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FEDERAL MEDIATION AND CONCILIATION SERVICE

In the Matter of the Arbitration between

FMCS No. 04-07090 Grievant Helen Gail B. Hart

NATIONAL TREASURY EMPLOYEES UNION CHAPTER 276, Union,

and

FEDERAL DEPOSIT INSURANCE CORPORATION, Agency.

/

OPINION OF THE ARBITRATOR

July 22, 2005

After a Hearing Held March 9, 2005 At the Regional Office of the FDIC in Atlanta, Georgia

For the Union:

Timothy C. Welsh Assistant Counsel National Treasury Employees Union 2801 Buford Highway, Suite 430 Atlanta, GA 30329

For the Agency:

David A. Stockwell Counsel/Corporate Affairs Section Federal Deposit Insurance Corporation 10 Tenth Street, 8 th Floor Atlanta, GA 30309

I. THE CORPORATE SUCCESS AWARD (“CSA”) PROGRAM

As part of contract negotiations during 2002, the National Treasury

Employees Union (“NTEU” or “Union”) and the Federal Deposit Insurance

Corporation (“FDIC”, “Agency”, or “Employer”) agreed to establish a

Corporate Success Award program. The Compensation Agreement Between

FDIC And NTEU For The Years 2003-2005 (JX 2) provides in pertinent

part:

A Corporate Success Award (CSA) will be established which

provides that an additional 3.0 percent increase will be made in basic

pay for those employees recognized as top contributors. The

Chairman [of the FDIC’s Board of Directors] has sole discretion to set

the percentage of bargaining unit employees who will be recognized

as top contributors under the CSA program. However, the percentage of bargaining unit employees to receive the CSA shall be no less than 33 1/3 percent. These awards shall be made on an annual basis.

In implementation of their agreement, on March 13, 2003, the parties

signed a Memorandum Of Understanding Between FDIC & NTEU (JX 3 or

“MOU”), which provides in pertinent part:

1. CSAs will be distributed to employees in a fair and equitable manner, and in accordance with the terms of this MOU and FDIC Circular 2420.1.

2. The EMPLOYER agrees to provide data to NTEU in an electronic spreadsheet on bargaining unit Corporate Success Award (CSA) recipients in 2004 and 2005 (based on contributions made in 2003 and 2004, respectively) that will include the following fields: division/office, position title, pay plan, job series, grade, region, duty station, gender, race/national origin and age (date of birth).

3. If the data for one or more groups included in the fields identified in #2, above, indicates a rate of distribution that is less than 80% of the distribution rate for the group with the highest rate in that field, the FDIC and NTEU will conduct a joint review of the approved awards to determine if these results can be justified by a legitimate business reason or explained by the size(s) of the group(s) being compared. However, this joint review process does not waive the right of the Union or any employee to seek remedial relief in any appropriate legal forum.

4. Any grievances filed over the failure to receive a CSA will be filed under an expedited grievance procedure, under which the parties agree to waive Step One of the negotiated grievance procedure.

The parties negotiated a new Chapter 11 (JX 4) to FDIC Circular

2420.1, FDIC Rewards and Recognition Program (JX 24), to describe the

CSA program. TR 21. The criteria for the CSA were set forth in Section 11-

4:

The criteria below are intended to be achievable by any eligible employee in any position. Nominations for the award effective in 2004 must be based on contributions made between January 1, 2003 and December 31, 2003. Nominations effective in 2005 must be based on contributions made between January 1, 2004 and October 31, 2004.

Nominations will be evaluated based on one or more of the following criteria. These are the only criteria permitted under the Corporate Success Award Program. Nominations will provide specific statements of the contributions by the employee that meet the identified criteria. Meeting one or more of these criteria does not entitle employees to be nominated to receive the Corporate Success Award.

A. Business

initiative, creativity, and innovation to produce results that reflect

Consistently

Results:

displays

a

high

level

of

important contributions to the Corporation and/or its organizational

components.

B. Competency:

competency within his/her position, and is frequently relied upon by others for advice, assistance, and/or judgment that reflect important contributions to the Corporation and/or its organizational components.

Demonstrates

an

exceptional

degree

of

C. Working Relationships: Builds extremely productive working

relationships with co-workers, other Divisions/Offices, or other public

or private sector agencies based on mutual respect that reflect

important contributions to the Corporation and/or its organizational

components.

D. Learning and Development: Takes an active part in

developing personal skills and competencies and applies newly acquired skills and competencies that reflect important contributions

to the Corporation and/or its organizational components.

The parties apparently had high expectations for the new program,

even

anticipating

that

it

might

replace

the

cumbersome

performance

evaluation system then in use. “Corporate Success Award (CSA) Questions

and Answers” (JX 20), Q30. Unfortunately, what was perceived as a major

employee

incentive

program

has

turned

out

to

be

an

administrative

nightmare, spawning over 100 arbitral disputes nationwide. 1 At least one of

the reasons for the program’s hotly contested results is that receipt of a CSA

increases

an

employee’s

dependent upon it.

base

pay

and

hence

all

employee

benefits

1 “A total of 160 CSA grievances were invoked for arbitration by NTEU. Although some of these have been withdrawn, the aggregate number of cases nation-wide is significant.” Agency Brief @ 24, fn 30.

II. THE FDIC’S ORGANIZATIONAL STRUCTURE

“The

FDIC

is

a

government

corporation

and

the

independent

insurance agency created by Congress in 1933 to maintain stability and

public confidence in the nation’s banking system. The FDIC provides

deposit insurance for virtually all United States banks and savings and loan

associations, serves as the primary regulator of state chartered banks that are

not members of the Federal Reserve System, and arranges the resolution of

failed banks and savings and loans whose deposits are insured by the FDIC.

See 12 U.S.C. §§ 1815, 1820, and 1821.” Agency Brief @ 2 & fn 1.

To understand the issues in this arbitration, an overview of the

Agency’s

organization is

required.

The FDIC

is

divided into various

divisions and offices, such as the Division of Insurance and Research and the

Office of Inspector General. The division with which this arbitration is

concerned is the Division of Supervision and Consumer Protection (“DSC”

or simply “Division”). The director of the DSC is Michael J. Zamorski

(“DSC Director”), who is stationed in Washington, DC.

