United States Department of the Army, Corpus Christi Army Depot, Corpus Christi, Texas (Agency) and American Federation of Government Employees, Local 2142 and National Federation of Federal Employees, Local 797 and International Association of Machinists and Aerospace Workers, Lodge 2049 (Unions)
[ v58 p87 ]
58 FLRA No. 17
UNITED STATES DEPARTMENT OF THE ARMY
CORPUS CHRISTI ARMY DEPOT
CORPUS CHRISTI, TEXAS
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, LOCAL 2142
NATIONAL FEDERATION OF FEDERAL
EMPLOYEES, LOCAL 797
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS
September 13, 2002
Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1]
I. Statement of the Case
This matter is before the Authority on exceptions to an award and billing statement of Arbitrator John B. Barnard filed by the Agency under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Unions filed an opposition to the Agency's exceptions.
The Arbitrator awarded attorney fees under the Back Pay Act, 5 U.S.C. § 5596. Subsequently, the Arbitrator sent statements to the parties billing them for the storage of records from the underlying arbitration. We find that the billing statement is deficient, and we set it aside. With respect to the award of fees, we remand for further proceedings on the award of attorney fees for non-attorney staff. Otherwise, we deny the Agency's exceptions to the award of fees.
In an award described more fully in United States Dep't of the Army, Corpus Christi Army Depot, Corpus Christi, Tex., 56 FLRA 1057 (2001) (CCAD), reconsid. denied 57 FLRA 290 (2001), [n2] the Arbitrator ruled that employees were entitled to have received environmental differential pay (EDP) for exposure to asbestos and awarded them backpay. In addition, the Arbitrator ordered contractual attorney fees, pursuant to a contingency fee agreement, to be segregated and paid to the Unions' attorneys at the time of the payment of the award. In a supplemental award, the Arbitrator clarified the process by which the contractual attorney fees would be distributed. The Agency filed exceptions to the initial award and the supplemental award.
In CCAD, the Authority determined that the supplemental award was deficient to the extent that it directed the head of Corpus Christi Army Depot to permit and make deductions from EDP to pay the contractual attorney fees. Otherwise, the Authority denied or dismissed the Agency's exceptions. The Authority modified the supplemental award to direct that the Corpus Christi Army Depot submit a request to the "head of the agency," within the meaning of 5 C.F.R. § 550.311, to consider authorizing an allotment for the payment of the contractual attorney fees. [n3]
While the Agency's exceptions were pending in CCAD, the Unions applied to the Arbitrator for an award of attorney fees under the Back Pay Act. The application sought an award of $569,544.25 to the law firm of Gray & Becker and $92,523.00 to the law firm of Gillespie, Rozen & Watsky for legal services performed through November 27, 2000.
III. Arbitrator's Award
As his award resolving the application for attorney fees, the Arbitrator directed the Agency to pay the law firms the amounts requested. In support of the award, the Arbitrator determined that the award of fees satisfied the requirements of the Back Pay Act.
He first noted that his award in CCAD specifically found that: (1) the aggrieved employees were affected [ v58 p88 ] by an unjustified or unwarranted personnel action; (2) the personnel action directly resulted in the withdrawal or reduction of the grievants' pay, allowances, or differentials; and (3) but for such action, the grievants otherwise would not have suffered the withdrawal or reduction.
Next, the Arbitrator noted that the award of fees must be in accordance with the standards established under 5 U.S.C. § 7701(g), and he specifically addressed those standards. He ruled that the grievants were prevailing parties within the meaning of § 7701(g) and that the award of fees was warranted in the interest of justice. He concluded that the grievants were prevailing parties because the award sustaining the grievances constituted an enforceable judgment that directly benefitted them. He concluded that fees were warranted in the interest of justice because he found that the Agency knew or should have known that the Unions would prevail on the merits of the grievance.
