John Calhoun Wells
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A Little Background on Arbitrator John C. Wells

Op-Ed Questions Tobacco Settlement Arbitrator's Motives

In a WALL STREET JOURNAL op-ed, Holman Jenkins Jr. suggests that John Calhoun Wells, a tobacco settlement arbitration negotiator, may not have been acting neutrally when voting an .2 billion award to lawyers in Florida, Texas, and Mississippi. Jenkins writes: "Mr. Wells has been called a 'masterful negotiator' . . . . He just quit a four-year stint as Bill Clinton's head of the Federal Mediation Service, as he explained in a letter to the President, so he could 'attend to building financial security' for his family. Certainly a man on such a mission can do himself no harm by making a bunch of millionaires very, very grateful. . . . Where did Mr. Wells come from? He was proposed by Walter Umphrey, famed Texas trial attorney, who owns a large piece of the Texas settlement and sizable chunks of the Florida and Mississippi deals. In fact, his firm owns chunks of dozens of states, making him the guy with the most money on the hook in the arbitration process."

Source: Holman Jenkins Jr., "Secret Lives Of The Tobacco Arbitrators," WALL STREET JOURNAL, December 23, 1998, p. A15.

(Post Date: 12/23/98)


FOR IMMEDIATE RELEASE
Tuesday, March 17, 1998 CONTACT: Dave Helfert
(202) 606-8100

Nation Chief Mediator Announces Return to Private Sector
The nation top labor-management mediator has notified the White House of his intention to resign as Director of the Federal Mediation and Conciliation Service (FMCS) and return to the private sector. John Calhoun Wells told the President in a letter that his charge to "take an organization with a distinguished history of service to our nations collective bargaining and labor-management communities, and prepare it for an even more crucial role in Americas 21st Century economy, is largely complete."

Dr. Wells referred to the strategic redirection of FMCS which he said, "has been driven by a vision of a customer-focused, performance-based organization, with 360-degree mediators providing a full range of labor-management mediation and conflict resolution services at least the equal of the best in the private sector. The redirection has required a quantum change within FMCS, including more flexible hiring criteria and more rigorous mediator selection; restructured field operations and a redefinition of field and National Office leadership roles and responsibilities; recruiting and promoting a higher-qualified, more diverse workforce; major investments in employee education and training, in technology modernization and major workplace redesign. We have learned to "listen to the marketplace," through the agencys first National Customer Survey, customer focus groups and an emphasis on customer outreach by field mediators and managers."

The Strategic Redirection of FMCS was recognized last fall by Vice President Gore and the National Performance Review with the Hammer Award, given to agencies for outstanding efforts in building a government "that works better and costs less."

Wells said, "The most important thing I have done is use my position as a forum to articulate an enlightened construct in collective bargaining in which the labor-management relationship, itself, is recognized and promoted as a means for improved economic performance and competitive advantage, leading to the inter-related goals of profits and jobs. This is a partnership for the future."

Wells was appointed by President Clinton in November 1993. He has led mediation teams in the settlement of some of the largest, most difficult labor disputes in modern history, including United Parcel Service and the International Brotherhood of Teamsters (1997), McDonnell Douglas Aircraft and the International Association of Machinists and Aerospace Workers (IAM) (1996), The Trucking Industry and the Teamsters (1994), Boeing Aircraft and the Machinists (1995), and Caterpillar Inc. and the United Auto Workers (UAW) (1993- ).

Wells said the long dispute between Caterpillar and the UAW has given him both his greatest moments of satisfaction and frustration. "I was proud of the role FMCS was able to play in reaching a tentative agreement on February 13," Wells said. "When that tentative agreement was not ratified by UAW local union members, I was very disappointed. But yesterday, in a conference telephone call with the Caterpillar and UAW chief negotiators, the company offered a modified contract proposal to the union, and I am once again hopeful that a final settlement might not be too far away."

Wells also pointed to FMCS role in helping some of the countrys largest corporations begin to move workplace relationships with their employee unions from adversarial to partnership.

"These Preventive Mediation services have grown from 10 percent of the agency mediation caseload to nearly one-third during the last four years," he said. "This is a very positive and hopeful course for American business, workers and unions to take. Through our training in cooperative processes, we are able to help them transform their relationship, yielding a more productive and profitable enterprise, and therefore, one that is better able to provide jobs and employment security."

Wells said he would be leaving FMCS in the "not too distant future," and wanted to give the President ample time to consider his successor.




