[00:00:29] Speaker 03: Ms. [00:00:29] Speaker 03: Horn, you may proceed. [00:00:32] Speaker 00: May it please the court? [00:00:35] Speaker 00: In this case, an arbitrator was asked to decide a single issue. [00:00:39] Speaker 00: Yet, despite deciding that single issue in Ms. [00:00:42] Speaker 00: Ahota's favor, he imposed on her a 10-day suspension, and he denied her three years of back pay. [00:00:49] Speaker 05: I find the record here in the arbitrator's decision and the transcript very confusing. [00:00:53] Speaker 05: You agree that the proposal [00:00:55] Speaker 05: Well, let me just start with the proposed removal. [00:00:58] Speaker 05: The proposed removal had two grounds. [00:01:01] Speaker 05: One, the willfulness one, which was automatic removal, and two, an efficiency of the service one for violating some other regulation, right? [00:01:10] Speaker 05: That's right. [00:01:10] Speaker 05: And I guess there's some question as to whether the final decision sustains both, or do you agree that the final decision sustains both as well? [00:01:21] Speaker 00: We don't agree that the final decision sustains both. [00:01:24] Speaker 05: Even though it says all reasons and specifications are sustained. [00:01:29] Speaker 05: That's right. [00:01:31] Speaker 05: If you read the transcript of the oral reply that you supplied to us earlier this week, it's pretty clear that the union understood that there were two charges being presented to the deciding official. [00:01:43] Speaker 00: That's right. [00:01:44] Speaker 05: Because the union official argued for [00:01:47] Speaker 05: mitigation based on Douglas factors, which would only apply to the second specification, not the first, right? [00:01:54] Speaker 00: That's right. [00:01:54] Speaker 05: So I assume what you're basing your view of only the one specification was issue on is the colloquy back and forth in the transcript of the hearing before the arbitrator. [00:02:08] Speaker 00: Yes. [00:02:09] Speaker 05: I mean, I know you still want to retain your argument that [00:02:12] Speaker 05: both grounds weren't sustained in the final decision, right? [00:02:15] Speaker 05: I don't see how that's really tenable when they say all bases and specifications were sustained, even though she concentrates or he concentrates whichever on the willfulness one. [00:02:26] Speaker 00: Well, the arbitrator at the hearing indicated that he interpreted the decision letter that way. [00:02:30] Speaker 05: That's my problem is I've read this transcript a couple of times through these relevant pages, and it seems to me that you're all talking past each other at various points. [00:02:43] Speaker 05: I mean, you can read it as the agency conceding that, yeah, the willfulness charges are only before it, or read it as them conceding that for that charge, the only issue is willfulness and mitigations not on the table, which is true, but not saying anything about the other charges. [00:03:01] Speaker 05: I just don't know what to do with this. [00:03:03] Speaker 05: Let me lay it out. [00:03:05] Speaker 05: If the deciding official sustain both charges, if I find that that's the case, [00:03:10] Speaker 05: If I find the agency hasn't waived both charges, then what are we supposed to do here? [00:03:17] Speaker 05: I don't think that you can find that the agency... Okay, I know that's your point, but please answer my hypothetical, which is I conclude that the deciding official sustained both and that in this colloquy, the agency did not specifically waive its right to rely on the second charge. [00:03:36] Speaker 00: Well, the IRS before this court on page 19 of their brief says that to be sure, only the willfulness issue was briefed and argued here. [00:03:48] Speaker 00: So I think that supports. [00:03:49] Speaker 05: Again, you're not answering the hypothetical. [00:03:52] Speaker 05: What do we do if I find that that second specification has been preserved and the arbitrator should have decided it? [00:04:00] Speaker 00: If you make that finding, I think that [00:04:03] Speaker 00: You could remand the case to the arbitrator in order to give both parties an opportunity to present their evidence before the arbitrator on that issue. [00:04:14] Speaker 05: You don't think the arbitrator has somehow kind of implicitly made that finding by imposing a penalty for negligence, which is what that charge was based upon? [00:04:23] Speaker 00: I don't think you can. [00:04:26] Speaker 00: On page three of the arbitrator's decision, he sets out, and that's page