Federal Deposit, Insurance Corporation (Agency) and National Treasury Employees Union, Chapter 274 (Union)
[ v61 p735 ]
61 FLRA No. 148
September 11, 2006
Before the Authority: Dale Cabaniss, Chairman and
Carol Waller Pope, Member [n1]
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator John Remington 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 found that the Agency violated the parties' agreement by not recommending the grievant for an award. As a remedy, the Arbitrator awarded the grievant a three percent increase in his base pay. For the reasons that follow, we modify the award.
II. Background and Arbitrator's Award
The Arbitrator found that the grievant was eligible for a corporate success award (CSA) nomination in 2004, based on his 2003 performance, but that the grievant was not nominated for the award. [n2] The Arbitrator found, based on witness testimony and other record evidence, that the "[g]rievant's contributions equaled or exceeded those of at least three other nominees from the Region who were ultimately awarded CSA's in 2004." Award at 10. The Arbitrator also found that the Agency did not demonstrate that it acted fairly and equitably when it did not nominate the grievant for an award. In this regard, the Arbitrator found that the Agency's witness was unable to explain why some employees were nominated for a CSA and the grievant was not, and provided only vague and unresponsive answers to questions concerning the comparison of the grievant's contributions to those of the nominated employees.
The Arbitrator concluded that the grievant was "denied access to the process which may, or may not, have resulted in his being selected for a CSA." Id. at 11. In this connection, the Arbitrator acknowledged that the grievant's "eligibility for a CSA does not automatically entitle him to receive one" but he found that "it would clearly be an abuse of discretion to exclude him for non-meritorious or arbitrary reasons." Id. Based on the record evidence about the nomination process, the Arbitrator found "nothing within the record to support the Agency's claim that this decision was simply the proper exercise of its broad discretion rather than arbitrary or capricious behavior." Id. Accordingly, the Arbitrator found that the Agency violated the parties' agreement and abused its discretion when it declined to nominate the grievant for a CSA. To remedy the violation, the Arbitrator granted the grievant a three percent increase to his base pay as set forth in § II.C of the parties' agreement. However, the Arbitrator clarified that the "remedy should . . . not be interpreted as a CSA award to [the g]rievant. Rather, it is a make whole remedy to the Agency's violation of the agreement and abuse of discretion in not nominating him for this award." Id. at 15.
III. Positions of the Parties
A. Agency's Exceptions
The Agency argues that the award affects its rights to assign work and direct employees. Based on the Authority's decision in United States Dep't of the Treasury, Bureau of Engraving & Printing, Wash., D.C., 53 FLRA 146 (1997) (BEP), the Agency further argues that, while BEP prong I is not in dispute, the award fails to satisfy BEP prong II because the Arbitrator did not find that the grievant would have received a CSA if he had been nominated. The Agency asserts that the Arbitrator should have directed it to consider the grievant for a CSA and requests that the Authority either set aside or modify the award to require the Agency to consider the grievant for a CSA, based on the Arbitrator's findings.
The Agency also argues that the remedy fails to draw its essence from the parties' agreement by awarding the grievant a three percent pay increase. In this [ v61 p736 ] connection, the Agency claims that the agreement expressly precludes the Agency from giving CSAs to more than one third of all bargaining unit members.
B. Union's Opposition
The Union does not dispute the Agency's claim that the award affects management's rights to assign work and direct employees and enforces a provision that was negotiated under § 7106(b) of the Statute in satisfaction of prong I of the BEP framework. With respect to prong II of the BEP framework, the Union argues that the Arbitrator effectively found that the grievant would have received an award had he been nominated when he found that the grievant's contributions were equal or superior to at least three award recipients and that the Agency's decision to exclude him was arbitrary and capricious. To support this argument, the Union notes that the Arbitrator rejected the Agency's claim that the grievant did not demonstrate that he was more deserving of an award than other recipients. The Union acknowledges the Arbitrator's statement that the remedy should not be interpreted as an award of a CSA, but claims that the statement reflects make whole relief for what the grievant lost when "he was improperly denied a CSA." Opposition at 8 n.1.