The Arbitrator also ruled that attorney fees were incurred by the grievants and that the amount of fees requested was reasonable. As to the reasonableness of the requested amount, the Arbitrator stated that what was in dispute was whether the relevant community for determining the prevailing market rate was Corpus Christi and, if so, whether it was reasonably necessary to employ the two law firms that were from outside the area. The Agency had argued to the Arbitrator that the requested rates of the Unions' attorneys based on their billing rates outside Corpus Christi, which were higher than prevailing local rates, were not supportable because it was not reasonably necessary for the Unions to employ attorneys from outside Corpus Christi.
The Arbitrator determined that the Unions satisfied their burden of showing that it was reasonably necessary to employ attorneys outside the community and that the requested rates of Gray & Becker and Gillespie, Rozen & Watsky were appropriate and allowable. [n4]
IV. Arbitrator's Billing Statement
In correspondence among the parties and the Arbitrator prior to the Arbitrator's award of attorney fees under the Back Pay Act, the Unions' attorneys had proposed a plan for delivery and storage of the records of the arbitration and payment of associated costs. The Agency had objected to any such plan and expressly objected to assuming any costs for such a plan.
After issuance of the award of attorney fees and the bill for his professional services associated with that award, the Arbitrator sent a statement to the parties concerning the storage of records of the arbitration. He notified the parties that he had placed the arbitration records in storage and "must bill the parties for their portion of the incurred expenses." Arbitrator's Statement of January 24, 2001. He billed each party for half of the expenses.
V. Positions of the Parties
A. Agency's Exceptions
The Agency contends that the award of attorney fees is deficient because it is contrary to law and regulation. The Agency further contends that the "Arbitrator's supplemental award for storage fees" is deficient because the Arbitrator was functus officio and because the supplemental award is not consistent with the collective bargaining agreement between the Agency and AFGE Local 2142. Exceptions at 7.
In support of its contention that the attorney fee award is contrary to law and regulation, the Agency argues that the awarded fees: (1) were not incurred by the grievants; (2) are not reasonable; (3) do not meet the interest-of-justice standard; and (4) include unrecoverable expenses. In addition, the Agency asserts that the award of fees is not sufficiently articulated.
The Agency argues that attorney fees have not been incurred by the grievants because the grievants did not agree to pay statutory attorney fees under the Back Pay Act. The Agency maintains that the grievants' contractual fee obligation was to pay one-third of the total recovery. Thus, the Agency asserts that statutory fees have not been incurred. Alternatively, the Agency argues that as a result of the contingency fee, the Authority should reduce the Arbitrator's fee award by two-thirds because the grievants only incurred one-third of the statutory attorney fees.
As to its argument that the awarded fees are not reasonable, the Agency maintains that the hourly rates awarded by the Arbitrator to attorneys Brian Bishop and Hal Gillespie should have been at the lower rates prevailing in the Corpus Christi area because under precedent of the Merit Systems Protection Board, the relevant community for determining a reasonable hourly rate is the site of the hearing. See id. at 3 (citing Manley v. Dep't of the Air Force, 67 M.S.P.R. 467 (1995)). The Agency contends that compensation of an out-of-town attorney at a higher rate prevailing where the attorney customarily practices will be sustained if it is reasonably necessary for the employee to employ a non-local attorney. [ v58 p89 ] The Agency argues that the attorneys have not satisfied their burden of establishing that it was reasonably necessary to employ out-of-town counsel.
Although the Agency asserts in its exceptions that "the claimed fees . . . do not meet the interest of justice standard under 5 U.S.C. § 7701(g)," the Agency does not further address this assertion. Id. at 2.
The Agency argues that the amount awarded by the Arbitrator is deficient because it includes amounts that are not substantiated and are not recoverable under the Back Pay Act. The Agency asserts that the Arbitrator awarded 1,296.6 hours in "legal assistant" time for which there was no substantiation that the services were allowable as attorney fees. Id. at 5. The Agency also claims that the Arbitrator never specified the legal assistant time for which he was awarding attorney fees. In addition, the Agency notes that the hourly rates requested for attorneys John Jacks and Monte Swearengen, and awarded by the Arbitrator, were $150 and $135. The Agency claims that the award of fees at these rates by the Arbitrator is not substantiated because there was no evidence of their qualifications and credentials. The Agency maintains that the hourly rates for legal assistants is similarly unsubstantiated. The Agency notes that without explanation or support, the hourly rates requested for legal assistants and awarded by the Arbitrator ranged from $35 to $55. The Agency further asserts that the award of supplemental attorney fees for Hal Gillespie is unsubstantiated because he failed to produce an affidavit or billing statement. Accordingly, the Agency argues that a remand to the Arbitrator is necessary to determine a reasonable hourly rate for the attorneys and to eliminate non-recoverable costs for non-attorney services.
