54:0773(79)AR - - DOD, Defense Dependents Schools and Federal Education Association - - 1998 FLRAdec AR - - v54 p773



[ v54 p773 ]
54:0773(79)AR
The decision of the Authority follows:


54 FLRA No. 79

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

_____

U.S. DEPARTMENT OF DEFENSE

DEPARTMENT OF DEFENSE DEPENDENTS SCHOOLS

(Agency)

and

FEDERAL EDUCATION ASSOCIATION

(Union)

0-AR-3033

_____

DECISION

August 28, 1998

_____

Before the Authority: Phyllis N. Segal, Chair; Donald S. Wasserman and Dale Cabaniss, Members.

I. Statement of the Case

This matter is before the Authority on exceptions to an award of Arbitrator Earle W. Hockenberry filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.

The Arbitrator awarded the Union attorney fees incurred for the representation of one grievant during a prior arbitration proceeding (the Fee Award). In that prior proceeding, the Arbitrator, enforcing another arbitrator's award of interest on delayed payments, established the specific date for the accrual of that interest.

For the reasons that follow, we deny the Agency's exceptions.

II. Background and Arbitrator's Award

The Fee Award at issue is the last of three related arbitration awards. The first grievance, resolved before Arbitrator Richard Bloch, involved seventeen grievants and alleged that the grievants were entitled to interest on payments that were untimely paid by the Agency (Bloch Award).(1) In the Bloch Award, the arbitrator sustained the grievance, finding that the Agency's failure to pay interest on untimely payments violated the Back Pay Act, 5 U.S.C. § 5596, and the parties' collective bargaining agreement. In doing so, the arbitrator specifically rejected the Agency's claims that the Agency's action or inaction did not constitute an unjustified or unwarranted personnel action under the Back Pay Act. However, Arbitrator Bloch found that he was unable to determine the amount of the interest to which each of the named grievants was entitled, and therefore, directed the parties to resolve that issue on a case by case basis.

The second grievance, resolved by Arbitrator Hockenberry, alleged that the Agency did not meet the requirements of the Bloch Award because the Agency failed to pay proper interest on backpay determinations that had been paid (Merits Award). In the Merits Award, Arbitrator Hockenberry stated that the "single question" he was charged with resolving involved the "payment of interest on back pay determinations [that had been already made by the Agency] and the application of the logic of the Bloch [A]ward to such decisions by the Agency." Merits Award at 6. In this regard, the Arbitrator found that the Agency handled interest on backpay issues in an inconsistent manner and treated employees disparately. Specifically, he found that the Agency used different lengths of time for the commencement of accrual of interest on backpay and there was confusion as to the methods the Agency used to calculate interest.

The Arbitrator then determined that in calculating the appropriate accrual date for the payment of interest awarded in the Bloch Award, "interest on back pay begins to accrue on the effective date of the withdrawal of pay, allowances, and/or differentials." Merits Award at 8. After making this general finding applicable to all the grievants, the Arbitrator determined that, consistent with the Bloch Award, the amount of interest due to individual grievants had to be resolved on a case by case basis.

The Arbitrator found that the record was sufficient to determine the amount of interest owed to one grievant--grievant Rooney--and the Arbitrator sustained the grievance with regard to that grievant. In this regard, the Arbitrator determined the date from which grievant Rooney was entitled to interest on his delayed payment. However, the Arbitrator found that the record before him was insufficient to make individual determinations as to the specific date interest was to accrue. In this respect, the Arbitrator denied the grievance and directed the issue back to the parties to be resolved on a case by case basis "following the guidance of [the Merits A]ward, and the instructions of Arbitrator Bloch[.]" Id. at 14.

Following the Merits Award, the Union filed a motion with Arbitrator Hockenberry, seeking attorney fees in connection with all aspects of the Merits Award. The Arbitrator set forth the following issues to be resolved in that fee proceeding:

Are the named attorneys entitled to attorney fees for the representation of the grievants in the Merits Award? If so, what is the appropriate amount of attorney fees?

Fee Award at 3.

Before the Arbitrator the Agency argued that the Union was not entitled to attorney fees because: (1) the setting of an interest accrual date does not constitute an award of backpay; (2) the Union was not the prevailing party; (3) fees were not warranted in the interest of justice; and (4) the fees requested were not reasonable. 

Rejecting the Agency's claims, the Arbitrator concluded that the Union was entitled to attorney fees in connection with the Merits Award regarding grievant Rooney--the sustained portion of the grievance. With respect to that portion of the award, the Arbitrator awarded fees and costs totaling approximately $25,000.

In reaching that conclusion, the Arbitrator first set forth the applicable statutory provisions contained in the Back Pay Act, 5 U.S.C. § 5596, and 5 U.S.C. § 7701(g).(2) The Arbitrator then, citing to Allen v. United States Postal Service, 2 MSPR 420 (1980) and U.S. Department of the Navy, Headquarters, Naval District, Washington, D.C. and Fraternal Order of Police, U.S. Navy Yard Labor Committee, 48 FLRA 1264 (1993), set forth the threshold requirement to an award of attorney fees under section 7701(g) as follows: (1) the appellant must be the "prevailing party"; (2) the award of attorney fees must be "warranted in the interest of justice"; and (3) the fee must be "reasonable." Fee Award at 5-6.

