Court Opinion

ID: 2674713
Source: CourtListenerOpinion
Date Created: 2014-05-16 15:01:03.217987+00
Date Added: 2024-06-11T13:06:15.960323
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 13, 2014                 Decided May 16, 2014

                        No. 12-1463

  BROADCASTING BOARD OF GOVERNORS OFFICE OF CUBA
                 BROADCASTING,
                   PETITIONER

                             v.

          FEDERAL LABOR RELATIONS AUTHORITY,
                     RESPONDENT

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL
                       1812,
                    INTERVENOR

         On Petition for Review of a Final Decision
          of the Federal Labor Relations Authority

    Howard S. Scher, Attorney, U.S. Department of Justice,
argued the cause for petitioner. With him on the briefs were
Stuart F. Delery, Assistant Attorney General, and Leonard
Schaitman, Attorney.

    Zachary R. Henige, Attorney, Federal Labor Relations
Authority, argued the cause for respondent. On the brief was
Rosa M. Koppel, Solicitor.
                                2
     Leisha A. Self argued the cause for intervenor. With her on
the brief was David A. Borer.

    Before: GARLAND, Chief Judge, and TATEL and PILLARD,
Circuit Judges.

    Opinion for the Court filed by Circuit Judge TATEL.

     TATEL, Circuit Judge: Compared to the charges of
cronyism, waste, and mismanagement that dominated this
dispute in its earlier stages, the legal issue we confront is quite
tame. After an arbitrator found that Petitioner Broadcasting
Board of Governors violated both a collective bargaining
agreement and federal labor relations law when it laid off
sixteen employees, the Federal Labor Relations Authority
upheld the arbitrator’s determination. The Board of Governors
now petitions for review. Because Congress has barred the
courts from hearing challenges to FLRA orders that “involve[]
an award by an arbitrator[], unless the order involves an unfair
labor practice,” 5 U.S.C. § 7123(a), we must determine whether
the order at issue here, which undoubtedly involves an award by
an arbitrator, also involves an unfair labor practice. Finding that
it does not, we dismiss the petition for lack of subject matter
jurisdiction.

                                I.
     The Office of Cuba Broadcasting, a division of Petitioner
Broadcasting Board of Governors, produces radio and television
programming for dissemination inside Cuba. This programming
runs the gamut from breaking news to in-depth pro-democracy
documentaries to the Major League Baseball playoffs. There’s
just one problem. For as long as the Office has been
broadcasting to Cuba, the Cuban government has engaged in a
massive signal-blocking campaign. In response, the Office has
                               3
sought innovative ways to sneak its content through. For
example, in order to maximize the strength of its signal, the
Office has broadcast from an airplane flying as close to Cuba as
possible.

     So who’s winning—the Office or the Cuban government?
Depends on whom you ask. Citing statistics suggesting high
levels of online engagement, the Office’s supporters insist that
its programming has become an invaluable resource for Cubans
otherwise cut off from reliable news and information. See
Broadcasting Board of Governors, Radio and TV Marti,
http://www.bbg.gov/broadcasters/ocb/ (last viewed May 5,
2014). By contrast, critics frequently cite Government
Accountability Office studies suggesting that the blocking
campaign has prevented virtually all Cubans from watching or
listening to any of the Office’s programs. See, e.g., U.S. Gov’t
Accountability Office, Broadcasting to Cuba: Actions Are
Needed to Improve Strategy and Operations 3 (2009); see also
U.S. Gov’t Accountability Office, Broadcasting Board of
Governors Should Provide Additional Information to Congress
Regarding Broadcasting to Cuba 11 (2011) (noting difficulties
estimating audience size); cf. also Editorial, A New Voice of
America,       WALL       ST.      J.,   May       6,      2014,
http://online.wsj.com/news/articles/SB10001424052702304831
304579545870588304300 (endorsing congressional efforts to
reform the “U.S. international-broadcasting system”).

     In 2009, members of Congress critical of the Cuba
broadcasting program proposed reducing the Office’s budget by
almost half—over $16 million. After program advocates
complained, Congress settled on a $4.2 million cut, anticipating
that the Office could find the necessary savings by scrapping its
expensive airplane program and reforming its contracting
procedures. See American Federation of Government
                                 4
Employees, Local 1812 v. Broadcasting Board of Governors,
74–75 & n.39 (Nov. 19 2011) (Butler, Arb.) (“Arbitration
Award”).

