[ v61 p650 ]
61 FLRA No. 129
August 4, 2006
Before the Authority: Dale Cabaniss, Chairman and
Carol Waller Pope, Member
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator William L. Schmidt filed by the Union under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Agency filed an opposition to the Union's exceptions.
The Arbitrator denied the grievance over the Agency's failure to pay the grievant a $25,000 voluntary separation incentive payment (VSIP) when he resigned from his position. For the reasons set forth below, we deny the Union's exceptions.
II. Background and Arbitrator's Award
In December 2003, the Agency issued a memorandum announcing a plan to close, among others, its Seattle office by March 31, 2004. Under the plan, affected employees could either relocate to the San Francisco or Dallas office or be separated. At the time of the announcement, the Agency had requested, and been granted, VSIP authority from the Office of Personnel Management (OPM) from November 1, 2003 through March 31, 2004.
Subsequently, the Agency and the Union engaged in impact and implementation bargaining, reaching agreement on various issues, including affected employees' relocation preferences. The Agency issued a memorandum dated February 11, 2004, memorializing the parties' agreement that, with one exception, all Seattle employees (including the grievant) chose to be reassigned to either the Dallas or the San Francisco office. The memorandum also explained that the Agency intended to seek extended VSIP authority from OPM. On March 8, 2004, the Agency requested from OPM an extension of its VSIP authority until September 30, 2004, for the Seattle office.
On March 19, 2004, the Agency issued the grievant (and other affected Seattle employees) a directed reassignment letter, instructing him to elect either to relocate to the San Francisco office or to separate from the Agency and receive the VSIP. On March 23, the grievant elected reassignment to San Francisco effective May 16. The Agency sent an email on March 26, 2004, announcing that, on March 22, OPM had approved its request to extend VSIP authority until September 30, 2004. The Seattle office closed as planned on March 31, and on May 16, the grievant's duty station officially changed to San Francisco. Thereafter, the grievant commuted to the San Francisco office for work.
On September 20, 2004, the grievant notified the Agency that he wanted to separate from the Agency effective September 30 and receive a VSIP. The Agency informed the grievant that he was no longer eligible for a VSIP because, pursuant to his March election, he had been reassigned to San Francisco, which did not have VSIP authority. Award at 13. The grievant retired effective September 30 without receiving a VSIP. [n1]
The grievant filed a grievance over the VSIP denial. Unresolved, the grievance was submitted to arbitration. The Arbitrator stated the issue as "[w]hether the [Agency] violated a collectively bargained agreement with the [Union] by denying [the grievant's] application for a $25,000 VSIP payment upon his retirement in September 2004." Id. at 2. Before the Arbitrator, the Union claimed, and the Agency denied, that the Agency's March 26 email announcing that OPM has approved its request for an extension of the VSIP period established for the grievant "a `tryout' period" following his reassignment to San Francisco during which, up to September 30, 2004, he could exercise a VSIP option. Id. at 16. [ v61 p651 ]
The Arbitrator rejected the Union's claim. In so doing, the Arbitrator relied on the fact that the Agency's December 2003 memorandum gave employees the option of "either" relocating "or" separating with VSIP. Id. The Arbitrator found no evidence that this "either or" approach was ever modified. Id. at 17. Moreover, in view of the detail contained in the Agency's February 11 memorandum regarding relocation and VSIP preferences, the Arbitrator found that it was "reasonable to expect this memo would contain some discussion of a Seattle tryout proposal[,]" but that it did not. Id. The Arbitrator also relied on the fact that the Agency sought VSIP authority for its New York office to temporarily accommodate affected employees from Boston but did not seek similar authority for the San Francisco or Dallas office to accommodate the Seattle employees. See id. at 18. In addition, the Arbitrator found no evidence in the grievant's directed reassignment letter that indicated the parties' agreement to a tryout period. To the contrary, the Arbitrator found that the grievant's letter "specifically state[d] otherwise" by providing that "if you choose not to accept this reassignment, you are eligible for a Voluntary Separation Payment . . . ." Id. at 19.
