Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-05-01405/USCOURTS-caDC-05-01405-0/pdf.json

Parties Involved:
Federal Labor Relations Authority
Respondent
National Treasury Employees Union
Petitioner

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 15, 2006 Decided October 27, 2006 

No. 05-1405 

NATIONAL TREASURY EMPLOYEES UNION, 

PETITIONER

V. 

FEDERAL LABOR RELATIONS AUTHORITY, 

RESPONDENT

On Petition for Review of a Decision and Order of the 

Federal Labor Relations Authority 

Barbara A. Atkin argued the cause for petitioner. With 

her on the briefs were Gregory O’Duden and Elaine Kaplan. 

James F. Blandford, Attorney, Federal Labor Relations 

Authority, argued the cause for respondent. With him on the 

brief was William R. Tobey, Acting Solicitor. 

Before: RANDOLPH and GRIFFITH, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

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WILLIAMS, Senior Circuit Judge: The National Treasury 

Employees Union petitions for review of a decision of the 

Federal Labor Relations Authority setting aside an arbitrator’s 

award favorable to the union. The underlying dispute 

involves arrangements between local union chapters and 

certain IRS regions, under which the IRS regions promised 

time-off awards to employees who volunteered for seasonal 

customer service duty. 

When the IRS refused to award the promised time off 

during the 2003 tax filing season, the union pursued 

grievances, claiming that the refusal was a violation of the 

local agreements and constituted an unfair labor practice 

under 5 U.S.C. § 7116. An arbitrator agreed with the union, 

and the IRS filed exceptions with the FLRA. The Authority 

ruled that provision of the awards was barred by 5 U.S.C. 

§ 4502(e), which allows time-off awards only for “superior 

accomplishment or other personal effort that contributes to the 

quality, efficiency, or economy of Government operations.” 

The Authority supposed that the agreements called for awards 

even to volunteers who performed customer service duties 

below a minimally successful level. 

We find, however, that the agreements are ambiguous 

about whether they obliged the IRS to give awards even to 

inadequate volunteers, and note that the record evidence may 

be in conflict as to the parties’ contemporaneous 

understanding. Because the Authority did not address the 

ambiguities in the agreements, we set aside its holding and 

remand for further proceedings. 

* * * 

Each year during tax filing season, January 1 through 

April 15, the IRS experiences a surge of taxpayer inquiries 

through its phone lines, e-mail accounts, and walk-in centers. 

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To manage this seasonal variation in demand, the IRS has 

historically “borrowed” employees, such as revenue officers, 

tax auditors, and tax attorneys, from other activities for 

temporary reassignment to customer service work. 

In recent years, the IRS’s agreement with the national 

union over these filing-season secondments has authorized 

local negotiations on the issue; for the 2003 filing season the 

national agreement preserved then extant local provisions 

except as modified by a national agreement or local 

negotiations. On its face, then, the national agreement kept in 

place for 2003 the memoranda of understanding (“MOUs”) 

negotiated by NTEU Chapters 22, 34, and 60, under which 

qualified employees who volunteered for customer service 

duties and were used in that role would receive extra time off. 

The three agreements provided, in pertinent part, that 

[a]s an incentive for volunteering, all volunteers who are 

utilized [for seasonal customer-service work] will receive 

one hour for every forty hours of customer service 

worked as a Time Off Incentive Award . . . . Volunteers 

who are selected for full time positions would receive a 

minimum of 12 hours. In order to receive the 12 hours, 

full time volunteers must serve in their details for the 

entire filing season. All other volunteers who are utilized 

will receive a minimum of 6 hours. 

Joint Appendix (“J.A.”) 170. The agreement with Chapter 60 

was identical except for an additional sentence not material to 

our decision. 

Despite the national agreement allowing such MOUs, the 

IRS refused to honor the applicable time-off provisions in 

2003, arguing that awards under such terms would be contrary 

to law; it therefore didn’t grant time-off awards during the 

2003 tax filing season. The IRS rested on 5 U.S.C. § 4502(e), 

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which (as we said) authorizes agencies to award employees, 

pursuant to regulations promulgated by the Office of 

Personnel Management (“OPM”), extra time off “in 

recognition of superior accomplishment or other personal 

effort that contributes to the quality, efficiency, or economy of 

Government operations.” OPM regulations, in turn, permit 

agencies to grant such awards “on the basis of . . . [a] 

suggestion, invention, superior accomplishment, productivity 

gain, or other personal effort that contributes to the efficiency, 

economy, or other improvement of Government operations.” 

5 C.F.R. § 451.104 (2006). 

The IRS claimed that awards called for by the agreements 

failed to provide the statutorily required contribution “to the 

quality, efficiency, or economy of Government operations” 

because of the possibility that volunteers performing less than 

minimally successful work would be entitled to awards. 

The arbitrator rejected the IRS defense, reasoning that in 

volunteering an IRS employee contributed to the efficiency of 

government operations by “allowing the IRS to have a willing 

employee interacting with the public, rather than an employee 

who was detailed with no desire to be in that position.” J.A. 

30. 

The IRS filed exceptions with the FLRA pursuant to 

5 U.S.C. § 7122, and the FLRA set aside the award, reasoning 

that the arbitrator’s decision had required awards even for 

volunteers whose customer-service work fell below a 

minimally successful level. Such work would not, it said, 

contribute to the efficiency, economy or improvement of 

Government operations. Nat’l Treasury Employees Union 

Chapters 22, 34, & 60, 61 F.L.R.A. No. 33 (2005). 

