32:0020(3)CA - - Justice, Bureau of Prisons, Washington, DC and Bureau of Prisons, Federal Correctional Institute, Ray Brook, NY and AFGE Local 3882 - - 1988 FLRAdec CA - - v32 p20
[ v32 p20 ]
The decision of the Authority follows:
32 FLRA No. 3
UNITED STATES OF AMERICA
FEDERAL LABOR RELATIONS AUTHORITY
UNITED STATES DEPARTMENT OF JUSTICE
BUREAU OF PRISONS, WASHINGTON, D.C. AND
BUREAU OF PRISONS, FEDERAL CORRECTIONAL
INSTITUTION, RAY BROOK, NEW YORK
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, AFL-CIO, LOCAL 3882
Case No. 1-CA-40368
[22 FLRA 928]
DECISION AND ORDER ON MOTION FOR
PAYMENT OF ATTORNEY FEES
I. Statement of the Case
This case is before the Authority on exceptions filed by the Charging Party (the Union) and the Respondent to the attached Decision of the Administrative Law Judge. The Judge found that under the Back Pay Act, 5 U.S.C. § 5596, the Agency was required to pay attorney fees and costs in connection with a previously decided unfair labor practice case. For the reasons stated below, we agree with the Judge and will order the payment of attorney fees in the amount ordered by him.
The facts relating to the underlying unfair labor practice proceeding for which attorney fees and costs are sought are set forth in detail in United States Department of Justice, Bureau of Prisons, Washington, D.C. and Bureau of Prisons, Federal Correctional Institution, Ray Brook, New York, 22 FLRA 928 (1986) (Ray Brook). See also Judge's Decision at 2-5.
In Ray Brook, the Authority found that the Respondent committed an unfair labor practice by refusing to comply with an arbitration award. The award required the Respondent to reinstate an employee, Richard Frontera, to his former position at the Federal Correctional Institution (FCI) at Ray Brook, New York. The Respondent did not return Frontera to FCI, Ray Brook, but instead reassigned him to the United States Penitentiary, Lewisburg, Pennsylvania.
The Authority ordered the Respondent to comply with the Arbitrator's award. The Authority's decision was enforced by the United States Court of Appeals for the Second Circuit. United States Department of Justice, Bureau of Prisons, Federal Correctional Institution (Ray Brook) v. FLRA, No. 86-4133 (2d Cir. Order April 22, 1987).
The motion for attorney fees and costs relates only to the unfair labor practice proceeding.
III. Administrative Law Judge's Decision
The Judge first addressed the timeliness of the motion for attorney fees and costs. He noted that following the Authority's decision of July 30, 1986, in Ray Brook, Gay Snyder served her motion for attorney fees and costs under the Back Pay Act on August 19, 1986, and addressed it to the Authority's Boston Regional Director. Snyder's motion stated that copies of her motion were being sent to the other parties and to the Authority's Office of Administrative Law Judges (OALJ) in Washington, D.C. The Boston Regional Office received the motion on August 21, 1986; the OALJ received copies of the motion on August 22, 1986. The Regional Director forwarded a copy of the motion to the Authority's Office of Case Management (OCM), which received the copy on September 2, 1986. On September 11, 1986, OCM transferred the motion to the Chief Administrative Law Judge pursuant to section 2430.7 of the Authority's Regulations.
Before the Judge, the Respondent argued that the motion should be dismissed because it was improperly filed with the Regional Director, or was received by the Authority's central office from the Regional Director more than 30 days after the Authority's decision. The Judge rejected this argument. He noted that the Authority's Regulations to date had not addressed the procedures for applying for attorney fees pursuant to the Back Pay Act. The Judge also noted that the Regulations gave Regional Directors certain responsibilities for resolving backpay controversies. Therefore, he concluded that it was not unreasonable for Snyder to file her motion with the Regional Director.