The Agency argues that the award is deficient because the Arbitrator's decision is not sufficiently articulated and reasoned. The Agency maintains that the Arbitrator addressed "virtually none of the issues" raised by the Agency in its response to the Unions' amended application for fees and expenses. Id. at 7.
The Agency argues that as to the storage fees, the Arbitrator was functus officio because the billing constitutes a supplemental award, which revised the Arbitrator's billing. The Agency maintains that because the Arbitrator did not retain jurisdiction on the issue of storage costs, the Arbitrator's further action required the joint request of the parties. The Agency asserts that the storage bill was at no time jointly requested by the parties. In addition, the Agency argues that the billing statement is inconsistent with its collective bargaining agreement with AFGE Local 2142.
B. Unions' Opposition
The Unions contend that the Agency has failed to establish that the Arbitrator's award of attorney fees under the Back Pay Act is deficient.
The Unions maintain that fees are incurred by an employee within the meaning of § 7701(g) as long as an attorney-client relationship exists and the attorney has rendered legal services on behalf of the employee. The Unions further maintain that an attorney-client relationship exists if an attorney has represented an employee on behalf of a union. The Unions claim that such a relationship exists and that services were provided. In addition, the Unions dispute that Back Pay Act fees must be incurred. The Unions argue that statutory attorney fees under the Act cannot be "literally" incurred by the grievants because only the Agency can be ordered to pay statutory fees. Opposition at 3.
The Unions argue that the hourly rates awarded by the Arbitrator are not excessive or unreasonable. The Unions assert that they substantiated the need for representation by non-local attorneys and that the hourly rates awarded by the Arbitrator to Brian Bishop and Hal Gillespie are consistent with their prior billing history.
The Unions also argue that contrary to the claim of the Agency, the Arbitrator's decision is sufficiently articulated and reasoned.
The Unions further argue that the award of fees for legal assistant services are recoverable as attorney fees because the work of the legal assistants was "reasonable and significantly contributed to the success of the case." Opposition at 8.
As to storage expenses, the Unions argue that the Arbitrator was not functus officio and that the billing for the storage expenses was consistent with the collective bargaining agreements. The Unions claim that the Arbitrator's retention of jurisdiction authorized his billing statement.
VI. Analysis and Conclusions
A. Standard of Review
The Agency contends that the award of fees is contrary to law and regulation. When a party's exceptions dispute an award's consistency with law or regulation, we review the questions of law and regulation raised by the award and the exceptions de novo. See, e.g., United States Dep't of Health and Human Services, Centers for Medicare and Medicaid Services, Baltimore, Md., 57 FLRA 704, 706 (2002). [ v58 p90 ]
B. The Agency has failed to establish that fees were not incurred.
As the Authority has repeatedly recognized, attorney fees are incurred when an attorney-client relationship exists and counsel has rendered legal services on behalf of the employee. See, e.g., Ala. Ass'n of Civilian Technicians, 56 FLRA 231, 233 (2000). Moreover, an attorney-client relationship exists when an attorney represents an employee on behalf of a union. In this case, the Agency does not dispute that there was an attorney-client relationship and that attorney fees were incurred pursuant to a contractual attorney fee agreement. Instead, the Agency argues that statutory fees under the Back Pay Act were not incurred. The Agency misconstrues the basis for payment of attorney fees under the Act.
The provision by the Back Pay Act for the payment of attorney fees shifts the payment of attorney fees in a reasonable amount from the employee to the agency, as a matter of law. Consequently, statutory attorney fees under the Act do not require that there must first be some agreement to that effect between employees and their legal representatives. In this case, the grievants incurred attorney fees by agreement with the two law firms, which provided counsel, and the obligation to make payment of a reasonable amount of those fees shifted to the Agency when the grievants prevailed and the other requirements of the Act were met.
