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34:0725(126)AR
The decision of the Authority follows:
34 FLRA No. 126
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.
UNITED STATES DEPARTMENT OF THE NAVY
NORFOLK NAVAL SHIPYARD
and
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
LOCAL 4015
0-AR-1574
DECISION
February 2, 1990
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to the award of Arbitrator Roger P. Kaplan filed on behalf of the American Federation of Government Employees, Local 4015 (the Union). The Department of the Navy (the Agency) did not file an opposition to the exceptions.
The Arbitrator denied the Union's request for attorney fees in connection with a previous award in which he reduced an employee's discipline from a 2-day suspension to a written reprimand. The Union contends that the denial of the request for attorney fees is erroneous and contrary to law, rule, and regulation. For the following reasons, we deny the Union's exceptions.
II. Background and Arbitrator's Award
The Agency suspended an employee for 2 days for shouting at a supervisor. The employee filed a grievance contending that the discipline imposed was too severe and should be reduced to an oral reprimand. The matter was submitted to arbitration on that issue.
In the award on the merits, the Arbitrator found that there was not just cause for suspending the grievant for 2 days. The Arbitrator determined that an appropriate penalty was an official letter of reprimand. He ordered the Agency to expunge the 2-day suspension from the grievant's record and to pay the grievant backpay for the unwarranted suspension.
The attorney representing the Union and the grievant then filed a request for an award of attorney fees with the Arbitrator. The attorney maintained that the grievant was the prevailing party and was entitled to attorney fees because he obtained mitigation of the discipline from a 2-day suspension to a written reprimand. The attorney also maintained that an award of attorney fees was warranted in the interest of justice, that the grievant had incurred the fees, and that the amount claimed was reasonable.
The Arbitrator denied the request for attorney fees. He noted that Allen v. United States Postal Service, 2 MSPR 420 (1980) (Allen), and Naval Air Development Center, Department of the Navy and American Federation of Government Employees, Local 1928, AFL-CIO, 21 FLRA 131 (1986) (NADC), contain the requirements which must be met for an award of attorney fees. The Arbitrator stated that an award of attorney fees is discretionary with the finder of fact and requires findings that: (1) there was an attorney-client relationship; (2) the grievant was the prevailing party in the matter; (3) the fees are warranted in the interest of justice; and (4) the amount requested is reasonable. Arbitrator's Award at 2. He also stated that "[t]he Merit Systems Protection Board (MSPB) has determined that 5 U.S.C. 7701(g)(1) establishes the criteria as to whether an employee is the prevailing party, and whether the award is in the interest of justice." Id. He stated that under NADC, the requirements of 5 U.S.C. 7701(g) "include a finding that the fees were incurred for the services of an attorney, the fees can only be awarded to the prevailing party, the award must be in the interest of justice, the fees must be reasonable, and the arbitrator must provide a fully articulated, reasoned decision for granting or denying the award." Id. at 3.
The Arbitrator found that the attorney and the grievant had an attorney-client relationship. He then considered whether the grievant was the prevailing party in the underlying grievance. He noted the decision of the U.S. Court of Appeals for the Federal Circuit that "if a penalty is imposed against an employee and, as a result of his or her appeal it is reduced, then that employee may be deemed to have prevailed." Arbitrator's Award at 3, citing Sterner v. Department of the Army, 711 F.2d 1563, 1567 (Fed. Cir. 1983).
The Arbitrator determined that the grievant was not a prevailing party. He stated that the grievant "bore partial responsibility for the verbal confrontation that occurred" and "that some disciplinary action must be taken to avoid repetition of such conduct." Arbitrator's Award at 3. He further stated that "[w]hile the arbitration record demonstrated that the disciplinary action taken against the Grievant was not for just cause, the record also demonstrated factually that the Grievant was involved in yelling at his supervisor, an offense for which some discipline must be imposed as a corrective measure." Id. at 3-4.
