Riverbay Corporation v. Service Employees International Union, Local 32BJ

Background

Riverbay and Service Employees International Union, Local 32BJ were parties to a collective bargaining agreement covering maintenance and grounds employees working at Co-Op City. The agreement required disputes to proceed through a grievance process ending in final and binding arbitration.

The dispute concerned Damien Reyes, who worked as a bulk truck driver for Riverbay. During a March 18, 2022, telephone conversation with Assistant Director of Janitorial Services Arthur Taylor about a disputed pickup assignment, Reyes used a racial slur. He immediately apologized. Riverbay investigated and discharged Reyes on April 1, 2022, for violating its code of conduct and rules against discrimination and harassment.

The parties submitted one question to arbitration: whether Reyes’s discharge was for just cause and, if not, what the remedy should be. After a hearing at which both sides appeared through counsel and presented evidence, the arbitrator issued an award on December 16, 2022. She found that Reyes’s conduct violated Riverbay’s policy but that his discharge was not for just cause. She ordered Riverbay to reinstate Reyes, without back pay, and treated him as having served a one-month suspension.

Motions and legal standard

Riverbay moved for summary judgment seeking to vacate, or cancel, the arbitration award. Local 32BJ moved for summary judgment seeking to confirm and enforce it, back pay beginning January 9, 2023, nine percent prejudgment interest, and attorneys’ fees.

The court explained that judicial review of a labor arbitration award is highly deferential. The court may not reconsider the arbitrator’s factual findings or decide whether the arbitrator reached the best interpretation of the collective bargaining agreement. The relevant questions were whether enforcing the award would violate a clearly established public policy or whether the arbitrator acted outside the authority granted by the agreement.

Public-policy challenge

Riverbay argued that reinstating Reyes violated the public policy against workplace discrimination because the arbitrator found that Reyes had used a racial slur and that Taylor felt demeaned, upset, and disrespected. The court agreed that laws prohibit workplace racial discrimination, but it held that those laws do not require an employer to discharge every employee who makes a racist comment. Corrective action short of discharge may satisfy an employer’s legal obligations, depending on the circumstances.

The court also distinguished a prior case involving an employee who had committed multiple acts of sexual harassment, including conduct that had led to an earlier arbitration award. Here, Reyes was being punished for a single act. Riverbay therefore failed to show that reinstatement after a suspension created an explicit conflict with federal, state, or city law. The court rejected the public-policy challenge.

Authority under the collective bargaining agreement

Riverbay also argued that the arbitrator exceeded her authority by deciding how serious Reyes’s violation was and by finding that discharge was not justified. The court rejected that argument. Although the agreement reserved management rights, it also stated that regular employees could not be discharged without good and just cause. Because the agreement did not define “just cause,” the arbitrator had authority to interpret and apply that term to the dispute submitted by the parties.

The court concluded that the award applied and interpreted the collective bargaining agreement. Even if the court disagreed with the arbitrator’s assessment of Reyes’s intent or credibility, that disagreement was not a basis for vacating the award. Riverbay’s motion for summary judgment to vacate the award was therefore denied.

Back pay and interest

The court held that confirming the award required giving Local 32BJ and Reyes the benefit of reinstatement. Because Riverbay did not contest the requested back pay, the court awarded back pay from January 9, 2023—the date Reyes was available to return to work—to the date of the opinion and order.

The court also awarded nine percent prejudgment interest on the back pay. It relied on the collective bargaining agreement’s statement that arbitration awards are final and binding and on the usual practice of awarding interest from the arbitration award through the judgment confirming it.

Attorneys’ fees and disposition

The court denied attorneys’ fees. It found that Riverbay’s failure to comply with the award was neither unjustified nor undertaken in bad faith. Riverbay actively participated in the court proceedings and had offered a reasonable, though unsuccessful, explanation for waiting for a court order before honoring the award.

Judge Liman’s order granted in part and denied in part Local 32BJ’s motion for summary judgment to confirm the arbitration award. It confirmed the award, granted back pay and nine percent prejudgment interest, and denied attorneys’ fees. The order denied Riverbay’s motion for summary judgment to vacate the award and directed the Clerk of Court to close the case.