21:0910(106)AR - HHS, HCFA, Region IV, Atlanta, Ga. and NTEU, Chapter 210 -- 1986 FLRAdec AR
[ v21 p910 ]
21:0910(106)AR
The decision of the Authority follows:
21 FLRA No. 106
DEPARTMENT OF HEALTH AND HUMAN
SERVICES, HEALTH CARE FINANCING
ADMINISTRATION, REGION IV,
ATLANTA, GEORGIA
Activity
and
NATIONAL TREASURY EMPLOYEES
UNION, CHAPTER 210
Union
Case No. 0-AR-803
DECISION
I. STATEMENT OF THE CASE
This matter is before the Authority on exceptions to the addendum
award of attorney fees by Arbitrator Ralph Roger Williams filed by the
Activity under section 7122(a) of the Federal Service Labor-Management
Relations Statute and part 2425 of the Authority's Rules and
Regulations.
II. BACKGROUND AND ARBITRATOR's AWARD
In his initial award in this matter, the Arbitrator found that the
Activity violated the parties' collective bargaining agreement by
failing to temporarily promote the grievant for a period of
approximately 11 months when he performed the duties of a higher-graded
position. The Arbitrator ordered that the grievant be promoted
retroactively for the period with backpay. The Arbitrator also retained
jurisdiction of the matter for the purpose of determining whether an
award of reasonable attorney fees was warranted. The Union subsequently
filed a request for such fees for the services of its staff attorney who
represented the grievant in the case.
In his addendum opinion and award the Arbitrator found: (1) the
grievant had incurred attorney fees; (2) the grievant was the
prevailing party; (3) an award of attorney fees was warranted in the
interest of justice since the weight of the evidence favored the Union,
the Activity knew or ought reasonably to have known that it had the
"weaker case" and that the grievant was in fact working at the higher
level, and the Activity's action was without merit; and, (4) the
grievant was entitled to reasonable attorney fees at the market-value
presentation of the case multiplied by the reasonable market-value
hourly rate for the geographic area for any attorney with similar
experience and expertise. In calculating the fee due the grievant, the
Arbitrator found that 22.2 hours claimed by the Union attorney were
reasonable and proper under the circumstances and were appropriately
itemized. As to the amount of fees, the Arbitrator concluded that the
market-value rate of $85.00 per hour was reasonable for the locality for
an attorney with the training and experience of the Union staff
attorney. Accordingly, as his addendum award, the Arbitrator provided:
The Grievant's request for attorney fees is allowed. The
amount of such fees in the total of $1,887.00 is hereby awarded
the Grievant.
III. FIRST EXCEPTION
A. Contentions
In its first exception, the Activity contends that the Arbitrator's
award is contrary to 5 U.S.C. Section 5596, /1/ and to 5 U.S.C. Section
7701(g), /2/ because the case did not involve a prohibited personnel
practice or an agency personnel action. In support of this contention,
the Activity argues that under the statutory provisions relied upon,
particularly 5 U.S.C. Section 7701(g)(1), attorney fees cannot be
granted in matters which are not the result of an action or proceeding
taken by an agency or the result of a prohibited personnel practice, and
the matter involved in this case was the result of a grievance filed by
the employee.
B. Analysis and Conclusion
The Authority finds that the Activity's assertion that attorney fees
are only warranted in situations involving agency prohibited personnel
practices or actions taken against employees is without merit. It is
well-established that an agency's violation of a collective bargaining
agreement constitutes an unjustified or unwarranted personnel action for
purposes of a retroactive temporary promotion and backpay under the Back
Pay Act. Veterans Administration Hospital and American Federation of
Government Employees, Lodge 2201, 4 FLRA 419, 424 (1980). It is also
clear that attorney fees may be awarded by arbitrators in a variety of
unjustified and unwarranted personnel actions, including, but not
limited to, actions subject to negotiated grievance procedures and that
the broad category of personnel actions covered by the Back Pay Act
includes the omission or failure to take an action or confer a benefit.
Naval Air Development Center, Department of the Navy and American
Federation of Government Employees, Local 1928, AFL-CIO, 21 FLRA No. 25,
slip op. at 4. Thus, the Authority concludes that the Activity has
failed to establish that the award is contrary to law as alleged in this
exception.
IV. SECOND EXCEPTION
A. Contentions
In its second exception, the Activity alleges that the Arbitrator's
award is contrary to law because it is not in the interest of justice as
required by 5 U.S.C. Section 7701(g)(1). In support of this exception,
the Activity argues that it had substantial reason to believe it would
prevail on the merits when it did not temporarily promote the grievant.
B. Analysis and Conclusion
In Naval Air Development Center, the Authority summarized the
requirements for an award of reasonable attorney fees under 5 U.S.C.