The Arbitrator also discussed the requirement that an attorney fee award be in the interest of justice. He ruled that there was no prohibited personnel practice by the Agency and that the Agency did not engage in bad faith by harassing the grievant. He also ruled that there could not be a finding that the Agency knew or should have known that the 2-day suspension would not be sustained. The Arbitrator stated that "{h}aving found that the Agency's action was not totally without merit, an attorneys' fee award would be unsupportable and unwarranted." Id. at 4.
The Arbitrator concluded that the grievant was not the prevailing party and that an award of attorney fees would not be in the interest of justice. He denied the motion for attorney fees.
III. Union's Exceptions
The Union contends that the Arbitrator erred in finding that the grievant was not a prevailing party in the proceeding. The Union maintains that the grievant must be considered to be the prevailing party because he obtained substantially all of the relief sought--reduction of the 2-day suspension to a written reprimand. The Union cites Hodnick v. Federal Mediation and Conciliation Service, 4 MSPR 371 (1980), in support of this position.
The Union also contends that the Arbitrator erred when he failed to find that attorney fees were warranted in the interest of justice. The Union maintains that the grievant prevailed on the sole issue at arbitration--the reasonableness of the discipline imposed. The Union notes that the grievant argued that a 2-day suspension was too harsh and that it should be reduced to a reprimand. The Union cites Lambert v. Department of the Air Force, 34 MSPR 501 (1987), in which the MSPB held that the selection of a penalty is part of the merits of the case and that an award
of attorney fees is warranted where the MSPB corrects a penalty chosen by the agency.
IV. Discussion
When exceptions are filed to arbitration awards resolving requests for attorney fees under the Back Pay Act, the Authority's role is to ensure that the arbitrator complies with applicable statutory standards. A threshold requirement for entitlement to attorney fees under the Back Pay Act 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. The Back Pay Act further requires that an award of attorney 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). U.S. Patent and Trademark Office and Patent Office Professional Association, 32 FLRA 375, 378 (1988).
The prerequisites for an award of attorney fees under section 7701(g)(1), which applies to all cases except those involving allegations of discrimination, 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. The standards established under section 7701(g) further require a fully articulated, reasoned decision setting forth the arbitrator's specific findings supporting the determination on each pertinent statutory requirement, including the basis on which the reasonableness of the amount was determined when fees are awarded. Id.
For the following reasons, we conclude that the Arbitrator erred in finding that the grievant was not a prevailing party. However, we also conclude that the Arbitrator's finding that an award of attorney fees was not in the interest of justice is not contrary to any law, rule or regulation. Therefore, the Arbitrator's award denying attorney fees is not deficient under section 7122(a) of the Statute.
A. The Grievant Is the Prevailing Party
In order to be eligible for attorney fees under 5 U.S.C. 7701(g), an employee must be a prevailing party in the proceeding. This requirement is met if the employee
has obtained all or a significant part of the relief which was sought. United States Department of Housing and Urban Development, Region VI and United States Department of Housing and Urban Development, Region VI, San Antonio Area Office, 24 FLRA 885, 887-88 (1986) (HUD). The "prevailing party" requirement was examined in detail by the U.S. Court of Appeals for the Federal Circuit, which stated:
In applying this standard, it should be borne in mind that determining who prevails is really no more than a totaling up of who won and who lost. It is a practical matter: for example, if a penalty is imposed against an employee and, as a result of his appeal, it is reduced, then that employee may be deemed to have prevailed.
Sterner v. Department of the Army, 711 F.2d at 1567 (footnote omitted).
Under the definition of "prevailing party" set forth in Sterner, a grievant may be the prevailing party in the proceeding if he or she obtains mitigation of discipline, even though he or she may have committed the offense which is the basis for that discipline. See also Van Fossen v. MSPB, 788 F.2d 748, 749 n.5 (Fed. Cir. 1986), in which the court, citing Sterner, upheld the MSPB's finding that a grievant was a prevailing party because he obtained a significant part of the relief sought--reduction of discipline from a removal to a 30-day suspension--although the charges against him were sustained.
