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The decision of the Authority follows:
30 FLRA NO. 134 30 FLRA 1206 29 JAN 1988 DEPARTMENT OF DEFENSE DEPENDENTS SCHOOLS, PACIFIC REGION Agency and OVERSEAS EDUCATION ASSOCIATION PACIFIC REGION Union Case Nos. O-AR-1343 O-AR-1445 DECISION I. Statement of the Case This matter is before the Authority on exceptions to awards of Arbitrator R. Charles Bocken. The Arbitrator, in Case No. O-AR-1343, concluded that the grievants, Mary Owen and Lora Dory, were entitled to receive living quarters allowances (LQAs) and foreign post differentials (FPDs) as a result of being transferred from teaching posts in Germany, where they were "local hires," to teaching posts in Okinawa and Korea. 1 The Arbitrator also concluded that grievant Owen was entitled to a renewal transportation agreement and determined the entitlement of witnesses to reimbursement of transportation expenses. The Arbitrator ordered, among other things, that the Agency pay each grievant an LQA and an FPD retroactive to the date of transfer. The Arbitrator retained jurisdiction for the limited purpose of considering an application for attorney fees. The attorneys who represented the grievants and the Union filed a request for fees. The Arbitrator granted the request in Case No. O-AR-1445. Exceptions were 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 Rules and Regulations to the Arbitrator's award on the merits of the grievances in Case No. O-AR-1343 and to his award of attorney fees in Case No. O-AR-1445. We have consolidated these cases for decision. For the reasons discussed below, we conclude that the Agency has failed to establish that the award of LQAs and FPDs to the grievants is contrary to law and Government-wide regulation. Accordingly, we deny the Agency's exceptions. We also conclude that the Agency has failed to establish that the award of attorney fees is deficient. However, the award must be modified to conform to the appropriate method of computing fees for the Union's attorney. II. Case No. O-AR-1343 A. Background This case arose as a result of the Agency's denial of LQAs and a FPDs to two overseas teachers. Both teachers were initially hired by the Department of Defense Dependents Schools (DODDS) in Germany as local hires. They were subsequently transferred to other overseas areas under the provisions of Article 48, section 3c, the Inter - Regional Transfer Program, of the parties' collective bargaining agreement. Grievant Owen was hired in 1968. In 1982, she applied for and received a transfer to Okinawa as a permanent change of station. Upon arrival in Okinawa, she was informed by the civilian personnel office that she was not entitled to receive an LQA or an FPD. Grievant Dory was hired in 1974. In 1985, she applied for and received a transfer to Korea as a permanent change of station. Upon arrival in Korea she received an LQA and an FPD. Subsequently, she was informed by the civilian personnel office that she was not entitled to these allowances and that the amounts already paid would be recouped. A grievance was filed protesting DODDS' actions with respect to the LQAs and FPDs. The grievance was submitted to arbitration. The Union argued at arbitration that the practice of DODDS had been to grant LQAs to local hires who transferred to other duty stations. The Union also argued that in negotiating their collective bargaining agreement, the parties intended to provide local hires who applied for and received a transfer with the same benefits as a CONUS hire, specifically, the LQA and FPD, provided that the local hires had served 3 continuous years after receiving an "excepted appointment without condition. The Agency argued at arbitration that any previous grant of an LQA or an FPD to a transferred employee was erroneous and not precedential. The Agency asserted that the parties' agreement merely provides that a local hire may apply for a transfer and does not refer to a transferred employee's entitlement to an LQA. The Agency also argued that the Department of State Standardized Regulations (DSSRs), as implemented by Department of Defense (DOD) regulations, apply to the local hire transfer program and clearly provide that an LQA is to be provided only in certain circumstances. The Agency asserted that in this case LQAs were not authorized because the transfers were not "management-generated actions" as required by those regulations. The Agency also argued that a clear reading" of the parties' agreement did not support the Union's position. B. Arbitrator's Award The Arbitrator noted that section 031.12c of the DSSRs provides that an LQA may be granted to a local hire who was not initially granted such an allowance if "as a condition