Broadcasting Board of Governors Office of Cuba Broadcasting v. Federal Labor Relations Authority

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 13, 2014 Decided May 16, 2014

No. 12-1463

BROADCASTING BOARD OF GOVERNORS OFFICE OF CUBA

BROADCASTING,

PETITIONER

v.

FEDERAL LABOR RELATIONS AUTHORITY,

RESPONDENT

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL

1812,

INTERVENOR

On Petition for Review of a Final Decision

of the Federal Labor Relations Authority

Howard S. Scher, Attorney, U.S. Department of Justice,

argued the cause for petitioner. With him on the briefs were

Stuart F. Delery, Assistant Attorney General, and Leonard

Schaitman, Attorney.

Zachary R. Henige, Attorney, Federal Labor Relations

Authority, argued the cause for respondent. On the brief was

Rosa M. Koppel, Solicitor.

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Leisha A. Self argued the cause for intervenor. With her on

the brief was David A. Borer.

Before: GARLAND, Chief Judge, and TATEL and PILLARD,

Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Compared to the charges of

cronyism, waste, and mismanagement that dominated this

dispute in its earlier stages, the legal issue we confront is quite

tame. After an arbitrator found that Petitioner Broadcasting

Board of Governors violated both a collective bargaining

agreement and federal labor relations law when it laid off

sixteen employees, the Federal Labor Relations Authority

upheld the arbitrator’s determination. The Board of Governors

now petitions for review. Because Congress has barred the

courts from hearing challenges to FLRA orders that “involve[]

an award by an arbitrator[], unless the order involves an unfair

labor practice,” 5 U.S.C. § 7123(a), we must determine whether

the order at issue here, which undoubtedly involves an award by

an arbitrator, also involves an unfair labor practice. Finding that

it does not, we dismiss the petition for lack of subject matter

jurisdiction.

I.

The Office of Cuba Broadcasting, a division of Petitioner

Broadcasting Board of Governors, produces radio and television

programming for dissemination inside Cuba. This programming

runs the gamut from breaking news to in-depth pro-democracy

documentaries to the Major League Baseball playoffs. There’s

just one problem. For as long as the Office has been

broadcasting to Cuba, the Cuban government has engaged in a

massive signal-blocking campaign. In response, the Office has

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sought innovative ways to sneak its content through. For

example, in order to maximize the strength of its signal, the

Office has broadcast from an airplane flying as close to Cuba as

possible.

So who’s winning—the Office or the Cuban government?

Depends on whom you ask. Citing statistics suggesting high

levels of online engagement, the Office’s supporters insist that

its programming has become an invaluable resource for Cubans

otherwise cut off from reliable news and information. See

Broadcasting Board of Governors, Radio and TV Marti,

http://www.bbg.gov/broadcasters/ocb/ (last viewed May 5,

2014). By contrast, critics frequently cite Government

Accountability Office studies suggesting that the blocking

campaign has prevented virtually all Cubans from watching or

listening to any of the Office’s programs. See, e.g., U.S. Gov’t

Accountability Office, Broadcasting to Cuba: Actions Are

Needed to Improve Strategy and Operations 3 (2009); see also

U.S. Gov’t Accountability Office, Broadcasting Board of

Governors Should Provide Additional Information to Congress

Regarding Broadcasting to Cuba 11 (2011) (noting difficulties

estimating audience size); cf. also Editorial, A New Voice of

America, WALL ST. J., May 6, 2014,

http://online.wsj.com/news/articles/SB10001424052702304831

304579545870588304300 (endorsing congressional efforts to

reform the “U.S. international-broadcasting system”).

In 2009, members of Congress critical of the Cuba

broadcasting program proposed reducing the Office’s budget by

almost half—over $16 million. After program advocates

complained, Congress settled on a $4.2 million cut, anticipating

that the Office could find the necessary savings by scrapping its

expensive airplane program and reforming its contracting

procedures. See American Federation of Government

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Employees, Local 1812 v. Broadcasting Board of Governors,

74–75 & n.39 (Nov. 19 2011) (Butler, Arb.) (“Arbitration

Award”).

