United States 9th Circuit Court of Appeals Reports

AMERICAN FEDERATION. v. PRINCIPI, 464 F.3d 1049 (9th Cir. 2006) AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO LOCAL 2152, Edwin D. Savlov, M.D., Plaintiffs-Appellants/Cross-Appellees, v. Anthony J. PRINCIPI, Secretary of Veterans Affairs, Robert H. Opinion Roswell, M.D., VA under Secretary for Health, Defendants-Appellees/Cross-Appellants. Nos. 04-16607, 04-16692. United States Court of Appeals, Ninth Circuit. Argued and Submitted June 14, 2006. Filed October 2, 2006. Page 1050

Kevin M. Grille, Assistant General Counsel, American
Federation of Government Employees, ALF-CIO, Chicago, IL,
for the plaintiffs-appellants/cross-appellees.

Greg Addington, Assistant United States Attorney, Reno, NV,
for the defendants-appellees/cross-appellants.

Appeal from the United States District Court for the
District of Nevada; Edward C. Reed Jr., District Judge,
Presiding. D.C. No. CV-02-00379-ECR.

Before: SCHROEDER, Chief Judge, GRABER, Circuit Judge, and
DUFFY,[fn*] Senior District Judge.

[fn*] The Honorable Kevin Thomas Duffy, Senior District
Judge for the Southern District of New York, sitting by

DUFFY, Senior District Judge:

Plaintiffs-Appellants/Cross-Appellees American Federation
of Government Employees, AFL-CIO (“AFGE”), and Dr. Edwin
Savlov (collectively “Appellants”) brought this action to
challenge Defendants-Appellees/Cross-Appellants’
(“Appellees” or “VA”)[fn1] exemption from arbitration of a
grievance that had been filed under the negotiated
grievance procedure of a collective bargaining agreement.
Ruling on cross-motions for summary judgment, the district
court accepted one reason given by the VA, but found that
an alternate reason would not have justified the exemption
from arbitration. Appellants appealed and the VA
cross-appealed the district court’s rejection of the
alternate ground asserted as a basis for an exemption from
arbitration. The VA also appeals the district court’s
earlier denial of Page 1051 a motion to dismiss for lack
of subject matter jurisdiction.


Dr. Savlov was a VA physician who filed a grievance
alleging unlawful discrimination based upon his age and
gender. Dr. Savlov spent approximately seventy percent of
his time providing primary care services, in the form of
compensation and pension examinations (“C&P examinations”),
and approximately thirty percent of his time performing
surgeries. The basis of the grievance was the allegation
that Dr. Savlov was removed from surgical duties at the age
of seventy-six, and his “specialty pay” for surgery was
discontinued, even though, allegedly, a female physician of
approximately the same age, who had also been removed from
surgical duty, continued to receive specialty pay. Dr.
Savlov was denied specialty pay from 2000, when he was
removed from surgical duty, until 2002, when he retired and
ceased all work for the VA. He estimates that he was denied
a total of approximately $46,000 in specialty pay, which he
allegedly should have received in addition to his pay for
his primary care duties.

Title VII of the Civil Service Reform Act of 1978 (“CSRA”),
codified at 5 U.S.C. § 7101-7135, governs
labor management and relations for non-postal federal
employees. The CSRA authorizes collective bargaining with
certain federal employees. The CSRA also directs that a
collective bargaining agreement (“CBA”) “shall provide
procedures for the settlement of grievances.” 5 U.S.C.
§ 7121(a)(1). “[A]ny grievance not satisfactorily
settled under the negotiated grievance procedure shall be
subject to binding arbitration which may be invoked by
either the exclusive representative or the agency.” Id. at
§ 7121(b)(1)(C)(iii) (emphasis added). The grievance
procedure in this case was the product of a CBA that the
union, as labor’s “exclusive representative,” negotiated
with the VA pursuant to 5 U.S.C. § 7114(a)(4).

The United States Court of Appeals for the District of
Columbia’s (“D.C.Circuit”) decision in Colorado Nurses
Ass’n v. FLRA, 851 F.2d 1486 (D.C. Cir. 1988), questioned
whether the CSRA applied to the labor rights of VA medical
professionals. In response to the Colorado Nurses decision,
Congress enacted 38 U.S.C. § 7422 as part of the
Department of Veterans Affairs Labor Relations Improvement
Act of 1991 in an effort to grant VA medical professionals
the title 5 collective bargaining rights enjoyed by other
federal employees.

While VA medical professionals now enjoy collective
bargaining rights, including a grievance procedure, these
rights are restricted by three significant exemptions
designed to ensure adequate patient care and to prevent
conflicts with statutorily established pay scales. The
rights to grievance procedures provided by a CBA do not
extend to three statutorily exempted types of disputes,
relevantly including “any matter or question concerning or
arising out of (1) professional conduct or competence . . .
or (3) the establishment, determination, or adjustment of
employee compensation under this title.” Id. §
7422(b). Section 7422(d) provides that whether a matter
concerns or arises from one of the exemptions of §
7422(b) “shall be decided by the Secretary and is not itself
subject to collective bargaining and may not be reviewed by
any other agency.” 38 U.S.C. § 7422(d).

After exhausting the procedures of the negotiated grievance
process, AFGE Local 2152, acting on Dr. Savlov’s behalf,
sought to have the grievance resolved by a labor
arbitrator, in accordance with the terms of Page 1052 the
CBA. Before the dispute was finally submitted to the
arbitrator, VA Under Secretary Roswell issued a “decision
paper,” under the authority of 38 U.S.C. §
7422(d),[fn2] determining that the grievance was exempt
from the terms of the CBA because the grievance involved
issues of “professional conduct or competence” and because
it “concerns or arises out of a matter or question of the
establishment, determination, or adjustment of compensation
under Title 38.” After issuing its decision paper, the VA
moved for the arbitration to be dismissed with prejudice,
based upon the exemptions defined by § 7422(b). The
arbitrator dismissed the case without prejudice to give
Appellants an opportunity to seek judicial review.
Plaintiffs filed no exceptions to the arbitrator’s decision
and filed this action, claiming that the VA had “misused,
misapplied and violated 38 U.S.C. § 7422(b) and (d).”

The district court ruled on the parties’ cross-motions for
summary judgment and found that the VA misapplied the
exclusion based on “the establishment, determination, or
adjustment of employee compensation,” 38 U.S.C. §
7422(b)(3), but was exempted from arbitration because it
had correctly applied the “professional conduct or
competence” exemption under 38 U.S.C. § 7422(b)(1).
Plaintiffs filed a timely notice of appeal, and the VA
cross-appealed, arguing that the district court erred: (1)
in rejecting the VA’s argument that the matter was exempt
from arbitration because it involved an “adjustment of
employee compensation” under 38 U.S.C. § 7422(b);
and (2) in rebuffing the VA’s claim that the D.C. Circuit
is the exclusive forum for judicial review of this dispute.