The DSC is divided into 8 regions nationally. The region with which

this arbitration is concerned is the Atlanta Region (“Region”), which

consists of 7 states, West Virginia, Virginia, North Carolina, South Carolina,

Georgia, Alabama, and Florida. The regional director is Mark S. Schmidt

(“Regional Director”). The Region in turn is divided into 7 territories, each

of which is overseen by a field supervisor. TR 55, 70. There are 13 field

offices in the Region. See generally, Organization Chart of Atlanta Region

(JX 7), and DSC: Atlanta Risk Management Territory Map (JX 8).

The territory with which this arbitration is concerned is known as the

“Charlotte Territory”, because its principal office is located in Charlotte,

NC. TR 29-30. The Charlotte Territory is comprised of South Carolina and

western North Carolina. Grievant works out of the Columbia, SC office in

the Charlotte Territory, where she is employed as a bank examiner IT

[Information Technology], grade 14. Employees in her position are referred

to as “IT examiners”.

Additional organizational structure will be introduced as required to

explain the events at issue.

III. THE CSA PROCEDURES

The procedures for the CSA program are set forth in Chapter 11 (JX

4) of Circular 2420.1 (JX 24). Those at issue are found in Section 11-5.A-D:

A. Supervisors shall conduct a group meeting with employees at

least annually, to explain the Corporate Success Award criteria and to

discuss how the criteria apply to the work of their organization and

unit.

B.

Supervisors shall nominate their top contributors by preparing

form FDIC 2420/21, Corporate Success Award Nomination.

Forms

must be submitted to the designated reviewing official within 15

calendar days after the end of the consideration cycle. Employees may provide input to the appropriate supervisors for other employees to be considered for a Corporate Success Award.

C. Reviewing Officials, as designated in the Division/Office

delegations of authority, will ensure the consistent application of Corporate Success Award criteria and the fair and equitable treatment of employees. The reviewing official shall sign the nomination form and forward it to the Division/Office Director within 30 calendar days after the end of the consideration cycle.

D. Each Division/Office Director, or his/her designee, will serve as

the approving official for all Corporate Success Awards within their

Division/Office. Directors are responsible for ensuring that the percentage of bargaining unit and non-bargaining unit employees recognized under the Corporate Success Award program equals the percentage identified by the Chairman. The Director, or his/her designee, will sign the nomination forms and forward them to their AO [Administrative Officer] for coordination with DOA [Division of Administration], HRB [Human Resources Branch].

On November 17, 2003, the DSC Director issued the following

memorandum to deputy directors, regional directors and associate directors,

Re: Procedures for Processing Corporate Success Awards (JX 13):

In order to ensure a fair and equitable distribution of the CSA’s within

the division, DSC will implement the following procedures for nominating employees.

Regional Office CSA Nomination Procedures

1. The supervisor 2 prepares written CSA nominations for eligible employees.

2. The supervisor prioritizes and assigns a numerical ranking for

2 Here “supervisor” means “field supervisor”. TR 70, 71. That meaning is used throughout this opinion.

all nominated employees within their span of control.

3.

The supervisor submits the CSA nomination forms with numerical rankings to the Regional Office Assistant Regional Director, Administration (RO ARD-Admin). …

4.

The RO ARD-Admin consolidates and prepares the CSA nomination forms for evaluation by a first-level review panel consisting of the Assistant Regional Directors and the Deputy Regional Director-Compliance.

5.

The first-level review panel evaluates each CSA recommendation and prioritizes the top one-third by assigning a numerical ranking.

6.

The first-level review panel forwards their numerically ranked CSA recommendations to the second-level review panel consisting of the Deputy Regional Directors and Area Directors.

7.

The second-level review panel evaluates and/or re-ranks each CSA recommendation and submits to the Regional Director for approval.

8.

The Regional Director reviews the CSA recommendations, signs the appropriate justification forms, and submits the final Regional CSA recommendations to the Division Director.

… .

In a memorandum distributed to FDIC Employees Corporate on

November 28, 2003 (JX 16), the Chairman “determined for 2004 that 33 1/3

percent of eligible bargaining unit employees will receive the Corporate

Success Award, based on their contributions to the FDIC’s objectives.” The

FDIC’s objectives are spelled out on the last page of JX 20, under “Strategic

Objectives” and “Corporate Initiatives”. TR 36, 66-67, 254.

It is important to note that the Union has been kept well informed of

program developments (see, for example, JX 11; TR 63) and has raised no

objection to the procedures specified in the DSC Director’s memo (JX 13).

For these reasons, the arbitrator considers the documents controlling the

CSA program to be the Compensation Agreement (JX 2), the MOU (JX 3),

Chapter 11 (JX 4) of Circular 2420.1, the DSC Director’s memo (JX 13),

the Chairman’s memo (JX 16), and the FDIC’s objectives and initiatives (JX

20).

There are 7

IV. THE GRIEVANCE

IT field examiners in the Atlanta Region and 2 IT

specialists in the Atlanta office itself. TR 240-241. Of the 7 field examiners,

4 are grade 14, including Grievant, and the other 3 are grade 13. Grievant’s

field supervisor nominated her (UX 2) and another grade 14 examiner in the

Charlotte office (JX 22D). The supervisor indicated that these two nominees

met

all

4

CSA

criteria

(Business

Results,

Competency,

Working

Relationships, Learning and Development).

Of the 7 field examiners, one grade 13 and three grade 14s received

CSAs, including the 14 from Charlotte. TR 255. Field supervisors judged

that the grade-13 winner (JX 22B) and 2 of the grade-14 winners (JXs

22A&C) satisfied 3 of the 4 criteria. Neither Atlanta IT specialist received a

CSA. TR 255.

When Grievant learned that she had not been selected for a CSA, she

filed a grievance on March 15, 2004 (JX 6A), in which she stated in ¶ 6:

Grievant and the Union contend that Grievant’s contributions to the FDIC during 2003 warranted her receipt of a CSA in 2004 for her work in 2003. Accordingly, FDIC’s failure to provide Grievant with a CSA in 2004 for Grievant’s work in 2003 constitutes a breach of Circular 2420.1, Article 18 of the Nationwide Agreement between the Union and the FDIC and of Article II Part C of the 2003-2005 Compensation Agreement between the FDIC and the Union.

