Cornelius v. Nutt

• Citation: 105 S.Ct. 2882,472 U.S. 648,86 L.Ed.2d 515
• Decision Date: 24 June 1985
• Docket Number: No. 83-1673,83-1673
• Parties: Loretta CORNELIUS, Acting Director, Office of Personnel Management, Petitioner v. Allison E. NUTT et al
• Court: United States Supreme Court

472 U.S. 648

105 S.Ct. 2882

86 L.Ed.2d 515

Loretta CORNELIUS, Acting Director, Office of Personnel Management, Petitioner

v Allison E. NUTT et al.

No. 83-1673.

Argued Jan. 7, 1985.

Decided June 24, 1985.

Syllabus

Under the Civil Service Reform Act of 1978 (Act), a federal employee may challenge agency disciplinary action by appealing the agency's decision to the Merit Systems Protection Board (Board), or if he is a member of a federal employees' labor union he may, in the alternative, challenge the action through any grievance and arbitration procedure provided by the collective-bargaining agreement between the agency and the union. Under 5 U.S.C. § 7701(c)(2)(A), the Board may not sustain the agency's action if the employee "shows harmful error in the application of the agency's procedures in arriving at such decision." The Act also requires an arbitrator to apply this "harmful-error" rule in grievance and arbitration procedures under a bargaining agreement. Two employees of the General Services Administration (GSA), members of a union having a bargaining agreement with the GSA, were removed from their jobs for falsification of records and other reasons. When the employees were first interrogated about the wrongdoing, and later when they admitted it in sworn affidavits, they were not advised that they were entitled to have a union representative present. The employees also did not receive notices of proposed removal until almost three months after the wrongdoing. The employees challenged their removals under the bargaining agreement's grievance and arbitration procedures. The arbitrator, while finding that the wrongdoing normally would justify removal, also found that the GSA had committed procedural errors in violation of the bargaining agreement by failing to give the employees an opportunity to have a union representative present during interrogation and by unreasonably delaying issuance of the notices of proposed removal. The arbitrator concluded that, although the errors did not prejudice the employees, the removals were not for just cause. Accordingly, the arbitrator reduced the penalties to two weeks' suspension without pay. The Court of Appeals affirmed in substantial part, holding that although the employees were not prejudiced, the arbitrator, in making the ultimate award, could take into account significant violations of the bargaining agreement that were important to the union, because such violations were tantamount to "harmful error" to the union within the scope of § 7701(c)(2)(A). The Court of Appeals also ruled that the reduction of the penalties was a proper means of "penalizing the agency" for disregarding the agreement's procedural protections.

Held: Under § 7701(c)(2)(A), the employee-grievant must show error that caused substantial prejudice to his individual rights by possibly affecting the agency's decision. Pp. 657-665.

(a) The Board has so interpreted § 7701(c)(2)(A) in its regulation defining "harmful error," and its interpretation is entitled to deference. To apply a different definition of "harmful error" in an arbitral context than in a Board proceeding so as to permit an arbitrator to overturn agency disciplinary action on the basis of a violation of a bargaining agreement that is harmful only to the union would directly contravene the Act's purpose of promoting consistency in resolving federal employee grievances and avoiding forum shopping. Pp. 657-662.

(b) Moreover, the "harmful-error" rule must be interpreted as the Board interprets it if the underlying purpose of the Act of maintaining an effective and efficient Government, and the particular purpose of § 7701 to give agencies greater ability to remove or discipline erring employees expeditiously, are to be carried out. The purpose of the Act of strengthening federal employee unions and making the collective-bargaining process more effective is not undermined by application of the Board's interpretation of the "harmful-error" rule in the arbitral context. Under any interpretation of the rule, unions are free to bargain for procedures to govern agency actions, and agencies must follow agreed-upon procedures. If the agency violates these procedures with prejudice to the individual employee's rights, any resulting agency disciplinary decision will be reversed. Whether or not there is prejudice to the individual employee, the union may file a grievance in its own behalf and, in the case of a clear breach of the agreement, may file an unfair labor practice charge with the Federal Labor Relations Authority. Thus, the union has adequate remedies of its own for enforcing agency compliance with the procedural requirements of the bargaining agreement. Pp. 662-665.

718 F.2d 1048 (CA Fed.1983), reversed.

Charles A. Rothfeld, Washington, D.C., for petitioner, pro hac vice, by special order of the Court.

Charles A. Hobbie, Washington, D.C., for respondents.