The Judge further stated that: (1) the motion was served on all parties and the OALJ; (2) no party was prejudiced; and (3) the motion was received directly by the OALJ and by the Authority from the Regional Director within the time period set by the Authority for filing applications for attorney fees pursuant to the Equal Access to Justice Act.
Citing the Authority's decision in United States Department of Housing and Urban Development, Region VI and United States Department of Housing and Urban Development, Region VI, San Antonio Area Office, 24 FLRA 885 (1986) (HUD, San Antonio), the Judge stated that the Back Pay Act authorizes awards of attorney fees against the Government where an appropriate authority has found: (1) that an employee has been affected by an unwarranted or unjustified personnel action which results in the withdrawal or reduction in pay, allowances, or differentials; and (2) that this action be remedied by an award of backpay. He found that the motion for attorney fees in this case met these threshold requirements.
The Judge next noted that the Back Pay Act requires that fee requests be judged under the standards provided in 5 U.S.C. § 7701(g) for awarding attorney fees. Applying these standards, the Judge found the following:
1. Incurrence of attorney fees: Attorney fees were incurred by the Union on the employee's (Frontera's) behalf. Frontera was represented by his certified bargaining representative--the Charging Party--and by the Union's counsel. Office of Personnel Management (OPM) regulations governing backpay provide that an employee or an employee's personal representative may request payment of reasonable attorney fees. 5 C.F.R. § 550.806. The Authority and the Merit Systems Protection Board (MSPB) have granted attorney fees in analogous circumstances. See Naval Air Development Center, Department of the Navy and American Federation of Government Employees, Local 1928, AFL-CIO, 21 FLRA 131 (1986); Department of Health and Human Services, Health Care Financing Administration, Region IV, Atlanta, Georgia and National Treasury Employees Union, Chapter 210, 21 FLRA 910 (1986); O'Donnell v. Department of the Interior, 2 MSPB 604 (1980).
2. Prevailing party: The General Counsel and the Charging Party were the prevailing parties. Frontera also prevailed in that he obtained a significant part of the relief sought, namely reinstatement to his position at Ray Brook, backpay, and expenses incurred as a result of his improper reassignment. HUD, San Antonio, 24 FLRA at 888.
3. Interest of justice: The result obtained in the underlying unfair labor practice proceeding shows that an award of attorney fees is warranted in the interest of justice. The Agency's refusal to comply with the arbitrator's award was clearly without merit and wholly unjustified, and the Agency knew or should have known that it would not prevail on the merits in the unfair labor practice proceeding.
4. Reasonableness of the amount of the award: Gay Snyder, for part of her period of representation, and Martin Cohen, at all relevant times, were employed by the Union. They requested a market rate fee for all work including that performed when employed by the Union, based on Curran v. Department of the Treasury, 805 F.2d 1406 (9th Cir. 1986). In Health Care Financing Administration, 21 FLRA 910 (1986), the Authority held that where attorney fees are to be paid to a union, including a special union fund expended solely for legal work, the fees are computed based on actual costs rather than on the prevailing market rate for the legal services rendered. The MSPB has held that a union attorney's hourly salary rate must be based on the total number of annual work hours for which the attorney was paid, rather than on the hours of actual service. Contrary to the position urged by Snyder and Cohen, there can be no deduction for holidays, sick leave, and annual leave. Powell v. Department of the Treasury, 85 FMSR 5074, 26 MSPR 343 (1985); Overton v. Department of the Treasury, 85 FMSR 5083, 27 MSPR 394 (1985).
As set forth in detail at pages 11-13 of his Decision, the Judge reviewed the itemized lists of the time spent and work performed on the case by Snyder and Cohen. The Judge found that there was no evidence to show that counsels' hours: (1) were duplicative of the General Counsel's; (2) failed to make a substantial contribution to the General Counsel's efforts in prosecuting the case; or (3) were not effectively used in advancing the employee's interests. Based on his review, the Judge recommended that the Authority order the Respondent to pay $2,082.42 to the American Federation of Government Employees (AFGE) Legal Representation Fund for Cohen's work and for the work performed by Snyder while she was employed by AFGE. He also recommended, based on his review of Snyder's work as the Charging Party's private counsel after her position at AFGE was terminated by a reduction in force, that the Respondent be ordered to pay her $3,030.34.
