National Treasury Emp. Union v. Nixon

• Decision Date: 20 October 1975
• Citation: 172 U.S.App.D.C. 217,521 F.2d 317
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 317

521 F.2d 317

172 U.S.App.D.C. 217

NATIONAL TREASURY EMPLOYEES UNION, Appellant v Richard M. NIXON, Individually and as President of the United States.

No. 74-1891.

United States Court of Appeals District of Columbia Circuit.

Argued 11 June 1975.

Decided 20 Oct. 1975.

Michael H. Gottesman, Washington, D. C., for appellant. George H. Cohen and Robert M. Tobias, Washington, D. C., were on the brief for appellant.

Eloise E. Davies, Atty., Dept. of Justice, with whom Carla A. Hills, Asst. Atty. Gen., at the time the brief was filed, Earl J. Silbert, U. S. Atty., and Leonard Schiatman, Atty., Dept. of Justice, were on the brief for appellee.

Before LEVENTHAL and WILKEY, Circuit Judges and MERHIGE, ^* United States District Judge for the Eastern District of Virginia.

Opinion for the Court filed by Circuit Judge WILKEY.

WILKEY, Circuit Judge:

Appellant National Treasury Employees Union (NTEU) successfully prosecuted a claim on behalf of its members that former President Nixon denied a 5.14% Pay increase effective as of October 1972, contrary to the Federal Pay Comparability Act (FPCA). ¹ The President implemented the decision of this court upholding appellant's claim through Executive Orders 11777 and 11778, which adjusted pay rates not only for members of NTEU but for all federal employees subject to the FPCA. As a result some 31/2 million employees ultimately received retroactive salary payments ranging from $69 to more than $450.

On remand NTEU filed an application for award of counsel fees and litigation expenses. The District Court denied the application, stating that recovery was not warranted under either the "private attorney-general" exception or the "common-benefit" exception (sometimes referred to as the "common fund" exception) to the general American Rule, which bars such awards. We hold that the "common benefit" exception is applicable on the facts of this case. We therefore reverse the judgment of the District Court and remand for further determinations as discussed herein.

I. Jurisdictional Issues

Initially, appellee has presented a series of jurisdictional arguments to appellant's application for attorney's fees and expenses. First, it is argued that the application is barred by 28 U.S.C. § 2412 which provides, in pertinent part:

Except as otherwise specifically provided by statute, a judgment for costs, as enumerated in Section 1920 of this title But not including the fees and expenses of attorneys may be awarded to the prevailing party in any civil action brought by or against the United States or any agency or official of the United States acting in his official capacity . . ..

The Government apparently concedes that the statute is not directly applicable because the request is for reimbursement from benefitted employees and not from the public treasury. However, it does take the position that the statute must also be read to bar the imposition on the Government of the expense of collecting the fees from its employees. ² The short answer to this argument is that such expenses simply are not "fees and expenses of attorneys" within the meaning of the statute and thus are not barred by Section 2412.

Anticipating our position on this issue, appellee argues in addition that such expenses are not "costs", as specifically defined by Section 1920 and, as a result, there has been no waiver of sovereign immunity with respect to them. We find no support for the application of sovereign immunity to the facts of this case. The core of the doctrine seeks to protect the public fisc against unconsented claims for monetary relief. We agree with appellee that such claims need not be against the United States Eo nomine to be barred by the doctrine as long as the judgment "would expend itself on the public treasury or domain . . .." ³ However, the mere imposition of an expense upon the Government is not generally enough to invoke the doctrine.

