73 FLRA No. 8

 

AMERICAN FEDERATION

OF GOVERNMENT EMPLOYEES

LOCAL 3954

(Union)

 

and

 

UNITED STATES

DEPARTMENT OF JUSTICE
FEDERAL BUREAU OF PRISONS
FEDERAL CORRECTIONAL INSTITUTION
PHOENIX, ARIZONA

(Agency)

 

0‑AR‑5676

 

______

 

DECISION

 

May 31, 2022

 

______

 

Before the Authority:  Ernest DuBester, Chairman, and

Colleen Duffy Kiko and Susan Tsui Grundmann, Members

 

1. Statement of the Case

    

In a merits award, Arbitrator Patrick E. Bingham found that certain employees were entitled to overtime compensation under the Fair Labor Standards Act (FLSA).[1]  Subsequently, the Arbitrator issued a damages award that determined the amount of overtime compensation, liquidated damages, and attorney fees and costs.  The Union filed exceptions to the damages award on nonfact, exceeded-authority, contrary-to-law,               fair-hearing, and impossible-to-implement grounds.  Because the Union does not establish that the award is deficient on nonfact and exceeded-authority grounds, we deny those exceptions.  We grant the contrary-to-law exception, in part, dismiss certain untimely exceptions, and find it unnecessary to address the remaining exceptions.

 

1. Background

 

1. Merits Award

    

As relevant here, the Union filed a grievance over whether bargaining-unit employees (employees) should be compensated under the FLSA for certain activities outside of their scheduled shifts.  The parties bifurcated the proceedings into liability and damages phases.  On March 1, 2020, the Arbitrator issued an award finding, based on representative evidence, that the Agency violated the FLSA.  As a remedy, the Arbitrator awarded backpay beginning two years before the Union filed the grievance and found that the Union was entitled to attorney fees and costs.  The Arbitrator advised the parties that because the evidence in the merits hearing was “representational,” additional proceedings were needed for the “final monetary award . . . to include all employees of the Agency that are similarly situated in circumstance to the employees who testified at [the] hearing.”[2]  No exceptions were filed to the merits award.

 

Subsequently, during a conference call to discuss the remaining issues and a possible hearing on damages, the Arbitrator asked the parties to exchange “their best effort at arriving at an amount of damages, fees and expenses to be paid to the Union as the prevailing party.”[3]  The parties could not agree on a settlement; therefore, the Arbitrator resolved the issues in a damages award.

 

1. Damages Award

 

On October 23, 2020, the Arbitrator issued the damages award.  In deciding the amount of backpay owed to employees, the Arbitrator considered the parties’ exhibits, the arguments made in their submissions, and testimony from the merits hearing.  To address the amount owed to correctional employees, the Arbitrator reviewed samples of daily assignment rosters (daily rosters), quarterly assignment rosters, and adjustments made by the Agency to the daily rosters as “evidence of the extent” of the employees’ overtime.[4]  The Arbitrator used the samples because a “full complement” of this evidence “would have amounted to approximately 4,200 such documents to cover the 5.96 years” relevant in this case.[5]

 

Basing the calculations on these samples, the Arbitrator averaged the amount of overtime correctional employees spent performing all compensable activities and found that it was “approximately 17.5 minutes” per shift.[6]  Using that approximation, the Arbitrator concluded that the Agency was liable for over 5,000 hours of overtime. 

 

The Arbitrator then adopted the Agency’s recommended pay scale, finding that determining the “rate of pay for each post where overtime was incurred . . . is not possible.”[7]  The adopted pay scale was based on the relevant 2020 locality pay, and the Arbitrator found that the overall amount of backpay owed was $229,123.96.  Then, by dividing the overall amount by          “approximately 105” correctional employees on staff during the relevant time period, the Arbitrator concluded that the amount of backpay owed to each employee was $2,182.13.[8]  The award stated that the Arbitrator was “not able to further refine which individual is to be paid what” amount, and concluded that this calculation was sufficiently “in line with the information that was submitted by the parties during [the merits] hearing.”[9]  For non‑correctional employees, the Arbitrator adopted the backpay amount the Agency proposed to the Union and, without explanation, found those employees were entitled to a total amount of $105,758.04. 

 

Regarding liquidated damages, the Arbitrator “reaffirm[ed]” the finding from the merits award that “there was no intentional violation of law by the Agency.”[10]  The Arbitrator noted that the Union’s failure to raise overtime issues at monthly labor‑management committee meetings contributed to the delay in resolving the issues years earlier.  But the Arbitrator also found that the Agency “knew it had a problem with staffing” and that there was evidence that some employees were required to remain at their posts and were “discouraged” or “rebuffed” by their supervisors from requesting overtime.[11]  Based on these considerations, the Arbitrator awarded $5,000 in liquidated damages.