five of the appendix, [00:04:31] Speaker 00: he sets out the issue statement, which is, did the loss taken on Ms. [00:04:37] Speaker 00: Zahota's 2003 tax return constitute, quote, willful neglect? [00:04:41] Speaker 00: And that language comes directly out of section 1203B9. [00:04:45] Speaker 00: And therefore, I think that's clear that the arbitrator set out to decide only that issue. [00:04:54] Speaker 01: But the issue then goes on to say, if not, [00:04:58] Speaker 01: alludes, if not, of finding a willful neglect, then what is the appropriate remedy? [00:05:03] Speaker 00: That's right. [00:05:04] Speaker 01: What remedy issue is before the arbitrator if the only thing he's supposed to decide is willfulness and removal? [00:05:15] Speaker 00: Well, an arbitrator only has authority to answer the issues put to him. [00:05:21] Speaker 00: And so if the remedy portion of the issue statement wasn't included, it's possible that the arbitrator might not have [00:05:28] Speaker 00: have had the authority to reinstate her upon a finding that her conduct was not willful. [00:05:34] Speaker 01: The first charge had in the alternative that a violation of other laws, even if it's not determined to be willful, doesn't that implicate simple negligence that would justify what the arbitrator has done? [00:05:54] Speaker 00: The notice of proposed removal included a charge that she violated other laws, rules, and regulations. [00:06:03] Speaker 00: And again, it's ambiguous whether the decision letter actually removed her on that basis. [00:06:09] Speaker 00: But it's clear that the parties agreed at the hearing and that the arbitrator said in his decision that he was setting out to decide only the willfulness issue. [00:06:19] Speaker 04: Well, go ahead. [00:06:21] Speaker 04: Did Ms. [00:06:23] Speaker 04: Cejota [00:06:24] Speaker 04: fail to accurately and fully pay her taxes, I'm quoting from the determination. [00:06:32] Speaker 00: That issue was not fully aired at the arbitration. [00:06:37] Speaker 00: There was some evidence and discussion of the closing agreement, which resolved her audit of her 2003 tax return. [00:06:46] Speaker 00: In that closing agreement, resolving the audit, she admitted that she [00:06:52] Speaker 00: understated her tax liability negligently. [00:06:55] Speaker 05: Would that satisfy the second specification? [00:07:00] Speaker 04: Right. [00:07:00] Speaker 04: Reason two. [00:07:02] Speaker 05: I didn't see anything in the transcript of her oral response where she really disputed that. [00:07:07] Speaker 05: It was more directed to the removal and the ultimate penalty and the like. [00:07:12] Speaker 00: I'm not sure that we can draw any conclusions when at the hearing [00:07:16] Speaker 00: The parties all agreed that the only issue before the arbitrator was willfulness. [00:07:20] Speaker 01: I think there were some references in the union brief before the arbitrator to whether or not [00:07:38] Speaker 00: She actually owned the business. [00:07:41] Speaker 00: And so if it hadn't been agreed upon at the hearing that willfulness was the only issue, perhaps the union could have presented its case differently. [00:07:51] Speaker 05: Can we just get to the transcript? [00:07:52] Speaker 05: Because I know what you're relying on. [00:07:54] Speaker 05: I assume I know what you're relying on. [00:07:55] Speaker 05: And you have some statements that are pretty good. [00:07:58] Speaker 05: But then you go on and read other parts, and it's less clear. [00:08:00] Speaker 05: Let's look at page 189 of the transcript. [00:08:03] Speaker 00: Yes. [00:08:04] Speaker 05: You brought your transcript. [00:08:05] Speaker 05: Yes. [00:08:05] Speaker 05: Thank you. [00:08:08] Speaker 05: And at the bottom, this is what I think, I assume you've cited this. [00:08:11] Speaker 05: I know that we've keyed in on this where the arbitrator asks, so I have to determine whether or not she willfully understated her tax return. [00:08:24] Speaker 05: And before this, I recognized the union representative who said the only issue is willfulness. [00:08:29] Speaker 05: And the union or the agency representative said it's correct. [00:08:32] Speaker 05: And the arbitrator says in no other charges that we're dealing with, correct. [00:08:36] Speaker 05: That seems pretty good for you. [00:08:37] Speaker 05: But then you follow on, and just a couple lines later on the next page, Mr. Daimler, who's the agency rep, right, says that's part of the problem with not having the deciding official. [00:08:51] Speaker 