The Supreme Court has acknowledged this distinction in the analogous context of immunity under the Eleventh Amendment. In Edelman v. Jordan ⁴ the Court held that the Eleventh Amendment barred the retroactive award of benefits under the Aid to the Aged, Blind, and Disabled program. The Court, however, noted that sovereign immunity did not bar prospective decrees despite the fact that such decrees were likely to have a significant "impact on state treasuries," as state officials become required henceforth to spend more "money from the state treasury." (Pp. 667-68, 94 S.Ct. 1347.) "Such an ancillary effect on the state treasury is a permissible and often an inevitable consequence of the principle announced in Ex Parte Young (209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908)). . . ." ⁵ Similarly we believe that sovereign immunity does not bar the award of attorney's fees and litigation expenses against private parties merely because some incidental expense might be imposed upon the Government by such an award. ⁶

Finally, it is argued that the District Court lacks subject matter jurisdiction to enter an appropriate decree granting plaintiff relief. Appellee contends that because jurisdiction to entertain the substantive claim was under the mandamus statute, 28 U.S.C. § 1361, the granting of appellant's application must satisfy the standards for grant of mandamus.

This argument confuses subject matter jurisdiction with the substantive law governing appellant's application. The District Court has the power to entertain the application for attorney's fees and expenses because it has subject matter jurisdiction over the main claim. The award of attorney's fees is not a separate claim for relief requiring an independent jurisdictional base, but rather is an additional equitable remedy which under appropriate conditions can be awarded to the prevailing party. Equitable considerations, the substance of which are substantially different from the law governing the grant of mandamus relief, govern the award of attorney's fees.

Having considered and rejected appellee's jurisdictional arguments, we turn our attention to the merits of the application.

II. The "Common Benefit" Exception

At least since the Supreme Court's opinion in Trustees v. Greenough ⁷ the federal courts have permitted "a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorney's fees, from the fund or property itself or directly from the other parties enjoying the benefit." ⁸ An exception has been made to the general rule of non-recovery in this class of cases because of the perceived injustice of permitting third parties to benefit from the actions of another without sharing in the expenses incurred in securing or guaranteeing the benefit. The District Court's ruling requires us to consider the precise scope of the "common benefit" exception.

Initially, appellee argues that the doctrine is inapplicable because "there is literally no common fund." This argument is based on the conceded fact that the retroactive salary payments were paid out of several different appropriations of funds. In our view, it is a mere technicality that Congress chose to fund these retroactive salary payments in such a way that agencies were required to draw upon previously appropriated funds before drawing upon the funds made available by the Second Supplemental Appropriations Act, 1974. ⁹ The entire sum paid to federal employees is the "common fund" or "common benefit" to which the request for con- tribution is applicable, government accounting procedures notwithstanding.

Appellee's second contention relates to the fact that the District Court has no control over the "common fund." The Supreme Court has clearly indicated that such control is not necessary for reimbursement. "Although the earliest cases recognizing a right to reimbursement involved litigation that had produced or preserved a 'common fund' for the benefit of a group, nothing in these cases indicates that the suit must actually bring money into the court as a prerequisite to the court's power to order reimbursement of expenses." ¹⁰ In Mills v. Electric Auto-Lite, ¹¹ for example, the Court held that minority shareholders should be reimbursed for the costs of establishing a violation of the securities laws even though the suit might never produce a monetary recovery. Control over funds or assets is not a necessary condition for the application of the doctrine.

Professor Dawson in a recent law review article noted: "The common fund doctrine emerged in situations where the interests of litigants and outsiders were so closely interlocked that success in the litigation inevitably brought evident and measurable gains to outsiders." ¹² This is precisely such a case. Millions of federal employees tangibly benefited directly because plaintiff persevered in this litigation. Where the members of a distinct class of persons, such as these federal employees, derive a significant sum of money from the efforts of a few, it is only just to permit the few to spread their reasonable expenses to all members of the class. On the facts of this case NTEU has presented a prima facie case for reimbursement of its attorney's fees and litigation expenses and we therefore reverse the judgment of the District Court.

III. On Remand

Although plaintiff has made a prima facie case for recovery, there are three tasks which remain for the District Court on remand. First, the District Court must consider whether a deduction for attorney's fees from future paychecks would be prohibited by statute. Second, it must determine the amount of attorney's fees and/or litigation expenses to be awarded. Finally, it should consider whether the expense of collecting those amounts is so disproportionate to the recovery that it would be inequitable to impose that expense on the employees.

Because the retroactive salary adjustment necessitated by our prior ruling has already been paid over to its intended recipients, appella...