of employment by a government agency, the employee was required by that agency to move to another area, in cases specifically, authorized by the head of the agency." Award at 7. He further noted that DOD regulations implementing the DSSRs provide, at DOD Directive 1400.25M: Section 031.12C, DSSR, will be applied when an employee is relocated to another area by a management-generated action. It also will be applied when management must request that an employee not now eligible for LQA relocate to another area. A management request that an employee relocate is considered a management-generated action. Award at 7. The Arbitrator determined that the transfer of a local hire employee under the negotiated Inter - Regional Transfer Program was a management-generated action to fill an Agency need in another overseas area. He concluded that since the grievants were relocated by management-generated actions, they were entitled to LQAs under section 031.12c of the DSSRs. In reaching his conclusion that the grievants were entitled to LQAs and FPDs, the Arbitrator made a number of findings. Award at 9-12. He found that the purpose of the negotiated transfer program was to encourage employees to move to hardship areas and that local hires were eligible to apply for transfer under the program after completion of 3 continuous years of service. He found that the grievants met the service time requirement, applied for, and were selected for transfer to fill a management need. The Arbitrator further found that the grievants believed that they would receive LQAs upon being transferred. They accepted the reassignment offer on that basis. Additionally, the Arbitrator found that the grievants were subject to termination if they declined a transfer after accepting management's offer. The Arbitrator also determined that the Agency's implementation of the DSSRs and DOD Directive 1400.25M was inconsistent and unclear because at least two local hires had been granted LQAs when they were transferred under the negotiated program. He also noted that a Personnel Guide for managers issued by the Agency, which the Agency argued was not a regulation and was contrary to its policy, provided for the payment of LQAs to teachers who voluntarily participated in and were selected for transfer under the negotiated program when the transfer is made for the benefit of the Government. Moreover, the Arbitrator found that the bargaining history of the parties' agreement indicated that the Inter - Regional Transfer Program was negotiated to permit a local hire to receive the same benefits as a CONUS hire upon transfer to another area, provided the employee had served 3 continuous years after appointment. The Arbitrator therefore sustained the grievance as it related to LQAs and the FPDs. The Arbitrator ordered the Agency to pay grievants Owen and Dory LQAs and FPDs retroactive to the effective dates of their transfer. He directed that any prior LQA payments made to grievant Dory were to be credited to the Agency. He also ordered the Agency to correct grievant Owen's transportation agreement to reflect her actual place of residence and to provide her with a renewal travel agreement. The Arbitrator further ruled on the entitlement of witnesses in the proceeding to reimbursement for transportation expenses. B. Agency Exceptions The Agency contends that the portion of the Arbitrator's award ordering it to grant the grievants LQAs and FPDs is contrary to Government-wide regulation and law. 1. The Agency's allegation that the award is contrary to Government-wide regulation The Agency first contends that the award is contrary to the DSSRs. In support of this contention, the Agency argues that the DSSRs allow local hires to receive LQAs only if they are required to move to another area. The Agency asserts that the grievants were not required to move, but, rather, were voluntarily transferred. The Agency argues that the negotiated transfer program in the parties' agreement is voluntary and, therefore, an employee transferred under that program is not "required" to relocate. The Agency further asserts that the Arbitrator's interpretation of the parties' agreement is not supported by the language of the agreement. The Agency also disputes the Arbitrator's finding that the grievants were subject to termination if they refused to transfer, arguing that the grievants had 48 hours to decline a transfer offer. 