The Arbitrator in the instant case found that although the grievant was involved in the offense, there was not just cause for the 2-day suspension. We conclude that the reduction in discipline, although not the reduction to an oral reprimand sought by the grievant, is sufficient to make the grievant the prevailing party in the proceeding for the purpose of determining eligibility for attorney fees. Therefore, we agree with the Union that the Arbitrator erred by finding that the grievant was not the prevailing party.
B. Attorney Fees Are Not Warranted In the Interest of Justice
Because we find that the grievant was the prevailing party in the grievance on the merits, we must consider whether the Arbitrator's denial of fees is proper under the "interest of justice" requirement. The court stated in Sterner that "[t]he determination of who prevailed is, after all, only a threshold test of eligibility; the more difficult question of entitlement is reserved for the second prerequisite, 'warranted in the interest of justice.' Eligibility is broad but the entitlement standard operates to limit it." 711 F.2d at 1567 (emphasis in original, footnote omitted).
In Allen, the MSPB listed five illustrative examples "which provide a useful indication of circumstances considered to reflect the 'interest of justice.'" Allen, 2 MSPR at 434. The Authority applies the Allen standards, as interpreted by the U.S. Court of Appeals for the Federal Circuit, in determining whether an award of attorney fees is warranted in the interest of justice. See, for example, Federal Aviation Administration, National Aviation Facilities Experimental Center and National Federation of Federal Employees, Local 1340, 32 FLRA 750, 752 (1988) (FAA); HUD, 24 FLRA at 888-90.
An award of fees is warranted in the interest of justice if any of the Allen criteria are met. HUD, 24 FLRA at 889. The Allen criteria are as follows:
1. [T]he agency engaged in a "prohibited personnel practice" ( 7701(g)(1));
2. [T]he agency's action was "clearly without merit" ( 7701(g)(1)), or was "wholly unfounded," or the employee is "substantially innocent" of the charges brought by the agency;
3. [T]he agency initiated the action against the employee in "bad faith," including:
a. Where the agency's action was brought to "harass" the employee;
b. Where the agency's action was brought to "exert improper pressure on the employee to act in certain ways";
4. [T]he agency committed a "gross procedural error" which "prolonged the proceeding" or "severely prejudiced" the employee;
5. [T]he agency "knew or should have known that it would not prevail on the merits" when it brought the proceeding.
2 MSPR at 434-35 (footnote omitted).
In the instant case, there is no contention that attorney fees are warranted on the basis of criterion 1, 3, or 4. Our decision addresses whether attorney fees are warranted under criterion 2 or 5.
1. The Agency's Action Was Not Clearly Without Merit or Wholly Unfounded and the Grievant Was Not Substantially Innocent of the Charges
Under criterion 2, an award of fees is warranted in the interest of justice where the result of the appeal--here the arbitration proceeding--shows that (1) the agency's action was "clearly without merit" or was "wholly unfounded"; or (2) the employee is "substantially innocent" of the charges brought by the agency. See FAA, 32 FLRA at 752. The Union contends that attorney fees are warranted because the penalty imposed on the grievant was mitigated. We conclude that the Union has failed to demonstrate that the Arbitrator erred in failing to grant an award of fees under either the first or second factor of this criterion.
In the instant case, the Arbitrator found that "the Grievant bore partial responsibility for the verbal confrontation that occurred . . . and that some disciplinary action must be taken to avoid repetition of such conduct." Arbitrator's Award at 3. The Arbitrator also stated that the record "demonstrated factually that the Grievant was involved in yelling at his supervisor, an offense for which some discipline must be imposed as a corrective measure." Id. at 4. Although the Arbitrator improperly used these findings as a basis to determine that the grievant was not the prevailing party, these findings are relevant to determining whether the Agency's action was "clearly without merit" or "wholly unfounded" or whether the grievant was "substantially innocent" of the charges so as to warrant an award of attorney fees.
