Court Opinion

ID: 4382403
Source: CourtListenerOpinion
Date Created: 2019-03-29 16:00:43.78098+00
Date Added: 2024-06-11T12:00:02.487037
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

                  AFGE LOCAL 3599,
                      Petitioner

                            v.

      EQUAL EMPLOYMENT OPPORTUNITY
                COMMISSION,
                   Respondent
             ______________________

                       2018-1888
                 ______________________

   Petition for review of an arbitrator’s decision in No.
170711-0278 by John B. Dorsey.
                 ______________________

                Decided: March 29, 2019
                ______________________

    BARBARA B. HUTCHINSON, Washington, DC, argued for
petitioner.

    ERIN MURDOCK-PARK, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for respondent. Also represented by
JOSEPH H. HUNT, ALLISON KIDD-MILLER, ROBERT EDWARD
KIRSCHMAN, JR.
                  ______________________

  Before TARANTO, BRYSON, and STOLL, Circuit Judges.
2                                   AFGE LOCAL 3599 v. EEOC

BRYSON, Circuit Judge.
    In 2017, the Equal Employment Opportunity Commis-
sion (“EEOC”) removed David Hamilton from his position
as an agency mediator. Mr. Hamilton’s union filed a griev-
ance challenging the removal. Pursuant to the collective
bargaining agreement with the agency, Mr. Hamilton
elected to have the challenge to his removal heard by an
arbitrator rather than by the Merit Systems Protection
Board. Following a hearing, the arbitrator overturned Mr.
Hamilton’s removal, but denied the union’s request for an
award of attorney fees. Mr. Hamilton’s union, AFGE Local
3599, has petitioned for review of the denial of attorney
fees. We vacate the arbitrator’s denial of attorney fees and
remand for further proceedings on that issue.
                             I
    Mr. Hamilton has been employed by the EEOC for 20
years. In 2014, he was promoted to the position of media-
tor. The record reflects that during the period of his em-
ployment Mr. Hamilton had no disciplinary problems, with
the exception of one day in 2016.
     On that day, November 29, 2016, Mr. Hamilton was en-
gaged in a mediation when he suddenly began to act errat-
ically. Witnesses later testified that Mr. Hamilton began
using racial epithets and engaging in physical violence to-
ward the parties in the mediation, mistreated his co-work-
ers, and refused to follow orders from management
officials. Based on his conduct on that day, the EEOC pro-
posed Mr. Hamilton’s removal. Following Mr. Hamilton’s
response, the agency removed him from federal service on
May 3, 2017. The union filed a grievance, which led to the
union taking the case to arbitration.
    The arbitrator, appointed by the Federal Mediation
and Conciliation Service, conducted a two-day hearing.
The EEOC called 11 witnesses at the hearing, and the un-
ion called Mr. Hamilton.
AFGE LOCAL 3599 v. EEOC                                   3

     Although the arbitrator found that certain aspects of
the EEOC’s case had not been proved, the arbitrator cred-
ited the testimony of several of the EEOC witnesses to the
effect that Mr. Hamilton engaged in bizarre behavior that
led the arbitrator to conclude that Mr. Hamilton “had a ma-
jor physical and/or mental breakdown during the late stage
of the November 29, 2016, mediation session.” Noting that
Mr. Hamilton denied that he lost control of himself or took
any of the actions he was charged with, the arbitrator con-
cluded that Mr. Hamilton “did not remember or . . . even
recall his actions that day.”
    The arbitrator found that Mr. Hamilton’s behavior on
November 29, 2016, was a one-time event and that he oth-
erwise had “an unblemished 19 year record as a Federal
employee.” The arbitrator further concluded that the
EEOC had not shown that Mr. Hamilton’s behavior had
any negative effect on the agency’s reputation, and that the
agency had failed to consider that Mr. Hamilton’s unusual
behavior “was caused by his obvious medical condition.”
Accordingly, the arbitrator determined that the agency had
not established that it had just cause to remove Mr. Ham-
ilton.
    As a remedy, the arbitrator directed that Mr. Hamil-
ton’s removal be set aside and that he be reinstated in his
position with back pay and benefits. However, the arbitra-
tor denied the union’s request that the agency be held re-
sponsible for the union’s arbitration costs and attorney
fees.
    Both parties petitioned the arbitrator for reconsidera-
tion of the decision. The EEOC requested that the arbitra-
tor reconsider reinstating Mr. Hamilton, and the union
asked that the arbitrator reconsider the portion of the
award denying the union’s request for attorney fees. In re-
sponse, the arbitrator reaffirmed the award, including the
denial of attorney fees. The union then filed this petition
for review, challenging the arbitrator’s failure to award
4                                   AFGE LOCAL 3599 v. EEOC