Furthermore, to the extent that the Agency is arguing that the contractual attorney fee agreement somehow negated liability of the Agency for statutory attorney fees under the Back Pay Act, the Authority specifically rejected such an argument in CCAD. The Authority expressly noted that the contractual fee arrangement between employees and the attorneys "is separate and independent from statutory attorney fees under the Back Pay Act." 56 FLRA at 1076 n.18. The Authority further ruled that "[i]n other words, the Unions' and/or the employees' agreement to pay fees to the attorneys does not affect the attorneys' eligibility for fees paid by the Agency under the Back Pay Act." See id.
We conclude that the Agency has failed to establish that the award of statutory attorney fees is deficient on the ground that attorney fees were not incurred. Accordingly, we deny the Agency's exception.
C. The Agency has failed to establish that the hourly rates awarded by the Arbitrator are not reasonable.
The Agency argues that the rates awarded by the Arbitrator to Brian Bishop and Hal Gillespie are not reasonable because they exceed the rates prevailing in the Corpus Christi area, which should have controlled in the Arbitrator's rate determination.
In United States Dep't of Def., Def. Distribution Region East, New Cumberland, Pa., 51 FLRA 155 (1995) (DDRE), the Authority followed the practice of the Merit Systems Protection Board (MSPB) in determining the relevant community for calculating the prevailing market rate. The Authority ruled that the relevant community for determining the prevailing market rate is normally the place of the hearing. However, the Authority noted that the MSPB sustained compensation of an out-of-town attorney at a higher rate prevailing where the attorney customarily practices if it was reasonably necessary for the employee to employ a non-local attorney. Noting that it follows the practices of the MSPB when resolving exceptions, which concern the standards established under § 7701(g), the Authority ruled that the site of the arbitration hearing was the relevant community for calculating the prevailing market rate because the union had failed to establish that the case necessitated a non-local attorney. See 51 FLRA at 160 n.5, 163-64.
Prior to the award in this case, the MSPB changed its practice for determining the relevant community for calculating the prevailing market rate. Prior to April 26, 2000, under § 1201.203(a)(3), evidence in support of a fee application required
[a] statement of the attorney's customary billing rate for similar work if the attorney has a billing practice or, in the absence of that practice, other evidence of the prevailing community rate that will establish a market value for the attorney's services[.]
Effective April 26, 2000, what is required is
[a] statement of the attorney's customary billing rate for similar work, with evidence that that rate is consistent with the prevailing community rate for similar services in the community in which the attorney ordinarily practices[.]
Under the new rule, the MSPB no longer requires a showing that it is reasonably necessary for an employee to employ a non-local attorney because the relevant community is now the community in which the attorney ordinarily practices. See Martinez v. United States Postal Serv., 89 MSPR 152, 161 (2001).
The Authority has not yet had an opportunity to address the application of 5 C.F.R. § 1201.203(a)(3), as amended. However, as the Authority acknowledged in [ v58 p91 ] DDRE, the Authority follows the practices of the MSPB when exceptions concern the standards established under § 7701(g). As the MSPB had changed its practice for determining the relevant community for calculating the prevailing market rate prior to the award in this case, in resolving the Agency's exception under § 7701(g), we will apply 5 C.F.R. § 1201.203(a)(3), as amended. Applying 5 C.F.R. § 1201.203(a)(3), as amended, we deny the Agency's exception.
The Agency has never disputed that the rates requested for Bishop and Gillespie, and awarded by the Arbitrator, were their customary rates for similar work and that the rates were consistent with the prevailing rates in the communities in which they practiced. Moreover, the Unions' law firms provided evidence to support the requested rates. Accordingly, the Agency has failed to establish that the hourly rates awarded by the Arbitrator are not reasonable.
D. The Agency has failed to establish that the award is deficient on the ground that the award does not satisfy the interest-of-justice standard.
