U.S. Federal Labor Relations Authority

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United States Department of the Treasury, United States Customs Service, Port of New York and Newark (Agency) and National Treasury Employees Union, Chapter 161 (Union)

[ v57 p718 ]

57 FLRA No. 151







March 20, 2002


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 to an award of Arbitrator Robert T. Simmelkjaer 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 determined that the Agency violated the collective bargaining agreement and § 7116(a)(1) and (5) of the Statute when it unilaterally implemented a new overtime vessel boarding policy without providing the Union with an opportunity to bargain. As a remedy, the Arbitrator ordered the Agency to pay backpay for lost overtime to designated individuals within the bargaining unit.

      For the reasons set forth below, we conclude that the award is deficient under § 7122(a) of the Statute. Accordingly, we set aside the award.

II.     Background and Arbitrator's Award

A.     Factual Background

      A dispute arose as a result of the Agency's decision to stop temporarily the practice of having Customs Inspectors board vessels in Port Newark/New York while on overtime. The Agency suspended the practice from April 26 to October 1, 1999. Prior to April 26, 1999, Customs Inspectors in Port Newark/New York routinely boarded every vessel entering the port, regardless of whether overtime work was involved or not. The only exceptions to the practice of boarding every vessel were when there was severe weather or an emergency.

      A 1993 statutory enactment eliminated mandatory boarding of all vessels. However, before implementing any boarding practice changes, the Customs Service met with the National Treasury Employees Union at the national and local levels to negotiate with respect to the changes. A National Memorandum of Understanding (National MOU) resulted and was scheduled to become effective on January 1, 1998. Local negotiations on matters specific to the Port of Newark/New York began in 1998, producing a local agreement in the spring of 1999. However, neither the National MOU nor the related local agreement became effective at the planned times. Instead, they became effective after regulations upon which the agreements depended were made final on February 18, 2000.

      On April 1, 1999, before the national and local agreements became effective, the Agency sent a letter to the Union's President concerning the boarding of vessels during overtime hours. The Agency explained that due to financial problems, the routine boarding of vessels during overtime hours would stop until the end of the fiscal year. The Agency set an effective date for the change of April 15, 1999. The Union did not request negotiations. As indicated above, this change actually took effect on April 26, 1999, and continued until October 1, 1999.

      The Union filed a grievance on April 19, 1999, alleging that the Agency's action violated both the Statute and the collective bargaining agreement. When the parties were unable to resolve the dispute, it was submitted to arbitration.

B.     Arbitrator's Interim Opinion and Award

      The Arbitrator determined that the Agency violated § 7116(a)(1) and (5) of the Statute and Article 37 of the parties' collective bargaining agreement by discontinuing the boarding of vessels during overtime hours without giving the Union an opportunity to bargain. [n1]  The Arbitrator determined that the boarding of vessels on overtime was a past practice. The Arbitrator further held that § 7116(a)(1) and (5) of the Statute and Article 37 of the parties' agreement required the Agency to bargain before changing the practice. Additionally, the Arbitrator ruled that the Agency had not given the [ v57 p719 ] Union "adequate, sufficient or specific" notice of its intent to change the practice. Interim Award at 29. Thus, the Arbitrator concluded, by failing to bargain before temporarily suspending the practice, the Agency committed an unfair labor practice under the Statute and violated the parties' agreement.

      In reaching his conclusion that the Agency had improperly changed the past practice of boarding vessels on overtime, the Arbitrator rejected a number of Agency defenses. The Arbitrator disagreed with the Agency's contention that the Union had waived its right to bargain. The Arbitrator held that the Agency did not provide adequate notice to the Union of the change, given the "totality of the circumstances." Id. at 32. The Arbitrator found persuasive the Union's argument that although the Agency provided documentary notice of its intended change in its April 1, 1999 letter, the Union was confused about the Agency's actual intentions because of recently completed national and local agreements relating to vessel boarding. In this regard, the Arbitrator stated that although the information in the April 1, 1999 letter was "sufficiently specific as to the Agency's plan of action," under the circumstances the Agency was required to give the Union "a clear and unequivocal notice that it is meeting its obligation to bargain as opposed to providing information." Id.

      As a remedy, the Arbitrator ordered backpay under the Back Pay Act. However, given the absence of relevant data, he only made an interim award. The Arbitrator retained jurisdiction in order to enable the Agency and the Union to provide additional data.

