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58 FLRA No. 93
FRATERNAL ORDER OF POLICE
NEW JERSEY LODGE 173
(Union)
and
UNITED STATES
DEPARTMENT OF THE ARMY
ARMY GARRISON
FORT MONMOUTH, NEW JERSEY
(Agency)
0-AR-3578
_____
DECISION
March 27, 2003
_____
Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1]
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Arthur A. Riegel 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 found that, with respect to one portion of the grievance, the grievant's suspension was not for just cause, and he ordered backpay. The Arbitrator determined that the remaining portion of the grievance, challenging the assessment of financial liability, was not arbitrable. The Arbitrator declined to grant the Union's request for attorney fees.
For the reasons that follow, we find that the Arbitrator's arbitrability determination is contrary to law. We remand the financial liability and attorney fees issues to the parties for resubmission to the Arbitrator, absent settlement. In addition, we modify the award to include an award of interest.
II. Background and Arbitrator's Award
As relevant here, the grievant was both suspended and assessed a financial penalty for allegedly damaging government property. A grievance was filed with regard to both issues and, when the grievance was not resolved, it was submitted to arbitration, where the parties stipulated the issues as follows:
1. Was the Grievant . . . suspended for just cause and, if not, what shall be the remedy?
2. Is the grievance of assessed financial liability for damages to government property by the Grievant arbitrable? If arbitrable, was the financial assessment consistent with the extent of damage to government property?
Award at 2.
With regard to the suspension, the Arbitrator found that the Agency's investigation into the property damage was flawed because, among other things, the Agency's investigator failed to ascertain the credibility of an eyewitness whose written statement was the "cornerstone" of the Agency's case. Id. at 15. Because that eyewitness did not testify at the hearing, the Arbitrator determined to give "little weight" to the eyewitness's written statement. Id. The Arbitrator concluded that the suspension was not for just cause, and he rescinded it and awarded backpay.
With regard to whether the financial penalty issue was arbitrable, the Arbitrator found that 10 U.S.C. § 4835 (§ 4835) and the Agency regulations implemented pursuant to that statute provide that financial assessments are "final once approved by the Secretary of the Army or his/her designee." [n2] Id. at 16. The Arbitrator determined that the parties' agreement "provides for the binding nature of statutes and regulations," and "[t]hus, it is unreasonable to conclude that the parties intended for the assessment of financial liability to be grievable when it is grounded in a statute and a regulation pursuant to that statute." Id. at 17. The Arbitrator concluded that the financial penalty issue was not arbitrable. [ v58 p385 ]
Finally, the Arbitrator stated: "As to the matter of the awarding of attorney's fees, the undersigned finds no basis for doing so." Id. at 17-18.
III. Positions of the Parties
A. Union's Exceptions
The Union argues that the Arbitrator's arbitrability determination is contrary to law and Authority precedent, citing AFGE, AFL-CIO, Council 214, 21 FLRA 244 (1986) (Council 214), remanded without decision as to other matters sub nom. AFGE, AFL-CIO, Council 214 v. FLRA, No. 86-1340 (D.C. Cir. Apr. 28, 1987), decision on remand, 27 FLRA 814 (1987), and Int'l Bhd. of Elec. Workers, 14 FLRA 680 (1984). The Union contends that § 4835 merely establishes "the final authority in the Army" for determining pecuniary liability and does not prevent arbitral review of the determinations. Exceptions at 6. The Union requests that the Authority remand this matter to the Arbitrator with instructions to rescind the financial penalty. In the alternative, the Union requests that the Authority rescind the penalty on the ground that the grievant did not cause the damage on which the financial penalty was based, and thus, "an assessment of pecuniary liability for property he never damaged cannot stand." Id. at 16 n.1.
In addition, the Union contends that the Arbitrator erred by not awarding attorney fees. According to the Union, the requirements of the Back Pay Act have been met and fees are proper because the Agency's actions were clearly without merit or wholly unfounded, the grievant was substantially innocent, and the Agency knew or should have known that it would not prevail on the merits. The Union also asserts that the Arbitrator erred by failing to award interest on the backpay.
B. Agency's Opposition
The Agency asserts that the Arbitrator made a "procedural arbitrability" determination that the Authority should not overturn. Opposition at 6. According to the Agency, the Arbitrator properly interpreted § 4835 to find that the grievance was not arbitrable. In this connection, the Agency asserts that the word "final" in 10 U.S.C. § 4835 would be meaningless unless it precludes outside review of financial penalty determinations. In the event that the Authority finds the award deficient, the Agency requests that the matter be remanded.