2. The Agency's allegation that the award is contrary to law In support of its contention that the award is contrary to law, the Agency argues that the Arbitrator erred in concluding that filling the vacancies by transfer constituted a management-generated action. The Agency relies on an unpublished decision of the Comptroller General, Comp. Gen. No. B-194024 (Oct. 5, 1979) (unpublished). The Agency asserts that in that case the Comptroller General sustained the determination by the agency head that a local hire who applied for and received a transfer to another location was not entitled to an LQA and that the situation did not constitute a management-generated action. The Agency asserts that the Arbitrator should have found that the transfers in this case were not management-generated actions. The Agency also argues that the Arbitrator erred in adopting the Union's position regarding the bargaining history of the negotiated transfer program. Specifically, the Agency argues that the Arbitrator erred in adopting the Union's position that the parties agreed that if a local hire served 3 continuous years after appointment, the employee would be eligible to apply for a transfer and to receive the same benefits as a CONUS hire. The Agency asserts that this interpretation is contrary to law and that the Union could not gain through negotiations that which is contrary to law. The Agency relies on a decision of the U.s. Claims Court, Acker v. United States, 6 Cl. Ct. 503 (1984) (Acker II). The Agency maintains that the court affirmed its decision in an earlier Acker case, Acker v. United States, 620 F.2d 802 (Ct. Cl. 1980) (Acker I). The Agency asserts that in Acker I, the court determined that nonprobationary local hires were not entitled to an LQA based on longevity. Therefore, the Agency asserts that the Arbitrator's interpretation of Article 48, section 3c of the parties' agreement as allowing a local hire who served 3 continuous years after appointment to apply for a transfer and receive the same benefits as a CONUS hire is contrary to law. C. Analysis and Conclusions We find that the Agency has not established that the Arbitrator's award is deficient. 1. The award is not contrary to Government-wide regulation As to its first contention, the Agency has not sub-stantiated its assertion that the award is contrary to the DSSRs. As noted, section 031.12c of the DSSRs provides that an LQA may be granted if an employee is required as a condition of employment to move to another area. The essence of the Agency's contention is that the grievants were voluntarily transferred and not required to relocate. Whether the Arbitrator's award is contrary to regulation, therefore, depends on the validity of the Arbitrator's determination that the grievants were required to relocate. As indicated above, the Arbitrator expressly concluded, based on the evidence and testimony presented and the parties' agreement, that the grievants were required to relocate as a condition of employment. In defining the term "required," the Arbitrator noted the provision in DOD's implementing regulations, DOD Directive 1400.25M, that payment of an LQA under the DSSRs is authorized when an employee is relocated to another area by a management-generated action. The Arbitrator determined that the selection of an employee under the Inter - Regional Transfer Program in the parties' agreement is a management-generated action which is taken to fill an Agency need in another overseas area. Thus, the Arbitrator determined, based on his interpretation of the parties' agreement, that the grievants were transferred from Germany as a result of a management-generated action to fill Agency needs in Okinawa and Korea. Moreover, in finding that the grievants were required to relocate, the Arbitrator credited the grievants' testimony that they were led to believe that they would receive LQAs and FPDs upon transfer under the program. The grievants also testified that they would not have accepted the transfer offer had they known that they would not be eligible for the allowances. Thus, while the Agency correctly argues that under the negotiated program the grievants had 48 hours in which to reject a transfer offer, the grievants had no reason to decline the offers because they believed that they would receive the allowances until long after the 48-hour period had expired. The Arbitrator also found, as a fact in the case, that under Agency policy the grievants were subject to dismissal if they declined the transfer after they had accepted the offer. The Union established that included in the evidence introduced at the hearing was a statement the Agency required transfer applicants to sign, which provided: If I an offered a transfer to an area of my choice.... I will accept unless an emergency should arise. I also understand that if I accept an offer to transfer and later decline for reasons that are determined as unacceptable to the U.S. (G)overnment, I may be separated. Opposition at 6. The grievants did not learn that they would not