Sunday, May 7, 2017

DC Circuit panel split on impact of public policy on OIG investigation arbitration award

In National Railroad Passenger Corp. v. Fraternal Order of Police, Lodge 189 Labor Committee, the DC Circuit, over a strong dissent by Judge Pillard, has affirmed the District Court's decision vacating an arbitrator's award that reinstated a member of the Amtrak police department.

The cba between Amtrak and the Union contained a "Police Officer's Bill of Rights" provision. That provision ("Rule 50") required that any officer subject to an investigation be informed of their right to remain silent, the right to delay questioning to have a union representative present, and the recording of the interview with the officer by either mechanical or stenographic means.

After allegations arose that an officer jointly owned a home with her supervisor and received a disproportionate share of premium assignments, Amtrak's Internal Affairs Unit conducted an investigation. The officer was interviewed in compliance with Rule 50. That investigation was closed without discipline (other than a letter of counseling for creating the appearance of impropriety and potential conflict of interest). The Office of Inspector General subsequently conducted its own investigation. The officer was again interviewed, but was not advised of her right to have a union representative present and the interview was not recorded. After receiving the Inspector General's report, which concluded that the officer had made false statements and omissions during the internal affairs investigation and that some of her conduct was potentially criminal, Amtrak terminated the employment of the officer.

The termination was pursued to arbitration, and Arbitrator Joan Parker ordered the officer's reinstatement, concluding that "because the procedural safeguards guaranteed to employees by Rule 50 were not afforded her during the ...Amtrak OIG interrogation" there was not just cause for her discharge. Arbitrator Parker's award can be found here.

Shortly after the arbitrator's award was issued, the DC Circuit issued its decision in U.S. Department of Homeland Security v. Federal Labor Relations Authority holding that "public sector unions and agencies can neither add to nor subtract from the OIG's investigators authority through collective bargaining." 

Amtrak sought to vacate the arbitrator's award. The District Court granted that request (
here), concluding that the award was contrary to public policy. The Court held that the Circuit court's decision in the Department of Homeland Security case:

... makes clear that the IG Act's public policy of Inspector General independence would be violated if CBAs could restrict an Inspector General's investigative authority. Because the Arbitrator's Decision would subject the Amtrak OIG's investigative powers to limitations contained in a CBA — not a statute — there is no question that the Decision is contrary to the public policy underlying the IG Act. Thus, the Arbitrator's Decision cannot stand.

The Court denied the Union's Motion for For Reconsideration (here), and the Union appealed.

The Circuit court, in a 2-1 decision, has affirmed. The majority determined that the Court's previous decision in Department of Homeland Security "is directly on point." The Court noted that the Arbitrator explicitly based her decision on the OIG's failure to observe the provisions of Rule 50 and held:

It makes no difference that DHS was decided after the arbitration award. ... That collective bargaining agreements may not regulate an Inspector General's investigatory authority has been the law for decades, as the Fourth Circuit's 1994 decision in Nuclear Regulatory Commission v. FLRA shows. ... A federal court, reviewing an arbitration award, "may refuse to enforce contracts that violate law or public policy." United Paperworkers, 484 U.S. at 42 (citing Hurd, 334 U.S. at 35). Rule 50, as applied to the Amtrak Inspector General, is such a contractual provision and the district court was right in refusing to enforce the arbitrator's award based on that provision.

The dissent, noting the "extremely narrow" scope of review of arbitration awards, would confirm the award. Judge Pillard noted that while the arbitrator did not anticipate the Circuit's subsequent Homeland Security decision, nothing in the arbitrator's reasoning, i.e. that the employee was dismissed without appropriate procedural objections, compeled any violation of public policy. Contrary to the majority's public policy analysis, Judge Pillard concluded:

The court's decision to vacate the arbitral award in this case contradicts decades of precedent delineating a narrow public policy exception and threatens as a practical matter to destabilize many, if not most, arbitral awards. Indeed, its impact may well reach beyond labor arbitration to commercial arbitration under the Federal Arbitration Act, as "[t]here is no doubt that the scope of review of arbitration in cases involving mandatory arbitration of statutory claims is at least as great as the judicial review available in the context of collective bargaining." Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1486 (D.C. Cir. 1997) (emphasis omitted). Today's decision invites litigation in every case in which a disappointed party to an arbitration can base its objection on some claim of error that places the award at odds with "law or public policy." Once arbitration becomes the start rather than the end of the dispute resolution process, it no longer serves the role Congress envisioned. Because I do not see how, consistent with binding precedent, the court can relieve Amtrak of its obligation to comply with its collective bargaining agreement and the arbitral awards rendered thereunder, I respectfully dissent.

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