05: I don't know what that means. [00:08:52] Speaker 05: I mean, then I could go on to the second part if I had her, and the arbitrator said it's pretty self-evident. [00:08:58] Speaker 05: What does that mean? [00:09:00] Speaker 05: I mean, can't you read that to mean that we don't need to deal with the second part because she's already agreed in her settlement that she was negligent. [00:09:09] Speaker 05: So there's no reason to go forward with putting on proof on that second issue. [00:09:15] Speaker 05: Look, I think you have good arguments. [00:09:17] Speaker 05: I think there are arguments on the other side. [00:09:19] Speaker 05: This transcript makes almost no sense to me, so I don't see why [00:09:24] Speaker 05: we can decide how we can decide this and just shouldn't send it back to the arbitrator because clearly the arbitrator thought that even if he didn't sustain the penalty on the first one, which was an up or down penalty, everybody seemed to understand that, that he had authority to discipline her for something else. [00:09:42] Speaker 05: And the only thing could have been the second specification, right? [00:09:47] Speaker 00: Well, um, [00:09:49] Speaker 00: I'm not sure that's right. [00:09:52] Speaker 05: Well, no, I'm not either. [00:09:53] Speaker 05: I don't understand what the arbitrator did here, but we have to assume that he thought he had some authority to impose a lesser sentence. [00:10:02] Speaker 05: And the only basis would have been the specification, the second specification, not the first, because I think even the government agrees that when the first specification, it's up or down. [00:10:13] Speaker 05: If it's willful, she's out. [00:10:15] Speaker 05: And if it's not willful, she's in. [00:10:19] Speaker 00: Right. [00:10:21] Speaker 00: When I first read the arbitrator's decision, it appeared to me that the arbitrator was doing something similar to what the board did in the Burroughs case, which we cite in our brief. [00:10:31] Speaker 00: And there, the board sustained a portion of the one charge that was before the board and then imposed a penalty on that basis. [00:10:40] Speaker 00: And this court found that that was improper. [00:10:43] Speaker 05: Well, if we only had one charge here, you would have a really good argument. [00:10:47] Speaker 05: But we have two charges. [00:10:49] Speaker 05: one of which could have supported the lesser penalty the arbitrator imposed. [00:10:53] Speaker 05: So why isn't it just as likely that that's what the arbitrator meant? [00:10:58] Speaker 00: I don't think it can be just as likely because, again, on page three of his decision, he sets out the issue statement, whether Ms. [00:11:05] Speaker 05: Sahota... But again, doesn't that go back to this colloquy, which is we don't need to deal with the second charge because [00:11:12] Speaker 05: it's clear on the record that she committed that. [00:11:14] Speaker 05: Let's just look at willfulness. [00:11:16] Speaker 05: If that's the reading of this colloquy, I know it's not your reading, but if that's the reading in this colloquy, then doesn't that explain his decision, which is, here's what I'm deciding? [00:11:28] Speaker 00: I don't think so, Your Honor, because on page 194 of the record, the arbitrator says, [00:11:43] Speaker 00: So you understand, and he's talking to agency counsel, so you understand that if I find that it's not willful, then I'm going to order her reinstatement. [00:11:51] Speaker 00: And Mr. Daimler says yes. [00:11:55] Speaker 01: But that doesn't answer the question. [00:11:58] Speaker 01: It still leaves open the whole issue we've been talking about. [00:12:02] Speaker 01: And you keep referring to the issue on page three of the arbitrator's decision. [00:12:11] Speaker 01: It's absolutely clear to me that what the arbitrator is saying is that I need to decide whether her filing was the result of willful neglect. [00:12:25] Speaker 01: And then he goes on to say, if not, I have to decide what is the appropriate remedy. [00:12:32] Speaker 01: So obviously, he thought there was something else before him that he would have to address if he concluded that there was no [00:12:40] Speaker 01: willful neglect. [00:12:41] Speaker 01: And that's what the bulk of the opinion addresses that. [00:12:47] Speaker 00: Yes. [00:12:47] Speaker 00: My reading, again, of the remedy portion of the issue statement was- Just to point out that you're under rebuttal time. [00:12:54] Speaker 00: OK. [00:12:55] Speaker 00: Thank you. [00:12:57] Speaker 