[ v55 p444 ]
55 FLRA No. 72
AMERICAN FEDERAL OF GOVERNMENT
53 FLRA 835 (1997)
JAMES J. POWERS
AMERICAN FEDERATION OF GOVERNMENT
53 FLRA 364 (1997)
DECISION AND ORDER
ON PETITIONS FOR AMENDMENT OF RULES
April 30, 1999
Before the Authority: Phyllis N. Segal, Chair; Donald S. Wasserman and Dale Cabaniss, Members [n1]
1. Statement of the Case
The petitioners in the above-captioned and consolidated cases have each petitioned the Authority for amendment of rules pursuant to 5 C.F.R. §§ 2429.28 and 2430.5. Petitioners seek to increase the maximum per hour rate for attorney fees under the Equal Access to Justice Act (EAJA). 5 U.S.C. § 504(b)(1)(A) (1994 & Supp. II 1996). Section 2430.4 of the Authority's regulations currently provides for a maximum rate of $75.00 per hour for the award of attorney fees.
Petitioners seek amendment of the Authority's regulations in two respects: First, they seek a rate of $125 per hour based on 1996 amendments to the EAJA raising the maximum hourly rate. Second, petitioners move for both retroactive and prospective application of any increase in the maximum hourly rate. Finally, petitioners seek rates of $150 and $145, respectively, based on an increase in the cost of living and other special factors.
On consideration of the petitions and briefs of the parties, we deny the petitions to retroactively increase the rate to $125 per hour based on the 1996 amendment to the EAJA. However, we grant the petitions' request that the Authority promulgate a regulation raising the maximum EAJA per hour rate to $125. Further, we grant the petitions insofar as they move the Authority to engage in rulemaking to consider establishing appropriate criteria for adjustments to the maximum EAJA per hour rate based on cost of living and other special factors.
A. Authority's and Judge's Decisions Prompting the Rulemaking Petitions
1. Local 987
In American Federation of Government Employees, Local 987, Warner Robins, Georgia and Nedra T. Bradley, 46 FLRA 1048 (1992) (AFGE Local 987 I), the Authority held that Local 987 violated section 7116(b)(1) and (8) of the Federal Labor-Management Relations Statute (Statute) by denying readmission to membership to the Charging Party, Nedra Bradley. The manner in which Local 987 complied with this order led to a second ULP complaint which was eventually dismissed in American Federation of Government Employees, Local 987 and Nedra T. Bradley, 53 FLRA 364 (1997) (AFGE Local 987 II). This dismissal prompted Local 987 to petition for attorney's fees under the EAJA and, on receiving a favorable recommended decision from the Administrative Law Judge (Judge), for rulemaking to permit an enhanced attorney fee rate under the Authority's regulations.
The Authority concluded that the General Counsel was substantially justified in prosecuting the December 15, 1993 unfair labor practice complaint against Local 987 notwithstanding the fact that the complaint was dismissed. American Federation of Government Employees, Local 987 and Nedra T. Bradley, 55 FLRA No. 71 (1999) (Member Wasserman Dissenting) (AFGE Local [ v55 p445 ] 987 III). Thus, the Authority dismissed Local 987's petition for attorney fees under the EAJA. [n2]
2. Local 2419
In American Federation of Government Employees, Local 2419 and James J. Powers, 53 FLRA 835 (1997) the Authority concluded that Local 2419 did not violate sections 7102, 7116(b)(1), (8), and (c) of the Statute in imposing discipline against a union employee. Accordingly, the Authority dismissed the unfair labor practice complaint that had been filed by the General Counsel on May 31, 1995.
Local 2419 petitioned for fees under the EAJA. The Judge determined that Local 2419 was entitled to attorney fees and expenses in the amounts of $1337.49 and $158.46, respectively, for that portion of work performed by its counsel as a result of the General Counsel's filing of exceptions to the Judge's original decision. Local 2419 petitioned for rulemaking to enhance the fee rate. Because neither party filed exceptions to the Judge's recommended decision on attorney fees, the Judge's decision became the decision of the Authority. 5 C.F.R. § 2423.41(a).
