City of Livingston v. Montana Public Employees Ass'n, 339 P.3d 41

Background

Matthew Tubaugh, a Livingston police officer employed since 2004, was placed on administrative leave and discharged in 2012 after several incidents of aggressive/unprofessional conduct and a fitness-for-duty evaluation by psychologist George Watson concluding Tubaugh was unfit for duty.
Police Chief Raney ordered the fitness-for-duty exam; Watson diagnosed personality-disorder traits and recommended Tubaugh not continue as an officer.
Tubaugh grieved his discharge under the City–MPEA collective bargaining agreement (CBA); Arbitrator Anne MacIntyre found just cause to discipline but ruled termination improper and ordered reinstatement, three months’ suspension without pay, back pay, and expungement of the fitness-for-duty report from Tubaugh’s personnel file.
The City petitioned the Sixth Judicial District Court to vacate the award; the District Court vacated it, holding the arbitrator exceeded her powers, the reinstatement violated public policy (officer/public safety), the award impaired management’s right to require fitness-for-duty exams, and the arbitrator lacked authority to expunge the report.
The Montana Supreme Court reversed, holding the arbitrator acted within the scope of the CBA and the limited judicial review of arbitration awards; it remanded with instructions to confirm the award.

Issues

Issue	Plaintiff's Argument (MPEA/Tubaugh)	Defendant's Argument (City of Livingston)	Held
1. Did arbitrator exceed powers by imposing progressive-discipline requirement?	Arbitrator properly interpreted CBA’s “good cause” and remedial purpose to require corrective/progressive discipline before termination.	CBA does not mandate progressive steps; arbitrator altered negotiated terms and added requirements.	Reversed District Court: arbitrator’s interpretation is a plausible construction of CBA and within her authority.
2. Does reinstatement violate public policy (officer/public safety)?	Reinstatement consistent with arbitrator’s contract-based remedy; no law or precedent bars reinstatement here.	Reinstatement undermines public safety given fitness-for-duty findings; violated well-defined public policy.	Reversed: public-policy exception is narrow and requires explicit legal prohibition; none shown here.
3. Did award improperly prevent City from requiring fitness-for-duty exams?	Arbitrator only found this particular exam unreliable and improper as used; she did not bar exams generally.	Award supplanted management rights to order fitness-for-duty exams.	Reversed District Court: arbitrator weighed credibility; award did not eliminate City’s general management rights.
4. Did arbitrator exceed powers by ordering expungement of the fitness report?	Removal from personnel file is a permissible, equitable remedy tied to improperly relied-upon evidence.	Report is part of record/public reporting; arbitrator lacked authority to expunge public-record material.	Reversed: expungement from personnel file is a remedial power within arbitrator’s broad authority.

Key Cases Cited

Terra W. Townhomes, L.L.C. v. Stu Henkel Realty, 298 Mont. 344 (Mont. 2000) (arbitration-review principles)
Paulson v. Flathead Conservation Dist., 321 Mont. 364 (Mont. 2004) (deference to arbitrators)
Duchscher v. Vaile, 269 Mont. 1 (Mont. 1994) (statutory limits on review)
Teamsters Union Local No. 2 v. C.N.H. Acquisitions, Inc., 350 Mont. 18 (Mont. 2009) (confirm/vacate under arbitration statutes)
First Options, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (appellate review standard for district-court arbitration rulings)
W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (U.S. 1983) (public-policy exception to enforcement)
Sheet Metal Workers Int’l Ass’n v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647 (9th Cir. 1988) (award must draw its essence from contract)
Misco v. United Paperworkers, 484 U.S. 29 (U.S. 1987) (courts cannot overturn awards for mere legal error)
Stead Motors of Walnut Creek v. Automotive Machinists Lodge No. 1173, 886 F.2d 1200 (9th Cir. 1989) (limits on public-policy vacatur for reinstatement)
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (U.S. 1960) (role of arbitrator as contract interpreter)
George Day Constr. Co. v. United Bhd. of Carpenters, 722 F.2d 1471 (9th Cir. 1984) (plausible interpretation standard for awards)