99 N.Y.2d 273 (2002)
A dispute is arbitrable if there is no statutory, constitutional, or public policy prohibition against arbitrating the grievance, and the parties agreed to arbitrate the specific issue in their collective bargaining agreement.
Summary
The Cities of Johnstown and Schenectady appealed a decision to compel arbitration of grievances filed by their respective Police Benevolent Associations (PBAs). The PBAs sought arbitration regarding the calculation of retirement benefits for Tier II employees under Retirement and Social Security Law § 302(9)(d). The New York Court of Appeals held that the grievances were arbitrable because no law or public policy prohibited arbitration, and the collective bargaining agreements (CBAs) contained broad arbitration clauses encompassing the dispute. The court emphasized the distinction between the merits of the grievance and the threshold question of arbitrability, stating that the arbitrator, not the court, weighs the merits.
Facts
The Cities of Johnstown and Schenectady entered into CBAs with their respective PBAs. The CBAs stipulated that retirement benefits would be calculated using the definition of “Final Average Salary” in Retirement and Social Security Law § 302(9)(d). At the time the CBAs were signed, this section applied only to Tier I employees. Subsequently, the statute was amended to extend the 12-month calculation formula to non-Tier I employees (Tier II). The PBAs then argued that all members, including Tier II employees, were eligible for these benefits under the existing CBAs. The cities disagreed, leading to the PBAs demanding arbitration based on the broad arbitration clauses in the CBAs.
Procedural History
The Cities filed petitions in Supreme Court to stay the arbitrations. The Supreme Court granted the stays, reasoning that the parties did not intend to provide retirement benefits to Tier II employees. The Appellate Division reversed, dismissing the petitions and finding a “reasonable relationship” between the CBAs and the grievances. The Cities then appealed to the New York Court of Appeals.
Issue(s)
Whether a grievance concerning the interpretation of a collective bargaining agreement’s retirement benefits provision to include Tier II employees is arbitrable, despite the fact that at the time the agreement was signed, it would have been illegal to provide those benefits to Tier II employees?
Holding
Yes, because there is no statutory, constitutional, or public policy bar preventing the parties from agreeing that an arbitrator will decide whether they intended in these clauses to extend benefits to Tier II employees if and when it became lawful for municipalities to do so.
Court’s Reasoning
The Court of Appeals applied the two-part test from Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.) to determine arbitrability. The first question is whether any law or public policy prohibits arbitration of the grievance. The Court found that Retirement and Social Security Law § 443(f-1), which prohibits compulsory interest arbitration for these benefits, does not apply to grievance arbitration, which involves interpreting an existing CBA, not negotiating a new one. The second question is whether the parties agreed to arbitrate the dispute. The Court found a “reasonable relationship” between the subject matter of the dispute (retirement benefits) and the general subject matter of the CBA (terms and conditions of employment). The court emphasized that CPLR 7501 directs that when deciding whether a dispute is arbitrable, “the court shall not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute.”
The dissenting judge argued that Civil Service Law § 201(4) expressly excludes retirement benefits from the definition of terms and conditions of employment subject to collective bargaining, meaning the dispute was not arbitrable. The dissent also noted the legislature specifically precluded interest arbitration for these benefits. The dissent asserted the majority’s focus ignored the right of a municipality to determine if it is able to bear the cost of extending the benefit, because there is no legal authority for an arbitrator to extend such retirement benefits in the absence of municipal authorization.