IV. Positions of the Parties (*)
A. The Union
The Union contends that the Judge erred by failing to find the following: (1) a fee award to an attorney employed by a union should be based on a prevailing market rate basis rather than on a "cost based" formula; and (2) assuming that a cost based fee is the appropriate standard, an attorney's hourly compensation rate should be based on the hours actually worked on an annual basis, not the total number of annual hours for which the attorney was paid. The Union further contends that contrary to the Judge's finding, the value of annual and sick leave, health benefits, retirement contributions, and similar items should be considered as part of an employee's salary in calculating an employee's hourly rate of pay.
B. The Agency
The Agency challenges the Judge's award of fees in its entirety. The Agency contends that the Judge erred in ruling that the Agency was required to make a special showing that private counsel was not necessary for the effective investigation and prosecution of the case. The Agency asserts that in any event, such a showing was made in this case. The Agency further contends that fees should not be awarded because Frontera: (1) was under no obligation to pay attorney fees to Snyder and thus did not incur any fees; (2) was not a party to the case and therefore was not represented at all; and (3) was not a "prevailing party" within the meaning of the Back Pay Act and 5 U.S.C. § 7701(g).
A. Timeliness of the Motion
No exceptions were filed to the Judge's finding that the motion for fees and costs was timely filed. We adopt the Judge's finding for the reasons stated by him.
On April 4, 1988, the Authority published proposed rules concerning the processing of applications for awards of attorney fees under the Back Pay Act. See 53 Fed. Reg. 10885 (April 4, 1988). Section 2431.5 of the proposed rules provides that an application for attorney fees under the Back Pay Act may be filed with the Authority no later than 30 days after the entry of the Authority's final order in an unfair labor practice proceeding. Until final rules are issued and become effective, the Authority will continue, as did the Judge, to apply equitable considerations to the timeliness of such motions and to be guided to the extent practicable by our regulations for the filing of applications for fees under the Equal Access to Justice Act. See 5 C.F.R. § 2430.
B. The Agency's Exceptions
In HUD, San Antonio, 24 FLRA 885 (1984), the Authority addressed for the first time the standards to be applied to requests for attorney fee awards under the Back Pay Act in unfair labor practice cases. The Authority held that under the standards set forth in 5 U.S.C. § 7701(g)(1), as incorporated by the Back Pay Act, it must be shown that: (1) attorney fees were incurred; (2) the employee was the prevailing party; (3) an award was warranted in the interest of justice; and (4) the amount of the award requested was reasonable.
In the instant case, in addition to raising specific objections to the Judge's recommended Decision, the Agency asks that we reconsider the Authority's holding in HUD, San Antonio. The Agency argues that no attorney fees were incurred by the employee because "the employee was not a party to this case and was therefore not represented at all." Agency's Brief at 2. The Agency further contends that since the employee was under no obligation to pay attorney fees, none were incurred. These arguments must be rejected.
As the Judge found, the Union and its counsel filed the charge in this case and were at all relevant times prosecuting the case primarily, if not solely, on behalf of employee Frontera. Frontera was the sole person who suffered whatever harm was occasioned by the Agency's commission of an unfair labor practice. The remedy sought, and eventually obtained, through the administrative and judicial process was personal to Frontera.
In agreement with the Union, we believe that the term "prevailing party" as used in § 7701(g)(1) refers explicitly to MSPB proceedings. Under the Back Pay Act, an employee who has suffered an unjustified personnel action may or may not be a direct "party" to the range of proceedings which can give rise to an award of attorney fees.
