DONALD J. DEVINE, DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT, PETITIONER V. ALLISON E. NUTT, ET AL. No. 83-1673 In the Supreme Court of the United States October Term, 1984 On Writ of Certiorari To The United States Court of Appeals For the Federal Circuit Reply Brief for the Petitioner Respondents devote most of their brief to an outline of the role created for public employee unions and arbitration by the Civil Service Reform Act of 1978 (CSRA or the Act), 5 U.S.C. 2301 et seq. They conclude that the significance of collective bargaining will be unduly restricted, and the discretion of arbitrators improperly narrowed, unless the harmful error rule set out in 5 U.S.C. 7701(c)(2) is read to permit arbitrators to set aside adverse agency action on account of nonprejudicial violations of collective bargaining agreements. In reaching this conclusion, however, respondents disregard the specific statutory provisions that limit the role of unions and channel the discretion of arbitrators in adverse action challenges, as well as Congress's express intention both to "preserv(e) the ability of federal managers to maintain 'an effective and efficient Government'" (Bureau of Alcohol, Tobacco & Firearms v. Federal Labor Relations Authority, No. 82-799 (Nov. 29, 1983), slip op. 2, quoting 5 U.S.C. 7101) and to forestall forum shopping on the part of aggrieved employees between the Merit Systems Protection Board (MSPB) and negotiated grievance procedures. At the same time, respondents both overstate and understate the importance of the harmful error rule. Interpreting the rule as it was written -- to permit the assertion in adverse action proceedings only of those procedural errors that affected the agency's decision -- plainly will not, as respondents assert, make the collective bargaining process meaningless. Conversely, failure to apply the rule necessarily will lead to retention on the federal payroll of employees who have engaged in serious misconduct. 1. Respondents correctly observe that the CSRA recognizes the importance of collective bargaining and arbitration to federal employees. Respondents also properly note that unions play a significant role in the arbitration process. Br. 27-33. In arguing that these general characteristics of the CSRA implicitly authorize an arbitrator to vindicate "union rights" (Br. 28) by according a windfall benefit to an individual aggrieved employee in an adverse action challenge, however, respondents entirely ignore the other central purposes of the CSRA: those of "giv(ing) agencies greater ability to remove or discipline expeditiously employees who engage in misconduct" (S. Rep. 95-969, 95th Cong., 2d Sess. 51 (1978)) while "avoid(ing) forum shopping" on the part of aggrieved employees between the MSPB and negotiated grievance procedures. H.R. Rep. 95-1717, 95th Cong., 2d Sess. 157 (1978). In particular, respondents disregard the statutorily-prescribed nature of an arbitral adverse action challenge. a. As drawn by Congress, challenges to adverse action call into play a unique set of procedures in which the union has a carefully defined and sharply limited role. Thus, as we explained in our opening brief (at 22-23, 27), when adverse action is at issue the employee rather than the union may choose the forum (either the grievance procedure or an appeal to the MSPB) for the challenge, and only the employee may seek judicial review of the arbitrator's ruling. /1/ Similarly, Congress has promulgated substantive burden and standard of proof rules that -- as respondents acknowledge (Br. 25 & n.20) -- must in all events "govern" both MSPB and arbitral decisions in adverse action cases, no matter what the nature of the grievance procedures that have been negotiated by the union. 5 U.S.C. 7121(e)(2), 7701(c). See Devine v. Brisco, 733 F.2d 867, 872 (Fed. Cir. 1984). The harmful error rule, which is one of these substantive rules of decision (see ibid.), requires the arbitrator in an adverse action case to base his decision on the employee's situation: although the union represents the employee (5 U.S.C. 7121(b)(3)(C)), the arbitrator may reverse adverse agency action on account of procedural error only when the "employee or applicant for employment" carries the burden of "show(ing) harmful error in the application of the agency's procedures in arriving at (its) decision." 