C.     Arbitrator's Final Award

      In the final award, the Arbitrator concluded that 706 vessels were not boarded during the relevant period, resulting in a total backpay award of $146,502 for lost overtime pay. From the members of the bargaining unit, the Arbitrator excluded 17 inspectors who had no overtime earnings for fiscal year 1998-99, and 101 inspectors who "probably were not impacted by the change." Final Award at 12. The Arbitrator then ordered the total award to be divided into two parts. Fifty percent of the award would be distributed among 79 inspectors who were members of the overtime pool involved in boarding vessels, and 50 percent would be distributed among 151 inspectors who were displaced from their own overtime pools by the members of the first group.

III.     Positions of the Parties

A.     Agency

      The Agency argues that the Arbitrator's interim award is deficient because it is contrary to law and because it fails to draw its essence from the collective bargaining agreement. The Agency also argues that the Arbitrator's remedy is contrary to law.

      With regard to Authority case law, the Agency asserts that the Arbitrator did not follow Authority rulings when he held that the Agency had failed to give the Union adequate notice of its intent to change working conditions. The Agency contends that the notice it provided through the April 1, 1999 letter to the Union President was "adequate" under the standard as set forth in United States Army Corps of Engineers, Memphis District, Memphis, Tennessee, 53 FLRA 79 (1997) (Corps of Engineers).

      With further regard to the notice issue, the Agency contends that the award fails to draw its essence from the parties' collective bargaining agreement. In this connection, the Agency argues that the Arbitrator misinterpreted Article 37, Section 2, which states that the Agency "shall provide the Union with reasonable advance notice of intended changes in operational or administrative procedures or of any new initiative." Exceptions at 9. The Agency asserts that the Arbitrator's "totality of the circumstances" analysis exceeds the terms of the agreement. The Agency further asserts that the Union waived both its statutory and contractual bargaining rights.

      Finally, the Agency asserts that the award is inconsistent with the Back Pay Act. In that regard, the Agency argues that the Arbitrator failed to make all of the findings necessary for an award of backpay. Specifically, the Agency contends that the Arbitrator failed to find that the Agency's alleged violation of the collective bargaining agreement "directly affected the aggrieved employees." Id. at 14. The Agency also contends that the Arbitrator failed to find that "but for" the Agency's purported improper conduct, the aggrieved employees would have performed the overtime work and received overtime pay during the period that vessel boarding during overtime hours had been discontinued. The Agency calls "convoluted" the Arbitrator's determination on how to distribute money to certain employees. Id. The Agency argues that this distribution scheme fails to determine whether employees actually suffered a reduction in pay. Finally, the Agency maintains that the Arbitrator's calculation of the backpay award wrongly relies [ v57 p720 ] on prior year earnings rather than findings regarding ability and willingness to work overtime.

B.     Union

      The Union does not address the substance of the Agency's argument that the Arbitrator incorrectly ruled on the adequacy of the Agency's notice to the Union. The Union confines its response on this point to the claim that the Agency's arguments constitute a simple disagreement with the Arbitrator's decision. [n2] 

      With regard to the Back Pay Act, the Union admits that there were difficulties in determining which employees were impacted and deserving of backpay. Nevertheless, the Union argues that the Arbitrator's decision is in full compliance with the Back Pay Act.

IV.     Analysis and Conclusions

A.     The interim award is contrary to Authority case law regarding what constitutes adequate notice of a change in working conditions and waiver of the right to bargain.

      Where a party's exceptions challenge an award's consistency with law, the Authority reviews the exceptions 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) (Customs). 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.

      Where an agency raises the defense that a union waived its right to bargain over a change in conditions of employment, the agency "bears the burden of establishing that the exclusive representative received adequate notice of the change." Corps of Engineers, 53 FLRA at 82-83. Notice to an exclusive representative "of a proposed change in conditions of employment must be sufficiently specific and definitive to adequately provide the exclusive representative with a reasonable opportunity to request bargaining." Id. at 82.

      The Authority has identified a set of requirements which, if met, establish that an Agency's notice regarding an impending change is adequate. The Authority has held in this regard that "the notice must apprise the exclusive representative of the scope and nature of the proposed change in conditions of employment, the certainty of the change, and the planned timing of the change." Id.

