James v. Santella, 02-3118.

• Decision Date: 13 May 2003
• Docket Number: No. 02-3118.,02-3118.
• Citation: 328 F.3d 1374
• Parties: Kay Coles JAMES, Director, Office of Personnel Management, Petitioner, v. Frank SANTELLA and Joseph Jech, Respondents, and Merit Systems Protection Board, Respondent.
• Court: U.S. Court of Appeals — Federal Circuit

328 F.3d 1374

Kay Coles JAMES, Director, Office of Personnel Management, Petitioner, v. Frank SANTELLA and Joseph Jech, Respondents, and Merit Systems Protection Board, Respondent.

No. 02-3118.

United States Court of Appeals, Federal Circuit.

May 13, 2003.

Patricia M. McCarthy, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for petitioner. With her on the brief was David M. Cohen, Director. Of counsel on the brief were Steven E. Abow, Deputy Assistant General Counsel, and David T. Truong, Attorney, Office of General Counsel, Office of Personnel Management, of Washington, DC.

William L. Bransford, Shaw, Bransford, Veilleux & Roth, of Washington, DC, argued for respondents Frank Santella and Joseph Jech. With him on the brief was Diana J. Veilleux.

Calvin M. Morrow, Attorney, Office of the General Counsel, Merit Systems Protection Board, of Washington, DC, argued for respondent Merit Systems Protection Board. With him on the brief was Martha B. Schneider, Acting General Counsel.

Before LINN, DYK, and PROST, Circuit Judges.

PROST, Circuit Judge.

The Director of the Office of Personnel Management ("OPM") petitions this court pursuant to 5 U.S.C. § 7703(d) for review of the final decision of the Merit Systems Protection Board ("MSPB" or "Board"), Nos. CB-1215-91-0007-R-1, CB-1215-91-0008-R-1, interpreting 5 U.S.C. § 1204(m)(1) to authorize an award of attorney fees to a prevailing employee who is found to be "substantially innocent" of charges made by the Office of Special Counsel ("OSC") in a complaint to the Board. Because we conclude that the Board acted permissibly and lawfully in adopting the "substantially innocent" standard, we affirm.

I

In 1990, the OSC, an independent agency authorized to investigate and prosecute allegations of prohibited personnel practices, filed a complaint against federal employees Frank Santella and Joseph Jech, charging retaliation in violation of the Whistleblower Protection Act (the "WPA"), 5 U.S.C. § 2302(b)(8). The charges against respondent-employees Santella and Jech (collectively "Santella") were initially sustained by the MSPB's Chief Administrative Law Judge (hereinafter "Administrative Judge"). However, due to the intervening decision of this court in Eidmann v. Merit Systems Protection Board, 976 F.2d 1400, 1406 (Fed. Cir.1992), holding that the "significant factor" rather than the "contributing factor" standard applies to OSC disciplinary actions that allege violations of the WPA, the Board vacated the Administrative Judge's initial recommended decision and remanded the case for a new determination under the appropriate standard. Special Counsel v. Santella, 65 M.S.P.R. 452, 456-64 (1994) ("Santella I"). The Board also directed that additional findings be made with respect to certain issues. Id. at 466-67. On remand, the Administrative Judge made the factual findings directed by the Board and, applying the correct "significant factor" standard, concluded that none of the four counts charged in the OSC complaint could be sustained. The Board adopted the second recommended decision and dismissed OSC's complaint. Special Counsel v. Santella, 77 M.S.P.R. 672 (1998) ("Santella II").

Santella subsequently filed a motion pursuant to 5 U.S.C. § 1204(m)(1)¹ contending that he was entitled to attorney fees because he was the "prevailing party" and had been proven "substantially innocent" of the charges. The Administrative Judge, in an addendum initial decision, awarded a portion of the attorney fees sought. OSC filed a petition for review, arguing for a narrower standard that would make it more difficult for prevailing parties to qualify for attorney fees. The Board affirmed the Administrative Judge's decision as modified, holding that a prevailing employee found "substantially innocent" of the charges against him in an OSC disciplinary action may be awarded attorney fees under 5 U.S.C. § 1204(m)(1). Santella v. Special Counsel, 86 M.S.P.R. 48, 56-62 (2000) ("Santella III").

