Natl Treas Empl v. FLRA

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 24, 2006 Decided June 23, 2006

No. 05-1230

NATIONAL TREASURY EMPLOYEES UNION,
PETITIONER

v.

FEDERAL LABOR RELATIONS AUTHORITY,
RESPONDENT

On Petition for Review of an Order of the
Federal Labor Relations Authority

Julie M. Wilson argued the cause for petitioner. With her
on the briefs were Gregory O'Duden and Barbara A. Atkin.

William E. Persina, Attorney, Federal Labor Relations
Authority, argued the cause for respondent. With him on the
brief was William R. Tobey, Acting Solicitor.

Before: GINSBURG, Chief Judge, and SENTELLE and
HENDERSON, Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG.

GINSBURG, Chief Judge: The National Treasury Employees
Union petitions for review of a decision of the Federal Labor
 2

Relations Authority holding the Internal Revenue Service did
not have a duty to bargain over the Union’s proposed “Leave
Swapping Program.” Because the Authority reasonably
concluded that the subject of how leave would be allocated
among employees was “covered by” the pre-existing collective
bargaining agreement between the Union and the IRS, we deny
the Union’s petition for review.

I. Background

The Union and the IRS are parties to a national collective
bargaining agreement that governs the terms and conditions of
employment at, among other locations, the Service’s call site in
Denver, Colorado. Article 32, Section 1.C of that agreement
provides:

[T]he Employer will resolve a conflict in requests by
employees in the same occupation for scheduled
annual leave by granting preference to the employee
with the most service as determined by enter on duty
(EOD) date.

U.S. Dep’t of the Treasury, Internal Revenue Serv., Denver,
Colo., 60 F.L.R.A. 572 app. at 574 (2005) (IRS). The managers
at the Denver site scheduled local employees’ annual leave in
accord with their seniority, per Article 32, and with the
scheduling requirements set centrally by the business operating
division of the IRS, which requirements dictated the number of
employees needed to answer calls on any given day.

Employees who believed their requests for leave had been
unfairly denied complained about this arrangement. Ms.
Patience Ellis, the senior official at the Denver call center,
created a committee of union and management representatives
to consider the issue. The committee developed a consensus
 3

“Leave Swapping Program” under which one employee could
transfer his approved leave to another employee with the same
job skills, regardless of either employee’s seniority. Id. at 575.

Representatives of the Union took the position that the
leave-swapping program was a binding collective bargaining
agreement, but management refused either to implement or to
bargain further over it on the ground that the subject was already
covered by Article 32 of the national agreement. This prompted
the Union to file a grievance claiming the IRS had violated the
Federal Service Labor-Management Relations Statute, 5 U.S.C.
§§ 7116(a)(1), (5), by “refus[ing] to consult or negotiate in good
faith.” When the Union and the IRS were at an impasse over the
grievance, the Union demanded arbitration.

The arbitrator concluded the national agreement “does not
cover the leave swapping program”; rather, it “only governs how
the agency will initially assign annual leave” and does “not
speak to the situation in which an employee chooses not to use
approved leave.” Unlike the national agreement, the arbitrator
explained, the leave-swapping program involves only “voluntary
swaps among willing employees”; seniority “is not a
consideration” because “there is no conflict [when] both
employees want to make the swap.” It followed that, because
the leave-swapping proposal was not “covered by” the national
agreement, the agency had violated 5 U.S.C. §§ 7116(a)(1) and
(5) by refusing to bargain over it.

The IRS appealed to the Authority, which held “the
Arbitrator erred in determining [the leave swapping program]
‘covers an entirely different subject’” than does the national
agreement. IRS, 60 F.L.R.A. at 574. In the Authority’s view,
the proposed leave-swapping program “would circumvent” the
system of seniority established by the national agreement
because it would “permit[] an employee with approved annual
 4

leave ... to grant [that] annual leave to any employee, whether or
not there is a more senior employee who has requested leave for
that same period.” Id. Accordingly, the Authority concluded,
the national agreement having “expressly addressed” the
standard for determining who gets leave when not all requests
can be granted, “the Union’s leave swapping proposal is covered
by the agreement and the Agency has no duty to bargain” over
it. Id.

