From time to time, I get the benefit of notes taken of various events involving labor and employee relations. In this case, the person attending the oral argument in the DC Circuit did an excellent job of explaining a complex issue. Much thanks are owed to them. Here are the notes.
“… the DC Circuit Court of Appeals heard oral arguments in the appeal of two Authority decisions – Patent and Trademark Office, 65 FLRA No. 62 (Circuit Court Case 11-1019) and Bureau of Public Debt, 65 FLRA No. 109 (Circuit Court Case 11-1102).
Patent and Trademark Office. Brief background. As relevant to the court case, in 2000, PTO received OPM permission for special salary rates because of difficulty in recruitment. In approving the rates, OPM and PTO reached a “Millennium Agreement” which provided that PTO will request, for the next five years, an increase in the special salary rate to maintain the 10% and 15% differentials. If OPM refuses the request, the agency shall enter into discussions with the union in order to provide substantively equivalent alternatives. The agency sought the special rate but OPM denied the request noting there was no longer a need as recruitment problems no longer existed. After the denial, the agency and the union discussed ways to pay employees a substantially equivalent raise. No agreement was reached and the union grieved. The arbitrator directed the agency to make a good faith effort to resolve to find a way to make-up for the lost locality pay. On exception, the Authority found that this provision, requiring bargaining over increased pay, impacted management’s right to retain employees and was not an appropriate arrangement. The Authority noted that the arbitrator did not address whether the second sentence was intended to ameliorate the adverse effects cited by the union.
In 2003, the agency notified the union that it would not be requesting a salary increase from OPM as it was not needed for recruitment purposes. The union grieved. The arbitrator found that the provision of the Millennium Agreement required the agency to request special salary rates from OPM every year. Now, even though the agency did not petition OPM and there was, therefore, no refusal on OPM’s part, the agency was still obligated to enter into discussions with the union as provided in the Millennium Agreement. While this arbitrator was aware of the previous arbitrator’s award, he found that the language in the Millennium Agreement was an appropriate arrangement and, therefore, the agency was bound by its terms.
In denying the agency’s exception, the Authority noted, among other things, that it now uses an “abrogation” standard when reviewing an arbitrator’s finding that a provision is an appropriate arrangement (not an excessive interference standard) and that here, unlike the first PTO decision (PTO I), the arbitrator specifically found that the Millennium Agreement constitute an appropriate arrangement. The Authority held that where a provision is subject to different interpretations, it will support the varied interpretations provided by the arbitrator. The Authority also noted that the arbitrator in PTO II was presented with different facts and arguments than presented in PTO I, PTO I did not preclude the second arbitrator from finding the language was an appropriate arrangement.
PTO’s argument before the court was that the arbitrator in PTO II was bound by the determining in PTO I that the provision in dispute violated management’s rights and was not an appropriate arrangement (as decided by the Authority in PTO I.) PTO argued that collateral estoppel (a judgment in one case prevents a party to that suit from trying to litigate the same issue in another legal action, in effect, once decided, the parties are permanently bound by that ruling.) PTO argued that once the Authority found the provision was not an appropriate arrangement, another arbitrator, with the same facts and involving the same parties, could not find otherwise.
The Authority stated that in reviewing arbitrator’s awards, the Authority is not reviewing the contract but the arbitrator’s award, so different arbitrator’s can interpret the same contract differently. The Authority also stated that the arbitrator in PTO I did not specifically rule on whether the provision was an appropriate arrangement. As there were different issue, there was no collateral estoppel.
The Authority also noted that the use of the abrogation standard in an arbitration review was a reasonable interpretation of the Statute and the Authority articulated the reason for adopting the new standard.
The PTO union argued that collateral estoppel didn’t apply as it never argued appropriate arrangements in the first PTO case.
Interestingly, Judge Tatel stated and the end of the hearing that he believes the Authority has found that similar language was nonnegotiable in previous decisions. PTO noted that it assume the Authority would have found likewise here, so it had not previously argued collateral estoppel. The representative reinforced its position that a union is not allowed to keep going to different arbitrators (after intervening Authority decisions) looking for different outcomes to the same issue.
Treasury, Bureau of the Public Debt As relevant here, as part of the agency head review process, the agency head declared certain provisions nonnegotiable, to include certain provisions that were intended to be appropriate arrangements. The agency believed the provisions excessively interfered with management’s rights. The union appealed and the Authority determined that the standard for determining negotiability of appropriate arrangements during agency head review would be the abrogation standard, not the excessive interference standard. The excessive interference standard would still be used for determining negotiability of appropriate arrangements if declared nonnegotiable at the bargaining table.
The focus of the oral arguments was whether the court had jurisdiction to hear the case. Treasury argued that based on extraordinary circumstances or futility, the court has authority to hear and decide the case. The Authority argued the court should not hear the case as the Authority did not have an opportunity to consider the agency’s arguments regarding the abrogation/excessive interference standard with regard to agency head review.
NTEU argued that the court did not have jurisdiction and, anyway, the Authority’s interpretation was reasonable.
Now we wait…”