5 U.S.C. 7701(c)(2) and (A) (emphasis added). /2/ Whatever the role of the union's interests in other contexts, then, Congress plainly placed the focus of an adverse action challenge squarely on the protection of the aggrieved employee. /3/ This focus advances the congressional aim of "(s)treamlin(ing) the processes for dismissing and disciplining Federal employees" (S. Rep. 95-969, supra, at 2). In contrast, allowing a union to assert its interests as part of an employee's adverse action challenge not only distorts the statutory structure and departs from the statutory language; it also requires -- as the decision in this case demonstrates -- retention on the federal payroll of employees who have engaged in manifestly "unacceptable conduct." Id. at 9. /4/ b. In response to our observation that identical burden and standard of proof rules apply in arbitral and MSPB proceedings, respondents assert that we would find fault with "any difference in the two types of proceedings" (Br. 33 (emphasis in original)). See also Br. of Amici Curiae National Treasury Employees Union (NTEU) and National Federation of Federal Employees (NFFE) 19-20. This argument brazenly misstates our position: in giving employees a choice of forums, Congress undeniably contemplated differences between the two types of proceedings. This use of different procedural devices might, of course, occasionally lead to different results in otherwise similar cases. /5/ Despite the leeway given unions to negotiate for advantageous grievance procedures (see 5 U.S.C. 7121(a) and (b)), however, it is equally undeniable that Congress intended "to promote consistency in the resolution of (adverse action challenges), and to avoid forum shopping" (H.R. Rep. 95-1717, 95th Cong., 2d Sess. 157 (1978)) by providing that arbitrators must be "governed" by the same substantive standards as is the MSPB. 5 U.S.C. 7121(e)(2). Although respondents acknowledge this congressional goal (Br. 25 n.20), they make no attempt to address either the inconsistent results or the inevitable forum shopping that will flow from the use of rules of decision that lead to "predictable difference(s) in substantive outcome" between MSPB and arbitral adverse action decisions. Devine v. Pastore, 732 F.2d 213, 216 (D.C. Cir. 1984). Such differences unquestionably will follow from the permission granted arbitrators by the court below to depart from the CSRA's standard of proof and burden of proof provisions. /6/ 2. Despite the existence of these statutory limits on the role of unions and the discretion of arbitrators, respondents assert that Congress intended to make the arbitral process apply to federal employees in a way that is essentially identical to its operation in the private sector (Br. 35-36). Pointing to the private sector's "common law" tradition of deference to arbitral decisions, respondents then reason that the arbitrator's award in this case should not be disturbed because it "draws its essence from the terms of the contract itself and does not interpret statutes or regulations in reaching its result" (Br. 36-37 (emphasis in original)). Both of these contentions are incorrect. Respondents base (Br. 35-36) their arguments for the strict use of a private sector model on 5 U.S.C. 7122(a), which, as they note, in some circumstances allows the Federal Labor Relations Authority (FLRA) to modify arbitral awards on "'grounds similar to those applied by the Federal courts in private sector labor-management relations'" (Br. 36). But respondents' selective quotation from this provision is highly misleading. In fact, the FLRA does not apply private sector rules in adverse action cases, because the Authority never addresses adverse action issues; challenges to arbitral decisions in such cases go directly to the Federal Circuit, rather than to the Authority. 5 U.S.C. 7121(f), 7122(a). Furthermore, even in areas where the FLRA has jurisdiction, Section 7122(a)(1) itself acknowledges the unique constraints on federal arbitration by directing the Authority to modify arbitral awards that are "contrary to any law, rule, or regulation." This provision, in combination with the statutory limits on arbitrators and public employee unions that are noted above, plainly indicates that private sector rules must give way when necessary to "preserv(e) the ability of federal managers to maintain 'an effective and efficient Government.'" Bureau of Alcohol, Tobacco & Firearms v. Federal Labor Relations Authority, No. 82-799 (Nov. 29, 1983), slip op. 2, quoting 5 U.S.C. 7101(b). As a result, courts plainly cannot defer to arbitral decisions that disregard the statutory restrictions on arbitral authority imposed by 5 U.S.C. 7701(c). In any event, respondents' arguments about the applicability of private sector rules are beside the point: even in the private sector respondents' reliance on the tradition of deference to arbitral judgments would be misplaced, because the controversy in this case does not involve the terms of the collective bargaining agreement. Cf. Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960). Thus, the Agency on appeal did not challenge the arbitrator's findings of fact or his interpretation of the disputed contractual provisions (see Pet. App. 8a). Instead, the Agency took issue only with the arbitrator's decision to ignore a controlling provision of external law -- the harmful error rule. /7/ Since "the specialized competence of arbitrators pertains primarily to the law of the shop, not the law of the land" (Alexander v. Gardner-Denver Co., 415 U.S. 36, 57 (1974)), the arbitrator's interpretation of the rule is entitled to no special deference. See also Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728 (1981); Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581-582 (1960). To the contrary, it is well established that an arbitral award that violates external law is unenforceable in federal court. See W. R. Grace & Co. v. Local Union 759, Int'l Union of Rubber Workers, No. 81-1314 (May 31, 1983), slip op. 8-9. /8/ 3. Respondents again overstate their case in arguing that negotiated procedures will be rendered meaningless if nonprejudicial violations of those procedures cannot be enforced in individual adverse action challenges (Br. 30-32). In fact, under any interpretation of the harmful error rule, unions will be free to bargain for procedures to govern agency action (5 U.S.C. 7106(b)). Agencies will be obligated to abide by the agreed-upon procedures. And any adverse action affected by violations of such procedures will be overturned. By definition, then only the least "meaningful" of procedureal violations -- those found by an arbitrator or the MSPB to have had no effect on the challenged agency action -- will not be redressable in an employee's adverse action challenge. Moreover, a union may redress even those violations by filing either a grievance of its own or an unfair labor practice charge. See Gov't Br. 25-26. /9/ Thus, respondents are simply incorrect in making the uncharacteristic argument that a union may not use remedies other than an individual adverse action proceeding to vindicate all of its institutional rights. Indeed, respondents nowhere deny that a union may file a grievance "in its own behalf" to challenge "the effect or interpretation, or a claim of breach, of a collective bargaining agreement." 5 U.S.C. 7121(b)(3)(A), 7103(a)(9)(C)(i). For their part, amici NTEU and NFFE apparently acknowledge that the arbitrator in such a proceeding might order the agency to "cease and desist" from engaging in further procedural violations (Br. 26). /10/ And it is far from clear that following such a course would, as respondents suggest (Br. 42-43), inevitably lead to duplicative proceedings; a union might, for example, file an institutional grievance that parallels an individual complaint lodged by an employee, and seek to have the two consolidated by an arbitrator. Respondents do attempt to demonstrate the unavailability of an unfair labor practice remedy when the aggrieved employee has lodged a complaint through the negotiated grievance procedure (Br. 40), but nothing in the statutory provision upon which they rely (5 U.S.C. 7116(d)) provides that an employee's decision to pursue a particular procedural avenue forecloses a union from charging an unfair labor practice. To the contrary, Section 7116(d) states only that identical issues cannot be raised by the same "aggrieved party" both under the grievance procedure and as an unfair labor practice charge. This statutory language plainly does not prevent distinct aggrieved parties from basing separate causes of action on one factual situation. Thus, the FLRA has held that an employee's election does not bar the union from filing an unfair labor practice charge in its institutional capacity. See Department of Air Force, 14 F.L.R.A. 390, 391-392 (1984); Internal Revenue Service, 9 F.L.R.A. 480, 480-481 n.2, 