Court Opinion

ID: 2827322
Source: CourtListenerOpinion
Date Created: 2015-08-14 11:56:12.37651+00
Date Added: 2024-06-11T13:39:54.276740
License: Public Domain

COURT OF APPEALS
                           SECOND DISTRICT OF TEXAS
                                FORT WORTH

                                NO. 02-14-00281-CV

CITY OF ARLINGTON                                                    APPELLANT

                                         V.

TIBOR KOVACS                                                          APPELLEE

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           FROM THE 48TH DISTRICT COURT OF TARRANT COUNTY
                     TRIAL COURT NO. 048-261269-12

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                                     OPINION

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                                  I. INTRODUCTION

         An arbitrator reinstated the employment of Appellee Tibor Kovacs after he

was terminated by Appellant City of Arlington for violating numerous personnel

rules.     The issue we consider in this appeal is whether the arbitrator, in

determining whether Kovacs violated the personnel rules as charged, exceeded

his authority by relying on evidence of events that occurred after the City

terminated Kovacs. Because the City’s personnel manual limited the extent to
which the arbitrator could consider post-termination evidence and because the

arbitrator’s written decision confirms that he improperly considered post-

termination evidence in determining whether Kovacs violated personnel rules as

charged, we hold that the arbitrator exceeded his authority to resolve the dispute.

Accordingly, we will reverse and remand.

                                 II. BACKGROUND

      Kovacs went to work for the Arlington Police Department after attending

the police academy in 2003. On October 28, 2010, A.K. reported to Arlington

police that she was driving her vehicle at around 10:00 p.m. the previous night

when a police officer—Kovacs—stopped her. Kovacs told A.K. that he thought

she had been drinking, and A.K., who had consumed one “Four Loko,” was

feeling tipsy, and had an outstanding warrant for her arrest, thought she was

going to jail. A.K. pleaded with Kovacs not to arrest her and told him that a friend

lived nearby. After running A.K.’s information, Kovacs instructed her to leave her

car in the parking lot and to get into the back seat of his police cruiser. On the

way to the neighborhood where A.K.’s friend lived, Kovacs stopped the vehicle in

a neighborhood that was unfamiliar to A.K. and allowed her to move to the front

seat. After Kovacs continued driving, he placed his hand on A.K.’s thigh and

digitally penetrated her vagina.1 Kovacs received a personnel complaint that

informed him of the personnel rules that he had allegedly violated and the nature

      1
      A.K. said in her statement that she was wearing a short denim dress and
no panties.

                                         2
of the complaint. On November 1, 2010, Kovacs was placed on administrative

leave pending an investigation by internal affairs.

      On December 31, 2010, while Kovacs was still on administrative leave, his

fiancée, M.H., reported to Cedar Hill police that Kovacs had awakened her by

saying, “It’s time to suck my d—k, b---h.” M.H. told Kovacs not to speak to her

like that, and Kovacs put her in a leg lock, shoved her head into a pillow, and

grabbed her forearms until she bruised.         Authorities charged Kovacs with

assault‒family violence, and a warrant issued for his arrest.

      Several weeks later, on January 19, 2011, M.H. reported to Cedar Hill

police that Kovacs had pinned her down and attempted to force her to perform a

sexual act on him. She also reported that Kovacs had made several retaliatory

statements against Arlington and Cedar Hill police officers. Cedar Hill police

arrested Kovacs that same day for assault–family violence and additionally

charged him with two counts of obstruction/retaliation and one count of attempted

sexual assault.2

      On January 21, 2011, acting police chief Will Johnson notified Kovacs that

he was being dismissed. The memorandum identified three separate charges

      2
       On January 19, 2011, Kovacs acknowledged receiving (i) a personnel
complaint regarding the allegation that he had assaulted M.H. on December 31,
2010; (ii) a personnel complaint regarding the charges for sexual assault and
obstruction/retaliation; and (iii) an amended personnel complaint regarding the
incident with A.K. The amended complaint stated in part, “It is alleged that you
used poor judgment when you decided not to arrest the female citizen and
placed the female in your patrol car to give her a ride to her friend’s house.” It
also stated, “It is . . . alleged that you did not properly accurately reflect your
status via MDT or radio.”

