[ v39 p1261 ]
The decision of the Authority follows:
39 FLRA No. 109
FEDERAL LABOR RELATIONS AUTHORITY
OVERSEAS EDUCATION ASSOCIATION
U.S. DEPARTMENT OF DEFENSE
March 15, 1991
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of attorney fees of Arbitrator John H. Abernathy filed by the Union under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations. The Agency did not file an opposition to the Union's exceptions.
The Arbitrator found that attorney fees were warranted, but reduced the amount of hours requested and denied certain fees. He awarded fees based on the cost-plus formula. The Union contends that the Arbitrator improperly reduced the number of hours sought and erred in not granting other attorney fees. It also contends the Arbitrator erred in not awarding attorney fees based on the prevailing market rate.
For the following reasons, we conclude that the Arbitrator's award is deficient. We will remand the matter of the Union's request for attorney fees to the parties for further proceedings consistent with this decision.
The grievance in this case concerned a 1-day suspension of a unit employee because of a statement he made at a meeting. The grievant was employed at the Pusan American School in Korea. The suspension was grieved and arbitrated. The Arbitrator sustained the grievance, finding that the grievant was not suspended for just cause, and awarded the grievant backpay. The Agency moved for reconsideration of the Arbitrator's award. The Arbitrator denied the request for reconsideration.
The Union subsequently moved for attorney fees pursuant to the Back Pay Act. The Union requested compensation for H.T. Nguyen, its principal attorney assigned to the case, for 304.28 hours. It requested compensation of 12.5 hours for staff attorney Gladys Hernandez, who had drafted a section of the post-hearing brief that concerned constitutional issues. The Union requested compensation of 22.6 hours for its Pacific Region counsel, Ann Hurst, for her processing of the grievance and preparing the motion for attorney fees. It also requested compensation of 22.6 hours for its General Counsel, Ronald Austin, for time spent supervising the work of his three staff counsels, advising them on tactics and defenses that they should use in the case, and reviewing their work.
The Union claimed fees at market rate for the four attorneys, Austin at $165 an hour, Nguyen and Hurst at $120 an hour, and Hernandez at $95 an hour. The market rate for these fee requests was substantiated by reference to prior fee awards to these counsel, which have ranged from $90 to $140 an hour, and by citation to and analysis of published surveys of attorney fees. Each of the four counsel's claim for fees was accompanied by affidavits that described their experience and qualifications and contained copies of the time records each kept in this case detailing the work that they had done. Further, each affidavit stated that the attorneys were not obligated by their employment contract with the Union to return to the Union any fees awarded to them that exceeded the equivalent to their hourly salary for the time expended on the case. The Union also claimed reimbursement for certain expenses.
III. The Arbitrator's Award on Attorney Fees
The Arbitrator found that the statutory requirements for an award of attorney fees were met because the grievant was the prevailing party, backpay was awarded, and a fee award would be in the interest of justice.
The Arbitrator granted the Union's request for compensation for all the hours spent by Hurst on the case and expenses claimed. However, he reduced Nguyen's request for compensation from 304.28 hours to 200 hours. The Arbitrator found that "[a]n award based on 200 hours . . . would be more reasonable[.]" Award at 25. He granted the total expenses claimed by Nguyen. The Arbitrator denied the Union's request for compensation for the 12.5 hours spent by Hernandez on research and preparation of the Union's argument concerning the First Amendment because the "constitutional issue had no part in my analysis or ruling in the case." Id. at 23. The Arbitrator also denied compensation for the 22.6 hours spent by Austin on the case. The Arbitrator found that "Austin's participation in this case was more in the nature of administrative and supervisory activities than legal services per se." Id. He concluded that an attorney fee award with respect to Austin would not be "consistent with the requirements of the statute." Id.
The Arbitrator further ruled that the Back Pay Act entitled the Union attorneys only to fees on the basis of a "cost-plus" formula (twice their reconstructed hourly salary) rather than at the prevailing market rate. The Arbitrator analyzed the different cases with respect to this issue. He found that the "case law also makes it clear that the [Union] is not to receive a 'windfall' from payment at prevailing market rates[.]" Id. at 22. In this regard, the Arbitrator stated:
The [Union], of course, is entitled to compensation in the form of reimbursement for [Union] attorneys for the actual costs, because the [Union] is acting through its attorneys on behalf of a substantially innocent employee. It is not clear to me, though, how making payment directly to the [Union] attorneys at prevailing market rates furthers the interest of the statute to compensate innocent persons, rather than punish the [A]gency. Therefore, I believe that payment to the attorneys based on the same cost plus formula as applied if payment were to be made directly to the [Union] is the most appropriate course of action.