For example, individual employees who are grievants in negotiated grievance proceedings generally are not "parties" to arbitration proceedings under the Statute. Local 1600, American Federation of Government Employees and The Naval Ordnance Station, Indian Head, Maryland, 13 FLRA 345 (1983). Nonetheless, the Back Pay Act authorizes awards of fees to counsel who represent successful grievants in binding arbitration proceedings. See, for example, U.S. Customs Service and National Treasury Employees Union, Chapter 136, 21 FLRA 932 (1986) (grievant who should have been temporarily promoted was awarded backpay and attorney fees under the Back Pay Act; arbitrator found that the grievant was the prevailing party); Internal Revenue Service, Baltimore District Office and National Treasury Employees Union and NTEU Chapter 62, 21 FLRA 918 (1986) (grievant's suspension was set aside and she was awarded backpay and attorney fees under the Back Pay Act; the Authority found that attorney fees were incurred in behalf of the employee and the grievant was the prevailing party); Health Care Financing Administration, Region IV, Atlanta, Georgia, 21 FLRA 910 (arbitrator ordered grievant retroactively promoted with backpay and awarded attorney fees; grievant had incurred attorney fees and was the prevailing party).
To read the Back Pay Act to require an employee to file unfair labor practice charges in addition to, or as opposed to, the Union filing such charges as the representative of that employee would emphasize form over substance and render the Back Pay Act's provisions inapplicable in a large number of cases. We do not believe that such an interpretation is necessary or appropriate. We agree with the Union that the reference in 5 U.S.C. § 5596(b)(1)(A)(ii) of the Back Pay Act to "standards established under section 7701(g)" refers to the standards for determining that an award is in the interest of justice, including any case in which the agency's action was clearly without merit.
Accordingly, we conclude that the fact that the Union was a "party" to the case within the meaning of the Authority's regulations because it had filed the charge, but Frontera had not filed a charge and was therefore not a "party" within the meaning of those rules, does not preclude an award of attorney fees. We further conclude that the Union, acting at all times on behalf of Frontera, incurred fees within the meaning of the Act. See O'Donnell, 2 MSPB at 608-10.
The fact that the Union, on behalf of Frontera, prevailed in the unfair labor practice proceedings is beyond question. As fully set forth in the Judge's Decision, through the course of this litigation Frontera was reinstated to his position and was awarded backpay.
We further conclude, in agreement with the Judge, that an award of fees in this case clearly meets the interest of justice standard. The sole issue in the unfair labor practice proceeding was the Agency's failure to comply with an arbitration award. The award specifically set forth the Arbitrator's ruling that Frontera was to be reinstated to a position in Ray Brook, New York, and that his assignment to Lewisburg, Pennsylvania did not constitute compliance with that award. Nonetheless, the Agency continued to refuse to properly reinstate Frontera throughout the course of substantial litigation, including the unfair labor practice proceeding and an unsuccessful appeal to the court of appeals. The employee's position was vindicated at each step of these proceedings. We believe that this case presents the type of situation to which the authorization of attorney fee awards in MSPB and related proceedings is intended to apply. See, for example, discussion of the legislative history of 5 U.S.C. § 7701(g) contained in Allen v. U.S. Postal Service, 2 MSPB 582, 587-90 (1980).
In its remaining exception, the Agency argues that the burden should be on the party requesting attorney fees to demonstrate that private counsel was necessary for the effective investigation and prosecution of the case. The Agency contends that HUD, San Antonio improperly created a presumption in favor of attorney fee awards and requires an agency to show that the presence of the attorney was not necessary. The Agency also argues that counsel's contributions in the instant case were limited to assisting in the filing of the charge and defending an allegation of untimeliness.
We do not construe the decision in HUD, San Antonio as having created a presumption in favor of attorney fee awards. In discussing one aspect of the standards relating to the payment of fees--the reasonableness of the amount of the award--the Authority noted in that case that counsel had billed for work in preparing for the hearing, counsel's participation at the hearing, and the submission of a post-hearing brief. The Authority stated:
Since these aspects of participation are entitlements under the Authority's Rules and Regulations, we will not second-guess a party's decision to seek legal representation for such purposes in an unfair labor practice proceeding. Nor will we conclude, absent a specific showing, that participation by outside counsel was either duplicative of, or failed to make a substantial contribution to, the General Counsel's efforts in prosecuting the case. Although such fee requests must be carefully scrutinized, the mere presence of an administrative prosecutor does not per se preclude an award for contributions to the proceedings made by outside counsel. The specific inclusion of a fee award provision for unfair labor practice proceedings in the Back Pay Act further negates such an interpretation.
