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National Treasury Employees Union (Union) and United States , Department of Treasury, Internal Revenue Service, Office of Chief Counsel (Agency)

[ v62 p45 ]

62 FLRA No. 12

NATIONAL TREASURY
EMPLOYEES UNION
(Union)

and

UNITED STATES
DEPARTMENT OF TREASURY
INTERNAL REVENUE SERVICE
OFFICE OF CHIEF COUNSEL
(Agency)

0-AR-4024

_____

DECISION

March 22, 2007

_____

Before the Authority: Dale Cabaniss, Chairman and
Wayne C. Beyer, Member

I.      Statement of the Case

      This matter is before the Authority on exceptions to an award of Arbitrator S. Jesse Reuben 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 determined that the Agency did not repudiate a memorandum of understanding (MOU) and that consequently, the Agency did not violate § 7116(a)(1) and (5) of the Statute. For the following reasons, we deny the Union's exceptions.

II.      Background and Arbitrator's Award

      According to the Arbitrator, after a work group evaluated whether the Agency should increase the number of GS-15 attorneys, the Agency's acting chief counsel decided to establish 125 new GS-15 attorney positions and notified the Union's president. They issued a joint memorandum announcing the establishment of the positions, and the parties commenced negotiations over implementation of the initiative. In their negotiations, the parties disagreed over the procedures to be used in filling the positions. The Union proposed use of the procedures of Article 22 of the parties' collective bargaining agreement while the Agency proposed use of the procedures of its Executive Resources Board (ERB). In a memorandum of understanding (MOU), the parties agreed that the Union would not challenge use of the ERB procedures for filling the positions, but that the use of the procedures would not be precedential. Thereafter, the Agency issued a vacancy announcement for 125 new, nonmanagerial GS-15 attorney positions and, ultimately, selected 109 employees for the positions, of which 102 were in the bargaining unit. [n1] 

      The Union filed a grievance. [n2]  The Union alleged that the Agency had agreed in the MOU to establish 125 nonmanagerial positions and that in exchange, the Union had agreed to waive its right to have the positions filled under Article 22 of the collective bargaining agreement. Accordingly, the Union claimed that the Agency had repudiated the MOU, in violation of § 7116(a)(1) , (5) and (8) of the Statute, by failing to fill 125 positions. The Arbitrator denied the grievance. [n3] 

      In rejecting the Union's claim that the Agency repudiated the MOU, the Arbitrator found that the evidence failed to establish that the Agency had elected to bargain with the Union on the numbers, types, and grades of employees, within the meaning of § 7106(b)(1) of the Statute. He determined that it was clear "from the express language contained in the MOU that the parties agreed to negotiate the MOU for the purpose of implementing the management initiative which established 125 new nonmanagerial GS-15 attorney positions." Award at 14.

      He found no support for the Union's allegation that the Agency agreed to fill 125 bargaining-unit positions as the result of bargaining with the Union. He concluded that the Union failed to substantiate that "in the parties' negotiations for the MOU the Union obtained a commitment from the Agency to fill 125 positions as a quid pro quo for the Union giving up its right to utilize the Article 22 promotion procedures contained in the parties' collective bargaining agreement." Id. at 15. He noted that although the Union's negotiator testified that "she believed that the Union permitted the Agency to use the ERB process . . . in exchange for the Agency's commitment to fill the 125 positions, she made no reference to any discussions in this regard with the Agency during the negotiations or to any language in the MOU [ v62 p46 ] or documented bargaining history which supported her position." Id. He specifically rejected the Union's claim that it obtained the Agency's commitment to fill 125 positions "in exchange for the Union's concession to waive its right to apply the promotion procedures contained in Article 22 of the parties' collective bargaining agreement." Id. at 14. Noting that Article 22 expressly provides that its procedures do not apply to the "promotion of excepted service attorneys[,]" he determined that the procedures "were not available to the Union to utilize or waive since the Agency's attorneys were not covered by this provision." Id. at 16 (quoting, in part, Article 22 of the parties' agreement).

      In sum, the Arbitrator concluded that the establishment and filling of the disputed positions were matters decided by the Agency alone without the involvement of, or a bargaining request by, the Union. Accordingly, he ruled that the Agency did not repudiate the MOU by filling only 102 bargaining-unit positions and that consequently, the Agency did not violate § 7116(a)(1) and (5) of the Statute.

