State of Connecticut v. 2001 (2013)

MEMORANDUM OF DECISION

The plaintiff, State of Connecticut, seeks to vacate an award in arbitration pursuant to a collective bargaining agreement.   The grievant, Daphne McKinney, was terminated from her position with the State because of alleged fraudulent receipt of benefits from the Disaster Supplemental Nutrition Assistance Program (“DSNAP”) following Tropical Storm Irene in August of 2011.   The defendant Connecticut State Employees Association, SEIU, Local 2001 (“the Union”) filed a grievance challenging McKinney's dismissal and the parties made an unrestricted submission of the issues to arbitrator Harvey Schrage.   The submission of the parties reads as follows:

Did the State have just cause to dismiss the Grievant?   If not, what shall be the remedy consistent with the terms of the Collective Bargaining Agreement?

The arbitrator sustained the Union's grievance, found that there was not just cause for McKinney's dismissal, and reinstated to her employment with a suspension.   The State now seeks to vacate the award on two grounds:  1) the arbitrator exceeded his powers;  and 2) the award violates public policy.   The Union has filed a cross application seeking confirmation of the award.

I. STANDARD OF REVIEW

The standard governing the review of arbitration awards is narrow and well established.  Industrial Risk Insurers v. Hartford Steam Boiler Inspection & Ins. Co., 273 Conn. 86, 92, 868 A.2d 47 (2005).   As the authority of the arbitrator flows from the parties' mutual agreement, “the extent of ․ judicial review of the award is delineated by the scope of the parties' agreement ․ When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission ․ Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution.”  (Internal quotation marks omitted.)  Id., 92–93.

In Garrity v. McCaskey, 223 Conn. 1, 6, 612 A.2d 742 (1992), our Supreme Court recognized three grounds for vacating an arbitration award:  (1) the award rules on the constitutionality of a statute;  (2) the award violates clear public policy;  or (3) the award contravenes one or more of the statutory proscriptions of General Statutes § 52–418(a).  “The judicial recognition of these grounds for vacatur evinces a willingness, in limited circumstances, to employ a heightened standard of judicial review of arbitral conclusions, despite the traditional high level of deference afforded to arbitrators' decisions when made in accordance with their authority pursuant to an unrestricted submission.”  (Internal quotation marks omitted.)  HH East Parcel, LLC v. Handy & Harman, Inc., 287 Conn. 189, 197, 947 A.2d 916 (2008).

“[C]ourts are bound by the arbitrator's factual findings when reviewing a claim that an award violates public policy ․” HH East Parcel, LLC v. Handy & Harman, Inc., supra, 287 Conn. 204.  “The legal determination of whether a particular award violates public policy necessarily depends on the facts found by the arbitrator during those proceedings.”  Id., 201.

II. ARBITRATOR'S FINDINGS

The arbitrator made the following findings.

Tropical Storm Irene made landfall in Connecticut on August 28, 2011.   Trees and tree limbs downed by high winds caused widespread electrical power outages throughout the state which lasted for days, and in some cases, weeks.   At the time of the storm, McKinney resided in Harford.   The records of the electrical utility servicing that area showed no interruption to the electrical power in McKinney's neighborhood as a result of Storm Irene.   McKinney maintained she had been without power for two days and presented testimony offering an alternative explanation for the power loss—a defective electrical box.   The arbitrator did not record a finding as to whether in fact McKinney had actually lost electrical power as a result of Storm Irene.   However, the arbitrator appears to have credited McKinney's testimony in some degree, drawing his ultimate conclusions “in light of the questions raised by the grievant's testimony about the loss of power at her home.”  (Arbitrator's Award at p. 17, emphasis added.)   The court concludes that the arbitrator found that the State had not met its burden of establishing that McKinney never lost electrical power at her home during the period in question.

Following the storm, the Department of Social Services (“DSS”) began processing applications for the Disaster Supplemental Nutrition Assistance Program (“DSNAP”).   DSNAP provides temporary monetary assistance to allow households affected by a natural disaster to purchase food.   Through a series of events McKinney came to apply for the DSNAP program on September 27, 2011 at an office processing applications in Hartford.

