Opinion ID: 1938987
Heading Depth: 3
Heading Rank: 1

Heading: Statutory entitlement to fees

Text: Appellant asserts that the Randolph-Sheppard Act itself contemplates an award of attorneys' fees to a vendor wronged by state agency action. As Judge Kessler correctly pointed out, however, the Act simply does not provide anywhere in its language for the award of counsel fees. Nor has appellant pointed to legislative history manifesting a clear intent of Congress to allow for fees. Instead, appellant relies exclusively on federal appellate decisions, chief of which is Delaware Dep't of Health and Social Services v. United States Dep't of Educ., 772 F.2d 1123 (3d Cir.1985), in which the court upheld an arbitration panel's award of attorneys' fees against the state of Delaware. In Delaware a vendor licensed under the Act, having been passed over for appointment to a management position in violation of a state regulation, requested and received a full evidentiary hearing before a state hearing examiner. Id. at 1132. The examiner ordered that the vendor be appointed to the management position and awarded him a portion of his legal fees but disallowed $1,254 of those expenses. Id. An arbitration panel convened by DOE then awarded the vendor the $1,254 disallowed by the state examiner. Id. at 1134. On appeal from the arbitrator's decision, the district court overturned the arbitrator's award on the ground that it contravened the American Rule. See Delaware Dep't of Health and Social Services v. United States Dep't of Educ., 592 F.Supp. 1038 (D. Del.1984). The court of appeals reversed. Although the court endeavored to narrow the scope of the question before it to whether the arbitrators, who concluded that the $1,254 request was reasonable, acted arbitrarily, or capriciously, abused their discretion, or committed legal error in holding that the additional fees should be awarded, Delaware, supra, 772 F.2d at 1138, it nevertheless held broadly that an award of attorneys' fees is appropriate under the Randolph-Sheppard Act as an element of compensatory damages for breach of contract. Id. at 1139. The court reasoned that by undertaking to administer the Randolph-Sheppard program on the state level and agreeing to cooperate with DOE in carrying out the purposes of the Act, see 20 U.S.C. § 107b(1), a state enters a contractual relationship with the federal government to which licensed vendors are third-party beneficiaries. While acknowledging that the attorneys' fee question was a close one, the court concluded: [T]he overall scheme strongly suggests that the states must undertake to make blind vendors whole for breaches of the contractual obligations imposed on them by virtue of participation in the Federal Blind Vendors Program.... [A]n award of attorneys' fees as contract damages is, in this unique circumstance, an appropriate means to that end. Delaware has not met its burden of showing that the broad make-whole powers of the arbitration panel in this contractual situation did not include the power to award such fees. Id. at 1139-40 (footnote omitted; emphasis added). Appellant contends that although the fees at issue in Delaware were incurred during a state-level administrative hearing, the same rationale applies to her suit in Superior Court. RSA's failure to adopt procedures for full evidentiary hearings, she argues, see note 9, supra, left her with no alternative but to bring this action in Superior Court, which was the equivalent of both the hearing and the DOE arbitration that had been denied her by RSA. Thus, under the rationale of Delaware, the trial court was free to fashion a remedy that included reasonable attorneys' fees. Judge Kessler rejected this argument and distinguished Delaware on the ground that, since the issue of statutory authority for a fee award was not contested there, the court never decided the issue of whether the Act allows for an award of attorneys' fees. The judge also recognized, however, quoting the Third Circuit's opinion, that the question the court did deal with was `whether, as a matter of federal law, attorneys' fees are an appropriate element of damages for breach of contract between a blind vendor and a Randolph-Sheppard state licensing agency.' In reversing the district court, the court in Delaware expressly held that an award of attorneys' fees against state agencies is proper under the Randolph-Sheppard Act as part of a make-whole remedy for breaches of contractual obligations imposed on them by virtue of participation in the Federal Blind Vendors Program. Delaware, supra, 772 F.2d at 1139. Thus it is problematical, at least, to say that the court never considered whether fees could be awarded under the Act. Nevertheless, we agree with Judge Kessler that the differences between Delaware and this case are significant. At bottom the court in Delaware ruled as it did because it could find nothing in the history of the Act revealing an intent to limit the traditionally broad make-whole powers of [an] arbitration panel under federal law. Id. at 1140. [16] Only by analogy can the proceedings in Superior Court in this case be said to have mirrored the arbitration panel's decision in Delaware. Even if the parallel were exact, however, we would decline to follow the result reached in that case for the following reason. In F.D. Rich Co. v. United States, supra , the Supreme Court, in denying an award of attorneys' fees, recognized the logic that unless fees are awarded the party who must bear the costs of his attorneys' fees out of this recovery is not made whole. Id. at 129. Notwithstanding this fact, in the absence of express language or clear evidence of congressional intent, the Court declined to read the Miller Act, 40 U.S.C. §§ 270a et seq., as permitting an award of attorneys' fees. Similarly, in Summit Valley Industries, Inc. v. Local 112, supra, the Court assumed for argument's sake that Congress plainly intended Section 303 [of the Labor Management Relations Act] to be fully remedial and to restore to the victimized employer all . . . losses  (emphasis by Court), but held that this justification is not sufficient to create an exception to the American Rule in the absence of express congressional authority. Id. The conclusion seems inescapable, therefore, that the Supreme Court has rejected the same argument of a make-whole remedy implicit in a statute otherwise silent on the fee issue that persuaded the Delaware court to sustain an award of attorneys' fees under the Act. [17] Judge Kessler correctly found that there is no statutory basis for an award of attorneys' fees in this case. [18]