Last week, the Ohio Supreme Court issued a decision emphasizing the power of an arbitrator to amend an employer’s disciplinary decision where the CBA lacks an express provision limiting the arbitrator’s authority to do so.

At issue in the case was the termination of a police officer for the violation of several police department rules, the most serious being the department’s sexual harassment policy.  The chief of police determined that the Grievant should be discharged.  In doing so, he applied a “discipline matrix” the department had adopted pursuant to authority granted it in the CBA.  The matrix was a system for determining proper employee discipline.  The matrix gave the chief of police “sole discretion” to choose among the options for discipline suggested by the matrix.

At arbitration, however, the arbitrator found that the City did not clearly establish that the Grievant violated the department’s sexual harassment policy, leaving the department without just cause to terminate the Grievant.  The arbitrator found that instead, the evidence only established conduct unbecoming an officer.  Looking at the matrix, the arbitrator noted that it specified two possible options for discipline for conduct unbecoming — a 3-10 day suspension or termination.  But, the arbitrator didn’t pick either.  Instead, he ordered a “lengthy disciplinary suspension” and reinstated the Grievant without back pay.  He did not give the chief of police the discretion to pick between the two options.

The lower courts both held that the arbitrator had exceeded his power by departing from the language of the matrix, which gave sole discretion to the chief of police in deciding between the 3-10 day suspension or termination.  Because the chief had picked one of those for the conduct the chief found to have occurred, the arbitrator lacked authority to modify that discipline. The Ohio Supreme Court reversed, focusing entirely on the express language of the CBA.

The key issue in the majority’s view was not whether the CBA empowered the department to create a punishment matrix, but rather whether the CBA contained language allowing a punishment matrix to override the “just cause” language for punishment.  The Court found that it did not.  Importantly, the Court held that “the city’s right to develop rules is not a right to determine what particular form of discipline it has just cause to impose for a violation of those rules.”

The Court went on to state that while “nothing in the CBA precludes the city from using the matrix as a guide in imposing discipline, treating the matrix as binding on the arbitrator would conflict with the just cause requirement for discipline….” Therefore, because the matrix itself was not bargained for by the parties, and no other language limited the arbitrator’s authority to amend discipline decisions, the arbitrator had authority to review the appropriateness of the discipline and fashion a remedy consistent with the evidence.

Chief Justice O’Connor dissented, finding the majority’s decision “overbroad,” and likely to have “unintended consequences” for parties to union agreements, among other issues. O’Connor noted that an arbitrator’s source of law is found not only within the four corners of the CBA, but also in the practices of the parties and industry.  By requiring specific bargaining to limit the arbitrator, O’Connor stated that “the majority opinion may prevent an employer from relying on past practice as the basis for disciplinary action.” Under the majority’s holding, if an employer disciplines an employee based on an “uncontested practice of imposing the same disciplinary action for a similar violation” for years, the arbitrator may ignore years of precedent and impose the arbitrator’s own level of discipline.

For the labor professional, the decision is a good reminder that the best defense is clear contract language.  The opinion provides strong authority for arbitrators to fashion their own discipline, in lieu of management’s judgment, in the absence of such language.  Prudent employers should review their agreements and determine whether or not this issue should be a focus area in upcoming negotiations.

In addition, labor professionals may note that this decision involved a public employer in Ohio.   However, the court construed language generally applicable to enforcing (or vacating) arbitration awards, both in the public and the private sector.