Justice BLACKMUN delivered the opinion of the Court.

Under the Civil Service Reform Act of 1978, Pub.L. 95-454, 92 Stat. 1111, a federal employee may challenge agency disciplinary action by appealing the agency's decision to the Merit Systems Protection Board (Board). If, however, the employee is a member of a collective-bargaining unit of federal employees, he, in the alternative, may challenge the disciplinary action by pursuing any grievance and arbitration procedure provided by the collective-bargaining agreement. Neither the Board nor the arbitrator may sustain the agency's decision if the employee "shows harmful error in the application of the agency's procedures in arriving at such decision." 5 U.S.C. § 7701(c)(2)(A). The Board has interpreted this statute to require the employee to show error that causes substantial prejudice to his individual rights by possibly affecting the agency's decision. This case presents the issue whether a different "harmful-error" interpretation should apply in an arbitration, or, to phrase it another way, whether the arbitrator may overturn agency disciplinary action on the basis of a significant violation of the collective-bargaining agreement that is harmful only to the union.

I

The 1978 Act is "a comprehensive revision of the laws governing the rights and obligations of civil servants, [and] contains the first statutory scheme governing labor relations between federal agencies and their employees." Bureau of Alcohol, Tobacco and Firearms v. FLRA, 464 U.S. 89, 91, 104 S.Ct. 439, 441, 78 L.Ed.2d 195 (1983). Among the major purposes of the Act were the "preser[vation of] the ability of federal managers to maintain 'an effective and efficient Government,' " ibid., quoting 5 U.S.C. § 7101(b), and the "strengthen[ing of] the position of federal unions and [making] the collective-bargaining process a more effective instrument of the public interest," 464 U.S., at 107, 104 S.Ct., at 449.

To promote the first of these purposes, the Act provides that a federal employee may be removed or otherwise disciplined for unacceptable performance or for misconduct. Specifically, § 4303 establishes procedures by which an agency may remove or demote an employee whose performance is unacceptable. In addition, § 7512 provides that an agency may take adverse action against an employee, including removal, suspension for more than 14 days, reduction in grade or pay, or a furlough of 30 days or less, for, as § 7513 states, "such cause as will promote the efficiency of the service," including misconduct. A federal employee subjected to agency disciplinary action taken pursuant to § 4303 or § 7512 may appeal the agency's decision to the Board. §§ 4303(e), 7513(d), and 7701. The Board must sustain the agency's decision if it is supported by appropriate evidence. § 7701(c)(1).¹ The agency's decision may not be sustained, however, if the employee "shows harmful error in the application of the agency's procedures in arriving at such decision." § 7701(c)(2)(A).²

To promote the second of these purposes of the Act—"to strengthen the position of federal unions and to make the collective-bargaining process a more effective instrument of the public interest"—the Act requires federal agencies and unions representing agency employees to "negotiate over terms and conditions of employment, unless a bargaining proposal is inconsistent with existing federal law, rule, or regulation." Bureau of Alcohol, Tobacco and Firearms v. FLRA, 464 U.S., at 92, 104 S.Ct., at 441. Even matters reserved to agency-management discretion, such as discipline, are subject to negotiation concerning the procedures that management officials will observe in exercising their authority. § 7106(b)(2).

The Act also requires any collective-bargaining agreement between a federal agency and a union to provide for a grievance procedure and binding arbitration for the resolution of disputes arising under the agreement. §§ 7121(a) and (b). An employee in a bargaining unit having a negotiated grievance procedure that covers agency disciplinary action taken pursuant to § 4303 or § 7512 thus may elect to challenge such action by filing a grievance rather than appealing to the Board. § 7121(e)(1). If the employee elects so to proceed, and the union or the agency invokes binding arbitration, see § 7121(b)(3)(C), the arbitrator is to apply the same substantive standards that the Board would apply if the matter had been appealed. See S.Rep. No. 95-969, p. 111 (1978); H.R.Conf.Rep. No. 95-1717, p. 157 (1978), U.S.Code Cong. & Admin.News 1978, p. 2723. In particular, the Act provides: "In matters covered under sections 4303 and 7512 . . . which have been raised under the negotiated grievance procedure . . ., an arbitrator shall be governed by section 7701(c)(1). . . ." § 7121(e)(2). Section 7701(c)(1) incorporates by reference the provisions of subsection (c)(2), including the harmful-error rule. Thus, the statutory scheme mandates that the harmful-error rule is to apply whether the employee challenges the...