Devine v. National Treasury Employees Union

• Decision Date: 13 November 1986
• Docket Number: No. 83-1409,83-1409
• Citation: 805 F.2d 384
• Parties: 126 L.R.R.M. (BNA) 2638 Donald J. DEVINE, 1 Petitioner, v. NATIONAL TREASURY EMPLOYEES UNION, Respondent. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 384

805 F.2d 384

126 L.R.R.M. (BNA) 2638

Donald J. DEVINE, ¹ Petitioner, v. NATIONAL TREASURY EMPLOYEES UNION, Respondent.

Appeal No. 83-1409.

United States Court of Appeals, Federal Circuit.

Nov. 13, 1986.

Michael A. Gordon, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued, for petitioner; with him on the brief were Richard K. Willard, Acting Asst. Atty. Gen. and David M. Cohen, Director. Steven Ash, I.R.S., Washington, D.C., of counsel and Steven Abow, U.S. Office of Personnel Management, Washington, D.C., of counsel.

Mary H. Haller, Asst. Counsel, Nat. Treasury Employees Union, Washington, D.C., argued, for respondent; with her on the brief were Lois G. Williams, Director of Litigation and Kerry L. Adams, Asst. Director of Litigation.

Before RICH, DAVIS, and BALDWIN, Circuit Judges.

ORDER

RICH, Circuit Judge.

National Treasury Employees Union (NTEU) applies for attorney fees and expenses in connection with representing employee Zazenza Smith in an adverse action proceeding. ² Smith ultimately prevailed in this court. Specifically, NTEU seeks attorney fees for responding to the Office of Personnel Management's (OPM) petition for reconsideration of the arbitrator's decision in Smith's case in December 1982 and fees and expenses for defending the petition by OPM to this court during the period 1983 to 1984. OPM opposes this application.

Fees for Defending the Motion for Reconsideration

On December 17, 1982, OPM moved for reconsideration of the arbitrator's decision mitigating the agency's penalty of removal to an eleven-month suspension, and the arbitrator denied that motion on January 19, 1983. Any recovery due NTEU for representing Smith before the board, in this case an arbitrator in the board's stead, would lie in the Back Pay Act, 5 U.S.C. Sec. 5596. Gavette v. Office of Personnel Management, 785 F.2d 1568, 1573 (Fed.Cir.1986). In order to recover, NTEU must show that Smith was the "prevailing party" and that an award of attorney fees would be "in the interest of justice." 5 U.S.C. Sec. 5596(b)(1)(A)(ii) (1982); Gavette, supra, at 1573. That Smith was the prevailing party is undisputed, but that an award of fees would be in the interest of justice is, and properly so. We hold that it would not be in the interest of justice to compensate NTEU for its time spent defending Smith before the arbitrator for the following reasons: (1) Smith was removed from a position of independent responsibility and trust for falsifying her time sheets and making false statements to her supervisor about the sheets; (2) the arbitrator sustained all of the charges made by the agency; (3) removal for dishonesty has been upheld by this court's predecessor on a number of occasions; and (4) OPM believed that the arbitrator did not consider all of the relevant factors when determining the penalty. See Wise v. Merit Systems Protection Board, 780 F.2d 997, 999 (Fed.Cir.1985); Young v. Merit Systems Protection Board, 776 F.2d 1027, 1029 (Fed.Cir.1985). Therefore, we award NTEU nothing in connection with defending the government's motion for reconsideration before the arbitrator.

Fees for Defending the Appeal to This Court

1. Liability

OPM petitioned this court for review of the arbitrator's decision on February 23, 1983. This court held that the arbitrator, in a well-reasoned opinion, addressed all the relevant issues and considered the applicable Douglas factors. Smith being a prevailing party, NTEU shall recover attorney fees and expenses incurred in defending the government's petition for review to this court under the Equal Access to Justice Act (EAJA) "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. Sec. 2412(d)(1)(A) (as amended, Pub.L. No. 99-80, 99 Stat. 183; enacted August 5, 1985, 99th Congress, 1st Session); Gavette, supra, at 1578. In other words, OPM must show that it "was clearly reasonable in asserting its position, including its position at the agency level, in view of the law and the facts." Id. at 1579. We do not find that an award would be unjust or that the position of the United States was clearly reasonable for the following reasons: (1) this court, in Devine v. Sutermeister, 724 F.2d 1558 (Fed.Cir.1983), stated that "we question whether the issue of the arbitrator's balancing of the factors concerning mitigation is even an issue properly appealed by OPM under 5 U.S.C. Sec. 7703(d)" and the "issue of mitigation is essentially a matter of judgment closely tied to the facts of this case, precisely the type of issue which OPM should not petition for review." Id. at 1566. The merits panel of this case reiterated that position. The position of the United States--that the arbitrator improperly mitigated the penalty--was not substantially justified.