The arbitrator found that the application process was characterized by “chaos” and a “lack of direction and confusion.”   The arbitrator found that these factors contributed to (but did not totally excuse) McKinney providing inaccurate information on her application.   Specifically, the arbitrator found that, on her application for DSNAP benefits, McKinney underreported her net income and her assets on hand by failing to disclose her employment with the state and by failing to report approximately $70,000 in savings.   After completing the application process, McKinney received DSNAP benefits of $793.00 in the form of an electronic benefit transfer (EBT) card.

Although not expressly stated, it is evident that the arbitrator was not persuaded that the State had met its burden of proving that McKinney intentionally submitted a fraudulent application for DSNAP benefits.   This conclusion is bolstered by the arbitrator's conscious comparison of the facts of McKinney's case to other “prior arbitration awards relating to the same type of conduct.”  (Arbitrator's Award at p. 18.)   In one of the cases used for comparison, the arbitrator had expressly found that the evidence did not support the conclusion that the grievant intentionally sought to obtain funding by fraud.   In the other, the arbitrator found that the employee's understatement of assets arose from a DSS worker's suggestion that the employee remove any reference to $10,000 in savings from the application.   The arbitrator states that his conclusion is based on “a review of the three decisions, and considering the facts of the instant case ․” (Arbitrator's Award at p. 17.)

After reviewing the prior arbitration awards relating to State employees terminated for actions related to the DSNAP program, the arbitrator concluded that the penalty of termination was too severe.   Therefore, the arbitrator concluded that just cause did not exist for McKinney's dismissal, but just cause did exist for disciplinary action.   Accordingly, the arbitrator converted the termination to a suspension.

III. ANALYSIS AND DISCUSSION

A. Common Law Public Policy Exception

The public policy relied on by the State is the recognized public policy of our state which prohibits the “knowing misappropriation of public funds.”   (State of Connecticut's June 3, 2013 Memorandum of Law at pp. 7–8, citing State v. Council 4 AFSCME, 27 Conn.App. 635, 641, 608 A.2d 718 (1992)).   In reviewing this claim, the court is bound by the arbitrator's factual findings.

As previously discussed, it is apparent that the arbitrator found a lack of evidentiary support to conclude that McKinney intentionally sought to misappropriate public funds.   On the basis of that finding, a “knowing misappropriation of public funds” was not proven and therefore it was not a violation of public policy to find in favor of McKinney.   The arguments of the State that “just cause” was shown to terminate McKinney's public employment, rather than impose a penalty of suspension, must fail for the same reason.   The finding of the arbitrator that McKinney's conduct was not knowing or intentional, but nonetheless serious and inexcusable, is logically and rationally connected to his conclusion that dismissal is not warranted, and suspension is that appropriate penalty.

B. Whether the Arbitrator Exceeded his Powers in Violation of § 52–418(a)(4)

The State argues that the “arbitrator's unilateral decision to refuse to consider Ms. McKinney's past disciplinary record ․ violates the [collective bargaining agreement] because it now imposes an express requirement on management ․ which is not found in the contract.”  (State of Connecticut's June 3, 2013 Memorandum of Law at p. 2, emphasis in original.)

General Statutes § 52–418(a)(4) provides that an arbitration award shall be vacated if an arbitrator has exceeded his powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.

“In our construction of § 52–418(a)(4), we have, as a general matter, looked to a comparison of the award with the submission to determine whether the arbitrators have exceeded their powers ․ We have also recognized, however, that ․ [a]n award that manifests an egregious or patently irrational application of the law is an award that should be set aside pursuant to § 52–418(a)(4) because the arbitrator has exceeded [his] powers or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.”  (Internal quotation marks omitted.)  Harty v. Cantor Fitzgerald & Co., 275 Conn. 72, 80–81, 881 A.2d 139 (2005).  “Judicial review of arbitral decisions is narrowly confined ․ When the parties agree to arbitration and establish the authority of the arbitrator through the terms of their submission, the extent of our judicial review of the award is delineated by the scope of the parties' agreement ․ When the scope of the submission is unrestricted, the resulting award is not subject to de novo review even for errors of law so long as the award conforms to the submission ․ Because we favor arbitration as a means of settling private disputes, we undertake judicial review of arbitration awards in a manner designed to minimize interference with an efficient and economical system of alternative dispute resolution ․ Courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators' decision of the legal questions involved ․ In other words, [u]nder an unrestricted submission, the arbitrators' decision is considered final and binding;  thus the courts will not review the evidence considered by the arbitrators nor will they review the award for errors of law or fact.”  (Internal quotation marks and citation omitted.)  McCann v. Department of Environmental Protection, 288 Conn. 203, 213–4 (2008).

