Court Opinion

ID: 9688830
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:07:42.321904+00
Date Added: 2024-06-11T12:06:55.295712
License: Public Domain

SHORT, Judge
(dissenting).
I respectfully dissent with regard to the part of this court’s opinion involving the public policy exception. Minnesota should recognize the public policy exception and expressly adopt the principle that some matters of public policy require vacating an arbitration award, even though the arbitrated issues are within the arbitrator’s authority to determine. See W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 766, 103 S.Ct. 2177, 2183, 76 L.Ed.2d 298 (1983) (“the question of public policy is ultimately one for resolution by the courts”); cf. Medcenters Health Care, Inc. v. Park Nicollet Med. Ctr., 430 N.W.2d 668, 673 (Minn.App.1988) (declining to apply W.R. Grace analysis), pet. for rev. denied (Minn. Apr. 26, 1989). In several other jurisdictions, it is a "generally established principle” that an arbitration award should be vacated when the award compels conduct contrary to accepted public policy. See, e.g., In re Standard Coffee Service Co., 499 So.2d 1314, 1316 (La.App.1986) (public policy exception exists despite lack of statutory provision for vacating an award that is contrary to public policy), writ denied by 501 So.2d 232 (La.1987); Village of Turtle Lake v. Orvedahl Const., Inc., 135 Wis.2d 385, 400 N.W.2d 475, 478 (1986) (arbitrator’s decision will be overturned if it violates the law or strong public policy; arbitrator’s decision “must uphold the strong public policy of avoiding the possibility of fraud, favoritism, collusion, or improvidence”).
There are good reasons why we should adopt the public policy exception. A court’s refusal to enforce an arbitrator’s award on public policy grounds is but an application of the general common-law principle that a court may decline to enforce contracts that violate law or public policy. Courts decline to enforce such contracts because of a reluctance to aid a party that bases a cause of action upon an immoral or illegal act. City ofDe Kalb v. Local 1236, 182 Ill.App.3d 367, 131 Ill.Dec. 492, 495, 538 N.E.2d 867, 870 (1989), appeal denied by 127 I11.2d 614, 136 Ill.Dec. 582, 545 N.E.2d 106 (1989). Indeed, when an arbitrator’s interpretation of an agreement is in clear contravention of the public policy of the State of Minnesota, our affirmance of the arbitrator’s award is akin to the enforcement of a void contract. Standard Coffee Service Co., 499 So.2d at 1316. The majority correctly notes the importance of not undermining the availability of arbitration, but this goal may be balanced with other important public policy goals. Cf AFSCME v. State, 124 U1.2d 246, 124 Ill. Dec. 553, 560, 529 N.E.2d 534, 541 (1988) (balancing public policy of promoting constructive relationships between public employers and public employees and the public policy requiring finality in arbitration awards on the one hand with goal of compassionate care for the mentally disabled on the other).
Applying the public policy exception to the present case, the state has met its burden of proving the arbitrator’s award violates Minnesota’s public policy against embezzling state property. Cf. City of New Haven v. AFSCME, Council 15, 208 Conn. 411, 544 A.2d 186,190 (1988) (burden on party challenging arbitral authority). As we noted in Medcenters, an analysis under the public policy exception requires a two-part inquiry. Medcenters, 430 N.W.2d at 673. First, is there a well defined and dominant public policy? Id.; see also United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 43, 108 S.Ct. 364, 367, 98 L.Ed.2d 286 (1987) (court’s refusal to enforce arbitrator’s interpretation of contracts limited to situations where contract as interpreted would violate some explicit public policy that is well defined and dominant, and is to be ascertained by reference to the laws and not from general considerations of supposed public interests). *596Minnesota’s public policy against embezzling state property is well defined and dominant, and it is ascertained by reference to specific laws and not from a general consideration of supposed public interests. See Minn. Const, arts. V, § 6 (state officers sworn to discharge faithfully the duties of their office to the best of their judgment and ability), XI, § 13 (officers charged with the safekeeping of state funds required to give ample security for them and to keep accurate entries of each sum received); Minn.Stat. §§ 6.01 (duties of state auditor), .53 (penalty for refusal to assist state auditor), 43A.38, subd. 4 (1990) (employee shall not use state property for his or her private interests).
Second, has a violation of that public policy occurred? Medcenters, 430 N.W.2d at 673. In this case, the grievant submitted inflated and false expense reports that, he had signed under penalty of perjury. He was untruthful in providing information to the state auditor during his investigation, and compromised the state’s credibility and integrity. Grievant, as a local government auditor, was charged with assisting the state auditor in his statutory duties of superintending and managing the state’s fiscal concerns, yet his own dishonest actions created an explicit conflict with these duties. Under these circumstances, the arbitrator’s reinstatement of the grievant violates public policy and must be reversed.