Lead Opinion
Opinion for the Court filed by Circuit Judge HENDERSON.
Oрinion concurring in the judgment filed by Circuit Judge ROGERS.
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,
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 apprоval 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 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 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 at 11 (internal quotations omitted). OPM recommended that PTO explore “the strategiс 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 nоn-special rate employees received locality pay increases.” PTO I,
On review, the Authority set aside the arbitral award as violating section 7106 of the FSLMRS. The Statute generally imposes on a federal agency a duty to bargain in good faith with a public employee union over conditions of employment but section 7106(a) exempts from the duty certain “management rights,” including the right to retain its employees. See U.S. Dep’t of the Treasury v. FLRA 670 F.3d
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,
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 аt 24). He further concluded that section A.2 was an “appropriate 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 fоr 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 § 7106(b)(3).” Id. (quoting Award II at 25-26). He further determined PTO’s breach of both sentences of section A.2 — by declining to submit a request to OPM, then failing to enter
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.’ ”
II.
PTO contends, inter alia, that collateral estoppel precluded the Authority from finding section A.2 constituted an “arrangement.” We agree.
Under FLRA precedent, collateral estoppel, or issue preclusion, requires a showing of five elements:
Before the doctrine of collateral estoppel can be apрlied, 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.,
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,
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,
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.”
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 from the operation of law, not the exercise of a management right.”
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 section 7106(b)(3) notwithstanding it affected the management right to retain employees; PTO I was a final FLRA decision which was judicially unreviewable, see Patent Office Prof'l Ass’n v. FLRA,
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 5 U.S.C. § 7123(c) (“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.”). Unlike our concurring colleague, we do not find it “questionable” whether PTO adequately raised the objection below. See Concurrence at 1103. While it did not use the magic words “collateral estoppel,” PTO nonetheless argued the substance of a collateral estoppel defense in its exceptions to Award II. There, it cited PTO I as “binding Authority precedent,” in which “[t]he Authority has already determined that Section (A)(2) of the Millennium Agreement is not an arrangement” because it “ ‘ameliorates adverse effects that result from the operation of law, not the exercise of a management right.’ ” Agency’s Exceptions to Arbitrator’s Award at 14, PTO II (Aug. 28, 2006) (JA 14) (quoting PTO I,
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 elimination of paper files and addition of customer service duties and that the Authority should have so held.
So ordered.
Notes
. According to the FLRA, POPA asserted in PTO I
that elimination of the paper files adversely affects employees by requiring them to spend virtually their entire work day tethered to a computer screen!,] that computer images of patents are inferior to paper copies, that there are problems with conducting key wоrd searches of old patents on computers, and that computer patents do not include examiners’ notes that were in paper patents and which facilitated the patent search for examiners.
. The two subsections provide:
(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 or negotiate in good faith with a labor organization as required by this chapter;....
5 U.S.C. § 7116(a)(1), (5).
. Before its decision in U.S. EPA, the Authority reviewed arbitral awards using its “excessive interference standard” under which the enforcement of a contract provision in the award is appropriate unlеss it "excessively interferes with management's rights.” U.S. Dep’t of Justice, Fed. Bureau of Prisons,
. In light of our disposition, we do not address PTO's alternative grounds for review, including its challenge to the Authority’s adoption of the abrogation standard. See supra p. 1099 note 3 & accompanying text.
. The "entirety” of section A covers the "Uniform Special Pay Schedule,” including the directive in section A.l that PTO submit an initial request for special rates in 2001 as well as the language in section A.2 governing the request procedure for subsequent years. In PTO I, the Authority stated: "Special rates are, by law, a means to ameliorate recruitment and retention problems.” (citing 5 C.F.R. § 530.303(a) ("OPM may increase the minimum rates otherwise payable under the pay schedules ... to the extent it considers necessary to overcome existing or likely significant handicaps in the recruitment or retention of well-qualified personnel____”)).