 

As for the remaining monetary issues concerning attorney fees and costs, the Arbitrator reviewed a summarized statement that the Union had provided to the Agency during the parties’ attempt to resolve the issue.  The Union also provided the Arbitrator with “detailed documents supporting the Union’s position regarding attorneys’ fees and expenses” in an August 24, 2020 submission because it alleged that the summarized statement submitted by the Agency was incomplete and inaccurate.[12]  Based on this information, the Arbitrator determined that the hours, hourly rates, and costs the Union requested were excessive.  And instead of the requested Washington, D.C. market hourly rate, the Arbitrator found that the applicable attorney-fee rate was that for Phoenix, Arizona, because that was the location of the Union’s office and where the Union filed the grievance.  The Arbitrator also found that the complexity of the case was “modest,” and that the Union did not prevail on all of its overtime claims.[13]  Therefore, the Arbitrator reduced the amount of fees and costs requested by the Union.

 

The Union filed exceptions on November 23, 2020, and the Agency filed an opposition on January 19, 2021.[14]

 

1. Preliminary Issue:  Several of the Union’s arguments are untimely exceptions to the merits award.

 

Under 5 C.F.R. § 2425.2(b), the time limit for filing exceptions to an arbitration award is thirty days after the date of service of the award.  The time limit may not be extended or waived by the Authority.[15]  Further, an award is considered final for purposes of filing exceptions when it fully resolves all issues submitted to arbitration.[16]

 

In the merits award, the Arbitrator resolved the issues submitted:  whether the Agency suffered or permitted bargaining-unit employees to work in excess of eight hours per day in violation of the FLSA and the parties’ agreement, and if so, what would be the appropriate remedy.[17]  The Arbitrator found that the Agency violated the FLSA, ordered a remedy, and retained jurisdiction to assist in implementing the remedy.[18]  Because the only remaining issue was the amount of the remedy, the merits award constituted a final award for purposes of filing exceptions to that award.[19]  And the Union was required to file any exceptions to that award within thirty days after it received the award.[20]

 

Here, the Union challenges, on nonfact and contrary-to-law grounds, the Arbitrator’s findings in the merits award regarding which activities were compensable,[21] and the determination that the Agency’s liability for backpay was retroactive to two years before the grievance was filed.[22]  The Union also challenges the Arbitrator’s findings in the merits award as to which activities were compensable on exceeded‑authority grounds.[23]  Because these arguments challenge determinations and findings that the Arbitrator made in the merits award, which was issued in March 2020, we dismiss them as untimely.[24]

 

1. Analysis and Conclusions

    

1. The award is not based on nonfacts.

    

                The Union asserts that the damages award is based on a nonfact.  To establish that an award is based on a nonfact, the excepting party must demonstrate that a central fact underlying the award is clearly erroneous, but for which the arbitrator would have reached a different result.[25]  A challenge to an arbitrator’s legal conclusion does not provide a basis for finding an award deficient on nonfact grounds.[26]  

 

The Union argues that the Arbitrator’s award of attorney fees and costs is based on nonfacts[27] because there is no evidence that the amounts the Union requested are unreasonable.[28]  To the extent this argument challenges the Arbitrator’s legal conclusion regarding the appropriate amount of fees, it provides no basis for finding the award deficient.[29]  Moreover, the Union’s disagreement with the Arbitrator’s evaluation of the evidence concerning fees and costs[30] does not demonstrate that the award is based on a nonfact.[31]

 

Accordingly, we deny the nonfact exception.

1. The Union’s exceeded-authority exception fails to establish that the award is deficient.

 

The Union argues that the award is deficient on exceeded-authority grounds.  Arbitrators exceed their authority when they fail to resolve an issue submitted to arbitration, resolve an issue not submitted to arbitration, disregard specific limitations on their authority, or award relief to persons who are not encompassed by the grievance.[32] 

 

First, the Union argues that the Arbitrator lacked the authority to issue a decision on attorney fees before the Union had submitted its “detailed and contemporaneous billing records.”[33]  However, the issue before the Arbitrator was the amount that the Agency should pay to employees and the Union’s attorneys, and the award is directly responsive to that issue.[34]  Therefore, the Union’s argument does not establish that the award is deficient.[35]

 

The Union also argues that the Arbitrator erred by failing to determine the amount of damages for time that correctional employees spent responding to emergencies.[36]  However, a review of the record does not indicate that the Arbitrator specifically found that employees in this case responded to an emergency for which they were not compensated.[37]  Thus, this argument does not establish that the Arbitrator erred.