Grievant sought a CSA with interest retroactive to January 1, 2004.

Per the MOU, ¶ 4, the first step in the grievance procedure was

waived, and parties began at step two. The Agency’s step-two decision was

delivered on March 29, 2004 (JX 6B), by the acting deputy regional director,

who wrote in pertinent part:

You have not shown any specific violation of Circular 2420.1 (Rewards and Recognition), Chapter 11. At no point during the grievance process have you provided any evidence that you should have received a CSA because your contributions were more significant than another bargaining unit CSA recipient. I specifically asked you about this during your oral presentation. The CSA is a comparative process. The Division was responsible for comparing the value of contributions for each DSC employee.

Still dissatisfied, Grievant proceeded to step three on April 9, 2004

(JX 6C). Again she was rebuffed, this time by the associate director, who, in

a memorandum dated May 17, 2004 (JX 6D), stated in pertinent part:

At Step Three you provided more detail about your contributions and accomplishments, which I appreciate having received. As you know, the CSA is a comparative process. However, during the Step Three meeting, you declined to compare yourself to another award recipient, stating that you should receive a CSA based on your performance during 2003. To the extent that you refer to your 2002-2003 performance, the CSA was based upon a contribution of calendar year 2003 only.

You did not provide any information at Step Three about how your contributions were in the top one-third of eligible employees in your pool. While your contributions to the FDIC were commendable, you were not considered to be one of the top contributors among the other DSC employees during the calendar year 2003.

Undeterred, Grievant moved on to the fourth and final step in the

grievance procedure on June 9, 2004 (JX 6E). The final Agency rebuff was

delivered that same day, by the director of the transformation office (JX 6F),

who reiterated:

You have provided substantial detail about your contributions and accomplishments, which we appreciate having received. However, as has been explained to you in the Step Two and Step Three decisions, the CSA is a comparative process. It is not enough that you meet one of the criteria, but you must also be in the top one-third of eligible employees in your pool. You have failed to provide any information to us about how your contributions are in the top one-third of eligible employees. We do not find any additional information that would warrant changing the Step Three deciding official’s decision. Your contributions to the FDIC mission were commendable, however, you were not considered to be one of the top contributors among other DSC employees during the calendar year 2003. Accordingly, your grievance and requested remedy is denied.

By letter dated July 7, 2004 (JX 6G), the Union demanded arbitration

in this and 3 other cases. This arbitrator was selected from a list prepared by

the Federal Mediation and Conciliation Service. A hearing was scheduled

for March 9, 2005, in Atlanta, and proceeded as scheduled. However, at the

request of the parties, briefs were not filed until July 8, 2005.

V. PRE-HEARING DISCOVERY

The Union filed with the arbitrator a motion to compel, dated

February 23, 2005, requesting that the Agency be required to turn over, in

advance of the hearing, “copies of all nomination forms for all Corporate

Success Award recipients of the Atlanta Region in 2004.” The Agency

responded in letter format on February 28, 2005, and the Union replied

briefly in a letter dated March 1, 2005. The Union’s discovery motion was

one of at least 7 such requests filed in various CSA arbitration proceedings

around the country.

After

the

arbitrator

had

expended

considerable

time

and

effort

considering the Union’s motion, together with supporting documentation

from other arbitrations, the parties asked the arbitrator to halt work on the

motion, as they supposedly had reached a resolution. However, at the

hearing on March 9, 2005, they still had not resolved their disagreement

over Grievant’s own nomination form (UX 2), so that the arbitrator had to

make a ruling after all. TR 312-314. Thus, it is appropriate to summarize

results of the arbitrator’s efforts on the Union’s motion, as he relied on them

at the hearing.

First,

it

should

be

noted

that

the

nomination

forms

are

not

confidential, at least not those of the CSA winners. Indeed, the associate

director of human resources in Washington, who was in charge of the day-

to-day operations of the CSA program (TR 35), reminded FDIC supervisors,

in a memorandum dated January 15, 2004 (JX 17), that they “should provide

each awardee with a copy of his/her approved nomination form.” He

reiterated that instruction in another memo dated February 17, 2004 (JX 19),

and a question and answer to that effect was posted on the Agency web site

(JX 20, Q20). Thus, the Union was not seeking anything confidential, at

least as to the winners’ forms.

In other arbitrations, some arbitrators ordered production on the basis

of 5 USC § 7114(b)(4):

The duty of an agency and an exclusive representative to negotiate in good faith under subsection (a) of this section shall include the obligation - … in the case of an agency, to furnish to the exclusive representative involved, or its authorized representative, upon request and, to the extent not prohibited by law, data –

(A) which is normally maintained by the agency in the regular

course of business;

(B) which is reasonably available and necessary for full and

proper discussion, understanding, and negotiation of subjects within the scope of collective bargaining; and

(C)

which

does

not

constitute

guidance,

advice,

counsel,

or training provided for management officials or supervisors, relating to collective bargaining … .

While the statute certainly could be read as covering the discovery

issue, it contains its own enforcement mechanism, which this arbitrator

found too cumbersome for arbitration, especially expedited arbitration.

Elkouri & Elkouri, How Arbitration Works (ABA/BNA 6 th ed 2003) @ 352.

In point of fact, at least 3 unfair labor practice (“ULP”) cases were pending

before the Federal Labor Relations Authority (“FLRA”) at the time, in

which the Union was seeking to compel the FDIC to turn over discovery

material.

The arbitrator saw no unfairness to the FDIC in letting the Union

pursue discovery simultaneously in arbitration and before the FLRA. Indeed,

the FDIC itself seems to have anticipated such a tactic, because in a memo

dated February 17, 2004 (JX 19), the head of day-to-day CSA program

operations reminded FDIC supervisors that employees “may also make

information

requests

through

several

different

venues

for

related

information.” The comparable tactic of simultaneously seeking information

under the Freedom of Information Act, 5 USC § 552, and through a

discovery process is well known. Hill & Sinicropi, Evidence in Arbitration

(BNA 2 nd ed 1987) @ 297-301.