The Arbitrator concluded that the Agency's March 26 email constituted "nothing more than an informational notice." Id. at 20. The Arbitrator also concluded that "no agreement existed" between the Agency and the Union "that would permit the Seattle judges to elect reassignment . . . while retaining an unqualified option to elect separation with a VSIP at any time through September 30." Id. at 21.
Finally, the Arbitrator rejected the Union's claim that the Agency treated the grievant differently from another employee "under materially similar circumstances." Id. In this regard, the Arbitrator found that the employees' circumstances were not similar.
Based on the foregoing, the Arbitrator found that the Agency did not violate the parties' agreement by denying the grievant a VSIP.
III. Positions of the Parties
A. Union's Exceptions
According to the Union, the award is contrary to law "because it fails to apply the rules of interpreting bargaining agreement terms applied by the [f]ederal courts in private sector labor-management relations." Exceptions at 19. Specifically, the Union disputes the Arbitrator's reliance on "extrinsic" and "parol" evidence. Id. at 20, 22. In this connection, the Union asserts that the "only stated condition for the acceptance of the VSIP offer was that it be accepted by September 30, 2004." Id. at 22-23. The Union cites federal court cases in support of its argument that the Arbitrator should not have relied on extrinsic and parol evidence because there were no ambiguities in the agreement. See id. at 22 (citing Boise Cascade Corp. v. Paper Allied-Indus., Chem. and Energy Workers (Pace), Local 7-0159, 309 F.3d 1075 (8th Cir. 2002) (Judge Bye dissenting) (Boise); Keebler v. Milk Drivers and Dairy Employees Union, Local No. 471, 80 F.3d 284 (8th Cir. 1996) (Keebler)). The Union maintains that, even if the parties' agreement was ambiguous, the ambiguity should have been construed against the Agency, as the drafter of the agreement. See id. at 23 (citing Hills Materials Co. v. Rice, Sec'y of the Air Force, 982 F.2d 514 (Fed. Cir. 1992) (Hills).
The Union also claims the award is contrary to law because the Arbitrator failed to find that the Agency violated § 7117 of the Statute and § 6.2 of the parties' agreement by failing to respond to the Union's proposals. [n2] In addition, the Union claims that the award is contrary to law because the Arbitrator failed to find that the Agency violated 5 C.F.R. § 576.102(c)(3) by not informing employees of the VSIP availability period. [n3] See id. at 25.
Finally, the Union asserts that the award is irrational, unfounded, and implausible and that it evidences a manifest disregard of the agreement. See id. at 25-26.
Based on the foregoing, the Union requests that the Authority set aside the award and order the Agency to pay the grievant a $25,000 VSIP.
B. Agency's Opposition
Citing OPM v. Richmond, 496 U.S. 414 (1990), the Agency asserts that it is unnecessary to review the Union's exceptions on the merits because "there is no statutory authority" to award the $25,000 that the Union seeks in damages. Opposition at 18. In this regard, the Agency asserts that it cannot "extend VSIP authority in a manner that is inconsistent with the plan approved by OPM[,]" as that plan "did not include VSIP authority for San Francisco." Id. at 18-19. [ v61 p652 ]
The Agency asserts that the Union's dispute over the Arbitrator's use of extrinsic and parol evidence "amounts to a claim that the award fails to draw its essence from the collectively bargained agreement." Id. at 20. According to the Agency, the Union has not established that the award fails to draw its essence from the parties' agreement.
Finally, according to the Agency, the Authority should not consider the Union's claims that the award is contrary to § 7117 of the Statute, § 6.2 of the parties' agreement, and 5 C.F.R. § 576.102(c)(3) because the Union did not argue below that the Agency failed to bargain in good faith or meet its burden of informing employees of the time period of the Agency's VSIP authority. See id. at 29, 32-35.