In Sims v. Department of the Navy, 711 F.2d 1578 (Fed. Cir. 1983), the court determined that an employee whose removal was mitigated to a 10-day suspension was not entitled to attorney fees. Applying criterion 2, the court ruled that the mitigation of the penalty did not in itself warrant an award of attorney fees in the interest of justice because the grievant admitted the wrongdoing. The court held that "[t]he agency's adverse action was not 'clearly without merit,' and it concerned indisputably improper conduct." 711 F.2d at 1582.
We find, consistent with the court's decision in Sims, that the Arbitrator's finding that the Agency's action "was not totally without merit" (Award at 4) is not contrary to law. Therefore, we find that the Union has failed to show that the Agency's action was "clearly without merit" or "wholly unfounded" so as to warrant an award of attorney fees under the first factor of criterion 2.
As to whether the grievant was "substantially innocent" of the Agency's charges, the U.S. Court of Appeals for the Federal Circuit has stated that "the substantially innocent standard means that . . . an employee is essentially without fault for the charges alleged, and was needlessly subjected to attorney fees in order to vindicate himself." Massa v. Department of Defense, 833 F.2d 991, 993 (Fed. Cir. 1987).
In our view, the Arbitrator's findings that the charges against the grievant were sustained supports a conclusion that the grievant was not without fault and was not needlessly subjected to attorney fees. See Massa. Compare Boese v. Department of the Air Force, 784 F.2d 388, 391 (Fed. Cir. 1986), in which the court overruled the MSPB's denial of attorney fees because the grievant was shown to be "substantially innocent" of the charges; and FAA, in which the Authority found that the arbitrator failed to apply the correct "interest of justice" standard when he denied attorney fees to an employee against whom charges were not proven. Because the Arbitrator found that the grievant was not "substantially innocent" and the Union fails to show that this finding is contrary to law, attorney fees are not warranted under the second factor of criterion 2.
2. The Agency Did Not Know and Should Not Have Known That It Would Not Prevail On the Merits
Under criterion 5, an award of attorney fees is warranted in the interest of justice where the agency "knew or should have known that it would not prevail on the merits" when it brought the proceeding. The Arbitrator found that this criterion was not met because there could not "be a finding that [the Agency] knew or should have known that the two day suspension would not be sustained." Arbitrator's Award at 4.
The Union contends that fees are warranted under this criterion because the Arbitrator mitigated the penalty from a 2-day suspension to a letter of reprimand. The Union notes that the MSPB has held "that the penalty is part of the merits of the case, and that attorney fees are warranted in the interest of justice where an agency knew or should have known that its choice of penalty would be reversed." Lambert, 34 MSPR at 505. In Lambert, the MSPB ruled that an employee was not substantially innocent, but that attorney fees were warranted in the interest of justice because the agency knew or should have known that it would not prevail on the discipline imposed--a removal which was mitigated by the MSPB to a 60-day suspension.
The MSPB applied Lambert in Sprenger v. Dept. of the Interior, 34 MSPR 664 (1987), in which it awarded attorney fees to an employee whose reduction in grade was mitigated to a 30-day suspension--"the maximum reasonable penalty for the sustained charge." Id. at 666. The MSPB concluded that under Lambert, the appellant "carried his burden of showing that the agency 'knew or should have known that it could not prevail' on its selection of the penalty, which is part of the merits of the case, when it brought the adverse action." Id. at 668.
In the instant case, the Arbitrator concluded that the grievant committed the offense and that disciplinary action was required. The Arbitrator found that the Agency did not know, nor should it have known, "that the two day suspension would not be sustained." Arbitrator's Award at 4. The Union has not demonstrated that the Arbitrator's finding is erroneous or that it violates any applicable law or regulation. Accordingly, attorney fees are not warranted under criterion 5 of the "interest of justice" standard.
V. Decision
The Arbitrator erred by determining that the grievant was not the prevailing party. However, the Arbitrator did not err in determining that an award of attorney fees would not be in the interest of justice. Consequently, we find that the award denying fees is consistent with the requirements of 5 U.S.C. 7701(g)(1).
The Union's exceptions are denied.
FOOTNOTES:
(If blank, the decision does not
have footnotes.)