In the case before this arbitrator, it appears that the Agency, in Article

48, Section 4.C of the collective bargaining agreement (JX 1), may have

agreed to disclose more information than it otherwise might be obligated to

disclose under the statute standing alone. Thus, the result in arbitration under

the collective bargaining agreement may be very different from the results in

the various ULP proceedings before the FLRA, and, in fact, the ULP results

may have little or no bearing on arbitration.

This arbitrator also rejected the notion that the Federal Arbitration Act

(“FAA”), in 9 USC § 7, might support discovery, as the FAA does not apply

to federal sector arbitration. Elkouri & Elkouri, supra, @ 1297. A fortiori,

the arbitrator rejected the related notion that a state arbitration statute could

govern relations between the federal government and its employees. Const,

Art VI, ¶ 2 (Supremacy Clause).

The arbitrator prefers to ground his ruling on the language of the

collective bargaining agreement (JX 1), as did the arbitrators in the better

reasoned cases between theses parties:

The arbitrator shall have the obligation of assuring that all necessary facts and considerations are brought before him or her by the representatives of the Parties. Article 48, Section 4.C.

This way the arbitrator’s ruling falls within the pale of the Steelworkers

Trilogy, by drawing its essence from the contract itself. Steelworkers v

American Mfg Co, 363 US 564 (1960); Steelworkers v Warrior & Gulf

Navigation Co, 363 US 574 (1960); Steelworkers v Enterprise Wheel & Car

Corp, 363 US 593 (1960).

Finally, the arbitrator notes that the FLRA seems to have answered the

question about discovery affirmatively in Dept of Health and Human

Services,

SSA

and

AFGE,

AFL-CIO,

27

FLRA

706

(1987).

FDIC

supervisors repeatedly were directed to preserve all CSA documentation in

case of grievances (JXs 12 & 19), and Grievant’s nomination form is clearly

relevant to her claim of having been improperly denied a CSA. The

arbitrator ordered it produced at the hearing, and the Agency did so. UX 2;

TR 314.

VI. THE PARTIES’ BRIEFS

VI.A. THE UNION’S BRIEF

The parties were unable to agree upon the issue presented. The Union

states it thusly:

WHETHER THE AGENCY APPLIED THE CORPORATE SUCCESS AWARD PROGRAM CRITERIA IN A FAIR, EQUITABLE AND CONSISTENT MANNER TO THE GRIEVANT. Union Brief @ 1.

Highlights of the Union’s position are excerpted from its brief:

[W]hile nomination forms were not segregated by job category, office or grade when reviewed, the panel also sought to insure that each field

office and territory would be represented, TR 91 … . Union Brief @

5-6.

It is apparent from the testimony of those responsible for administering the Program in the Atlanta Region awards did not necessarily go to the “top contributors” in the Agency as the Program was designed and promoted to do. Union Brief @ 9.

It is clear that the ARD [first-level review] panel’s selection and ranking process was not so much a search for the Agency-wide “top contributors” as a selection of top contributors by office, job category and grade. Union Brief @ 10.

The Union urges that the “preponderance of the evidence” standard

should apply to this arbitration (Union Brief @ 8-9) and requests that

Grievant be awarded a CSA (Union Brief @ 14).

VI.B. THE AGENCY’S BRIEF

Throughout

its

brief,

the

Agency repeatedly urges

an

abuse of

discretion standard of review, citing such authorities as Shaller v United

States, 202 Ct Cl 571 (1973). Agency Brief @ 9. Indeed, it states the issue as

follows:

Did the FDIC abuse its discretion when it did not give a Corporate Success Award to Grievant in 2004 based on her contributions for 2003, in violation of Chapter 11 of Circular 2420.1, or Section 1 of the Memorandum of Understanding? If so, what is the appropriate remedy? Agency Brief @ 2.

Highlights of the Agency’s position are excerpted from its brief:

Even an employee who has met several criteria will receive a CSA only upon being recognized as a top contributor in comparison with a

specified percentage of his or her co-workers. emphasis supplied.

Agency Brief @ 4;

The Reviewing Official’s role was to “ensure the consistent application of Corporate Success Award criteria and the fair and equitable treatment of employees” by comparing the relative contributions of all of the nominees submitted to him. Agency Brief @ 5; emphasis supplied.

As described above, the CSA program is comparative: employees in the same Division or Office are compared to each other, and the contributions of one employee are measured relative to the contributions of others. Agency Brief @ 13; emphasis supplied.

The next step in the analysis is to compare those who contributed to determine which individuals were in the top third of all employees. Agency Brief @ 14; emphasis supplied.

At best, the Union has established only that Grievant’s contributions were comparable or similar. Agency Brief @ 16.

The Union did not demonstrate in any way that the FDIC failed to abide by the CSA program as designed. Agency Brief @ 16; emphasis supplied.

So long as these Agency-wide procedures were followed, each Division was able to supplement these with its own procedures that best fit its own organization. Agency Brief @ 21; emphasis supplied.

This process included consideration of Grievant’s contributions by:

a supervisory examiner and field supervisor, who would be in the best position to know what contributions the individual had made;

… Each of the reviewing individuals were in the best position to compare Grievant’s contributions with the contributions made by others within the Division to ensure that the standards were consistently applied.

… . Agency Brief @ 21-22; emphasis supplied.

If the Arbitrator determines that the Agency did not properly consider the contributions of the Grievant, or that the process was flawed in some critical way, then the appropriate remedy would be to order the Agency to reconsider the contributions of the Grievant as they compare to the other employees. Agency Brief @ 23; emphasis supplied.

The Agency’s suggestion that, should Grievant be awarded a CSA,

then the arbitrator must strip some recipient of an award, is so flagrantly

violative of due process and equal protection as to be summarily dismissed.

Agency Brief @ 23-24. See Arbitrator David Vaughn’s rejection of that

outrageous notion in the Grohal case below.

VI.C. THE GROHAL ARBITRATION

Both parties cite the related case of FDIC and NTEU, Chapter 207,

FMCS No. 04-50042 (Vaughn Arb 2005) (“Grohal”), an opinion which this

arbitrator endorses. In Grohal, the Assistant Director of Planning and

Resource Management for the Division of Insurance and Research “testified

that CSA would be a pay-for-performance system that would reward those

employees who make contributions that exceed their normal duties.” Slip

Opinion @ 7. Arbitrator Vaughn noted that “[t]he limitations on submitted

justification notwithstanding, there is no prohibition on managers utilizing

their broader knowledge of nominee’s relevant performance.” Id. @ 10.

