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The decision of the Authority follows:
51 FLRA No. 17
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF DEFENSE
DEFENSE DISTRIBUTION REGION EAST
NEW CUMBERLAND, PENNSYLVANIA
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
September 18, 1995
Before the Authority: Phyllis N. Segal, Chair; and Tony Armendariz, Member.
I. Statement of the Case
This matter is before the Authority on exceptions to a supplemental award of Arbitrator Walter J. Gershenfeld 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 Regulations. The Union filed an opposition to the Agency's exceptions.
For the following reasons, we conclude that the Agency has failed to establish that the supplemental award is deficient with respect to the Union's entitlement to an award of attorney fees. However, we conclude that the Arbitrator erred in his calculation of the fees because he did not rely on the appropriate relevant community for determining the prevailing market rate. Based on the record before us, we are unable to determine reasonable fees within the meaning of 5 U.S.C. § 7701(g)(1). Accordingly, we sustain in part and deny in part the Agency's exceptions, and remand the award to the parties for resubmission to the Arbitrator in accordance with this decision.
II. Background and Supplemental Award
In his original award dated June 22, 1994, as relevant here, the Arbitrator sustained a grievance filed on behalf of employees claiming entitlement to environmental differential pay (EDP) for exposure to toxic chemicals. As a remedy, the Arbitrator ordered the Agency to pay certain grievants 4 percent EDP for a period of 9 months, rather than 6 years, as had been sought. No exceptions were filed to that award.
In a supplemental award, the Arbitrator granted the Union's request for attorney fees in the amount of $18,438.72, to be paid to the Union's Legal Representation Fund. The Arbitrator concluded that his earlier finding that EDP had been improperly withheld constituted a finding that the grievants had suffered an improper personnel action. In addition, the Arbitrator concluded that the Union was the prevailing party for the purpose of determining eligibility for attorney fees because the Union had prevailed on a "significant" portion of its claim. Award at 3. In reaching these conclusions, the Arbitrator rejected the Agency's argument that because the grievants had received EDP for exposure to asbestos for the same time period pursuant to a different arbitration award, they were ineligible to receive the EDP ordered by the Arbitrator for exposure to toxic chemicals.(1) The Arbitrator also concluded that attorney fees were warranted in the interest of justice because an internal Agency memoranda established that the Agency knew or should have known that it could not prevail on the merits of the grievance.
Finally, the Arbitrator determined that the Union's attorney sought fees for appropriate activities and that the requested rate of $176.11 per hour was reasonable because it was consistent with the rates for attorneys with his skill and experience in the Philadelphia, Pennsylvania, area where he normally works. The Arbitrator rejected the Agency's argument that it should be charged only $125 per hour, which it claimed was the market rate in the New Cumberland, Pennsylvania, area where the arbitration hearing was held. The Arbitrator stated that he had no information to support that rate.
A. Agency's Contentions
The Agency argues that the award is contrary to law, rule or regulation and that the payment of attorney fees should be denied.
The Agency asserts that 5 C.F.R. § 532.511(b)(4) precludes the grievants from recovering the EDP ordered in the original award because they had received EDP for a greater, inclusive period of time under the earlier award relating to asbestos exposure.(2) On these grounds, the Agency argues that: (1) the grievants suffered no withdrawal or reduction of compensation as required by the Back Pay Act, 5 U.S.C. § 5596 (Back Pay Act); (2) the Union was not the prevailing party for purpose of determining eligibility for attorney fees; and (3) fees are not warranted in the interest of justice.
Further, the Agency contends that the Union was not the prevailing party because the period of time for which EDP was ordered did not constitute a significant portion of the relief sought by the Union in the grievance. In addition, the Agency contends that the fees are not warranted in the interest of justice because the Arbitrator failed to consider evidence and testimony that conditions at the grievants' worksite did not entitle them to EDP.
Finally, the Agency claims that, although fees should be based on the $125.00 per hour market rate prevailing in New Cumberland, payment should be limited to $75.00 per hour, based on 5 C.F.R. § 2430.4(a).(3)
B. Union's Opposition
The Union contends that the Agency has failed to establish that the supplemental award is deficient. The Union also asserts that the Arbitrator's original award, to which no exceptions were filed, became final and binding and that the Agency cannot dispute the payment of EDP under that award in exceptions to the supplemental award.
The Union maintains that, as found by the Arbitrator, the fees should be based on the market rate of the suburban Philadelphia area where the Union's attorney normally works and not on the market rate of New Cumberland. The Union states that the attorney is an expert in Federal sector labor and employment law and that the Agency has not shown that any attorney in the New Cumberland area or even in the "greater Harrisburg" area possessed comparable expertise. Opposition at 6.