The Agency also asserts that attorney fees should not be awarded because the grievant is not substantially innocent, the Agency's actions were not clearly without merit or wholly unfounded, and the Agency did not know, and should not have known, that it would not prevail. In this connection, the Agency claims that the grievant deliberately withheld, until the time of the hearing, information that could have exonerated the grievant. The Agency asserts that, if the Authority finds the record is not sufficient to make a determination regarding attorney fees, then the matter should be remanded.
IV. Analysis and Conclusions
The Union alleges that the Arbitrator's arbitrability determination is contrary to §§ 7103(a)(9) and 7121(a)(1) and (2) of the Statute and Authority precedent, and that his denial of attorney fees and interest is contrary to the Back Pay Act, 5 U.S.C. § 5596. The Authority reviews questions of law raised by exceptions to an 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.
A. The Arbitrator's arbitrability determination is contrary to law and Authority precedent.
As an initial matter, we reject the Agency's assertion that the Arbitrator made a procedural arbitrability determination. Procedural arbitrability involves "procedural questions, such as whether the preliminary steps of the grievance procedure have been exhausted or excused," and is distinguished from substantive arbitrability, which involves questions regarding whether "the subject matter of a dispute is arbitrable." Elkouri & Elkouri, How Arbitration Works 305 (Marlin M. Volz & Edward P. Goggin eds., 5th ed. 1997) (How Arbitration Works) (emphasis added). Compare United States Dep't of Agric., Rural Dev. Centralized Servicing Ctr., Saint Louis, Mo., 57 FLRA 166, 168 (2001) (timeliness of grievance a procedural arbitrability issue); with Pan. Canal Comm'n, 56 FLRA 451, 457 (2000) (statutory limitation on ability to file grievance a substantive arbitrability issue). In particular, "[s]ubstantive arbitrability is a question of subject matter jurisdiction: whether the parties have agreed to arbitrate a particular category or type of dispute." EEOC, 53 FLRA 465, 476 n.12 (1997) (citing How Arbitration Works at 301).
As the Arbitrator's arbitrability determination was based on the subject matter of the grievance, not a procedural provision of the parties' agreement, he made a [ v58 p386 ] substantive -- not procedural -- arbitrability determination. Thus, the Agency's argument does not provide a basis for declining to consider the merits of the Union's exceptions. See, e.g., Ass'n of Civilian Technicians, Show-Me Army Chapter, 58 FLRA 154, 155 n.4 (2002).
Where an arbitrator's substantive arbitrability determination is based on a statute, the Authority reviews that determination de novo. See, e.g., id. at 155 (substantive arbitrability determination based on § 7116(d) of Statute). By contrast, where a substantive arbitrability determination is based on a contract, the Authority applies the deferential "essence" standard. See NAGE, Local R4-45, 55 FLRA 695, 699-700 (1999).
The Arbitrator found that § 4835 and regulations implementing that section preclude arbitral review. The Arbitrator also found that the parties' agreement did not demonstrate an intent to include such matters within the scope of the grievance procedure. The award demonstrates that the Arbitrator's finding regarding the parties' agreement was made merely to demonstrate that § 4835 and its implementing regulations controlled the question of arbitrability. That is, the Arbitrator found that, by agreement, the parties were bound by, and did not agree to override, whatever restrictions on the scope of the grievance procedure were imposed by § 4835. As such, and noting that both parties interpret the award as based on § 4835, we conclude that the Arbitrator's substantive arbitrability determination is based on that statute and its implementing regulations. Accordingly, we review the matter de novo, not under the essence standard.
The Authority has held that grievance procedures negotiated under § 7121 of the Statute are "exclusive for resolving all grievances which come within their coverage." Council 214, 21 FLRA at 247. In order for a statute to remove a matter from the scope of the negotiated grievance procedure, there must be "clear[,] specific indications that the statutory procedures were intended to be exclusive." Id. at 249. Accord AFGE, Local 3258, 53 FLRA 1320, 1325-26 (1998). This requirement is met, for example, by wording that an administrative review procedure "does not authorize an appeal outside the agency or judicial review" and that "the procedure and the decision upon appeal may not be subject to negotiation, arbitration, or agreement." United States Dep't of Treasury, IRS v. FLRA, 996 F.2d 1246, 1249 (D.C. Cir. 1993).