First, the Arbitrator determined that the prevailing party requirement was met only with respect to grievant Rooney. The Arbitrator found that the Bloch Award established that the named grievants were entitled under the Back Pay Act to interest payments that the Agency had failed to pay, and therefore, the only matter at issue in the "merits award" was "at what time [] interest was to begin accruing for each [g]rievant[.]" Fee Award at 6. Because, based on the record before him, the Arbitrator was able to make that determination with respect to grievant Rooney, grievant Rooney was a prevailing party. The Arbitrator rejected the Agency's argument that grievant Rooney was not a prevailing party because the merits award only established the date from which interest was to accrue. In this regard, the Arbitrator found that grievant Rooney received the relief he sought--establishment of a date--and "[i]nherent in the establishment of [that] date . . . is the payment of money due to Mr. Rooney as interest." Id. Thus, the Arbitrator concluded, grievant Rooney prevailed.

Second, the Arbitrator found that attorney fees were warranted in the interest of justice. In reaching that conclusion, the Arbitrator cited to Naval Air Development Center, Department of Navy and American Federation of Government Employees, Local 1928, 21 FLRA 131 (1986), and relying on his findings in the Merits Award that the Agency's action with respect to the accrual of interest on backpay was "inconsistent" and "arbitrary," determined that the Agency's action lacked "substantial justification." Fee Award at 7. The Arbitrator also determined that the "grievance has had a beneficial effect to the public in the form of demonstrating the need for the establishment forthwith of policy and guidance and uniform application to the bargaining unit" regarding the payment of interest. Id.

Finally, the Arbitrator found that the attorney fees sought were reasonable. The Arbitrator considered the fact that in the Merits Award the grievance was sustained in part and denied in part, and determined that only those fees incurred with respect to the portion of the award that was sustained--i.e., the setting of the accrual date--could be recovered. Specifically, the Arbitrator found that fees could only be awarded for the work of the attorney that pertained to grievant Rooney, because a party must have prevailed in order to receive attorney fees.

The Arbitrator then reviewed the documentation setting forth the time and fees expended with regard to the grievance generally and determined that only one attorney's work, and only part of that attorney's time, was attributable to grievant Rooney's claims. In doing so, the Arbitrator rejected the Agency's argument that the fees sought should be proportional to the number of grievants who were found to be the prevailing party, i.e., 1/17 of the fees claimed, as only one of the 17 grievants prevailed, because the Arbitrator found that such an allocation was "arbitrary and [was] not supported in the record." Id. at 8. The Arbitrator then determined that the fee rate requested by that attorney was reasonable based on market rate survey data, the attorney's 21 years of experience, and the parties' past practices regarding attorney fee rates.

Based on the underlying finding in the Bloch Award that the grievants were entitled to interest under the Back Pay Act, and his additional findings set forth above, the Arbitrator granted the motion for attorney fees and expenses incurred with respect to grievant Rooney's grievance.

III. Positions of the Parties

A. Agency's Exceptions

The Agency excepts to the award on grounds that the award is contrary to 5 U.S.C. § 5596 and 5 U.S.C. § 7701(g).

1. 5 U.S.C. § 5596

First, the Agency claims that the Arbitrator did not make the requisite finding that grievant Rooney was affected by an "unjustified or unwarranted personnel action." Exceptions at 4. According to the Agency, the Arbitrator found that the Agency's failure to pay interest to the grievants in general was the result of "negligence or indifference," not an unjustified or unwarranted personnel action. Id. at 5.

Second, the Agency contends that the Arbitrator did not award backpay, and therefore, under the Back Pay Act, attorney fees cannot be recovered. According to the Agency, here the Arbitrator only established the date for accrual of interest, and the Arbitrator must "clearly and definitely grant back pay" to support an award of attorney fees. Id. at 6.

Finally, the Agency claims that even if the award constitutes an award of backpay, the award did not involve pay, allowances and differentials as required under the Back Pay Act. Specifically, the Agency argues that the award only involved the payment of interest, and according to the Agency, interest does not fall within the statutory definition of backpay.

2. 5 U.S.C. § 7701(g)

First, the Agency claims that the Union is not the prevailing party. The Agency states that "prevailing party" status depends on whether the employee succeeded in obtaining all or a significant part of the relief sought. Exceptions at 9. In this regard, the Agency argues that the Union failed to obtain a significant part of the relief sought because seventeen grievants sought a date for the accrual of interest, yet only one grievant received that determination. Additionally, the Agency claims that that grievant only received a fourteen day adjustment to the accrual date, where he sought a thirty day adjustment. The Agency also argues that the Union is not the prevailing party because awarding attorney fees in this case is contrary to public policy. Specifically, the Agency contends that based on the accrual date set by the Arbitrator, the amount of attorney fees awarded far exceeds the nominal interest recovered by the grievant.

Second, the Agency contends that attorney fees are not warranted in the interest of justice. According to the Agency, the "de minimis nature" of the grievant's recovery must be considered in determining whether the interest of justice standard is met. Id. at 10. The Agency argues that Congress did not envision the type of recovery in this case as meeting that standard.

