70 FLRA No. 152                                                                                                                                                                              

 

UNITED STATES

DEPARTMENT OF THE NAVY

PUGET SOUND NAVAL SHIPYARD

AND INTERMEDIATE

MAINTENANCE FACILITY

BREMERTON, WASHINGTON

(Agency)

 

and

 

BREMERTON METAL TRADES COUNCIL

(Union)

 

0‑AR‑5240

 

_____

 

DECISION

 

August 13, 2018

 

_____

 

Before the Authority:  Collen Duffy Kiko, Chairman,

and Ernest DuBester and James Abbott, Members

(Member DuBester dissenting)

 

I.                    Statement of the Case

 

In this case, we vacate an award because the Arbitrator modified the terms of the parties’ agreement instead of interpreting the agreement.

 

Arbitrator Walter Kawecki, Jr. issued an award finding that the Agency had a nondiscretionary policy, established by past practice, of promoting apprentices every six months when they satisfied certain training and education requirements.  He also found that this policy had been incorporated into Article 39 of the parties’ collective‑bargaining agreement (Article 39).  Consequently, he found that the Agency violated Article 39 when it failed to timely promote one apprentice (the grievant) who had satisfied the requirements.

 

The main question before us is whether the award fails to draw its essence from the agreement.  The Arbitrator relied on an alleged past practice to effectively create a new contract provision that entitles apprentices to nondiscretionary promotions under certain circumstances.  Because the Arbitrator’s finding modified – rather than interpreted – Article 39, the award fails to draw its essence from the agreement.  Accordingly, we set aside the award.

 

II.                  Background and Arbitrator’s Award

 

The grievant participates in the Agency’s apprentice program.  Under the apprentice program, the Agency initially appoints apprentices to wage trainee (WT)-1, and they are eligible for noncompetitive promotions every six months until they reach the highest grade of WT-8.  Article 39 includes general statements about the apprentice program.  For example, it provides that:  apprentices will be excepted‑service employees until their successful completion of the program, the Agency will train apprentices and assign them a variety of increasingly complex work assignments, and the program administrator will certify apprentices’ satisfactory completion of the program.  In addition, the Agency’s apprentice‑program policy states that apprentices’ “[p]romotion eligibility will be contingent upon satisfactory academic and work performance and successful completion of a minimum of 900 hours of academics, trade theory[,] and related on‑the‑job training every six months.”[1] 

 

As relevant here, the Agency promoted the grievant from WT‑3 to WT‑4, but delayed processing the promotion, so she did not receive it on her six‑month anniversary.  The Union filed a grievance alleging that the Agency failed to timely promote the grievant.  The grievance went to arbitration. 

 

At arbitration, the parties did not agree to a stipulated issue, so the Arbitrator framed the issues as:  “Did the Agency violate the [agreement] and/or a nondiscretionary [A]gency policy or federal regulations by not promoting [the grievant] . . . on [her six‑month anniversary]?  If so, what is the appropriate remedy?”^[2]

 

Before the Arbitrator, the Union argued that the Agency had a nondiscretionary policy, established by past practice, of promoting apprentices every six months when they satisfied certain training and education requirements.  The Union maintained that the grievant met these requirements by her six‑month anniversary, but that the Agency failed to timely promote her because of an administrative error. 

 

Conversely, the Agency argued that apprentices are eligible for – but not entitled to – promotions every six months because, under the apprentice-program policy, “[p]romotion eligibility [is] . . . contingent upon satisfactory academic and work performance and successful completion of” certain training and education requirements.[3]  According to the Agency, promotions are discretionary because the Agency must evaluate whether apprentices have successfully completed the apprentice‑program requirements before it approves their promotions.

 

The Arbitrator considered evidence from both parties regarding the existence of a past practice.  The Arbitrator found that no evidence contradicted a Union witness’s testimony that, “[d]uring the [thirty] years [that he] managed or oversaw the apprenticeship program, he ensured that apprentices were promoted noncompetitively every six months when they”:  (1) completed and signed a worksheet demonstrating fulfillment of the 900‑hour training requirement, and (2) satisfied all educational requirements with at least a 2.5 grade‑point average.^[4]  The Arbitrator also noted that a particular Agency exhibit (Exhibit 7) showed that the Agency promoted apprentices in six‑month intervals 60% of the time.  The Arbitrator found that Exhibit 7 demonstrated that “the majority of apprentices were promoted within six[‑]month intervals, showing a continuing past practice.”^[5]  Further, the Arbitrator found that a letter from the Agency to the Union concerning the process for verifying training hours demonstrated “the Agency’s intent . . . to promote [apprentices] every six months.”^[6]

 

 In light of these findings, the Arbitrator found that the Agency had “a long‑standing past practice” of promoting apprentices every six months when the apprentice “met the satisfactory performance of 900 hours of [training] by completing and signing the [training worksheet,] and [met] all [of] the educational requirements with a 2.5 [grade‑point average] or better.”^[7]  The Arbitrator found that this practice created a “nondiscretionary”^[8] policy that “became part of Article 39.”^[9]  The Arbitrator also found that the grievant was eligible for a promotion under the policy because she satisfied the promotion requirements by her six‑month anniversary.  Thus, the Arbitrator concluded that the Agency violated the agreement by failing to timely promote the grievant.  As a remedy, the Arbitrator found that the grievant was entitled to a retroactive promotion.

