Court Opinion

ID: 9688829
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:07:42.314805+00
Date Added: 2024-06-11T12:06:55.242411
License: Public Domain

OPINION
FORSBERG, Judge.
FACTS
Respondent State of Minnesota, Office of the State Auditor (the State) is responsible for auditing the accounting and budget systems of all accounts and records relating to the use of public funds by local government units in Minnesota. These audits of local government units are conducted by persons employed as Local Government Auditors. The auditors work in regional teams and spend much of their work time in the field. The grievant, Mark G. Beer (grievant), worked for the State as an auditor from July 1987 until he was discharged in April 1991.
Grievant was assigned to the Anoka crew. In January 1991, a fellow auditor from the Anoka crew requested a meeting with State Auditor-elect Mark Dayton. Grievant asked the fellow auditor if griev-ant could also attend this meeting, because grievant was aware the auditor intended to inform Dayton of the practice engaged in by some auditors in the Anoka crew of submitting false expense reports. Griev-ant and his fellow auditor told Dayton that several auditors on the Anoka crew submitted, and were reimbursed for, inflated or false expense reports. Both grievant and his fellow auditor admitted to Dayton that prior to July 1989, they had both engaged in a similar practice, but both claimed they no longer did so.
Based on this information, Dayton began an investigation. As a result, he took adverse action against five employees of the Anoka crew who had falsified expense reports, reprimanding two and discharging three. Grievant was one of those discharged, for reasons of admittedly falsifying expense reports signed under penalty of perjury, being untruthful in providing information to Dayton during the investigation, and compromising the integrity and credibility of the State.
The State and appellant Minnesota Association of Professional Employees (MAPE) are parties to a collective bargaining agreement (Agreement), which governs the terms and conditions of employment for persons who work as auditors. MAPE, on behalf of grievant, sought arbitration of his discharge. The arbitrator held a hearing and received evidence. In his decision, the arbitrator concluded there was just cause to discipline grievant, but not to discharge him. The arbitration award therefore reinstated grievant to his position.
The State moved to vacate the arbitrator’s award pursuant to Minn.Stat. § 572.-19, subd. 1(3) (1990). In granting the State’s motion, the district court concluded that the award either violated the public policy contained in the Agreement or explicitly conflicted with a well-defined and dominant public policy. MAPE appeals. The Minnesota Education Association, et al., and AFSCME Council No. 6, et al. have filed amicus curiae briefs in support of MAPE’s appeal.
ISSUE
Did the district court err by vacating the arbitrator’s .award on the grounds the award either (1) violates the public policy contained in the Agreement or (2) conflicts with a well-defined and dominant public policy?
ANALYSIS
Arbitration is a proceeding favored in law. Ehlert v. Western Nat’l Mut. Ins. *593Co., 296 Minn. 195, 199, 207 N.W.2d 334, 336 (1973). The primary intent of arbitration is to encourage voluntary resolution of disputes in a forum created and controlled by the parties in their written agreement, and to discourage litigation. Eric A. Carlstrom Constr. Co. v. Independent Sch. Dist. No. 77, 256 N.W.2d 479, 483 (Minn.1977).
A reviewing court is limited to determining whether the specific language contained in an agreement precludes the award made by the arbitrator. City of Bloomington v. Local 2828, 290 N.W.2d 598, 602 (Minn.1980). The “ ‘court must independently determine the scope of the arbitrator’s powers under the parties’ agreement in de novo proceedings’ ” when reviewing an arbitrator’s award pursuant to Minn.Stat. § 572.19, subd. 1(3). County of Hennepin v. Hennepin County Ass’n of Paramedics, 464 N.W.2d 578, 580 (Minn.App.1990) (quoting Children’s Hosp., Inc. v. Minnesota Nurses Ass’n, 265 N.W.2d 649, 652 (Minn.1978)).
I. Minn.Stat. § 572.19, subd. 1(3).
“[I]n the absence of any agreement limiting his authority, [the arbitrator] is the final judge of both law and fact, including the interpretation of the terms of any contract.” Cournoyer v. American Television & Radio Co., 249 Minn. 577, 580, 83 N.W.2d 409, 411 (1957), quoted by State v. Berthiaume, 259 N.W.2d 904, 910 (Minn.1977). The State argues the Agreement implicitly includes public policy, and therefore the award exceeded the scope of the arbitrator’s powers.
The Agreement provides that discipline, including discharge, shall be imposed on an employee only for “just cause” and that discipline shall be corrective where appropriate. The Agreement does not define just cause. While the State could have sought to include in the Agreement those public policy concerns that it now urges are implicitly present, it did not do so. “By failing to specifically define what acts constitute just cause for discharge, * * * the parties left this decision for the arbitrator.” City of Bloomington v. Local 2828, 290 N.W.2d 598, 602 (Minn.1980).
The Agreement further provides the following limits on an arbitrator’s powers:
The Arbitrator shall be without power to make decisions contrary to or inconsistent with or modifying or varying in any way the application of laws, rules, or regulations having the force and effect of law.