Instead of grounding the plane and reforming its procedures,

however, the Office announced a “reduction-in-force”—in other

words, layoffs. According to the Office, this would save money

without sacrificing program quality. But the union representing

the affected employees, the American Federation of Government

Employees, Local 1812, objected, claiming that the layoffs were

unjustified. And even assuming the layoffs were justified, the

Union insisted that the Office had an obligation under both the

collective bargaining agreement and sections 7116(a)(5) and

(a)(8) of the Federal Service Labor-Management Relations

Statute (the Statute), 5 U.S.C. § 7101 et seq., to engage in so-

called impact and implementation bargaining over how it would

carry them out, see 5 U.S.C. § 7116(a) (“[I]t shall be an unfair

labor practice for any agency . . . to refuse to consult or negotiate

in good faith with a labor organization as required by this

chapter; . . . [or] otherwise fail or refuse to comply with any

provision of this chapter.”). After an extensive back-and-forth

between the Union and management, the Office decided to

proceed as planned, ultimately terminating sixteen employees.

Believing that the Office had carried out unjustified layoffs

in an impermissible manner, the Union initiated formal

proceedings under the Federal Service Labor-Management

Relations Statute. The Statute “contains a two-track system for

resolving labor disputes.” Ass’n of Civilian Technicians, N.Y.

State Council v. FLRA, 507 F.3d 697, 699 (D.C. Cir. 2007)

(ACT) (internal quotation marks omitted). “Under the first track

. . . , a party may file an unfair labor practice charge with the

[FLRA’s] General Counsel, who will investigate and issue a

complaint, if warranted. The matter is then adjudicated by the

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[FLRA],” and the FLRA’s order is then fully reviewable by this

Court. Id. (internal citations omitted). “Under the second

track . . . , a party may file a grievance in accordance with its

collective bargaining agreement. . . . The grievance is subject to

binding arbitration, and the arbitral award is subject to review by

the [FLRA].” Id. (internal citations omitted). In this case, the

Union pursued the second track, filing a formal grievance and

then taking the Office’s parent agency, the Broadcasting Board

of Governors, to binding arbitration.

After considering extensive evidence regarding, among

other things, the background of the layoffs and the intent of the

parties to the collective bargaining agreement, the arbitrator

sided with the Union. In a comprehensive and blistering opinion,

the arbitrator dismissed the Board’s justifications for the

reduction-in-force, determining that the layoffs were in fact part

of the then-Office director’s “bad faith plan to at least

intimidate, if not actually get rid of, his internal critics.”

Arbitration Award at 76. As for the methods by which the Office

had carried out the layoffs, the arbitrator examined the text of

the collective bargaining agreement, the intent of the negotiators,

and the way in which layoffs had been implemented in the past,

concluding that the Office had violated the agreement by failing

to engage in impact and implementation bargaining. Id. at 61,

67–68. Moreover, the arbitrator agreed with the Union that by

failing to engage in such bargaining, the Office had committed a

statutory unfair labor practice. See id. at 94. In doing so, the

arbitrator expressly rejected the Board’s invocation of the

“covered by” defense, under which parties have no statutory

obligation to negotiate over an issue that the collective

bargaining agreement already addresses with sufficient

particularity. Arbitration Award at 64; see also id. at 58

(explaining that the “covered by” defense applies only to

statutory duties, not contractual duties); Federal Bureau of

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Prisons v. FLRA, 654 F.3d 91, 94–95 (D.C. Cir. 2011)

(describing the defense). The arbitrator then went on to find that

the Office had breached the collective bargaining agreement in

several additional ways, including by failing to give affected

employees “priority consideration” for certain vacant positions.

Arbitration Award at 79–80. In the end, these contractual and

statutory violations combined with management’s bad faith

conduct led the arbitrator to award the Union a “status quo ante”

remedy, requiring that all terminated employees be reinstated

and paid damages. Id. at 94.

Appealing to the FLRA, the Board of Governors argued that

the arbitrator had improperly rejected its “covered by” defense.