With particular regard to the matter in dispute here, the Authority has stated that "[u]nless it can be shown that [an a]gency's procedures for determining pecuniary liability are intended to be the exclusive procedures for resolving that issue, such matters are within the scope of the negotiated procedure." Council 214, 21 FLRA at 248. Further, the Authority has found that statutes providing a particular individual with "final" authority to decide issues of employee liability do not preclude arbitrators from resolving grievances involving such liability. Id. at 251; AFGE, Local 3258, 53 FLRA at 1328-330.
Consistent with the foregoing, the Authority has held that § 4835 does not preclude arbitral review of financial penalties against Agency employees. See Int'l Bhd. of Elec. Workers, 14 FLRA 680, 681-82 (1984). While § 4835 states that action taken against an employee based on destruction to government property "is not final until approved by the Secretary or the Secretary's designee," it does not contain "clear[,] specific indications" that the negotiated grievance procedure is intended to be barred or that the statutory procedures in § 4835 are intended to be exclusive. Council 214, 21 FLRA at 249.
As § 4835 does not preclude arbitral review of financial penalties against Agency employees, the Arbitrator misinterpreted § 4835. Thus, his determination that the grievance is not substantively arbitrable is contrary to § 4835.
When an arbitrator has erred in finding a grievance not substantively arbitrable, the Authority consistently has remanded the matter for the arbitrator to address the merits. See, e.g., NFFE, Local 2010, 55 FLRA 533, 535 (1999); AFGE, Local 3258, 53 FLRA at 1330; and NFFE, Local 1636, 48 FLRA 511, 515 (1993). While the Union requests that the Authority direct the Arbitrator to rescind the financial assessment on remand (or rescind it without remand), there is no basis in the record for determining that financial assessment is inappropriate based solely on a finding that the Agency lacked "just cause" for the suspension. In this regard, there is no basis to conclude that the standards for "just cause" and financial assessment are the same, such that finding the Agency lacked just cause to suspend the grievant compels a conclusion that financial assessment is inappropriate. As such, and consistent with Authority precedent, we remand the financial penalty issue to the parties for resubmission to the Arbitrator, absent settlement. [ v58 p387 ]
B. We remand the attorney fee issue.
Where an arbitrator denies a request for attorney fees, but does not address the statutory requirements for such an award, the Authority assesses whether the legal sufficiency of the arbitrator's denial can be derived from the record. See Ala. Ass'n of Civilian Technicians, 54 FLRA 229, 233 (1998) (ACT). If it cannot be derived, then the Authority remands the matter to the parties for resubmission to the arbitrator. See id.
The Arbitrator denied the Union's request for attorney fees, but did not address the statutory requirements for such an award. [n3] While many of those requirements appear to be met, the record does not provide a sufficient basis for determining whether certain of those requirements are met. In particular, we are unable to resolve the Union's assertion that fees would be in the interest of justice because issues relevant to this determination cannot be resolved on the record before us.
For example, the question of whether the grievant deliberately withheld information that could have exonerated him -- as alleged by the Agency but not addressed by the Arbitrator -- is relevant to whether the Agency's actions were clearly without merit or wholly unfounded and to whether the grievant was substantially innocent. See NAGE, Local R4-6, 56 FLRA 1092, 1095 (2001) (clearly without merit or wholly unfounded analysis requires assessing degree of employee's fault); Wise v. MSPB, 780 F.2d 997, 1000 (Fed. Cir. 1985) (substantial innocence analysis requires assessing whether employee knew of his or her innocence and could have proven it, but deliberately did not inform deciding official). In addition, with regard to whether the Agency knew or should have known that it would not prevail on the merits, the Arbitrator made no findings with regard to whether the Agency lacked credible, probative evidence to support its actions. See NAGE, Local R4-6, 56 FLRA at 1095 ("knew or should have known" requires analysis of whether agency lacked credible, probative evidence). Although the Arbitrator declined to credit eyewitness testimony that he found to be the "cornerstone" of the Agency's case, Award at 15, he did so because the eyewitness did not attend the hearing, not because the statement was incredible. Moreover, the Arbitrator did not address, and the record does not reveal, what amount of fees would be reasonable or whether the total amount of requested fees is related to the personnel action.
As the record does not contain a sufficient basis for resolving the legal sufficiency of the Arbitrator's denial of attorney fees, we remand the attorney fee issue to the parties for resubmission to the Arbitrator, absent settlement. See ACT, 54 FLRA at 233. On remand, the Arbitrator should determine whether all of the requirements of the Back Pay Act, set forth supra at note 3, are met.