The State points to the reference in the arbitrator's decision to his having “considered ․ the fact that her prior discipline dated back a number of years prior to her conduct in this case, and were [sic.] not specifically noted in the letter of termination.”  (Arbitrator's Award, p. 17.)   The State contends that this language demonstrates that in making his award, the arbitrator improperly relied on the fact that prior instances of employee discipline were not specifically noted in the letter of termination.   The State argues that the arbitrator thus exceeded his powers or imperfectly executed them by “unilaterally” imposing a requirement not found in the contract—that in order for an employee's past disciplinary record to be considered at arbitration, it must be specifically noted in the letter of termination.   By “inventing this procedural device,” the State claims that the arbitrator avoided any consideration of McKinney's significant prior disciplinary record in reaching his conclusions regarding the penalty of dismissal.  (State of Connecticut's June 3, 2013 Memorandum of Law at p. 14.)

The court's review of such a claim is narrowly confined:

Where one party claims that the award, as issued, is inherently inconsistent with the underlying collective bargaining agreement, the court will compare the agreement with the award to determine whether the arbitrator has ignored his obligation to interpret and apply that agreement as written.   This additional analysis is conducted pursuant to such a claim because an arbitrator's award is legitimate only so long as it draws its essence from the collective bargaining agreement.   When the arbitrator's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of this award.   If, for example, there was evidence that “revealed that [the arbitrator] had reached his decision by consulting a Ouija board, [it would] not suffice that the award conformed to the submission.

It must be emphasized, however, that merely claiming inconsistency between the agreement and the award will not trigger judicial examination of the merits of the arbitration award.   Rather, in the face of such a claimed inconsistency, this court will review the award only to determine whether it “draws its essence from the collective bargaining agreement.”

(Citations omitted, internal quotation marks omitted.)  Board of Education v. Local 818, 5 Conn.App. 636, 640, 502 A.2d 426 (1985).

In this case, even a cursory review of the award does not support the State's claim that the arbitrator “refused to consider” McKinney's “blemished work history” by resort to a procedural device.   The arbitrator clearly states:  “I have considered ․ the fact that [McKinney's] prior discipline dates back a number of years prior to her conduct in this case.”  (Arbitrator's Award at p. 17.)

Even if it was improper for the arbitrator to “consider” the fact that past instances of discipline had not been referenced in the termination letter, it does not necessarily follow that, as a result, the award does not “draw its essence from the collective bargaining agreement.”   Compare, Board of Education v. Local 566, 43 Conn.App. 499, 504, 683 A.2d 1036 (1996), appeal denied, 239 Conn. 957, 688 A.2d 327 (1997) (even where arbitration board may have erroneously admitted evidence, court not persuaded “that it resulted in an award that falls completely outside the scope of the agreement and the contemplation of the parties”).

A review of the award reveals that the arbitrator referenced all of the contract provisions and regulations relevant to the dispute, including the just cause, management rights, discipline, suspension, demotion and dismissal provisions, and determined that, based on those provisions and the facts found to have been proven, termination of employment was too severe a penalty to impose on McKinney.   The arbitrator supported his decision by reference to the grievant's years of service, the fact that prior discipline “dated back a number of years” and a review of prior arbitration awards relating to the same type of conduct.

“By including an arbitration clause in their contract, the parties bargain for a decision maker that is not constrained by formalistic rules governing courtroom proceedings and dictating judicial results ․ Put simply, the parties bargain for the arbitrator's independent judgment and sense of justice ․” Stratford v. International Ass'n of Firefighters, AFL–CIO, Local 998, 248 Conn. 108, 121–22, 728 A.2d 1063 (1999).

The State has not given this court reason to disturb that exercise of independent judgment and sense of justice.

IV. CONCLUSION

For the reasons stated above the State's application to vacate the arbitration award is denied and the Union's application to confirm the award is granted.

BY THE COURT,

Sheridan, J.

Sheridan, David M., J.