CONTRACT ARBITRATION Day 17

CONTRACT ARBITRATION-JANUARY 22, 2002



Day 17 began with the Postal Services lead legal counsel, Ed Ward, offering some exhibits that the Postal Service had previously committed to producing. He then recalled Mr. Peter Bernstein, Vice President of RCF Economic & Financial Consulting. His firm provides volume forecasts for the Postal Service. He had testified on day 14 but travel commitments shortened his testimony and precluded cross examination. However, it was agreed at that time that he would be made available for cross examination at a later date. An overview of his testimony on day 14 has been published on page 28 of the January 19, 2002 edition of The National Rural Letter Carrier. His testimony on day 17 was more extensive but generally mirrored his remarks on day 14. Among many other things, he said the following:



¡¤ 3.5% of all advertising dollars being spent on the Internet negatively impacts standard mail volume, by 2005 the percentage will rise to 4.5%

¡¤ Standard Mail volume is growing slowly

¡¤ the growth in First Class Mail volume is declining

¡¤ billions of First Class Mail pieces will be lost to technological alternatives

¡¤ the growth in Periodical Mail is declining

¡¤ the growth in total volume is less than the population growth

¡¤ there is little growth in parcels

¡¤ over 90% of all mail is not household to household



Although his forecast seemed gloomy enough, under the direct questioning by Mr. Ward, the witness stated that the predictions were made using data collected prior to the events of September 11th and the anthrax situation; therefore, Postal Service¡¯s financial condition may be even graver. He said that the Postal Service is ¡°facing stagnation¡± and that costs throughout the Postal Service needed to be controlled. The Postal Service needed revenue to finance the costs of additional deliveries and the infrastructure. He stated that mail volume would not be enough to meet the financial needs. He said that rate increases above the rate of inflation result in less volume which in turn requires yet another rate increase, thus a vicious cycle that does not solve the problem. There needs to be rate moderation and cost moderation to stem the tide. Additionally, he said that increased labor costs make rate moderation difficult.



After finishing his direct testimony and undergoing cross examination, the witness was asked by the arbitration panel Chairman, Mr. Wells, what the Postal Service had to do to remain viable. Mr. Bernstein responded by saying that the Postal Service needed to be leaner and smaller, close cost negative post offices, and to embrace business economics.



Next, the Postal Service called former witness, Don Develin, to the witness stand. Mr. Develin had testified on day 16 of the hearings. His testimony that day focused on the projected costs of the NRLCA proposals. A summary of his remarks on that day are published in January 19, 2002 edition of The National Rural Letter Carrier. On this day, he testified that the proposals in the aggregate would cost the Postal Service approximately $ 3.7 billion over four years. The cost of an upgrade to what is referred to as ¡°level six¡± would account for $ 1.55 billion of that amount. He said that from 1971 to the present, carriers have experienced an average of three wage increases a year. Wages have increased by $ 29,149 over that time, ,954 of that coming in COLA increases, ,195 in general increases. The employer believes COLA to be ¡°an outdated wage benefit¡±. Further, nationally only a small number of employees enjoy COLA. He contended that COLA is a ¡°stealth element¡± and should not be a ¡°given¡± in collective bargaining. COLA¡¯s linkage to the CPI-W makes it difficult to plan budgets and to set rates because of its unpredictability. An outside consulting firm estimates that inflation and COLA resulted in a 16.2% increase in wages in the last agreement. He also said that private sector employers who do have COLA obligations in the contracts with their employees have a more modest arrangement. He specifically alluded to UPS and its lump sum based, capped version of COLA. His testimony was in support of the Postal Service¡¯s attempt to eliminate COLA.



After lunch, Mr. Develin addressed ¡°quit rates¡± and wage rates for rural carriers. The quit rate for regular rural carriers is .9%. It was his testimony that the current quit rate for full time employees in the private sector was well above 10%. The quit rate for RCA¡¯s in Fiscal Year 2000 was 12.9%. This is comparable to similarly situated employees in the private sector. Although he threw out several statistics with narrative testimony on this issue, his conclusion was that the quit rate is low because the jobs in the rural craft and the Postal Service generally, are good jobs with generous wages and benefits with a no lay off protection for regular rural carriers.



