
    Binghamton Civil Service Forum, Appellant, v City of Binghamton, Respondent.
    Argued January 3,1978;
    decided February 22,1978
    
      POINTS OF COUNSEL
    
      Frederick P. Conte for appellant.
    I. The court below erred in finding the arbitrator’s award violative of the public policy established by section 30 of the Public Officers Law. (Lawrence Constr. Corp. v State of New York, 293 NY 634; People v Clampitt, 34 Misc 2d 766; Matter of People ex rel. Sherwood v State Bd. of Canvassers, 129 NY 360; Matter of Haller v Carlson, 42 AD2d 829; Matter of Dawson, 231 App Div 490.) II. The award of the arbitrator was not in contravention of public policy; the arbitrator decided the submitted issue. (People v Moore, 85 Misc 2d 4; Local 453, Int. Union of Elec., Radio & Mach. Workers, AFL-CIO v Otis Elevator Co., 314 F2d 25; International Assn, of Machinists, Dist. No. 8, AFL-CIO v Campbell Soup Co., 406 F2d 1223; Matter of Associated Gen. Contrs., N. Y. State Ch. [Savin Bros.], 45 AD2d 136, 36 NY2d 957; Matter of Aimcee Wholesale Corp. [Tomar Prods.], 21 NY2d 621; Matter of Western Union Tel. Co. [American Communications Assn.], 299 NY 177; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229; Matter of Howard & Co. v Daley, 27 NY2d 285; Matter of Long Is. Lbr. Co. [Martin], 15 NY2d 380.) III. The policy of the Federal and State government is to encourage voluntary arbitration. (Steelworkers v Warrior & Gulf Co., 363 US 574; Steelworkers v American Mfg. Co., 363 US 564; Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co. of Amer., 37 NY2d 91; Matter of Weinrott [Carp], 32 NY2d 190.) IV. Arbitrators are granted broad powers and the court has limited rights of review of arbitration awards. (Steelworkers v Enterprise Corp., 363 US 593; Matter of Raisler Corp. [New York City Housing Auth.], 32 NY2d 274; Matter of S & W 
      
      Fine Foods [Office Employees Int. Union, Local 153, AFL-CIO], 8 AD2d 130, 7 NY2d 1018; Matter of Wenger & Co. v Propper Silk Hosiery Mills, 239 NY 199; Fudickar v Guardian Mut. Life Ins. Co., 62 NY 392; Matter of Granite Worsted Mills [Aaronson Cowen, Ltd.], 25 NY2d 451; Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229; Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578.) V. The matter herein was arbitral and the award is binding on the parties. (United Buying Serv. Int. Corp. v United Buying Serv. of Northeastern N. Y., 38 AD2d 75; Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578; Gulf States Tel. Co. v Local 1692, Int. Brotherhood of Elec. Workers, AFL-CIO, 416 F2d 198; Matter of Overseas Distrs. Exch. [Benedict Bros. & Co.], 5 AD2d 498.) VI. The decision of the court below creates disparate treatment. (Matter of Merrin v Town Bd. of Town of Kirkwood, 48 AD2d 992.)
    
      Patrick J. Raymond, Corporation Counsel (John W. Park of counsel), for respondent.
    I. The award of the arbitrator herein is contrary to the public policy of the State of New York and should therefore be vacated. (Matter of Associated Teachers of Huntington v Board of Educ., 33 NY2d 229; Matter of Western Union Tel. Co. [American Communications Assn.], 299 NY 177; Matter of Publishers’ Assn, of N. Y. City, 280 App Div 500; Matter of Susquehanna Val. Cent. School Dist. at Conklin [Susquehanna Val. Teachers’ Assn.], 37 NY2d 614.) II. The arbitrator’s award addresses a subject which could not have been negotiated by the parties and therefore he exceeded his authority under the contract. (Matter of Board of Educ. v Yonkers Federation of Teachers, 40 NY2d 268; Matter of Exercycle Corp. [Maratta], 9 NY2d 329.) III. Arbitration of discharge and discipline of civil service employees is prohibited by law. (Washington Life Ins. Co. v Clason, 162 NY 305.)
   OPINION OF THE COURT

Cooke, J.

The question presented in this appeal is whether the award of an arbitrator, based upon issues submitted to him by the parties to a collective bargaining agreement, is required to be vacated as violative of the public policy of this State. The arbitrator found that there was no just cause for the discharge of a municipal employee, who admitted receiving unlawful gratuities, and modified the penalty imposed, directing that the employee make restitution to the city-employer of the gratuities received and ordering him suspended for six months without pay.

During the criminal trial of a salesman, who solicited business from the City of Binghamton, Richard Cornwell, a city building and maintenance superintendent, admitted, under a grant of immunity, that he received gifts from the defendant. As a result of this and additional testimony by other city employees, the salesman was convicted of bribery in the second degree (Penal Law, § 200.00). Upon the conclusion of the trial, Cornwell was summarily discharged by the Mayor of Binghamton for "bribe-receiving” based upon admissions made by him at the trial of the salesman.