     Instead of grounding the plane and reforming its procedures,
however, the Office announced a “reduction-in-force”—in other
words, layoffs. According to the Office, this would save money
without sacrificing program quality. But the union representing
the affected employees, the American Federation of Government
Employees, Local 1812, objected, claiming that the layoffs were
unjustified. And even assuming the layoffs were justified, the
Union insisted that the Office had an obligation under both the
collective bargaining agreement and sections 7116(a)(5) and
(a)(8) of the Federal Service Labor-Management Relations
Statute (the Statute), 5 U.S.C. § 7101 et seq., to engage in so-
called impact and implementation bargaining over how it would
carry them out, see 5 U.S.C. § 7116(a) (“[I]t shall be an unfair
labor practice for any agency . . . to refuse to consult or negotiate
in good faith with a labor organization as required by this
chapter; . . . [or] otherwise fail or refuse to comply with any
provision of this chapter.”). After an extensive back-and-forth
between the Union and management, the Office decided to
proceed as planned, ultimately terminating sixteen employees.

      Believing that the Office had carried out unjustified layoffs
in an impermissible manner, the Union initiated formal
proceedings under the Federal Service Labor-Management
Relations Statute. The Statute “contains a two-track system for
resolving labor disputes.” Ass’n of Civilian Technicians, N.Y.
State Council v. FLRA, 507 F.3d 697, 699 (D.C. Cir. 2007)
(ACT) (internal quotation marks omitted). “Under the first track
. . . , a party may file an unfair labor practice charge with the
[FLRA’s] General Counsel, who will investigate and issue a
complaint, if warranted. The matter is then adjudicated by the
                                5
[FLRA],” and the FLRA’s order is then fully reviewable by this
Court. Id. (internal citations omitted). “Under the second
track . . . , a party may file a grievance in accordance with its
collective bargaining agreement. . . . The grievance is subject to
binding arbitration, and the arbitral award is subject to review by
the [FLRA].” Id. (internal citations omitted). In this case, the
Union pursued the second track, filing a formal grievance and
then taking the Office’s parent agency, the Broadcasting Board
of Governors, to binding arbitration.

     After considering extensive evidence regarding, among
other things, the background of the layoffs and the intent of the
parties to the collective bargaining agreement, the arbitrator
sided with the Union. In a comprehensive and blistering opinion,
the arbitrator dismissed the Board’s justifications for the
reduction-in-force, determining that the layoffs were in fact part
of the then-Office director’s “bad faith plan to at least
intimidate, if not actually get rid of, his internal critics.”
Arbitration Award at 76. As for the methods by which the Office
had carried out the layoffs, the arbitrator examined the text of
the collective bargaining agreement, the intent of the negotiators,
and the way in which layoffs had been implemented in the past,
concluding that the Office had violated the agreement by failing
to engage in impact and implementation bargaining. Id. at 61,
67–68. Moreover, the arbitrator agreed with the Union that by
failing to engage in such bargaining, the Office had committed a
statutory unfair labor practice. See id. at 94. In doing so, the
arbitrator expressly rejected the Board’s invocation of the
“covered by” defense, under which parties have no statutory
obligation to negotiate over an issue that the collective
bargaining agreement already addresses with sufficient
particularity. Arbitration Award at 64; see also id. at 58
(explaining that the “covered by” defense applies only to
statutory duties, not contractual duties); Federal Bureau of
                                6
Prisons v. FLRA, 654 F.3d 91, 94–95 (D.C. Cir. 2011)
(describing the defense). The arbitrator then went on to find that
the Office had breached the collective bargaining agreement in
several additional ways, including by failing to give affected
employees “priority consideration” for certain vacant positions.
Arbitration Award at 79–80. In the end, these contractual and
statutory violations combined with management’s bad faith
conduct led the arbitrator to award the Union a “status quo ante”
remedy, requiring that all terminated employees be reinstated
and paid damages. Id. at 94.