 

Accordingly, we deny the exceeded-authority exception.[38]

 

1. The award is contrary to law, in part.

 

The Union asserts that the award is contrary to law for several reasons.[39]  When an exception involves an award’s consistency with law, the Authority reviews any question of law raised by the exception and the award de novo.[40]  In applying the standard of de novo review, the Authority assesses whether an arbitrator’s legal conclusions are consistent with the applicable standard of law.[41]  In making that assessment, the Authority defers to the arbitrator’s underlying factual findings unless the excepting party establishes that they are nonfacts.[42]

 

1. The amount of overtime awarded is contrary to law because it is based on averages.

 

The Union argues that the Arbitrator’s use of averages to determine the amount of overtime is contrary to the FLSA and Authority precedent.[43]  The Union further asserts that unrebutted testimony at the merits hearing, “established that the amount of [overtime] expended varied based on the particular circumstances of a job assignment or post,” and that the Union could have presented specific “evidence reflecting when each employee worked a position entitled to damages pursuant to the [merits] award and the damages owed to that person for that work.”[44] 

 

Authority precedent requires an award of overtime compensation to be as precise as possible,[45] and “specifically reject[s] an arbitrator’s use of an ‘average amount of time expended per day per officer’ in calculating an award of backpay under the FLSA.”[46]  Here, the Arbitrator recognized that because the evidence in the merits hearing was “representational,” additional evidence was needed for the “final monetary award . . . to include all employees of the Agency that [were] similarly situated.”[47]  And there is no dispute that the amount of time employees spent performing compensable work varied.[48]  But instead of considering additional evidence, the Arbitrator based the amount of overtime worked primarily on the sample evidence from the merits hearing.[49]  By relying on representational evidence and not considering the “full complement”[50] of evidence, the Arbitrator was “not able to further refine which individual [was] to be paid what.” [51]  Consequently, because the Arbitrator could have made precise overtime determinations, but did not do so, the award is contrary to law.[52]

 

The Authority has also rejected the use of averages to determine the pay rate when the rate of pay varies.[53]  Here, the award adopted the Agency’s proposed pay rate because the Arbitrator found that deciding a rate for each post was not possible.[54]  But this finding was not based on anything in the record showing that such evidence was nonexistent or impossible to determine.[55]  Where, as here, there is no finding that the Agency was unable to produce records of the precise pay rate for each post, and the award is based on an average pay rate, the award is contrary to law.[56]

 

Consistent with Authority precedent, we reject the Arbitrator’s use of averages to calculate damages in this case.[57]  Where the record is insufficient to determine the precise amount of overtime owed, and at what pay rate, the Authority will remand an award for resubmission to the arbitrator to consider specific evidence showing how much overtime compensation is owed to each employee who was denied it.[58]  Accordingly, we remand the award to the parties for resubmission to the Arbitrator, absent settlement, for further findings as to the amount of overtime owed to each employee.[59]

 

1. The Arbitrator’s liquidated-damages determination is based on the incorrect legal standard.

 

                The Union argues that the award is contrary to law because the Arbitrator did not award liquidated damages in the same amount as the unpaid overtime.[60]  The Union further argues that the Arbitrator failed to determine, when deciding the amount of liquidated damages, whether the Agency acted in good faith when it violated the FLSA.[61] 

 

                Under the FLSA, where an employer does not satisfy its “substantial burden” of proving that it acted both with good faith and with a reasonable basis for believing that it was not violating the FLSA, liquidated damages are mandatory in an amount equal to the unpaid overtime.[62]  As the Authority has explained, “to meet its burden, an employer must ‘affirmatively establish’ that it attempted to discern the FLSA’s requirements for the specific circumstances involved and comply with those requirements.”[63]  Further, the Authority has found that the good-faith requirement is not satisfied simply because the employer “did not purposefully violate the provisions of the FLSA.”[64]

 

Here, the Arbitrator’s liquidated-damages determination is based on findings that the Agency did not willfully violate the FLSA.[65]  However, this finding does not satisfy the FLSA’s good-faith requirement, and the Arbitrator made no additional findings that would satisfy the legal standard.[66]  Consequently, the Arbitrator’s liquidated-damages determination is contrary to law.