On the issue of pre-hearing discovery, Arbitrator Vaughn explained:

The CSA process is, as indicated, comparative; only the top one-third of employees, compared to other employees, can receive a CSA. In order to enable at least limited comparison, while preserving the confidentiality of information about CSA recipients, the Parties have developed a system under which nomination forms for other employees, redacted of names and some identifying information, are made available to the Union for review and for possible use by either Party in the CSA grievance/arbitration process. The actual identity of comparators might or might not be known to Grievant and the Union, depending on job title and/or description of accomplishments. Id. @

15-16.

In weighing accomplishments within and without an employee’s

normal duties, Arbitrator Vaughn concluded:

I have reviewed the language of the negotiated criteria as well as the

joint documents; the criteria do not limit or differentiate between an employee’s performance of existing duties and of duties beyond the scope of his/her position. They certainly do not exclude consideration of performance of existing duties. To the contrary, the “competency” criterion requires “demonstration of an exceptional degree of competency within his/her position.”; and the first of the talking points describes a search for exceptional efforts “both within and outside of the scope of the job.” To assume that particularly effective performance of existing duties cannot make an employee a high achiever is beyond logic. Id. @ 23-24.

He further observed:

I note, in any event, that at the professional level, the dividing line between what is expected in the normal course of an employee’s duties and what is “above and beyond” is amorphous and subjective. Id. @ 24.

In ruling that the grievant’s case had been mishandled, Arbitrator

Vaughn found that management had taken into consideration factors outside

of the negotiated criteria:

It also appears that Managers evaluating Grievant’s nomination relied “heavily” on Grievant’s perceived “inflexibility” in his relations with other people and on the impact of that inflexibility on Management’s ability to assign Grievant work. I have searched the negotiated criteria for the place where that ascribed trait fits into the areas for which Grievant was nominated (“business results” and “competency”), but find none. … Moreover, the examples of alleged inflexibility relied on by the Agency clearly related to times prior to 2003. Id. @ 24.

Arbitrator Vaughn fashioned the following remedy:

The Agency argues that there is no way to determine whether Grievant would have received a CSA or not, and so maintains that the only appropriate remedy if a violation were found would be to remand the dispute for a reassessment of Grievant’s performance. I find the Agency to be correct in this regard. There is no way to ascertain whether, at the time and in comparison with other employees, Grievant would have received a CSA. A remand and reassessment of Grievant’s entitlement to a CSA is the appropriate remedy.

The Agency argues, further, that the Director’s decision fixed the percentage (and therefore the number) of CSA recipients and the amount of money available to pay CSA; it urges that any remedy in favor of Grievant must be accompanied by withdrawal of an award from another CSA recipient or a pro rata reduction in the amount of monies awarded to each CSA recipient. I assume that this argument is presented to discourage any award in an employee’s favor, as the realities of the workplace would render such a result an accounting nightmare, would create enormous hate and discontent requiring the blacking out of the name of the Agency attorney who would succeed with such an argument in order to reduce exposure to retaliation by irate employees.

No such exercises are necessary. Before me is the question whether the Agency violated the March 13, 2003 MOU and the 2003-2005 Compensation Agreement in its action toward Grievant, and not whether some other employee(s) may have been disadvantaged as a result. I have neither authority nor basis to withdraw a CSA from an employee who has received one or to reduce the monies awarded to any employee, let alone all CSA recipients, even if I were to assume

Grievant’s success in his reassessment. The question to be answered is whether Grievant should have received a CSA and what should be the remedy with respect to him as a result of the Agency’s violation. Id. @ 25-26.

VII. THE FLAWED REVIEW PROCESS

VII.A. THE FIRST-LEVEL REVIEW PANEL

Per the DSC Director’s memo of November 17, 2003 (JX 13),

completed nomination forms were sent to the assistant regional director of

administration, who, in Grievant’s case, is Marion G. Cook, himself a

member of the first-level review panel. Mr. Cook copied the forms and

distributed copies among panel members. TR 58-59, 77. In addition to Mr.

Cook, the other members of the 5-person panel were James C. Watkins,

Kelly M. Smith, and Gail Simons-Poole, all assistant regional directors, and

Michael J. Dean, deputy regional director of compliance and administration.

JX 7; TR 77-78, 301.

VII.B. THE PROCEDURE EMPLOYED BY THE FIRST-LEVEL REVIEW PANEL

The panel met for 3½ days. TR 78-79. Members read the forms for

half a day before beginning discussions. TR 101, 250. Not every nomination

was discussed, as there was unanimity about some of them. No nominee was

excluded because of a supervisor’s report. TR 89. No one was considered for

an award who was not nominated by his supervisor. TR 90-91.

Of the 240 eligible employees, field supervisors nominated 40%, or a

total of 96. TR 101. The usual range was 35-40%. TR 68. Each field

supervisor ranked his nominees, by comparing them to other employees in

their office or territory. TR 88, 101. Each employee was compared to his

peers in his work unit. TR 90.

Since panel members understood that only 1/3 rd of the 240 eligible, or

80 employees, could receive awards, they set about to whittle down the list.

TR 83-84, 104. They looked for clear statements of contributions on the

nomination forms. TR 85. The significance of employee contributions

varied. TR 87. Some employees have specialties or unique duties. TR 90.

Members reviewed the field supervisors’ rankings, and disagreed with some

of them. TR 80-81, 90, 104.

Panel members strove for consistency within the Region. TR 53, 249-

250. Each field office and territory was to be represented. TR 91. They

sought representation among grade levels and occupations. TR 98-99. There

was no guidance as to any strict percentage for any field office.

They

arrived at a “top third” and then reviewed the other forms a second time. TR

84.

VII.C. HIGHER-LEVEL REVIEWS

The first-level panel forwarded 80 names, together with 4 alternates,

to the second-level review panel, which made 2 changes. TR 92-93. From

there the names were sent to the Regional Director, who made no changes.