Finally, the Agency claims that the award of fees is not reasonable. The Agency argues that it did not contest the grievants' entitlement to interest and that the reason the grievants were not paid interest initially was because of the confusing and conflicting practices of government agencies in setting such dates. The Agency also argues that "[u]nder the standards for determining reasonableness of fees . . . it is appropriate to balance the value of the claim against the value of the fee award." Id. at 11.

B. Union's Opposition

1. 5 U.S.C. § 5596

First, the Union claims that fault does not play an integral part in determining whether the Agency has committed an unjustified or unwarranted personnel action. In this regard, the Union argues that the Agency's failure to pay the grievant all that the grievant was entitled to constitutes an unjustified and unwarranted action.

Second, the Union contends that the award of attorney fees was made in conjunction with an award of backpay. According to the Union, the grievants had already received backpay in the form of the overdue authorized payments and therefore, interest was the only issue before the Arbitrator. The Union argues that "[i]nterest[,] as an element of back pay[,] is authorized [under] the Back Pay Act." Opposition at 5.

Finally, the Union contests the Agency's claims that interest is not backpay for the purposes of supporting an award of attorney fees, contending that "[i]nterest is, a fortiori, an element of backpay." Id.

2. 5 U.S.C. § 7701(g)

First, the Union claims that it is the prevailing party because it prevailed on the most significant part of the arbitration--the dispute over how interest would be determined. However, according to the Union, the degree of success obtained is not a consideration in determining whether the Union is the prevailing party. The Union, noting that the Authority has adopted the prevailing party standard set forth by the Merit Systems Protection Board (MSPB) in Ray v. Department of Health and Human Services, 64 MSPR 100 (1994), claims that the enforceable award regarding interest is enough to satisfy the prevailing party standard because that award changed the legal relationship between the grievant and the Agency. The Union also notes that the fact that the Agency conceded that the grievant was entitled to interest is irrelevant because the Court of Appeals for the Federal Circuit has said that it is enough that the initiated grievance brought about a concession.

Second, the Union argues that attorney fees are warranted in the interest of justice. According to the Union, the Arbitrator's decision "changes the way in which interest for every other subsequent claimant within the [Agency] will be calculated[,]" and the long term effect of that decision is significant, reaching far beyond just the value to the grievant here. Opposition at 8.

Finally, the Union claims that the fee award is reasonable. In this regard, the Union contends that the "pivotal issue as seen by the Arbitrator was the arbitrary and capricious manner in which interest was being calculated by the Agency on awards of back pay[,]" and therefore, "the award . . . was neither de minimis nor inconsequential." Id. at 9.

IV. Analysis and Conclusions

The Agency's exceptions involve the award's consistency with law. Thus, we review the questions of law raised by the Agency's exceptions and the Arbitrator's award de novo. See National Treasury Employees Union, Chapter 24 and U.S. Department of the Treasury, Internal Revenue Service, 50 FLRA 330, 332 (1995). In applying a de novo standard of review, the Authority assesses whether the arbitrator's legal conclusions are consistent with the applicable standard of law. See National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, Army Research, Development and Engineering Center, 53 FLRA 1703, 1710 (1998). In making that assessment, the Authority defers to the arbitrator's underlying factual findings. See id. If an award fails to contain the factual findings necessary to enable the Authority to assess the arbitrator's legal conclusions, and the findings cannot be derived from the record, the award will be set aside and the case will be remanded to the parties for submission to the arbitrator so that the requisite findings can be made. See id.

A. The Statutory Requirements for Attorney Fees

The threshold requirement for entitlement to attorney fees under the Back Pay Act, 5 U.S.C. § 5596, is a finding that the grievant was affected by an unjustified or unwarranted personnel action, which resulted in the withdrawal or reduction of the grievant's pay, allowances, or differentials. See U.S. Department of Defense, Defense Distribution Region East, New Cumberland, Pennsylvania and American Federation of Government Employees, Local 2004, 51 FLRA 155, 158 (1995) (DDRE). Once such a finding is made, the Act further requires that an award of fees must be: (1) in conjunction with an award of backpay to the grievant on correction of the personnel action; (2) reasonable and related to the personnel action; and (3) in accordance with the standards established under 5 U.S.C. § 7701(g), which pertains to attorney fee awards by the MSPB. See id.

The prerequisites for an award of attorney fees under section 7701(g)(1) are as follows: (1) the employee must be the prevailing party; (2) the award of fees must be warranted in the interest of justice; (3) the amount of the fees must be reasonable; and (4) the fees must have been incurred by the employee. See id.

Because the Agency only challenges the Arbitrator's determinations on whether: (1) it committed an unjustified or unwarranted personnel action; (2) an award of interest constitutes an award of backpay; (3) the one grievant who obtained relief was the prevailing party; and (4) an award of fees was warranted in the interest of justice and was reasonable, we need not consider the other requirements of the Back Pay Act. See U.S. Department of Veterans Affairs Medical Center, North Chicago, Illinois and American Federation of Government Employees, Local 2107, 52 FLRA 387, 398 n.9 (1996) (Veterans Affairs).

