FLRA Reverts to Prior Doctrine on Interlocutory Appeals of Arbitration Awards

by Lise Gelernter

On December 8, 2022, the United States Federal Labor Relations Authority[1] (FLRA) rolled back a short-lived Trump-era interlocutory appeal doctrine concerning arbitration proceedings, and mostly restored the doctrine that the FLRA had established previously over the course of 28 years.   U.S. Department of the Army and National Federation of Federal Employees, 73 FLRA No. 70, 73 FLRA 356 (12/8/22), https://www.flra.gov/decisions/v73/73-70.html (Dept. of the Army).

The FLRA does not ordinarily hear appeals from ongoing arbitration proceedings because of the federal policy supporting the use of arbitration to resolve disputes.  Parties usually cannot file exceptions (appeals of arbitrators’ awards) until the arbitrator makes a final decision on the merits of a case.  However, between 1990 and 2018, the FLRA had issued a series of decisions developing a doctrine that allowed interlocutory appeals (meaning appeals before a final award is issued) in very limited circumstances. In the December 8, 2022 Dept. of the Army decision, the FLRA described the operation of the doctrine in this manner:

“[S]tarting with IRS I [a 1990 decision] the Authority asked the same basic, general questions: Is there some jurisdictional bar (whether actual, plausible, or merely alleged) that precluded the arbitrator from hearing the grievance, and would resolving the interlocutory exceptions advance the case’s ultimate disposition?”

In assessing those questions, the Authority would find a plausible jurisdictional defect only when the exceptions challenged the arbitrator’s jurisdiction as a matter of law. This was distinct from cases where a party alleged that the arbitrator’s award was contrary to law, which did not warrant interlocutory review. It also was distinct from cases where a party relied on contractual limitations to an arbitrator’s jurisdiction – which also did not warrant interlocutory review.

73 FLRA at 357-58.

The FLRA changed that doctrine in 2018 during the Trump administration when it issued a decision that expanded the allowable circumstances for interlocutory appeals from arbitrators’ decisions. U.S. Dept. of Treasury, IRS and National Treasury Employees’ Union, 70 FLRA No. 161, 70 FLRA 806 (2018) (IRS II).  The Authority held:

“we clarify that any exception which advances the ultimate disposition of a case—by obviating the need for further arbitral proceedings—presents an extraordinary circumstance which warrants our review.  In other words, we will no longer turn a blind eye to exceptions, which if decided, could obviate the need for further arbitration.” 70 FLRA at 808.

In the 2018 IRS II case, the FLRA applied the new doctrine and found that an arbitrator’s decision finding that a late-filed grievance was arbitrable did not draw its essence from the contract and vacated the arbitrator’s non-final award.  Under the pre-2018 doctrine, the FLRA would not have considered an interlocutory appeal under those circumstances because the non-final award had not resolved the substantive merits of the dispute.

The FLRA reverted to the IRS I 1990 interlocutory appeal doctrine in the December 8, 2022 Dept. of the Army decision.  The majority opinion stated that the IRS II 2018 decision not only made the arbitration and FLRA litigation processes less efficient, it varied from the private sector doctrine on interlocutory appeals from arbitration decisions.  Because the FLRA plays the same role in the federal sector as district courts do in the private sector for interlocutory appeals of arbitration awards, the doctrine arising from the IRS I 1990 decision had closely tracked private sector doctrine on the issue. The 2022 Dept. of the Army opinion noted that “the Authority recently has been admonished not to depart from private-sector arbitration principles, at least where the [Federal Service Labor-Management Relations] Statute [5 U.S.C. § 7101 et seq.] does not provide a basis for doing so.”  73 FLRA at 358-359.[2]  Private sector doctrine on a district court’s review of non-final arbitration awards is very limited, the majority explained:

“In the private sector, the ‘complete-arbitration rule’ prohibits district courts from hearing piecemeal appeals from arbitration awards. As particularly relevant to the IRS II test, such appeals are precluded even when hearing them could resolve the entire case and avoid further proceedings. Further, the complete-arbitration rule bars interlocutory appeals of arbitrators’ arbitrability determinations where the arbitrators have not yet resolved the merits of the issues presented, and even where a party is alleging that the arbitrator’s non-final award is unlawful.

As a general matter, the Statute gives no indication that the Authority should depart from these well-established private-sector principles.” 73 FLRA at 360-61.

However, because the federal sector differs from the private sector in that “certain matters are excluded, as a matter of law, from negotiated grievance procedures and grievance arbitration,” the majority found it was

“appropriate to carve out a similar exception in the context of interlocutory appeals and continue to allow interlocutory appeals that demonstrate legal bars to an arbitrator’s jurisdiction. If a dispute arises whether an arbitrator is legally barred from hearing a grievance in the first place – an issue that the Authority reviews de novo, without deference to the arbitrator’s legal interpretation – it is appropriate for the Authority to intervene, when asked, on an interlocutory basis to resolve that dispute.”

The FLRA stated it will apply the exception very narrowly, however:

First, we emphasize that this exception involves only bars to the arbitrator’s authority to exercise jurisdiction over a grievance in the first place – not situations where, for example, an arbitrator is asked to find a violation, or to grant a remedy, that would conflict with governing law. The latter situations will not warrant interlocutory review.

Second, we will apply this exception only where an excepting party has demonstrated that the arbitrator lacks jurisdiction as a matter of law. It will not be sufficient to merely allege, or even present a “plausible” claim, regarding legal bars to jurisdiction. . . .

Third – consistent with both the Authority’s extant precedent and the private-sector principles above – we will continue to grant interlocutory review only if doing so would bring an end to the entire dispute that the parties submitted to arbitration.

In sum, the Authority will now consider interlocutory exceptions only when the excepting party demonstrates both that the arbitrator lacks jurisdiction as a matter of law and that resolving the exceptions would bring an end to the entire dispute that the parties submitted to arbitration. Accordingly, we hereby reverse IRS II and any other Authority decisions to the extent that they conflict with this standard. 73 FLRA at 361-62.

The Authority then applied its re-adopted standard to the case before it in which the Department of the Army sought to vacate an arbitrator’s interim award determining that a grievance was procedurally arbitrable.  Because the Agency did not argue that the arbitrator lacked jurisdiction as a matter of law, but was simply arguing that the arbitrator did not interpret the collective bargaining agreement correctly, the FLRA denied the appeal because the Agency did not claim that the arbitrator lacked the jurisdiction to make that decision.

The FLRA’s restoration and refinement of its previous interlocutory appeal doctrine returns unions and management to a well-tested set of principles.  It also brings the Authority into line with how similar appeals are handled for private sector arbitration proceedings.  In addition, the FLRA claims that returning to the prior doctrine could boost the efficiency of arbitration and FLRA proceedings.  73 FLRA at 360.

[1] The FLRA has regulatory authority over labor-management disputes between United States federal employee unions and their agency employers.

[2] The majority was referring to a decision from the United States Circuit Court of Appeals for the District of Columbia, Nat’l Weather Serv. Emps. Org. v. FLRA, 966 F.3d 875, 881 (D.C. Cir. 2020).