UNITED STATES DEPARTMENT OF COMMERCE, PATENT AND TRADEMARK OFFICE, Pеtitioner v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent. Patent Office Professional Association, Intervenor.
No. 11-1019.
United States Court of Appeals, District of Columbia Circuit.
Argued Dec. 8, 2011. Decided March 16, 2012.
672 F.3d 1095
For the foregoing reasons, we deny the petition for review and grant the Board‘s cross-application for enforcement.
So ordered.
Howard S. Scher, Attorney, United States Department of Justice, argued the cause for the petitioner. Tony West, Assistant Attorney General, and William Kanter and Thomas M. Bondy, Attorneys, were on brief.
Rosa M. Koppel, Solicitor, Federal Labor Relations Authority, argued the cause for the respondent. Joyce G. Friedman, Attorney, Federal Labor Relations Authority, entered an appearance.
Richard J. Hirn argued the cause for intervenor Patent Office Professional Association in support оf the respondent.
Gregory O‘Duden, Larry J. Adkins, Peyton H.N. Lawrimore, Andres M. Grajales
Before: HENDERSON, ROGERS and TATEL, Circuit Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
Opinion concurring in the judgment filed by Circuit Judge ROGERS.
KAREN LeCRAFT HENDERSON, Circuit Judge:
OPINION
The Patent and Trademark Office of the United States Department of Commerce (PTO or Agency) seeks review of a decision of the Federal Labor Relations Authority (FLRA or Authority) upholding an arbitrator‘s award in favor of the Patent Office Professional Association (POPA or Union). U.S. Dep‘t of Commerce Patent & Trademark Office, 65 F.L.R.A. 290 (2010) (PTO II). The arbitrator concluded PTO committed an unfair labor practice in violation of the Federal Service Labor-Management Relations Statute (FSLMRS or Statute),
I.
In 2000, PTO patent examiners’ wages, like those of most executive branch employees, were determined pursuant to the General Schedule (GS). Because it was experiencing problems recruiting and retaining employees, PTO requested and obtained OPM approval to pay employees special pay rates exceeding the comparable GS rates by ten or fifteen per cent, depending on the grade. Over time, however, special rates decrease in value relative to the corresponding GS rates because, while both rates receive annual general increases, only the latter include annual locality increases. Accordingly, PTO and POPA negotiated the following provision in an agreement effective January 2001:
The [PTO] shall request OPM approval for the next five years to increase the special pay schedule so as to maintain thе 10% and 15% salary differentials relative to the updated GS rates, in a manner consistent with OPM regulations. If OPM refuses the request, the Agency shall enter into discussions with POPA in order to provide substantially equivalent alternatives.
Agreement on Initiatives for a New Millennium between [PTO and POPA], § A.2 (JA 69) (Millennium Agreement).
In 2002, federal employees in the Washington, D.C. region received a 3.6% general wage increase and a 1.17% locality pay increase. Pursuant to section A.2 of the Millennium Agreement, in February 2002, PTO requested that OPM increase the special pay rate by 1.17% to maintain the ten and fifteen per cent differentials, subsequently lowering the request to 1%. OPM denied PTO‘s request on the ground PTO‘s filings did not show it was “experiencing or ... likely to experience significant handicaps in recruiting or retaining patent professionals.” Award II аt 11 (internal quotations omitted). OPM recommended that PTO explore “the strategic use of other compensation flexibilities to address targeted recruitment and retention problems.” Id. Accordingly, PTO entered into discussions with the Union regarding “substantially equivalent alternatives” pursuant to the second sentence of section A.2. When the discussions proved fruitless, the Union filed a grievance, which was then submitted to arbitration.
The arbitrator concluded that PTO had violated section A.2 of the Millennium Agreement and ordered it to “engage in ... discussions [with POPA] in good faith with a sincere resolve to find a way to make-up for the lost locality pay.” In re Arbitration Between Patent & Trademark Office & Patent Office Prof‘l Ass‘n, FMCS Case No. 04-00138 at 16 (Oct. 1, 2001) (Arbitral Award of Arbitrator Evans) (Award I). In his order, Arbitrator Evans “found that Section A.2 was intended to address the adverse effect of special rate erosion that would occur over time as non-special rate employees received locality pay increases.” PTO I, 60 F.L.R.A. at 842 (citing Award I at 12).