B. The Award is Not Deficient Under the Back Pay Act

1. The Agency Committed an Unjustified or Unwarranted Personnel Action

In this case, the Arbitrator awarded attorney fees in conjunction with his Merits Award setting forth the date for the accrual of the interest that was awarded in the Bloch Award. The Agency argues that the Arbitrator failed to find in the Merits Award that the Agency committed an unjustified or unwarranted personnel action. According to the Agency, because the Arbitrator did not make this finding in the Merits Award, the award of attorney fees in conjunction with that proceeding is contrary to the Back Pay Act. In this regard, the Agency's argument improperly attempts to collaterally attack the Bloch Award. See U.S. Department of Transportation, Federal Aviation Administration and National Air Traffic Controllers Association, 54 FLRA 480, 483 (1998) (FAA).

In the Bloch Award, the arbitrator found that the Agency committed an unwarranted and unjustified personnel action in failing to make timely payments and therefore, the grievants were entitled, under the Back Pay Act, to interest on the backpay the grievants had been paid. In the proceeding before Arbitrator Hockenberry, which resulted in the Merits Award, the Union was seeking to enforce the Bloch Award, and establish a policy for the payment of the interest awarded by Arbitrator Bloch and the specific amount of interest due to each grievant. In this respect, Arbitrator Hockenberry stated that because the Bloch Award established that the grievants were entitled to interest payments under the Back Pay Act, the only matter at issue in the Merits Award was the date from which interest accrued for each grievant.

As the Authority recognized in FAA, 54 FLRA at 483, when a party fails to file timely exceptions to an arbitration award under section 7122(a) of the Statute, the award becomes final and binding and the Agency must take such actions as are required by the award. See also DDRE, 51 FLRA at 159-60. As explained by the court in Department of the Air Force v. FLRA, 775 F.2d 727, 735 (6th Cir. 1985):

[s]ince an award becomes final and must be implemented if the parties fail to file an exception within the required period, the necessary implication is that a party can no longer challenge the award by any means. It has become final for all purposes.

The Agency did not file exceptions to the Bloch Award. Under the terms of section 7122(b) of the Statute, the Bloch Award setting forth the Agency's obligation to pay the grievants interest became final and binding. Consequently, the Agency is obligated to comply with that award and cannot now challenge any of its terms. See Department of Health and Human Services, Social Security Administration v. FLRA, 976 F.2d 1409 (D.C. Cir. 1992) (court affirmed the Authority's determination that, in an unfair labor practice proceeding brought as a result of an agency's refusal to comply with an arbitration award, the agency could not attack the arbitrator's contractual jurisdiction in the original proceeding).

Although the Agency asserts that it is now challenging only the award of attorney fees, its argument that the grievants were not affected by an "unjustified or unwarranted personnel action" actually challenges Arbitrator Bloch's contrary conclusion in his award. As such a contention may not be raised at this stage of the proceedings, the Bloch Award remains intact. Because the Bloch Award satisfies the statutory requirement that the grievants were affected by an unjustified and unwarranted personnel action, and because that determination cannot now be contested, any subsequent action regarding the enforcement of that award cannot be challenged on that ground. See FAA, 54 FLRA at 485-86 (because the agency's exceptions to an award directing it to comply with a prior award actually challenged the terms of that prior "final and binding" award, the Authority "simply enforce[d] the mandate of the Statute" in denying the exceptions).

In addition, it is undisputed that in the Bloch Award the arbitrator found that the grievants were entitled to interest on untimely payments. Similarly, it is not disputed that because of the Agency's failure to implement the Bloch Award, the Union filed the grievance that resulted in the Merits Award. The Merits Award, in which Arbitrator Hockenberry, implementing the Bloch Award, determined the specific date from which interest was to accrue for grievant Rooney, was clearly an extension of the Bloch Award. In this regard, Arbitrator Hockenberry stated that "the single question" he was charged with resolving involved the "payment of interest on back pay determinations [that had been already made by the Agency] and the application of the logic of the Bloch [A]ward to such decisions by the Agency." Merits Award at 6. Because it is the Agency's failure to implement the Bloch Award that has resulted in the two subsequent arbitration proceedings before Arbitrator Hockenberry, it is appropriate to view these arbitration proceedings as a continuum that begins with the Bloch Award.(3) Thus, the Agency cannot now attempt to relieve itself from liability in the Fee Award by isolating and distinguishing the Merits Award from the underlying Bloch Award.

Based on the foregoing, we conclude the award is not deficient because the Arbitrator failed to find that the Agency committed an unjustified or unwarranted personnel action.

2. The Merits Award Constitutes an Award Pursuant to the Backpay Act

According to the Agency, the Arbitrator in the Merits Award did not award backpay, and therefore, the Fee Award is deficient under the Back Pay Act. The Agency claims that a fee award is authorized only where the Arbitrator makes a specific award of backpay.