24 FLRA at 891 (citations omitted).
In our view, this statement is intended to emphasize two principles: (1) a rule of law making attorney fee awards inappropriate per se when the General Counsel prosecutes an unfair labor practice case is unwarranted because such a rule would nullify the specific provision of the Back Pay Act authorizing attorney fee awards in unfair labor practice cases; and (2) fee requests must be carefully scrutinized to determine whether and to what extent participation by outside counsel contributed to the General Counsel's efforts in prosecuting the case or merely duplicated those efforts. As is the case with establishing that the other elements necessary for an award of fees have been met, the fee requestor must show how counsel's participation is to be viewed against that standard. We reaffirm these principles and will apply them in reviewing the Judge's Decision as to the reasonableness of the number of hours billed and the hourly rate sought.
We find no error in the Judge's granting of the hours requested. While counsel's participation at the hearing itself was not extensive, the question presented in this case was essentially a legal one--whether Frontera's reinstatement to Lewisburg rather than Ray Brook constituted an unfair labor practice. This was not a case which required extensive examination or cross-examination of witnesses to resolve disputed facts. It did not require the submission of expert testimony or numerous exhibits. Noting particularly that the Agency's exceptions do not specifically contest the reasonableness of the number of hours requested in counsel's affidavits and submissions, we adopt the Judge's analysis as to this matter and conclude that his thorough review of counsel's submission should not be disturbed.
C. The Union's Exceptions
The Union excepts to the Judge's recommended decision on the grounds that a fee award to a union-employed attorney should be based on the prevailing hourly market rate of legal services and that even assuming that such an award is to be based on a "cost-plus" formula, the Judge erred in calculating that award. With respect to the latter argument, the Union contends that: (1) the hourly salary of the union-employed attorney should be based on the number of hours per year the attorney actually worked, as opposed to the number of hours per year for which the attorney was paid; and (2) the calculation of the hourly compensation of the attorney should include the value of health care benefits, retirement contributions, and similar items.
In support of its argument that the award should be based on the prevailing market rate, the Union relies on Curran v. Department of Treasury, 805 F.2d 1406 (9th Cir. 1986). In Curran (a case involving fees for representation in MSPB proceedings), the court ruled that use of the market rate for fee awards deposited in a separate fund or account earmarked exclusively for a union's litigation activities did not violate ethical restrictions on the unauthorized practice of law or constitute fee-splitting with a lay entity. The Curran decision, however, is directly contrary to the case law of the Federal Circuit Court of Appeals and the MSPB. See, for example, Goodrich v. Department of the Navy, 733 F.2d 1578 (Fed. Cir. 1984), cert. denied, 469 U.S. 1189 (1985).
We agree with the position of the MSPB and the Federal Circuit. We decline to follow Curran and to overturn our existing interpretation of this matter. We will continue to base fee awards to union-employed attorneys on a cost-plus formula as set forth in Health Care Financing Administration, 21 FLRA 910 (1986). See Department of Defense Dependents Schools, Pacific Region and Overseas Education Association, Pacific Region, 30 FLRA 1206, 1217-18 (1988).
We find no error in the Judge's rulings on the specific calculation of the hourly rate. The Judge's computation is consistent with MSPB practice relating to computation of an hourly salary rate. The Judge calculated the attorney's annual salary, before taxes, and divided it by the total number of hours for which the attorney was paid. He further allowed an equal sum as overhead. This allowance for overhead was designed to make the Union whole for the various costs associated with employing attorneys above and beyond their s