Under Authority case precedent, bare assertions provide no basis for finding an award deficient. See, e.g., United States Dep't of Veterans Affairs Med. Ctr., Coatesville, Pa., 56 FLRA 966, 971 (2000). The Agency does not address its assertion that the award of fees is not warranted in the interest of justice. Consequently, the claim is nothing more than a bare assertion. Accordingly, we deny this exception.
E. We remand for further proceedings on services of non-attorney staff.
The Agency has argued that the amount awarded by the Arbitrator is deficient because it includes amounts that are not substantiated and are not recoverable under the Back Pay Act.
Section 2429.5 of the Authority's regulations provides that the Authority will not consider issues that could have been, but were not, presented to the arbitrator. The Authority has applied § 2429.5 to bar agencies from raising objections to an arbitrator's award of attorney fees when the agency did not raise the objection to the arbitrator. See, e.g., United States Dep't of Def. Educ. Activity, Arlington, Va., 56 FLRA 985, 987 (2000); United States Dep't of the Navy, Naval Undersea Warfare Ctr., Newport, R.I., 56 FLRA 477, 479 n.4 (2000) (Naval Undersea Warfare Center).
We have reviewed the record in this case, and we find no indication that the Agency argued to the Arbitrator that the request for attorney fees was not sufficiently substantiated because there was no evidence of the qualifications and credentials of John Jacks and Monte Swearengen and because Hal Gillespie failed to produce an affidavit or billing statement. As these issues presented by the Agency's exception should have been, but were not, raised before the Arbitrator, these issues are barred from consideration by the Authority under § 2429.5. Accordingly, these objections provide no basis for finding the award deficient.
The Agency did raise before the Arbitrator its objection to any award of attorney fees for non-legal support staff without further substantiation and explanation. Clearly, to the extent that the award encompasses secretarial services, such services are not recoverable under § 7701(g) or the Back Pay Act. See, e.g., United States Dep't of Def., Def. Mapping Agency, Hydrographic/Topographic Ctr., Washington, D.C., 47 FLRA 1187, 1200 (1993) ("Both the Authority and the Merit Systems Protection Board have held that payment for secretarial services is not a recoverable cost under 5 U.S.C. § 7701(g)."). However, regulations implementing the Back Pay Act specifically provide that "attorney fees shall be allowed only for the services of members of the Bar and for the services of law clerks, paralegals, or law students, when assisting members of the Bar." 5 C.F.R. § 550.807(f).
As recognized by the Authority, the rationale for including charges for such non-attorneys in fee awards is that they provide necessary services which, were they performed by attorneys, would be more costly. See Fed. Deposit Ins. Corp., Div. of Info. Res. Mgmt, Atlanta, Ga., 53 FLRA 1657, 1661 (1998) (FDIC). In addition, the Authority noted that in two cases, the MSPB has awarded attorney fees for the services of law students and legal assistants. See id. (citing Anderson v. GPO, 55 M.S.P.R. 548 (1992); Mitchell v. United States Postal Serv., 6 M.S.P.R. 22 (1981)). In both cases, the MSPB ruled that an award of fees for the services of non-attorneys was appropriate because their involvement was under the direct supervision of, and as the agent for, the retained attorney.
In FDIC, the Authority denied the agency's claim that an award of fees for the services of a paralegal was deficient. The Authority ruled that the award was consistent with case precedent and § 550.807 because the arbitrator found that the paralegal performed services as a paralegal under the supervision of, and as the agent for, the retained attorney.
The record in this case is insufficient to allow the Authority to determine whether the award of fees for non-attorney staff is consistent with § 550.807 and case precedent. The Arbitrator did not address the Agency's objection to awarding fees for non-attorney staff, and the Unions' attorneys did not further substantiate their request for fees for their services.
When an arbitration award does not sufficiently explain the arbitrator's determination on a pertinent statutory requirement, the Authority examines the record to [ v58 p92 ] see if it permits the Authority to resolve the matter. See, e.g., United Sates Dep't of Def. Educ. Activity, Arlington, Va., 57 FLRA 23, 24 (2001) (DoD); United States Dep't of Agriculture, Animal and Plant Health Inspection Serv., Plant Prot. and Quarantine, 53 FLRA 1688, 1695 (1998) (PP&Q). If it does not, the Authority remands for further proceedings to assure that the resolution of the request for fees is consistent with law and regulation. See DoD, 57 FLRA at 24-25; PP&Q, 53 FLRA at 1695.