The Back Pay Act provides the standards that must be met for an "appropriate authority" to award back pay in an "appeal" or "administrative determination."(4) In order to establish entitlement to back pay under section 5596(b)(1) of that Act, the Authority has held that a moving party must establish the following three elements:

(1) the aggrieved employee was affected by an unjustified or unwarranted personnel action;

(2) the personnel action directly resulted in the withdrawal or reduction of the grievant's pay, allowances or differentials; and

(3) but for such action, the grievant otherwise would not have suffered the withdrawal or reduction.

Social Security Administration, Mid-Atlantic Program Service Center and American Federation of Government Employees, Local 1923, 53 FLRA 956, 965 (1997).(5)

The Bloch Award and the Merits Award, which, as set forth in section B.1., supra, are properly analyzed as points on a continuum, demonstrate that each of the elements of entitlement to interest under the Back Pay Act is satisfied.

As a threshold matter, this case involves an "appeal or an administrative determination" of entitlement by an "appropriate authority." 5 U.S.C. § 5596(b)(1). Under Office of Personnel Management regulations, individuals authorized to award back pay under the Back Pay Act include an arbitrator or "another official of the employing agency to whom such authority is delegated." 5 C.F.R. § 550.803. In this case, the requirement that an appropriate authority determine entitlement is satisfied by the Agency's underlying determination that backpay was owed, Arbitrator Bloch's finding that the elements of the Back Pay Act had been met, and Arbitrator Hockenberry's determination of the exact amount of interest that grievant Rooney was entitled to pursuant to the Bloch Award. Further, it is undisputed that Arbitrator Bloch properly found that the employees were entitled to interest for the Agency's wrongful withholding of pay.

Under the first of the three criteria set forth above, the Back Pay Act's requirement that the moving party show that the agency committed an "unjustified or unwarranted personnel action" is satisfied by Arbitrator Bloch's conclusion that the Agency violated the parties' collective bargaining agreement. Fee Award at 1-2; see supra section B.1. See Department of Health and Human Services, Health Care Financing Administration, Region IV, Atlanta, Georgia and National Treasury Employees Union, Chapter 210, 21 FLRA 910, 913 (1986) (collective bargaining agreement violation triggers entitlement under Back Pay Act).

Under the second criterion, the requirement that a party show a "withdrawal or reduction of pay, allowances or differentials" is satisfied by Arbitrator Bloch's finding that the Agency's action resulted in the grievants "suffer[ing] delays, sometimes extensive, in payment of monies that were unquestionably owed to them." Bloch Award at 9. Under the third criterion, the "but for" test is also satisfied by Arbitrator Bloch's conclusion that the Agency's failure to pay the grievants "impacted the employees in all three [of the following] respects[:]" (1) it prevented a personnel action from being effectuated as originally intended; (2) it resulted in non-discretionary administrative regulations or policies not being carried out; and (3) it deprived an employee of a right granted by statute or regulation. Id. at 12.

In sum, although the underlying correction of the improper personnel action was accomplished prior to Arbitrator Hockenberry's Merits Award, that award, coupled with Arbitrator Bloch's Award, established that the Agency had, in fact, committed an unwarranted personnel action and that employees were entitled to all remedies available under the Back Pay Act, including interest. Thus, this continuum of awards that underlie the Fee Award meet all the requirements of an award pursuant to the Back Pay Act despite the fact that the term "backpay" was not recited.

Based on the foregoing, we conclude that attorney fees may be awarded even though the Arbitrator's Merits award did not specifically state that backpay was granted to the grievants.

3. An Arbitrator May Properly Award Attorney Fees Based on an Award of Interest

The Agency further argues that an arbitral award granting only interest under the Back Pay Act may not support an award of attorney fees. According to the Agency, because an award of interest does not constitute "pay, allowances, or differentials," it is not an "award of backpay" and cannot lead to an award of attorney fees.

The Authority, in Dependents Schools, 54 FLRA 514, held that attorney fees can be awarded in conjunction with an award of interest. Based on the plain wording of the Back Pay Act--that interest is automatically paid "with" the reimbursement of pay, allowances or differentials--the Authority found that interest is an inseparable element of any payment of withdrawn or reduced pay under the Back Pay Act. The Authority stated that "[t]his wording of the Back Pay Act, that back pay is computed 'with interest,' confirms the common sense observation that an award of interest is necessarily tied to an underlying award of back pay, on which the interest has been computed." Id. at 518-19 (quoting 5 U.S.C. § 5596(b)(2)(A)).

Further, the Authority noted the element of the Back Pay Act that an award of back pay may be made by "any appropriate authority, including an agency official." Id. at 519 (citing 5 U.S.C. § 5596(b)(1); 5 C.F.R. § 550.803). In this regard, the Authority stated that:

There is no requirement in our precedent or the Back Pay Act that an award of back pay be in the same proceeding as the proceeding that determines entitlement to attorney fees. Rather, as long as employees have, in fact, been determined to be entitled to an award of back pay under the Back Pay Act, that this award was made in advance of the proceeding at issue has no bearing on a party's entitlement to the other remedies provided for in the Back Pay Act.

Id.

