‘Public Policy Exception’ To Arbitration Finality Alive And Well In Illinois

The most commonly-litigated exception to the principle that arbitration decisions are final and binding is known as the “public policy” exception. In general, the public policy exception only arises when a party clearly shows enforcement of the contract, as interpreted by the arbitrator. In a case involving Decatur, Illinois Police Officer Jeremy Welker, the Illinois Court of Appeals gave a broad reading to the public policy exception.

Welker was terminated for an off-duty domestic violence incident involving his wife, Michelle. Michelle alleged that Welker had “head-butted” her in the face above her nose; Welker initially denied that there was any physical contact between the two, but later stated Michelle hit him in the forehead with her face and nose.

An arbitrator ruled that while the City proved by a preponderance of the evidence the domestic violence and untruthfulness charges against Welker, it had not proved domestic violence by the higher proof standard of clear and convincing evidence. While the Arbitrator found a nexus existed between Officer Welker’s conduct and the reputation and efficiency of the service and determined Officer Welker’s misconduct was “somewhat detrimental,” the Arbitrator determined Officer Welker’s “conduct can be corrected with progressive discipline instead of termination.” The Arbitrator noted Officer Welker “had a very good record with infrequent discipline” and over 14 years of “good to excellent service,” and determined the proper penalty was a 45-day suspension.

The City refused to comply with the Arbitrator’s decision, and the dispute wound up in the Illinois Court of Appeals. The Court refused to uphold the Arbitrator’s opinion. The Court held: “We are aware of no case, and no statute, that requires an allegation of misconduct in this context be proved by clear and convincing evidence because the misconduct may also be criminal and because the City seeks to discharge the officer. There is well-defined and dominant public policy against acts of domestic violence. Acts of domestic violence are even more disturbing when committed by a police officer – whether on or off duty.

“It is a violation of public policy to require the continued employment of an officer who has been found to be abusive and untruthful. We find the standard of proof is preponderance of the evidence. The Arbitrator concluded the act was proved by a preponderance and the lie was proved by a preponderance. It would be repugnant to public policy to retain Welker as a police officer in these circumstances.”

Decatur Police Benevolent and Protective Ass’n Labor Committee v. City of Decatur, 968 N.E.2d 749 (Ill. App. 2012).

Note: The Court’s decision is at one end of a continuum of views on the public policy exception. By rejecting the Arbitrator’s conclusion that the burden of proof should be by clear and convincing evidence, the Court was substituting its judgment on the interpretation of the just cause provision of the contract for that of the Arbitrator. Courts at the other end of the continuum would find that the parties bargained for a final and binding decision by the arbitrator on the meaning of the contract.