United States, Department of the Treasury, Internal Revenue Service (Agency) and National Treasury Employees Union, Chapter 72 (Union)

[ v61 p304 ]

61 FLRA No. 55

UNITED STATES
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
(Agency)

and

NATIONAL TREASURY
EMPLOYEES UNION
CHAPTER 72
(Union)

0-AR-3957

_____

DECISION

September 29, 2005

_____

Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members

I.     Statement of the Case

      This matter is before the Authority on exceptions filed to an award of Arbitrator I. B. Helburn filed by the Agency under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.

      The Arbitrator sustained the Union's grievance alleging that the Agency violated the parties' collective bargaining agreement by releasing seasonal employees in the San Antonio office before releasing less senior seasonal employees in the Austin office. As a remedy, the Arbitrator awarded backpay.

      For the reasons set forth below, we dismiss the Agency's contrary to law exception, and deny the remaining essence exception.

II.     Background and Arbitrator's Award

      Prior to 2002, the parties had an established past practice where the Agency's San Antonio and Austin offices were considered separate posts of duty for the purpose of establishing recall and release lists for seasonal employees. In 2002, the parties negotiated a new collective bargaining agreement, including Article 14, which modified the recall and release procedures that the Agency would follow with respect to seasonal employees. [n1]  In 2003, while the new agreement was in effect, and consistent with the parties' prior past practice, the Agency released employees in San Antonio before releasing less senior employees in Austin. There were no local negotiations prior to the release. The Union filed a grievance alleging that the Agency's actions violated Article 14 of the parties' 2002 agreement, which it claimed requires the Agency to consider San Antonio and Austin offices as a single post of duty for recall and release purposes. The grievance was not resolved and was submitted to arbitration on this stipulated issue:

Whether the Agency violated Article 14 . . . when it released seasonal data transcribers in San Antonio . . . while retaining seasonal data transcribers in Austin . . . who ranked lower on the release/recall list? If so, what shall the remedy be?

Award at 5.

      The Arbitrator interpreted Article 14 as requiring the Agency to consider the San Antonio and Austin offices as a single post of duty for recall and release purposes. In this connection, the Arbitrator found that "San Antonio [i]s a satellite of the Austin Center Campus" within the meaning of Article 14, § 1(B) of the parties' agreement. Id. at 9. The Arbitrator rejected the Agency's claim that Article 14, § 1(C), which allows for local alternatives to § 1(B), was applicable. In this connection, the Arbitrator found that the parties had not reached any local agreement that altered the national agreement. The Arbitrator also rejected the Agency's claim that the parties continued to be bound by their past practice, notwithstanding the subsequently negotiated Article 14. In this regard, the Arbitrator explained that [ v61 p305 ] "an unwritten past practice does not transcend a change in the underlying contract language." Id. at 8.

      Finally, the Arbitrator rejected the Agency's argument that it had a compelling business justification for continuing the past practice. According to the Arbitrator, "even a compelling business case cannot override contract language." Id. at 9. Based on the foregoing, the Arbitrator found that the Agency violated Article 14 of the parties' agreement when it released San Antonio employees while retaining less senior Austin employees. As a remedy, the Arbitrator awarded backpay to all seasonal employees who were improperly released as a result of the Agency's violation.

III.     Positions of the Parties

A.      Agency's Exceptions

      The Agency excepts to the Arbitrator's finding that, under the newly negotiated Article 14, the parties are no longer bound by their past practice of considering the San Antonio and Austin seasonal employees separately for recall and release purposes. In this regard, the Agency claims that "the contract language at issue was not really new, in that it imposed no obligations on management different from those imposed under the old contract." [n2]  Exceptions at 9. According to the Agency, the new language was negotiated as a result of a reorganization and merely accounts for a "change in nomenclature" by replacing the contract's reference to "branches" with a reference to "operations." Id. at 10. Therefore, the Agency argues that the parties' past practice "was every bit as contrary to the old contract as it continued to be under the new" and that the new language "should not be viewed as contravening the long-standing past practice of the parties . . . ." Id. at 9-10. The Agency also argues that the new agreement does not take precedence over the past practice because the new agreement was negotiated at the national level, while the past practice was established at the local level.

      The Agency also excepts to the award as excessively interfering with its right to assign work. Specifically, the Agency claims the award affects its right to assign work by requiring it "to assign work to San Antonio employees" instead of Austin employees. Id. at 11. Although the Agency acknowledges that "Article 14 . . . was intended as an appropriate arrangement to ameliorate the effects of management's exercise of its right to assign work[,]" it asserts that the arrangement is not appropriate because "no real benefits accrue to employees." Id. at 14. Conversely, the Agency argues that the award imposes the burden of requiring the Agency to operate in an inefficient manner, by raising its overhead and delaying the processing of tax documents, which "could inconvenience taxpayers." Id. at 15.