In reaching this conclusion, the Authority found that its decision was supported by the terms of the attorney fees provision of the Back Pay Act, which provides that fees are paid when "related to the personnel action," and does not limit attorney fees to proceedings for pay, allowances or differentials. 5 U.S.C. 5596(b)(1)(A)(ii). The Authority also recognized that, consistent with this provision, attorney fees are routinely awarded for time spent litigating entitlement to attorney fees. See, e.g., American Federation of Government Employees, AFL-CIO, Local 3882 v. FLRA, 994 F.2d 20 (D.C. 1993) (AFGE, Local 3882). Drawing an analogy between the collection of attorney fees and the collection of interest, the Authority found, fees for collecting interest are "equally necessary to make the employee whole" and to "fulfill the purposes of the statutory scheme on which the action is based." Dependents Schools, 54 FLRA at 520. Thus, the Authority concluded that attorney fees sought in conjunction with an award of interest are authorized by the terms and policy of the Back Pay Act. Id.

Consistent with the Authority's conclusion in Dependents Schools, we reject the Agency's contention, and conclude that the award of interest in this case meets the statutory requirements for an award of attorney fees.

C. The Award is Not Deficient Under 5 U.S.C. § 7701(g)

1. The Union Is Entitled to Attorney Fees Because It Was the Prevailing Party

The Agency claims that the Union is not entitled to attorney fees because the Union only prevailed with regard to grievant Rooney and therefore, failed to succeed in obtaining all or a significant part of the relief it sought. The Agency also argues that finding the grievant to be a prevailing party in this case is contrary to public policy because the amount of attorney fees awarded far exceeds the nominal damages recovered.

The requirement in 5 U.S.C. § 7701(g) that an employee be a prevailing party is met if the employee has received "an enforceable judgment or settlement which directly benefitted him at the time of the judgment or settlement." DiGiulio v. Department of Treasury, 66 MSPR 659 (1995) (citing Ray v. Department of Health and Human Services, 64 MSPR 100 (1994) (Ray)). Contrary to the Agency's assertion, the degree of success obtained is not a consideration in determining whether an employee is a prevailing party. See DDRE, 51 FLRA at 161. Further, the fact that a party receives only a nominal award does not impact on whether he or she is a prevailing party. See Farrar v. Hobby, 506 U.S. 103, 112 (1992) (Farrar) (holding that plaintiff receiving judgment for one dollar was prevailing party even though the plaintiff had sought $17 million in compensatory damages).(6)

Here, the Fee Award granted attorney fees only with respect to the Merits Award and that portion of the Merits Award concerning grievant Rooney. It did not award attorney fees for work incurred for any other portion of the grievance resolved in the Bloch Award or the Merits Award. Thus, the attorney fees awarded only relate to the portion of the grievance in which the Union was successful. In this respect, the grievance resolved in the Merits Award sought the appropriate payment of interest, to which the grievants were entitled by virtue of the Bloch Award, and the Arbitrator made a specific finding as to the accrual date for the payment of interest due to grievant Rooney. As found by the Arbitrator in the Fee Award, inherent in the establishment of that date was the requirement that the Agency pay grievant Rooney a specific amount of interest that he otherwise would not have received. See Fee Award at 6. Clearly, grievant Rooney benefitted from that award, and, as a result, grievant Rooney is the prevailing party. See American Federation of Government Employees, Local 3310 and U.S. Department of the Army, Army Corps of Engineers, Waterways Experiment Station, Vicksburg, Mississippi, 53 FLRA 1595, 1600 (1998). The fact that grievant Rooney sought interest for a longer period than that for which he received interest is irrelevant. See DDRE, 51 FLRA at 161. Similarly, the fact that his recovery is arguably nominal is irrelevant to the "prevailing party" determination. See Farrar, 506 U.S. at 112.

Based on the foregoing, we conclude that the Arbitrator properly found that grievant Rooney is the prevailing party.

2. Attorney Fees Are Warranted In the Interest of Justice

Relying on Sterner v. Department of the Army, 711 F.2d 1563 (Fed. Cir. 1983) (Sterner), the Agency contends that attorney fees are not warranted in the interest of justice because of the "de minimis" nature of the grievant's recovery. Exceptions at 10. We conclude that the Agency's claims in this respect are misplaced.

In Woodall v. Federal Energy Regulatory Commission, 33 MSPR 127, 131 (1987) (Woodall), the MSPB noted the Sterner court's holding "that 'the extent of a party's victory' is clearly relevant to the interest of justice requirement set out in 5 U.S.C. § 7701(g)(1)." However, in Woodall, the MSPB specifically rejected the Agency's contentions that the extent of the employee's victory was "de minimis" because the amount of backpay the employee received was small--after four years of litigation, the employee benefitted by approximately $1,800 dollars. In this regard, the MSPB found that "the amount of the [employee's] back pay award has no relevance to the question of the extent of his victory in determining his entitlement to attorney fees." Id. at 132. Rather, the MSPB, citing Van Fossen v. MSPB, 788 F.2d 748, 751 & n.7 (Fed. Cir. 1986) and Sterner, 711 F.2d at 1569-70, stated that "[d]etermining the extent of a party's victory requires a consideration of such factors as whether the appellant succeeded in having the action mitigated as opposed to reversed; if the action is mitigated, whether the penalty is major or minor; and the gravity and circumstances of the sustained charges." Woodall, 33 MSPR at 132. See also Butler v. Dowd, 979 F.2d 661 (8th Cir. 1992) (court upheld award of approximately $95,000 in attorney fees where civil rights plaintiffs only received $1 each in damages); National Association of Government Employees, Local R4-6 and U.S. Department of the Army, Fort Eustis, Virginia, 52 FLRA 1522 (1997) (reversing the arbitrator's determination that attorney fees were not recoverable under the Back Pay Act in connection with an award of two hours of administrative leave).