On review, the Authority set aside the arbitral award as violating
In 2003, the locality pay rate for the Washington, D.C. region again increased by 1.17%. PTO determined it could not certify to OPM that a special pay rate increase was “critical to the mission of the Agency” and, accordingly, notified POPA it would not submit a request that OPM increase the rate. PTO II, 65 F.L.R.A. at 291. POPA again filed a grievance, which was again submitted to arbitration.
Arbitrator Arrigo found section A.2 affected the Agency‘s management right to retain employees because “the essential facts and circumstances” were “substantially identical” to PTO I. Id. at 292 (quoting Award II at 24). He further concluded that section A.2 was an “apрropriate arrangement” because “the entirety of [§] A,” including § A.2, “was negotiated as a quid pro quo for the elimination of paper patents and the addition of customer service duties for employees[,]” two changes desired by the Agency and opposed by the Union. Id. (quoting Award II at 24) (alteration in original). Arbitrator Arrigo specifically found that “the linkage between a special pay schedule and the paper file and customer service issues was established ‘in every document concerning the discussions between the parties,‘” id. (quoting Award II at 25), and the special pay rate provisions were “a ‘balm’ to ‘ameliorate the adverse effects upon employees for the Union‘s acceding to the Agency‘s desire to exercise its management rights regarding the elimination of paper files ... and employees being assigned additional duties’ and were enforceable as appropriate arrangements under
PTO excepted to the award and the FLRA sustained it. The FLRA first upheld Arbitrator Arrigo‘s unchallenged finding that section A.2 affected management‘s right to retain employees. The Authority further affirmed his determination that section A.2 was an arrangement, relying on his finding “that the entire subject of special pay was negotiated ‘to provide a “balm” to the Union which would ameliorate the adverse effects upon employees’ of ‘the Agency‘s desire to exercise its management rights regarding the elimination of paper files.‘” 65 F.L.R.A. at 295 (quoting Award II at 25-26). Finally, the Authority considered whether the arrangemеnt was “appropriate” under the “abrogation” standard, which it recently re-adopted in U.S. Environmental Protection Agency, 65 F.L.R.A. 113 (2010) (U.S. EPA).3 Under the abrogation standard, the Authority assesses “whether the arbitration award ‘precludes [the] agency from exercising’ the affected management right“—if it does not, the Authority will “find that the arrangement is appropriate within the meaning of
II.
PTO contends, inter alia, that collateral estoppel precluded the Authority from finding section A.2 constituted an “appropriate arrangement.” We agree.4
Under FLRA precedent, collateral estoppel, or issue preclusion, requires a showing of five elements:
Before the doctrine of collateral estoppel can be applied, it must be demonstrated that: (1) the same issue was involved in both cases; (2) that issue was litigated in the first case; (3) resolving it was necessary to the decision in the first case; (4) the decision in the first case, on the issue to be precluded, was final; and (5) the party attempting to raise the issue in the second case was fully represented in the first case.
U.S. Dep‘t of Energy W. Area Power Admin., Golden, Colo., 56 F.L.R.A. 9, 11 (2000) (citing U.S. Dep‘t of the Air Force, Scott Air Force Base, Ill., 35 F.L.R.A. 978, 982 (1990)). If all five elements are met, the Authority is bound by its findings in the earlier case. See Scott Air Force Base, 35 F.L.R.A. at 981. All five are met here.