attorney fees for the arbitration proceeding. The EEOC did
not seek review of the arbitrator’s decision reinstating Mr.
Hamilton.
                             II
    When arbitration is provided for in a government
agency’s collective bargaining agreement, an affected em-
ployee has the option to invoke arbitration in place of an
appeal to the Merit Systems Protection Board. 5 U.S.C.
§ 7121(e)(1). Such an arbitration proceeding is governed
by the same standard of proof as a proceeding before the
Board. Id. § 7121(e)(2). A fee award following an arbitra-
tion is available to a prevailing employee under the same
circumstances that it would be available to such an em-
ployee following a successful appeal to the Merit Systems
Protection Board, and is awarded in accordance with
standards established under 5 U.S.C. § 7701(g). Id.
§ 5596(b)(1)(A)(ii). This court has jurisdiction over appeals
from arbitration awards, as it does over appeals from the
Merit Systems Protection Board. Id. §§ 7121(f), 7703.
    We review an arbitrator’s decision in the same manner
as decisions of the Merit Systems Protection Board. Dunn
v. Dep’t of Veterans Affairs, 98 F.3d 1308, 1311 (Fed. Cir.
1996). We will therefore uphold an arbitrator’s denial of
attorney fees unless the arbitrator’s decision was arbitrary,
capricious, an abuse of discretion, or otherwise unlawful,
procedurally deficient, or unsupported by substantial evi-
dence. 5 U.S.C. § 7703(c). We afford “great deference to
the Board (or an arbitrator standing in the place of the
Board) on questions of entitlement to attorney fees.” Dunn,
98 F.3d at 1311.
    The governing statute for fee awards in this context, 5
U.S.C. § 7701(g), provides that an adjudicator may require
an agency to pay the employee’s reasonable attorney fees if
the employee is the prevailing party and the adjudicator
determines that payment by the agency “is warranted in
the interest of justice.” This court has identified five non-
AFGE LOCAL 3599 v. EEOC                                    5

exclusive factors that the Board (or an arbitrator) may con-
sider in determining whether a fee award is in the interest
of justice. Those factors, first identified by the Board in
Allen v. U.S. Postal Service, 2 M.S.P.R. 420 (1980), and
known ever since as the Allen factors, are the following:
     1. Where the agency engaged in a “prohibited per-
    sonnel practice” (§ 7701(g)(1));
     2. Where the agency’s action was “clearly without
    merit” (§ 7701(g)(1)), or was “wholly unfounded,” or
    the employee is “substantially innocent” of the
    charges brought by the agency;
     3. Where the agency initiated the action against
    the employee in “bad faith,” including:
         a. Where the agency’s action was brought
        to “harass” the employee;
         b. Where the agency’s action was brought
        to “exert improper pressure on the em-
        ployee to act in certain ways”;
     4. Where the agency committed a “gross proce-
    dural error” which “prolonged the proceeding” or
    “severely prejudiced” the employee;
     5. Where the agency “knew or should have known
    that it would not prevail on the merits” when it
    brought the proceeding.
Yorkshire v. Merit Sys. Prot. Bd., 746 F.2d 1454, 1456 (Fed.
Cir. 1984).
     In challenging the arbitrator’s decision denying the re-
quest for fees, the union makes essentially three argu-
ments. First, the union contends that under the applicable
standards, the arbitrator was required to award fees. Sec-
ond, the union contends that the arbitrator improperly
failed to apply the findings he made in his decision on the
merits to the question whether to award fees. And third,
6                                    AFGE LOCAL 3599 v. EEOC

the union argues that the arbitrator’s failure to provide
reasons for his decision to deny attorney fees requires that
the decision be reversed. 1 The court will address the three
arguments in the order presented above.
    1. In light of the fact that the arbitrator made no find-
ings as to the reasons for denying the fee application, the
union’s first argument in effect asks us to hold that regard-
less of any findings that the arbitrator might have made on
that issue, the record compels us to hold that the arbitrator
abused his discretion by denying a fee award. Put another
way, in order to reverse outright and hold that the arbitra-
tor abused his discretion in denying fees, we would have to
conclude that any application of the Allen factors in this
case would compel the conclusion that a fee award was re-
quired. While it may be that in some cases the record
would point so strongly toward granting a fee award that
we could reverse the adjudicator’s denial even in the

