Michigan Supreme Court Declines Application for Leave to Appeal Lower Court’s Vacation of Arbitration Award

In Michigan AFSCME Council 25 v. County of Wayne, the Supreme Court of Michigan declined an application filed by Michigan AFSCME Council 25 and Affiliated Local 101 for leave to appeal a judgment of the circuit court and court of appeals vacating an arbitrator’s decision regarding an employment-related dispute. The court’s order was limited to the denial of the defendant’s application and noted, “we are not persuaded that the questions presented should be reviewed by this Court.” However, a concurring opinion addressed the underlying arbitration and issues created by the court of appeals decision regarding the applicable standard of judicial review.

The underlying case involved a county employee who applied for retirement while a disciplinary action was pending against him. The employee signed a “separation waiver,” which confirmed that he was terminating his employment with no agreement concerning reemployment. The employee was then terminated by the county as a result of the disciplinary action, and he filed a grievance seeking reinstatement of his employment. While the grievance was pending, the employee’s retirement was approved. The grievance seeking reinstatement was arbitrated and the arbitrator ruled in favor of the employee, concluding that the county violated the collective bargaining agreement when it terminated the employee and that he was entitled to reinstatement. The Michigan AFSCME Council 25 labor organization filed a lawsuit in circuit court against the county to enforce the arbitrator’s award, and the county filed a counterclaim seeking to vacate the award. The circuit court ruled in favor of the county and vacated the arbitrator’s award concluding that the arbitrator had exceeded his authority “by failing to enforce the separation waiver in the retirement application and issuing an award that violated Internal Revenue Service regulations.” In an unpublished non-binding opinion, the court of appeals affirmed the circuit court opinion.

Significantly, the concurring opinion also addressed the standard of review that applies to collective bargaining arbitration decisions, noting that the court of appeals had failed to acknowledge the court’s prior decisions that expressed approval of “the policy favoring arbitration of disputes arising under collective bargaining agreements.” The court noted that the court of appeals instead applied the standard of review that the Michigan Supreme Court “adopted in the context of statutory arbitration disputes” and that “the standard of review that applies to collective bargaining arbitration decision is now called into question.” After recognizing this apparent conflict in the applicable standard of review, the concurring opinion concluded that if the court of appeals decision was published and binding precedent “this Court would be obligated to act in this case and resolve the parties’ disagreement about which standard of judicial review governs.” The concurring opinion concludes by encouraging the legislature to clarify state law addressing the standard of review that should be applied to labor arbitrations in Michigan.

Michigan AFSCME Council 25 v. County of Wayne, No. SC 164435 (Mich. May 3, 2024).