Another MAJOR Decision by the Minnesota Court of Appeals Overturning the Decision of an Arbitrator

The Minnesota public labor community was already pretty taken aback at the Minnesota Court of Appeals’s decision in City of Richfield v. Law Enforcement Labor Services, which reversed an arbitrator’s decision returning an officer to duty after he was terminated for striking a young man in a city park and not documenting his use of force after the fact.  In that case, the court found that returning an officer to duty “after he had been trained, retrained, counseled, and disciplined on this topic” of report writing violated a “well-defined and dominant” public policy. That decision may be reviewed by the Minnesota Supreme Court (we’ll know next month).


Now, on June 11, 2018, the Court of Appeals reversed another arbitrator decision.  In this case, the arbitrator had rendered an award returning a prison warden with serious issues of misconduct to his post.  The basis for misconduct in Minnesota Department of Corrections v. Steven Hammer (2018), was warden Hammer’s behavior, including alleged harassing behavior, that occurred in 2014 for which he was terminated in 2016.  Arbitrator McCoy returned the grievant to his post after finding the policy violations were not serious enough to bypass progressive discipline, and that the investigation that exposed the misconduct was “built on a falsehood” created by the Human Resources Director for the Minnesota Correctional Facility – Rush City.

The State sought certiorari in order to appeal the decision, arguing that the arbitrator erred in his application of Minn. Stat. §43A.33, which relates to standards of conduct applied to state employees.  The statute states, “No permanent employee in the classified service shall be reprimanded, discharged, suspended without pay, or demoted, except for just cause,” and defines just cause as “consistent failure to perform assigned duties, substandard performance, insubordination, and serious violation of written policies and procedures, provided the policies and procedures are applied in a uniform, nondiscriminatory manner.”

In reviewing the case, the Court of Appeals went to great lengths to flesh out the facts that should have led to the termination of the grievant, and laid out an additional policy violation that, based on the court’s decision, appears not to have been presented during the arbitration.  Finally, the court found that “the DOC was not required to follow progressive discipline when the DOC policy allows for discharge.”

This decision is a definite win for the State Department of Corrections, who was able to get rid of an alleged sexual harasser who had serious issues of misconduct related to working with other people.  However, this decision chips away further at the finality of arbitrator decisions in public labor situations.

At the beginning of its analysis, the court stated that its review was limited to “questions affecting the jurisdiction of the [government body], the regularity of its proceedings, and, as to merits of the controversy, whether the order or determination in a particular case was arbitrary, oppressive, unreasonable, fraudulent, under an erroneous theory of law, or without any evidence to support it.”  The court, however, cited none of the reasons above for its reversal of the arbitrator’s award, and instead found that the employer could terminate the employee because it had a policy that allowed for it.

This case could prove to be a double-edged sword.  For the time being, the State can rely on this decision in those situations where an arbitrator goes against its determination of just cause as an employer. At the same time, the decision does not foreclose an employee from appealing an unfavorable arbitrator’s award and presenting his or her evidence all over again in hopes the court will find the arbitrator violated the “just cause” statute by not sustaining a grievance.  In other words, the finality of an arbitration decision is no longer “final,” no matter the result.

It had been almost 20 years since the last successful challenge to an arbitrator’s ruling occurred in Minnesota.  Now, within the last three months, there have been two separate victories for employers on two separate bases where the courts have determined that there was adequate cause to reverse an arbitrator’s award. With as much interest as these two cases have garnered, it is likely we will be hearing more on these from Minnesota’s highest court.  Stayed tuned, as we will be monitoring these cases closely.