City of Portsmouth, New Hampshire Police Commission/Police Department v. Portsmouth Ranking Officers Association, NEPBA, Local 220 ( 2023 )

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Rockingham
No. 2021-0511
CITY OF PORTSMOUTH, NEW HAMPSHIRE POLICE COMMISSION/POLICE
DEPARTMENT
v.
PORTSMOUTH RANKING OFFICERS ASSOCIATION, NEPBA, LOCAL 220
Argued: October 4, 2022
Opinion Issued: June 7, 2023
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
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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 staff’s 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.
Judicial review of an arbitrator’s award is limited. Keene Sch. Dist. v.
Keene Educ. Ass’n, 174 N.H. 796, 801 (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 (2016) (quotation omitted). To demonstrate
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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.
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 (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 (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. If the employer meets this
burden, “neither reinstatement nor front pay is an appropriate remedy” for the
underlying unlawful termination. Id. at 362.
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; Appeal of N.H. Dept. of
Employment Security, 140 N.H. 703, 712-13 (1996). In McDill, we held that
the after-acquired-evidence doctrine applies differently depending on the basis
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for the employee’s wrongful termination claim: With respect to contract-based
claims, the doctrine can serve as a complete bar to recovery, whereas, in tort-
based claims, the doctrine may be used only to mitigate the employee’s
damages. See McDill, 144 N.H. at 640-41. Because the parties agree that, as
applied here, the after-acquired-evidence doctrine may serve to mitigate, not
bar, Goodwin’s damages, we assume, without deciding, that this is the proper
rule.
Here, the City terminated Goodwin on June 24, 2015, and discovered
after-acquired evidence of his wrongdoing on August 20, 2015, when the
Probate Decision issued. In extending the backpay award beyond August 20,
2015, the arbitrator weighed four extraordinary equitable circumstances: She
considered “the severity of . . . Goodwin’s actions” as determined in the Probate
Decision as weighing in the City’s favor. On the other hand, in Goodwin’s
favor, the arbitrator weighed the City’s failure — after the Probate Decision —
to afford Goodwin the procedural due process protections required by
Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985), and the
process guaranteed by the CBA, as well as the failure of the Police Department
command staff to properly supervise Goodwin.
The City argues that the arbitrator was plainly mistaken when she relied
on the lack of due process as an equitable circumstance because her
underlying legal conclusion was incorrect — the City did not violate Goodwin’s
due process rights. In essence, the City claims that the arbitrator committed a
plain mistake of law by misapplying the law to the facts of this case. As
relevant to this appeal, an arbitral award may be vacated for a plain mistake of
law if the arbitrator “clearly misapplied the law to the facts.” Finn, 169 N.H. at
146; see also John A. Cookson Co. v. N.H. Ball Bearings, 147 N.H. 352, 361-62
(2001) (concluding that arbitrator committed plain mistake when, due to “an
error of law,” arbitrator denied plaintiff interest on an award). We therefore
consider whether the arbitrator clearly misapplied the law to the facts when
she concluded that the City violated Goodwin’s due process rights.
Neither party appears to dispute the arbitrator’s conclusion that
Goodwin, a public employee protected by a CBA, had a property interest in his
continued employment that entitled him to procedural due process protections.
But see Appeal of Alexander, 163 N.H. 397, 407-08 (2012) (observing that
public employment alone does not rise to the level of a protected property right
and concluding that appellant had not shown he had a protected property
interest in continued public employment because he failed to cite a provision of
the CBA creating such an interest). Rather, the parties disagree about whether
the arbitrator was correct in concluding that, because the Probate Decision
served as a second basis for Goodwin’s termination, Goodwin was entitled
under Loudermill to notice of this new ground for termination and an
opportunity to be heard after the Probate Decision issued. The City argues
that this determination was error because, under the circumstances presented,
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all that was required to satisfy due process was for the City to provide Goodwin
notice that it intended to rely on the Probate Decision in the arbitration, which
the City did. The Union asserts that the process was insufficient because the
City did not give Goodwin notice or a Loudermill hearing prior to relying on the
Probate Decision as a basis for his termination. We agree with the City.