The Union also disputes the Agency's claim that the award fails to draw its essence from the parties' agreement. Specifically, the Union asserts that the parties' agreement requires the Agency to grant CSAs to a minimum of one third of the bargaining unit members. However, according to the Union, the Agency has discretion to grant more than the minimum.
IV. Analysis and Conclusions
The Authority reviews questions of law raised by exceptions to an arbitrator's award de novo. See NTEU, Chapter 24, 50 FLRA 330, 332 (1995) (citing United States Customs Serv. v. FLRA, 43 F.3d 682, 686-87 (D.C. Cir. 1994)). In applying a standard of de novo review, the Authority determines whether the arbitrator's legal conclusions are consistent with the applicable standard of law. See NFFE, Local 1437, 53 FLRA 1703, 1710 (1998). In making that determination, the Authority defers to the arbitrator's underlying factual findings. See id.
In determining whether an award violates a management right under § 7106(a) of the Statute, the Authority applies the framework established in BEP. Under prong I of that framework, upon finding that an award affects a § 7106(a) management right, the Authority examines whether the award provides a remedy for a violation of either an applicable law under § (a)(2) of the Statute or a contract provision that was negotiated under § 7106(b) of the Statute. Under prong II, the Authority examines whether the arbitrator's remedy reflects a reconstruction of what management would have done had it not violated the law or contractual provision at issue. An award that fails to satisfy either prong I or prong II will be set aside, modified, or remanded, as appropriate. See BEP, 53 FLRA at 154.
The Union does not dispute the Agency's claim that the award affects management's rights to assign work and direct employees or that it enforces a contract provision that was negotiated under § 7106(b) of the Statute, thus satisfying BEP prong I. As such, our inquiry begins with prong II of the BEP framework. See, e.g., United States Dep't of Justice, Fed. Bureau of Prisons, Fed. Corr. Inst., El Reno, Okla., 59 FLRA 536, 538-39 (2003) (addressing only prong I where affect on management's rights and prong II were not in dispute).
The Arbitrator found that the Agency violated the parties' agreement by not nominating the grievant for a CSA and that it, therefore, denied the grievant the opportunity to be considered for a CSA. However, the Arbitrator did not determine that, had the grievant been nominated for a CSA, he would have received one. To the contrary, acknowledging the Agency's "broad discretion" in selecting award recipients, the Arbitrator found that the grievant's eligibility did not automatically entitle him to receive a CSA. Award at 10. Moreover, although the Arbitrator found that the grievant's "contributions equaled or exceeded those of at least three other nominees[,]" id., he expressly found that the evidence was "not conclusive" as to whether the grievant would have been selected for a CSA. Id. at 12. Indeed, the Arbitrator expressly found that a proper nomination "may, or may not, have resulted in his being selected for a CSA." Id. at 11. Based on the foregoing, we cannot conclude that the Agency would have selected the grievant for a CSA had it not violated the parties' agreement. Consequently, we find that an award of a three percent pay increase to the grievant does not reconstruct what the Agency would have done in the absence of the violation, and we therefore conclude that the remedy awarded fails to satisfy BEP prong II. [n3]
The record establishes that, absent the violation of the agreement, the Agency would have nominated and considered the grievant for an award, as the parties' agreement requires. The Agency acknowledges that requiring it to consider the grievant for a CSA would reconstruct what it would have done absent the violation and requests that the Authority modify the award to reflect this appropriate remedy. See Exceptions at 12-14 (and cases cited therein). The Agency's request for a modification of the award is consistent with Authority [ v61 p737 ] precedent and we, therefore, modify the award, as requested, to reflect the appropriate remedy of permitting the Agency to consider the grievant for a CSA. See, e.g., United States Dep't of Health & Human Servs., Health Resources Servs. Admin., Rockville, Md., 60 FLRA 118 (2004) (modifying award and directing agency to re-evaluate grievant where arbitrator correctly found performance appraisal deficient, but improperly changed the appraisal); accord, United States Dep't of the Army, United States Army Aviation & Missile Command, Redstone Arsenal, Ala., 58 FLRA 400 (2003).
The award is modified by striking the portion of the award that grants the grievant a three percent pay increase and the Agency is directed to consider the grievant for a CSA.