III.      Positions of the Parties

A.      Union's Exceptions

      The Union contends that the award is deficient because the award fails to draw its essence from the agreement and is contrary to law and because the Arbitrator exceeded his authority.

      In contending that the award fails to draw its essence from the agreement, the Union claims that the Arbitrator misinterpreted the MOU by erroneously finding that the purpose of the MOU was limited to the process that would be used to implement the management initiative that established the new positions. The Union asserts that the award is deficient because the Arbitrator "did not address in any fashion the adequacy, or not, of the express language on the face of the [MOU]." Exceptions at 12. The Union claims that the Arbitrator completely ignored "references over and over again in the agreement to the `establishing,' `filling,' and `selection' for 125 GS-15 positions." Id. at 9. The Union maintains that in view of the express language of the MOU, "it seems nonsensical" that the Arbitrator could have found that the agreement was not about actually filling the 125 positions. Id. at 10. The Union argues that the deficiency is confirmed by the Arbitrator's improper analysis of the meaning of the MOU. The Union asserts that rather than addressing the express language of the MOU, the Arbitrator "immediately resorted to parol[] evidence to make his ultimate findings[.]" Id. at 12.

      The Union similarly argues that the Arbitrator exceeded his authority by ignoring specific limitations on his authority set forth in the parties' collective bargaining agreement. The Union notes that under Article 35 of the agreement, the Arbitrator was confined to interpreting the express provisions of the MOU and had no authority to add to, subtract from, or modify the MOU. The Union claims that by ignoring the repeated references in the MOU to establishing, filling, and selecting 125 applicants, the Arbitrator altered the MOU by confining it solely to process.

      The Union contends that the award is contrary to law because the Arbitrator ignored Authority precedent on an agency's "obligation to give the union clear, specific and honest notice of any change it proposed." Id. at 18. The Union claims that the Agency "virtually admitted that it mislead the union as to any change it proposed or even as to any agreement it intended to implement." Id. In addition, the Union contends that the award is contrary to law because "[t]he Agency waived its right to challenge any conclusion that it elected to bargain over numbers." Id. at 19. In the Union's view, "once the Agency took the position that it had not `elected to bargain,' it was required to raise a claim of arbitrability of the `election to bargain' issue before addressing the merits of the situation." Id. (emphasis in original). Thus, the Union maintains that the award is contrary to law because the Arbitrator failed to find that the Agency had conceded the election-to-bargain issue by not challenging its arbitrability. The Union also contends that the award is contrary to law by failing to find that the Agency patently breached the MOU and violated § 7116(a)(1) and (5).

B.      Agency's Opposition

      The Agency contends that the award is not deficient and that the Union's exceptions should be denied.

      The Agency argues that the award draws its essence from the agreement because the plain language of the MOU and the evidence presented at the arbitration hearing support the Arbitrator's finding that the MOU concerned the process for filling the disputed positions and did not constitute an agreement under § 7106(b)(1) to fill 125 positions. The Agency maintains that the Union was not given the choice of filling all of the positions in exchange for agreeing to ERB procedures but, rather, the Union was given the choice of agreeing to the ERB procedures or risking that the Agency would not go forward with the initiative at all. In particular, the Agency asserts that the Union's exception ignores and does not dispute the Arbitrator's finding that Article 22 of the collective bargaining agreement did not apply and that consequently, the Union had nothing to waive in exchange for a commitment to fill all of the positions. The Agency asserts that the Union's contention that the Arbitrator exceeded his [ v62 p47 ] authority is merely a recast of its essence exception and provides no basis for finding the award deficient.

      The Agency argues that there is no support for the Union's argument that the Agency was required to raise the issue of whether there was an agreement under § 7106(b)(1) as a matter of arbitrability. The Agency maintains that the Authority has repeatedly held that the question of the existence of an agreement on a matter covered under § 7106(b)(1) is a question of contract interpretation, not a question of arbitrability.

      The Agency further argues that the Arbitrator correctly ruled that the Agency did not violate § 7116(a)(1) and (5). Finally, the Agency asserts that the Union's claim that the Union "was induced by fraud, misrepresentation, or some other nefarious act on the part of the Agency" to agree to the MOU is without support. Opposition at 31. The Agency maintains that as found by the Arbitrator, there was never a discussion or negotiation with the Union concerning the number of positions that would be filled, and there was never a commitment to fill all of the positions.