According to the Board, “the covered-by doctrine relieves an

agency from its obligation to bargain over a matter if that matter

is contained in an agreement or that matter is inseparably bound

up with a subject expressly covered by an agreement.” See

Broadcasting Board of Governors Office of Cuba Broadcasting,

66 FLRA 1012, 1014 (2012) (“FLRA Order”). As a result, the

Board argued, it had no statutory or contractual obligation to

engage in impact and implementation bargaining over the

layoffs. The FLRA rejected this argument, reasoning that the

“covered by” defense applies only to statutory duties, not

contractual duties, and that the arbitrator’s award could rest

equally well on contractual or statutory grounds. In a footnote

central to the issue before us, the FLRA explained that it had no

need to address the merits of the Union’s statutory unfair labor

practice claims or the Board’s “covered by” defense:

The Agency also argues that the Arbitrator’s

interpretation of Article 3 and Article 30, Section 2 is

contrary to law because it is inconsistent with the

covered-by doctrine. Although the Arbitrator stated

that the Agency violated the Statute, it is unnecessary

to address the Agency’s exception. The Arbitrator’s

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contractual interpretation of these provisions of the

parties’ agreement serves as a separate and independent

basis for the award, and the Agency has not established

that this basis is deficient. Thus, we need not address

any claims regarding an alleged statutory violation.

See, e.g., Broad. Bd. of Governors, 66 FLRA 380, 385-

86 (2011) (Member Beck dissenting) (finding it

unnecessary to address contrary-to-law exceptions

because party did not establish that arbitrator’s contract

interpretation, which was a separate and independent

basis for the award, was deficient).

Id. at 1019 n.5 (internal quotation marks and citations omitted).

After rejecting every one of the Board’s contractual arguments,

the FLRA upheld the status quo ante remedy. Id. at 1020–21.

The Board of Governors now petitions for review. Before

addressing the merits of the Board’s arguments, however, we

must determine whether we have subject matter jurisdiction. See

Department of the Navy v. FLRA, 665 F.3d 1339, 1344 (D.C.

Cir. 2012).

II.

Lying at the heart of this case is a fundamental principle of

federal labor relations law: arbitration awards are presumed final

and not subject to judicial review. Reflecting this principle, the

Statute prohibits courts from reviewing an FLRA order

“involving an award by an arbitrator, unless the order involves

an unfair labor practice.” 5 U.S.C. § 7123(a). “Insulating

arbitration awards from judicial review reflects a strong

Congressional policy favoring arbitration of labor disputes and

furthers Congress’s interest in providing arbitration results

substantial finality.” Department of the Navy, 665 F.3d at 1344

(internal quotation marks omitted). The “limited exception that

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allows . . . judicial review . . . furthers Congress’s other stated

interest of ensuring a single, uniform body of case law

concerning unfair labor practices.” ACT, 507 F.3d at 699

(internal quotation marks omitted). Thus, for this Court to have

subject matter jurisdiction over the Board’s petition, the order

under review must “involve[]” a statutory unfair labor practice.

The word “involves” is far from precise. Simplifying our

task, this Court has addressed the word’s scope in a series of

decisions, all of which faithfully respect Congress’s desire to

limit judicial review of arbitration awards. We first considered

the meaning of “involves” in Overseas Education Association v.

FLRA, 824 F.2d 61 (D.C. Cir. 1987), in which we held that “a

statutory unfair labor practice [must] actually be implicated to

some extent in the [FLRA’s] order,” so even if certain conduct is

“capable of characterization as a statutory unfair practice . . . [,]

the conduct must actually be so characterized and the claim

pursued, by whatever route, as a statutory unfair labor practice,

not as something else.” Id. at 66. Not only that, but in American

Federation of Government Employees, Local 2510 v. FRLA, 453

F.3d 500 (D.C. Cir. 2006) (AFGE), we emphasized that even

when an aggrieved party argues that the other party committed a

statutory unfair labor practice, and even when the arbitrator’s

award addresses that alleged unfair labor practice, “it is the order

of the [FLRA] that is the subject of the petition for judicial

review,” not the arbitrator’s decision or the initial grievance. Id.

at 504. That order, moreover, must do more than merely

acknowledge an unfair labor practice. As we made clear in

Department of the Interior v. FLRA, 26 F.3d 179 (D.C. Cir.