Regarding the first and second elements, in each proceeding the parties litigated the issue whether section A.2 constituted an appropriate arrangement or, more fundamentally, whether it constituted an arrangement at all. In Award I, Arbitrator Evans “found that Section A.2 was intended to address the adverse effect of special rate erosion that would occur over time as non-special rate employees received locality pay increases.” PTO I, 60 F.L.R.A. at 842 (citing Award I at 12). The Authority upheld this finding of intent but concluded that section A.2 was not—indeed, could not—be an “arrangement” within the meaning of
In Award II, Arbitrator Arrigo addressed the same issue, reaching a contrary conclusion. Recognizing that “the essential facts and circumstances” in the case before him were “substantially identical” to those found by the Authority in PTO I, he therefore “found, in accordance with that decision, that § A.2 of the [Millennium Agreement] affected management‘s right to retain employees.” PTO II, 65 F.L.R.A. at 292 (quoting Award II at 24-25). He nonetheless found that section A.2 was indeed an arrangement because “the entirety of [§] A,” including § A.2, “was negotiated as a quid pro quo for the elimination of paper patents and the addition of customer service duties for employees“[—]two changes desired by the Agency and opposed by the Union. Id. (quoting Award II at 24) (bracketed material deleted).5 In PTO II, the Authority upheld this determination notwithstanding it had rejected the very same finding in PTO I “as unsupported.” 60 F.L.R.A. at
The FLRA contends the two cases did not involve the same issue because they involved different arbitrators interpreting section A.2 in different awards under different circumstances. According to the Authority, one arbitrator‘s interpretation of a contract provision should not be binding on a subsequent arbitrator‘s interpretation in a different proceeding. But it is not Arbitrator Evans‘s interpretation in Award I that is binding here—rather, it is the Authority‘s legal conclusion in PTO I that section A.2 does not qualify as an appropriate arrangement because it “ameliorates adverse effects that result from the operation of law, not the exercise of a management right.” 60 F.L.R.A. at 842; see Scott Air Force Base, 35 F.L.R.A. at 981 (on exceptions from arbitrator decision, “Authority is bound by its finding” in previous decision reviewing administrative law judge‘s unfair labor practice decision); Resp‘t‘s Br. 21 (“The Authority‘s decision in PTO I set aside the First Award as contrary to law....“). The force of the Authority‘s conclusion applies no less to the facts in PTO II as to those in PTO I.
The Authority further attempts to distinguish the cases by asserting that PTO I involved a violation of section A.2‘s second sentence while PTO II found a breach only of its first sentence only. PTO I, however, made no distinction between the intent behind the first and the second sentences, stating: “Section A.2, as interpreted and enforced by the Arbitrator, ameliorates adverse effects that result frоm the operation of law, not the exercise of a management right.” 60 F.L.R.A. at 842. Moreover, we do not see how the two intertwined sentences can be viewed in isolation from each other (or assigned different purposes) inasmuch as they operate together, in sequence, to offset the annual pay erosion resulting from “the fact that under
The third through fifth collateral estoppel elements are plainly satisfied: In PTO I, the resolution of the “arrangement” issue was necessary in order to decide whether section A.2 was an appropriate arrangement so as to be enforceable under
Finally, we reject Intervenor POPA‘s claim that the court lacks jurisdiction to address the collateral estoppel claim because PTO failed to raise it before the Authority. See
For the foregoing reasons, we conclude that POPA was estopped from arguing section A.2 is an appropriate arrangement intended to lessen the adverse effects from the еlimination of paper files and addition of customer service duties and that the Authority should have so held.7 Accordingly, we grant PTO‘s petition for review.
So ordered.
ROGERS, Circuit Judge, concurring in the judgment:
I.
The Patent and Trademark Office (“the PTO“) makes two distinct, but related, claims regarding the Authority‘s treatment of its precedent. The court‘s review of both is to determine whether the Authority‘s order was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
A.
The court grants the petition on the basis of collateral estoppel. See Op. at 1100-02. There are good reasons not to address this argument.
First, it is questionable whether the PTO sufficiently raised the issue in its exceptions to the PTO II arbitrator‘s award, and thus whether the court has jurisdiction to address this argument. “No objection that has not been urged before the Authority, or its designee, shall be considered by the court, unless the failure or neglect to urge the objection is excused because of extraordinary circumstances.”