      Applying these requirements to this case, we find that the Agency gave the Union adequate notice regarding the Agency's proposed discontinuation of overtime vessel boarding. Specifically, in its April 1, 1999 letter to the Union, the Agency explained that effective April 15, 1999, due to financial problems, the routine boarding of vessels during overtime hours would stop until the end of the fiscal year. Interim Award at 10, 29. Thus, the Agency's April 1 letter conveyed to the Union the scope and nature of the proposed change, the certainty of the change, and the planned implementation date - all of the requirements listed by the Authority in Corps of Engineers. 53 FLRA at 82.

      The Arbitrator found that the Union's president was confused about the Agency's intentions set forth in the Agency's April 1, 1999 letter because the Union had recently completed negotiations concerning changes in vessel boarding practices flowing from the 1993 statutory amendments. Under these circumstances, the Arbitrator found that the Agency was required to provide the Union with "clear and unequivocal notice," including "an unequivocal communication that the Agency intended to breach or unilaterally change the local agreements generated pursuant to the National MOU[.]" Interim Award at 32, 30.

      We believe that, in so doing, the Arbitrator misapplied the statutory notice requirements. The record establishes that the notice furnished to the Union was adequate to apprise the Union of the Agency's plan to discontinue the vessel boarding policy on overtime. As explained above, that notice contained specific information about the action the Agency planned to take as well as the planned implementation date. When viewed objectively, this notice satisfied the statutory standard. The Arbitrator's determination, based on the Union president's confused state of mind, that the Agency was required in these circumstances to provide the Union with "clear and unequivocal" notice, is inconsistent with law because it establishes a different standard from the standard set forth in the Statute. Id. at 32. Accordingly, the Arbitrator's determination on this matter is deficient.

      Having found that the Agency provided adequate notice of the impending change, the next question is whether the Union waived its bargaining rights. Under Authority case law, a union is deemed to have waived its bargaining rights if it fails to request negotiations [ v57 p721 ] after receiving adequate notice from the agency of a planned change in a past practice. Corps of Engineers, 53 FLRA at 82. It is conceded that the Union made no such bargaining request. Moreover, there is no claim that the Agency was under any contractual obligation regarding overtime vessel boarding matters that would have excused the Union from its obligation to request negotiations. In this latter connection, the Arbitrator rejected the Union's contention that the Agency had repudiated national and local agreements when it changed its overtime vessel boarding practices. The Union did not except to this aspect of the Arbitrator's interim award.

      For the foregoing reasons, the unfair labor practice portion of the award must be set aside. The Arbitrator's misapplication of Authority case law regarding notice is fatal to the Arbitrator's conclusion that the Agency committed an unfair labor practice. See, e.g., NTEU, Chapter 168, 55 FLRA 237, 241 (1999) (holding that an arbitrator resolving a grievance involving an unfair labor practice allegation must "apply the same standards and burdens that would be applied by an administrative law judge in a ULP proceeding under section 7118"). [n3] 

B.     The interim award fails to draw its essence from the collective bargaining agreement.

      The Agency challenges the Arbitrator's "adequate notice" holding, discussed above, not only as a misinterpretation of the Authority's case law, but also as a misinterpretation of the parties' contract. The Authority reviews such exceptions, involving an arbitrator's interpretation of a collective bargaining agreement, by applying the deferential standard of review used by the federal courts in reviewing private sector arbitration awards. See United States Dep't of the Army, Corpus Christi Army Depot, Corpus Christi, Tex., 56 FLRA 1057, 1061 (2001). In order for an arbitrator's award to be found deficient, an agency must show 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. Id. Further, the Authority will not find that an award fails to draw its essence from the agreement "merely because a party believes that the arbitrator misinterpreted the agreement." Id.

      The Authority previously has applied statutory standards in assessing the application of contract provisions that mirror, or are intended to be interpreted in the same manner as, the Statute. See, e.g., United States Dep't of Justice, Fed. Correctional Facility, El Reno, Okla., 51 FLRA 584, 589 n.5 (1995) (in finding an award deficient as contrary to law, the Authority applied the same Privacy Act balancing of interests to an information request under a collective bargaining agreement as the Authority would apply to information requests under § 7114(b)(4) of the Statute).