receive LQAs and FPDs until after they had been transferred. It is clear that, as the Arbitrator found, they would have been subject to dismissal if they refused the transfer at that point. Furthermore, as the Arbitrator found, the Agency had paid LQAs to other local hires transferred under the negotiated program and the Agency's own Personnel Guide for its managers clearly indicated that such payments were appropriate where, as here, the transfers were for the benefit of Government. Thus, the Arbitrator's findings of fact indicate that local hires transferred under the negotiated program were paid LQAs pursuant to the DSSRs notwithstanding the voluntary nature of a teacher's application for transfer under the program. In view of the Arbitrator's determination, based on his interpretation of the parties' agreement and findings of fact, that the grievants were required to relocate as the result of a management-generated action, we conclude, contrary to the Agency's contention, that his award of LQAs to the grievants is consistent with section 031.12c of the DSSRs. The Agency's contention constitutes nothing more than an attempt to relitigate the merits of the dispute before the Authority and disagreement with the Arbitrator's findings of fact, reasoning and conclusions and interpretation and application of the parties' agreement. It is well established under Authority precedent that such disagreement provides no basis for finding an award deficient under the Statute. See, for example, 351st Combat Support Group, Whiteman Air Force Base and Local 2361, American Federation of Government Employees, 30 FLRA No. 68 (1987); Overseas Education Association and Department of Defense Dependents Schools, Mediterranean Region, 16 FLRA 276, 277-78 (1984); Department of Defense Dependents Schools and Overseas Education Association, 13 FLRA 475, 476-77 (1983). See also United States Paperworkers International Union v. Misco, Inc., 56 U.S.L.W. 4011, 4014 (U.S. Dec. 1, 1987) (in which the Supreme Court reinforced national arbitration policy that it is the arbitrator's view of the facts and the meaning of a contract that the parties have agreed to accept and a court may not reject the arbitrator's findings of fact or interpretation of the contract simply because it disagrees). 2. The award is not contrary to law We likewise find that the Agency has failed to establish that the Arbitrator's award is contrary to law. In support of this contention, the Agency reiterates the argument that the transfer of the grievants was not a management-generated action. However, as we found with regard to its DSSR argument above, the Agency fails to substantiate this claim. The Agency does not cite any express provision of law to support its argument. Moreover, the decisions relied on by the Agency do not demonstrate that the Arbitrator's award in this case is contrary to any law. The Agency's reliance on the Comptroller General's 1979 unpublished decision is misplaced. In that case, the Comptroller General sustained the determinations of Headquarters, U.S. Air Force and the Office of the Assistant Secretary of Defense for Manpower and Reserve Affairs (OASD) that the employee was not entitled to an LQA. The Air Force and OASD determined that the employee was not entitled to an LQA because the circumstances of his transfer from Berlin to the Netherlands did not constitute a "management-generated action," as they defined that term. The Air Force had defined management-generated action as including a reassignment due to abolishment of an employee's position; a transfer of function where the employee works; or a management-requested reassignment. Since the employee's transfer did not fall into any of those categories, the Air Force denied his LQA claim. OASD defined the term as an action taken at the request of or at the direction of management, and affirmed the denial of the LQA. The Comptroller General concluded that since the Air Force and OASD had determined that the employee's transfer was not a management-generated action, there was no basis on which to hold that he was entitled to an LQA. In this case, there was a basis on which to hold that the grievants were entitled to LQAs under the DSSRs. Unlike the situation in the case before the Comptroller General, the dispute before the Arbitrator was not confined to a question of the propriety of the Agency's determinations under its regulations. The dispute also involved a question of the rights of the grievants under the Inter - Regional Transfer Program of the parties' collective bargaining agreement. The Arbitrator resolved the dispute by determining that the transfers of the grievants under the negotiated transfer program were management-generated