Section 5596 and 5 U.S.C. Section 7701(g)(1). In order for an award of
attorney fees to be authorized, the award of fees must be in conjunction
with an award of backpay to the grievant on correction of the
unwarranted or unjustified personnel action; must be reasonable and
related to the personnel action; and must be in accordance with
standards established under section 7701(g). Section 7701(g)(1), which
applies to all cases except those of discrimination, requires that the
fees must have been reasonable and have been incurred by the employee;
the employee must have been the prevailing party in the proceeding; and
the payment of the fees by the agency must be warranted in the interest
of justice. Finally, there must be a "fully articulated, reasoned
decision" setting forth the specific findings supporting the
determination on each pertinent statutory requirement, including the
basis upon which the reasonableness of the amount of fees was
determined. In this case, it is clear that the Arbitrator established
in a fully articulated and reasoned decision that the Union is entitled
to an award of attorney fees. Thus, the award is in conjunction with an
award of backpay to the grievant on correction of the unwarranted
personnel action, the failure to temporarily promote the grievant.
There is no dispute that fees were incurred on behalf of the employee
and that the grievant is the prevailing party. With regard to the
"interest of justice" standard, the Arbitrator effectively found, based
upon consideration and discussion of the various facts and circumstances
involved, that the Activity knew or should have known that it would not
prevail on the merits. The Authority therefore concludes that the
Arbitrator's determination that the payment of attorney fees was
warranted in the interest of justice is fully consistent with applicable
legal requirements and that the Activity's exception provides no basis
for finding the award deficient.
V. THIRD EXCEPTION
A. Contentions
As its third exception, the Activity contends the Arbitrator's award
is not in accordance with the governing standards established under 5
U.S.C. Section 7701(g) for determining the reasonableness of an award of
attorney fees. In support of this contention, the Activity argues that
the Union should not receive fees calculated at the prevailing market
rate but should recover only the salary of the Union attorney plus
overhead costs.
The Union in its opposition maintains that it is entitled to an award
of attorney fees calculated at the prevailing market rate since the fees
recovered in this case are set aside for a Legal Services Program (LSP)
used solely to litigate the rights of Federal employees before
administrative and judicial tribunals. The Union argues that the LSP
fund qualifies for treatment as a public interest organization or legal
services firm and therefore it should be compensated under the
market-rate formula.
B. Analysis and Conclusions
In determining what constitutes reasonable attorney fees, courts have
applied a variety of methods and analyses. An example of a method
acceptable to administrative adjudicatory agencies and most courts is
the "lodestar" method, in which the attorney's customary hourly billing
rate is multiplied by the number of hours reasonably devoted to the case
with appropriate adjustments for any special factors. Naval Air
Development Center, slip op. at 9. This is the method ordinarily
applied by the MSPB in determining reasonable attorney fees under 5
U.S.C. Section 7701(g)(1) when the attorney involved is in private
practice, for example, Kling v. Department of Justice, 2 MSPB 620,
624-28 (1980), and applied by the Authority in reviewing an arbitrator's
award of fees to an attorney in private practice. Naval Air Development
Center, slip op. at 12.
Where, however, the attorney is an employee of a union, a different
method must be applied in computing reasonable fees under 5 U.S.C.
Section 5596 and 5 U.S.C. Section 7701(g)(1). Where such fees are to be
paid to a union, the fees are computed based on actual costs rather than
on the prevailing market rate for the legal services rendered. Further,
a special fund created by a union into which all fees awarded to
union-employed attorneys would be paid and expended solely for legal
work does not entitle the union to market-rate fees for the services of
its staff. Id. at 10; National Treasury Employees Union v. Department
of the Treasury, 656 F.2d 848 (D.C. Cir. 1981); Goodrich v. Department
of the Navy, 733 F.2d 1578 (Fed. Cir. 1984), cert. denied 105 S. Ct. 958
(1985); Wells v. Schweiker, 12 MSPB 329 (1982).
With regard to the computation of actual costs, there are three
elements to be considered: the compensation paid to the attorney
employee for the time expended on the case; out-of-pocket expenses
related to the case; and overhead costs. Additionally, as to overhead
costs, in the absence of evidence that an allowance of 100 percent of
the attorney's compensation for overhead is substantially excessive or
insufficient, such an overhead allowance may normally be included as an
element of actual costs. Powell v. Department of the Treasury, 8 MSPB
21 (1981).
Among the reasons for limiting fees for salaried union attorneys
under those statutory provisions to recovery of actual costs is, as the
MSPB held in Wells v. Schweiker, 12 MSPB at 333:
(T)o award more . . . than that which is available under the
cost-plus method would be inconsistent with the language and
purpose of 5 U.S.C. Section 5596(b)(1)(A) (ii), the fees provision
of the Back Pay Act. An attorney fee award ordered under that
provision may not exceed the cost reasonably incurred by or on
behalf of the employee for legal representation. Cf. 5 U.S.C.
