The Law of Higher Education. William A. Kaplin
of interest or dishonesty). Generally speaking, a court will examine whether the issues as defined by the parties and the arbitrator are within the terms of the agreement. Second, the authority for the arbitrator's award must be rationally derived from the agreement (State System of Higher Education v. State College and University Professional Association, 743 A.2d 405 (Pa. 1999)). (See Luzerne County Community College Association of Higher Education v. Luzerne County Community College, 916 A.2d 731 (Pa. Commw. Ct. 2007), upholding the arbitrator's award of promotion because the agreement included such authority; but see Massachusetts Board of Higher Education v. Massachusetts Teachers Association, 943 N.E.2d 485 (Mass. App. Ct. 2011), holding that an arbitrator had exceeded his authority by ordering a college to hire a grievant.)
If an arbitration award is challenged on public policy grounds, the party seeking to overturn the award must demonstrate that the award is contrary to law or some recognized source of public policy. For example, in Illinois Nurses Association v. Board of Trustees of the University of Illinois, 741 N.E.2d 1014 (Ill. App. Ct. 2000), a nurse had been fired for actions that endangered patient safety. An arbitrator reinstated her, ruling that the hospital had not proved one of the charges and that the nurse's long seniority and otherwise good work record mitigated the severity of her misconduct. The court refused to enforce the arbitrator's award, ruling that the nurse's actions had threatened patient safety and thus her reinstatement violated public policy with respect to patient care.
A Pennsylvania appeals court determined that an arbitration award reinstating a faculty member found responsible for engaging in sexual harassment of students violated public policy and thus refused to enforce it. In Slippery Rock University of Pennsylvania v. Association of Pennsylvania State College and University Faculty, 71 A.3d 353 (Pa. Commw. 2013), the university had terminated a tenured faculty member and department chair who had made allegedly inappropriate sexual comments to students while intoxicated on a field trip to Spain that he was leading. Although the arbitrator credited the professor's defense that his comments were “trash talk” and not sexually harassing, the court found that several of the arbitrator's findings were not rationally derived from the collective bargaining agreement, and also that, given the alleged conduct, which the professor admitted, and an earlier instance of sexual harassment by that individual, reinstating the professor violated public policy.
Also, the Supreme Court of New Hampshire vacated an arbitration award that would have reinstated a tenured professor who had lowered evaluations that students had given another instructor. In University System of New Hampshire Board of Trustees v. Dorfsman, 130 A.3d 1219 (N.H. 2015), the university had terminated the professor on the grounds of moral turpitude—one of the “just cause” reasons for termination in the collective bargaining agreement. Although the arbitrator found that the misconduct did constitute moral turpitude, he determined that the termination did not comport with the requirements of just cause and ordered the professor reinstated. The court ruled that the arbitrator acted beyond the scope of his authority; his finding that the professor's misconduct constituted moral turpitude required the arbitrator to uphold the termination.
Arbitration clauses are appearing in student enrollment agreements, particularly those used by for-profit proprietary schools. To date, most students who have signed such agreements, but who have then attempted to avoid arbitration and pursue class action claims for fraud, breach of contract, and other state law claims, have been unsuccessful. The decision of the U.S. Supreme Court in AT&T Mobility v. Concepcion, 563 U.S. 333 (2011), which ruled that arbitration clauses containing waivers of class action claims, both in court and in arbitration, were not preempted by the Federal Arbitration Act, is in large part responsible for this lack of success. For example, in Miller v. Corinthian Colleges, Inc., 769 F. Supp. 2d 1336 (D. Utah 2011), and Montgomery v. Corinthian Colleges, Inc., 2011 U.S. Dist. LEXIS 31651 (N.D. Ill. March 25, 2011), students who had enrolled at Everest College, owned by Corinthian Colleges, signed arbitration agreements that not only limited the students to arbitration in the event of a dispute but also included a waiver of their right to file class action lawsuits or demands for arbitration. The students later attempted to bring class action lawsuits against Corinthian under state consumer protection laws for allegedly deceptive practices and promises. In both cases, federal trial courts ruled that the arbitration clauses were valid and that the only remedy was individual arbitration. See also Bernal v. Burnett and Westwood College, 793 F. Supp. 2d 1280 (D. Colo. 2011) (same result).
Students in one case had some success escaping the arbitration clause they had signed. In Rude v. NUCO Education Corp., 2011 Ohio App. LEXIS 5605 (Ohio Ct. App. December 30, 2011), a state appellate court ruled that an arbitration clause in the enrollment agreement of a nursing school was both procedurally and substantively unconscionable as a contract of adhesion. But in Best v. Education Affiliates, Inc., 82 So.3d 143 (Fla. Dist. Ct. App. 2012), the court ruled that the arbitrator, not the court, must determine whether the enrollment agreement's arbitration clause was invalid because of its limits on remedies for students.
Faculty and administrators should carefully weigh the benefits and challenges of ADR systems when considering whether to implement such innovations as mediation, arbitration, or the creation of a campus ombudsperson. Although these systems are useful in channeling disputes away from the courts, they require extensive internal processes, additional staff, and careful adherence to procedural requirements in order to be effective.
Section 2.4. Institutional Management of Liability Risk6
2.4.1 Overview and suggestions. The risk of financial liability for injury to another party remains a major concern for postsecondary institutions as well as their officers, faculties, and other personnel. This section examines various methods for managing such risk exposure and thus minimizing the detrimental effects of liability on the institution and members of the campus community. Risk management may be advisable not only because it helps stabilize the institution's financial condition over time but also because it can improve the morale and performance of institutional personnel by alleviating their concerns about potential personal liability. In addition, risk management can implement the institution's humanistic concern for minimizing the potential for injuries to innocent third parties resulting from its operations and for compensating any such injuries that do occur.
The major methods of risk management may be called risk avoidance, risk control, risk transfer, and risk retention. For risk transfer, there are three subcategories of methods: liability insurance, indemnity (or “hold-harmless”) agreements, and releases (or waivers).
Institutions should find it helpful to develop these various methods of risk management, and strategies for their implementation, into a campus risk management plan. A key component of any such plan is a professional risk manager or an office of risk management that provides a focal point for the institution's risk management efforts. The institution's legal counsel should also be involved in all phases of risk management. Another helpful organizational device would be an institution-wide risk management team or committee, which may also include school-level or division-level coordinators or teams. Risk assessment should be an essential aspect of any risk management plan. For some institutions, external consultants may be an important source of assistance in undertaking a comprehensive assessment of institutional risks or periodically updating this assessment. Risk assessment teams from within various sectors of the institution may also be helpful. (For additional guidance and resources, see the website of the University Risk Management and Insurance Association, at http://www.URMIA.org.)
The tragic effects of Hurricane Katrina on New Orleans, Louisiana, and its higher education institutions have served to cast a spotlight on the intricacies of property insurance and its role in institutional risk management. A group of cases consolidated under the title In Re: Katrina Canal Breaches Litigation provides a striking example. The cases were all lawsuits against insurance companies that had refused to pay claims for property damages resulting from Katrina and the failure of the New Orleans levees. One of the plaintiffs, Xavier University, alleged