His testimony was replete with statistics on the wage and benefit issue comparing postal employees, and specifically rural carriers, to private sector workers. He stated that in Accounting Period 7 Fiscal Year 2001, the cost per hour to the employer for a regular rural carrier was .04 compared to the private sector at .55. Additionally, the weighted average for RCA¡¯s was .54 an hour as compared to .65 an hour for a similarly situated employee in the private sector. Mr. Develin also addressed the issue of HCR contractors. There are 5,758 box delivery HCR¡¯s. The weighted average hourly remuneration is .64.



Mr. Develin was cross-examined by NRLCA lead legal counsel, Bill Peer. Due to the fact that part of Mr. Develin¡¯s direct testimony had referenced the UPS contract, Mr. Peer concluded his cross-examination of this witness by requesting that the NRLCA be provided with a copy of that document. The witness promised to do so.



At this point Mr. Ed Ward, the Postal Service¡¯s lead counsel, was prepared to take the witness stand. However, the NRLCA made a motion to the arbitrator that Mr. Ward¡¯s testimony was not necessary because Mr. Ward was going to recount and analyze all of the past postal arbitration awards and interject editorial comment throughout the presentation. The NRLCA¡¯s position was that the arbitrator only need look at the printed contracts. Within those booklets, one can find the manifestation of the decisions of previous arbitrators. After the motion was considered by the arbitration panel, the motion was denied. Postal Service attorney, Jon Saperstein, asked Mr. Ward to give some background as to his education and postal service employment. Mr. Ward provided an impressive educational and employment resume¡Ç to the panel.



Sprinkled throughout his testimony were references to virtually all of the arbitrators who have issued decisions in Postal Service disputes with its major unions during the last twenty five years. He referenced the Volz Award-Mr. Volz was the arbitrator in the 1984 USPS/NRLCA interest arbitration proceeding-in which the arbitrator had concluded that approximate parity existed between the rural carriers and the other major postal unions. This was in reference to the attempt of the NRLCA to ¡°catch up¡±, i.e., recover the approximately difference in salary that resulted because of the capped COLA provision that was negotiated and subsequently ratified in 1978. He also pointed out to the panel that the rural carriers had ratified negotiated agreements in recent years by overwhelming margins, agreements that did not include the ¡°catch up¡±. He cited the ratification of a negotiated agreement by 99.23% and then, almost mockingly, noted that a later ratification of a tentative agreement had squeaked by with only a 99.11% approval rating. The 99.11% reference was the ratification of the 1995-1999 National Agreement with only the state of Arizona voting against ratification. All of this was to show the arbitrator that apparently rural carriers have been happy with their lot.



Despite the angry denunciation by NRLCA arbitrator, past president Steve Smith, of the Postal Service¡¯s tactics on an earlier day of the proceedings, Mr. Ward read articles from The National Rural Letter Carrier that were published during the two instances when the NALC was attempting to decertify the NRLCA as the collective bargaining agent for the rural craft. He also recounted the efforts of another union, the NPMHU (Mail Handlers) that attempted to, at a later date; remedy what was perceived to be a very unfavorable negotiated agreement. He quoted the arbitrator in that arbitration as having said, ¡°A deal is a deal.¡± This quote and the related testimony was the last of many times that the Postal Service has told the neutral arbitrator, Mr. Wells, that he should not grant the rural carriers something that was negotiated in 1978 and something that the NRLCA has not been successful in achieving in negotiations since that time.



Mr. Ward went on to discuss the Fleischli Award. This is the award that gave the city carriers ¡°level six¡±, although it is now called ¡°grade 1¡±. After stating that, ¡°We lost, big time¡±, Mr. Ward went on to describe the process that followed the issuance of the award, a process in which he stated that the NALC made concessions related to work methods which save the USPS -100 million a year. Next, he discussed the recent Goldberg Award, the award for the APWU. Although he spent considerable time in doing so, the summation of his comments is that the award was a favorable one for the USPS. He was particularly pleased that Mr. Goldberg rejected the APWU¡¯s parity argument. From 1907 and until the Fleischli Award, the NALC and the APWU had experienced wage parity. Although there were some 58,000 upgrades granted in the recent APWU decision, most from level 4 to level 5, Mr. Goldberg did not grant an upgrade to the overwhelming majority of APWU members. Mr. Ward did not want that point lost on the neutral arbitrator.