In reaching its determination, the Board recognized that 5 U.S.C. § 1204(m)(1) specifically required that, in order to establish entitlement to attorney fees, the prevailing party must demonstrate that the fees are "warranted in the interest of justice." Santella III, 86 M.S.P.R. at 59. Based largely on the fact that the language of 5 U.S.C. § 1204(m)(1) is virtually identical to that of another attorney fee provision administered by the Board — 5 U.S.C. § 7701(g)(1) — the Board reasoned that it was appropriate to look to the manner in which "warranted in the interest of justice" had been construed in the context of section 7701(g)(1) as a guide for defining the identical language in section 1204(m)(1). Thus, it concluded that the "substantially innocent" category, adopted in Allen v. United States Postal Service, 2 MSPB 582, 2 M.S.P.R. 420, 428-35 (1980), for cases arising under 5 U.S.C. § 7701(g)(1), "is applicable to cases arising under 5 U.S.C. § 1204(m)(1)." Santella III, 86 M.S.P.R. at 64. Accordingly, because it found Santella to be a "prevailing party" as well as "substantially innocent," the Board upheld the grant of attorney fees. Id. at 64-66.

After the Board denied OPM's petition for reconsideration, Santella v. Special Counsel, 90 M.S.P.R. 172 (2001) ("Santella IV"), OPM petitioned this court for review pursuant to 5 U.S.C. § 7703(d). By order dated February 1, 2002, this court granted review.

II

The scope of our review in any appeal from a decision of the Board is defined by statute. We must affirm the decision unless we find it to be "(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule, or regulation having been followed; or (3) unsupported by substantial evidence." 5 U.S.C. § 7703(c).

Issues of statutory construction are reviewed by this court de novo. Doyon, Ltd. v. United States, 214 F.3d 1309, 1314 (Fed.Cir.2000); Strickland v. United States, 199 F.3d 1310, 1313 (Fed.Cir.1999); see also Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 n. 9, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ("The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent." (citations omitted)).

III

The crux of OPM's argument on appeal is that the Board unlawfully construed 5 U.S.C. § 1204(m)(1) by concluding that the "substantially innocent" category articulated in Allen v. United States Postal Service, 2 MSPB 582, 2 M.S.P.R. 420 (1980),² in the context of 5 U.S.C. § 7701(g)(1), is an appropriate standard for determining whether a grant of attorney fees is "warranted in the interest of justice." In essence, OPM advocates a more stringent test here, which would make it much more difficult for prevailing parties to qualify for attorney fees. In the course of making this argument, OPM challenges the adequacy and correctness of the Board's basic statutory construction analysis, and then goes on to offer several more specific arguments as to why, in its view, the Board's ultimate conclusion cannot be sustained. Thus, we begin with a discussion and analysis of the statute and the Board's statutory construction before turning to OPM's more specific arguments.

As noted above, section 1204(m)(1) was enacted as part of the OSC Reauthorization Act. This section provides that:

Except as provided in paragraph (2) of this subsection, the Board, or an administrative law judge or other employee of the Board designated to hear a case arising under section 1215, may require payment by the agency involved of reasonable attorney fees incurred by an employee or applicant for employment if the employee or applicant is the prevailing party and the Board, administrative law judge, or other employee (as the case may be) 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.

5 U.S.C. § 1204(m)(1) (emphasis added).

The language of this provision is virtually identical to that of 5 U.S.C. § 7701(g)(1) which authorizes attorney fees to prevailing employees who successfully challenge certain adverse actions taken by their employing agencies.³ In dispute here is the proper interpretation and application of the phrase "warranted in the interest of justice," which, along with being a "prevailing party," is one of the two statutory criteria for the award of attorney fees under both sections 7701(g)(1) and 1204(m)(1). The phrase "warranted in the interest of justice" is not statutorily defined as to either provision.

The Board summarized its reasons for concluding that Allen's "substantially innocent" category could be applied to section 1204(m)(1) in Santella IV as follows:

In the Reauthorization Act, Congress enacted an attorney fees provision for OSC disciplinary actions that is substantially identical to the attorney fees provision applicable to cases arising under the Board's appellate jurisdiction. Compare 5 U.S.C. § 1204(m)(1) with 5 U.S.C. § 7701(g)(1). Generally, words or phrases in a statutory provision that were used in a prior act pertaining to the same subject matter will be construed in the same sense. Marks v. United States, 161 U.S. 297, 302, 31 Ct.Cl. 453, 16 S.Ct. 476, 40 L.Ed. 706 (1896); Sutherland Stat. Const. § 51.02 (5th ed.1992). Congress is presumed to have been aware of the existing interpretations of section 7701(g)(1) when it enacted section 1204(m)(1). Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978). Further, the legislative history of the new attorney fees provision identified section 7701(g) as the model for that provision.

Santella IV, 90 M.S.P.R. at 176-77.

From this analysis, the Board concluded...