Matter of DeMartino v New York City Dept. of Transp.

[*1] Matter of DeMartino v New York City Dept. of Transp. 2009 NY Slip Op 50169(U) [22 Misc 3d 1117(A)] Decided on January 27, 2009 Supreme Court, New York County Lobis, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 27, 2009
Supreme Court, New York County

In the Matter of the Application of Gene DeMartino, as President, Local 376, District Council 37, American Federation of State, County and Municipal Employees, AFL-CIO, Petitioner,

against

New York City Department of Transportation; and JANETTE SADIK-KHAN, as Commissioner of the New York City Department of Transportation, Respondents.



111788/08



Appearances of Counsel:

For Petitioner:

Schwartz, Lichten & Bright, P.c.

By: Stuart Lichten, Esq.

275 Seventh Avenue - 17th Floor

New York, New York 10001

For Respondents:

Corporation Counsel of the City of New York

100 Church Street

New York, New York 10007

Joan B. Lobis, J.

Petitioner Gene DeMartino, President of Local 376, District Council 37, American Federation of State, County and Municipal Employees, AFL-CIO ("Local 376"), brings this proceeding, pursuant to Article 75 of the C.P.L.R., for an order confirming the August 10, 2008 award of Arbitrator Rose F. Jacobs in the matter of The City of New York and the New York City Department of Transportation v. Local 376, District Council 37, AFSCME, AFL-CIO, A-[*2]12421-07 (the "Award") and ordering respondents to reinstate Local 376 member Kenneth Greene to the position of Highway Repairer, with full back pay and benefits. Respondents New York City Department of Transportation (the "Department") and Janette Sadik-Khan, Commissioner of the Department (the "Commissioner"), cross-petition for an order vacating the Award on the grounds that the arbitrator exceeded her power and jurisdiction and that the Award is irrational and violates public policy.

Greene was employed by the Department beginning in September 1989 as a Debris Remover. In or about 1998, Greene was appointed to the permanent, competitive class position of Highway Repairer. A Highway Repairer performs roadway maintenance and repair work, such as laying asphalt.

On or about August 5, 1998, Greene was required to submit to a random drug test to test for the presence of THC, cocaine, PCP, opiates, and amphetamines. The test result was positive for cocaine. On August 28, 1998, Greene, a Local 376 representative, and a representative of the Department entered into a two-page document entitled "Stipulation and Agreement" (the "August 1998 Stipulation") which sets forth that in lieu of certain charges and specifications being brought against him, Greene was admitting that he received a positive drug test result and that both parties were "agree[ing] to resolve this matter without the necessity of formal disciplinary charges." Greene agreed to accept a penalty of a suspension without pay for fifteen working days, and could return to work only if his return to duty test has a negative result and he received the approval of the Citywide Employee Assistance Unit ("EAU"). Greene further agreed to participate in the mandatory random drug and alcohol testing program, in which he would be tested at least six times in the next twelve months. The parties further agreed that Greene's employment could be terminated "for a second positive test result in the next 12 months." His employment could also be terminated if he were to violate any other conditions of employment during his twelve month period of probation. Finally, he agreed to waive any rights he had concerning this matter, pursuant to the Civil Service Law or any other applicable laws, statutes, rules, or regulations. The August 1998 Stipulation concludes with the language that it was executed "in consideration of the City of New York resolving this matter without the furtherance of disciplinary action in this matter."

A follow-up drug and alcohol test that was performed on or about December 3, 1998, also resulted in a positive finding for the presence of cocaine. Although the August 1998 Stipulation clearly gave the Department the right to terminate Greene's employment for a second positive test result within twelve months, the Department did not seek to terminate his employment at that time. In lieu of proceeding with formal disciplinary charges, on December 23, 1998, the Department, Local 376, and Greene entered into a second stipulation (the "December 1998 Stipulation"), in which Greene admitted that he received a second positive test result and admitted that he was in violation of the August 1998 Stipulation. The parties agreed that Greene would serve a two-year probationary period, through December 23, 2000. Greene further agreed to an additional fifteen-day unpaid suspension. The December 1998 Stipulation further provided that he was subject to termination from employment for a second positive test result within the next twelve months. [*3]

It is undisputed that for the next nine years, Greene was not charged with any disciplinary violations. On or about April 9, 2007, Greene was required to submit to a random drug test. He tested positive for cocaine. On April 23, 2007, Greene was served with a notice of discipline (the "Notice"). In addition to setting forth the positive test results for the test performed in April 2007, the Notice states that "[d]uring the period of August 1998 through November 1998 the Respondent [Greene] tested positive for cocaine twice and in each instance he entered into a stipulation agreement."