                                         3
and the specifications for each charge. Specifically, Charge 1 alleged a violation

of section 201.11.A of the City’s Personnel Manual—“Unbecoming Conduct and

Conduct Prejudicial to Good Order.” The four specifications included Kovacs

having been arrested for assault‒family violence; having been arrested and

charged with retaliation against Arlington and Cedar Hill police officers; having

been charged with sexual assault against M.H.; and having agreed to drive A.K.

to a friend’s house instead of arresting her, allowing A.K. to sit in the front seat of

his police cruiser, and inserting his finger into A.K.’s vagina while she was in the

front seat.   Charge 2 alleged a violation of section 201.02.A of the City’s

Personnel Manual—“Conformance to Laws.” The single specification was that

an arrest warrant had issued for Kovacs for assault‒family violence against M.H

and that Kovacs was arrested on the warrant. Charge 3 alleged a violation of

section 201.04.B of the City’s Personnel Manual—“Judgment.”                The single

specification relied upon events involving A.K.—Kovacs had failed to arrest a

person who he suspected had operated a vehicle under the influence of alcohol,

transported the person to a residence while on duty, and allowed the person to

move from the rear seat of the police cruiser to the front seat.

      On January 25, 2011, Kovacs’s attorney denied the charges against

Kovacs and requested that Chief Johnson reconsider his decision, which he

declined to do. After Kovacs’s administrative appeal was denied, he requested

that the decision to terminate him be reviewed by arbitration.

                                          4
      The parties eventually proceeded to arbitration, and the arbitrator issued a

written decision. Therein, the arbitrator acknowledged that he was limited by the

City’s personnel manual to determining “(1) whether the employee violated the

personnel rules, as charged, and (2) whether the disciplinary action as imposed

is reasonable.”   [Emphasis added.]      The “Background” section of the written

decision includes the following statements:

      •Feb. 28, 2011 [M.H.] testifies in her Protective Order Hearing
      seeking protection from Kovacs.

      •Mar. 2, 2011 Kovacs was No Billed by the Dallas County Grand
      Jury on all four Felony charges regarding family violence, attempted
      sexual assault, and the two retaliation charges. [M.H.] was the
      complainant in the family violence and the attempted sexual assault
      charges and she was the sole witness in the retaliation cases.

      •In criminal cases the Grand Jury must find probable cause to true
      bill someone. They did not find probable cause in the charges
      against Kovacs.

      •Mar. 7, 2011 The Judge in the Protective Order Hearing denied the
      issuance of a Protective Order.

      •Apr. 12, 2011 [A.K.] signed an undated Affidavit of Non-Prosecution
      regarding the events of October 27, 2010.

The “Discussion” section of the decision set out the same information regarding

the no-bills by the grand jury, the denial of the protective order, and the affidavit

of non-prosecution.

      As to the allegations involving M.H., which included the assault‒family

violence, sexual assault, and retaliation charges, the arbitrator determined that

“the City did not establish by a preponderance of the evidence[] Kovacs’

involvement in” those charges. As to the allegations involving A.K., the arbitrator

                                         5
determined that “the City did not establish by a preponderance of the evidence

that Kovacs was sexually inappropriate with” her. The arbitrator did, however,

determine that Kovacs “broke several City rules when he allowed [A.K.] to ride in

the front seat of his patrol car, did not search her for a weapon, and failed to

enter his mileage with the dispatcher.” Concluding that “[t]he City did not prove

the violations of all personnel rules as Charged and therefore the discipline of

termination that was imposed for the proven violations was not reasonable[,]” the

arbitrator determined that Kovacs should be reinstated, given a twenty-day

suspension, and awarded back pay.