Although the dissenting Member in PTO II would have ruled that the Authority was bound by collateral estoppel to apply its decision in PTO I, he noted only that the PTO‘s exceptions were “rife with collateral estoppel implications.” PTO II, 65 F.L.R.A. at 301 (Member Beck, dissenting) (emphasis added). The majority‘s discussion appears only in a brief footnote, dismissing the claim “[t]o the extent that the [PTO]‘s exceptions can be construed as arguing” collateral estoppel. Id. at 295 n. 5 (emphasis added). Even though the Authority may have addressed the issue, “[s]ection 7123(c) requires a party to present its own views to the Authority in order to preserve a claim for judicial review.” U.S. Dep‘t of the Treasury v. FLRA, 670 F.3d 1315, 1320 (D.C.Cir.2012) (internal quotation marks and citation omitted) (emphasis in original). “Discussion of an issue by the [Authority] does not necessarily prove compliance with section” 7123(c), and “the most delicate [§ 7123(c)] questions arise in cases such as the one before us, where ... the objection is not unmistakable.” Local 900, Int‘l Union Elec., Radio & Mach. Workers v. NLRB, 727 F.2d 1184, 1191, 1193 (D.C.Cir.1984). The “delicate” nature of the issue, combined with the fact that it is unnecessary to the disposition of this appeal, counsel against deciding the question.
Second, the Authority‘s precedent describing its collateral estoppel doctrine implies that the Authority itself can be collaterally estopped in its own proceedings by its prior decisions. In adopting the collateral estoppel doctrine in Scott Air Force Base, the Authority spoke in terms of both “the party [being] precluded,” and “the Authority [being] estopped,” 35 F.L.R.A. at 983; see also U.S. Dep‘t of Energy W. Area Power Admin., Golden, Colo., 56 F.L.R.A. 9, 9-12 (2000) (discussing whether the administrative law judge was collaterally estopped). To the extent the Authority suggested that collateral estoppel applies to itself, however, the Authority misconstrues the collateral estoppel doctrine. In Clark-Cowlitz Joint Operating Agency v. FERC, 826 F.2d 1074 (D.C.Cir.1987) (en banc), the court explained the difference in considering whether the Federal Energy Regulatory Commission (“FERC“) was “precluded” from changing its statutory interpretation of a provision that gave licensing preference to municipal, rather than private, power plants, after the Eleventh Circuit had already upheld its opposite interpretation:
It is true as a general matter that preclusion principles can apply to parties to administrative proceedings.... The doctrine of preclusion is meant to prevent parties from rearguing issues they have already lost.... It was the decisionmaker, FERC, that changed its position. Thus, to the extent preclusion analysis is appropriate at all, it is applicable to the extent FERC pаrticipated as a party before the Eleventh Circuit. Preclusion principles are meant to provide an affirmative defense that one party to a prior proceeding may raise against another party that took an adverse position in that proceeding.
Id. at 1080 n. 5 (second emphasis in original); see also United States v. Andrews, 479 F.3d 894, 900 (D.C.Cir.2007) (stating
To the extent collateral estoppel is relevant in the instant case, it is not a question of whether the Authority is precluded by its order as the decisionmaker in PTO I, it is instead whether the Authority was arbitrary and capricious in not precluding the Union from relitigating against the PTO an issue it had lost in PTO I.1 Although the Authority, or arbitrators and administrative law judges may reach an incorrect decision in applying (or not applying) the collateral estoppel doctrine to parties’ arguments, they, аs adjudicators, are not themselves “estopped” by prior decisions. Because “collateral estoppel ... [is an] affirmative defense[ ] that must be pleaded,” Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 476, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998) (internal quotation marks and citation omitted), or else is waived, see Dep‘t of Treasury v. FLRA, 762 F.2d 1119, 1121 (D.C.Cir.1985), it is odd to speak of the Authority as being estopped in its own proceedings.