2. Amount of Fees to be Awarded

NTEU claims that it is entitled to attorney fees at the "prevailing market rate" as prescribed by Sec. 2412(d)(2)(A) of the EAJA and therefore seeks $13,781.25 for defending the appeal to this court: $75/hour for 183.75 hours of work (NTEU's figures were four hours too high, apparently due to errors in addition). Absent a showing of special circumstances such as the limited availability of qualified attorneys for the proceeding involved, which is not the case here, "attorney fees shall not be awarded in excess of $75 per hour." Sec. 2412(d)(2)(A)(ii). NTEU seeks the maximum rate, $75/hour, which is permissible absent a showing of special circumstances. ³

OPM argues that, with respect to attorney fees, NTEU is entitled to recover only its actual costs for attorneys, i.e., the computed hourly wage, based on salary, of the attorneys who worked on the case, multiplied by the number of hours spent on the case. It argues that to award the union the prevailing market rate times the number of hours worked would give the union a windfall because the union did not expend nearly that amount to defend Smith and would be in violation of the rules of ethics; the award would go into NTEU's general coffers and be used for nonlegal purposes. OPM relies on Goodrich v. Department of the Navy, 733 F.2d 1578 (Fed.Cir.1984), and National Treasury Employees Union v. Department of the Treasury, 656 F.2d 848 (D.C.Cir.1981), for this latter proposition.

The Goodrich case involved an award of attorney fees under 5 U.S.C. Sec. 7701(g)(1) of the Civil Service Reform Act (CSRA) to an attorney who was employed by the American Federation of Government Employees (AFGE) and who represented a federal employee who was removed from his job, this court holding that the board did not commit legal error in limiting the attorney fees award for services rendered in connection with proceedings before the board to "the expenses the union incurred in providing services." Goodrich, supra, at 1581. The statute, 5 U.S.C. Sec. 7701(g)(1) authorizes the board to "require payment by the agency involved of reasonable attorney fees incurred by an employee" who successfully overturns an agency personnel action if the award would be "in the interest of justice," ⁴ the same standard as that used in the Back Pay Act. See 5 U.S.C. Sec. 5596(b)(1)(A)(ii); ⁵ Sims v. Department of the Navy, 711 F.2d 1578, 1579-81 (Fed.Cir.1983).

The board ordinarily calculates the fee in 7701(g) and Back Pay Act cases by multiplying the lawyer's customary hourly rate by the number of hours expended. Where the lawyer is employed by a union, however, the board limits the fee to the amount the union has expended in providing the services, i.e., the lawyer's salary plus overhead expenses. O'Donnell v. Department of the Interior, 2 MSPB 604, 611 n. 10, 2 MSPR 445. 454 n. 10 (1980); Wells v. Schweiker, 12 MSPB 329, 331-32, 14 MSPR 175, 179 (1982); Powell v. Department of the Treasury, 8 MSPB 21, 19 MSPR 174 (1984); Allen v. Department of the Treasury, 20 MSPR 518 (1984).

The latter three board cases, as well as Goodrich, rely upon the thoughtful reasoning in National Treasury Employees, supra. That case involved the NTEU's quest to recover attorney fees under the Privacy Act, 5 U.S.C. Sec. 552a (1976) ⁶ for supplying legal services to a successful plaintiff who belonged to the union's prepaid legal plan. The attorneys were salaried employees of the union, and admitted that the fee, if awarded, would go to the union, not to them. The court stated that unless the fees were awarded to the lawyers, and not to the union that paid their salary, fees equal only to the union's costs in representing the plaintiff could be awarded. The court cited ABA Code of Professional Responsibility, Disciplinary Rule (DR) 2-103(D)(4)(a) for the maxim that prepaid legal services plans must be so "organized and operated that no profit is derived by it from the rendition of legal services by lawyers," and DR's 3-102 and 3-101(A) that attorneys may not split fees with laymen or lay organizations, or enable them to engage in the unauthorized practice of law. National Treasury Employees, 656 F.2d at 851-52. Accord Munsey v. Federal Mine Safety & Health Com'n, 701 F.2d 976 (D.C.Cir.1983); Jordan v. United States Dept. of Justice, 691 F.2d 514 (D.C.Cir.1982). ⁷

Nothing in the EAJA or its legislative history indicates that courts should ignore these safeguards, addressed in similar cases above, established by the legal profession to protect the public from irresponsible and incompetent law practice when awarding attorney fees under the EAJA. Although the Act specifically contemplates that associations, corporations, and similarly large entities can be prevailing parties, and therefore, a fortiori, are eligible to receive fee awards, the Act provides no guidance on the question whether a union, not a prevailing party itself, is eligible to receive prevailing market rate fees for services performed as a legal aid organization. These ethical safeguards provide just as compelling a reason to not award...