IV. Preliminary Matters
The Agency claims the Authority should not consider the Union's exceptions on the merits because the Arbitrator could not lawfully have awarded the remedy the Union sought in the grievance. However, the Authority has long held that arbitrators have broad discretion to fashion remedies. See, e.g., United States Dep't of the Interior, United States Geological Survey, Nat'l Mapping Div., Mapping Applications Ctr., 55 FLRA 30, 33 (1998). As such, the Arbitrator was not limited by the Union's request for a particular remedy. Moreover, disputes over the legality of an arbitrator's remedy -- in particular, issues involving sovereign immunity -- are commonly resolved by the Authority on exceptions to an arbitration award. See, e.g., United States Dep't of the Air Force, Minot Air Force Base, N.D., 61 FLRA 366, 369-70 (2005) (Member Pope dissenting on other grounds). Thus, the Agency's argument provides no basis for the Authority to not consider the Union's exceptions on the merits.
However, § 2429.5 of the Authority's Regulations bars Authority consideration of any issue that could have been, but was 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). The Agency asserts that the Union's claims based on § 7117 of the Statute, § 6.2 of the parties' agreement, and 5 C.F.R. § 576.102(c)(3) are barred because they could have been, but were not, raised before the Arbitrator. A review of the record supports the Agency's claim that the Union could have, but did not, raise claims under these provision before the Arbitrator. Consequently, we will not consider the Union's exceptions concerning § 7117 of the Statute, § 6.2 of the parties' agreement, and 5 C.F.R. § 576.102(c)(3).
Finally, while not raised by the parties, we note that § 7121(c)(2) of the Statute excludes from the scope of negotiated grievance procedures "any grievance concerning . . . retirement[,]" such as eligibility for retirement or benefits available only in connection with retirement. Here, the parties' dispute concerns whether the Agency properly denied the grievant's request for a VSIP, not the grievant's eligibility for retirement. Further, VSIP eligibility is based on an employee's separation without regard to retirement. Therefore, even if the Union is correct in claiming that the Agency erred in denying the grievant a VSIP, the grievance concerns only the grievant's entitlement to additional pay; the grievance does not concern retirement under § 7121(c)(2) of the Statute. Cf. Prof'l Airways Sys. Specialists, 57 FLRA 415 (2001) (grievance not barred by § 7121(c)(2) where issue, although motivated by grievant's anticipated retirement, concerned grievant's service computation date, wholly apart from the issue of retirement).
V. Analysis and Conclusions
As noted above, the Union expressly claims that the award fails to draw its essence from the parties' agreement. See Exceptions at 25-26. In addition, the Union claims the award is contrary to law because the Arbitrator improperly relied on extrinsic and parol evidence in interpreting the agreement. The Agency argues that the latter claim should be construed as an argument that the award fails to draw its essence from the parties' agreement.
We construe the Union's exceptions as raising both a fair hearing and an essence claim. In this regard, the Authority has addressed claims that an arbitrator erred in relying on certain evidence as fair hearing claims. See United States Dep't of Homeland Sec., United States Customs and Border Prot., 61 FLRA 113, 115 (2005) (Member Armendariz dissenting on other grounds) (construing agency's argument that arbitrator improperly relied on hearsay evidence as a fair hearing claim) and United States Dep't of the Navy, Naval Surface Warfare Ctr., Indian Head Div., Indian Head, Md., 57 FLRA 417, 421 (2001) (construing agency's argument that arbitrator improperly considered evidence that was not part of the record as a fair hearing claim). In addition, the Union relies on Boise and Keebler to support its argument regarding parol evidence, and Boise and Keebler apply the same essence standard that the Authority applies in reviewing arbitral interpretations of contract language. In this regard, the court in Boise explained the federal court's practice of vacating labor arbitration awards that are "completely irrational[,]" explaining further that "[a]n award is irrational where it fails to draw its essence from [ v61 p653 ] the agreement . . . ." 309 F.3d at 1080 (citation omitted). Similarly, the court in Keebler explained that "a labor arbitration award should be enforced `so long as it draws its essence from the collective bargaining agreement.'" 80 F.3d at 287 (citation omitted). [n4]