TR 97. Neither did the Division Director. TR 310.

VII.D. FOCUS ON GRIEVANT

Grievant was compared to the 9 IT examiners and specialists in the

Region, 7 of whom are in the field. TR 60, 240. All four of the grade 14s,

including Grievant, were nominated, and 4 of the 7 field examiners, or 57%,

received CSAs, including one in Charlotte. TR 255, 311. The panel was

concerned

that

the

number

of

IT

nominations

and

awards

was

disproportionate. TR 91, 305, 307, 308-309. Members voted unanimously

not to recommend Grievant for an award. TR 312, 333. Altogether, 9 Union

employees from the Charlotte Territory received CSAs. TR 95-96.

VII.E. THE FIRST-LEVEL PANEL’S MISTAKE OF LAW

While

first-level

panel

members

are

to

be

commended

for

the

conscientiousness with which they undertook their task, it seems clear that

they proceeded under a mistake as to the panel’s role in achieving a

distribution of awards among Region employees. Mr. Cook testified as

follows:

Q. Okay. Now, how did the number of Field Offices and territories in

the Atlanta Region factor in to the overall decision?

A. We were looking to make sure that each Field Office and territory

Such

would be represented.

Q. Uh-huh.

A. In the recipients. TR 91.

a selection strategy favors those employees

performing offices and territories.

in small or under-

Mr. Cook further explained the panel’s attempts to ensure a wide

distribution of awards:

Q. … [Panel members] didn’t segregate [nominees] by job title and,

uh, grade in their discussions, did they?

A. There was no formal segregation in terms of how you describe but

we did have Summary Data Information that told us how many Examiners from each office there were, how many Compliance Examiners there were by office, by grade. We did have that information available.

Q.

When you were doing the review discussions, right?

A.

Yes.

Q.

And what was the purpose of having that kind of data available to

you?

A.

We were seeking to have representation amongst the various

disciplines, Compliances, Management, the various grade levels. TR

98-99.

Again, the strategy favors employees in categories with few employees.

Panel members were especially concerned over what they perceived to

be an over-representation by IT employees. TR 91, 305. Panel member

Watkins expressed the concern thusly:

A. … then we looked at some, uh, if there was any imbalances. One of

the imbalances we saw was that there was a lot of nominations of the

IT Specialists and we went back and carefully reread those nominations. TR 307.

Mr. Watkins elaborated:

A. … we had discussion that, uh, was there a disparate – you know,

was there an equitable treatment or review of the IT Specialists? We had more, we had an unusually large number of IT Specialists

nominated.

Q. How many were nominated out of the whole group, percentage

wise?

A. Percentage wise, let’s see, it would have been 4 of 7. I remember

that percentage now.

Q. Uh-huh.

A. It was a large number, unusual percentage, outside the third and

particularly of the Grade 14 IT Specialists, we had four IT Grade 14 Examiners and all four were nominated.

Q. Okay.

A. And so we went back and carefully reviewed that to see if that was

appropriate. TR 308-309.

See also TR 315-316. 3

From the record, it appears that panel members thought that there was

one

IT

examiner

too

many,

and

bumped

Grievant.

The

governing

documents, however, make clear that “over-representation” is perfectly

3 Note that Mr. Watkins sometimes uses “IT specialist” to mean or to include IT examiner. TR 326.

permissible, and corrective action, if any is required, is to be taken at higher

levels. At a time when the entire banking system seems to be converting to

e-banking, it is hardly surprising that IT personnel are positioned to make

significant contributions to the FDIC and may in fact be doing so.

The initial agreement on the CSA program (JX 2) says nothing about

the distribution of awards among Union employees; it says only that at least

1/3 rd will receive them overall. The MOU (JX 3) says only that the parties

will review the distribution; the document is silent as to what action they

may take if the results cannot be justified by a legitimate business reason or

explained by the sizes of employee groups. Circular 2420.1 (JX 4) says only

that responsibility for assuring compliance with the percentage limit set by

the Chairman rests with division and office directors.

None of these controlling documents authorizes a first-level review

panel to consider the distribution of CSA nominations among various groups

of employees. Indeed, if at each step in the process, care were taken to

assure even distribution among employee groups, then the review for which

the MOU calls would be rendered superfluous. An interpretation which

renders a key document provision meaningless is not favored. Elkouri &

Elkouri, supra, @ 463-464.

The May 21, 2003 memo from human resources in Washington to all

FDIC supervisors (JX 12) plainly provides:

The actual percentage of employees under your direct supervision who are top contributors may be more, or less, than the percentage set by the Chairman, so long as the overall percentage of the Division/Office equals the percentage set by the Chairman.

The memo continues:

Regardless of the percentage determined by the Chairman, you should not nominate employees up to that percentage if you do not feel you have that many top contributors in your work unit.

The memo concludes by reiterating that the FDIC and NTEU will review

disparities.

The questions and answers attached to the memo continue in the same

vein:

The percentage set by the Chairman applies overall for the Corporation and each Division/Office. There is no minimum or maximum number, or quota, for each individual unit within a Division/Office. The paramount requirement is to recognize the top contributors in your organization. The percentage of employees who are nominated by supervisors may be more, or less, than the percentage set by the Chairman.

Supervisors of individual units may nominate more, or less, than 33 1/3 percent of employees, as long as the overall percentage of employees in the Division or Office who receive the CSA does not exceed the percentage set by the Chairman.

Questions and answers posted on the FDIC web site (JX 20; TR 36-

37, 46-47, 76-77) confirm that the only adjustment is to occur at the highest

level:

Each supervisor’s CSA nominations will be forwarded to a higher level official for review and concurrence before the nomination is forwarded to the appropriate Division/Office Director. Another review will take place at the Division/Office level to make final award selections at the percentage specified by the FDIC Chairperson.

Nothing

authorizes

the

in

the

extensive

first-level

review

documentation

panel

to

take

of

the

CSA

program

into

consideration

the

distribution of nominees among employee groups. TR 37-38, 40-41, 67. The

panel’s task was to pick the top third, allowing the chips to fall where they

may. It was for the Union and Agency to review where the chips fell.

