Goodrich v. Department of the Navy

• Decision Date: 09 May 1984
• Docket Number: No. 83-1363,83-1363
• Citation: 733 F.2d 1578
• Parties: Clifton L. GOODRICH, Petitioner, v. DEPARTMENT OF THE NAVY, Respondent. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1578

733 F.2d 1578

Clifton L. GOODRICH, Petitioner, v. DEPARTMENT OF THE NAVY, Respondent.

Appeal No. 83-1363.

United States Court of Appeals Federal Circuit.

May 9, 1984.

Charles A. Hobbie, Washington, D.C., argued, for petitioner. With him on the brief was Mark D. Roth, Washington, D.C.

M. Susan Burnett, Washington, D.C., argued, for respondent. With her on the brief were Richard K. Willard, Acting Asst. Atty. Gen. and David M. Cohen, Director, Washington, D.C.

Before FRIEDMAN, DAVIS and NIES, Circuit Judges.

FRIEDMAN, Circuit Judge.

This petition to review challenges the amount of an attorney's fee the Merit Systems Protection Board (Board) awarded. The attorney who represented the federal employee was employed by a union. He sought a fee based upon the market value of his services. The Board awarded a fee based upon the union's expenses in providing the services. We affirm.

I

This case grew out of the Department of the Navy's downgrading of petitioner's position. Following proceedings before the Board (which initially held it lacked jurisdiction) and the Court of Appeals for the Third Circuit (which vacated that jurisdictional ruling, Goodrich v. Department of the Navy, 686 F.2d 169 (1982)), the Board overturned the downgrading. The Board held that the downgrading was a reduction in force, which was invalid because the Navy had not followed the procedures necessary to take such action.

Following the Board's action, Mr. Hobbie (the petitioner's attorney) filed with the Board a motion for payment of attorney's fees, as 5 U.S.C. Sec. 7701(g)(1) (1982) authorizes. Mr. Hobbie is a staff counsel with the union of which petitioner is a member. Mr. Hobbie is paid an annual salary by the union, and he did not charge the petitioner a fee for representing him. Mr. Hobbie sought compensation at $75 a hour, which he stated "represents the market hourly rate [in Washington, D.C.] for an attorney of his experience." The total fee he sought was $3,675.

In his motion, Mr. Hobbie stated that in response to the decision in National Treasury Employees Union v. Department of the Treasury, 656 F.2d 848 (D.C.Cir.1981) (supplemental opinion), which held that an attorney employed by a union could not receive legal fees in excess of the union's actual expenses in performing particular services, his union had

established its Legal Representation Fund into which any attorney fees awarded AFGE [American Federation of Government Employees] attorneys are paid. These monies are under the sole control of the AFGE's General Counsel and are to be used solely for legal work. The fund is maintained as a discrete account and is totally separate and segregable from the union's general treasury.

The Board held that Mr. Hobbie satisfied the statutory requirements for the award of an attorney's fee. It calculated the fee on the basis of the number of allowable hours Mr. Hobbie had expended on the case, multiplied by Mr. Hobbie's hourly salary rate from the union. This came to $979.32, which the Board doubled to reflect the union's overhead costs. This resulted in a total fee of $1,958.64, which the Board ordered the Navy to pay to the union's Legal Representation Fund.

II

A. Since neither party has questioned or discussed whether the petitioner was "adversely affected or aggrieved" by the Board order awarding the union a lower fee than it sought, we assume that the petitioner has standing to challenge the order under 5 U.S.C. Sec. 7703(a)(1) (1982), as someone within one of those categories.

B. The governing 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" if the statutory criteria are satisfied (the Board held they were satisfied). The Board has held that lawyer's fees are "incurred by an employee" if they are incurred in his behalf, even though he does not pay them. O'Donnell v. Department of Interior, 2 M.S.P.B. 604 (1980).

In determining reasonable attorney's fees under this provision, the Board ordinarily applies the principle that the fee should be based upon the lawyer's customary hourly rate multiplied by the number of hours expended, with any adjustments that are appropriate in light of special factors in the particular case. Kling v. Department of Justice, 2 M.S.P.B. 620, 624-28 (1980); Powell v. Department of the Treasury, 81 FMSR p 7076 (1981). Where, however, the lawyer is an employee of a union, the Board applies a different standard. In that situation, it limits the fee to the amount the union has expended in providing the services, i.e., the lawyer's salary plus the union's overhead expenses.

The Board took this position in reliance on the Treasury Employees case, supra. In its supplemental opinion in that case, the court held that an award of attorney's fees to a union that exceeded the union's expenses in providing legal services to a member would be improper because "the union would profit--perhaps handsomely--on the legal activities of those lawyers under any arrangement whereby market-value fees wend their way into the union's general treasury." The court explained that

the settled expectation of the union employer and the employed attorneys that all fees recovered belong to the union means that the employing lay organization would capitalize on the attorney's services, reap a profit therefrom, and put the monies thus made to any use it chooses. In the absence of any compelling reason to disregard the ethical considerations implicated--and we discern none here--we believe that an allowance of above-cost fees to the union is inappropriate.

Id. at 853, footnote omitted.

The Board applied this principle to the award of attorney's fees to a union under 5 U.S.C. Sec. 7701(g)(1) in Powell, supra. It stated...