We do not believe this clause may be read to limit the arbitrator’s powers so as to require him to discharge grievant on public policy grounds. This is a standard clause in collective bargaining agreements. See, e.g., City of Bloomington, 290 N.W.2d at 601; Berthiaume, 259 N.W.2d at 908 n. 4; County of Hennepin, 464 N.W.2d at 579. It merely means the arbitrator’s award must not call for the commission of an illegal act. The award in this case is clearly not illegal within the meaning of this clause.
Accordingly, whether public policy could be implied into the terms of the Agreement was a decision reserved to the arbitrator. The district court therefore erred in vacating the award on the basis the arbitrator exceeded his powers under Minn.Stat. § 572.19, subd. 1(3). See W.R. Grace & Co. v. Local Union 759, 461 U.S. 757, 764, 103 S.Ct. 2177, 2182, 76 L.Ed.2d 298 (1983) (reviewing “court may not overrule an arbitrator’s decision simply because the court believes its own interpretation of the contract would be the better one”).
II. Public Policy Exception.
The State claims even if the award is valid under Minn.Stat. § 572.19, subd. 1(3), the court may not enforce it because it violates public policy. The United States Supreme Court has recognized a narrow public policy exception which permits the vacation of arbitration awards even when the award is.otherwise within the powers of the arbitrator. See W.R. Grace, 461 U.S. at 766, 103 S.Ct. at 2183. While two of our cases have discussed the public policy exception, neither has expressly adopted it. See County of Hennepin v. Hennepin County Ass’n of Paramedics, 464 N.W.2d *594578, 582 (Minn.App.1990); Medcenters Health Care, Inc. v. Park Nicollet Med. Ctr., 430 N.W.2d 668, 673 (Minn.App.1988), pet. for rev. denied (Minn. Apr. 26, 1989).
For several reasons, we similarly refuse to adopt a public policy exception. Good labor relations involve a delicate balancing of the powers of management with that of labor. Allowing a public policy exception would overwhelmingly tip the balance of power toward management because the exception would be available to employers in virtually every case where an arbitrator found just cause to discipline but not just cause to discharge. In addition, the exception would interfere with the finality of arbitration by giving the judiciary the opportunity to second-guess an arbitrator’s decision. Whether arbitration is available by agreement or compelled in exchange for the relinquishment of the right to strike, it should not be undermined by a vague exception. Unless the labor arbitration system is preserved, we will be in the same chaotic and disorderly situation which existed before it was conceived.
Even if Minnesota were to recognize the public policy exception, we do not believe its application requires vacation of the arbitration award in this case. In order to invoke the exception, the public policy
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.”
W.R. Grace, 461 U.S. at 766, 103 S.Ct. at 2183 (quoting Muschany v. United States, 324 U.S. 49, 66, 65 S.Ct. 442, 451, 89 L.Ed. 744 (1945)). In order to overturn an arbitrator’s decision, the court must find that the award is in direct conflict with these well-defined and dominant public policies. See United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 43, 108 S.Ct. 364, 373, 98 L.Ed.2d 286 (1987).
In its brief on appeal, the State cites to a number of provisions in the Minnesota Constitution, Minnesota Statutes, and Minnesota Rules of Civil Procedure, which it argues establish three well-defined and dominant public policies. Those policies include the requirement that public funds be expended only for a public purpose, that honesty and integrity is required of government employees and officials, and that honesty and integrity is required of certified public accountants.1
However, we need not decide whether these policies are well-defined and dominant because the inquiry does not focus on grievant’s underlying conduct, but on whether the award reinstating grievant violates these policies. While an employee’s conduct may be against public policy, it does not necessarily follow that an arbitration award reinstating the employee violates public policy.
To this extent, the State’s own personnel actions undeniably establish that the decision to reinstate grievant did not violate any public policy. Although Dayton (and the arbitrator) found a total of six employees had submitted false expense reports, only three of these employees were discharged. Of the remaining three, two were reprimanded and one was actually commended (for stopping his practice of submitting false reports, trying to get others to stop, and informing Dayton of the practice).
These personnel actions illustrate the fact-finding nature of fashioning a remedy, whether it be discharge or discipline with or without back pay or suspension. Such decisions are clearly within the exclusive province of the arbitrator, and should not be subject to judicial scrutiny. Since the remedy fashioned by the arbitrator does not violate any well-defined and dominant public policy, the district court erred in examining the merits of the case and engaging in fact-finding. See City of Bloomington, 290 N.W.2d at 603.
Because we conclude that the arbitrator’s award is not in direct conflict with any public policy, we need not discuss the State’s claim that the district court should have considered the affidavit of Mark Dayton.
*595DECISION
Since the arbitrator must interpret whether the terms in the Agreement include public policy, the arbitrator did not exceed his power under Minn.Stat. § 572.-19, subd. 1(3). No public policy cited by the State is violated by the arbitration award reinstating grievant. The district court erred in vacating the arbitrator’s award.
Reversed.

. Grievant is a certified public accountant.