 

The Union argues that the record establishes that the Agency did not act in good faith.[67]  Although the award noted evidence that some officers were “discouraged” or “rebuffed”[68] by their supervisors when they intended to request overtime, the Arbitrator made no findings concerning whether the Agency took affirmative steps to discern and comply with the FLSA’s requirements, and none are apparent from the record.[69]  Therefore, we remand the award to the parties for resubmission to the Arbitrator, absent settlement, for further findings and an application of the correct legal standard.[70]

 

1. The Arbitrator’s finding that the Phoenix, Arizona market hourly rate applied for attorney fees is contrary to law.

    

                The Union argues that the Arbitrator improperly applied the Phoenix, Arizona market hourly rate for attorney fees instead of the Washington, D.C. rate.[71]  The FLSA provides a statutory right to attorney fees,[72] and the Authority has found that the relevant community and appropriate market rate for determining attorney fees in an FLSA case is the community in which the attorney ordinarily practices.[73] 

 

                It is undisputed that the Union’s attorneys are based in Washington, D.C.[74]  However, the Arbitrator applied the Phoenix hourly rate, where the Agency’s facility is located.[75]  Because the appropriate rate is the community in which the Union’s attorneys ordinarily practice – in this case, Washington, D.C. – and the Arbitrator did not apply that rate, the fee award is deficient.[76]  Accordingly, we remand the award to the parties, absent settlement, for resubmission to the Arbitrator for a determination of the amount of fees using the Washington, D.C. hourly rate.

 

1. The Union’s remaining arguments do not establish that the award of fees and costs is deficient.

    

                The Union argues that the amounts requested for fees and costs were reasonable and that the Arbitrator erred by reducing them.[77]  However, “[t]he Authority requires that fee requests ‘be closely examined to ensure that the number of hours expended was reasonable[,]’ because ‘the number of hours expended are not necessarily those reasonably expended.”’[78]  The standard of review as to the reasonableness of the number of hours awarded is deferential, and an arbitrator’s determination as to the appropriate amount will not be disturbed absent a specific showing that it is incorrect.[79]

 

                The Arbitrator reviewed the Union’s summarized billing and expense statement.[80]  This statement identified each attorney’s hours and rates, and the level of experience and position in the law firm.[81]  The statement also included the hours and rates of paralegals.[82]  Based on the Union’s statement, the Arbitrator examined each request for fees and costs and concluded that they were unreasonable, finding primarily that they were either excessive or duplicative.[83]  The Arbitrator therefore adjusted and reduced the requested amounts.[84]

 

The Union argues that the Arbitrator determined the amount of fees and costs prematurely, before the Union had an opportunity to submit its “detailed and contemporaneous billing records.”[85]  The Union contends that a detailed fee petition would have enabled the Arbitrator to “correctly identify[] the factual and legal basis” for the amount requested.[86]  But the record demonstrates that the Union had the opportunity to, and did, submit evidence to the Arbitrator regarding its entitlement to attorney fees and expenses.[87]  And the Union makes no argument that the actual invoices would show any difference in the amount of time spent on the case than what was already in the evidence submitted to the Arbitrator.  Because we defer to the Arbitrator as to the reasonableness of the requests, and the Union fails to identify a specific error in the determination, we find that the Union has not demonstrated that the Arbitrator erred.[88]

 

The Union, citing Authority precedent, also claims that the Arbitrator erred by determining that the Union’s share of the Arbitrator’s fee was not reimbursable.[89]  Under the FLSA, a prevailing party is entitled to “a reasonable attorney’s fee to be paid by the defendant, and costs of the action,”[90] and, as the Union notes, these costs may include the portion of the arbitrator’s fee paid by the prevailing party.[91]  In the cases cited by the Union, however, the arbitrators premised their awards of this cost upon a determination that the parties had not contractually agreed to waive the entitlement to costs.[92]  Here, in contrast, the Arbitrator found that the parties’ agreement required the parties to split the arbitration fees.  And in neither of the decisions upon which the Union relies did the Authority conclude that such a contractual provision is unenforceable under the FLSA.  Nor does the Union challenge the Arbitrator’s interpretation of the agreement regarding fee splitting on essence grounds.  Therefore, the Union fails to demonstrate that the Arbitrator’s determination regarding costs is contrary to law.[93]

 

Based on the foregoing, we grant the Union’s contrary-to-law exception, in part, and deny it, in part, as it pertains to the reasonableness of the fees and costs.  We remand those portions of the damages award described above.

 

1. Decision

    

   We dismiss those exceptions that we have found untimely.  We deny the Union’s nonfact and               exceeded-authority exceptions and we deny, in part the contrary-to-law exception.  We grant the contrary-to-law exception, in part and remand, in part, the matter to the parties, absent settlement, for resubmission to the Arbitrator consistent with this decision.