492-493 (1982); United States Air Force, 4 F.L.R.A. 512, 527 (1980). See also Carter v. Kurzejeski, 706 F.2d 835, 843 n.10 (8th Cir. 1983). Respondents' lack of familiarity with this principle is surprising, for in this case they in fact filed both a grievance on the employees' behalf and an unfair labor practice charge; the Authority assumed jurisdiction and issued a complaint concerning one aspect of the charge (Pet. Reply Mem. App. 6a). See Gov't Br. 26-27 n.25. The cases cited by respondents (Br. 40-41) are entirely consistent with the position outlined above. Social Security Administration, 15 F.L.R.A. 211, 212 (1984), held only that one aggrieved party -- there, a union -- may not assert the same institutional and employee rights first in a grievance proceeding and then as an unfair labor practice charge. Similarly, in Internal Revenue Service, 3 F.L.R.A. 479 (1980), the Authority held that an employee's grievance barred a union's unfair labor practice charge because in both proceedings the union had requested information on behalf of the employee for use in his disciplinary action. 4. Finally, respondents disregard the statutory structure when they assert that deference is not due the MSPB's interpretation of the harmful error rule (Br. 26-27). Congress specifically has provided (5 U.S.C. 7701(j)) that the Board "may prescribe regulations to carry out the purpose of (5 U.S.C. 7701)," the provision in which the harmful error rule appears. The Board accordingly has promulgated a regulation defining the meaning of the term "harmful error." 5 C.F.R. 1201.56(c)(3). Such an interpretation of a statutory provision that Congress has placed within the Board's area of expertise must be accorded substantial deference. And, given the congressional insistence that "arbitrator(s) * * * follow the same rules governing burden of proof and standard of proof that govern adverse actions before the Board" (H.R. Rep. 95-1717, supra, at 157), that deference is as appropriate in a case on appeal from an arbitral judgment as it is in a case involving the review of a Board decision. Respondents' parallel suggestion (Br. 26-27) that deference is due the FLRA rather than the MSPB pays equally little attention to the statutory language. Congress directed the Authority to carry out the purposes of 5 U.S.C. 7101-7135; the harmful error rule, however, appears in 5 U.S.C. 7701. Indeed, the FLRA never will have occasion even to address the meaning of the rule. The rule in applicable only in arbitral proceedings involving adverse action challenges (5 U.S.C. 7121(e)). Yet appeals of arbitral adverse action decisions bypass the FLRA altogether, going directly to the Federal Circuit. Compare 5 U.S.C. 7121(f) with 5 U.S.C. 7122(a). In these circumstances, attempts to ascertain the FLRA's views on harmful error are unlikely to be of much assistance to the courts. For the foregoing reasons and the reasons stated in our opening brief, the judgment of the court of appeals should be reversed. Respectfully submitted. REX E. LEE Solicitor General DECEMBER 1984 /1/ Furthermore, while a union's appeal in a nonadverse action case goes first to the Federal Labor Relations Authority and then to the regional courts of appeals (5 U.S.C. 7122(a), 7123(a)), in an adverse action challenge the employee's appeal goes directly to the Federal Circuit. 5 U.S.C. 7121(f), 7703(a)(1); 28 U.S.C. 1295(a)(9). /2/ Given the requirement that the employee identify harmful error that occurred while the agency was "arriving at (its) decision," it is difficult to credit respondents' bald assertion that the language of the statute "neither states nor suggests" that error is "harmful" only when it affects the outcome of the proceeding (Br. 26 (emphasis in original)). This is particularly true given the parallel meaning accorded the term "harmful error" in other contexts. See, e.g., McDonough Power Equipment, Inc. v. Greenwood, No. 82-958 (Jan. 18, 1984), slip op. 5; United States v. Hasting, No. 81-1463 (May 23, 1983), slip op. 6. /3/ Despite respondents' repeated assertions to the contrary (Br. 8, 26, 30, 33), Devine v. White, 697 F.2d 421 (DC. Cir. 1983), is not in accord with the decision below on the question whether union rights may be asserted in adverse action proceedings. In White, the District of Columbia Circuit held that an arbitrator may set aside adverse agency on account of nonprejudicial violations of a negotiated procedural