In reaching that conclusion, the Arbitrator noted that he might have reached a different conclusion if the basis of the award were a finding that the Agency acted in bad faith. In such a case, he reasoned, the purpose of the attorney fee award would be more punitive than compensatory. The Arbitrator also noted that, although it was not his major reason for selecting the cost-plus formula, it would be difficult to determine a prevailing rate for the attorneys involved in this case.
The Union excepted to the amount of attorney fees granted by the Arbitrator. The Union contends that the Arbitrator: (1) improperly reduced the number of hours for which Nguyen sought compensation without making detailed findings concerning which hours claimed were unreasonably expended; (2) improperly denied fees requested for the services provided by Hernandez and Austin; and (3) erred by awarding fees based on the cost-plus formula rather than at the prevailing market rate.
With regard to the reduction of hours for which Nguyen sought compensation, the Union contends that the Arbitrator's award was inconsistent with law because he reduced the number of hours sought without making detailed findings concerning which of the hours Nguyen spent on particular aspects of the preparation, trial, and briefing had been unreasonably expended. It argues that it is settled Authority case law that any reduction in the hourly rate or the number of hours awarded must be justified by detailed findings, citing, in support of its position, FAA, Washington Flight Service Station and National Association of Air Traffic Specialists, 27 FLRA 901, 903 (1987); Naval Air Development Center, Department of the Navy and American Federation of Government Employees, Local 1928, AFL-CIO, 21 FLRA 131, 139 (1986); Department of the Air Force Headquarters, 832D Combat Support Group DPCE, Luke Air Force Base, Arizona and American Federation of Government Employees, AFL-CIO, Local 1547, 32 FLRA 1084, 1101 (1988) (Luke Air Force Base). Further, citing to Crumbaker v. MSPB, 781 F.2d 191, 195 (Fed. Cir. 1986) (Crumbaker) and Northcross v. Board of Education, 611 F.2d 624, 637 (6th Cir. 1979), cert. denied, 447 U.S. 911 (1980) (Northcross), the Union argues that a mere conclusory finding that the amount of time spent on a case by counsel was unreasonable is inadequate to support a reduction in the fees requested.
The Union contends that the hours sought by Nguyen were adequately, even painstakingly, documented. It requests that the Authority modify the award by directing the Agency to pay Nguyen for the full 304.28 hours that he spent on the case.
As to the Arbitrator's denial of the Union's request for reimbursement of the 12.5 hours spent by Hernandez researching a constitutional issue, the Union contends that the Arbitrator improperly concluded that a fee award for that time was not appropriate because he did not overturn the grievant's suspension on that ground. The Union argues that successful litigants are entitled to a fee award for all time reasonably spent by counsel on a case, regardless of whether the fact finder reaches all the issues raised by the litigant. The Union further argues that its counsel was ethically obligated to raise all possible, nonfrivolous defenses on the grievant's behalf, and the fact that the suspension was reversed on one particular ground does not demonstrate that the time spent by counsel researching and advocating an alternative legal theory was unreasonably spent. In support of its contention, the Union quotes the Supreme Court's holding in Hensley v. Eckerhart, 461 U.S. 424, 435 (1983) (Hensley), that when a prevailing party "has obtained excellent results, his attorney should recover a fully compensatory fee. . . . Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters." The Union also cites to Northcross in support of its position and notes that the Merit System Protection Board (MSPB) has held that appellants are entitled to a fee award encompassing the time their counsel spends advocating any number of alternative theories or defenses against an adverse action, even if the presiding official overturns the adverse action on the basis of only one of the alternative defenses.
The Union further contends that the Arbitrator's decision to deny compensation for the 22.6 hours expended by Austin was also in error; that the Arbitrator incorrectly held that the Union was not entitled to a fee award for Austin simply because his work was supervisory in nature. It argues that fees should be awarded to multiple counsel on a case even if one acts in a supervisory role. It contends that the time spent by Austin constituted services provided to the grievant because the trial attorney in this case, Nguyen, relied upon the advice and guidance of Austin, an attorney with over 30 years of practice experience. The Union further argues that it should not be penalized for having a less senior counsel try the case by denying it fees for the minimal amount of time the senior counsel spends giving the trial counsel, and derivatively the grievant, the benefit of his experience.
