U.S. Dept. of Health and Human Services v. Federal Labor Relations Authority

• Decision Date: 06 October 1988
• Docket Number: Nos. 87-1595,87-1832,s. 87-1595
• Citation: 858 F.2d 1278
• Parties: 129 L.R.R.M. (BNA) 2709, 57 USLW 2260 UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Petitioner, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent, and National Treasury Employees Union, Intervenor-Respondent. FEDERAL LABOR RELATIONS AUTHORITY, Petitioner, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1278

858 F.2d 1278

129 L.R.R.M. (BNA) 2709, 57 USLW 2260

UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Petitioner, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent, and National Treasury Employees Union, Intervenor-Respondent.

FEDERAL LABOR RELATIONS AUTHORITY, Petitioner, v. UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, Respondent.

Nos. 87-1595, 87-1832.

United States Court of Appeals Seventh Circuit.

Argued Feb. 12, 1988.

Decided Oct. 6, 1988.

Peter R. Maier, Appellate Staff, Civ. Div., U.S. Dept. of Justice, Washington, D.C., (Nicholas S. Zeppos, William Kanter, of counsel), for petitioner.

Arthur A. Horowitz, Federal Labor Relations Authority, Michael J. McAuley, National Treasury Employees Union, Washington, D.C., for respondent.

Before WOOD, Jr., FLAUM and KANNE, Circuit Judges.

FLAUM, Circuit Judge.

The Department of Health and Human Services ("HHS") appeals from an order issued by the Federal Labor Relations Authority ("FLRA") requiring HHS to collectively bargain with the National Treasury Employees Union ("NTEU") over a proposal that would subject to binding arbitration all adverse employment action ¹ taken with respect to nonpreference excepted service employees. ² We reverse.

I.

A.

The central issue in this case is whether attorneys at HHS, whom Congress gave limited rights of review over adverse employment decisions, may nonetheless collectively bargain to bring employment-related claims before an independent arbitrator. This appeal requires us to interpret the interplay between two statutory frameworks created as part of the Civil Service Reform Act of 1978 ("CSRA") that "comprehensively overhauled the civil service system." Lindahl v. OPM, 470 U.S. 768, 773, 105 S.Ct. 1620, 1624, 84 L.Ed.2d 674 (1985). Accordingly, we address these two frameworks in some detail.

The first portion of the CSRA implicated in this dispute addresses the rights and remedies afforded federal employees when adverse employment action is taken against them. As the Supreme Court recently explained in United States v. Fausto, --- U.S. ----, 108 S.Ct. 668, 671, 98 L.Ed.2d 830 (1988), a "leading purpose of the CSRA was to replace the haphazard arrangements for administrative and judicial review of personnel action" that characterized the prior civil service system. Under the CSRA, an agency is granted the specific authority necessary to ensure acceptable employee performance and conduct. Harrison v. Bowen, 815 F.2d 1505, 1509 (D.C.Cir.1987). The statute also "provides employees with specific substantive rights with respect to these actions, as well as protection against various types of unfair treatment...." Id. These provisions were explained by the Supreme Court in Fausto as follows:

Chapter 43 of the CSRA governs personnel actions based on unacceptable job performance. It applies to both competitive service employees and members of the excepted service. 5 U.S.C. Sec. 4301. It provides that before an employee can be removed or reduced in grade for unacceptable job performance certain procedural protections must be afforded, including 30 days' advance written notice of the proposed action, the right to be represented by an attorney or other representative, a reasonable period of time in which to respond to the charges, and a written decision specifying the instances of unacceptable performance. Sec. 4303(b)(1). Although Congress extended these protections to nonpreference members of the excepted service, it denied them the right to seek either administrative or judicial review of the agency's final action. Chapter 43 gives only competitive service employees and preference eligible members of the excepted service the right to appeal the agency's decision to the [Merit Systems Protection Board ("MSPB") ] and then to the Federal Circuit. Sec. 4303(e).

Chapter 23 of the CSRA establishes the principles of the merit system of employment, Sec. 2301, and forbids an agency from engaging in certain "prohibited personnel practices," including unlawful discrimination, coercion of political activity, nepotism, and reprisal against so-called whistleblowers. Sec. 2302. Nonpreference excepted service employees who are not in positions of a confidential or policy-making nature are protected by this chapter, Sec. 2302(a)(2)(B), and are given the right to file charges of "prohibited personnel practices" with the Office of Special Counsel of the MSPB, whose responsibility it is to investigate the charges and, where appropriate, to seek remedial action from the agency and the MSPB. Sec. 1206.