guarantee because "some bargained-for procedural rights are, by definition, substantial rights of an employee" (697 F.2d at 443 (emphasis added)). In contrast, the court below reasoned that adverse action may be set aside in such circumstances because procedural error harms the union (Pet. App. 12a-14a). While the decision in White also is inconsistent with the statutory language and purposes, its reasoning provides no support for respondents. /4/ Respondents' argument that the arbitrator in this case "clearly sustained the disciplinary action while modifying the penalty" (Br. 24 (emphasis in original)) is not meaningful. However the arbitrator's award is characterized, its effect was to overturn adverse agency action because of nonprejudicial procedural error; if the arbitrator's decision is upheld, the grievants in this case will be retained as federal law enforcement officers even though they engaged in misconduct that fully warranted discharge. /5/ We note, however, despite the hints of amici NTEU and NFFE to the contrary (Br. 20-21), that the only differences between MSPB and negotiated grievance proceedings will be procedural: the Board, as well as a contractual grievance mechanism, will fully enforce negotiated rights. See, e.g., Stalkfleet v. United States Postal Service, 6 M.S.P.B. 536, 537, 539 (1981). /6/ Thus, while respondents correctly suggest that a bargained-for procedural rule might, in a given case, enhance or detract from a grievant's ability to challenge adverse agency action (Br. 34-35), that is not the situation at issue here. Instead, the arbitrator in this case improperly departed from the "rules governing burden of proof and standard of proof" (H.R. Rep. 95-1717, supra, at 157), a course that, if sanctioned by this Court, will lead to routine and predictable differences in outcome between MSPB and arbitral adverse action decisions. The decisions cited by respondents (Br. 35) do not cast doubt on this point; they did not involve arbitral attempts to disregard Board interpretations of the CSRA's substantive standard and burden of proof rules. /7/ The arbitrator's -- and respondents' (Br. 22) -- attempt to characterize the issue in this case as being whether the grievants were removed from government service for "just cause" (see Pet. App. 21a) does not insulate the arbitral decision from review. As a matter of law, federal employees may be subjected to adverse action "for such cause as will promote the efficiency of the service." 5 U.S.C. 7513(a). And, in every case, no matter what provisions are contained in the contract, the arbitrator's decision must be governed by the statutory harmful error rule. Indeed, respondents appear to acknowledge that the issue in this case involves not the arbitrator's interpretation of the contract but the court of appeals' "extension of the 'harmful error' rule to errors prejudicial to the union" (Br. 39). /8/ Despite respondents' lengthy analysis of the issue (Br. 37-39), nothing in this case requires the Court to address the appropriate scope of judicial review of arbitral judgments. Rather, the question here is whether the arbitrator correctly interpreted controlling law. Respondents do not deny that arbitral awards are reviewable to the extent that they do not conform to statutory requirements. /9/ Respondents' parallel suggestion that enforcement of the harmful error rule somehow will erode contractual rights (Br. 32) therefore makes little sense. The Federal Circuit has acknowledged that the harmful error rule plays such a significant role in the statutory scheme that an agency and a union may not "exclude the harmful error rule from the (collective bargaining) agreement" (Devine v. Brisco, 733 F.2d 867, 872 (1984)); as a result, enforcing the rule hardly can detract from a contract's meaning. /10/ Amici note that "(s)uch relief does not correct the past actions of the agency" (Br. 26-27). If past violations were harmful, however, the affected employee would be able to obtain relief; if the violations were harmless, an award of relief would be inappropriate. Indeed, although amici attempt to minimize the effectiveness of a cease and desist order, such an order would be just as effective in putting the agency on notice that its actions were improper as would an award such as the one in this case; the only difference between the two is that in the latter case the individual grievant will receive a windfall.