      The record discloses that both parties made arguments to the Arbitrator with respect to the requirements set forth in Article 37. See, e.g., Interim Award at 13, 27. After "considering the respective positions of the parties," the Arbitrator concluded that the Agency's conduct violated the parties' agreement. Id. at 11. The Arbitrator did not provide any further elaboration concerning his contractual finding. Nonetheless, the Authority has stated that arbitrators are not obligated to provide a rationale for their findings unless required to do so by contract, submission of the parties, or law. See, e.g., United States Dep't of the Interior, Bureau of Mines, Pittsburgh Research Ctr., 53 FLRA 34, 40 (1997). See also Wissman v. Soc. Sec. Admin., 848 F.2d 176 (Fed. Cir. 1988). In this case, there is no argument about, or evidence of, any contractual, statutory, or regulatory requirements obligating the Arbitrator to set forth in detail the rationale of his decision.

      The Union does not contend that the notice requirements under Article 37 of the contract are different from the notice requirements under the Statute. Accordingly, in the absence of any claim to the contrary, we find that the contractual notice requirements are intended to be interpreted in the same manner as the statutory notice requirements described above. See NAGE, Local R14-143, 55 FLRA 317, 318-19 (1999) (Chair Segal concurring and dissenting in part) (as union did not argue that contract provides any different bargaining rights than exist under the Statute, union [ v57 p722 ] failed to show why arbitrator's determination that the union failed to prove a violation of the contractual duty to bargain did not also encompass the statutory duty to bargain).

      Because we find that the Arbitrator erred in finding that the Agency violated the Statute, and as there is no argument to distinguish the statutory notice requirements from contractual notice requirements, the Arbitrator's finding of a contractual violation cannot stand. Therefore, we find that the award does not represent a plausible interpretation of the agreement. See, e.g., NFFE, Local 2010, 55 FLRA 533, 534-35 (1999) (arbitrator's interpretation of agreement provision, which paralleled statutory provision, found deficient).

C.     The final award violates the Back Pay Act.

      Under the Back Pay Act, an award of backpay is authorized where an arbitrator finds that: (1) the aggrieved employees were affected by an unjustified or unwarranted personnel action; and (2) the personnel action resulted in the withdrawal or reduction of the grievants' pay, allowances, or differentials. United States Dep't of the Treasury, United States Customs Serv., El Paso, Tex., 55 FLRA 553, 559 (1999) (Customs Service, El Paso); see also United States Dep't of Health and Human Services, 54 FLRA 1210, 1218-19 (1998) (clarifying that a requirement that the pay loss would not have occurred but for the unwarranted action is not a separate, independent requirement of the Act, but merely amplifies the Act's causal connection requirement).

      A violation of the Statute or a collective bargaining agreement can constitute, in appropriate circumstances, an unjustified or unwarranted personnel action resulting in the withdrawal or reduction of an employee's pay, allowances or differentials. See, e.g., Customs Service, El Paso, 55 FLRA at 559; Dep't of the Interior, Bureau of Reclamation, Wash., D.C., 33 FLRA 671, 680-81 (1988). In the absence of an unjustified or unwarranted personnel action, however, there is no threshold basis on which to find that an award of backpay would be appropriate. Based on our determinations above, that there was neither a violation of the Statute nor a contract violation in this case, we must set aside the backpay portion of the award as well.

V.     Decision

      The award is set aside.

Footnote # 1 for 57 FLRA No. 151

   Article 37 is entitled "Bargaining," and contains provisions covering "traditional bargaining" and "interest-based negotiation." See Interim Award at 4.

Footnote # 2 for 57 FLRA No. 151

   The Union also asserts that the Agency's exceptions were untimely. In an Order dated after the Union filed its opposition, the Authority held that the Agency's exceptions were timely filed.

Footnote # 3 for 57 FLRA No. 151

   Although this case involves the Customs Service and vessel boarding issues, it is not comparable to Customs, 43 F.3d 682. In Customs, the D.C. Circuit reversed the Authority's determination regarding the Authority's jurisdiction to resolve exceptions to an arbitrator's award. In contrast to Customs, this case does not raise any jurisdictional issues. Unlike Customs, which involved a grievance alleging a violation of a statute that was not issued for the purpose of affecting the working conditions of employees, id. at 689, the grievance here alleges a violation of the Statute and the parties' collective bargaining agreement. Accordingly, the jurisdictional issues discussed by the D.C. Circuit in Customs are irrelevant to the disposition of this case. See United States Dep't of Justice, Fed. Bureau of Prisons, Med. Facility for Fed. Prisons, 51 FLRA 1126, reconsideration denied, 52 FLRA 694 (1996) (holding that Customs was distinguishable because the grievance was not predicated on a violation of law, as in Customs, but instead a violation of the parties' collective bargaining agreement).