Local 376 asserts that it filed a Step II grievance on April 24, 2007. The Department, which is required to rule upon a grievance within five working days, failed to act. On May 1, Local 376 appealed to a Step III grievance, which requires a response by the Department within ten working days. There was no response to this grievance, either. Respondents contend that they did not receive either grievance, which explains why they failed to act. They dispute that either grievance was filed properly. On May 22, 2007, Local 376 filed a Step IV appeal, which requires the Department to respond within twenty days. The Department took no action; again, the Department contends that it did not receive this appeal.[FN1]

On or about May 3, 2007, an informal conference on the Notice was held before Conference Leader Marcia Sampson. Conference Leader Sampson concluded that Charges I and II and been substantiated, and recommended a penalty of termination from employment. Greene was advised of his options for challenging the determination, and was informed that if he failed to respond to the decision and recommendation within five (5) days, the matter would be referred to OATH for a hearing. Because Greene failed to respond within the requisite time period, the matter was referred to OATH for a hearing.

Prior to the hearing, Greene's counsel submitted a letter requesting that the OATH hearing be postponed until after the completion of an arbitration of the issue of whether or not it was appropriate for the Department to refer to the two 1998 positive test results in the Notice and to submit them into evidence at the OATH hearing. Local 376 argued that the 1998 test results, the August 1998 Stipulation, and the December 1998 Stipulation should have been expunged from Greene's records. Local 376 based its argument on City of New York, Office of the Mayor, Executive Order No. 16, July 26, 1978, as amended. The Executive Order provides that heads of city agencies are responsible for establishing codes of conduct and "fair and efficient disciplinary systems." The section entitled "Informal Disciplinary Proceedings" provides that if an employee [*4]or official who is the subject of an informal disciplinary proceeding consents to accept a predetermined penalty upon a finding of cause in lieu of the filing of a formal disciplinary charge, then

the record and result of the informal disciplinary proceedings shall be expunged from all permanent personnel or employment files of the subject official or employee after one year in which such person has not been penalized as a result of any subsequent formal or informal disciplinary proceedings.

Executive Order No. 16, at § 6(b)(ii). Greene's counsel argued that the August 1998 Stipulation and the December 1998 Stipulation constituted informal disciplinary proceedings under the Executive Order and, therefore, should have been expunged. Counsel argued that Local 376 was entitled to grieve this issue, and asked that the OATH hearing be postponed until an arbitration hearing could be held to address the issue of expungement. By letter dated May 31, 2007, the Department responded to the request to postpone the OATH hearing by arguing that the August 1998 Stipulation and the December 1998 Stipulation did not constitute informal disciplinary proceedings within the meaning of Executive Order No. 16. Respondents argued that the Executive Order was inapplicable, because "the basis of [Greene's] misconduct and current disciplinary action is [Greene's] positive test results," not the August 1998 Stipulation and the December 1998 Stipulation. Respondents further argued that the expungement provision is only for minor violations, and was not intended to address serious offenses, such as violations of state and federal statutes. Respondents pointed to another provision of § 6, which provides that

The expungement of records and results of Informal disciplinary proceedings described in (b) above applies only to those informal disciplinary proceedings promulgated pursuant to this Executive Order and is not applicable to any of the records, results or procedures provided by law or by collective bargaining agreement.

In addition, the Department stated that it was unaware of any grievance filed on Greene's behalf.

OATH Administrative Law Judge ("ALJ") John Spooner issued a memorandum decision, dated June 1, 2007, denying Greene's request for a postponement. The ALJ concluded that the pending arbitration did not constitute good cause for an adjournment. Second, the ALJ found that the two prior positive drug tests in 1998 and the stipulations "were clearly not informal discipline'" within the meaning of § 6 of Executive Order No. 16, as amended. The ALJ stated that there was no showing that the two prior stipulations were informal disciplinary proceedings promulgated pursuant to Executive Order No. 16. The ALJ noted that the stipulations suggest that they were entered into as part of a formal disciplinary process, since both refer to "Charges and Specifications" for positive drug tests, which are to be brought. Finally, the ALJ stated that Greene waived any expungement, because the stipulations waive "any and all rights concerning the above referenced matter that [Greene] may have pursuant to the Civil Service Law, any other applicable laws, statutes, rules, regulations, or contractual agreements which pertain to disciplinary action against New York City employees."