C. We modify the award to provide for interest on the award of backpay.
Under the provisions of the Back Pay Act, "interest must be paid" on backpay awards. AFGE, Local 3134, 56 FLRA 983, 984 (2000) (citations omitted). Where an arbitrator awards a grievant backpay under the Back Pay Act, and no exception to that aspect of the award is filed, the payment of interest on that backpay is required. Id. In those circumstances, the Authority will modify the award to include interest. See id.
The Arbitrator awarded the grievant backpay, and the parties have not provided any basis for finding the backpay award deficient. Thus, an award of interest is required, and we modify the award to include an award of interest.
V. Decision
We find that the Arbitrator erred in finding the financial assessment issue was not arbitrable. We remand the financial assessment and attorney fee issues for resubmission to the Arbitrator, absent settlement, and we modify the award to include an award of interest. [ v58 p388 ]
Dissenting Opinion of Chairman Cabaniss:
I dissent on the limited issue of whether the Arbitrator made a substantive or procedural arbitrability determination regarding the assessment of liability claim. While I understand how the majority arrived at its conclusion, I am compelled to hold otherwise. In that regard, it appears that the Arbitrator interpreted Article 3, Section 1 (parties are bound by laws, rules, regulations, and other outside authorities) to mean that the parties had agreed to bind themselves by the terms and provisions of 10 U.S.C. § 4382 and the Army regulation (AR 735-5) issued pursuant thereto. While I personally would not have interpreted the parties' agreement in such a manner, I know of no reason that prevents the Arbitrator from so interpreting the agreement in that manner here, and there is nothing inherently erroneous, as a matter of law or otherwise, with the Arbitrator's interpretation of the agreement in that manner. And, as a procedural arbitrability claim is an issue of contract interpretation, I know of little in the record to support a conclusion that the Arbitrator's ruling here does not draw its essence from the parties' agreement. See, e.g., United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990).
Consequently, the Arbitrator did not find that the assessment of liability claim was not substantively arbitrable, he found that the assessment of liability claim was not procedurally arbitrable because the parties had agreed pursuant to the terms of the agreement to follow the terms of the statute involved and the agency regulation issued thereto (rather than processing liability assessment claims under the negotiated grievance procedure). There is nothing that would prevent the parties from having so agreed, or the Arbitrator from so interpreting their agreement. Accordingly, I would uphold the Arbitrator on this issue.
Footnote # 1 for 58 FLRA No. 93 - Authority's Decision
Chairman Cabaniss' dissenting opinion is set forth at the end of this decision.
Footnote # 2 for 58 FLRA No. 93 - Authority's Decision
Although the Arbitrator cited 10 U.S.C. § 4832 -- which provides that "[t]he Secretary of the Army may prescribe regulations for the accounting for Army property and the fixing of responsibility for that property" -- the "finality" wording relied on by the Arbitrator comes from § 4835, which provides, in pertinent part, that action taken against an employee based on destruction to government property "is not final until approved by the Secretary or the Secretary's designee." We note that the Agency relied on § 4835 before the Arbitrator, see Exceptions, Attachment D at 19 (Agency's Post-Hearing Brief), and the Union does not dispute that the award is based on § 4835, see Exceptions at 5-6.
Footnote # 3 for 58 FLRA No. 93 - Authority's Decision
For an award of attorney fees to be appropriate under the Back Pay Act, the grievant must have been affected by an unjustified or unwarranted personnel action that resulted in the withdrawal or reduction of the grievant's pay, allowances, or differentials. United States Dep't of the Navy, Naval Surface Warfare Ctr., Indian Head, Div., Indian Head, Md., 57 FLRA 417, 422 (2001). Further, an award of attorney fees must be: (1) in conjunction with an award of backpay on correction of the personnel action; (2) reasonable and related to the personnel action; and (3) in accordance with the standards established under 5 U.S.C. § 7701(g). Id. at 423. The standards under § 7701(g)(1) are that: (1) the employee must be the prevailing party; (2) the award of fees must be warranted in the interest of justice; (3) the amount of fees must be reasonable; and (4) the fees must have been incurred by the employee. Id. There are several grounds for finding an award in the "interest of justice," including, as argued by the Union, that: (1) the agency's actions were "clearly without merit or wholly unfounded," (2) the grievant is "substantially innocent," and/or (3) the agency "knew or should have known" that it would not prevail on the merits. See NAGE, Local R4-6, 56 FLRA 1092, 1094-95 (2001).