 

On November 8, 2016, the Agency filed exceptions to the Arbitrator’s award, and on November 28, 2016, the Union filed an opposition to the Agency’s exceptions.

 

III.               Analysis and Conclusion:  The award fails to draw its essence from the parties’ agreement. 

 

The Agency argues that the award fails to draw its essence from the parties’ agreement because the Arbitrator’s finding of a nondiscretionary past practice of promoting apprentices every six months improperly modifies Article 39.[10]  The Authority will find that an arbitration award fails to draw its essence from a collective‑bargaining agreement when the excepting party establishes that the award:  (1) cannot in any rational way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purposes of the agreement as to manifest an infidelity to the obligation of the arbitrator; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement.[11]  Further, arbitrators may consider parties’ past practices when interpreting an ambiguous contract provision,[12] but they may not rely on past practices to modify the terms of a contract.[13] 

 

As noted above, Article 39 provides, in general terms, for the existence of an apprentice program.  But Article 39 does not discuss the eligibility requirements for promoting apprentices every six months.  Thus, there is no ambiguous contract term that required the Arbitrator to consider the parties’ past practice.  Yet the Arbitrator found that the Agency’s alleged “long-standing past practice”[14] of promoting apprentices every six months when they satisfied certain program requirements created a “nondiscretionary”[15] promotion policy that “became part of Article 39.”[16]  By effectively converting the parties’ practice into a brand new contract provision that entitles apprentices to promotions in certain circumstances, the Arbitrator modified – rather than interpreted – Article 39.  Although arbitrators may look to parties’ past practices when interpreting an ambiguous[17] contract provision, they may not rely on past practices to create a new contract provision.[18]  Because the Arbitrator effectively did so here, we find that his award fails to draw its essence from the agreement, and we set it aside.[19] 

 

In so doing, we acknowledge that the Authority has previously stated that an agreement’s silence on a matter addressed by an arbitrator does not, by itself, demonstrate that the arbitrator’s award fails to draw its essence from the agreement.[20]  However, to the extent that such precedent is inconsistent with this decision, we reverse that precedent. 

 

IV.                Decision

 

We set aside the award. 

 

Member DuBester, dissenting:                                       

The majority’s decision is another step in their misguided effort to eliminate consideration of parties’ past practices when determining the parties’ rights and obligations in their collective-bargaining relationship.  In previous cases, the majority has rejected reliance on parties’ past practices “to modify the clear terms of a bargained-for agreement.”^[21]  I strongly disagreed.  In my view, “[a]n arbitrator’s award that appears contrary to the express terms of the agreement may nevertheless be valid if it is premised upon reliable evidence of the parties’ intent.”^[22] 

Now, the majority rejects reliance on parties’ past practices even where no “clear terms of a bargained‑for agreement” are involved.  The majority’s holding here, like their previous rejection of past-practice principles, conflicts with decades of legal authority on this subject, including long-standing, well-reasoned Authority past-practice precedent, established arbitral practice, and the predominant view of the courts.  

 

Contrary to the majority, I would find that the award does not fail to draw its essence from the parties’ agreement.  In order to establish conditions of employment through a past practice, a party must show that the practice has been consistently exercised over a significant period of time and followed by both parties, or followed by one party and not challenged by the other.^[23]  And here, the Arbitrator found that the Agency “has . . . a nondiscretionary promotion practice of promoting apprentices every [six] months” when the apprentice meets the Agency’s requirements.^[24]  The majority does not dispute this finding.

 

The Arbitrator further finds that this “long‑standing past practice . . . became part of” the provision in the parties’ agreement, Article 39, establishing the Agency’s apprentice-training program.^[25]  Relying on this past practice, the Arbitrator determines that the grievant met all the requirements for her promotion, and concludes that “[b]ut for[] the Agency failing to timely process the paperwork,” the grievant would have been promoted earlier.^[26]   

The majority rejects the Arbitrator’s reliance on the parties’ undisputed past practice because “Article 39 does not discuss the eligibility requirements for promoting apprentices every six months.”^[27]  But the parties’ failure to expressly discuss this particular aspect of the apprentice program does not alter the significance of the parties’ past practice. 

 

                As the Authority has held, “the meaning of [an] agreement must ‘[u]ltimately . . . depend[] on the intent of the contracting parties.’”^[28]  And as the Supreme Court has explained in the context of labor arbitration:  “The labor arbitrator’s source of law is not confined to the express provisions of the contract, as the [workplace] common law – the practices of the [workplace] – is equally a part of the collective[-]bargaining agreement, although not expressed in it.”^[29]  Elkouri and Elkouri adds:  “It is well recognized that the contractual relationship between the parties normally consists of more than the written word.  Day-to-day practices mutually accepted by the parties may attain the status of contractual rights and duties, particularly where they are not at variance with any written provision negotiated into the contract by the parties and where they are . . . long standing and were not changed during contract negotiations.”^[30]  “Unquestionably, the custom and past practice of the parties constitutes one of the most significant evidentiary considerations in labor‑management arbitration,”^[31] and accordingly can be used “to fill in the contract’s gaps.”^[32]  

The Arbitrator’s award adheres to these principles.  The majority’s decision disregards them.  Accordingly, I defer to the Arbitrator’s rational and well‑reasoned interpretation of the parties’ agreement and would find that the award draws its essence from the agreement.  I dissent from the majority’s decision to do otherwise.

 

 

 

 

 

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