The record does not permit us to make the determination of whether the amount is reasonable as a result of the inclusion of services performed by non-attorney staff. In particular, we are unable to determine whether the award of attorney fees is appropriate for the non-attorney staff. Accordingly, we will remand the award for clarification of the basis for inclusion of services performed by non-attorney staff and the calculation of the amount. See, e.g., Naval Undersea Warfare Center, 56 FLRA at 479 (award remanded for further proceedings; arbitrator's findings on whether fees were warranted in the interest of justice and were reasonable were insufficient and record did not permit Authority to make these determinations).
F. Insufficient articulation does not provide a basis for finding an award of attorney fees deficient.
The Agency claims that the award is deficient because the Arbitrator's decision is not sufficiently articulated. The Agency misconceives the purpose of an arbitrator's decision that sets forth the arbitrator's findings on the statutory requirements for an award of attorney fees. As the Authority explained in PP&Q, 53 FLRA at 1693-95, it would no longer simply find an award deficient that is not sufficiently explained or articulated. Instead, when the arbitrator has not sufficiently explained the determination on a pertinent statutory requirement, we examine the record to determine whether it permits us to properly resolve the exception. In cases where the record does not permit us to determine the proper resolution of the exception, we remand for further proceedings. In cases where the record does permit us to appropriately resolve the exception, we modify the award or deny the exception, as appropriate.
We have resolved all of the Agency's exceptions disputing the Arbitrator's determinations on pertinent statutory requirements. As an allegation of insufficient articulation does not itself provide a basis for finding an award deficient, we deny this exception.
G. The Arbitrator's billing statement for storage expenses is deficient.
Arbitrators exceed their authority when they fail to resolve an issue submitted to arbitration, resolve an issue not submitted to arbitration, disregard specific limitations on their authority, or award relief to persons who are not encompassed within the grievance. See, e.g., United States Dep't of Veterans Affairs, Eastern Kansas Health Care Sys., 57 FLRA 440, 441-42 (2001) (DVA).
There is no contention that the matter of storage expenses for records of the underlying arbitration was submitted by the parties to the Arbitrator for resolution. Moreover, there is no contention that the Arbitrator addressed the matter of storage expenses in any of his awards in this case. Consequently, as the issue of the storage expenses was never submitted to the Arbitrator for resolution or addressed by him in his awards, we find that the Arbitrator exceeded his authority by issuing a statement billing the parties for storage fees. See DVA, 57 FLRA at 442 (arbitrator exceeded his authority by issuing a supplemental award on a matter that was never submitted to him for resolution).
We acknowledge that in the initial award sustaining the grievance, the Arbitrator retained jurisdiction to resolve any dispute concerning the interpretation or implementation of the award. However, we disagree with the Unions that this retention of jurisdiction empowered the Arbitrator to address a matter that had never been submitted to him. Accordingly, we set the billing statement aside. [n5]
We set aside the billing statement. With respect to the award of fees, we remand to the parties for further proceedings, absent settlement, on the award of attorney fees for non-attorney staff. [n6] Otherwise, we deny the Agency's exceptions to the award of fees. [ v58 p93 ]
Member Pope, dissenting in part:
I concur with the majority, for the reasons stated by the majority, that the billing statement must be set aside and that the award of fees must be remanded for further proceedings. I dissent only because, for the reasons stated in my dissent to the companion case, issued today, United States Dep't of the Army, Corpus Christi Army Depot, Corpus Christi, Tex., 58 FLRA No. 16 (2002) (Order Concerning Remedy), I do not agree with the majority's finding, in note 6, that either party should be permitted to demand a different arbitrator if the remanded issue cannot be settled.
Footnote # 1 for 58 FLRA No. 17 - Authority's Decision
Footnote # 2 for 58 FLRA No. 17 - Authority's Decision