The Binghamton Civil Service Forum, the duly organized representative of city employees, filed a grievance under the collective bargaining agreement then in force which provided that "[n]o employee shall be disciplined or discharged without just cause.” The agreement further provided a four-step grievance procedure culminating in arbitration in which any dispute between the parties, including one concerning the meaning or interpretation of the collective bargaining agreement, was to be resolved.

With no further action being taken by either party, an arbitrator was chosen and the Forum and the city stipulated the following issue for resolution: "Was Richard Cornwell discharged for just cause pursuant to [the collective bargaining agreement]?” At the conclusion of the hearing, in which each party fully participated, the arbitrator made an award which found that Cornwell’s discharge was not for just cause pursuant to the terms of the agreement and reduced the penalty imposed to a six-month suspension without pay.

Upon motion to confirm the award, the city cross-moved to vacate, claiming for the first time outside of the arbitral forum, that by modifying the penalty imposed the arbitrator exceeded his powers, rendered an award on a matter which was not a term and condition of employment and that the award was contrary to the expressed public policy of this State. The Appellate Division, reversing the determination of the Supreme Court which had confirmed the award, vacated the award holding it violative of public policy on the ground that "municipal authorities [may] not be restricted in their power to discharge employees who participate in criminal acts in the absence of a clear and express waiver of that power.” (Matter of Binghamton Civ. Serv. Forum [City of Binghamton], 57 AD2d 27, 29). We reverse.

As we recently stated in Matter of Acting Superintendent of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.) (42 NY2d 509), any challenge to the submission of a dispute to arbitration between an employer and employee in the public sector necessarily involves a two-part inquiry into the question of whether there is a valid agreement to arbitrate a grievance (CPLR 7503, subd [a]). Under the Liverpool approach, it must first be determined that the submitted grievance is one permissible for resolution by arbitration. Manifestly, some matters, such as the decision to grant tenure to probationary teachers, are indefeasibly vested in executive authorities by law and, hence, may not be resolved in the arbitral forum (see Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 NY2d 774). It is well settled, however, that disputes relating to whether the necessary predicate exists for taking disciplinary action against a public employee and the proper penalty to be imposed if that predicate exists are terms and conditions of employment under the Taylor Law (Civil Service Law, § 204, subd 1), and as such, may be agreed by a public employer and employee to be resolved by arbitration (Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122, 131-132).

The second level of the Liverpool inquiry focuses on whether the authority to submit the dispute to arbitration was in fact exercised by the parties to the arbitration agreement (Matter of Acting Superintendent of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.] 42 NY2d 509, 513, supra). The collective bargaining agreement between the parties here expressly provided that resolution of whether there was just cause for the discharge or other discipline of an employee was to be resolved in a four-step grievance procedure, culminating in arbitration. Indeed, the parties here also stipulated orally on the record to submit this very issue of just cause to the arbitrator. Having so agreed, and having so stipulated, neither party may now be heard to complain that the dispute submitted to the arbitrator did not encompass an arbitrable term and condition of employment, for once the issue is properly before the arbitrator, questions of law and fact are merged in the award and are not within the power of the judiciary to resolve (Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578, 582-583; Matter of Associ ated Gen. Contrs., N. Y. State Ch. [Savin Bros.], 36 NY2d 957, 958-959). The city’s exclusive remedy in this regard is afforded by statute (CPLR 7503), and if no objection is made to the submission of the dispute, it is deemed to be waived. This restriction may not later be obviated, upon a motion to confirm an award, by blanket allegations that the arbitrator lacked the power to resolve the very issue which was submitted to him by the parties.

Inasmuch as the arbitrator had the power to determine whether the grievant had been discharged for just cause, the only question remaining is whether the arbitrator, in reducing the penalty imposed upon the grievant, did violence to the expressed public policy of the State which would require vacating an award not otherwise reviewable for errors of law and fact. Separate and apart from the otherwise broad power of public employers and employees to agree to resolve disputes arising from terms and conditions of employment by arbitration (see Syracuse Teachers Assn, v Board of Educ., 35 NY2d 743, 744), a small number of areas, interlaced with strong governmental or societal interests, restrict the power of an arbitrator to render an otherwise proper award (Matter of Susquehanna Val. Cent. School Dist. at Conklin [Susquehanna Val. Teachers’ Assn.], 37 NY2d 614, 616-617). In the public sector, this public policy limitation has arisen with respect to school matters and is derived from the statutory scheme implicit in the Education Law (see, e.g., Matter of Candor Cent. School Dist. [Candor Teachers Assn.], 42 NY2d 266). The discipline imposed upon a miscreant public employee, however, is not so limited so long as there has been a clear expression of intention to arbitrate the matter.