Mr. Ward gave testimony concerning EVA over the last five years. Managers have to meet goals regarding service, finances, and employee satisfaction in order to receive this pay. He pointed out that the EVA payments are in lieu of step increases, general increases, and COLA. He said that the percentage of payout has diminished over time. He also discussed the cost of retirement and health benefits. The Postal Service pays billions of dollars related to retirement. Contributions to the health care premium are also a concern. The employer desires to decrease the amount of employer contribution.



Before ending his direct testimony, Mr. Ward stated that the Postal Service was million below plan for Quarter 1 Fiscal Year 2002. Volume is down 2.8 billion pieces (5.5%) as compared to SPLY (Same Period Last Year). He said that this was the single largest drop in recent history. In addition, revenue is $1 billion short despite the decrease in 16,000 full time employees in the last 18 months.



Mr. Ward was cross-examined at length by NRLCA legal counsel, Bill Peer. After some brief re-direct questioning he was excused from the witness stand.



The Postal Service then called Ms. Andrea Wilson, USPS Contract Administrator NRLCA/NPMHU, as its next witness. Ms. Wilson was asked to give a summary of her employment background with the USPS. She has been an employee for 34 years, starting as a clerk in Baltimore. She has been involved with the NRLCA at the Headquarters level since 1984 and was the chief spokesperson for the Postal Service in the 1999 and 2000 negotiations with the NRLCA.



She began her testimony by saying that the evaluated system is ¡°not an incentive system¡±, but there were some incentives in the system. She spoke of the short-lived S.E.T. program of a few years ago. She then listed ¡°advantages¡± that rural carriers have over city letter carriers. She gave the following:

(1) Time standards for raw letter casing are better than the city carriers¡¯ have-16 as opposed to 18,

(2) A better time standard for pull down-60 as opposed to 70;

(3) Option of casing DPS mail;

(4) 71% of rural carriers have Saturday as their off day compared to 18% of city carriers;

(5) Rural carriers only have to work relief day on their own route and know one route;

(6) One relief for each route gives better chance to get leave;

(7) Only charged 8 hours of leave when on leave;

(8) Overtime built into retirement;

(9) PTF¡¯s guaranteed number of weekly hours, city PTF¡¯s are not;

(10) No Sunday or Christmas work; and

(11) Rural carriers are compensated for additional duties.



Ms. Wilson stated that the Postal Service is not willing to continue MOU .2 (the MOU wherein the parties in the past have agreed that the time standards, taken collectively, represent a fair day¡¯s pay for rural carriers) because the Postal Service believes the ¡°time standards are not appropriate¡±. She said that rural carriers work ¡°substantially below the evaluated hours¡±. To support that contention the Postal Service had looked at a 5 year period from FY 1997 through FY 2001. The data indicates that, on average, the actual work hours were 9.4% below the standard hours, with the breakdown being 9.8% for non-L routes and 9.0% for L-routes. In the most recent year, FY 2001, all routes were 10.4% under with L-routes being 10.1%. She noted that in FY 1997 L-routes were working 8.9% under. In 1984, the ¡°bump¡± was 3.3%. She told the arbitration panel that carriers on a 44-K route, the average route, are being paid for 4 ¨ö hours of overtime for which they are not working, this while volume is declining. She said that the NRLCA proposals would increase the evaluations of routes by 288 minutes which would increase the ¡°bump¡± by 96.3%.



As she continued her testimony, Ms. Wilson said that the USPS proposals on mail count and time standards would ¡°fix¡± the problem of the inappropriate bump. She testified that a two-week count is ¡°as accurate and reliable as a four-week count¡±. There has been no change to the time standards, yet the carriers have been the beneficiaries of new equipment and improved work methods, she said. She stated that the current time standards are ¡°too liberal¡± and that the ¡°outdated standards must be adjusted.¡± This has given rural carriers a ¡°windfall¡±. The definition of a letter and a parcel are ¡°unreasonable definitions¡±. The Postal Service is proposing to change the definition of a parcel to be only those items that would not fit into a standard #1 mailbox. Also, the USPS is proposing to change the definition of a letter from 5 inches to 6 1/8 inches.



In response to the union¡¯s observation that the rural craft proportionately generates significantly fewer grievances, the Postal Service¡¯s witness stated that this was the case because of the hard work of both parties in seeking innovative ways to resolve disputes. Additionally, she said that there are less grievances concerning overtime. However, the relationship has not been without a cost to the Postal Service. Most notably, millions of dollars are spent to maintain QWL/EI, a process that nurtures the relationship that exists between the parties. She asked the panel not to penalize the Postal Service for the cooperative relationship that the Postal Service has already paid for at a considerable cost.