00: And there's some discussion of this too. [00:13:00] Speaker 00: I think it's pages 190 to 194, where the arbitrator asks union counsel [00:13:10] Speaker 00: And then the second question should be, and what shall be the remedy? [00:13:15] Speaker 00: And the arbitrator says, so, you know, have you done a removal case before? [00:13:23] Speaker 00: Unless we ask what the remedy is, then can I go on to decide what I should do if I determine that Ms. [00:13:31] Speaker 00: Sahota's conduct was not willful? [00:13:33] Speaker 00: So I think that's why the second part of the issue statement, what shall be the remedy, is there. [00:13:41] Speaker 00: And on page 194, the counsel for the IRS agrees that if the arbitrator determines that her conduct was not willful, that she should be put back to work. [00:13:56] Speaker 05: But that kind of begs the question of put back to work without a suspension or not. [00:14:02] Speaker 05: I mean, they may have been agreeing that the second charge, absent the first, can't support removal. [00:14:09] Speaker 04: But it doesn't imply that there's no lesser penalty. [00:14:15] Speaker 04: Negligent failure by an IRS agent is still something that has to be considered. [00:14:22] Speaker 00: I think other parts of the record, Your Honor, suggest that the IRS agreed that if the arbitrator determines that her [00:14:31] Speaker 00: conduct was not willful, that mitigation is not on the table. [00:14:36] Speaker 00: And I think that's in the IRS Council's opening statement, which appears around page 43 and 44. [00:14:47] Speaker 00: But if I could reserve the balance of my time for rebuttal. [00:15:01] Speaker 02: Morning, and may it please the court. [00:15:02] Speaker 02: Go ahead, counsel. [00:15:03] Speaker 02: The arbitrator reasonably decided to mitigate the removal to a 10-day suspension, and it was within his authority. [00:15:09] Speaker 05: You agree that the first specification can't be mitigated, right? [00:15:15] Speaker 05: The statutory violation. [00:15:16] Speaker 05: Only the agency can mitigate that. [00:15:19] Speaker 02: That's right, but Your Honor, if you're referring to the willfulness aspect of the first, I want to be clear in terms of specifications versus reasons, and that's one of the aspects I wanted to be clear about in terms of [00:15:29] Speaker 02: what we're relying on here, because on page 80 of the appendix is the proposed removal letter. [00:15:35] Speaker 02: And it specifies two reasons, both of which have specifications. [00:15:39] Speaker 02: The specifications are essentially the factual background. [00:15:41] Speaker 02: Right. [00:15:41] Speaker 05: There's two different things. [00:15:42] Speaker 05: But one of them requires willfulness. [00:15:45] Speaker 05: And that can't be mitigated. [00:15:46] Speaker 02: Well, actually, Your Honor, the first one's framed in the alternative. [00:15:49] Speaker 02: And if you look at page 80 of the appendix, you see that reason one. [00:15:52] Speaker 05: You're getting caught up in semantics, I think, here. [00:15:54] Speaker 05: There are two different reasons you propose to remove her. [00:15:57] Speaker 05: One was based upon this mandatory statute that if she's willfully violating something, she's out and there's no mitigation by the board or the arbitrator. [00:16:08] Speaker 05: Right? [00:16:08] Speaker 02: Yes. [00:16:09] Speaker 05: And that wasn't sustained. [00:16:10] Speaker 02: That's correct, your honor. [00:16:11] Speaker 05: And so all we're talking about now is whether you preserve the second one, which supports removal penalty, but can also be mitigated under Douglas. [00:16:19] Speaker 05: Right? [00:16:19] Speaker 02: Well, yes. [00:16:21] Speaker 02: I think reason one is framed in the alternative and says, even if you did not act willfully, [00:16:26] Speaker 02: you fail to accurately state your tax liability. [00:16:28] Speaker 02: Reason two says you fail to timely pay your federal tax liability. [00:16:32] Speaker 02: Those are sort of two non-willful allegations of misconduct. [00:16:37] Speaker 02: But Your Honor's question, I know what you're driving at and yes, [00:16:40] Speaker 05: We're trying to say there's a difference between timely and accurate. [00:16:44] Speaker 05: I don't think we care for this purpose. [00:16:46] Speaker 05: There's two different bases. [00:16:47] Speaker 05: There's this unique statutory basis, which you didn't prove when you're not contesting, and there's the regular Chapter 75 efficiency of the service