B.      Union's Opposition

      The Union asserts that the award draws its essence from the parties' agreement because the Arbitrator "considered the applicable contract language as well as bargaining history testimony offered by both sides" in reaching his conclusion that Article 14 requires the Agency to consider San Antonio and Austin seasonal employees as "one group" for recall and release purposes. Opposition at 2. The Union also asserts that the Arbitrator's interpretation of Article 14 is consistent with the plain language of that provision and the Arbitrator correctly concluded that the Agency could have, but did not, negotiate a local alternative to Article 14. Id.

IV.     Preliminary Issue

      Under § 2429.5 of the Authority's Regulations, the Authority will not consider issues that could have been, but were not, presented to the arbitrator. See, e.g., United States Dep't of the Air Force, Air Force Materiel Command, Robins Air Force Base, Ga., 59 FLRA 542, 544 (2003). There is no indication in the record that the Agency argued below that Article 14, as interpreted by the Union, would violate management's right to assign work. See Award at 7. Moreover, it is clear that the Union's claim that Article 14 required the Agency to treat the employees as one unit for recall and release purposes was presented to the Arbitrator. Indeed, it is the Union's interpretation that the Arbitrator accepted and to which the Agency now objects. See id. at 9. As such, the Agency's § 7106(a) management rights argument could and should have been presented to the Arbitrator. Because it was not, the argument is not properly before the Authority, and we will not address it. See, e.g., United States Dep't of Defense, Defense Contract Audit Agency, Irving, Tex., 60 FLRA 296, 297 (2004) (where arbitrator interpreted agreement consistent with union's position below, Authority dismissed agency's exceptions under § 2429.5 because agency should have raised its management rights argument below).

V.     The Award Does Not Fail to Draw Its Essence
         from the Parties' Agreement.

      We construe the Agency's assertion that the new contract language "should not be viewed as contravening the long-standing past practice of the parties" as a [ v61 p306 ] claim that the award fails to draw its essence from the parties' agreement. Exceptions at 10.

      In reviewing an arbitrator's interpretation of a collective bargaining agreement, the Authority applies the deferential standard of review that federal courts use in reviewing arbitration awards in the private sector. See 5 U.S.C. § 7122(a)(2); AFGE, Council 220, 54 FLRA 156, 159 (1998). Under this standard, the Authority will find an arbitration award deficient as failing to draw its essence from the collective bargaining agreement when the appealing party establishes that the award: (1) cannot in any rational way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purposes of the collective bargaining agreement as to manifest an infidelity to the obligation of the arbitrator; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement. See United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990). The Authority and the courts defer to arbitrators in this context "because it is the arbitrator's construction of the agreement for which the parties have bargained." Id. at 576.

      The Arbitrator interpreted Article 14, § 1(B) of the parties' agreement as requiring the Agency to consider San Antonio and Austin seasonal employees together for recall and release purposes. The Arbitrator's interpretation of Article 14, § 1(B) is consistent with the testimony of the Agency's chief negotiator that "if you read the contract strictly, it would require those individuals (in San Antonio) to be on the same list" as those individuals in Austin. Award at 4. In addition, the Arbitrator's interpretation is consistent with the plain wording of the parties' agreement, as the Arbitrator specifically found that the San Antonio office was a satellite of the Austin office, and that both offices do "submission processing." Id. at 8-9. In this connection, Article 14, § 1(B) provides that "the basis for release and recall at Center Campuses will be Departments in the Accounts Management Centers and Operations in the Submission Processing and Compliance Service Centers" and Article 1, § 3(G) defines "Center Campus" as including "satellite" offices. Award at 2, 1 (quoting parties' agreement).

      The Agency's argument that the new contract language did not impose any new obligations on management does not undermine these conclusions. In this regard, the Agency claims the parties' past practice "was every bit as contrary to the old contract as it continued to be under the new." Exceptions at 9. This claim does not establish that the Arbitrator erred in refusing to continue the parties' past practice in view of the newly negotiated Article 14. See, e.g., Elkouri & Elkouri, How Arbitration Works 644 (Marlin M. Volz and Edward P. Coggin eds., BNA Books 6th ed. 1997) (explaining that a past practice may be discontinued as the result of subsequent bargaining). Moreover, it would be difficult to conclude that there was no intent to change a past practice where one party attempted, unsuccessfully, to incorporate the ter