City of Portsmouth v. Portsmouth Ranking Officers Ass'n

305 A.3d 899

CITY OF PORTSMOUTH, NEW HAMPSHIRE POLICE COMMISSION/POLICE DEPARTMENT

v.PORTSMOUTH RANKING OFFICERS ASSOCIATION, NEPBA, LOCAL 220

No. 2021-0511

Supreme Court of New Hampshire.

Argued: October 4, 2022

Opinion Issued: June 7, 2023

Rockingham

Jackson Lewis, PC, of Portsmouth (Thomas M. Closson on the brief and orally), for the plaintiff.

Nolan | Perroni, PC, of North Chelmsford, Massachusetts (Peter J. Perroni on the brief and orally), for the defendant.

BASSETT, J.

The plaintiff, City of Portsmouth, New Hampshire Police Commission/Police Department (the City), appeals the decision of the Superior Court (Honigberg, J.) denying the City’s request to modify, correct, or vacate an arbitrator’s award of backpay to Aaron Goodwin, a police officer who was previously employed by the City and who is a member of the defendant organization, Portsmouth Ranking Officers Association, NEPBA, Local 220 (the Union). See RSA 542:8 (2021); RSA 542:10 (2021). The arbitration arose from a grievance filed by the Union challenging Goodwin’s termination. The arbitrator found that the City wrongfully terminated Goodwin and awarded him approximately twenty-six months of backpay. The superior court confirmed the arbitrator’s termination decision and backpay award. On appeal, the City argues that the arbitrator committed plain mistake because she failed to correctly apply the after-acquired-evidence doctrine in determining the amount of the backpay award. Because we agree with the City that the arbitrator committed a plain mistake of law in reaching the backpay award, we reverse in part, vacate the superior court’s confirmation of the arbitrator’s award, and remand.

The arbitrator found, or the record supports, the following facts. In 2010, Goodwin was employed by the City as a police officer and was a member of the Union. While on duty, Goodwin met Geraldine Webber, who was then 92 years old. Over the next two years, Goodwin provided Webber with companionship and became increasingly involved in her affairs. At some point, Webber expressed a desire to leave her house and other assets to Goodwin. Goodwin assisted Webber in finding an attorney to help her execute a new will, which she did in May 2012. In December 2012, Webber (hereinafter "the decedent") passed away. Her new will left the majority of her estate to Goodwin.

The City created a Task Force to conduct an independent inquiry into Goodwin’s relationship with the decedent. In June 2015, the Task Force issued its report, which concluded that Goodwin’s "conduct in fostering a relationship with [the decedent] and not repudiating [her] bequest violated certain provisions of the Portsmouth Code of Ethics and the Police Department Duty Manual." It further concluded that the Police Department command staff and the Police Commission, although aware of the nature of Goodwin’s relationship with the decedent and her bequest to him, failed to take "appropriate action." Based on the Task Force report, the City terminated Goodwin on June 24, 2015. The Union timely filed a grievance under the terms of the parties’ Collective Bargaining Agreement (CBA), which proceeded to arbitration.

Meanwhile, the beneficiaries of the decedent’s prior will initiated an action in circuit court to contest the new will. On August 20, 2015, the Circuit Court (Cassavechia, J.) issued an order in the will contest (the Probate Decision), concluding that the decedent’s 2012 will and other estate planning documents "must be invalidated as the product of undue influence exerted by … Goodwin."

In June 2016, the City notified the Union that it intended to introduce the Probate Decision at the arbitration hearing to justify its termination of Goodwin and as mitigating evidence relative to any remedy. The parties then litigated the admissibility of the Probate Decision. The arbitrator concluded that the Probate Decision was not admissible in the arbitration to supply the "just cause" for Goodwin’s termination, but would be admissible at the remedy phase of the proceeding.

On August 7, 2017, after an evidentiary hearing on the merits, the arbitrator concluded that the City did not have just cause to terminate Goodwin based solely on the Task Force report. The arbitrator explained: "Although, I have determined the [City] did not have just cause to terminate … Goodwin it is not because he did nothing wrong." Rather, the arbitrator found no just cause because the City did not enforce its rules correctly and Goodwin "was improperly supervised when he was not informed his conduct was violating Department Rules and he needed to denounce [the decedent’s] bequests."