reason. [00:16:57] Speaker 05: That's right. [00:16:58] Speaker 05: All of this could have been better laid out in everything here, including your letters, the agency's briefing, the transcripts and stuff. [00:17:06] Speaker 05: What we have to decide, I think, that's left for us is reading this very confusing transcript is whether you've weighed reliance on the Chapter 75 efficiency of the service reason or not. [00:17:18] Speaker 02: Well, Your Honor, yes. [00:17:19] Speaker 02: I think a couple of points in response to that. [00:17:20] Speaker 02: One is that the deciding official's letter is not ambiguous in terms of saying that all reasons and specifications are sustained. [00:17:27] Speaker 05: Sure, but that doesn't prevent the agency from getting up in the hearing before the arbitrator and saying, we're no longer relying on that. [00:17:32] Speaker 05: We're putting all our eggs in the basket of the willfulness charge. [00:17:36] Speaker 02: And Your Honor, we acknowledge that the transcript is not a model of clarity. [00:17:40] Speaker 05: It's not good for you. [00:17:41] Speaker 02: Well, there are some mixed statements in there in terms of what was intended and what was not intended. [00:17:45] Speaker 02: What we submit is... It's better for the agency or for the union than for you. [00:17:49] Speaker 02: Well, Your Honor, I think just in terms of stepping back and what the parties were focused on in terms of the willfulness issue, keeping in mind that there is a statute that says if the willfulness determination is sustained, it is a mandatory removal. [00:18:01] Speaker 02: That is the mandatory penalty. [00:18:03] Speaker 02: And that was the initial threshold finding made by the agency. [00:18:06] Speaker 02: That was the focus of the discussion was willfulness. [00:18:09] Speaker 02: Now, it's true. [00:18:10] Speaker 05: Where's the state clear statement in this transcript of the hearing that the agency maintains that it still has the right to either remove or suspend her based upon a non-willful, a negligent violation? [00:18:22] Speaker 02: I don't think there is a clear statement to that effect, Your Honor, but by the same token, I don't think that there's a clear statement relinquishing it either. [00:18:28] Speaker 05: A clear waiver. [00:18:30] Speaker 02: A clear waiver. [00:18:30] Speaker 02: Ultimately, you have a decision issued by the arbitrator in which he adopts a [00:18:35] Speaker 02: I should back up and say, even before you get the arbitrator's statement, you have the IRS's closing. [00:18:39] Speaker 05: But he never presents that alternative reason and finds that is sustained. [00:18:46] Speaker 02: Well, I actually disagree with that, respectfully, Your Honor. [00:18:48] Speaker 02: I think the portion that I would direct the Court's attention to is pages 28 and 29 of the appendix, where you have the findings that the arbitrator makes. [00:18:56] Speaker 02: It's under the caption, findings. [00:18:58] Speaker 02: And he talks about reason one and reason two. [00:19:01] Speaker 02: With respect to specification one, he says, quote unquote, all true. [00:19:05] Speaker 02: but the failure was the result of negligence. [00:19:07] Speaker 05: I'm sorry. [00:19:08] Speaker 05: You're on 28 and 29. [00:19:10] Speaker 05: What part are you talking about? [00:19:11] Speaker 02: It's the section titled findings. [00:19:14] Speaker 02: OK. [00:19:15] Speaker 02: And I'm talking about the part where it says caption reason one and reason two. [00:19:20] Speaker 02: OK. [00:19:21] Speaker 02: And under reason two, and I'm quoting, the arbitrator wrote, the grievant failed to timely pay her federal tax liability. [00:19:27] Speaker 02: And that, in our view, is clearly adopting or sustaining charge two. [00:19:32] Speaker 02: And it would be really reading those, rendering that [00:19:35] Speaker 02: language meaningless to say, especially in light of the arbitrator's continued analysis of, if not willful, what do I do next? [00:19:43] Speaker 02: It would sort of read that out of his decision if you concluded that all he did was decide up or down on the willfulness issue. [00:19:50] Speaker 04: There's no factual dispute here. [00:19:52] Speaker 04: It's all interpreted. [00:19:53] Speaker 02: Well, Your Honor, I think that's correct. [00:19:55] Speaker 02: And just counsel made a reference about whether or not negligence was in play. [00:19:59] Speaker 02: I think you have this closing agreement where Ms. [00:20:02] Speaker 02: Sahota acknowledges the finding [00:20:04] Speaker 