     Appealing to the FLRA, the Board of Governors argued that
the arbitrator had improperly rejected its “covered by” defense.
According to the Board, “the covered-by doctrine relieves an
agency from its obligation to bargain over a matter if that matter
is contained in an agreement or that matter is inseparably bound
up with a subject expressly covered by an agreement.” See
Broadcasting Board of Governors Office of Cuba Broadcasting,
66 FLRA 1012, 1014 (2012) (“FLRA Order”). As a result, the
Board argued, it had no statutory or contractual obligation to
engage in impact and implementation bargaining over the
layoffs. The FLRA rejected this argument, reasoning that the
“covered by” defense applies only to statutory duties, not
contractual duties, and that the arbitrator’s award could rest
equally well on contractual or statutory grounds. In a footnote
central to the issue before us, the FLRA explained that it had no
need to address the merits of the Union’s statutory unfair labor
practice claims or the Board’s “covered by” defense:
    The Agency also argues that the Arbitrator’s
    interpretation of Article 3 and Article 30, Section 2 is
    contrary to law because it is inconsistent with the
    covered-by doctrine. Although the Arbitrator stated
    that the Agency violated the Statute, it is unnecessary
    to address the Agency’s exception. The Arbitrator’s
                                7
    contractual interpretation of these provisions of the
    parties’ agreement serves as a separate and independent
    basis for the award, and the Agency has not established
    that this basis is deficient. Thus, we need not address
    any claims regarding an alleged statutory violation.
    See, e.g., Broad. Bd. of Governors, 66 FLRA 380, 385-
    86 (2011) (Member Beck dissenting) (finding it
    unnecessary to address contrary-to-law exceptions
    because party did not establish that arbitrator’s contract
    interpretation, which was a separate and independent
    basis for the award, was deficient).

Id. at 1019 n.5 (internal quotation marks and citations omitted).
After rejecting every one of the Board’s contractual arguments,
the FLRA upheld the status quo ante remedy. Id. at 1020–21.

     The Board of Governors now petitions for review. Before
addressing the merits of the Board’s arguments, however, we
must determine whether we have subject matter jurisdiction. See
Department of the Navy v. FLRA, 665 F.3d 1339, 1344 (D.C.
Cir. 2012).

                               II.
     Lying at the heart of this case is a fundamental principle of
federal labor relations law: arbitration awards are presumed final
and not subject to judicial review. Reflecting this principle, the
Statute prohibits courts from reviewing an FLRA order
“involving an award by an arbitrator, unless the order involves
an unfair labor practice.” 5 U.S.C. § 7123(a). “Insulating
arbitration awards from judicial review reflects a strong
Congressional policy favoring arbitration of labor disputes and
furthers Congress’s interest in providing arbitration results
substantial finality.” Department of the Navy, 665 F.3d at 1344
(internal quotation marks omitted). The “limited exception that
                                 8
allows . . . judicial review . . . furthers Congress’s other stated
interest of ensuring a single, uniform body of case law
concerning unfair labor practices.” ACT, 507 F.3d at 699
(internal quotation marks omitted). Thus, for this Court to have
subject matter jurisdiction over the Board’s petition, the order
under review must “involve[]” a statutory unfair labor practice.

     The word “involves” is far from precise. Simplifying our
task, this Court has addressed the word’s scope in a series of
decisions, all of which faithfully respect Congress’s desire to
limit judicial review of arbitration awards. We first considered
the meaning of “involves” in Overseas Education Association v.
FLRA, 824 F.2d 61 (D.C. Cir. 1987), in which we held that “a
statutory unfair labor practice [must] actually be implicated to
some extent in the [FLRA’s] order,” so even if certain conduct is
“capable of characterization as a statutory unfair practice . . . [,]
the conduct must actually be so characterized and the claim
pursued, by whatever route, as a statutory unfair labor practice,
not as something else.” Id. at 66. Not only that, but in American
Federation of Government Employees, Local 2510 v. FRLA, 453
F.3d 500 (D.C. Cir. 2006) (AFGE), we emphasized that even
when an aggrieved party argues that the other party committed a
statutory unfair labor practice, and even when the arbitrator’s
award addresses that alleged unfair labor practice, “it is the order
of the [FLRA] that is the subject of the petition for judicial
review,” not the arbitrator’s decision or the initial grievance. Id.
at 504. That order, moreover, must do more than merely
acknowledge an unfair labor practice. As we made clear in
Department of the Interior v. FLRA, 26 F.3d 179 (D.C. Cir.
1994), a “passing reference does not satisfy the requirement that
an unfair labor practice be an explicit ground for or necessarily
implicated by the [FLRA’s] decision.” Id. at 184 (internal
quotation marks omitted). We thus concluded that we lack
jurisdiction where, as in that case, the FLRA describes an unfair
                                 9
labor practice claim solely to “reject the notion that an unfair
labor practice is any part of the case before [it].” Id. Reinforcing
this requirement, we held in ACT, 507 F.3d 697 (D.C. Cir.
2007), that the order must “contain a substantive discussion of
an unfair labor practice claim,” id. at 700—though we later
clarified in Department of the Navy v. FLRA, 665 F.3d 1339
(D.C. Cir. 2012), that the discussion need not be “explicit,” id. at
1345 (holding that when an FLRA order “necessarily implicates
a statutory unfair labor practice,” we have jurisdiction even if
the order never “explicitly discuss[es]” the unfair labor practice).