The OATH hearing was held on June 11, 2007. Six witnesses testified on behalf of the Department, including a toxicologist. Greene, who was represented by the same counsel [*5]representing him in the instant proceeding, did not offer any testimony or exhibits. Over Greene's objection, the results of the two 1998 drug tests were admitted into evidence.

On July 2, 2007, ALJ Spooner issued a Report and Recommendation sustaining the charges, and finding that Greene's employment should be terminated. The 1998 drug test results, the August 1998 Stipulation, and the December 1998 Stipulation are cited in the decision upholding the charges. Because this was Greene's third positive test, the ALJ concluded that termination from employment was the only appropriate remedy, noting that "his prior drug violations demand a far more severe penalty" than the suspensions he received in 1998. Greene was discharged, effective July 18, 2007.

After a review of the record and the Report and Recommendation, the Commissioner issued a letter, dated July 18, 2007, finding Greene guilty of the charges, as set forth in the Report and Recommendation. The letter notes that this is a final determination, which may be appealed either to the New York City Civil Service Commission (the "CSC"), or to a court, in accordance with Article 78 of the C.P.L.R. Petitioner elected to appeal to the CSC, which also affirmed the termination, on February 6, 2008.

Meanwhile, as set forth above, Local 376 filed grievances on Greene's behalf. Among the claims raised was that the Department was required to have expunged the two nine-year-old stipulations with respect to the charges that were brought in 1998, and that using these charges as part of the Notice he received in 2007 was unlawful. Local 376 argued that pursuant to the collective bargaining agreement in effect between the City of New York and the parent union, DC 37, a Highway Repairer who tests positive for drugs cannot be terminated from employment for the first positive test result, if the employee agrees to undergo treatment.

An arbitration proceeding was held on May 28, 2008, before Arbitrator Rose F. Jacobs. When the parties were unable to reach an agreement with respect to the statement of the issue to be determined, they stipulated, in writing, that the Arbitrator could frame the issue after reviewing the entire documentary record. She framed the issue to be resolved as follows:

Whether the termination of Kenneth Greene on July 18, 2007 was a violation of Mayoral Executive Order 83 of 1973, Mayoral Executive Order 16 of 1978 (Appendix D of the DOT Code of Conduct), and a misapplication and/or misinterpretation of the 1997 Federal Highway Administration Drug and Alcohol Testing Program Side-letter Agreement?

If so, what shall be the remedy?

Although exhibits were admitted into evidence, there was no testimony. Each party submitted a post-hearing brief. In her Award, Arbitrator Jacobs found that the Notice was improper, in that the two stipulations "should have been expunged from all permanent personnel or employment files." She found that the Department breached the collective bargaining agreements when the Department terminated Greene's employment after what should have been considered his first positive test result for cocaine. Instead of termination from employment, she found that Greene [*6]should have been offered the opportunity for treatment. The Arbitrator directed the Department to reinstate Greene to his position forthwith, and to offer him the opportunity to participate in drug treatment, pursuant to the Controlled Substance and Alcohol Abuse Policy.

The Department has not reinstated Greene. On or about August 27, 2008, petitioner commenced this proceeding on Greene's behalf. Petitioner seeks to enforce the remedy of reinstatement. Respondents seek to vacate the Award.