02: final and binding agreement, she said, I did act negligently with respect to these 2003 taxes. [00:20:09] Speaker 02: There really was no factual contention that she failed to pay these taxes. [00:20:14] Speaker 02: So everybody was focused on state of mind. [00:20:16] Speaker 02: Essentially, that was the thrust of the entire hearing. [00:20:19] Speaker 02: And you had a lot of colloquy back and forth on that. [00:20:21] Speaker 02: You had testimony back and forth on that. [00:20:23] Speaker 02: Ultimately, you have an arbitrator who is tasked under Douglas with, if he's not under the statute that requires mandatory removal, OK, what penalty do you have? [00:20:33] Speaker 02: And this court's decision in Luchance says that the board, or in this case, the arbitrator, if it is faced with a situation where it sustains some but not all of the charges, it can mitigate the penalty. [00:20:45] Speaker 02: And we think that that gave arbitration. [00:20:47] Speaker 04: Well, you did that. [00:20:47] Speaker 04: Sorry, go ahead. [00:20:48] Speaker 04: What we haven't talked about here is the delay. [00:20:53] Speaker 04: The union's failure to pursue. [00:21:00] Speaker 04: You note that the union was required to contact the arbitrator within six months to schedule a hearing, but the union did contact the arbitrator a month after the deciding official sustained a removal. [00:21:14] Speaker 02: Nothing happened after that. [00:21:16] Speaker 02: Your Honor, there was a three-year delay, and I think ultimately you have the arbitrator making a factual finding that's supported by substantial evidence that the union had [00:21:25] Speaker 02: was unjustified in having that amount of time. [00:21:28] Speaker 05: So really the only question- But didn't the arbitrator base it on latches? [00:21:31] Speaker 02: Well, Your Honor, the arbitrator did use the word latches. [00:21:34] Speaker 05: And there again, you have some confusion in the sense that- Do you think latches as an equitable doctrine is applicable to the statutory remedy in the Back Pay Act? [00:21:45] Speaker 02: Your Honor, I think probably a better way of the arbitrator characterizing it might have been a failure to mitigate damages. [00:21:50] Speaker 05: But because the latches- Did you argue failure to mitigate to the arbitrator? [00:21:54] Speaker 02: No, Your Honor, I think... Isn't that an affirmative defense? [00:21:57] Speaker 02: Well, the IRS did present... You argued latches to the arbitrator. [00:22:01] Speaker 05: The arbitrator... Which I think you probably now recognize is a legally impermissible way to block statutory damages, at least after recent Supreme Court decisions on that point. [00:22:14] Speaker 02: Yes, Your Honor, I think that the way that the arbitrator came up again in the context of the hearing, which is hardly clear in terms of what the parties were trying to do [00:22:23] Speaker 02: With respect to the latches issue, though, ultimately, there was a very clear stipulation. [00:22:27] Speaker 02: In contrast to the issue about willfulness, you had a very clear stipulation of the IRS saying, we're not going to say that this claim is barred in its entirety due to latches. [00:22:36] Speaker 02: That's very clear based on the record. [00:22:38] Speaker 02: But then you have the IRS said in its closing brief, we're not waiving an argument that the damages should be reduced. [00:22:45] Speaker 02: And whether you call it latches or not, I don't think really. [00:22:48] Speaker 05: Is there any evidence put forth on back pay calculations here? [00:22:52] Speaker 02: No, you're right. [00:22:52] Speaker 02: I don't believe so. [00:22:53] Speaker 05: Have you done back pay calculations for her or is it just because it's on appeal, nothing's been done? [00:22:57] Speaker 02: I'm not aware of anything having been done in that regard. [00:23:00] Speaker 05: In the typical back pay calculation, don't you get any kind of earnings, evidence during that period and subtract that from the award? [00:23:08] Speaker 02: Yes, Your Honor. [00:23:08] Speaker 02: I think Ms. [00:23:09] Speaker 02: Ahota notes in her reply brief that there might have been some offset under the back pay act. [00:23:14] Speaker 02: presented that information, but it's not in the record, and I'm not aware of what happened with that in terms of an offset for outside earnings. [00:23:22] Speaker 05: Well, isn't that potentially actually the real mitigation? [00:23:27] Speaker 05: I mean, if she did, I mean, I know he didn't phrase it this