Ms. Wilson then spoke on the relief system saying that there had been some problems in hiring and that the system was difficult to maintain. Hiring TRC¡¯s had helped. She gave a breakdown of the various leave replacement designations: 117 substitutes (73¡¯s), 444 RCR¡¯s (75¡¯s), 476 PTF¡¯s (76¡¯s), 10,827 TRC¡¯s (70/70-1¡¯s), and 47,162 RCA¡¯s (78¡¯s). Comparing PTF¡¯s to the other leave replacements was comparing apples and oranges. Acknowledging several NRLCA proposals that would enhance the position of the non-career leave replacements, she stated there was never any intention to grant career benefits to any classification other than the PTF¡¯s.



Before finishing her direct testimony, the witness repeated the main points on which she wanted the arbitration panel to focus. She stated that the evaluated system had advantages for both parties. (However, no one on the NRLCA team can recall any listing by the witness of the advantages for the Postal Service.) Bill Peer, NRLCA legal counsel, then cross-examined Ms. Wilson. During the cross examination she simply restated what she had testified to earlier. Mr. Peer suggested that some of the ¡°benefits¡± to rural carriers alluded to by Ms. Wilson were mandated by law and were not the product of negotiations between the parties. NRLCA panelist, Steve Smith, commented that it was the first time in his experience that he had ever heard the Postal Service say that the evaluated system was not an incentive system. He also stated that the most major change in time standards had been the DPS time standard, a standard for letters that resulted in the Postal Service getting more work done for less time credit; and, the carriers¡¯ extra effort was the logical explanation for the bump continuing to increase in the face of the diminished time standard.



Counsel for the Postal Service, Jon Saperstein, questioned Ms. Wilson about the 1990 MOU in which the USPS and the NRLCA agreed to hold in abeyance three provisions of the National Agreement in anticipation of the negative impact of DPS on route evaluations. Following testimony regarding that issue, NRLCA panelist, Steve Smith, made it clear that those carriers who agreed to carry overburdened routes exceeding 57:00 standard hours did the work at no additional cost to the Postal Service.



Ms. Wilson was then excused from the witness stand and the day ended.


CONTRACT ARBITRATION Day 18<
DAY 18: CONTRACT ARBITRATION-JANUARY 23, 2002



On day 18 of the hearings the Postal Service called as its first witness, Mr. James Kiser, Manager of Finance, Richmond District. USPS attorney, Jon Saperstein, conducted the direct examination of Mr. Kiser. Mr. Kiser was asked to tell the panel of his educational and employment background. Mr. Kiser stated that he had a bachelor¡¯s degree in the area of business administration and finance. He began his employment as an emergency hire in the rural craft in Bluefield, WV, in 1978. After a short time, he became a city carrier and then went on to many other postal positions before getting his current assignment in 1992. He is very familiar with mail volume and the cost of mail volume analyses. Additionally, he is experienced in assessing workload based on the volume and allocating work hours as the volume fluctuates. The only source of the data used is CDVP (City Delivery Volume Pieces). He told the panel that analyses of mail volumes are necessary to allocate delivery budgets, as an indicator of space requirements, and to determine the size and structure of vehicles.



The rest of Mr. Kiser¡¯s testimony was in support of the Postal Service¡¯s proposal for a two week mail count during the period the Postal Service believes is the most average two weeks of mail volume. According to the data compiled, that period would be the last week of February and the first week of March. Mr. Kiser stated that there is a basic consistency to the up¡¯s and down¡¯s of mail volume. He testified that the volume is above average during Accounting Periods 1, 2, & 3. It drops off in AP 4 and goes back up in AP 5 and then ¡°gravitates to average¡± in AP¡¯s 6 and 7. Beginning with AP 8 the average daily volume is negative for the rest of the Fiscal Year. The Postal Service looked at data on volume for Fiscal Years 98, 99, 00, & 01. Mr. Kiser said that week 2 of AP 7 is the closest to average of any non-negative week and the volume for that week is .295% above the average daily volume. On the other hand, the NRLCA proposal for a four week mail count with the Labor Day holiday included is during a period in which the daily volume averaged 2.065% above the fiscal year average daily volume. Further, the day after Labor Day is 12.53% above the average daily volume of non-holiday days, and the highest of any of the holidays.