Section 7701(g). This is consistent with the general purpose of
the Back Pay Act to "make whole" employees who had suffered a loss
in salary and benefits as the result of an improper personnel
action. Senate Report No. 1062, 89th Cong., 2nd Sess. (1966) 1-2.
Nothing in the Civil Service Reform Act indicates that Congress,
in amending section 5596, intended to deviate from this basic
principle. Thus, section 5596 clearly limits the recovery of
costs for legal expenses incurred by or on behalf of employees to
the expense they suffered as a result of the action. It is not
intended to provide a union with a windfall profit for the
performance of services which it was created to provide and by
their dues its members support.
In this case, it is undisputed that the attorney who represented the
grievant is an employee of the Union. Consequently, reasonable attorney
fees under 5 U.S.C. Section 5596 and 5 U.S.C. Section 7701(g)(1) for his
services can only be awarded on a cost-plus basis. Therefore, to the
extent that the Arbitrator awarded attorney fees on other than a
cost-plus basis, the award is deficient and must be modified.
VI. DECISION
Accordingly, for the above reasons, the Arbitrator's award is
modified to provide as follows:
Reasonable attorney fees are hereby awarded to reimburse the
Union for its actual costs in representing the Grievant in this
matter, including the 22.2 hours the Union attorney devoted to the
case, in accordance with the applicable cost-plus formula.
Issued, Washington, D.C., May 22, 1986.
/s/Jerry L. Calhoun, Chairman
/s/Henry B. Frazier III, Member
FEDERAL LABOR RELATIONS AUTHORITY
--------------- FOOTNOTES$ ---------------
(1) 5 U.S.C. Section 5596, the Back Pay Act, provides in part:
Section 5596. Back pay due to unjustified personnel
action.
. . . . . . .
(b)(1) An employee of an agency who, on the basis of a timely appeal
or an administrative determination (including a decision relating to an
unfair labor practice or a grievance) is found by appropriate authority
under applicable law, rule, regulation, or collective bargaining
agreement, to have been affective by an unjustified or unwarranted
personnel action which has resulted in the withdrawal or reduction of
all or part of the pay, allowances, or differentials of the employee --
(A) is entitled, on correction of the personnel action, to receive
for the period for which the personnel action was in effect --
. ..
(ii) reasonable attorney fees related to the personnel action
which, with respect to any decision relating to an unfair labor
practice or a grievance processed under a procedure negotiated in
accordance with chapter 71 of this title . . . shall be awarded in
accordance with standards established under section 7701(g) of
this title(.)
(2) 5 U.S.C. Section 7701(g)(1) (1982) provides:
Except as provided in paragraph (2) of this subsection, the Board . .
. may require payment by the agency involved of reasonable attorney fees
incurred by an employee . . . if the employee . . . is the prevailing
party and the Board . . . determines that payment by the agency is
warranted in the interest of justice, including any case in which a
prohibited personnel practice was engaged in by the agency or any case
in which the agency's action was clearly without merit.
ORDER DISMISSING REQUEST FOR RECONSIDERATION AND RELATED
REQUESTS
This matter is before the Authority on a request for reconsideration
filed by the Agency on April 14, 1986, seeking reconsideration of the
above-entitled Authority's Decision and Order of March 25, 1986. Filed
with its request for reconsideration, the Agency submitted requests for
stay, oral argument, and consolidation with Case No. 0-AR-583 (21 FLRA
No. 27 issued March 27, 1986), On April 28, 1986, the Union filed an
opposition to the Agency's request for reconsideration and related
requests. For the reason set forth below, the Agency's requests must be
dismissed.
Section 2429.17 of the Authority's Rules and Regulations, provides in
pertinent part:
2429.17 Reconsideration
After a final decision or order of the Authority has been
issued, a party to the proceeding before the Authority who can
establish in its moving papers extraordinary circumstances for so
doing, may move for reconsideration of such final decision or
order. The motion shall be filed within ten (10) days after
service of the Authority's decision or order. . . .
The Authority's Decision and Order was dated and served on the Agency
by mail on March 25, 1986. Therefore, under section 2429.17 of the
Authority's Rules and Regulations, and sections 2429.21 and 2429.22,
which also are applicable to computation of the time limit here
involved, the Agency's request for reconsideration and related requests
were due in the national office of the Authority before the close of
business on April 9, 1986. Since, as indicated above, the Agency's
requests were not filed until April 14, 1986, they are clearly untimely
and must be dismissed.
Accordingly, for the reason set forth above, and apart from other
considerations, the Agency's request for reconsideration and related
requests are hereby dismissed.
For the Authority.
Issued, Washington, D.C., May 8, 1986.
/s/ Harold D. Kessler
Director of Case Management