1994), a “passing reference does not satisfy the requirement that

an unfair labor practice be an explicit ground for or necessarily

implicated by the [FLRA’s] decision.” Id. at 184 (internal

quotation marks omitted). We thus concluded that we lack

jurisdiction where, as in that case, the FLRA describes an unfair

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labor practice claim solely to “reject the notion that an unfair

labor practice is any part of the case before [it].” Id. Reinforcing

this requirement, we held in ACT, 507 F.3d 697 (D.C. Cir.

2007), that the order must “contain a substantive discussion of

an unfair labor practice claim,” id. at 700—though we later

clarified in Department of the Navy v. FLRA, 665 F.3d 1339

(D.C. Cir. 2012), that the discussion need not be “explicit,” id. at

1345 (holding that when an FLRA order “necessarily implicates

a statutory unfair labor practice,” we have jurisdiction even if

the order never “explicitly discuss[es]” the unfair labor practice).

These decisions strongly suggest that we lack subject matter

jurisdiction in this case. True, as the Board points out, the Union

alleged and the arbitrator found a statutory unfair labor practice.

But under AFGE what matters is the FLRA’s final order—not

the arbitrator’s award or the initial grievance—and in that order

the FLRA mentioned the Union’s unfair labor practice claim

only in a footnote and only to explain why it had no need to

consider the claim. As we made clear in Department of the

Interior, the FLRA must do more than simply note the existence

of an unfair labor practice claim for its order to “involve” an

unfair labor practice—indeed, even explaining why it will not

address an unfair labor practice argument is insufficient. The

FLRA’s order must, as we held in ACT, reach and discuss the

merits of a statutory unfair labor practice or in some “other way

affect[] substantive law regarding” a statutory issue, something

the order in this case never does. 507 F.3d at 700.

Seeking to escape the clear dictate of our precedent, the

Board of Governors makes two arguments. First, it contends that

the FLRA’s order “involves an unfair labor practice” by virtue

of the Board’s invocation of the “covered by” defense, “a

statutory defense, [which] as such involves—or at least

implicates—the question of a statutory duty to bargain.”

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Petitioner’s Br. 41. Although the FLRA maintains that the

“covered by” defense applies only to statutory duties, the Board

of Governors insists that the defense applies as well to at least

some contractual duties, including the one the arbitrator found

here. According to the Board, the arbitrator’s consideration of

extrinsic evidence reveals that the arbitrator looked beyond the

text of the collective bargaining agreement when defining the

scope of the Board’s contractual duty to bargain, something the

arbitrator could not have done without first rejecting the Board’s

statutory “covered by” defense—in other words, determining

that the agreement itself fails to “cover” the impact and

implementation of layoffs sufficiently to relieve the Board of

any further bargaining obligation. Because, at least in this case, a

“contractual duty to bargain is not independent of a statutory

duty to bargain,” id. at 42, the Board urges us to take jurisdiction

on the ground that the FLRA had no basis for upholding the

arbitrator’s decision without at least implicitly rejecting the

Board’s statutory “covered by” defense. In support, the Board

relies on our recent opinion in Federal Bureau of Prisons v.

FLRA, 654 F.3d 91 (D.C. Cir. 2011), claiming that it stands for

the proposition that contractual and statutory duties are neither

separate nor independent. Thus, according to the Board, the

collective bargaining agreement could provide no “separate and

independent” basis for the arbitrator’s award.

Had the FLRA necessarily rejected the “covered by”

defense when it upheld the arbitrator’s award, we might well

agree that we have subject matter jurisdiction. See Department

of the Navy, 665 F.3d at 1345 (taking jurisdiction where the

FLRA’s order necessarily found an unfair labor practice, even

though the FLRA had ostensibly found only a contractual duty).

But as the FLRA explains, the Board of Governors’s argument

misconstrues the “covered by” defense, which applies only to

statutory duties. Simply put, the “covered by” defense respects

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the bargain the parties struck: if the agreement covers an issue in

sufficient depth, then we assume the parties have already fully

negotiated over that issue and therefore refrain from imposing

additional statutory obligations that appear nowhere in the

agreement. See Federal Bureau of Prisons, 654 F.3d at 94 (“If a

collective bargaining agreement ‘covers’ a particular subject,

then the parties to that agreement are absolved of any further

duty to bargain about that matter during the term of the

agreement.”) (citations and quotation marks omitted). It would

make little sense to consider such a defense when evaluating a

purported contractual duty, since contractual duties are

themselves products of the very bargaining the “covered by”

defense is designed to respect. And given that extrinsic evidence

of the mutual intent of the parties furnishes an appropriate

source of insight into the meaning of contractual terms, an

arbitrator’s consideration of such evidence hardly transforms the

contractual inquiry into a statutory one, opening the door to a

“covered by” defense. See RESTATEMENT (SECOND) OF

CONTRACTS § 214 (1981); see also National Treasury

Employees Union v. FLRA, 466 F.3d 1079, 1081 (D.C. Cir.