actions, thereby establishing the basis for the grievants' entitlement to LQAs under the DSSRs. The Agency's reliance on the decisions in Acker I and Acker II also is misplaced. In the Acker decisions, the court determined that local hire employees were not entitled to LQAs based on longevity. In this case, the Arbitrator did not award the grievants LQAs based on longevity. Rather, he determined that they were entitled to LQAs under the parties' negotiated transfer program. The length of service of the grievants was pertinent only to establish their eligibility to apply for a transfer under the negotiated program. As to the award of an LQA to grievant Dory, we note that the Claims Court has held that in the absence of a showing of error on the part of the authorized agency official who properly determined the eligibility of an overseas teacher's entitlement to an LQA, the subsequent revocation of that allowance was not justified. Bentley v. United States, 3 Cl. Ct. 403 (1983). See also Overseas Education Association and Department of Defense Departments Schools, 29 FLRA 240, 242-44 (1987). We conclude that the Agency has failed to establish that the Arbitrator's award is contrary to law. The Agency's arguments in support of this second contention constitute nothing more than disagreement with the Arbitrator's findings of fact, reasoning and conclusions and interpretation and application of the parties' agreement. As stated above, such disagreement provides no basis for finding an award deficient under the Statute. We further conclude that since the Agency has not established that the Arbitrator's award in Case No. O-AR-1343 is deficient, the Agency's exceptions must be denied. III. Case No. O-AR-1445 A. Arbitrator's Award In his award of attorney fees, the Arbitrator found, citing International Brotherhood of Electrical Workers and United States Army Support Command, Hawaii, 14 FLRA 680 (1984), that he was permitted to consider the issue of attorney fees simultaneously with a review of the decision on the merits. Award at 3-4. The Arbitrator found that the requirements of the Back Pay Act, 5 U.S.C. SS 5596, had been met because the grievants were subjected to an unjustified or unwarranted personnel action, the wrongful denial of LQAs and FPDs, which resulted in their loss of pay or allowances. Award at 5. He then addressed the requirements of 5 U.S.C. 7701(g)(1). He found that: (1) the grievants were the prevailing parties; (2) the attorney fees had been incurred by the grievants; and (3) attorney fees were warranted in the interest of justice. With regard to the actual amount of reasonable fees to be awarded, the Arbitrator found that the number of hours claimed by the grievants' attorneys was reasonable. 2 B. Agency Exception The Agency contends that the Arbitrator's award of attorney fees is contrary to law. The Agency argues that the Arbitrator is precluded from deciding the issue of attorney fees until the Authority resolves its exceptions to the underlying award on the merits making it final and binding. The Agency asserts that unless and until its exceptions to the underlying award are denied by the Authority, there is no final decision on which to base the required findings of whether there was an unwarranted or unjustified personnel action and whether the grievants were the prevailing parties. C. Analysis and Conclusion We find that the Agency has failed to establish that the award is deficient. However, we find that the award must be modified to provide that the Union, as the employer of Attorney Hurst, is to be reimbursed only for its actual costs in accordance with the applicable cost-plus formula. There is nothing in Authority precedent or applicable law which requires an arbitrator to refrain from granting a request for attorney fees until the Authority resolves any exceptions which may have been filed to the underlying award, if the award of fees otherwise meets the requirements of 5 U.S.C. 5596 and 5 U.S.C. 7701(g)(1). See Army Support Command, Hawaii, 14 FLRA 680 (the Authority resolved excep-tions to an award of attorney fees rendered simultaneously with a decision on the merits of the dispute). The Authority summarized the applicable legal requirements for an award of attorney fees in Naval Air Development Center, Department of the Navy and American Federation of Government Employees, Local 1928, AFL - CIO, 21 FLRA 131 (1986). In order for attorney fees to be awarded: (1) the fees must be in conjunction with an award of backpay to correct an unjustified or unwarranted personnel action; (2) the award must be reasonable and related to the personnel action; and (3) the award must be in accordance with the standards established under 5 U.S.C. 7701(g). Section 