Chapter 75 of the Act governs adverse action taken against employees for the "efficiency of the service," which includes action ... based on misconduct. Subchapter I governs minor adverse action (suspension for 14 days or less), Secs. 7501-7504, and Subchapter II governs major adverse action (removal, suspension for more than 14 days, reduction in grade or pay, or furlough for 30 days or less), Secs. 7511-7514. In each subchapter, covered employees are given procedural protections similar to those contained in Chapter 43, Secs. 7503(b), 7513(b), and in Subchapter II covered employees are accorded administrative review by the MSPB, followed by judicial review in the Federal Circuit. Secs. 7513(d), 7703. The definition of "employee[s]" covered by Subchapter II (major adverse action) specifically includes preference eligibles in the excepted service, Sec. 7511(a)(1)(B), but does not include other members of the excepted service. The Office of Personnel Management is, however, given authority to extend coverage of Subchapter II to positions in the excepted service that have that status because they have been excluded from the competitive service by OPM regulation. Sec. 7511(c).

Id., 108 S.Ct. at 672-73 (emphasis added).

To summarize, under Chapters 43 and 75 of the CSRA nonpreference excepted service employees are not entitled to have adverse employment action reviewed by the MSPB or the Federal Circuit, although they are entitled to certain procedural safeguards under Chapter 43. ³ In contrast competitive employees and preference eligible excepted service employees who are removed, suspended for more than 14 days, or are reduced in grade, may appeal the agency's action to the MSPB and then, if necessary, to the Federal Circuit. ⁴

Our task is to reconcile these provisions with certain portions of the Federal Service Labor Management Relations Statute ("LMRS"), as amended, 5 U.S.C. Secs. 7101-7135, which were enacted as Title VII of the CSRA. The LMRS provides a statutory scheme for collective bargaining between agencies of the federal government in their capacity as employers and labor organizations as bargaining representatives of federal civilian employees. ⁵ These parties are required "to meet at reasonable times and to consult and bargain in a good faith effort to reach an agreement with respect to the conditions of employment affecting [agency] employees...." 5 U.S.C. Secs. 7103(a)(12), 7114(a)(4) (emphasis added). The phrase "conditions of employment" in turn is defined to include essentially all "personnel policies, practices and matters ... except ... to the extent such matters are specifically provided for by federal statute." 5 U.S.C. Sec. 7103(a)(14). Disputes regarding the scope of the duty to bargain in good faith are resolved in the first instance by the FLRA. 5 U.S.C. Secs. 7105(a)(2)(E), 7117(c)(1).

The LMRS provides that any collective bargaining agreement reached by the parties must provide procedures for the settlement of grievances, including the requirement that "any grievance not satisfactorily settled under the negotiated grievance procedure shall be subject to binding arbitration which may be invoked by either the exclusive representative or the agency." 5 U.S.C. Sec. 7121(b)(3)(C). "Grievance" is broadly defined to include "any complaint by any employee concerning any matter relating to the employment of the employee." 5 U.S.C. Sec. 7103(a)(9). The negotiated grievance procedure is generally the exclusive procedure for resolving grievances. 5 U.S.C. Sec. 7121(a)(1). One exception to this rule, however, is "matters covered under sections 4303 and 7512 ... which also fall within the coverage of the negotiated grievance procedure." 5 U.S.C. Sec. 7121(e)(1). As previously discussed, Sec. 4303 addresses adverse action based on unacceptable performance and Sec. 7512 enables an agency to deal with employee misconduct. 5 U.S.C. Secs. 4303, 7512-13. Under these two sections competitive employees and preference eligible excepted service employees are permitted to appeal adverse employment action taken against them to the MSPB, a remedy unavailable to nonpreference excepted service employees. Employees against whom adverse action is taken for matters which fall within both the collective bargaining agreement and the statutory right to appeal to the MSPB are permitted to choose which of these two avenues they wish to pursue: the grievance procedure which culminates in arbitration, or appeal to the MSPB. Thus, at least with respect to competitive and preference eligible excepted service employees, Congress contemplated that the grievance procedure authorized in the LMRS could cover action which was also within the scope of Chapters 43 and 75.

B.

It was against this statutory backdrop that NTEU and HHS began negotiating over the terms of a new collective bargaining agreement. On January 23, 1986, NTEU offered a proposal that would have permitted nonpreference excepted service employees to challenge agency action through the grievance and arbitration procedure, including adverse employment action resulting from unsatisfactory work performance or job-related conduct. Specifically, the proposal provided:

The parties agree that the terms and conditions of this agreement, including the grievance procedure article, adverse action article, and arbitration article will apply to excepted service employees.

...