Appealling An Arbitration Decision - A Success Story Part II

The Supreme Court of Pennsylvania recently confirmed that sexual harassment is against public policy. Seems like a no brainer, right? The court seemed to agree, stating that the decision in Phila. Housing Authority v. AFSCME, District Council 33, Local 934 [WARNING EXPLICIT] (pdf) was not "a difficult case." So, why did it take over a decade to reach this conclusion?

Let's look at what happened.  The union representing an employee of the Philadelphia Housing Authority filed a grievance challenging the employee's termination for sexual harassment. An arbitrator reinstated the employee, with back pay, despite finding that the employee was not credible and had refused to take responsibility for his "lewd, lascivious and extraordinary perverse" physical and verbal harassment of a coworker. After the decision was appealed and wound its way to the court (for the second time), the court held that it was against public policy for an arbitrator to reinstate an employee who was terminated by a public employer for engaging in physical and verbal harassment. Although the arbitrator's award was entitled to deference under the essence test, the award essentially amounted to a reward for the employee's borderline criminal behavior and was contrary to the clear public policy prohibiting sexual harassment in the workplace.

You may recall from our prior posts that the essence test is an extremely deferential standard of review by which courts review the decisions of arbitrators. Under that test, if an arbitrator's decision is grounded in the collective bargaining agreement, and is rationally derived from that agreement, then the court will not disturb the arbitrator's findings. In the majority of cases, the courts simply defer to the decision of the arbitrator.  So what happened here? 

The court has carved out a limited exception to the essence test, known as the public policy exception. This exception may be used to vacate arbitration decisions that violate well defined public policies. The exception was first recognized while the Phila. Housing Authority case was already on appeal, which explains why this case took so long to decide. When this case made it back to the court a second time, the court was given the opportunity to provide guidance for determining when an arbitrator's decision violates a "well defined and dominate" public policy.

In explaining the contours of the exception, the court stated that while an arbitrator's decision is entitled to deference, such deference cannot allow the court to sanction a violation of such a clear public policy as the prohibition of sexual harassment in the workplace. The court noted that the arbitrator reinstated the employee even though he engaged in physical and verbal harassment of his female coworkers and demonstrated no remorse for his behavior. The decision amounted to a reward for the employee in this case. The court concluded that any other holding would essentially eliminate the public policy exception to the essence test.

The court's decision was limited to the specific facts of the case, and while the court noted that a public employer should be free to implement a zero tolerance policy for sexual harassment, the court and both parties agreed that termination is not necessarily the appropriate level of discipline in every case of harassment.  So, about that guidance for future cases . . . well if your arbitration decision lacks a "reasonable, calibrated, defensible relationship" between the conduct violating public policy and the arbitrator's response, you may have a basis for appeal.

Translation: the courts know it when they see it, and everyone knows that under any analysis, sanctioning sexual harassment is against public policy.
 

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