Separate Opinion of Chairman Cabaniss:
I write separately to explain my views in this case. Consistent with my views expressed in earlier opinions, I would not automatically remand a case where the remedy has been set aside, but would instead resolve on a case-by-case basis the issue of whether to remand back the parties an arbitration award in which the remedy has been set aside in whole or in part. See, e.g., Def. Sec. Assistance Dev. Ctr., 59 FLRA 270, 271-72 (2003) (Chairman Cabaniss concurring). In the present instance, I note the Agency has specifically recommended the award be remanded. Under the total circumstances of the case, I conclude that remand is appropriate.
I also write separately to address the lack of established burdens of proof upon the parties in arbitration. Short of jurisdictional issues, the Authority typically does not address issues that could have been raised in a party's exceptions, or oppositions thereto. See, e.g., United States Dep't of Justice, Fed. Bureau of Prisons, Fed. Corr. Inst., El Reno, Okla., 59 FLRA 536, 538-39 (2003). In the present instance, the Union does not challenge whether the award affects a management right, hence that issue is not addressed. My evaluation of the record leads me to conclude, however, that there is no such affect on the Agency's right to assign work or direct employees. Under our decision in United States Dep't of the Treasury, Bureau of Engraving & Printing, Wash., D.C., 53 FLRA 146 (1997) (BEP), a party should not be able to challenge an arbitration award as being contrary to 5 U.S.C. § 7106 if the award does not affect those rights, yet that is the result here.
In that regard, management's rights to direct employees and to assign work under § 7106(a)(2)(A) and (B) of the Statute encompass the authority to identify critical elements of performance and to establish performance standards. See NFFE, Local 2096, 36 FLRA 834, 845 (1990). An award that restricts an agency's authority to determine the content of performance standards and critical elements affects management's rights to direct employees and to assign work. See NTEU, 42 FLRA 964, 974-75 (1991); NFFE, Local 2096, 36 FLRA at 845. However, here the award only involves whether the grievant should have been considered for a CSA award, and as such, does not involve an assessment of the grievant's performance appraisal.
In Int'l Org. of Masters, Mates & Pilots, 36 FLRA 555, 565 (1990) (IOMMP), the Authority concluded that a provision which would determine in part an employee's eligibility for an "incentive pay bonus" was negotiable as it did not affect an agency's right to direct employees or assign work. Id. at 566. In this respect, the Authority determined that as the provision there did not "prescribe the type of work unit employees will perform nor does it establish the performance level necessary to avoid disciplinary action" it did not affect a management right. See also NTEU v. FLRA, 793 F.2d 371 (D.C. Cir. 1986).
Here, consistent with IOMMP, the award examines a matter that does not involve the grievant's performance appraisal and thus does not involve the Agency's right to direct employees and assign work. However, because the Union never raised the argument we do not consider the fact that there is no ability under BEP for the Agency to challenge the award as violative of § 7106.
I believe a better course of action would be to establish burdens of proof to require parties to first establish any pre-existing legal condition necessary to then assert a specific legal argument. For example, where a party wishes to argue that an arbitration award impermissibly conflicts with a management right under § 7106(a), the party would be obliged to first affirmatively establish that the award affects the right. Additionally, where a party wishes to assert that an agreement provision constitutes a § 7106(b) exception to a § 7106(a) right, the party would also have to first affirmatively establish that the provision affects that § 7106(a) right.
These are but two examples of legal argument that depend upon the existence of certain pre-existing legal conditions to have any validity. I believe it appropriate to mandate this showing so as to not render an opinion (in this case, on a Prong II analysis) that may not warrant the analysis to begin with, and thus avoid issuing seemingly contradictory precedent based upon the failure to examine whether the pre-existing condition (in this case, whether the award even affects the management rights in question) is present.
Footnote # 1 for 61 FLRA No. 148 - Authority's Decision
Footnote # 2 for 61 FLRA No. 148 - Authority's Decision
A CSA is "an annual award that provides for a 3.0 percent increase in basic pay (in addition to the annual Pay Adjustments) for those employees who are recognized as the top contributors within the Corporation." Award at 3 (quoting Chapter 11 of the parties' agreement).
Footnote # 3 for 61 FLRA No. 148 - Authority's Decision