The union filed a timely petition for review. 

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* * * 

Under 5 U.S.C § 7123(c), we must set aside a FLRA 

decision that is “arbitrary, capricious, an abuse of discretion, 

or otherwise not in accordance with law.” Bureau of Alcohol, 

Tobacco and Firearms v. FLRA, 464 U.S. 89, 97 n.7 (1983). 

We will uphold the Authority’s decision “if, but only if, we 

can discern a reasoned path from the facts and considerations 

before the [agency] to the decision it reached.” U.S. 

Information Agency v. FLRA, 960 F.2d 165, 169 (D.C. Cir. 

1992). The FLRA’s findings of fact are “conclusive” if 

supported by substantial evidence on the record, 5 U.S.C. 

§ 7123(c), and its “reasonable inferences” receive deference 

on review. American Fed’n of Government Employees, Local 

2441 v. FLRA, 864 F.2d 178, 184 (D.C. Cir. 1988).

As to the MOUs themselves, courts interpret labor 

agreements in light of the “practice, usage and custom” of the 

parties. Transportation-Communication Employees Union v. 

Union Pac. Ry. Co., 385 U.S. 157, 161 (1966). In particular, 

where the terms of a bargaining agreement are ambiguous, we 

look to evidence of the parties’ contemporaneous 

understanding. See Commonwealth Communications, Inc. v. 

NLRB, 312 F.3d 465, 468 (D.C. Cir. 2002); American Postal 

Workers Union v. U.S. Postal Service, 940 F.2d 704, 707–08 

(D.C. Cir. 1991). We see no reason to suppose that either the 

arbitrator or the FLRA could disregard those principles of 

interpretation.

The FLRA opinion rests heavily on the assertion that the 

arbitrator directed the IRS to award time off without regard to 

an employee’s actual performance and thus potentially in the 

absence of any contribution to the efficiency, economy or 

improvement of Government operations. But as FLRA 

Member Pope recognized in dissent, the arbitrator made no 

finding whether the agreements contemplated time-off awards 

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when an employee’s performance was less than minimally 

successful. 

Nor do the agreements, on their face, resolve the question 

of awards to underperforming individuals. The text makes no 

explicit mention of performance, stating only that “all 

volunteers who are utilized” will get time off. J.A. 170. 

Without the words “are utilized,” the agreements would 

perhaps best be understood to require awards for the mere act 

of volunteering. But the “utilized” phrase may impose a 

minimum performance threshold; the IRS arguably does not 

“utilize” non-performing employees. Alternatively, “utilize” 

might simply refer to an individual’s selection for duty by the 

IRS out of the initial pool of volunteers for customer service 

work, with no implied performance floor. Although we afford 

deference to the FLRA’s interpretation of union bargaining 

proposals, Nat’l Treasury Employees Union v. FLRA, 30 F.3d 

1510, 1514 (D.C. Cir. 1994), here the Authority did not 

address the MOUs’ textual ambiguities or offer any 

independent interpretation of the agreements. 

In fact, the record contains arguably contradictory 

evidence about the parties’ contemporaneous understanding of 

the MOUs. Lovett, the union representative, testified that the 

union never expected awards merely for volunteering, but 

rather for an employee’s “raising [his] hand [and] doing the 

work that was asked of [him] at a fully successful level.” 

Lovett testimony at 140 (Aug. 31, 2004) J.A. 76. Lovett 

explained that the IRS retained “absolute authority” to remove 

an underperforming employee from customer service duty and 

that such removal would “either eliminate or minimize any 

[time-off] award that they would receive.” Lovett testimony 

at 133 (Sept. 1, 2004) J.A. 124. 

But the union’s position may be undercut by its rejection 

of the IRS’s negotiating proposal to include an explicit quality 

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criterion that would have changed the award formula from 

“one hour for every forty hours of customer service worked” 

to “one hour for every forty hours [of customer service] 

successfully worked.” See Canning testimony at 57–59, 80–

81, J.A. 105, 110–11 (emphasis added). An IRS witness 

recalled that “there was absolutely no conceptual agreement 

that the performance had to be of a satisfactory nature.” Id. at 

80, J.A. 110. 

Another IRS witness testified that in the event of a 

volunteer’s serious underperformance, such as falling asleep 

on the job, the IRS’s “practice was to let the employee know 

and also let the union know that this person was falling asleep 

at the desk and we can’t have that.” Wolfson testimony at 34-

35, J.A. 99. There was evidence that those managing filing 

season employees in fact held expectations that volunteers 

would really work. Id. at 36, J.A. 99. But the record provides 

nothing more specific on whether underperforming employees 

ever actually claimed or received awards. 

In our view, the Authority’s failure to address the MOUs’ 

textual ambiguities and the arguably conflicting evidence as to 

the parties’ contemporaneous understanding or subsequent 

practices renders its decision arbitrary and capricious. We 

therefore vacate and remand for further proceedings consistent 

with this opinion; given the deference we owe the Authority 

on factual matters, we are not in a position to resolve factual 

disputes or to decide whether the evidence can in fact be 

reconciled (insofar as it controls the outcome). 

So ordered.

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