      In addition, the Agency asserts that although the Union's argument is "somewhat unclear[,]" to the extent that the Union's argument is that once the Agency decided not to fill all 125 positions, the Agency was required to give notice of this change and bargain with the Union, the argument was not raised to the Arbitrator and should be barred by § 2429.5 of the Authority's Regulations. Id. at 27.

IV.      Analysis and Conclusions

A.     Preliminary Issue

      Section 2429.5 of the Authority's Regulations bars Authority consideration of any issue that could have been, but was not, presented to the arbitrator. E.g., United States Dep't of Def. Educ. Activity, 60 FLRA 254, 256 (2004). The Agency asserts that although the Union's argument is "somewhat unclear[,]" to the extent that the Union's argument is that once the Agency decided not to fill all 125 positions, the Agency was required to give notice of this change and bargain with the Union, the argument was not raised to the Arbitrator and should be barred by § 2429.5. Opposition at 27.

      We agree with the Agency that the Union's argument is unclear. However, in our view, the Union's argument is directed to the Agency's alleged conduct during the MOU negotiations, which the Agency acknowledges was raised to the Arbitrator, id. at 32, and not to any alleged subsequent bargaining obligation. Consequently, we reject the Agency's assertion that this argument is barred by § 2429.5.

B.      The award does not fail to draw its essence from the agreement.

      The Authority will find that an award fails to draw its essence from an 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 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. United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990). The Union provides no basis for finding that the award fails to draw its essence from the MOU.

      The Union asserts that the Arbitrator misinterpreted the MOU by erroneously finding that the purpose of the MOU was limited to process. The Union claims that the Arbitrator failed to address the express language of the MOU and ignored the repeated references to establishing and filling 125 positions. For the following reasons, the Union's exception does not establish that the award fails to draw its essence from the agreement under any of the essence standards established by the Authority. E.g., United States Dep't of Def. Educ. Activity, Arlington, Va., 56 FLRA 779, 785 (2000).

      The Arbitrator specifically examined the language of the MOU and concluded that it was clear "from the express language contained in the MOU that the parties agreed to negotiate the MOU for the purpose of implementing the management initiative which established 125 new nonmanagerial GS-15 attorney positions." Award at 14. The Union has not established that the Arbitrator's interpretation of the express language evidences any disregard of the MOU. The introductory paragraph expressly provides that the MOU concerns implementation of what the parties describe as "an initiative establishing 125 new non-managerial GS-15 Senior Legal Counsel positions." Attachment to Exceptions. The remaining provisions address implementation issues, and the MOU concludes that it "constitutes the complete agreement of the parties with respect to the 125 GS-15 positions." Id. Similarly, as noted by the Agency, the Union's exception ignores and does not dispute the Arbitrator's finding that Article 22 of the collective bargaining agreement did not apply to promotions of excepted-service attorneys and that consequently, contrary to the Union's view of the MOU, the Union had nothing to waive in exchange for a commitment by the Agency to fill all of the positions.

      Likewise, the Union fails to establish that it was implausible, irrational, or unfounded of the Arbitrator to confirm his view of the express language of the MOU by relying on the testimony of the union negotiator, who [ v62 p48 ] could make "no reference to any discussions . . . with the Agency during the negotiations or to any language in the MOU or documented bargaining history which supported her position" that "the Union permitted the Agency to use the ERB process . . . in exchange for the Agency's commitment to fill the 125 positions[.]" Award at 15.

      Accordingly, we deny this exception.

C.      The Arbitrator did not exceed his authority.

      The Union asserts that the Arbitrator exceeded his authority by altering the MOU. When the Authority denies an exception which contends that the award fails to draw its essence from the agreement, and the appealing party essentially reiterates its essence arguments in contending that the arbitrator exceeded his or her authority, the Authority denies the exceeded-authority exception consistent with the denial of the essence exception. E.g., United States Dep't of Educ., Washington, D.C., 61 FLRA 307, 311 (2005) (Chairman Cabaniss concurring as to other matters); United States Dep't of the Treasury, Internal Revenue Serv., Austin, Tex., 60 FLRA 360, 362 (2004). The Union's exceeded-authority argument recasts its essence arguments that the Arbitrator misinterpreted the MOU as an exceeded-authority exception. Consistent with the denial of the essence exception, we deny this exception.