      As permitted by the City’s personnel manual,3 the City filed a petition in

district court seeking, among other things, to vacate the award on the ground that

the arbitrator exceeded his authority by relying on evidence that was not

available at the time that Kovacs was discharged—the no-bills by the grand jury,

the denial of the protective order, and the affidavit of non-prosecution. Aside

from determining that Kovacs was not entitled to back pay for the time that he

was incarcerated, the trial court confirmed the award.       The trial court issued

findings of fact and conclusions of law, concluding in relevant part that “the error,

if any, in considering the non-prosecution affidavit and/or the no bill by the Dallas

Grand Jury was not a serious error or that i[t] was a basis for the decision of the

      3
        The manual states in relevant part that “[a] state district court may set
aside an Arbitrator’s decision only on the grounds that the Arbitrator was without
jurisdiction or exceeded his/her authority, or that the decision is manifestly a
violation of law.”

                                         6
arbitrator that Arlington had failed to support its claims with a preponderance of

the evidence.”

                         III. POST-TERMINATION EVIDENCE

      In its first issue, the City argues that the arbitrator—in deciding that Kovacs

did not violate the personnel rules as charged regarding the allegations involving

M.H. and the sexually-related allegation involving A.K.—exceeded his authority

by improperly relying on evidence that did not exist when the City terminated

Kovacs’s employment on January 21, 2011—specifically, evidence (i) that the

jury no-billed the two assault charges involving M.H. and the two retaliation

charges involving the Arlington and Cedar Hill police officers, (ii) that a judge

denied M.H.’s request for a protective order, and (iii) that A.K. signed an affidavit

of non-prosecution regarding the events of October 27, 2010. Kovacs responds

that the arbitrator was required to consider the post-termination evidence.4

      We review a trial court’s decision to confirm or to vacate an arbitration

award de novo. Pettus v. Pettus, 237 S.W.3d 405, 418 (Tex. App.—Fort Worth

      4
        Kovacs initially argues that the City failed to preserve this issue for review
because it did not object when the complained-of evidence was elicited during
the arbitration. However, the City advised the arbitrator at the outset of the
arbitration proceeding that it had to prove that the policy violations occurred as
alleged “given the facts available to the decision-maker at the time the discipline
was imposed.” Moreover, “[f]or efficiency’s sake, arbitration proceedings are
often informal; procedural rules are relaxed[] [and] rules of evidence are not
followed.” Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 101 (Tex. 2011); see
Gulf Coast Indus. Workers Union v. Exxon Co., 991 F.2d 244, 255 n.12 (5th Cir.),
cert. denied, 510 U.S. 965 (1993) (“But given that arbitrators typically receive
evidence liberally and do not feel constrained by strict applications of the rules of
evidence, Exxon is not precluded from arguing this point on appeal in a de novo
review.”). The issue is therefore properly before us.

                                          7
2007, pet. denied). We indulge every reasonable presumption in favor of the

arbitrator’s decision. Id.

      Arbitration of disputes is strongly favored under state and federal law.

Prudential Sec., Inc. v. Marshall, 909 S.W.2d 896, 898 (Tex. 1995) (orig.

proceeding). Therefore, judicial review of an arbitration award is extraordinarily

narrow. E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267, 271 (Tex.

2010). The review focuses on the integrity of the process, not the propriety of the

result. Forest Oil Corp. v. El Rucio Land & Cattle Co., 446 S.W.3d 58, 75 (Tex.

App.—Houston [1st Dist.] 2014, pet. abated). Thus, even a mistake of fact or law

by the arbitrator is not a proper ground for vacating an award. Id.

      An arbitrator derives his authority to decide a dispute from the arbitration

agreement.     Nafta Traders, 339 S.W.3d at 90.      Therefore, the scope of an

arbitrator’s authority depends on the arbitration agreement, and an arbitrator

exceeds his authority when he decides a matter that is not properly before him.