Thus, the arguably de minimis nature of a grievant's backpay recovery does not impact on the determination as to whether attorney fees are warranted in the interest of justice. In contrast to the Agency's claims, it is well settled that an award of fees is warranted in the interest of justice in cases: (1) involving prohibited personnel practices; (2) where agency actions are clearly without merit or wholly unfounded, or where the employee is substantially innocent of charges brought by the agency; (3) when agency actions are taken in bad faith to harass or exert improper pressure on an employee; (4) when gross procedural error by an agency prolonged the proceeding or severely prejudiced the employee; (5) where the agency knew or should have known it would not prevail on the merits when it brought the proceeding; or (6) where there is a service rendered to the Federal work force or there is a benefit to the public derived from maintaining the action. DDRE, 51 FLRA at 161-62. An award of attorney fees is warranted in the interest of justice if any one of these criteria is met. Id. at 162.

In this case, the Arbitrator's Fee Award sets forth specific findings supporting the determination that the award of attorney fees was warranted in the interest of justice under a recognized criterion. In support of his determination, the Arbitrator found, under the second category above, that the Agency's actions with respect to establishing the accrual of and the payment of interest was "inconsistent" and "arbitrary," and therefore, lacked "substantial justification." Fee Award at 7. In addition, the Arbitrator found, under the sixth category above, that the "grievance has had a beneficial effect to the public in the form of demonstrating the need for the establishment forthwith of policy and guidance [regarding the payment of interest] and uniform application to the bargaining unit." Id.

In view of the Arbitrator's factual findings to which we defer, the Arbitrator's legal conclusion is consistent with the applicable standard of law. See Laborers' International Union of North America, Local 1376 and U.S. Department of Health and Human Services, Public Health Service, Navajo Area Indian Health Service, 54 FLRA No. 73, slip op. at 5 (1998). Based on the foregoing, we conclude that the Arbitrator's award satisfies the legal requirements for a finding that attorney fees are warranted in the interest of justice.

3. The Attorney Fees are Reasonable

The Agency contends that the award of attorney fees is contrary to 5 U.S.C. § 7701(g) because it is not reasonable. Specifically, the Agency argues that it is unreasonable to award fees where, as in this case, relief was granted to only one of 17 grievants and the fee award far exceeds the "de minimis" nature of the underlying award.

In Farrar, the Supreme Court, citing Hensley v. Eckerhart, 461 U.S. 424 (1983) (Hensley), found that once a plaintiff meets the threshold requirement of being the prevailing party, the extent to which he prevailed is the most critical factor to consider in determining reasonable attorney fees. 506 U.S. at 114. Thus, the Court stated "that if 'a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount.'" Id. (quoting Hensley, 461 U.S. at 436). Relying on that precedent, the MSPB has held that in determining the "reasonableness" of attorney fees under 5 U.S.C. § 7701(g), it is necessary to consider whether a fee award should be reduced because the relief ordered was significantly less than what was sought. See Stein v. United States Postal Service, 65 MSPR 685, 690 (1994) (Stein). In circumstances where the relief ordered is significantly less than that sought, "an award may be reduced either by identifying the hours associated with unsuccessful claims or by simply reducing it to account for the limited success." Id. (citing Smit v. Department of the Treasury, 61 MSPR 612, 619 (1994) (Smit)). Thus, the MSPB has held that "when more than one claim for relief is made and the claims involve a common core of facts or are based on related legal theories, the fee determination should reflect the significance of the overall relief obtained in relation to the hours reasonably expended." Smit, 61 MSPR at 618-19.

Additionally, in determining the reasonableness of fee awards, the Authority considers whether the number of hours expended were reasonable and whether those hours, multiplied by the rate, "establish[] an objective basis on which to make an initial estimate of the value of the lawyer's services." U.S. Department of the Treasury, Internal Revenue Service, Washington, D.C. and National Treasury Employees Union, 48 FLRA 931, 935 (1993) (Internal Revenue Service) (quotations and citations omitted). In doing so, the Authority examines an attorney's customary rates and the terms of any applicable fee agreement.(7) See U.S. Department of Defense, Defense Mapping Agency, Hydrographic/Topographic Center, Washington, D.C. and American Federation of Government Employees, Local 3407, 47 FLRA 1187, 1192 (1993).

In this case, the Arbitrator reviewed the information provided in the fee application and found that only one of the four attorneys requesting payment was entitled to fees because only that attorney represented the Union in connection with grievant Rooney--the prevailing party in the Merits Award. The Arbitrator specifically rejected any request for fees that were not associated with the representation of grievant Rooney because it was only that portion of the grievance that was sustained and only grievant Rooney was a "prevailing party" under 5 U.S.C. § 7701(g). In this respect, the Arbitrator found that grievant Rooney had received the exact relief that he sought.