This is not to say that an agency cannot ever be precluded or estopped in administrative proceedings. Instead, an agency may be precluded, whether in an administrative adjudication or in court, if it was in the position of a party in an earlier adversary proceeding and attempts, as a party in a later proceeding, to relitigate an issue. Cf. Graphic Commc‘ns Int‘l Union, Local 554 v. Salem-Gravure Div. of World Color Press, Inc., 843 F.2d 1490, 1493 (D.C.Cir.1988); see also Drummond v. Comm‘r of Soc. Sec., 126 F.3d 837, 841 (6th Cir.1997); Medina v. INS, 993 F.2d 499, 503-04 (5th Cir.1993); 18 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 4475 (2d ed.2002) (citing cases). Because the Authority‘s order in PTO I was held to be unappealable, see Patent Office Prof‘l Ass‘n v. FLRA, 180 Fed.Appx. 176 (D.C.Cir.2006);
B.
As the court recounts, see Op. at 1097-98, in PTO I, the Authority concluded that Section A.22 of the parties’ agreement of
The Authority‘s denial that it departed from its PTO I precedent is unavailing. As the court explains, see Op. at 1100-01, the Authority relied on the proposition that different arbitrators can interpret the samе contract differently based on their being “presented with different facts and arguments,” PTO II, 65 F.L.R.A. at 295, to suggest that there has been no departure from precedent. This is plainly wrong. The Authority, not the arbitrator, ruled in PTO I that Section A.2 was unlawful under
II.
A final note regarding the Authority‘s collateral estoppel doctrine is in order. The Union as intervenor contends that because PTO I was held unappealable, it was not collaterally estopped by PTO I from arguing in the instant case that Section A.2 was an “appropriate arrangement.” Because PTO I did not involve review of an unfair labor practice arbitration, this court lacked jurisdiction to review the Authority‘s order. See Patent Office Prof‘l Ass‘n v. FLRA, 180 Fed.Appx. 176;
As a general matter, collateral estoppel does not apply to preclude relitigation of an issue when the earlier determination was unappealable. See RESTATEMENT (SECOND) OF JUDGMENTS § 28 (1982). “The fact that an agency adjudication was subjected
In Scott Air Force Base, the Authority adopted its collateral estoppel doctrine based on the requirements that “courts have determined ... must be satisfied.” 35 F.L.R.A. at 982. In so doing the Authority had no occasion to determine whether the general exception to collateral estoppel for unappealable determinations would also apply to the Authority‘s application of the collateral estoppel doctrine; Scott Air Force Base involved Authority review of unfair labor practice arbitrations, see id. at 983, cases over which judicial review is available, see
The Union‘s contention raises the appealability question unaddressed by the Authority in Scott Air Force Base and unanswered by this court‘s precedent. The reason PTO I was unappealable is, however, critical to whether the exception applies. There is a “major distinction [] between decisions of a sort that ordinarily cannot be appealed and decisions that are ineligible for appeal only because of some special circumstance.” 18A WRIGHT & MILLER § 4433. Preclusion is denied to cases of the latter category, e.g., where a case becоmes moot pending an appeal. Id. On the other hand, “[d]ecisions of a sort that ordinarily cannot be appealed may be surrounded by alternative protections or special policies that support preclusion.” Id. Such is the case here, where PTO I was not made unappealable by special circumstances, but by Congress. In enacting
Because Congress deemed the Authority qualified to provide the final judgment on arbitration awards not involving unfair labor practice allegations, the concern underlying the general rule that only appealable decisions have preclusive effects—i.e.,
METROIL, INC., Appellant v. EXXONMOBIL OIL CORPORATION, et al., Appellees.
No. 10-7168.
United States Court of Appeals, District of Columbia Circuit.
Argued Oct. 20, 2011. Decided March 20, 2012.
Notes
(a) For the purpose of this chapter, it shall be an unfair labor practice for an agency—
(1) to interfere with, restrain, or coerce any employee in the exercise by the employee of any right under this chapter;
... [or]
(5) to refuse to consult оr negotiate in good faith with a labor organization as required by this chapter;....
For purposes of the instant appeal there is no relevant distinction between the first and second sentences. See Op. at 1101-02.The [PTO] shall request OPM approval for the next five years to increase the special pay schedule so as to maintain the 10% and 15% salary differentials relative to the updated GS rates, in a manner consistent with OPM regulations. If OPM refuses the request, the Agency shall enter into discussions with [the Union] in order to provide substantially equivalent alternatives.