The public policy of this State, as evidenced by statutory and decisional law, is devoid of any indication that a bribe-receiving public employee must be discharged so as to justify the refusal of a court to give effect to the award of the arbitrator. Thus, section 805-a of the General Municipal Law which prohibits a municipal officer from accepting a gift under circumstances where the inference could be drawn that the gift was intended to influence the performance of his official duties does not inflexibly mandate the discharge of an employee in violation of its proscriptions. There being no statutory bar to imposition of a lesser sanction than outright discharge (cf. Matter of Union Free School Dist. No. 2 of Town of Cheektowaga v Nyquist, 38 NY2d 137, 144), there is nothing in the award which would render it irrational as a matter of law or violative of public policy. Similarly, section 30 of the Public Officers Law, which provides for the vacatur of a public office when its incumbent is convicted of a felony, is inapplicable to the case at bar, there being no conviction supplied necessary for its application.

Having bargained to arbitrate whether there was just cause for the discipline or discharge of a municipal employee, and having submitted that very issue to the arbitrator, the city is bound by the determination of the tribunal to which the dispute was submitted. The fact that a different result might have been reached had the dispute been resolved in the courts is of no moment and does not empower a court to substitute its judgment for that of the arbitrator. The fact that we may disagree with the wisdom and advisability of the arbitration award, gives us no license, as a court of law, to impose what we may feel is a more appropriate remedy. The bargain, having been struck, must now be honored.

Accordingly, the order of the Appellate Division should be reversed and the order of the Supreme Court, confirming the award of the arbitrator, reinstated, without costs.

Wachtler, J.

(dissenting). Responsibility for setting the moral tone in civil service should not be wrested from local government by labor arbitrators. Recognizing this basic principle, the city objected in no uncertain terms when the arbitrator distended the notion of "just cause” by asserting a contractual as well as inherent authority to rule on the severity of a disciplinary penalty imposed by the municipal employer. While it is clear under present standards that the city should have moved to stay grievance proceedings rather than simply object to this usurpation of executive prerogative (see Matter of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509; Rochester City School Dist. v Rochester Teachers Assn., 41 NY2d 578), the ultimate award reducing the disciplinary penalty was nonetheless a nullity.

Overriding public policy considerations demand this conclusion. Municipal authorities may neither bargain away their duty to establish ethical standards for public officers and employees (see General Municipal Law, § 806, subd 1) nor be restricted in their power to enforce those standards by discharging those who participate in criminal acts (see Public Officers Law, § 30; Civil Service Law, § 75; cf. Board of Educ. v Areman, 41 NY2d 527; Matter of Cohoes Cent. School Dist. v Cohoes Teachers Assn., 40 NY2d 774).

The city’s Mayor initially exercised this responsibility when a local public works supervisor, in exchange for immunity from criminal prosecution, testified during a bribery trial that he had taken gratuities from the defendant, a salesman who regularly solicited business from the city. These admissions led to the salesman’s conviction. Although the city employee was immunized against a similar fate, regaining his job would require his union’s resort to a strained construction of the grievance procedures worked out with the city.

The arbitrator of course could not ignore the grievant’s public admissions of criminal complicity. Indeed, the arbitrator acknowledged that a "city official receiving a gratuity from a Vendor is inviting discharge. He is in fact constructively signing a blanket resignation.” But despite these findings, the arbitrator ruled that the penalty imposed by the city was too severe and that temperance compelled the employee’s reinstatement.

This amounted to nothing less than a usurpation of the most fundamental obligation of municipal government: the duty to maintain uncompromised integrity within its ranks. It can hardly be questioned that an elected official deprived of his ability to oust dishonest employees will be hard pressed to fulfill this obligation, let alone deal effectively with comparatively minor infractions or untoward incompetence.

Having acknowledged the discharged employee’s admitted misconduct and violation of public trust, the arbitrator should not, by either logic or law, be permitted to invade a province properly reserved to those who alone must account to the public for the effects of that conduct (see Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers’ Assn.], 37 NY2d 614; cf. Matter of Associated Gen. Contrs. [Savin Bros.], 36 NY2d 957). The basic tenor and direction of ethical standards governing conduct in municipal government should neither be molded by the pressures of collective bargaining nor left to the discretion of individual arbitrators. Accordingly, the order of the Appellate Division vacating the arbitrator’s award should be affirmed.

Chief Judge Breitel and Judges Jones and Fuchsberg concur with Judge Cooke; Judge Wachtler dissents and votes to affirm in a separate opinion in which Judges Jasen and Gabrielli concur.

Order reversed, etc. 
      
       For example, in the context of this case the city’s contention that the arbitrator exceeded his power by modifying the penalty imposed could only have been raised prior to the commencement of the arbitration proceedings (CPLR 7503, subd [b]). By its active participation in the selection of an arbitrator, the city waived any objection it may have had on the ground that there was no contract to arbitrate the issue of severity of the penalty (see, e.g., Matter of National Cash Register Co. [Wilson], 8 NY2d 377, 383; Matter of Yonkers Public Lib. [Landolfe Elec. Corp.], 27 AD2d 575, 576).
     