     These decisions strongly suggest that we lack subject matter
jurisdiction in this case. True, as the Board points out, the Union
alleged and the arbitrator found a statutory unfair labor practice.
But under AFGE what matters is the FLRA’s final order—not
the arbitrator’s award or the initial grievance—and in that order
the FLRA mentioned the Union’s unfair labor practice claim
only in a footnote and only to explain why it had no need to
consider the claim. As we made clear in Department of the
Interior, the FLRA must do more than simply note the existence
of an unfair labor practice claim for its order to “involve” an
unfair labor practice—indeed, even explaining why it will not
address an unfair labor practice argument is insufficient. The
FLRA’s order must, as we held in ACT, reach and discuss the
merits of a statutory unfair labor practice or in some “other way
affect[] substantive law regarding” a statutory issue, something
the order in this case never does. 507 F.3d at 700.

     Seeking to escape the clear dictate of our precedent, the
Board of Governors makes two arguments. First, it contends that
the FLRA’s order “involves an unfair labor practice” by virtue
of the Board’s invocation of the “covered by” defense, “a
statutory defense, [which] as such involves—or at least
implicates—the question of a statutory duty to bargain.”
                                10
Petitioner’s Br. 41. Although the FLRA maintains that the
“covered by” defense applies only to statutory duties, the Board
of Governors insists that the defense applies as well to at least
some contractual duties, including the one the arbitrator found
here. According to the Board, the arbitrator’s consideration of
extrinsic evidence reveals that the arbitrator looked beyond the
text of the collective bargaining agreement when defining the
scope of the Board’s contractual duty to bargain, something the
arbitrator could not have done without first rejecting the Board’s
statutory “covered by” defense—in other words, determining
that the agreement itself fails to “cover” the impact and
implementation of layoffs sufficiently to relieve the Board of
any further bargaining obligation. Because, at least in this case, a
“contractual duty to bargain is not independent of a statutory
duty to bargain,” id. at 42, the Board urges us to take jurisdiction
on the ground that the FLRA had no basis for upholding the
arbitrator’s decision without at least implicitly rejecting the
Board’s statutory “covered by” defense. In support, the Board
relies on our recent opinion in Federal Bureau of Prisons v.
FLRA, 654 F.3d 91 (D.C. Cir. 2011), claiming that it stands for
the proposition that contractual and statutory duties are neither
separate nor independent. Thus, according to the Board, the
collective bargaining agreement could provide no “separate and
independent” basis for the arbitrator’s award.

     Had the FLRA necessarily rejected the “covered by”
defense when it upheld the arbitrator’s award, we might well
agree that we have subject matter jurisdiction. See Department
of the Navy, 665 F.3d at 1345 (taking jurisdiction where the
FLRA’s order necessarily found an unfair labor practice, even
though the FLRA had ostensibly found only a contractual duty).
But as the FLRA explains, the Board of Governors’s argument
misconstrues the “covered by” defense, which applies only to
statutory duties. Simply put, the “covered by” defense respects
                                11
the bargain the parties struck: if the agreement covers an issue in
sufficient depth, then we assume the parties have already fully
negotiated over that issue and therefore refrain from imposing
additional statutory obligations that appear nowhere in the
agreement. See Federal Bureau of Prisons, 654 F.3d at 94 (“If a
collective bargaining agreement ‘covers’ a particular subject,
then the parties to that agreement are absolved of any further
duty to bargain about that matter during the term of the
agreement.”) (citations and quotation marks omitted). It would
make little sense to consider such a defense when evaluating a
purported contractual duty, since contractual duties are
themselves products of the very bargaining the “covered by”
defense is designed to respect. And given that extrinsic evidence
of the mutual intent of the parties furnishes an appropriate
source of insight into the meaning of contractual terms, an
arbitrator’s consideration of such evidence hardly transforms the
contractual inquiry into a statutory one, opening the door to a
“covered by” defense. See RESTATEMENT (SECOND) OF
CONTRACTS § 214 (1981); see also National Treasury
Employees Union v. FLRA, 466 F.3d 1079, 1081 (D.C. Cir.
2006) (“[C]ourts interpret labor agreements in light of the
practice, usage and custom of the parties. In particular, where the
terms of a bargaining agreement are ambiguous, we look to
evidence of the parties’ contemporaneous understanding.”
(internal citations and quotation marks omitted)).