See Gulf Oil Corp. v. Guidry, 160 Tex. 139, 143, 327 S.W.2d 406, 408 (1959);

Forged Components, Inc. v. Guzman, 409 S.W.3d 91, 104 (Tex. App.—Houston

[1st Dist.] 2013, no pet.); see also 9 U.S.C.A. § 10(a)(4) (West 2009) (allowing

district court to vacate arbitration award if arbitrator exceeded his powers); Tex.

Civ. Prac. & Rem. Code Ann. § 171.088(a)(3)(A) (West 2011); (same).

      Several federal courts have addressed this very issue.          In Gulf Coast,

Exxon fired Woods for violating its alcohol and drug use policy, breaching an

after-care agreement, and failing to report a relapse. 991 F.2d at 247. Woods’s

                                         8
union filed a grievance contesting the termination, and a single issue was

submitted to an arbitrator: “Was [Woods] discharged for just cause and, if not,

what is the proper remedy?” Id. at 247. In determining that Woods’s discharge

was unjustified, the arbitrator “considered and relied upon several assertions

regarding Woods’s post-discharge behavior, including (1) his post-relapse drug

and alcohol abstinence, (2) his ability to hold a job, and (3) his realization that he

must live ‘one day at a time.’”      Id. at 255.    Based on this post-termination

evidence, the arbitrator concluded that Woods “represented ‘a good bet for

successful rehabilitation so that discharge is not justified at this point in his

treatment.’”   Id.   The Fifth Circuit held that the arbitrator’s reliance upon

circumstances regarding Woods’s post-discharge rehabilitation efforts—in

determining whether Woods was discharged for just cause—“was a departure

from [the arbitrator’s] authority under the contract.” Id. at 257. It explained,

      Arbitrator Helburn was presented with this stipulated issue: “Was
      [Woods] discharged for just cause and, if not, what is the appropriate
      remedy?” The first part of the question is worded in the past tense.
      It is equivalent to asking, “Did Exxon possess just cause on June 15,
      1990 to terminate [Woods]?” Upon a careful review of the applicable
      legal principles and the terms of the parties’ collective bargaining
      agreement, which strips the arbitrator of authority “to alter or add to it
      in any way,” we hold that the arbitrator should have confined his
      considerations only to the facts as they existed at the time Exxon
      made its termination decision.

Id. at 256.

      In Association of Western Pulp & Paper Workers, Local 78 v. Rexam

Graphic, Inc., Greene was fired for leaving work without permission, her Union

filed a grievance, and the case was submitted for arbitration. 221 F.3d 1085,

                                          9
1087 (9th Cir. 2000). The issue to be considered by the arbitrator was framed as

follows: “Was [Greene] terminated for just and sufficient cause, as required by

the collective bargaining agreement? If not, what is the appropriate remedy?” Id.

at 1089. The arbitrator determined that Rexam had acted without just cause in

discharging Greene, but based on Greene’s post-termination conduct and

untruths, the arbitrator awarded Greene only back pay and benefits to the date of

the hearing instead of directing that she be reinstated. Id. at 1087. On appeal,

the Union objected to the arbitrator’s consideration of Greene’s post-termination

conduct. Id. at 1089. The Ninth Circuit agreed with the Fifth Circuit’s reasoning

in Gulf Coast that “post-termination conduct should not be used to determine

whether the employer had just cause for the termination,” but it concluded that

the arbitrator did not exceed her authority because she did not consider the post-

termination evidence in determining whether Rexam had just cause to fire

Greene but as a discrete issue relating only to the appropriate remedy. Id. at

1089‒90. Indeed,

      [The arbitrator] did not let Greene’s dishonesty influence her initial
      decision regarding whether Greene had been terminated for just
      cause, as evidenced by the very fact that she first ruled against
      Rexam on this threshold issue. However, the arbitrator then decided
      to award [back pay] and benefits, but to deny reinstatement as
      unworkable in view of Greene’s misconduct after her discharge and
      at the arbitration hearing.