A. Whether the Arbitrator failed to conduct a fair hearing.
An award will be found deficient on the ground that an arbitrator failed to provide a fair hearing where a party demonstrates that the arbitrator refused to hear or consider pertinent and material evidence, or that other actions in conducting the proceeding so prejudiced a party as to affect the fairness of the proceeding as a whole. See AFGE, Local 1668, 50 FLRA 124, 126 (1995). In addition, it is well established that the "liberal admission by arbitrators of testimony and evidence is a permissible practice." United States Dep't of Defense, Def. Mapping Agency, Hydrographic/Topograhic Ctr., 44 FLRA 103, 109 (1992). In view of the Arbitrator's liberty to admit and consider evidence, we conclude that the Arbitrator did not err in relying on extrinsic and parol evidence in interpreting the parties' agreement. Consequently, we find that the award is not deficient on fair hearing grounds. See United States Dep't of Veterans Affairs, Ralph H. Johnson Med. Ctr., Charleston, S.C., 57 FLRA 489, 493 (2001) (citation omitted).
B. Whether the award fails to draw its essence from the parties' agreement
For an award to be deficient as failing to draw its essence from the collective bargaining agreement, it must be established 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 agreement as to manifest an infidelity to the obligation of the arbitrator; (3) does not represent a plausible interpretation of the agreement; and (4) evidences a manifest disregard of the agreement. See United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990).
The Union claims the award is deficient because the parties' agreement unambiguously gave employees until September 30 to accept the VSIP offer, whether or not an employee had already been reassigned to another office. The Arbitrator rejected the Union's claim, finding that: (1) the Agency's December 2003 memorandum gave employees an option either to separate with a VSIP or to relocate; and (2) that the February 11 memorandum did not refer to a tryout period for the Seattle employees. The Arbitrator also considered the Agency's requests to OPM and found that the Agency did not seek extended VSIP authority for Seattle employees who were relocating to San Francisco, as it had for Boston employees who were temporarily relocating to New York. In addition, according to the Arbitrator, the grievant's reassignment letter specifically advised him that if he did not accept the reassignment, then he would be eligible for a VSIP. Based on this, and the "entire fabric of the impact negotiations[,]" the Arbitrator concluded that the Agency's March 26 email was nothing more than an informational notice advising employees that the Agency had been granted the authority to offer VSIP benefits until September 30. Award at 20.
The record evidence supports the Arbitrator's findings, which, in turn support his conclusion that the parties did not agree to a tryout period where Seattle employees retained the option to elect separation with a VSIP anytime before September 30 even if they had been reassigned to another office. Moreover, as found supra, the Union has not established that the Arbitrator improperly considered parol and extrinsic evidence. Accordingly, the Union has not established that the Arbitrator's award is irrational, unfounded, or implausible, or that it evidences a manifest disregard of the parties' agreement. We, therefore, deny the Union's exception.
The Union's exceptions with respect to § 7117 of the Statute, § 6.2 of the parties' agreement, and 5 C.F.R. § 576.102(c)(3) are dismissed. The Union's fair hearing and essence exceptions are denied.
Footnote # 1 for 61 FLRA No. 129 - Authority's Decision
We note that the one affected Seattle employee who declined reassignment elected the Agency's VSIP offer contingent upon OPM's approval of the Agency's request to extend the VSIP authority. As set forth above, OPM subsequently extended the Agency's VSIP authority to September 30 and, therefore, when that employee retired on August 1, 2004, he received a VSIP.
Footnote # 2 for 61 FLRA No. 129 - Authority's Decision
Section 7117 of the Statute and § 6.2 of the parties' agreement set forth, respectively, the parties' statutory and contractual obligations to bargain in good faith. See Exceptions, Attachment 7 at 7.
Footnote # 3 for 61 FLRA No. 129 - Authority's Decision
5 C.F.R. § 576.102(c)(3) requires an agency's VSIP plan to "include . . . [t]he time period during which incentives may be paid[.]" 5 C.F.R. § 576.102(c)(3).
Footnote # 4 for 61 FLRA No. 129 - Authority's Decision
The Union also relies on Hills and argues, in the alternative, that the ambiguous language should be construed against the Agency as the drafter of the agreement. However Hills did not concern arbitral interpretation of a labor agreement. Rather, Hills concerned review of the Board of Contract Appeals' interpretation of a service contract between a private company and the Air Force. The court explained that its review of that contract was "a matter of law" which the court was "free to undertake anew[.]" 982 F.2d at 516 (citations omitted).