    Federal Bureau of Prisons is not to the contrary. There,
unlike here, we clearly had jurisdiction because the FLRA had
explicitly addressed and found a statutory unfair labor practice.
654 F.3d at 454; see also ACT, 507 F.3d 699 (noting that where
an unfair labor practice is explicitly discussed in the FLRA’s
order, our jurisdiction is clear). Nor does that decision provide
any support for the Board’s argument that the “covered by”
defense applies to contractual duties. To be sure, after rejecting a
                               12
statutory unfair labor practice claim on the ground that a
particular issue was “covered by” the collective bargaining
agreement, we went on to “reject . . . the contention” that the
collective bargaining agreement provided a “‘separate and
independent basis’ for the arbitral award.” Federal Bureau of
Prisons, 654 F.3d at 97. We did so, however, not because the
“covered by” defense applies to contractual duties, as the Board
contends, but rather “because the arbitral award ma[de] no
distinction between the purportedly ‘separate’ statutory and
contractual grounds.” Id. Since under these circumstances the
Bureau of Prisons “was not required to file a separate exception”
outlining contractual arguments, the FLRA had no basis for
holding that the Bureau’s failure to file such an exception
waived all such arguments. Id. Here, the FLRA’s “separate and
independent basis” holding suffers from no similar defect: the
arbitrator found both a statutory and a contractual duty, and the
Board of Governors made both statutory and contractual
arguments before the FLRA. Accordingly, given Board
counsel’s refreshingly candid concession that he knows of no
cases where either the FLRA or any court has found a “covered
by” defense relevant to the scope of a contractual duty, Oral Arg.
Rec. 2:05–:30, we decline the Board’s invitation to do so here.

     Second, the Board of Governors argues that we have subject
matter jurisdiction because the FLRA’s order might implicate
sovereign immunity. Recall that the arbitrator interpreted the
collective bargaining agreement as requiring the Board to
provide employees affected by the layoffs with “priority
consideration” for certain vacant positions. See Arbitration
Award at 79–80. This requirement, the Board argues, forces it to
violate a government-wide Office of Personnel Management
regulation barring agencies from “assign[ing] an employee in an
excepted position to a position in the competitive service,” 5
C.F.R. § 351.705(b)(6), even though the Statute prohibits
                               13
agencies from entering into agreements “inconsistent with any
Federal law or any Government-wide rule or regulation,” 5
U.S.C. § 7117(a)(1). Thus, the Board maintains, the FLRA’s
order “would require management officials to violate the law,
implicating principles of sovereign immunity and giving this
Court jurisdiction to review such questions.” Petitioner’s Br. 42–
43. Again, we disagree.

     Even assuming that we always have jurisdiction to review
FLRA orders that implicate principles of sovereign immunity,
the order at issue here does no such thing. After all, as the FLRA
clearly explained, “priority consideration” and “assignment” are
separate concepts—an agency might provide a candidate
“priority consideration” for a particular position yet ultimately
refuse to “assign” the candidate to that position because she
proved ineligible. See FLRA Order at 1017. Since the order
before us mandates only “priority consideration,” management
officials can follow it without violating government-wide
regulations. See Reply Br. 16 (conceding that the order would be
“unobjectionable” if it mandated only “consideration” rather
than “assignment”).

                               III.
     Lacking subject matter jurisdiction, we dismiss the petition
for review.

                                                     So ordered.