The arbitrator erred when she treated the Probate Decision as a second
basis for Goodwin’s termination for which he was entitled to notice and an
opportunity to be heard pursuant to Loudermill. The City terminated Goodwin
only once, and that termination was based on the Task Force report. As after-
acquired evidence, the Probate Decision could not have served as a basis for
his termination. See McKennon, 513 U.S. at 360 (explaining that “[t]he
employer could not have been motivated by knowledge it did not have” at the
time of termination); see also Brown v. Fayetteville State University, 837 S.E.2d
390, 396 (N.C. App. Ct. 2020) (“[A]fter-acquired evidence of misconduct does
not serve as a justification for the termination.”). Nor did it. The arbitrator
ruled that the Probate Decision was not admissible to justify Goodwin’s
termination.
Instead, consistent with McKennon, the Probate Decision was admitted
as evidence that could mitigate the remedy for Goodwin’s wrongful termination.
See McKennon, 513 U.S. at 360-61. The City notified the Union that it
intended to use the Probate Decision for that purpose, and Goodwin had the
benefit of an evidentiary hearing before the arbitrator on the issue of whether
the after-acquired evidence of the Probate Decision should preclude him from
receiving the remedy of reinstatement or otherwise mitigate his damages. In
short, the August 2015 Probate Decision was not — nor, as a matter of law,
could it have been — a basis for Goodwin’s termination, which occurred on
June 24, 2015.
Loudermill is inapposite under these circumstances. Under Loudermill,
a public employee with a property interest in continued employment is entitled
to notice of the charges against him and an opportunity to be heard before
termination. See Loudermill, 470 U.S. at 542, 546. The function of this
Loudermill process is to provide an opportunity to test the evidence supporting
a proposed termination and thereby prevent wrongful termination. See id. at
545-46. Loudermill does not stand for the proposition that the same notice
and opportunity to be heard are required under these circumstances — when
the evidence at issue will not be used as a basis for the employee’s termination.
Additionally, even assuming for the sake of argument that, as the Union
contends, the Probate Decision constituted a “new or different” ground for
Goodwin’s termination, an opportunity for a Loudermill hearing following the
Probate Decision would have been futile. The purpose of a Loudermill hearing
is to prevent a wrongful termination in the first instance by ensuring that there
are reasonable grounds to support termination. Id. at 545-46. Here, at the
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time of the Probate Decision, Goodwin had already been terminated on the
basis of the Task Force report. Accordingly, even if he had been afforded a
Loudermill hearing regarding his wrongdoing as reflected in the Probate
Decision, that hearing could not have served its intended purpose: to prevent
his initial wrongful discharge.
We conclude that, because, as after-acquired evidence, the Probate
Decision was not used to justify Goodwin’s termination, but only to mitigate his
remedy, the arbitrator misapplied the law to the facts when she treated the
Probate Decision as a second ground for Goodwin’s termination and
determined that he was entitled to Loudermill protections on that basis. Put
simply, the arbitrator erred when she determined that the City violated
Goodwin’s due process rights and relied on that legal conclusion as an
extraordinary equitable circumstance. We further conclude that the City has
shown that the arbitrator, by relying in part on an erroneous legal conclusion,
committed an error of law that prevented her “free and fair exercise of
judgment” regarding the backpay award. Finn, 169 N.H. at 145 (quotation
omitted). Accordingly, the trial court also erred when it found that the
arbitrator did not commit plain mistake.
Because the weight that the arbitrator assigned to each of the four
equitable circumstances is not clear, we vacate the superior court’s
confirmation of the arbitrator’s award, see Stowell v. Andrews, 171 N.H. 289,
304 (2018), and remand to the superior court with instructions to remand to
the arbitrator to reconsider the backpay award in light of this opinion,1 see
Cookson, 147 N.H. at 362. Any issue raised in the notice of appeal that was
not briefed is deemed waived. See State v. Blackmer, 149 N.H. 47, 49 (2003).
Reversed in part; vacated in part; and remanded.
MACDONALD, C.J., and HICKS, HANTZ MARCONI, and DONOVAN, JJ.,
concurred.
1 Given that the backpay award may change upon remand, we need not address the City’s
argument that “there is nothing legally relevant” about the date the arbitrator designated as the
end point of the backpay award, August 7, 2017.
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