Finally, with regard to the Arbitrator basing his award of attorney fees on the cost-plus formula rather than at the prevailing market rate, the Union contends that the Arbitrator erred by ignoring the Authority's decision in Department of Defense Dependents Schools, Pacific Region and Overseas Education Association Pacific Region, 32 FLRA 757, 759 (1988) (DODDS, Pacific Region), which held that "attorneys employed by unions may be awarded market or prevailing rates if the fees are awarded directly to the attorneys" provided the attorney "demonstrate[s] that the terms of his or her employment do not require that the union be reimbursed from such [a] fee award for more than the actual costs the union incurred in providing [the] legal representation." It notes that this Authority decision is based on a clear line of authority contained in several decisions of courts of appeals. The Union argues that all four Union attorneys testified in their affidavits that they were not obligated by virtue of their employment contract with the Union to return to the Union attorney fees awarded in excess of their hourly salary.
The Union also takes issue with the Arbitrator's remark that he would have awarded fees at a prevailing market rate as a "punitive" measure if the evidence indicated that the Agency had acted in bad faith in suspending the grievant. It argues that there is no authority for the proposition that the rate at which fees are awarded under the Back Pay Act should be measured by the agency's good faith or bad faith.
The Union contends that the prevailing market rates for fees in the Washington, D.C. area are appropriate to establish the rates for the attorneys in this case. It further contends that the rates requested are fully supported and are based on nationwide surveys. Accordingly, the Union requests that the Arbitrator's fee award be modified to increase the fee awards to the Union counsel based on the lodestar computation at the hours and market rates it had requested.
V. Analysis and Conclusions
We conclude that the Arbitrator's award on attorney fees is deficient. We will remand the matter of the Union's request for attorney fees to the parties for further proceedings consistent with this decision.
A. Attorney Fee Request for Nguyen
We conclude that the Arbitrator's reduction of the number of hours sought for Nguyen from 304.28 to 200 is deficient because the Arbitrator did not justify the reduction with detailed findings concerning which of the hours spent by Nguyen were expended unreasonably.
In Crumbaker, the U.S. Court of Appeals for the Federal Circuit held that there must be a clear explanation of fee awards. In reaching its decision, the court applied the standard in Northcross, 611 F.2d at 636-37, concerning fee requests. Under that standard, "if a district court decides to eliminate hours of service adequately documented by the attorneys, it must identify those hours and articulate its reasons for their elimination." Crumbaker, 781 F.2d at 195 (quoting Northcross, 611 F.2d at 636-37). "Conclusory remarks . . . are wholly inadequate[.]" Id. The court remanded the case to the MSPB to make its determination "supported by a concise but clear explanation of its reasons for any reduction of the hours awarded from those claimed[.]" Id. (emphasis in original). In Luke Air Force Base the Authority specifically adopted this requirement in reviewing attorney fee requests. 32 FLRA at 1101.
The Union in this case provided adequate documentation in support of its request for attorney fees for Nguyen. Nonetheless, the Arbitrator found that "[a]n award based on 200 hours . . . would be more reasonable[.]" Award at 25. He provided no clear, articulated explanation for the reduction in hours. We find that the Arbitrator's finding was conclusory and did not contain the required detailed findings identifying those hours to be eliminated and reasons for their elimination. See also Federal Aviation Administration, Washington Flight Service Station and National Association of Air Traffic Specialists, 27 FLRA 901, 903 (1987); Naval Air Development Center, Department of the Navy and American Federation of Government Employees, Local 1928, AFL-CIO, 21 FLRA 131, 139 (1986) (any reduction of the hourly rate or the number of hours must be justified by detailed findings). Accordingly, we will set aside this portion of the Arbitrator's award and we will remand the question of the reasonableness of the request of attorney fees for Nguyen to the parties to obtain from the Arbitrator a detailed and reasoned decision on this issue.
B. Attorney Fee Request for Hernandez
We conclude that the Arbitrator's award is deficient insofar as it denies the requested attorney fees for Hernandez on the basis that the hours expended by Hernandez concerned an issue the Arbitrator did not consider or rule on. The Arbitrator did not find that Hernandez expended that time on an issue that was frivolous or asserted in bad faith. See Northcross, 611 F.2d at 636. Moreover, the results obtained for the grievant in this case were completely successful with the suspension reversed and the grievant receiving backpay.
As the Supreme Court stated in Hensley, "[l]itigants in good faith may raise alternative legal grounds for a desired outcome, and the court's rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters." 461 U.S. at 435. Applying the Hensley standard, we conclude that Hernandez "should recover a fully compensatory fee." Id. Accordingly, we will set aside this portion of the Arbitrator's award and we will remand the question of the reasonableness of the request of attorney fees for Hernandez to the parties to obtain from the Arbitrator a detailed and reasoned decision on this issue.