. POPA argues the appropriate arrangement issue was not "litigated” in the first proceeding, asserting: "In PTO I, Arbitrator Evans did not address the issue of whether the [Millennium Agreement], or any part of it, was intended as an 'appropriate arrangement’ within the meaning of § 7106(b)(3). It simply was not an issue in the first arbitration case.” Intervenor’s Br. 24-25 (emphasis in original). The issue was thoroughly addressed, however, on review before the Authority.
. We see no reason to deviate, as our concurring colleague suggests, from the general rule that "a valid and final adjudicative determination by an administrative tribunal has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court.” Restatement (Second) of Judgments § 83(1). It is true that the rules are " 'applied more flexibly to administrative adjudications than to judicial proceedings,'” Concurrence at 1107 (quoting Clark-Cowlitz Joint Operating Agency v. FERC,
Concurrence Opinion
concurring in the judgment:
I write separately regarding the distinction between the collateral estoppel doctrine and the Administrative Procedure Act’s requirement, as part of the prohibition on arbitrary or capricious agency action, that if an agency departs from its precedent it must provide a reasoned explanation for its decision to do so. Traditionally, precedent binds adjudicators and collateral estoppel precludes parties, yet the Authority conflates the two doctrines. Because the Authority has not provided a reasoned explanation for its departure from its precedent in U.S. Dep’t of Commerce, Patent & Trademark Office,
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.” 5 U.S.C. § 7123(c) (incorporating 5 U.S.C. § 7106’s standards); Nat’l Treasury Emps. Union v. FLRA
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 cirсumstances.” 5 U.S.C. § 7123(c). The PTO referred to PTO I as “binding precedent” in its exceptions but did not mention “collateral estoppel” or “issue preclusion.” Agency’s Exceptions to Arbitrator’s Award at 14, PTO II (Aug. 28, 2006). The Authority’s collateral estoppel doctrine, which
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,
Second, the Authority’s precedent describing its collateral estоppel 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,”
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 decision-maker, FERC, that changed its position. Thus, to the extent preclusion analysis is appropriate at all, it is applicable to the extent FERC participated 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,
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.
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.,
B.
As the court recounts, see Op. at 1097-98, in PTO I, the Authority concluded that Section A.2
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 сan interpret the same contract differently based on their being “presented with different facts and arguments,” PTO II,
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,
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 adjudiсation 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.”
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 becomes moot pending an appeal. Id. On the other hand, “[decisions 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 5 U.S.C. § 7123(a)(1), Congress was concerned with aligning the scope of judicial review of private and public sector arbitrations and “the conferees determined it would be inappropriate for there to be subsequent review by the Court of Appeals in such matters.” H.R. Conf. Rep. No. 95-1717, at 153 (1978), reprinted in 1978 U.S.C.C.A.N. 2860, at 2887 (1978); see U.S. Dept. Navy v. FLRA
Because Cоngress 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 appeal-able decisions have preclusive effects — ie.,
. In concluding that our precedent suggests the PTO’s exceptions may not have sufficiently raised a collateral estoppel argument, I suggest no deviation from the general rule that res judicata (or claim preclusion) and collateral estoppel (or issue preclusion) apply to final decisions of administrative tribunals. See Op. at 1102-03 n. 7. Had the Authority provided a reasoned explanation for departing from its precedent, it would be necessary to decide whether the court has jurisdiction and if so to address the merits of the collateral estoppel argument. Furthermore, ClarkCowlitz confirms that the Authority misapplies the collateral estoppel doctrine to itself; but neither it nor I suggest decisions of administrative agencies cannot have preclusive effect.
. Section A.2 of the parties’ agreement provides:
*1106 The [PTO] shall request OPM approval for tire 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.
For purposes of the instant appeal there is no relevant distinction between the first and second sentences. See Op. at 1101-02.
. 5 U.S.C. § 7106, "Management rights,” provides in subsection (b)(3): "Nothing in this section shall preclude any agency and any labor organization from negotiating ... (3) appropriate arrangements for employees adversely affected by the exercise of any authority under this section by such management officials."