Arbitrator violated policy, state Supreme Court rules

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An arbitrator's award reinstating a warehouseman who was fired for sexually harassing a co-worker violated "dominant" public policy, the state Supreme Court has ruled.

According to one lawyer involved in the case, the decision may mark the first time the high court has applied a public policy exception in vacating an arbitration award.

Despite an arbitrator's finding that the employee, Thomas Mitchell, engaged in "lewd, lascivious [and] extraordinarily perverse" behavior and that Mr. Mitchell's testimony was not credible, the arbitrator found the Philadelphia Housing Authority did not have just cause to fire him. The arbitrator ordered he be reinstated and granted back pay.

The high court, with three justices writing separately to concur, disagreed.

"Given the repeated [conduct] PHA sought to address, this should not be a difficult case," Chief Justice Ronald D. Castille wrote in a 21-page opinion. "A public employer cannot be denied the power to impose consequences for this sort of inappropriate, and facially criminal, conduct."

"Indeed, with the general notion in mind that recognized rights must generally have some form of remedy, it is clear that there must be a power in public employers to take meaningful steps to vindicate dominant public policy," Justice Castille wrote.

The justices had remanded the decade-old case of Philadelphia Housing Authority v. American Federation of State, County and Municipal Employees, District Council 33, Local 934 for the Commonwealth Court to examine whether the firing met the narrow public policy exception to the "essence test," which the justices carved out in 2007.

According to the opinion, the "essence test" is a highly deferential standard of judicial review of Public Employee Relations Act grievance arbitration awards, allowing a court to vacate an arbitration award only when it is proven to be without foundation or does not logically follow the underlying bargaining agreement. Commonwealth Court had ruled to vacate the award using the "core function" test in 2006, but faced remand after the justices created the public policy exception to the essence test the following year.

Writing for the majority, Justice Castille acknowledged an arbitrator's award was entitled to deference, but not a "level of devotion that makes a mockery of the dominant public policy against sexual harassment."

According to the opinion, Mr. Mitchell characterized his own actions as horseplay and denied specific allegations. One female co-worker he allegedly harassed said he was a bully and source of constant annoyance.

Such conduct must be punishable, Justice Castille said. "Even if the arbitrator's award reinstating Mitchell were not patently unreasonable on its face, the arbitrator's reasoning betrays a lack of appreciation for the dominant public policy, reasoning which obviously infected his award; the reasoning and the award simply cannot be separated one from the other."

Justices J. Michael Eakin and Thomas G. Saylor each wrote concurring opinions.

Mary T. Metzler, of Ballard Spahr, has represented the housing authority in this matter for the better half of a decade and has argued the case four times. Ms. Metzler said she believes this is the first case in which the Supreme Court decided to apply the public policy exception and vacate an arbitrator's award. "I'm glad that Philadelphia Housing Authority decided to fight this and it worked out in the end," she said.

legalnews

Ben Present: bpresent@alm.com or 215-557-2315. To read more articles like this, visit www.thelegalintelligencer.com.


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