The arbitrator previously has encountered instances in which policy

administrators have exceeded the authority granted them by policy makers,

albeit it in quite different contexts; see, for example, Oolite Industries, Inc

and Central States, Southeast and Southwest Areas Pension Fund, 8 EBC

2009 (Cornelius Arb 1987), an arbitration under § 4221 of ERISA, 29 USC §

1401, over multiemployer pension plan withdrawal liability.

In Oolite, the plan’s withdrawal liability review committee formulated a

“primary function” test and applied it to withdrawing employers, which had

the effect of narrowing the plan’s exemption for employers in the building and

construction industry. The arbitrator held that the committee exceeded its

authority and reversed the plan’s assessment of withdrawal liability against the

withdrawing employer. Although the contexts are different, the principles are

the same; in both Oolite and this case, the administrative committees exceeded

the authority delegated to them by the governing powers.

Even under the abuse of discretion standard urged by the Agency, a

failure to follow program rules constitutes an abuse of discretion. For the

reasons explained above, the arbitrator finds and concludes that the first-level

review panel abused its discretion.

VII.F. THE GRIEVANCE DENIALS

At each step in the grievance process, Grievant declined to compare

herself to other employees, and each of the Agency’s responses so noted

(JXs 6B, D & F). The Agency would not reveal the coworkers with whom

she had been compared. TR 184-185. At the arbitration hearing, Grievant

explained that Agency reviewing officials told her that if she were successful

with her grievance, then some fellow Union employee would have to be

dropped from the list of CSA winners, a result which Grievant found

discomforting. TR 223. Therefore, she declined to compare herself to others,

although she did do so before the arbitrator.

The arbitrator dismisses these assertions by Agency officials as mere

posturing. It is entirely possible that, if a Union employee fails to receive a

CSA as a result of Agency error, then the Agency simply is going to have to

bear the extra cost. Attempting to retract an award from a recipient surely

would provoke all manner of litigation. Grohal, supra, @ 26.

Grievant was not required to bump anyone. She simply had to be in

the

top

one-third

of

Union

contributors

in

the

DSC.

The

program

requirement was stated succinctly by the Agency’s counsel:

In order to receive an award, an employee must be more deserving of the award than two thirds of the bargaining unit. TR 12.

Thus, the remarks in the Agency’s responses, about Grievant failing to

demonstrate that she was in the top one-third of eligible employees in her

pool (JXs 6D & F), are misleading. She could be low person in her pool, so

long as she was in the top third overall. The official list of award winners is

arranged by Agency division and office, only, with no further breakdown by

work units (JX 5). The Agency erred in applying the rules of the CSA

program.

VII.G. CONTRIBUTIONS VERSUS PERFORMANCE

At the hearing, the Agency attempted to draw a bright line distinction

between

contributions,

which

the

CSA

is

designed

to

reward,

and

performance. TR 21, 25, 61, 334, 336-337, 342-343, 348-349. The attempt

failed, probably because there is no bright line. The CSA program itself

requires a performance level of “meets expectations” for eligibility (JX 2).

Moreover, it seems practically impossible to separate contributions and

performance with any clear line of demarcation. Just as faith without works

is dead, 4 so performance without contribution probably does not meet

expectations.

In point of fact, Agency documents tend to meld the two. Indeed, the

CSA program is referred to as a “pay for performance program” on the

Agency web site. JX 20, Q27; see also Q30. The operations director wrote in

a memo (JX 12):

Link to Strategic Objectives and Corporate Initiatives: … The CSA is based upon the individual contributions and on how an employee impacts productivity and organizational results through job performance while completing job responsibilities in a manner that clearly exceeds the regular expectations of their positions.

Supervisory Responsibilities: … In accordance with their performance plan, supervisors are expected to create a high performance climate by providing a clear vision and direction to staff. … (Emphasis supplied).

He repeated such performance-based descriptions in a subsequent memo (JX

14).

 

Grievant’s position is that her performance was her contribution. TR

185.

At

the

hearing,

she

produced two

Mission

Achievement

Award

certificates (UXs 3 & 4), which recite:

In Recognition Of Your Contributions In Support Of The Mission, Goals, And Values Of The Federal Deposit Insurance Corporation. (Emphasis supplied.)

The first award was signed by the DSC Director himself, and bears

4 James 2: 20 & 26 (Bible, KJV).

this citation:

Outstanding contribution to the Technology Supervision Branch on numerous projects while on detail. UX 3; emphasis supplied.

The second, signed by the Regional Director, cites:

Her contributions in developing an IT examination procedures manual. UX 3; emphasis supplied.

The citation was composed by Mr. Watkins, one of the first-level panel

members, who nominated her for the award. TR 355.

In

Circular

2420.1

described as follows:

(JX

24),

Mission

Achievement

Awards

are

4-1. Definition The Mission Achievement Award recognizes contributions of a diverse spectrum of employees in support of the FDIC mission, goals, values, and corporate priorities. Mission Achievement Awards are cash awards that range from $750 to $5,000 per employee.

4-3. Criteria The Mission Achievement Award links rewards and recognition to the FDIC mission, goals, and objectives. The achievement being recognized should improve the quality, timeliness, efficiency,

and/or effectiveness of FDIC programs and services. Criteria for this award are based on the extent of the impact of employee or group contributions to the accomplishment of the corporate and/or Division/Office goals and objectives. These goals and objectives can be found in the following documents, including, but not limited to:

A. FDIC Strategic Plan;

B. Annual Performance Plan;

C. Division/Office Annual Performance Plan; and

D. FDIC Diversity Strategic Plan.

… (Emphasis supplied.)

The Agency is not at liberty to play word games with Union employees; 5

Grievant made well documented contributions to her Division. TR 331.

VII.H. THE FIELD SUPERVISORS’ RANKINGS

There is a curious, even strange, discrepancy in the testimony of panel

members Cook and Watkins. The former testified that panel reviewed field

supervisors’ rankings of their nominees and that these rankings were most

helpful. TR 80-81. In marked contrast, Mr. Watkins testified that they were

given little weight. TR 316.

When Agency counsel sought to clarify Mr. Watkins’ testimony on

the point, the witness was even more emphatic:

Q. Okay. Mr. Welsh [Union counsel] spent some time talking about the ranking issue or prioritizing as it was referred to in some instances and I want to make sure I understood your testimony correctly, is that the Field Supervisor’s rankings were not a consideration into whether, as to whether to advance a nomination or decline a nomination, is that correct?