IV. Analysis and Conclusions
A. Statutory Requirements for Entitlement to Attorney Fees
The 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. U.S. Patent and Trademark Office and Patent Office Professional Association, 32 FLRA 375, 378 (1988) (Patent and Trademark Office). Once such a finding is made, 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). Id.
The prerequisites for an award of attorney fees under 5 U.S.C. § 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. American Federation of Government Employees, Local 12 and U.S. Department of Labor, Washington, D.C., 38 FLRA 1240, 1248 (1990). The standards established under 5 U.S.C. § 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. at 1248-49.
When an arbitrator has properly found that attorney fees are warranted under the Back Pay Act and 5 U.S.C. § 7701(g)(1), but has failed to explain how the amount of those attorney fees was calculated or has made an erroneous determination as to a reasonable amount, the award will be modified or remanded rather than set aside. Where it is apparent from the record what the amount of attorney fees would have been if the arbitrator had made a proper determination, the award will be modified accordingly. See National Association of Government Employees, Local R5-188 and U.S. Department of the Air Force, Seymour Johnson Air Force Base, North Carolina, 46 FLRA 458, 463-64 (1992) (Seymour Johnson Air Force Base).
B. Whether Union Is Entitled to Attorney Fees Because Grievants Suffered a Withdrawal or Reduction of Pay
The Agency does not dispute that the Arbitrator awarded attorney fees in conjunction with his original award of backpay. Instead, the Agency argues that, under 5 C.F.R. § 532.511(b)(4), the grievants could not legitimately recover this backpay for exposure to toxic chemicals because of their earlier receipt of an award of EDP for asbestos exposure and that, therefore, they suffered no reduction in pay. We reject the Agency's argument as an attempt to collaterally attack the Arbitrator's original award.
As the Authority recognized in Patent and Trademark Office and Patent Office Professional Association, 22 FLRA 7, 10 (1986), when a party fails to file timely exceptions to an arbitration award under section 7122(a) of the Statute, the award becomes final and binding and the Agency must take such actions as are required by the award. As explained by the court in Department of the Air Force v. FLRA, 775 F.2d 727, 735 (6th Cir. 1985):
[s]ince an award becomes final and must be implemented if the parties fail to file an exception within the required period, the necessary implication is that a party can no longer challenge the award by any means. It has become final for all purposes.
In this case, the Agency did not file exceptions to the original award. Under the terms of section 7122(b) of the Statute, and as the Agency here concedes, the Arbitrator's original award of backpay became final and binding. Consequently, the Agency was for all purposes unequivocally obligated to comply with that award and cannot now challenge any of its terms. See Department of Health and Human Services, Social Security Administration v. FLRA, 976 F.2d 1409 (D.C. Cir. 1992) (court affirmed the Authority's determination that, in an unfair labor practice proceeding brought as a result of an agency's refusal to comply with an arbitration award, the agency could not attack the arbitrator's contractual jurisdiction in the original proceeding).
Although the Agency asserts that it is now challenging only the supplemental award of attorney fees, in fact it argues here that the grievants suffered no compensable reduction of compensation, a contention that directly challenges the Arbitrator's contrary conclusion in the original award. As such a contention may not be raised at this stage of the proceedings, the Arbitrator's original award remains intact. Therefore, that award satisfies the statutory requirements that the grievants were affected by an unjustified and unwarranted personnel action that resulted in the withdrawal or reduction in the grievants' pay and differentials and that the fees were awarded in conjunction with an award of backpay on correction of the unjustified personnel action.
C. Whether Union Is Entitled to Attorney Fees Because It Was the Prevailing Party
The Arbitrator did not err in concluding that the grievants were the prevailing parties for the purpose of determining eligibility for attorney fees.(4) The requirement in 5 U.S.C. § 7701(g) that an employee be a prevailing party is met if the employee has received "an enforceable judgment or settlement which directly benefitted him at the time of the judgment or settlement." DiGiulio v. Department of Treasury, 66 MSPR 659 (1995) (citing Ray v. Department of Health and Human Services, 64 MSPR 100 (1994) (Ray)).(5)
We find that the grievants were the prevailing parties because they received an enforceable judgment that directly benefitted them at the time of the judgment. In this regard, the employees were awarded EDP in the grievance and, as the Agency failed to file exceptions to the award, it is required to take the actions required by that award. The fact that the period of time for which EDP was ordered was less than that sought is irrelevant. The degree of success obtained is no longer a consideration in determining whether an employee is a prevailing party. Ray, 64 MSPR at 104-05.