After concluding his direct testimony, Mr. Kiser was cross-examined by Bill Peer. In cross-examination, Mr. Kiser stated that the Postal Service¡¯s analysis was based on the data for Fiscal Years 1998 through 2001 because data previous to that was less detailed and did not count as many things. It was repeated that the data is solely based on mail delivered by city carriers and that these volumes represent 74% of business and residential deliveries. In response to NRLCA panelist, Steve Smith, who made the point that mail volume delivered by rural carriers is primarily estimated using a linear measurement system, Mr. Kiser told the panel that at this time there is an actual piece count on approximately 60% of mail volume delivered by rural carriers. DPS mail and box holders can be counted and 34% of flats were now being counted on automated equipment. The arbitration panel chairman, Mr. Wells, was also interested in knowing if there was specific data on rural volume and if there would be any proportional difference between volumes delivered by rural carriers versus city carriers. The witness did not believe so. The cross-examination and questioning by panel members concluded and the witness was excused.



After lunch, Mr. Kiser was again called to the witness stand to give testimony regarding the cost of mail counts. He stated that counters are managers from within and contract individuals, usually retired postal employees who have experience with rural routes and mail counts. The numbers that Mr. Kiser arrived at are based on a study of the cost of the two week national mail count in FY 2001(September 2000) in the former Mid-Atlantic Area and by the process of extrapolation he could give some firm numbers as to the cost Postal Service wide. 41,468 routes were counted. The total cost to the Postal Service was ,389,526. 9,641 counters were needed. On average, 1 counter was needed for 4.4 routes. The hourly cost of using a supervisor was .38. The hourly cost of using a contract individual was .00. Nationally, 19,321 extra work hours were needed daily. The witness stated that if there had been a four week count the cost would have been ,388,573. He also stated that a two week count is more accurate. The witness was then cross-examined. Before Mr. Kiser left the witness stand, NRLCA panelist, Steve Smith, stated that a longer period was better than a shorter period in ascertaining the proper evaluation of a route. Chairman Wells mused that there ought to be a ¡°more sophisticated way¡± and that the mail count seemed to be a ¡°primitive means in order to¡± get an accurate count. Mr. Kiser was then excused from the witness stand.



The Postal Service¡¯s next witness was Bob West. Mr. West gave an overview of his employment history with the USPS. He started in Alexandria, VA, as a city carrier, before serving in the military which included a tour in Viet Nam. After his military service was finished, he returned to the Postal Service and progressed through various positions. He has been at Headquarters since 1983 and has had involvement with the rural craft since 1978. He has been on several contract negotiating teams for the Postal Service.



Mr. West agreed with the NRLCA¡¯s history of mail count timeline which had been presented to the arbitration panel earlier in the interest arbitration process. However, he wanted to clarify for Chairman Wells that every count since 1995 has been a national count with the opt-in feature. Mr. West¡¯s direct testimony was of short duration. NRLCA legal counsel, Bill Peer, cross-examined the witness. During the cross-examination, Mr. West stated that the Postal Service wanted a count in late February and the first of March. He also said that a count in that time frame was ¡°fairer, more representative¡±. The cross-examination ended and the witness was excused.



USPS lead legal counsel, Ed Ward, again called Mr. Kiser to the witness stand. As Mr. Ward was about to question the witness, NRLCA legal counsel, Bill Peer, interrupted to inform the panel that he wanted to make a motion on behalf of the NRLCA. Mr. Peer explained to the arbitrator that the witness was going to give testimony related to a study that the Postal Service had conducted unilaterally and without giving notice to the union. The NRLCA contended that the study was a unilateral action that breached the legal mandate of good faith bargaining, was not in accordance with the established past practice of joint studies, and was a violation of Article 34. Therefore, the NRLCA made a motion to exclude both the exhibits and the supporting testimony that the witness was prepared to give. Once the motion was made, a flurry of animated exchanges occurred. After listening to both sides go back and forth, the Chairman conferred with his colleagues on the panel. The arbitration panel then went into executive session.



The panel returned and Chairman Wells announced the decision of the panel. He ordered the parties to prepare briefs on the issue and submit them to the panel by 10:00 A.M. the next morning. Due to this development, Mr. Ward told the arbitrator that the Postal Service could not continue its case until the matter was resolved. At that time Bill Peer told the panel that another day (s) of hearings would be necessary in addition to those already scheduled. That suggestion was taken under advisement as day 18 ended.