5 “When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean - neither more nor less.” “The question is,” said Alice, “whether you can make words mean so many different things.” “The question is,” said Humpty Dumpty, “which is to be master - that's all.” Through the Looking Glass by Lewis Carroll.

A. That’s correct. We considered the merits of each nomination on

their own. TR 326-327.

It appears that Mr. Cook may have the better recollection, as Mr.

Watkins did not seem to remember that Mr. Dean was on the panel. TR 303.

In any event, the important point is that panel members may not ignore field

supervisors’ rankings, as the DSC Director himself made them an integral

part of the selection process. JX 13, ¶¶ 2&3. While there may be good faith

disagreements with field supervisors’ judgments, the review panel at least

must consider the rankings of those management officials who are closest to

the nominees and who are responsible for nominating them in the first place.

VIII. THE REMEDY

At each step of the grievance procedure (JXs 6A, C & E), Grievant

and the Union cited violation of “Article 18 of the Nationwide Agreement

between the Union and the FDIC”. Section 1.B states:

The EMPLOYER will grant incentive awards in a fair and objective manner in accordance with this Agreement and applicable rules and regulations. (Emphasis supplied).

What the evidence has shown is that the first-level review panel did not

follow the rules negotiated by the parties and set down by the DSC Director.

The Union stipulated that “the issue is whether or not the grievant was

given fair and equitable treatment by the Agency and whether the program

criteria were applied in a consistent fashion to her.” TR 10. A decision

contrary to

the

rules

is

not

fair

and equitable.

Grievant was

treated

inconsistently and well may have been dropped from consideration in order

to provide representation from lower grades or other field offices or

territories.

A showing that the Agency misapplied the CSA rules does not,

standing alone, entitle Grievant to an award. She still must be determined to

have been among the top one-third of Union contributors in the DSC for

2003. For the reasons explained below, the arbitrator respectfully declines to

make that determination and remands the case to the Agency for a new

evaluation of her nomination in light of this opinion. The role of the

arbitrator is to correct mistakes of law and erroneous findings of fact, 6 not to

run the federal government. FDIC management, not the arbitrator, is in the

best position to determine the top Agency contributors.

Militating against an arbitral determination is the fact that all of the

evidence required for such a determination is not before the arbitrator—only

a handful of nomination forms was introduced. Moreover, the arbitrator

lacks sufficient knowledge about the FDIC and its operations to make sound

judgments about the relative values of employees’ contributions. That is a

6 In the absence of a specified standard of proof, arbitrators have the authority to establish whatever standard they consider appropriate, and the FLRA will not find an award deficient because a party claims that an incorrect standard was used. AFGE and Dept of Housing and Urban Development, 58 FLRA 207 (2002). The burden is, of course, on the Union. Elkouri & Elkouri, supra, @ 949-952; Hill & Sinicropi, Evidence in Arbitration (BNA 2 nd ed 1987) @ 32-39.

management function.

In particular, field supervisors made no attempt to correlate their

evaluations of employees on Form 2420/21 (3-03) (JX 9) with the Agency’s

articulated goals (JX 20, Strategic Objectives and Corporate Initiatives) or

those of the DSC. As a result, the arbitrator certainly would not be able to do

so. Only officials such as assistant regional directors and the deputy regional

director on the first-level panel could. TR 85, 254. Therefore, that task is left

to them.

The arbitrator notes that panel members drew upon their own personal

knowledge of the nominees’ work. TR 315, 318. One of the panel members,

Mr. Watkins, oversees Grievant’s territory and is very familiar with her

performance and contributions. TR 202, 239-240, 244. The concern is that

the amount of space on the CSA nomination form (JX 9) for a field

supervisor’s evaluation of a nominee was negotiated with the Union. TR 26,

62. When panel members draw upon their own personal knowledge, they are

treating employees with whom they are familiar differently than those whom

they do not know as well.

As a practical matter, it may be unreasonable to expect panel members

to disregard their own personal knowledge. They just need to be conscious

of the potential for unfairness and to make sure that their knowledge pertains

to the contribution period at issue. The arbitrator notes that there is no claim

of discrimination in the process; 2 of the 5 first-level panel members were

women. TR 81, 302. Thus, there is no reason to believe that the panel will

not arrive at a “fair and equitable” result based upon this opinion.

The first-level panel should consider Grievant’s nomination anew,

without regard to the number of IT employees or nominees and without

regard

to

the

distribution

of

employees

or

nominees

among

various

geographical locations or work units. The panel simply should determine

whether Grievant was among the top one-third of Union contributors to the

DSC for 2003. 7 If the answer is affirmative, then she is entitled to a CSA. If

the answer is negative, then she is not.

Although CSA procedures call for further review, there are numerous

reasons why that is now impractical. First, this is supposed to be an

expedited arbitration, which needs to be brought to a swift conclusion.

Second, the second-level panel, consisting of two deputy regional directors,

no longer is intact, as Angela Holguin has left the Agency. TR 54, 92.

Although Michael Dean remains, he is on the first-level panel. Thus,

meaningful second-level review cannot be obtained. Finally, inasmuch as

neither the Regional Director nor the DSC Director made any changes

7 Perhaps more precisely: Of those Union employees in the DSC, who met expectations during 2003, was Grievant among the top third of contributors? It is undisputed that Grievant met expectations. TR @ 61.

previously, there is no reason to believe that they would do so now.

IX. THE INTERIM AWARD

Grievant’s nomination for a CSA is remanded to the first-level review

panel for evaluation in accordance with the arbitrator’s opinion. The panel

should embody its decision in writing, and members should sign the

document, within thirty (30) days of the date of this opinion.

The Union’s request for attorney’s fees is denied as to the proceedings

thus far, as this is a new program, and there is no evidence of bad faith on

the Agency’s part.

The arbitrator retains jurisdiction to resolve any issues which may

arise in the course of the new evaluation and to address Grievant’s request

for interest, should she be found entitled to a CSA.

Dated July 22, 2005

E. Frank Cornelius, Arbitrator