Supreme Court At-a-Glance Contributor Jonathan P. Killeen, Shareholder at Boyle | Shaughnessy Law PC in Manchester, NH

No. 2021-0061

February 8, 2022

Affirmed

 

  • Whether an arbitrator’s award pertaining to early retirement stipend benefits exceeded the scope of the arbitrator’s authority or was otherwise plainly mistaken.

 

Randall Burns and R. Scott Hyde, two teachers that applied from early retirement with the Keene School District (School District), claimed that the School District’s delay in paying early retirement benefits violated the collective bargaining agreement (CBA) between the School District and the Keene Education Association (Association).  Specifically, until 2011, teachers that availed themselves to an annual stipend through early retirement would retire on July 1 and receive their first stipend payment at the end of August or early September of the same year. The School District did not consider early retirement stipends as “earnable compensation” and, as a result, did not contribute the employer’s required 17% contribution to the New Hampshire Retirement System (NHRS) or deduct 7% of the employee’s payment to remit to the NHRS. Yet, in 2011, the legislature amended RSA 224:161 such that early retirement benefits, like the stipend, were considered “earnable compensation” for members that vested prior to January 1, 2012. However, payments made 120 days after termination from employment would not be included as earnable compensation.  When the two teachers applied for early retirement, the School District informed them that it would make payments 120 days after the effective date of their retirements so that they, and the Board of Education, did not incur additional NHRS wage deductions from their stipends. The School District subsequently informed one of the two teachers that delaying payments 120 days avoided earnable compensation penalties, but it did not state that by doing so the School District was also avoiding its contribution to NHRS and diminishing the retirees’ retirement benefit by more than $100 per month.

The Association submitted the matter to arbitration. The arbitrator concluded that the matter was arbitrable, the School District’s delayed payment violated the CBA, the retirement payments included required contributions to NHRS, and that the teachers could pursue their retirement benefits with the NHRS. Thereafter, the School District petitioned the superior court to modify, correct, or vacate the arbitration award, which the court denied. The School District appealed to the Supreme Court arguing that the arbitrator exceed his powers by concluding  that early retirement stipends should include contributions to NHRS or alternatively that the arbitrator was mistaken in interpreting the CBA and in failing to consider the School District’s past payment practices.

On appeal, the Supreme Court concluded that the arbitrator acted within the scope of the parties’ submissions when he found that the stipends should includ contributions to NHRS. The Court reasoned that an arbitrator’s jurisdiction over, and interpretation of, the scope of an issue depends upon the voluntary agreement of the parties and the arbitrator is afforded great deference. In this instance, the School District argued that the reason for delaying stipend payments was so that the teachers did not incur additional NHRS wage deductions. As a result, the arbitrator’s decision that early retirement stipend payments should include contributions to NHRS was rationally derived from the parties’ submission. The Court further reasoned that the arbitrator was not “plainly mistaken” when he interpreted the CBA as not restricting NHRS payments. Lastly, the Court concluded that the arbitrator was not “plainly mistaken” when he concluded that the School District’s past practices of delayed stipend payments was at odds with the terms of the CBA and that there was no evidence to suggest that the Association knew, or agreed, to the School District’s practice. As a result, there was a lack of mutuality such that the School District’s past practice was not binding on the parties.

 

Soule, Leslie, Kidder, Sayward & Loughman PLLC, of Salem (Peter C. Phillips on the brief and orally), for the plaintiff; Esther Kane Dickinson, of Concord, staff attorney, NEA-New Hampshire, by brief and orally, for the defendant.