appellant's argument that the arbitrator's decision to reinstate a police officer. . . constitutes a violation of Florida public policy that police officers have good moral character. [31] In any case, comparisons to other jurisdictions can only go so far. American courts differ in their application of the public policy exception, [32] and the preceding cases rely on analyses of state law to determine the existence and nature of a public policy. What is at issue in the present case is the public policy of the State of Alaska. We turn now to an analysis of that policy.