D. Whether Attorney Fees Are Warranted in the Interest of Justice
An award of fees is warranted in the interest of justice in cases: (1) involving prohibited personnel practices; (2) where agency actions are clearly without merit or wholly unfounded, or where the employee is substantially innocent of charges brought by the agency; (3) when agency actions are taken in bad faith to harass or exert improper pressure on an employee;(4) when gross procedural error by an agency prolonged the proceeding or severely prejudiced the employee; (5) where the agency knew or should have known it would not prevail on the merits when it brought the proceeding;(6) or (6) where there is a service rendered to the Federal work force or there is a benefit to the public derived from maintaining the action. U.S. Department of the Army, Red River Army Depot, Texarkana, Texas and National Association of Government Employees, Local R14-52, 39 FLRA 1215, 1222-23 (1991) (Red River Army Depot). An award of attorney fees is warranted in the interest of justice if any one of these criteria is met. Id. at 1222.
We find that the Arbitrator's award fully articulates a reasoned decision setting forth specific findings supporting the determination that the award of attorney fees was warranted in the interest of justice under a recognized criterion. In support of his determination, the Arbitrator found that internal Agency memoranda established that the Agency was aware that the conditions under which the grievants handled materials were unacceptable during the period preceding the grievants' removal from the area where they had been exposed to toxic chemicals. Therefore, the Arbitrator found that the Agency knew or should have known that it would not prevail on the merits. Where, as here, an arbitrator fully articulates the reasons supporting one of the interest of justice criteria, the Authority will defer to the arbitrator's findings. See, e.g., Patent and Trademark Office, 32 FLRA at 378. Accordingly, the Arbitrator's award satisfies the legal requirements for a finding that attorney fees are warranted in the interest of justice.
E. Reasonableness of Attorney Fees
We conclude that the Arbitrator erred in his calculation of fees because he did not rely on the appropriate relevant community for determining the prevailing market rate, and, based on the record before us, we are unable to determine a reasonable fee within the meaning of 5 U.S.C. § 7701(g)(1). Accordingly, we remand this case for purposes of addressing this issue.
Under the Back Pay Act, attorney fees for an attorney employed by a union are calculated at the prevailing market rate if, as is the case here, fees are remitted to a legal defense fund. Bureau of Prisons, 46 FLRA at 1006-07. To determine the market rate for union-employed attorneys, it is necessary to consider the customary billing rates of private attorneys of reasonably comparable skill, experience, and reputation.(7) See id. at 1009; U.S. Department of the Treasury, Internal Revenue Service, Washington, D.C. and National Treasury Employees Union, 48 FLRA 931, 935 (1993).
There is no dispute with respect to the number of hours expended by the Union's attorney. The sole issue here is whether the relevant community for determining rates is, as found by the Arbitrator, the Philadelphia area, where the Union's attorney normally works or, as asserted by the Agency, the New Cumberland area, where the hearing was held. To resolve this issue, we find it appropriate to apply the decisions of the MSPB. See note 5, above.
The relevant community for determining the prevailing market rate is normally the place of the hearing. E.g., Crumbaker v. Department of Labor, 40 MSPR 70, 78 (1989). However, in accordance with decisions of the courts, the MSPB will sustain compensation of an out-of-town attorney at the higher rate prevailing where the attorney customarily practices if it was reasonably necessary for the employee to employ a non-local attorney, e.g., if there is no local attorney with specialized expertise readily available at the lower local rate. E.g., Lopez v. United States Postal Service, 54 MSPR 230, 234 (1992) (Lopez) (citing Donnell v. U.S., 682 F.2d 240, 251-52 (D.C. Cir. 1982)). Under MSPB case law, the burden is on the party seeking fees to establish that the "non-local attorney's fees are reasonable because it was reasonably necessary to hire [that attorney]" and the agency may present evidence to rebut that evidence. Lopez, 54 MSPR at 234-35. We find that the Union has failed to establish that New Cumberland is not the relevant community for determining the market rate. The Union has not alleged and the record does not indicate that this case reasonably necessitated a non-local attorney. See, e.g., Koenig v. Department of the Air Force, 55 MSPR 155, 160 (1992).
Having found that the Union is entitled to an award of attorney fees and that New Cumberland is the relevant community for determining those fees, however, we are unable to determine the prevailing market rate for similar work in the New Cumberland area so that the fees can be calculated. The Union has the burden of submitting specific evidence on that issue. See Manley v. Department of the Air Force, 67 MSPR 467, 473 (1995) (Manley); Bureau of Prisons, 46 FLRA at 1009. This burden may be met by presenting affidavits from attorneys in the relevant community whose qualifications are similar to those of the employee's counsel, which set forth the rates they charge and/or their knowledge of the rates other attorneys charge in similar matters. Manley, 67 MSPR at 473-74. In support of its request, the Union submitted documents addressing only the market rate in the Philadelphia area. Further, the Arbitrator found no support for the Agency's argument that it should be charged $125 per hour, which it claimed was the market rate in the New Cumberland area. Thus, there is insufficient evidence in the record addressing the prevailing rate charged by attorneys in the New Cumberland area with qualifications similar to those of the Union's attorney for Federal employment matters.