The Union filed a motion for reconsideration, arguing the
Authority had failed to defer to the arbitrator’s interpretation of
the national agreement, as required by precedent. The Authority
denied the motion, explaining that “although the Authority
defers to an arbitrator’s factual findings and contract
interpretations, the Authority does not defer to an arbitrator’s
conclusions as to the legal effect of those findings and
interpretations.” U.S. Dep’t of the Treasury, Internal Revenue
Serv., Denver, Colo., 60 F.L.R.A. 893, 894 (2005). In this case,
the Authority explained, it had disagreed only with the
arbitrator’s application of the “covered by” doctrine, id., which
application it reviews de novo, see, e.g., Nat’l Treasury
Employees Union Chapter 168, 55 F.L.R.A. 237, 241-42 (1999).
The Union petitions for review of both the Authority’s orders
denying relief.

II. Analysis

We will not set aside an order of the Authority unless it is
“arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A); see id. § 7123(c)
(adopting standard in § 706); Nat’l Treasury Employees Union
v. FLRA, 414 F.3d 50, 57 (D.C. Cir. 2005). The Union argues
the Authority acted arbitrarily because it failed to defer to the
arbitrator’s interpretation of the national agreement, even though
in the past the Authority has “consistently declined to overturn
 5

arbitral interpretations of collective bargaining agreements.” As
evidence of this alleged failure to defer, the Union notes the
Authority (1) twice described its own decision as “contrary to
the Arbitrator’s conclusion,” IRS, 60 F.L.R.A. at 574, and (2)
ignored Ms. Ellis’s testimony that the national agreement did not
“address” whether employees were required to consider
seniority if they wanted to trade leave. In sum, the Union argues
the Authority’s decision cannot stand because it is “fabricated
out of whole cloth,” with “nothing in the record evidence” to
support it.

The Authority argues the “Union misapprehends the issue
in this case”: The Authority rejected “the arbitrator’s legal
conclusion as to the interrelationship between the proposal and
[the national agreement], not his interpretation of the
agreement.” The Authority maintains it (1) owes no deference
to the arbitrator’s application of the “covered by” doctrine,
which it accordingly reviewed de novo, and (2) reasonably
concluded a proposal that would allow an employee to transfer
his leave to another, notwithstanding the request of a third
employee with greater seniority than that of the transferee,
would “effectively nullify the operation of [Article 32, Section
1.C]” of the national agreement.

As we recently explained in another case brought by the
same Union, an agency’s “duty to bargain [over disputes arising]
mid-term derives from the ... command [of the Statute] to both
labor and management to ‘meet and negotiate in good faith.’”
Nat’l Treasury Employees Union v. FLRA, 399 F.3d 334, 337
(2005). Such bargaining is not required, however, with respect
to a matter “covered by” a collective bargaining agreement
already in place. Id.

The Authority uses a two-step analysis to determine
whether a proposal for mid-term bargaining is “covered by” an
 6

existing collective bargaining agreement. First the Authority
considers whether the subject matter “is expressly addressed by
the terms of the parties’ collective bargaining agreement.” Nat’l
Treasury Employees Union, 59 F.L.R.A. 217, 218 (2003). The
Authority does not require an “exact congruence” between the
matter proposed for bargaining and the text of the existing
agreement; “if a reasonable reader would conclude that the
provision [in the agreement] settles the matter in dispute,” then
the matter is “covered.” U.S. Dep’t of Health & Human Servs.,
Soc. Sec. Admin., Balt., Md., 47 F.L.R.A. 1004, 1017-18 (1993).
Second, if the Authority determines the matter is not expressly
addressed in the agreement, then it must decide whether the
matter is “inseparably bound up with ... a subject expressly
covered by the contract.” Id. at 1018. In this case the Authority
concluded, pursuant to the first step of the analysis, that the
“standards for granting leave are expressly addressed” in, and
are therefore “covered by,” the national agreement. IRS, 60
F.L.R.A. at 574.