Additionally, in determining whether the number of hours expended by that attorney were reasonable, the Arbitrator reviewed the supporting affidavit and found that only 124 hours and $481.10 in costs--both being less than what was sought by the attorney--were expended with respect to grievant Rooney. In determining whether the hourly rate requested by that attorney was reasonable, the Arbitrator considered the hourly rate requested and the documentation provided in support of that request. The documentation examined by the Arbitrator included a report of market rate survey data, which the parties had utilized in the past without objection, providing the hourly rate of attorneys with specific years of experience in specific areas of legal expertise. In addition, the Arbitrator considered the fee rate that attorney has received since 1991, as well as the attorney's geographical location. After reviewing this documentation, and comparing the attorney's hourly rate request with that of other attorneys, the Arbitrator found that the attorney's rate was "not unreasonable and that the reasonableness of the fee criterion [under section 7701(g)] has been satisfied." Merits Award at 9.

The Arbitrator properly reduced the fees awarded to compensate only one attorney, and reduced his recovery by the hours associated with the unsuccessful portion of the grievance. See Stein, 65 MSPR at 690. In doing so, the Arbitrator clearly identified those hours that the attorney expended with respect to grievant Rooney's claim, and based on the finding that grievant Rooney's claim was successful, the Arbitrator awarded only those fees related to that claim. Cf. Farrar, 506 U.S. at 115 (holding that fee award was not reasonable because the plaintiff failed to prove an essential element of his claim--actual, compensable injury). Moreover, in arriving at the attorney fees award, the Arbitrator made specific findings to show how the hourly rate was determined and how the hours claimed were applied. Nothing in the record, nor the Agency's exceptions provide any basis for finding that the award of attorney fees is unreasonable.

Based on the foregoing, we conclude that the Arbitrator's award of attorney fees is reasonable under 5 U.S.C. § 7701(g).

V. Decision

The Agency's exceptions are denied.




FOOTNOTES:
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1. At the time the grievance was before Arbitrator Bloch, the Agency had in fact made the untimely payments, but had failed to pay interest on those payments.

2. As noted infra, 5 U.S.C. § 5596 sets forth the requirements for an award of attorney fees. In addition to other requirements, section 5596 requires that an award of attorney fees must be in accordance with the standards established under 5 U.S.C. § 7701(g).

3. Viewing these cases as a continuum that begins with the Bloch Award does not affect our finding that the Bloch Award is final and binding. Section 7122(b) of the Statute specifically provides that when a party fails to file timely exceptions to an arbitration award, the award becomes final and binding and the agency must take such actions as are required by the award. See DDRE, 51 FLRA at 159-60. As discussed in more detail infra, in U.S. Department of Defense, Dependents Schools and Federal Education Association, 54 FLRA 514 (1998) (Dependents Schools), the Authority found that the fact that an award of backpay was made in a prior proceeding does not impact on a party's entitlement to the other remedies provided for in the Back Pay Act, because there is no requirement that an award of backpay be in the same proceeding that determines entitlement to attorney fees. Thus, in viewing these cases as a continuum we are merely relying on arbitral findings--that are final and binding under the Statute--for the purpose of establishing whether the requisite findings for an award of attorney fees have been established.

4. The Back Pay Act, 5 U.S.C. § 5596, provides, in relevant part:

(b)(1) An employee . . . who, on the basis of a timely appeal or administrative determination, . . . is found by appropriate authority . . . to have been affected by an unjustified or unwarranted personnel action which has resulted in the withdrawal or reduction of all or part of the pay, allowances, or differentials of the employee-

(A) is entitled, on correction of the personnel action, to receive . . .

(i) an amount equal to all or any part of the pay, allowances, or differentials . . . which the employee normally would have earned . . . if the personnel action had not occurred . . . .

(ii) reasonable attorney fees related to the personnel action . . . .

. . . .

(2)(A) An amount payable under paragraph (1)(A)(i) of this subsection shall be payable with interest. . . .

5. The Back Pay Act is a waiver of sovereign immunity and is strictly construed in favor of the sovereign. Lane v. Pena, 518 U.S. 187, 192 (1996). There is no dispute in this case that the Back Pay Act waives sovereign immunity for the payment of interest on back pay.

6. In Farrar, after determining that the plaintiff was the prevailing party, the Court found that an attorney is not entitled to fees for the representation of a plaintiff receiving "only nominal damages because of [the plaintiff's] failure to prove an essential element of his claim for monetary relief[.]" 506 U.S. at 115. In the present case, however, the grievant did not fail to prove an essential element of his claim. Therefore, as set forth infra, such a basis for finding the fee award unreasonable is not present in this case.

7. In determining the market rate, "the Authority has held that 'where an applicant for a fee award has a prior billing history, the reasonable hourly rate will be counsel's established billing rate.'" Internal Revenue Service, 48 FLRA at 935 (quoting Department of the Air Force Headquarters, 83