44:1084(87)CO - - AFGE Local 2391 and Robert M. Wangeman - - 1992 FLRAdec CO - - v44 p1084

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The decision of the Authority follows:

44 FLRA No. 87








(Charging Party)




April 30, 1992

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on exceptions filed by the Union to the attached decision of the Administrative Law Judge. The General Counsel did not file an opposition.

The Judge awarded attorney fees to the Union, based on the "cost-plus" formula,(1) under 5 C.F.R Part 2430 of the Authority's Regulations, which implement the Equal Access to Justice Act (EAJA) of 1980, Pub. L. No. 96-481, codified at 5 U.S.C. § 504.

For the following reasons, we find that it is appropriate to award the Union attorney fees at market rates. We will modify the Judge's order accordingly.

II. Background and Judge's Decision

In the underlying unfair labor practice proceeding, the Judge concluded that the Union did not commit an unfair labor practice under section 7116(b)(1) of the Statute when the Union's president refused to rent an apartment to the charging party. As no exceptions were filed to the Judge's decision, the Authority adopted the findings, conclusions, and recommendations set forth therein and dismissed the complaint.

A Union-employed attorney represented the Union in the proceeding. Subsequently, the Union filed an application for attorney fees, based on market rates, and expenses. The General Counsel moved to dismiss the Union's application and argued, among other things, that attorney fees should be calculated based on the cost-plus formula rather than market rates.

The Judge found that the Union met the requirements of Part 2430 of the Authority's Regulations for an award of attorney fees and expenses under the EAJA. However, citing HHS, Region IV, the Judge concluded that the Union could not be awarded fees based on market rates and, instead, awarded fees based on the cost-plus formula.

III. Exceptions

The Union argues that the Judge erred by failing to award attorney fees based on market rates. The Union acknowledges that fees under the EAJA are capped at $75 per hour(2) but requests an "inflation adjustment" resulting in an award calculated at $84 per hour:

While [the Union's] submittal to the [Judge] did not ask for an inflation adjustment . . . [the Union] does here ask the FLRA to invalidate the FLRA's "rule making requirement" regarding the "removal" of said cap . . . and to declare that a reasonable inflation adjustment must be made available to any EAJA fee applicant . . . by the entity granting the EAJA fee award.

Exceptions at 9 n.7.(3) The Union also requests interest on the award.

IV. Analysis and Conclusions

Initially, we note that the EAJA provides that attorney fee awards shall be based upon prevailing market rates. 5 U.S.C. § 2412(d)(2)(A). In denying attorney fees based on market rates, the Judge relied on the Authority's decision in HHS, Region IV. In that case, the Authority concluded, as relevant here, that market-rate fees could not be awarded a union under the Back Pay Act, 5 U.S.C. § 5596, even if the union maintained a separate legal representation fund into which such fees would be paid. For this proposition the Authority cited, among other decisions, Goodrich v. Department of the Navy, 733 F.2d 1578, 1580 (Fed. Cir. 1984), cert. denied 469 U.S. 1189 (1985) (Goodrich), where the Court of Appeals for the Federal Circuit held that ethical concerns were raised by awards to union representation funds of market-rate fees because "the payment to the fund of legal fees that exceed the union's expenses . . . would result in the union's indirectly utilizing legal fees for its ordinary expenses."

In American Federation of Government Employees, AFL-CIO, Local 3882 v. FLRA, 944 F.2d 922 (D.C. Cir. 1991) (AFGE, Local 3882), the court held that attorney fee awards under the Back Pay Act may be based on market rates for union-employed attorneys where the union maintains a separate legal representation fund. Although the court acknowledged Goodrich, among other decisions, the court rejected the argument that the payment of market-rate fees in these circumstances raises ethical concerns. The court found that the fees received by the union's attorneys in AFGE, Local 3882 would be placed in the union's legal representation fund, an account which was separate from the union's general treasury, controlled solely by the union's general counsel, and used only for legal work. The court concluded that the fund was "the very sort [it had] approved as a bulwark against unethical practice." Id. at 935 (footnote omitted).

Although the application for attorney fees in this case was filed under the EAJA, there is no reason for us to reach a different conclusion here than the court in AFGE, Local 3882 reached under the Back Pay Act. Indeed, as noted previously, the EAJA specifically provides for market-based fees. Further, the Union asserts, without contradiction, that at all times pertinent to this case it maintained the same representation fund as that in AFGE, Local 3882. Accordingly, cons