## Facts

- A public school district and a teachers’ union were parties to a collective bargaining agreement (CBA) addressing health-insurance benefits and allocating premium costs.
- The CBA included a broad arbitration clause covering disputes concerning the agreement’s “meaning and interpretation.”
- The district joined a multi-district municipal cooperation arrangement to provide health insurance through a shared health plan administered by trustees.
- The plan’s trustees increased employees’ health-insurance copayment cap for financial reasons.
- The union filed a grievance alleging the increased copayment cap was an unlawful unilateral reduction of negotiated benefits and violated the CBA.
- The district denied the grievance and sought to stay arbitration, arguing the change was made by the plan trustees and was outside the district’s control and the CBA’s arbitration commitment.
- Lower courts stayed arbitration; the union appealed.

## Issues

1. Whether a grievance challenging an increased employee health-insurance copayment cap is substantively arbitrable under a public-sector CBA with a broad arbitration clause when the change was implemented by trustees of a shared health plan rather than directly by the district.
2. To what extent courts, at the arbitrability stage under the Taylor Law, may consider an employer’s asserted lack of “control” over benefit changes administered through an external multi-employer plan.

## Decision

- The Court of Appeals reversed the orders staying arbitration and compelled arbitration.
- Health-insurance benefits, including copayment terms, were treated as mandatory subjects of bargaining under the Taylor Law.
- Given the broad arbitration clause, doubts about coverage were resolved in favor of arbitration.
- The district’s “lack of control” argument was held to concern the merits and contract interpretation, which were for the arbitrator, not a basis to deny arbitrability.

## Legal Principles

- In public-sector labor disputes, a court deciding arbitrability first asks whether the subject matter is a permissible (or mandatory) subject of bargaining under the Taylor Law.
- If the subject is bargainable, the court next determines whether the parties agreed to arbitrate the dispute; broad clauses covering interpretation of the CBA create a strong presumption of arbitrability.
- Courts may not deny arbitration by resolving factual or contractual-merits questions (including defenses) under the label of “arbitrability.”
- An employer’s claim that benefit changes were made by an external plan administrator generally raises a contract-interpretation and breach question for the arbitrator when the grievance facially concerns negotiated benefits.

## Conclusion

The court required arbitration of the union’s grievance over increased health-insurance copayment caps because the dispute concerned negotiated benefits and fell within a broad CBA arbitration clause; the employer’s asserted lack of control over the shared plan’s decision was a merits defense for the arbitrator.


Board of Education of Watertown City School District v. Watertown Education Ass’n, 93 N.Y.2d 132, 710 N.E.2d 1064, 688 N.Y.S.2d 463 (1999)