7701(g)(1), which applies to all cases other than discrimination, requires that the fees must be reasonable and must have been incurred by the employee; that the employee must be the prevailing party in the proceeding; and that payment of the fees by the agency involved must be warranted in the interest of justice. Finally, there must be a "fully articulated, reasoned decision" setting forth the specific findings supporting the determination on each pertinent statutory requirement, including the basis upon which the reasonableness of the amount was determined when fees are awarded. In this case, it is clear that the Arbitrator properly established that the attorneys representing the grievants were entitled to an award of attorney fees. The award of fees is in conjunction with an award of retroactive LQAs and FPDs to the grievants to correct the Agency's unwarranted denial. There is no dispute that the fees were incurred on behalf of the employees. The grievants were the prevailing parties in the proceeding before the Arbitrator. The Arbitrator expressly found, based upon consideration of the facts and circumstances involved, that attorney fees were warranted in the interest of justice. Award at 6. We therefore conclude that the Arbitrator's determination that the attorneys representing the grievants are entitled to attorney fees is fully consistent with applicable legal requirements and that the Agency's exception does not provide a basis for finding the award deficient. We turn now to the question of the reasonableness of the amount of the fees awarded. In determining what constitutes reasonable attorney fees, the Authority has determined that if the award of fees is to an attorney in private practice, the appropriate acceptable method is the "lodestar" method, where the attorney's customary hourly billing rate is multiplied by the number of hours reasonably devoted to the case with appropriate adjustments for any special factors. 21 FLRA at 139. However, when the attorney is an employee of a union, fees are computed based on the actual costs rather than on the prevailing market rate for the legal services rendered. 21 FLRA at 140. In this case, the grievants were represented by two attorneys, Mr. Hirn, who is an attorney in private practice, and Ms. Hurst, who is an attorney employed by the Union. The Arbitrator awarded fees to both attorneys based on the "lodestar" method. The Arbitrator's award to Mr. Hirn is proper. However, to the extent that he awarded attorney fees to Ms. Hurst on other than a cost-plus basis, the award is deficient and must be modified. See Internal Revenue Service, Baltimore District Office and National Treasury Employee Union and NTEU Chapter 62, 21 FLRA 918, 924-926 (1986). With regard to the computation of fees to be paid when the attorney is an employee of a union, there are three elements to be considered: (1) the compensation paid to the attorney-employee for the time expended on THE case; (2) out-of-pocket expenses related to the case; and (3) the overhead costs. An overhead allowance of 100 percent normally may be included as an element of actual costs unless that amount is either "substantially excessive or insufficient." 21 FLRA 925. IV. Decision The Agency's exceptions in Case Nos. O-AR-1343 and O-AR-1445 are denied. However, the Arbitrator's award of attorney fees in Case No. O-AR-1445 is modified to direct the Agency to reimburse the Union, as the employer of Attorney Hurst, for its actual costs in accordance with the applicable cost-plus formula. The Union may submit a claim for reimbursement to the Agency based on the applicable formula. If the parties are unable to agree on the amount of reimbursement to be paid, they may resubmit the matter to the Arbitrator for resolution. Issued, Washington, D.C., January, 29, 1988. Jerry L. Calhoun, Chairman Jean Mckee, Member FOOTNOTES Footnote 1 A "local hire" is a United States citizen who is residing in a foreign area at the time of recruitment. "Local hires" do not receive the same benefits as individuals recruited in the Continental United States (CONUS) for foreign posts. "CONUS hires" receive certain benefits, for example, LQA, FPD, and transportation agreements to encourage them to leave the United States for a foreign post or assignment. Footnote 2 The Arbitrator found that certain discrepancies existed in the time records submitted in the initial fee request. Because of the discrepancies in the time records, the Arbitrator granted the attorneys representing the grievants an opportunity to clarify the fee request. The clarification of the fee request satisfied the Arbitrator's concerns and he found the number of hours reasonable. Award dated September 16, 1987, at 2.