B. EAJA Considerations
Pursuant to the EAJA (5 U.S.C. § 504(a)(1)), and the Authority's regulations implementing the EAJA (5 C.F.R. §§ 2430.1 et seq.), an eligible entity may receive an award of attorney fees when it is the prevailing party over the General Counsel in an adversary adjudication where the General Counsel's position in the proceeding was not substantially justified.
1. Maximum Rate
Prior to March 29, 1996, the EAJA provided that attorney fees "shall not be awarded in excess of $75 per hour." 5 U.S.C. § 504(b)(1)(A)(1994). On March 29, 1996, the EAJA was amended to raise the maximum rate from $75 to $125. 5 U.S.C. § 504(b)(1)(A) (1994 & Supp. II 1996). The amending legislation specified, however, that the increased rate is only applicable "to civil actions and adversary adjudications commenced on or after the date of the enactment of this subtitle." P.L. 104-121, § 233, 110 Stat. 864 (1996).
The Authority's current regulations reflect the statutory fee cap in effect prior to the 1996 amendments to the EAJA, providing that "[n]o award for the fee of an attorney . . . under these rules may exceed $75.00 per hour." 5 C.F.R. § 2430.4(a). The regulations also provide that any person may petition "for rulemaking to increase the maximum rate for attorney fees." 5 C.F.R. § 2430.5.
2. Cost of Living and Special Factors
The only statutory exception to the maximum award referenced in the preceding section is that an agency may "determine by regulation that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys or agents for the proceedings involved, justifies a higher fee." 5 U.S.C. § 504(b)(1)(A)(1994 & Supp. II 1996). The Authority has not heretofore promulgated a regulation permitting any increase in attorney fees above the maximum statutory rate. Instead, under the Authority's regulations, the only procedure for seeking higher fees is through a petition for rulemaking. 5 C.F.R. § 2430.5; see American Federation of Government Employees, Local 2391, AFL-CIO, 44 FLRA 1084, 1085 n.2, 1088 (1992) (Local 2391) (a section 2430.5 petition for rulemaking to increase the attorney fee rate is the proper way to obtain such an increase.)
III. Positions of The Parties
On receipt of the motions for rulemaking, the Authority consolidated the petitions in O-MC-18 and O-MC-19 and sought additional briefing from the parties. Specifically, the parties were directed to address the question of whether the increase in the maximum rate under the EAJA could be applied retroactively.
A. Position of Local 987 and Local 2419
Recognizing that each of their adversary adjudications was commenced well in advance of the March 29, 1996, amendment of the EAJA, the petitioners nonetheless seek to have the maximum $125 statutory rate applied retroactively. [n3] In any event, both Locals retroactively seek a higher market rate based on special factors and a cost of living adjustment. In this regard, [ v55 p446 ] Local 987 seeks a rate of $150 per hour and Local 2419 petitions for a rate of $145 per hour.
Turning first to the appropriate application of the amendment to the EAJA, the petitioners acknowledge the presumption of statutory construction against retroactive rulemaking. They note, however, that generally there is no absolute prohibition against it, citing General Motors Corporation v. National Highway Traffic Safety Administration, 898 F.2d 165, 169 (D.C. Cir. 1990) (GMC). The petitioners point out that in Bradley v. School Board of City of Richmond, 416 U.S. 696, 711 (1974) (Bradley), the Supreme Court held that retroactive application of a law is appropriate unless it would result in "manifest injustice." Thus, in analyzing the impact of retroactive application of the increased maximum attorney fees rate under the Bradley approach, the petitioners argue that the Authority should consider the nature and identity of the parties, the nature of their rights, and the nature of the impact of the change on the parties' rights. See Bradley, 416 U.S. at 717. Claiming manifest injustice would not result from retroactive application of an increased attorney fees rate, the Locals maintain that 1) because the attorney fees awards have already been granted, the higher rate will not intrude on the rights of the parties; 2) a retroactive increase in the rate would not substantially burden the government's obligation to pay the fees because the government ultimately bears the burden to pay the fees at any rate; 3) the retroactive increase would apply only to the parties in these two cases; and 4) an award of attorney fees adversely affects only the government.