2006) (“[C]ourts interpret labor agreements in light of the

practice, usage and custom of the parties. In particular, where the

terms of a bargaining agreement are ambiguous, we look to

evidence of the parties’ contemporaneous understanding.”

(internal citations and quotation marks omitted)).

Federal Bureau of Prisons is not to the contrary. There,

unlike here, we clearly had jurisdiction because the FLRA had

explicitly addressed and found a statutory unfair labor practice.

654 F.3d at 454; see also ACT, 507 F.3d 699 (noting that where

an unfair labor practice is explicitly discussed in the FLRA’s

order, our jurisdiction is clear). Nor does that decision provide

any support for the Board’s argument that the “covered by”

defense applies to contractual duties. To be sure, after rejecting a

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statutory unfair labor practice claim on the ground that a

particular issue was “covered by” the collective bargaining

agreement, we went on to “reject . . . the contention” that the

collective bargaining agreement provided a “‘separate and

independent basis’ for the arbitral award.” Federal Bureau of

Prisons, 654 F.3d at 97. We did so, however, not because the

“covered by” defense applies to contractual duties, as the Board

contends, but rather “because the arbitral award ma[de] no

distinction between the purportedly ‘separate’ statutory and

contractual grounds.” Id. Since under these circumstances the

Bureau of Prisons “was not required to file a separate exception”

outlining contractual arguments, the FLRA had no basis for

holding that the Bureau’s failure to file such an exception

waived all such arguments. Id. Here, the FLRA’s “separate and

independent basis” holding suffers from no similar defect: the

arbitrator found both a statutory and a contractual duty, and the

Board of Governors made both statutory and contractual

arguments before the FLRA. Accordingly, given Board

counsel’s refreshingly candid concession that he knows of no

cases where either the FLRA or any court has found a “covered

by” defense relevant to the scope of a contractual duty, Oral Arg.

Rec. 2:05–:30, we decline the Board’s invitation to do so here.

Second, the Board of Governors argues that we have subject

matter jurisdiction because the FLRA’s order might implicate

sovereign immunity. Recall that the arbitrator interpreted the

collective bargaining agreement as requiring the Board to

provide employees affected by the layoffs with “priority

consideration” for certain vacant positions. See Arbitration

Award at 79–80. This requirement, the Board argues, forces it to

violate a government-wide Office of Personnel Management

regulation barring agencies from “assign[ing] an employee in an

excepted position to a position in the competitive service,” 5

C.F.R. § 351.705(b)(6), even though the Statute prohibits

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agencies from entering into agreements “inconsistent with any

Federal law or any Government-wide rule or regulation,” 5

U.S.C. § 7117(a)(1). Thus, the Board maintains, the FLRA’s

order “would require management officials to violate the law,

implicating principles of sovereign immunity and giving this

Court jurisdiction to review such questions.” Petitioner’s Br. 42–

43. Again, we disagree.

Even assuming that we always have jurisdiction to review

FLRA orders that implicate principles of sovereign immunity,

the order at issue here does no such thing. After all, as the FLRA

clearly explained, “priority consideration” and “assignment” are

separate concepts—an agency might provide a candidate

“priority consideration” for a particular position yet ultimately

refuse to “assign” the candidate to that position because she

proved ineligible. See FLRA Order at 1017. Since the order

before us mandates only “priority consideration,” management

officials can follow it without violating government-wide

regulations. See Reply Br. 16 (conceding that the order would be

“unobjectionable” if it mandated only “consideration” rather

than “assignment”).

III.

Lacking subject matter jurisdiction, we dismiss the petition

for review.

So ordered.