Id. at 1090. The Ninth Circuit reasoned that arbitrators appropriately consider

post-termination evidence for purposes of devising a remedy, but not for

determining just cause to terminate, because such evidence “allows arbitrators to

                                       10
craft common-sense remedies responsive to all of the circumstances surrounding

the case presented to them.” Id.; see United Paperworkers Int’l Union, AFL-CIO

v. Misco, Inc., 484 U.S. 29, 40 n.8, 108 S. Ct. 364, 371 n.8 (1987) (“Labor

arbitrators have stated that the correctness of a discharge ‘must stand or fall

upon the reason given at the time of discharge,’ . . . , and arbitrators often, but

not always, confine their considerations to the facts known to the employer at the

time of the discharge.”).

      We agree with the reasoned approach utilized by the federal courts, but

only to the extent that it is consistent with the authority bestowed upon the

arbitrator by the arbitration agreement. See Nafta Traders, 339 S.W.3d at 90.

For example, the initial inquiry in both federal cases—as specified by the

respective agreements—was whether the employer had just cause to terminate

the employee. As the federal courts rightly concluded, post-termination evidence

has no bearing whatsoever on that inquiry, and an arbitrator exceeds his

authority when he considers such evidence in that context.

      The inquiry in this case is a little different. The City’s personnel manual

specifically limited the authority of the arbitrator to determining “1) whether the

employee violated the personnel rules, as charged, and [if so] 2) whether the

disciplinary action as imposed is reasonable.” [Emphasis added.] Regarding the

first inquiry, as charged, the City’s first Charge specified that Kovacs violated

personnel rule 201.11.A because (1) he was “arrested” for assault‒family

violence, (2) he was “arrested and charged” with retaliation against two police

                                        11
officers, (3) he was “charged” with sexual assault, and (4) he “put [his] finger in

[A.K’s] vagina while she was sitting in the front seat” of his police cruiser. Like

the just-cause inquiry in the federal cases, logic alone mandates that post-

termination evidence has no relevance as to whether Kovacs was arrested,

arrested and charged, or charged, but it could potentially have some relevance

as to the fourth specification, which is a significantly more detailed inquiry. Thus,

in terms of the Charge that Kovacs violated personnel rule 201.11.A, the City’s

personnel manual expressly prohibited the arbitrator from considering post-

termination evidence for purposes of specifications (1), (2), and (3) (involving

M.H.) but not (4) (involving A.K.).5

      Turning to whether the arbitrator actually considered post-termination

evidence, the arbitrator’s written decision states twice (i) that a grand jury had no-

billed the four felony charges against Kovacs and witnessed by M.H. and (ii) that

a trial court had denied M.H.’s request for a protective order. Referencing these

excerpts during a hearing, the trial court (in this case) stated, “He [the arbitrator]

puts this in the opinion. We know he relied on it.” There can be no doubt that

the arbitrator considered this post-termination evidence in reaching his decision.

The question then is for what purpose did he consider it? Like the Ninth Circuit in

Rexam Graphic, we must review the arbitrator’s written decision to determine

      5
        The same can be said for the City’s second Charge—that Kovacs violated
personnel rule 201.02.A because “a warrant was issued” for his arrest for
assault‒family violence and because he was “arrested” on the warrant, both
allegations involving M.H.

                                         12
whether the arbitrator considered the post-termination evidence for a proper

purpose.

      The arbitrator determined that “the City did not establish by a

preponderance of the evidence[] Kovacs’ involvement in the charges of [M.H.].”

Therefore, regarding the first inquiry that the arbitrator was charged with

deciding—whether the employee violated the personnel rules, as charged—the

arbitrator concluded “No” as to the personnel rule violations that involved the

allegations involving M.H. Because the arbitrator answered the first inquiry in the

negative, there was no reason to consider the second inquiry as to the

nonviolations—whether the disciplinary action as imposed was reasonable.

Therefore, the post-termination evidence relevant to the allegations involving

M.H. could not have been considered for that purpose.