The petitioners base their requests for the increases to $150 and $145 on both special factors and a cost of living adjustment. In their view, special factors include the fair market rate for the kind and quality of services furnished and the limited availability of qualified attorneys with specialized skill in the field of labor law. They argue that a cost of living adjustment to the $75 rate, based on the consumer price index, is appropriate and has been utilized by the courts, citing Ramon-Sepulveda v. INS, 863 F.2d 1458 (9th Cir. 1988). Finally, the petitioners note that there is no statutory prohibition against a retroactive increase in the attorney fee rate based on special factors or cost of living adjustment.
B. Position of the General Counsel
The General Counsel argues against retroactive application of the increased fee rate, which the General Counsel interprets as the $125 rate and not the higher rates of $150 and $145. The General Counsel explains that as a statute that waives sovereign immunity, the EAJA must be construed strictly. Because the 1996 amendment provides that the amendments apply to cases commenced on or after March 29, 1996--after these case commenced--the Locals cannot be compensated at a rate greater than the $75 provided in the current Authority regulations. Relying upon GMC, the General Counsel states that statutes are generally presumed to prohibit retroactive rulemaking, but that presumption can be overcome if there is congressional authorization for the retroactive application. Although a party's right to attorney fees at a specified rate under the EAJA is not dependent on any agency regulation, the General Counsel asserts that the circumstances in these cases indicate that Congress did not authorize retroactive application of the increased rate. In this regard, the General Counsel points out that Congress did not mandate an increased rate, but only allowed the cap to increase to $125.
A. Retroactivity of the EAJA Amendment
1. The EAJA, which is a Waiver of Sovereign Immunity, Must be Strictly Construed
As argued by the General Counsel and explained by the Supreme Court in Ardestani v. INS, 502 U.S. 129, 137 (1991) (Ardestani), "[t]he EAJA renders the United States liable for attorney's fees for which it would not otherwise be liable, and thus amounts to a partial waiver of sovereign immunity." As a result, "[a]ny such waiver must be strictly construed in favor of the United States." Id. This is a well-accepted proposition. See also Library of Congress v. Shaw, 478 U.S. 310, 318 (1986) ("In analyzing whether Congress has waived the immunity of the United States, we must construe waivers strictly in favor of the sovereign . . . and not enlarge the waiver beyond what the language requires.") (internal quotations and citations omitted); Fanning, Phillips and Molnar v. West, 160 F.3d 717, 721 (Fed. Cir. 1998) (The EAJA lifts the bar of sovereign immunity, "[but] does so only to the extent explicitly and unequivocally provided.") (internal quotations and citations omitted). The Authority, too, has recognized that "[s]overeign immunity can be waived by statute, but waiver will be found only if 'unequivocally expressed in statutory text[.]'" Immigration and Naturalization Service, Los Angeles District, Los Angeles, California, 52 FLRA 103, 104 (1996) (quoting Lane v. Pena, 64 U.S.L.W. 4541 (June 20, 1996)).
The sovereign immunity aspect of the EAJA undermines the petitioners' reliance on the Bradley "manifest injustice" test as the proper analysis for deter- [ v55 p447 ] mining whether the increased attorney fees rate should be applied retroactively. In this connection, the petitioners emphasize that retroactive application of any increased rate of attorney fees would not result in any "manifest injustice" because an increased rate impacts "only the government's interest." (Union's Petition at 7.) However, in a case involving retroactive application of the EAJA, the Seventh Circuit found that Bradley was not controlling because it "did not involve the issue of sovereign immunity of the United States." Commissioners of Highways of the Towns of Annawan v. U.S., 684 F.2d 443, 444 (7th Cir. 1982). Given that the EAJA must be strictly construed in favor of the government, the language of the EAJA amendments would have to clearly provide for retroactive application of the increased rate in order to meet that standard. However, rather than clearly permit retroactive application, the amendments explicitly prohibit it.
2. The EAJA Amendments are to be Applied Prospectively
The EAJA amending legislation provides that the increased fee is applicable "to civil actions and adversary adjudications commenced on or after the date of the enactment of this subtitle"--which was March 29, 1996. P.L. 104-121, § 233, 110 Stat. 864. There is no dispute that both of these cases commenced prior to that date.
In their briefs, the parties have not cited any administrative agency determination where the higher EAJA rate has been retroactively applied to an administrative adjudication commenced prior to March 29, 1996. There have, however, been numerous judicial interpretations of the analogous amendment to 28 U.S.C. § 2412(d)(2)(A) (judicial counterpart to 5 U.S.C. § 504(b)(1)(A), which similarly raised the maximum hourly attorney fee rate from $75 to $125 for civil actions filed on or after March 29, 1996). And, as noted in the preceding paragraph, the effective date of the EAJA amendment is equally applicable to both civil actions and adversary adjudications.