Respondents assert that the Award should be vacated, claiming that the arbitrator exceeded both her power and jurisdiction, and that the Award is irrational and violates public policy. "[A]n arbitrator's award will not be vacated for errors of law and fact committed by the arbitrator." Sprinzen v. Nomberg, 46 NY2d 623, 629 (1979). Even if the arbitrator purports to adhere to the substantive law and then misapplies it, the award will not be vacated. Schine Enters., Inc. v. Real Estate Portfolio of New York, Inc., 26 NY2d 799, 801 (1970). Nor will courts set aside an award where the arbitrator's interpretation of the parties' contract misconstrues or disregards its plain meaning. Silverman v. Benmor Coats, Inc., 61 NY2d 299, 308 (1984). In addition to the grounds set forth in C.P.L.R. § 7511(b), which provides that an award may be vacated on the grounds of corruption, fraud or misconduct; partiality; or, when the arbitrator exceeds his or her power or imperfectly executes his or her power so that a final award upon the subject matter submitted was not made, the Court of Appeals has held that an arbitration award may be vacated if " it violates a strong public policy, [or] is irrational. United Fed'n of Teachers, Local 2 v. Bd. of Educ., 1 NY3d 72, 79 (2003), quoting, Board of Educ. of Arlington Cent. School Dist. v. Arlington Teachers Ass'n., 78 NY2d 33, 37 (1991). Section 7511 further provides three circumstances when an award may be modified: (1) if there was a mathematical miscalculation or a mistake in the description of any person, thing or property referred to in the award; (2) if an award was made upon a matter not submitted for arbitration and the award may be corrected without affecting the merits of the decision upon the issues submitted; or, (3) if the award is imperfect in a matter of form, not affecting the merits of the controversy.

Respondents assert that petitioner failed to comply with the grievance procedure and failed to comply with other conditions precedent to arbitration, which warrant vacating the Award. But, by participating in the arbitration, respondents have waived any such objection and are now precluded from challenging petitioner's alleged failure to comply with the procedures for arbitration. Having participated in the selection of an arbitrator, and having attended the proceeding, they cannot now raise procedural objections to the proceeding. Contra Blamowski v. Munson Transp. Inc., 91 NY2d 190, 193-95 (1997). In Blamowski, the Court of Appeals noted that the employer could challenge the arbitration because it was "uncontroverted that Munson did not attend any of the arbitration hearings, did not participate in the selection of an arbitrator, and explicitly expressed its refusal to pay any part of the fees associated with the arbitration." 91 NY2d at 195. The reverse must also apply; having participated, respondents accepted the arbitration proceeding and cannot object at this juncture. Town of Ticonderoga v. United Fed'n of Police Officers, Inc., 15 AD3d 756, 757 (3d Dep't 2005) (holding that "by participating in the arbitration process for a period of four months before commencing this proceeding, petitioner [*7]waived its objection to respondent's defective service.").

Respondents also contend that the ALJ's decision is entitled to collateral estoppel effect, since they claim that petitioner had a full and fair opportunity to litigate the issue of expungement of the 1998 test results. The transcript of the proceeding, however, reflects the opposite. Petitioner expressly stated that

[t]here are three issues that relate to this proceeding, but the Respondent is not litigating in this proceeding. But we want to preserve them, and we want to pursue them in other forums. . . . One, Your Honor already talked about, it's Executive Order 16, which is actually attached as an addendum to the Department of Transportation Code of Conduct. We believe that the August 1998, and the November 1998 stipulations should've been expunged, and we are pursuing that, pursuant [sic] the Union Local 376 to which Mr. Greene belongs, is pursuing that in an arbitration at the Office of Collective Bargaining. Secondly, the rules regarding drug policy which are in evidence as Petitioner's Exhibit 7, and Petitioner's Exhibit 9, we believe are being violated by seeking Mr. Greene's termination. That is going to be pursued in the same arbitration as the first issue, before the Office of Collective Bargaining. And a request for arbitration will be filed either this week, or next week, if it hasn't been filed already.

Transcript of OATH hearing at 8-9.

Respondents' contention that the Arbitrator lacked authority to review the ALJ's decision is also without merit, since this is not what the Arbitrator did. While the Department seizes upon language contained in the Award in which the Arbitrator incorrectly refers to the proceeding as a "appeal" from the decision to terminate Greene's employment, the Arbitrator correctly framed the issue to be determined, as set forth at p. 8, supra. The issue is whether it was unlawful and a violation of the Department's procedures to allow the ALJ to consider the two 1998 drug test results and prior suspensions, thereby resulting in a scenario where the charges in the Notice were considered to be a third, rather than a first, violation of Department rules.