As we are unable to determine a reasonable fee within the meaning of 5 U.S.C. § 7701(g)(1), we remand the matter to the parties, who should, absent settlement, request the Arbitrator to make the necessary findings regarding the appropriate hourly rate and the amount of fees for the work the attorney performed. Seymour Johnson Air Force Base, 46 FLRA at 470.
The Agency's exceptions are granted in part and denied in part. We find no deficiency in the portion of the Arbitrator's award finding that the grievant is entitled to attorney fees. The remainder of the Arbitrator's award granting attorney fees in the amount of $18,438.72 is set aside. The award is remanded to the parties for resubmission to the Arbitrator in accordance with this decision.
(If blank, the decision does not have footnotes.)
1. Although the record before us does not include a copy of the arbitration award involving EDP for exposure to asbestos, the Agency has provided copies of release forms signed by employees who had received EDP payments required by that award. Agency's Exceptions, tabs 3/2, 3/4 and 3/5. Those release forms were signed in September 1992, well before the original award in this case.
2. 5 C.F.R. § 532.511(b)(4) provides that:
An employee may not be paid more than one environmental differential for a particular period of work.
3. 5 C.F.R. Part 2430 governs awards of attorney fees under the Equal Access to Justice Act, 5 U.S.C. § 504 (EAJA). 5 C.F.R. § 2430.4(a) provides, in relevant part, that "[n]o award for the fee of an attorney or agent under these rules may exceed $75.00 per hour."
4. Although the Arbitrator found that the Union was the prevailing party in the original grievance, it is clear that the Union was acting on behalf of employees. Therefore, we refer to the grievants as the prevailing parties.
5. In Ray, the Merit Systems Protection Board (MSPB) overruled its prior case law that defined a prevailing party as one who had obtained all or a significant part of the relief that was sought. In so doing, the MSPB relied on Supreme Court decisions interpreting other attorney fees statutes. In general, when exceptions concern the standards established under 5 U.S.C. § 7701(g), the Authority looks to the decisions of the MSPB and the U.S. Court of Appeals for the Federal Circuit. See United States Department of Health and Human Services, Social Security Administration, Baltimore, Maryland and American Federation of Government Employees, Local 1923, 49 FLRA 858, 864 (1994). Although the Authority has, in at least one case, departed from this general rule, see U.S. Department of Justice, Bureau of Prisons, Washington, D.C. and Bureau of Prisons, Federal Correctional Institution, Ray Brook, New York, 46 FLRA 1002, 1007 (1992) (Bureau of Prisons) (Authority agreed with the U.S. Courts of Appeals for the District of Columbia and Ninth Circuits, which, contrary to the MSPB and Federal Circuit, held that where a union maintains a legal representation fund, attorney fees for union-employed attorneys should be calculated on a market rate, rather than a cost-plus, basis), we find no reason to do so here. In cases decided prior to Ray, the Authority applied the same definition of prevailing party as the MSPB. E.g., United States Department of the Navy, Norfolk Naval Shipyard and American Federation of Government Employees, Local 4015, 34 FLRA 725, 728-29 (1990). Therefore, we will henceforth apply the definition of prevailing party set forth in Ray.
6. The Federal Circuit has explained this category as requiring an evaluation of the agency's decision to proceed against the employee. E.g., Yorkshire v. MSPB, 746 F.2d 1454, 1457 (Fed. Cir. 1984). Thus, in analyzing a request for fees under this category, arbitrators should focus on the agency's actions that resulted in the grievance.
7. The Agency's reliance on 5 C.F.R. § 2430.4(a) is misplaced because the attorney fees in this case are governed by the Back Pay Act, not the EAJA. There is no basis for the Authority to award the Union fees under the EAJA. The Authority has held that proceedings before arbitrators under the Statute are not adversary adjudications for purposes of the EAJA because they are not subject to the procedural requirements of the Administrative Procedure Act, 5 U.S.C. § 554. See, for example, U.S. Army Corps of Engineers and National Federation of Federal Employees, Local 639, 17 FLRA 424 (1985). The only Authority proceedings that do qualify for fees under the EAJA are unfair labor practice proceedings conducted by the Authority against a labor organization. See American Federation of Government Employees, Local 1960 and Naval Education and Training Program Development Center, Pensacola, Florida, 34 FLRA 799, 803-04 (1990).