A majority of the courts that have considered the issue in the context of 28 U.S.C. § 2412(d)(2)(A) have reasoned that the increased rate applies only to actions commenced after March 29, 1996. The Eleventh Circuit, in Jove Engineering, Inc. v. IRS, 92 F.3d 1539, 1559 n.15 (11th Cir. 1996), observed that the EAJA "was recently amended . . . by striking '$75' and inserting '$125,'" and "[a]lthough the issue is not before us, we note that this amendment probably does not apply in this case because § 233 of the Act states, 'The amendments . . . shall apply to civil actions and adversary actions commenced on or after the date of the enactment of this subtitle.'" The Court of Veterans Appeals similarly held that the amendment to increase the rate "was made effective to 'apply to civil actions and adversary adjudications commenced on or after the date of the enactment.'" Mannino v. West, 1999 WL 79507, *1 (Vet. App., February 19, 1999). Because in that case "the underlying appeal . . . was filed on May 12, 1997, the hourly rate for [the] application [was to be] calculated based on the amended $125." Id. See also Siconolfi v. Apfel, 1998 WL 827433, *1 n.2 (E.D.N.Y. 1998) ("A 1996 amendment to the EAJA raised this amount from $75 to $125, and applies to all actions commenced on or after the date of its enactment."); Rohan v. Apfel, 1997 WL 803867, *2 n.2 (N.D. Ill. 1997) (Amended maximum rate of $125 applies in any case filed on or after March 29, 1996.); Anderson v. Callahan, 1997 U.S. Dist. LEXIS 22385, *4 n.1 (M.D. Ala. 1997) ("The EAJA amendments . . . apply only to civil actions filed on or after March 29, 1996. Because this action was filed on November 13, 1995, the $75 cap is applicable."); DePriest v. Chater, 1997 WL 159061, *1 (D. Kan. 1997) (The $125 rate was not applicable because the action was filed prior to the EAJA amendment.); Van Doorn v. Chater, 1996 WL 567172, *1 (M.D. Fla. 1996) (same).
On the other hand, courts that have granted the increased fee rate under 28 U.S.C. § 2413(d)(2)(A) in cases commenced prior to March 29, 1996, have done so without explanation as to why it was permissible to ignore the March 29, 1996 commencement of action language. See Ott v. Apfel, 7 F.Supp.2d 1176, 1177-78 (D. Kan. 1998) (Government objected to application of March 29, 1996 amendment of statutory rate increasing it to $125 per hour on grounds that "this action . . . was commenced before March 26, 1996," yet without further discussion, the court found the increased hourly rate requested to be appropriate.); Simpson v. Apfel, 1998 WL 246542, *3 (E.D. Mo. 1998) (awarding, without explanation, increased rate to case commenced prior to March 29, 1996).
The language of the EAJA amendments and the court interpretations of its effective date support the determination that the maximum attorney fees rate is not to be retroactively applied to adversary adjudications commenced prior to March 29, 1996. Regardless of the actual financial impact such an increase would have on the Authority here, cases discussing and analyzing this issue clearly explain that the EAJA language is to be strictly construed in favor of the government. Therefore, we conclude that the increased EAJA attorney fee rate is not applicable in the instant cases or in any other cases that commenced prior to March 29, 1996. [ v55 p448 ]
B. Petitions for Rulemaking to Increase the Maximum EAJA Rate
Notwithstanding our refusal to retroactively apply the increased hourly rate to cases arising prior to March 29, 1996, we grant the petitions to the extent that they move we amend our regulations to adopt the higher rate of $125 per hour. Because this substitution of the $125 rate merely implements Congress's legislative determination to raise the maximum rate, we conclude that this may be accomplished without notice of proposed rulemaking and comment. 5 U.S.C. § 553(b)(B). Accordingly, section 2430.4(a) of the Authority's regulations will be amended to adopt the higher maximum rate and the Authority will utilize that rate in cases commenced after March 29, 1996.