way, but it seems to me that what the arbitrator has done is find a clever way around our ban on blanket time served [00:23:42] Speaker 05: penalties by imposing a short penalty period, but then just saying, I'm going to find the rest of it barred by latches. [00:23:53] Speaker 05: If he had just said, the removal here is not sustained, I'm going to impose a suspension, time served, without any further explanation, you'd agree that's incorrect, right? [00:24:05] Speaker 02: Well, yes, Your Honor, because that would fall within the ambit of the holding in Green Street that says you can't do that. [00:24:10] Speaker 02: This was not a time-served type of penalty, though. [00:24:13] Speaker 02: This acknowledged that you had really basically, the arbitrator found... Well, it's a time served less 10 days. [00:24:19] Speaker 05: Well, the time served isn't quite... Because he didn't tie up the time served minus 10 days to any mitigating factors in Douglas or failure to mitigate actual damages. [00:24:34] Speaker 05: If I agree with you, clearly the Backpay Act requires [00:24:38] Speaker 05: mitigation of actual damages. [00:24:40] Speaker 05: But there doesn't seem like there was any evidence of whether she did seek employment, whether she was employed, how much that mitigated damages, and the like. [00:24:48] Speaker 05: Why at the least, indeed, deduct the six months? [00:24:52] Speaker 02: The six months with respect to the delay. [00:24:54] Speaker 02: The six months that the union had to have. [00:24:57] Speaker 02: Right, Your Honor. [00:24:57] Speaker 02: I suppose that might be another way of coming at the issue. [00:25:00] Speaker 02: But just with respect to the Backpay Act, I do want to be clear, as we argued in our brief, [00:25:04] Speaker 02: The arbitrator did not violate the Back Pay Act because under the court's decisions in OLET, an American Federation of Government Employees, if the arbitrator or the board finds that the employee is at some fault and that some sort of personnel action is warranted, there's no obligation to issue back pay, award full back pay. [00:25:22] Speaker 02: So what the arbitrator was doing here was [00:25:25] Speaker 05: Yeah, but he has to rely on a legally sound principle not to award back pay. [00:25:31] Speaker 02: I would agree with that, Your Honor. [00:25:32] Speaker 05: Latches is not one. [00:25:34] Speaker 05: And he didn't apply a proper mitigation analysis. [00:25:38] Speaker 02: Your Honor, I respectfully disagree. [00:25:40] Speaker 02: I think that the arbitrator acknowledged he didn't apply a full-blown mitigation analysis. [00:25:45] Speaker 05: What he was trying to do... He didn't apply any mitigation analysis. [00:25:47] Speaker 02: Well, he did apply some analysis in terms of [00:25:50] Speaker 02: what his reasoning was for not awarding the full back pay and under the circumstances, which was what her delay mitigation is. [00:25:58] Speaker 05: She should have tried to get a job. [00:26:00] Speaker 05: She did it. [00:26:00] Speaker 05: Therefore I'm not going to give her full back pay. [00:26:03] Speaker 05: There's no evidence to support any evidence that she didn't mitigate for she did mitigate. [00:26:08] Speaker 02: Well, your honor, I think mitigation, I, again, I'm not sure that the label matters so much as that the arbitrator arbitrator had some discretion to come up with a correct remedy here. [00:26:18] Speaker 02: If mitigation is not the right word, it is that the arbitrator found that the IRS should essentially not be held responsible for this extended period of time that is attributable to the union. [00:26:31] Speaker 05: What's the legal theory for that? [00:26:33] Speaker 05: I mean, the Back Pay Act provides back pay for the period from the unlawful removal until the reinstatement. [00:26:42] Speaker 02: Right, but with respect to the Back Pay Act, we don't, under OLET, in those situations, the OLET decision is an example of this, where an employee is ordered reinstated but doesn't get the back pay because there's some fault on the part of the employee. [00:26:58] Speaker 02: And that's really where the Back Pay Act does not compel back pay for the entirety of the period is the point I'm trying to make. [00:27:05] Speaker 05: Now, the arbitrary... What was the reason in OLET? [00:27:07] Speaker 05: Was that one of the criminal prosecution cases or things like that? [00:27:11] Speaker 05: I mean, that's a good reason. [00:27:14] Speaker 05: Here his reason was latches, which is a legally impermissible