How final is arbitrator’s finding?

Listen to this article

A Minnesota Department of Corrections appeal of an arbitrator’s reinstatement of a fired department official will proceed under a Minnesota Court of Appeals ruling issued Tuesday.

Court of Appeals Chief Judge Susan Segal, writing in a special term opinion, said that an arbitrator’s decision is subject to judicial review under the Minnesota Administrative Procedure Act (MAPA) if the arbitrator was selected under Minnesota Statutes § 43A.33, subd. 3. That subdivision governs grievances of state employees who are appealing discharge, suspension without pay or demotion and are not covered by a collective bargaining agreement, Segal wrote.

Further, the plain language of the subdivision “compels the conclusion that the decision of the arbitrator constitutes a ‘final decision in a contested case’ under MAPA and is thus subject to judicial review in this court by certiorari,” wrote Segal, who decided the matter with Judge Louise Dovre Bjorkman and Judge Peter M. Reyes Jr.

The Department of Corrections (DOC) had turned to the appeals court for review of an arbitrator’s February ruling that reduced the termination of former employee DOC Nathan Knutson to a one-month suspension without pay and ordered DOC to reinstate him to his former job or a similar one with back pay and benefits.

Demoted, then fired

DOC officials demoted Knutson, then a 19-year department employee, in March 2020 from his position as assistant commissioner to his previous role as assistant warden of operations after a DOC investigation determined that he had engaged in employment misconduct, according to the arbitrator’s findings. That same day, DOC opened a second, unrelated investigation, and immediately placed Knutson on leave before terminating him in May 2020.

Knutson appealed his termination to the Bureau of Mediation Services (BMS), leading to virtual hearings in December and January before arbitrator Richard Beens, who awarded Knutson reinstatement and back pay.

Beens found that DOC’s investigation proved only one of five allegations against Knutson, that his calls to co-workers after he was placed on leave in March 2020 under an admonition not to contact them were acts of insubordination that constituted just cause for discipline.

Termination, however, was “not proportionate in view of length of service, work record and the seriousness of the violations,” Beens concluded.

‘Shoddy, incomplete investigation’

Beens sharply criticized the DOC’s handling of the matter, stating that department officials were “ill-served by a shoddy, incomplete investigation.”

The investigator interpreted ethical standards in a “‘zero tolerance’ manner without consideration of easily ascertainable facts and surrounding context,” Beens wrote. “There was not a good faith attempt to ascertain all the facts or to interview obviously relevant witnesses.”

Supreme Court review

Now Knutson, contending that DOC’s move for certiorari review before the Court of Appeals was improper, may petition the Minnesota Supreme Court for review of the appellate court’s decision, according his attorney, Marshall Tanick.

Knutson has argued that the only proper venue for review of the arbitrator’s decision is through an action brought in District Court under the Minnesota Uniform Arbitration Act, which Tanick said has been in place to handle arbitration appeals since the 1950s.

“Arbitration has a pretty well-established set of rules and doctrines for making appeals, and all of those are encompassed under the Uniform Act,” Tanick said in an interview. “By trying to shift this into the appellate court on certiorari, the department is arguing for a different and lesser standard of review that would try to give it a greater opportunity to overturn an arbitration award. That would significantly dilute the role of arbitration by allowing arbitration appeals to more readily challenge the arbitrator’s decisions, contrary to the doctrines that have been developed under the Uniform Arbitration Act.”

By going to the appellate court instead, Tanick said, DOC is trying to circumvent Uniform Arbitration Act and seek review of the arbitrator’s decision under a “less appropriate” standard.

Attorney: Arbitrator is ‘final judge of law’

“In arbitration the standard review calls for an arbitrator to be the final judge of law,” Tanick said. “In fact, the arbitration awards are not to be overturned or set aside unless there’s some kind of fraud or corruption or deviation from acceptable practices. The certiorari standard is a little bit different and a little bit less rigorous. They’re arguing that the court can overturn an arbitrator’s decision if it disagrees with it even though the traditional law is that an arbitrator’s decision is final unless there is some huge impropriety by the arbitrator.”

DOC contacts did not respond to a request for comment.

The Uniform Arbitration Act, Segal wrote in the appellate court’s opinion, allows very limited grounds to review.

“While still circumscribed in scope, certiorari review includes review of ‘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,’” Segal wrote in a footnote, citing Dietz v. Dodge County, a Minnesota Supreme Court Case from 1992.

Knutson, in arguing for review under the Uniform Arbitration Act in District Court, contended that the appeals court lacked jurisdiction to review the arbitration decision in response to a writ of certiorari because the decision was not a final one of BMS because an independent arbitrator had made the decision.

The court, however, found that the fact that arbitrators are not BMS employees “is not dispositive.”

Court: No distinction based on arbitrator’s (employment) status

“Knutson has cited no case law that makes a distinction based on whether the decision-maker was an employee of the agency or an independent agent, and we see no basis for doing so here,” Segal wrote. “To conclude otherwise would deprive parties of any opportunity for judicial review of an arbitration decision rendered under the procedures of § 43A.33, subd. 3,” which governs classified state employee grievances.

Knutson’s contention that the arbitration decision is subject to review in District Court under the Uniform Arbitration Act, Segal wrote, “is mistaken.” That act applies only to arbitrations held pursuant to an agreement to arbitrate.

“The appointment of the arbitrator was pursuant to a right of appeal granted by statute, not an agreement,” Segal continued. “Thus, neither party has a right to seek judicial review of the MBS arbitrator’s decision by initiating an action in District Court” under the Uniform Arbitration Act.