C. Petitions for Rulemaking to Increase the Maximum Rate Based on Cost of Living and Special Factors
As noted above, petitioners also seek hourly rates of $150 and $145 respectively based on cost of living adjustments and special factors. Petitioners correctly interpret the Authority regulations (5 C.F.R. §§ 2429.28 and 2430.5) and precedent (Local 2391) as providing that the only way to increase the attorney fee per hour rate is through rulemaking.
We grant petitioners' motions insofar as they request rulemaking to consider appropriate criteria for adjustments to the maximum EAJA rate based on cost of living adjustments or special factors. [n4] Unlike the change in the maximum rate noted in the preceding section, we conclude that rulemaking through the notice and comment process is in the public interest (5 U.S.C. § 553(b)(B)) and appropriate for the consideration of such criteria. Accordingly, we decline in this decision to adopt any such criteria or approve the enhanced rates sought by the petitioners herein. If criteria are adopted for the adjustment of the maximum rate for cases filed before March 29, 1996, Local 2419 may petition for an increase in the amount already awarded.
The petitions to engage in rulemaking are denied to the extent that they seek to retroactively increase the hourly rate to $125 based on the 1996 amendment to the EAJA. However, the petitions are granted insofar as they move the Authority to promulgate a regulation adopting the higher EAJA rate for cases arising after March 29, 1996. Further, we grant the petitions insofar as they move the Authority to engage in rulemaking to consider establishing appropriate criteria for adjustments to the maximum EAJA per hour rate based on cost of living and other special factors. If criteria for adjustments in the maximum rate for cases filed prior to March 29, 1996 are adopted, Local 2419 may petition for an increase in the amount already awarded.
Dale Cabaniss, Dissenting in Part
I agree with my colleagues in denying the petitions to retroactively increase the rate of $125 an hour based on the 1996 Amendments to the EAJA, and to grant the petitions' request to promulgate a regulation raising the maximum EAJA per hour rate to $125. I respectfully dissent, however, from the decision to grant the petitions insofar as they move the Authority to engage in rulemaking at this time to consider establishing appropriate criteria so as to permit adjustments to the maximum EAJA per hour rate based on cost of living or other special factors.
My reading of F.J. Vollmer v. Magaw, 102 F.3d 591, 598-99 (D.C. Cir. 1996) leads me to conclude that practitioners before the Authority do not qualify for the special factor enhancement. Additionally, in light of congressional action in 1996 to raise the EAJA rate from $75 to $125 per hour, I do not believe there is a sufficient basis at this time to consider promulgating regulations to permit an increase above the EAJA rate based upon cost of living considerations.
Footnote # 1 for 1. Statement of the Case
Footnote # 2 for 1. Statement of the Case
This determination moots that portion of Local 987's petition seeking retroactive application of any fee enhancement as pertains to the Authority's determination in AFGE Local 987 III, 55 FLRA No. 71 (April 30, 1999). However, we do not dismiss O-MC-18 because we construe Local 987's petition as also seeking rulemaking that would enhance the attorney fee rate in future cases. In accord with his dissent in AFGE Local 987 III, Member Wasserman would not dismiss Local 987's claim for fee enhancements and would accord Local 987 the same remedy granted to Local 2419, infra.
Footnote # 3 for 1. Statement of the Case
At the time it filed its brief with the Authority, Local 987's request for retroactive application of any fee enhancement was premised on the recommended, yet excepted to, Judge's determination that the position of the General Counsel was not substantially justified. The Authority had not yet rejected that recommended decision in AFGE Local 987 III.
Footnote # 4 for 1. Statement of the Case
It is unclear whether expertise in administrative practice before the Authority qualifies as a special factor. In this regard, the United States Court of Appeals for the District of Columbia Circuit has interpreted the special factor enhancement to be applicable only for attorneys whose specialty "requir[es] technical or other education outside the field of American law." Waterman Steamship Corp. v. Maritime Subsidy Bd., 901 F.2d 1119, 1124 (D.C. Cir. 1990). As a result, that court has concluded that expertise gained by practicing law in a particular regulated industry is insufficient, in and of itself, to justify a special factor enhancement over the maximum statutory EAJA per hour rate. F.J. Vollmer Co., Inc. v. Magaw, 102 F.3d 591, 598-99 (D.C. Cir. 1996).