reason. [00:27:20] Speaker 04: Did the arbitrator base his decision on anything other than the union's delay? [00:27:31] Speaker 02: In terms of the reduction in pay? [00:27:33] Speaker 02: No, I think it was based on the union's delay. [00:27:35] Speaker 02: I think his analysis was addressing that. [00:27:40] Speaker 02: I mean, in terms of the merits of that decision, again, if you're reviewing that for substantial evidence, it is, he took into account the fact the IRS's counsel had, or excuse me, the union's counsel had said during the hearing that there are many cases that he's handling, or this is at page 164 of the appendix talking about how he didn't, the union didn't have the personnel to address all these cases, sort of offering that explanation. [00:28:05] Speaker 02: The arbitrator [00:28:07] Speaker 04: took that into account and concluded that... What's the propriety of punishing Ms. [00:28:14] Speaker 04: Sahota for the union's misconduct? [00:28:17] Speaker 02: Well, Your Honor, I guess it would sort of be comparable to another situation in which a representative or a counsel or an agent does something that adversely affects his client's interests. [00:28:27] Speaker 02: And in this instance, it does [00:28:30] Speaker 02: it is appropriate, in our view, at least the arbitrator found it reasonably found that it was appropriate to hold her responsible for her representatives in action. [00:28:39] Speaker 05: Can you cite us any cases where we found undue delay on behalf of a representative in an MSPB proceeding or an arbitration proceeding to reduce a back [00:28:53] Speaker 02: I don't have in particular authority to offer your... I mean, I think in our brief, on page 27 of our brief, we cited some other cases, but those do deal with latches. [00:29:01] Speaker 02: I'm not aware of a particular case that fits the description you just described. [00:29:07] Speaker 02: For these reasons, we respectfully request that the court... Thank you, counsel. [00:29:17] Speaker 05: Let me go right to page 29 in the appendix. [00:29:20] Speaker 05: I think your friend pointed out some... [00:29:23] Speaker 05: helpfully or at least helpful to me clarifying language about what the arbitrator was doing. [00:29:27] Speaker 05: Why doesn't that demonstrate that the arbitrator actually was sustaining the second charge and the alternative? [00:29:34] Speaker 05: And don't get caught up in whether it's charge or reason or specification. [00:29:38] Speaker 05: I think we all know what we're talking about. [00:29:40] Speaker 00: Right. [00:29:40] Speaker 00: I don't think that those few lines on one page of the arbitrator's 30-page decision, which itself starts out on page 3 setting out the issue of willfulness, [00:29:49] Speaker 00: can be read as a conclusion that the arbitrator is sustaining those charges. [00:29:54] Speaker 04: That is what findings of fact and conclusions of law are for. [00:29:59] Speaker 00: The arbitrator's decision is somewhat ambiguous in that respect. [00:30:06] Speaker 05: Only if we assume that what had been going on, even though it's not properly reflected in the transcript, it's an understanding between everybody that [00:30:15] Speaker 05: because of the settlement letter where she agreed that she was negligent, that really you didn't need to go into the basis for the second one, that she admitted that. [00:30:26] Speaker 05: If that's the case, then you wouldn't expect a full discussion of whether she committed the acts there and whether it should be sustained. [00:30:36] Speaker 05: He just sustained it and then went on and proposed the penalty he thought was appropriate. [00:30:43] Speaker 00: Well, we think that the transcript [00:30:46] Speaker 00: shows that the understanding was that the evidence would be presented only on the wilfulness issue. [00:30:52] Speaker 00: But even assuming that the arbitrator properly reached those other charges and properly sustained them, which of course we maintain that he did not, he determined, the arbitrator determined... You're going to have to wrap it up, counsel. [00:31:07] Speaker 00: The arbitrator determined that those charges only warranted a 10-day suspension. [00:31:11] Speaker 00: a three-year reduction in Ms. [00:31:14] Speaker 00: Sahota's back pay is far out of proportion and of course is based on, was expressly based on an application of the Latches Doctrine that is in defiance of the Back Pay Act. [00:31:26] Speaker 00: Thank you. [00:31:26] Speaker 00: Thank you. [00:31:28] Speaker 04: The matter will stand submitted.