      Apparently sustaining Charge 3—that Kovacs violated personnel rule

201.04.B—the arbitrator determined that Kovacs “broke several City rules when

he allowed [A.K.] to ride in the front seat of his patrol car, did not search her for a

weapon, and failed to enter his mileage with the dispatcher.”              Therefore,

regarding the first inquiry that the arbitrator was charged with deciding—whether

the employee violated the personnel rules, as charged—the arbitrator concluded

“Yes” as to several of the allegations contained in the specification for Charge 3.

The arbitrator then proceeded to consider whether the disciplinary action as

imposed was reasonable, but the arbitrator did not consider the post-termination

evidence relevant to the allegations involving M.H. for that purpose. Cf. Rexam

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Graphic, 221 F.3d at 1089‒90 (reasoning that arbitrator considered post-

termination evidence for purposes of determining remedy). Not only was the

post-termination evidence involving M.H. not relevant to whether Kovacs “broke

several City rules when he allowed [A.K.] to ride in the front seat of his patrol car,

did not search her for a weapon, and failed to enter his mileage with the

dispatcher,” the arbitrator specifically concluded in his written decision that the

disciplinary action imposed was not reasonable because the “City did not prove

the violations of all personnel rules as Charged.”

      Finally, we determined above that post-termination evidence could be

relevant to the fourth specification for the Charge that Kovacs violated personnel

rule 201.11.A—the sexual conduct involving A.K. in Kovacs’s police cruiser.

However, the post-termination evidence relevant to that inquiry was that A.K. had

executed an affidavit of non-prosecution, not that a grand jury no-billed the four

felony charges against Kovacs or that a court denied M.H. a protective order,

events related to an entirely different set of allegations.

      The arbitrator’s written decision thus confirms not only that he considered

the post-termination evidence involving M.H. but also that he could only have

considered it for an improper purpose—whether Kovacs violated the personnel

rules as charged by being arrested for assault‒family violence, arrested and

charged for retaliation against two police officers, and charged with sexual

assault, and by having a warrant issue for his arrest for assault‒family violence,

all allegations involving M.H. By considering the post-termination evidence, the

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arbitrator improperly pursued an inquiry beyond the scope of the City’s charging

instrument, thus departing from his authority as clearly and unambiguously

confined by the same document.

      Kovacs argues that the arbitrator properly considered the challenged post-

termination evidence because the arbitrator was tasked with determining whether

Kovacs in fact committed the alleged conduct.6 But that is not at all what was

charged. As charged, the City alleged that Kovacs violated several personnel

rules because he had been arrested, arrested and charged, and charged and

because a warrant had issued for his arrest.          The specifications for the

disciplinary Charges did not allege that Kovacs violated the personnel rules

because he “committed” the alleged offenses, was “indicted” for the alleged

offenses, or was “convicted” of the alleged offenses.      Kovacs’s interpretation

erroneously re-writes the wording of the City’s charging instrument, and the

arbitrator exceeded his authority if he construed the City’s charging instrument as

Kovacs advocates.

      We hold that the arbitrator exceeded his authority as specified by the City’s

personnel manual by improperly considering post-termination evidence in

determining whether Kovacs violated the City’s personnel rules as charged. See

Nafta Traders, 339 S.W.3d at 90; Gulf Oil Corp., 160 Tex. at 143, 327 S.W.2d at

      6
      Kovacs thus concedes that the arbitrator considered the post-termination
evidence in deciding the allegations involving M.H.

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408. We sustain the City’s first issue and do not reach its second and third

issues. See Tex. R. App. P. 47.1.

                                 IV. CONCLUSION

      Having sustained the City’s first issue, we reverse the trial court’s judgment

confirming the arbitration award and remand this cause to the trial court for

further proceedings.

                                                   /s/ Bill Meier
                                                   BILL MEIER
                                                   JUSTICE

PANEL: GARDNER, MEIER, and GABRIEL, JJ.

DELIVERED: August 13, 2015

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