C. Attorney Fee Request for Austin
We conclude that the portion of the Arbitrator's award denying attorney fees for Austin is deficient. We find the fact that an attorney's participation in a case was limited to administrative or supervisory functions is not, by itself, a sufficient basis for denying attorney fees. Here, there was no finding that Austin's activities were not related to the case.
In Wilson v. Department of Health and Human Services, 834 F.2d 1011 (Fed. Cir. 1987), the court held that the presiding official's deletion of work-time of an associate on the grounds that his work was duplicative of the principal attorney's own efforts must be supported by substantial evidence. The court found that "[a]n associate's function is usually to help his principal . . . [t]his is not at all duplication but an aid to his principal's functioning[.]" 834 F.2d at 1013.
We find that the Arbitrator's determination that administrative and supervisory activities were not compensable is not a sufficient basis under the Back Pay Act for denying an award of attorney fees. In order to deny fees for Austin, the Arbitrator must fully articulate and specify the reasons why the functions performed by Austin were either insufficiently related to the case or were duplicative of the work performed by the principal counsel. Accordingly, we will remand this portion of the Arbitrator's award to the parties for a fully articulated decision. See United States Department of the Navy, Norfolk Naval Shipyard and American Federation of Government Employees, Local 4015, 34 FLRA 725, 728 (1990)(5 U.S.C. º 7701(g) requires 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).
D. Appropriate Rate for Fees
We conclude that the Arbitrator's award granting fees using the cost-plus formula is deficient.
In DODDS, Pacific Region, the Authority adopted and applied portions of the courts' decisions in National Treasury Employees Union v. U.S. Department of Treasury, 656 F.2d 848 (D.C. Cir. 1981) and Devine v. National Treasury Employees Union, 805 F.2d 384 (Fed. Cir. 1986), petition for cert. denied sub nom. NTEU v. Horner, 108 S. Ct. 67 (1987), that attorneys employed by unions may be awarded market or prevailing rates if the fees are awarded directly to the attorneys. The Authority found in DODDS, Pacific Region, that:
In order for an award of fees at the prevailing rate to be made to a union-salaried attorney, the attorney must present evidence that the fee is to be awarded directly to the attorney. Furthermore, the attorney must demonstrate that the terms of his or her employment do not require that the union be reimbursed from such a fee award for more than the actual costs the union incurred in providing the legal representation.
32 FLRA at 759.
The Arbitrator rejected this standard and decided that the cost-plus formula in determining payment was more appropriate. He noted that he might have reached a different conclusion if the basis of the award were a finding that the Agency acted in bad faith. We find the Arbitrator's conclusions are contrary to law.
The Union has submitted affidavits from the four attorneys regarding the disposition of fees obtained by them. The affidavits were also provided to the Arbitrator. On the basis of the uncontradicted assertions in the affidavits, we conclude that the Union has demonstrated that the four attorneys are not required to turn over their entire fee awards to the Union. Therefore, we conclude that the prevailing market rate should be used to determine the amount of compensation to be awarded to each attorney.
The Arbitrator did not reach the issue of what the appropriate prevailing market rate should be for each of attorneys. Although the Arbitrator noted that it would be difficult to determine a prevailing market rate for the attorneys involved in this case, we take notice under section 2429.26 of our Rules and Regulations of a subsequent award of the Arbitrator involving the same parties and three of the four attorneys involved in this case. That award was provided by the Union and served on the Agency. In that case the Union requested the same rate for each of the attorneys as it did in this case, relying on the same supporting evidence. The Arbitrator granted an award of attorney fees as requested.
As the Arbitrator did not reach the issue of what the appropriate rate should be for each of the attorneys involved in this case, we will remand this question to the parties for further proceedings on that issue.
We conclude that: (1) the Arbitrator's summary reduction of hours requested by the Union for Nguyen is deficient and we remand the question of the reasonableness of the attorney fees request for Nguyen to the parties to obtain from the Arbitrator a detailed and reasoned decision; (2) the Arbitrator's denial of the Union's request for attorney fees for Hernandez is deficient and we will remand the question of the reasonableness of the attorney fees request for Hernandez to the parties to obtain from the Arbitrator a detailed and reason decision; (3) the Arbitrator's conclusory finding that Austin was not entitled to attorney fees because his activities were administrative and supervisory in nature is insufficient and we remand that portion of the award to the parties to obtain a fully articulated decision; and (4) the Arbitrator's granting of attorney fees using the cost-plus formula rather than the prevailing market rate is deficient and we remand to the parties for further proceedings the determination of the appropriate prevailing market rate for fees.
We conclude that the Arbitrator's award of attorney fees is deficient. We remand the matter of the Union's request for attorney fees to the parties for further proceedings consistent with this decision.
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