The Arbitrator concluded that the Department violated its own procedures. In forming this conclusion, she looked to the face of the August 1998 Stipulation and the December 1998 Stipulation, both of which set forth that Greene admitted to a positive test result but "agrees to resolve this matter without the necessity of formal disciplinary charges." Looking at the face of an agreement or contract is a fundamental rule of contract interpretation. The Arbitrator found that the language must be applied "in accordance with its ordinary meaning and intent." After reviewing all of the documents and contractual mandates, the Arbitrator was "constrained to concluded that there is sufficient evidence to prove that the City . . . breached the parties' Agreement and that the Union should prevail." The Arbitrator expressly rejected respondents' argument that because Greene had a second positive result within the year, expungement was unwarranted. She noted that Greene could have been terminated from employment after the second positive result, but was not. Instead, after the second positive result, the Department agreed to a second informal resolution of the disciplinary proceeding.

It was not erroneous for the Arbitrator to give the statements in the two stipulations their [*8]plain meaning and conclude that since both parties waived the necessity of formal charges, the proceedings constituted informal disciplinary proceedings. As informal proceedings, all records of these proceedings and the underlying test results should have been expunged. The Award sets forth that the Arbitrator was "constrained to conclude" that respondents' breached their agreement to expunge the 1998 test results.

An agency's violation of its own procedures with respect to a disciplinary proceeding "constitutes a ground for annulment of the determination." Grosvenor v. Dalsheim, 90 AD2d 485 (2d Dep't 1982); Lechar Realty Corp. v. Lawitts, 20 Misc 3d 1121(A) (Table), 2008 WL 2795958 at 4 (Sup. Ct. NY Co. 2008) (holding in an Article 78 proceeding that "[a] decision made in violation of an agency's own procedural rules should be annulled."); Nesbitt v. Goord, 12 Misc 3d 702, 705 (Sup. Ct. Albany Co. 2006). Having found that the Department violated its own procedures, the Arbitrator was within her authority to determine that Greene should be reinstated.

The First Department's decision in Islar v. Koehler, 160 AD2d 575, 576 (1st Dep't 1990), is instructive. In Islar, the court upheld the dismissal of a corrections officer, who had recently completed his probationary period, after he engaged in an unprovoked physical assault on another individual. The hearing officer took note of the officer's prior 1987 command discipline for failure to safeguard his police identification card and shield. The First Department noted that this prior offense should have been expunged from petitioner's personnel file due to the lapse of time, and the hearing officer should not have had that information before him. But, because there was "no indication in [the] report to the respondent Commissioner that [the hearing officer's] recommendation for dismissal was in any way based upon this 1987 command discipline," the court upheld the penalty. Id.

Here, in contrast, the Department referred to the 2007 test result as Greene's "third positive test result" and the ALJ specifically considered the two 1998 positive drug test results in determining the penalty of dismissal. But, had the prior records been expunged, there would have been no record of the two prior results; they would not have been referred to in the Notice; and, the ALJ would not have been able to refer to the results in his Report and Recommendation. Greene was not brought up on any disciplinary charges in the two years following the December 1998 Stipulation, which ended on December 23, 2000. If the 1998 drug test results had been expunged, it would have been as if the 2007 positive test result were Greene's first positive test. Under the Department's Controlled Substance and Alcohol Abuse Policy, an employee cannot be terminated from employment for his or her first positive drug or alcohol test, absent compelling circumstances.

It logically follows that had the records been expunged, the ALJ would not have recommended termination from employment.

Finally, the Department's argument that the Award violates public policy is specious. The Department could have terminated Greene's employment after his second positive test result in 1998, six months after his first positive test result. It elected not to do so, and instead, suspended [*9]him from employment. The Department cannot now argue that Greene's continued employment jeopardizes public safety when the Department failed to terminate his employment in December 1998, although it had the clear right to do so. The Arbitrator's determination that Greene's employment should not be terminated, after nine years without a single disciplinary charge, cannot be deemed to violate public policy.

For all of these reasons, the Award is confirmed in all respects. This constitutes the decision, order, and judgment of the court.

Dated: January, 2009

______________________________

JOAN B. LOBIS, J.S.C. Footnotes

Footnote 1: No copy of any of the grievance forms has a date or time receipt, or proof of service or filing, except for the Step IV appeal, for which there is a fax receipt showing that a fax was sent to (212) 306-7740, which, according to petitioner's reply affirmation, is the fax number for the New York City Office of Administrative Trials and Hearings ("OATH"). On May 31, Greene's counsel sent a letter to OATH, attaching the three grievance documents, together with a fax receipt for the Step IV appeal. Counsel also acknowledges that Local 376 mistakenly filed a second Step II grievance on May 1, 2007, which it corrected by changing the form to a Step III Grievance.