D.     The award is not contrary to law.

      The Authority reviews questions of law raised by an exception to an arbitrator's award de novo. NFFE Local 1437, 53 FLRA 1703, 1709 (1998). 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. In making that determination, the Authority defers to the arbitrator's underlying findings of fact. Id. at 1710. In making that determination, the Authority also defers to an arbitrator on questions of contract interpretation. Id. at 1709 n.4. For the reasons that follow, we deny the Union's exception.

      The Union argues that the award is contrary to law by failing to find that the Agency patently breached the MOU and violated § 7116(a)(1) and (5). The Authority has established a framework consisting of two elements for analyzing an allegation of repudiation. The first element is whether the alleged breach of an agreement provision was clear and patent, and the second element is whether the provision goes to the heart of the agreement. E.g., Soc. Sec. Admin., New York, N.Y., 60 FLRA 301, 304 (2004). The Arbitrator interpreted the MOU to solely concern implementation of the management initiative and determined that the Agency did not breach the MOU . In reviewing the Arbitrator's legal conclusion that the Agency did not violate § 7116(a)(1) and (5), we defer to the Arbitrator's contract interpretation, which we have concluded does not fail to draw its essence from the agreement and does not exceed the Arbitrator's authority.

      Consistent with that interpretation, the MOU concerned only process, not numbers, and the Agency did not breach the MOU. Thus, neither element of the repudiation framework is established. Accordingly, the Union's argument provides no basis for finding the award contrary to law. See, e.g., NTEU Chapter 168, 55 FLRA 237, 242 (1999) (when the arbitrator's interpretation of the parties' agreement is a complete defense to an unfair labor practice, no basis is provided for finding the denial of a grievance alleging a violation of § 7116 contrary to the Statute).

      The Union's other arguments similarly provide no basis for finding the award deficient. The Union argues that the Agency misled the Union in the bargaining over the number of positions to be filled and that the Arbitrator ignored Authority precedent on the Agency's obligation to give the Union "clear, specific and honest notice" on the coverage of the MOU. Exceptions at 18. However, as noted, in reviewing the Union's exception de novo, we defer to the Arbitrator's findings of fact and contract interpretation. NFFE Local 1437, 53 FLRA at 1709 n.4, 1710. In this case, the Arbitrator specifically found that there was never any bargaining over a commitment to fill positions pursuant to § 7106(b)(1). Consequently, the Union's argument is premised on a view of the negotiations that conflicts with the factual findings and contract interpretation of the Arbitrator to which we defer.

      Finally, we reject the Union's claim that the Agency was required to raise the issue of whether there was an agreement under § 7106(b)(1) as a threshold matter of arbitrability. In this regard, the Authority has never held that the question of whether there has been an agreement on a matter covered under § 7106(b)(1) is a question of arbitrability. Instead, as noted by the Agency, the Authority has repeatedly held that the question of the existence of an agreement on a matter covered under § 7106(b)(1) is a question of contract interpretation. E.g., United States Dep't of Transportation, Fed. Aviation Admin., 60 FLRA 159, 162 (2004) (Chairman Cabaniss concurring in result). Consequently, the parties appropriately submitted their dispute over whether the MOU constituted an agreement on any matters covered under § 7106(b)(1) to the Arbitrator for his construction of the MOU. Id.

V.      Decision

      The Union's exceptions are denied.

Footnote # 1 for 62 FLRA No. 12 - Authority's Decision

   In its opposition to the Union's exceptions, the Agency states that the allocation of positions by office actually added up to 126 positions, rather than 125 positions. Opposition at 7 n.4. However, the Agency does not contend that the actual allocation of positions by office affects whether the award is deficient.

Footnote # 2 for 62 FLRA No. 12 - Authority's Decision

   Before the Arbitrator, the Union stipulated that its grievance did not cover the filling of the positions that are not in the bargaining unit.

Footnote # 3 for 62 FLRA No. 12 - Authority's Decision

   In denying the grievance, the Arbitrator noted that in its post-hearing brief, the Union no longer alleged that the Agency violated § 7116(a)(8) of the Statute. Award at 9 n.7.