CONTRACT ARBITRATION Day 20

DAY 20: CONTRACT ARBITRATION-JANUARY 25, 2002



Day 20 of the arbitration hearing was called into session at 9:30 A.M. Friday, January 25, 2002. NRLCA consultant, Dr. Ken Mericle, was called to the stand to continue his rebuttal testimony that had begun on the previous day. He began by rebutting what Postal Service representative, Bill Daigneault, Headquarters Labor Relations Specialist, had said about some of his calculations and conclusions. Dr. Mericle clarified his interpretation of overtime hours and explained the theory of built-in overtime. He next addressed the issue of 2080 and the number of work days and hours that workers are available. Dr. Mericle then challenged the Postal Service¡¯s assertion that carriers were ¡°earning money and not working for it¡±. He reiterated his conclusion that the Postal Service saves .5 million by allowing route evaluations to exceed the 57:36 (48K) evaluation.



Before concluding his direct testimony, Dr. Mericle challenged the analysis that had been put forth several days earlier by Postal Service witness, Mr. Alexandrovich. Postal Service lead counsel, Ed Ward, then began his cross-examination of Dr. Mericle. Mr. Ward questioned Dr. Mericle extensively about his conclusions concerning the unilateral time study performed by the Postal Service. Mr. Ward then moved on to attack Dr. Mericle¡¯s rebuttal of Bill Daigneault¡¯s testimony. The cross-examination concluded and the arbitration panel was given an opportunity to question the witness. Arbitrator Wells asked Dr. Mericle to give an overview of his testimony and explain to the arbitrator what points he would like the panel to take from his testimony. Dr. Mericle was specifically asked by arbitrator Wells his opinion of the Postal Service¡¯s study and the NRLCA presentation to change time standards. Dr. Mericle firmly stated he would not change the standards based on what either side had presented. Dr. Mericle¡¯s testimony concluded.



NRLCA counsel, Michael Gan, called Dr. Amy McCarthy to the stand to rebut the testimony of Mr. Alexandrovich. Dr. McCarthy was asked to give her educational background and her experience. Dr. McCarthy was testifying as an expert witness on wages, salaries, and benefits. She commented on annual salary versus hourly salary. She also testified on the Postal Services exhibits presented by Mr. Alexandrovich. Dr. McCarthy had recalculated all of the exhibits presented by Mr. Alexandrovich to more closely reflect actual employee compensation contrasting the Postal Service¡¯s slant toward employer cost. Dr. McCarthy noted that in May of 1978 the salary for a 40 hour city route and a 40 hour rural route was identical, ,501. She stated that by any of the generally recognized economic measurements, rural carrier compensation had not kept pace with the private sector since 1978. She made the comparison of a 40 hour rural route and a 40 hour city route. She also made a comparison of a 44 hour rural route and a 40 hour city route. She was critical of Postal Service¡¯s analyses based upon all employers regardless of the number of employees. She explained that it was more appropriate to use employers with 500 or more employees in order to reach any reliable conclusions. Dr. McCarthy then concluded her direct testimony.



Arbitrator Wells asked her what she would like the panel of arbitrators to ¡°take away¡± from her presentation. Dr. McCarthy responded with two points: (1) city letter carriers are the only group that can be compared to rural letter carriers, and city carriers are paid more; (2) since May of 1978, pay increases for rural carriers have failed to keep them even with comparable employees in the private sector.



Postal Service lead counsel, Ed Ward, began cross-examination. At 4:00 P.M. cross-examination ended and with no further questions from the arbitration panel Dr. McCarthy was excused from the witness stand.



NRLCA counsel, Michael Gan, then called NRLCA Secretary-Treasurer, Clifford Dailing, to the stand to rebut the testimony of Bob West. Clifford testified to the case set-up that Mr. West had described earlier. The case labels used were the actual case labels from Mr. Dailing¡¯s route. Clifford explained that his entire route was not represented on the equipment used by the Postal Service to demonstrate how a route is set up. He further explained there were two pieces of equipment missing from the Postal Service¡¯s example and the absence of that equipment left the impression that casing was much easier than it actually is. He covered the history of the casing equipment he had used on his route since he began his postal career. Postal Service counsel Jon Saperstein conducted a brief cross-examination of Mr. Dailing. There were no questions from the arbitration panel and Mr. Dailing was excused from the witness stand.



At 4:58 P.M. arbitrator Wells recessed the hearing until Thursday January 31 at 9:00 A.M.