We are not persuaded by the Union’s arguments that the
Authority erred in so holding. To begin, we agree with the
Authority that the Union has mistaken the arbitrator’s
application of the “covered by” doctrine for an “interpretation”
of the national agreement. Application of the “covered by”
doctrine is an exercise in construction; it requires the adjudicator
of a dispute over the meaning of a collective bargaining
agreement to determine how broadly or narrowly the agreement
should be read in view of the policies embodied in the statute
establishing the duty to bargain. See Dep’t of the Navy, Marine
Corps Logistics Base, Albany, Ga. v. FLRA, 962 F.2d 48, 58-59
(D.C. Cir. 1992) (“covered by” doctrine should be applied to
further the “stability and repose” the Statute is intended to
promote). In short, whether a subject is “covered by” an
existing agreement is a question of law. See Garden State
Tanning, Inc. v. Mitchell Mfg. Group, Inc., 273 F.3d 332, 335
 7

(3d Cir. 2001) (“construction” “determines [the] legal operation”
of agreement; “interpretation” of agreement resolves any
ambiguity in terms used).

The “covered by” analysis is thus analogous to the inquiry
we make in order to determine whether a federal statute
impliedly preempts related state law; rather than focusing only
upon the meaning of a particular word or words in search of
congressional intent, as we might in a case of statutory
interpretation, see, e.g., Friends of the Earth, Inc. v. EPA, 446
F.3d 140, 142 (D.C. Cir. 2006) (word “daily” as used in the
Clean Water Act “means daily, nothing else”), “the entire
scheme of the statute must ... be considered .... If the purpose of
the [federal] act cannot otherwise be accomplished[,] ... the state
law must yield.” Crosby v. Nat’l Foreign Trade Council, 530
U.S. 363, 373 (2000) (internal quotation marks removed); see
also Sheridan Kalorama Historical Ass’n v. Christopher, 49
F.3d 750, 757-58 (D.C. Cir. 1995) (considering “comprehensive
scheme[s]” provided by federal statute and D.C. law and holding
federal law controlled). Therefore, although the Authority
defers to an arbitrator’s interpretation of a contract, it properly
reviews de novo the arbitrator’s application of the “covered by”
doctrine. See Nat’l Treasury Employees Union Chapter 168, 55
F.L.R.A. at 241-42; cf. Bldg. & Constr. Trades Dep’t, AFL-CIO
v. Allbaugh, 295 F.3d 28, 32 (D.C. Cir. 2002) (reviewing de
novo decision of district court regarding preemption).

Although the Union here argues the Authority did not defer
to the arbitrator’s interpretation of the national agreement, the
Union has not pointed to any word or phrase in that agreement
to which the Authority attributed a different meaning than had
the arbitrator. The Authority disagreed with the arbitrator only
with regard to what the national agreement “speak[s] to,”
“governs,” and “address[es]” -- in other words, what the
agreement, or more specifically Article 32 of the agreement,
 8

“covers.” Because the Authority properly decides de novo what
the agreement covers, it did not err in failing to defer to the
arbitrator in this regard; nor for the same reason was it required,
as the Union implies, to rely upon Ms. Ellis’s testimony
regarding what she believed the national agreement addressed.

Therefore the Authority’s decision cannot fairly be
described, the Union’s assertion notwithstanding, as having been
“fabricated out of whole cloth” and without “record evidence”
to support it. The Authority reasoned that the Union’s leave-
swapping proposal would depart from the criterion of seniority
to which the parties had subscribed in the national agreement.
IRS, 60 F.L.R.A. at 574. Under the Union’s proposal an
employee with leave approved on the basis of his seniority could
trade that leave to an employee other than the next most senior
employee who had requested, but was denied, leave for that
same period. Consistent with its past decisions, therefore, the
Authority concluded the leave-swapping program was “covered
by” the national agreement, which had established seniority as
the sole criterion upon which employees would qualify for leave
when not all who wanted leave for a particular period could be
accommodated. See Prof’l Airways Sys. Specialists, 56 F.L.R.A.
798, 804 (2000) (proposal to train employees who could not
sustain a certain level of pay due to lack of training was
“covered by” provision of agreement setting forth agency’s
obligations to provide training and to compensate employees
unable to sustain that level of pay). That conclusion, if not
compelled, was eminently reasonable.

III. Conclusion

The Authority neither failed to defer to the arbitrator’s
interpretation of the national agreement nor otherwise erred in
concluding the national agreement “covered” the subject of how
 9

leave would be allocated. The Union’s petition for review is,
therefore,

Denied.