Following a separate evidentiary hearing as to the appropriate remedy for Goodwin’s wrongful termination, the arbitrator ruled that Goodwin’s wrongdoing, as found in the Probate Decision, "was so severe that alone, it was cause for [his] termination if the City had known of the wrongdoing at the time of the discharge." The arbitrator therefore refused to reinstate Goodwin.

Nonetheless, as a remedy for Goodwin’s wrongful termination, the arbitrator awarded him backpay. In crafting the backpay award, the arbitrator considered the parties’ relative fault: Although the arbitrator noted the severity of Goodwin’s conduct, she also concluded that the City failed to afford Goodwin the process he was due as a public employee protected by the CBA and considered the Police Department’s command staffs failure to properly supervise Goodwin. After weighing these considerations, the arbitrator awarded Goodwin backpay from the date of his termination on June 24, 2015, to August 7, 2017, the date the arbitrator found that Goodwin’s dismissal based solely on the Task Force report was not supported by just cause.

The City then filed in the superior court its challenge to the arbitrator’s award of backpay. See RSA 542:8. Following a hearing, the court ruled that it could not "find a ‘plain mistake’ of fact or law that would justify doing anything other than confirming the arbitrator’s decision in full." This appeal followed. See RSA 542:10.

[1–3] Judicial review of an arbitrator’s award is limited. Keene Sch. Dist. v. Keene Educ. Ass’n, 174 N.H. 796, 801, 274 A.3d 1199 (2022). RSA 542:8 provides that a party to arbitration may apply to the superior court to confirm, correct, or modify an award for "plain mistake," or to vacate an award "for fraud, corruption, or misconduct by the parties or by the arbitrators, or on the ground that the arbitrators have exceeded their powers." We have defined a "plain mistake" as "an error that is apparent on the face of the record and which would have been corrected had it been called to the arbitrators’ attention." Finn v. Ballentine Partners, LLC, 169 N.H. 128, 145, 143 A.3d 859 (2016) (quotation omitted). To demonstrate plain mistake, "[i]t must be shown that the arbitrators manifestly fell into such error concerning the facts or law, and that the error prevented their free and fair exercise of judgment on the subject." Id. (quotation omitted). We therefore consider arbitral awards with deference to the arbitrator. Id.

On appeal, although the City does not dispute that Goodwin is entitled to backpay, it challenges the amount of backpay awarded. The City argues that the arbitrator should have awarded backpay only through August 20, 2015 — the date of the Probate Decision — and that the award of backpay through August 7, 2017 was the result of the arbitrator’s mistaken application of the after-acquired-evidence doctrine. The Union counters that the arbitrator correctly applied the after-acquired-evidence doctrine to the facts by identifying extraordinary equitable circumstances that justified the award. We therefore begin with a discussion of the after-acquired-evidence doctrine.

[4, 5] After-acquired evidence is evidence of an employee’s misconduct — discovered by the employer after it has terminated the employee for an unlawful reason — which is so severe that the employer would have terminated the employee on those grounds alone had it known of the misconduct at the time of the discharge. See McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 361-63, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995).

Under the after-acquired-evidence doctrine, employers may introduce such evidence in defense of wrongful or unlawful termination claims to bar or limit the employee’s recovery. See id.; McDill v. Environamics Corp., 144 N.H. 635, 640-41, 757 A.2d 162 (2000).

In McKennon, the United States Supreme Court held that, in order for the employer to rely on after-acquired evidence of the employee’s wrongdoing to bar or limit the employee’s remedy, it "must first establish that the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge." McKennon, 513 U.S. at 362-63, 115 S.Ct. 879. If the employer meets this burden, "neither reinstatement nor front pay is an appropriate remedy" for the underlying unlawful termination. Id. at 362, 115 S.Ct. 879.

However, the Court held that the doctrine did not necessarily bar all recovery. See id. It explained: "The beginning point in the trial court’s formulation of a remedy should be calculation of backpay from the date of the unlawful discharge to the date the new information was discovered." Id. It further stated that, in determining the appropriate remedy, the lower tribunal "can consider taking into further account extraordinary equitable circumstances that affect the legitimate interests of either party." Id.

We subsequently adopted and applied the general principles laid out in McKennon. See McDill, 144 N.H. at 640-41, 757 A.2d 162; Appeal of N.H. Dept. of Employment Security, 140 N.H. 703, 712-13, 672 A.2d 697 (1996). In McDill, we held that the after-acquired-evidence doctrine applies differently depending on the basis for the employee’s wrongful termination claim: With respect to contract-based claims,...