    1    In its opening brief, the union argued at several
points that the Equal Access to Justice Act, 5 U.S.C. § 504;
28 U.S.C. § 2412(d), governs the attorney fee award in this
case. The union did not press that argument in its reply
brief or at oral argument, and it is clear that it is unavail-
ing. The Equal Access to Justice Act applies only to a “civil
action,” 28 U.S.C. § 2412(d)(1)(A), or an “adversary adjudi-
cation,” 5 U.S.C. § 504(a)(1). The latter term is defined to
exclude adjudications involving “the selection or tenure of
an employee,” 5 U.S.C. § 504(b)(1)(C); id. § 554(a)(2). See
Gavette v. Office of Pers. Mgmt., 808 F.2d 1456, 1461 (Fed.
Cir. 1986) (en banc) (“Here, 5 U.S.C. § 504 . . . does not
apply to the board proceedings because the case does in-
volve tenure. Also inapplicable is section 2412(d)(3) of 28
U.S.C. . . . because the present case is not an ‘action for
judicial review of an adversary adjudication.’”); Olsen v.
Dep’t of Commerce, Census Bureau, 735 F.2d 558, 562 (Fed.
Cir. 1984).
AFGE LOCAL 3599 v. EEOC                                     7

absence of any express findings by the adjudicator as to the
Allen factors or other reasons to deny the award, this is not
such a case. In his opinion, the arbitrator found that a
number of the EEOC’s allegations were supported by evi-
dence, credited the testimony of those EEOC officials who
testified at the hearing, and did not credit Mr. Hamilton’s
denials that any of the events set forth in the EEOC’s
charges had occurred. Nor does the record contain undis-
puted evidence that would have compelled an adjudicator
to find that the Allen factors indisputably favored granting
fees. This is therefore not a case in which we can say that
no application of the Allen factors could reasonably lead to
a conclusion that a fee award should be denied.
     2. As for the union’s second argument, developed in the
reply brief and at oral argument, we reject the contention
that in determining whether to award fees, the arbitrator
could not consider any facts other than those that were in-
cluded in his opinion on the merits. The union argues that
its position is supported by this court’s decision in Morrison
v. National Science Foundation, 423 F.3d 1366 (Fed. Cir.
2005), but we disagree.
    The Morrison court criticized an arbitrator’s decision to
deny a fee award, because in deciding the attorney fee is-
sue, the arbitrator “retreated from his earlier position” in
his opinion on the merits regarding the agency’s improper
conduct. Id. at 1370. Focusing on the second Allen factor,
the court said that the analysis of that factor “must be de-
termined by examining the arbitrator’s decision, not the ev-
idence and information available to the arbitrator.” Id.
That is, the court explained, “the arbitrator may not revise
the merits decision as a basis for denying attorney fees.”
Id. The court did not hold that the arbitrator’s decision as
to the fee award is limited to those factual findings and
conclusions set forth in the opinion on the merits; the only
prohibition set out by the court was that the arbitrator may
not “revise the merits decision,” i.e., make findings
8                                     AFGE LOCAL 3599 v. EEOC

contrary to the merits decision, in determining whether to
award fees.
    Several of the Allen factors involve issues that would
not ordinarily be discussed in an opinion on the merits of
the agency action against the employee. It would thus
make no sense for the arbitrator to be limited to the four
corners of the merits opinion in determining whether to
award fees. There is no indication that the arbitrator acted
contrary to the directive in Morrison, properly interpreted,
so the court rejects the union’s argument on that issue.
    3. The union’s third argument—that the arbitrator
erred by failing to provide an explanation for his decision
not to award fees—has more force. 2
    This court has held that “[t]he principal constraint
upon the Board’s section 7701(g) discretion to determine
when an award is warranted arises from the Board’s duty
to exercise that discretion reasonably, which necessarily
includes the duty to articulate a rational explanation for

    2   As the union acknowledged at oral argument, it did
not make this argument to the arbitrator in its motion for
reconsideration of the denial of the fee award. However,
the EEOC failed to argue waiver of the issue in its brief in
this court or at oral argument. Instead, the EEOC ad-
dressed the issue on the merits. EEOC Br. 18–19. Under
these circumstances, we exercise our discretion to hold that
the union did not forfeit its opportunity to raise the issue
on appeal. See Tokatly v. Ashcroft, 371 F.3d 613, 618 (9th
Cir. 2004) (“[I]t is well-established that the government
can ‘waive waiver’ implicitly by failing to assert it.” (inter-
nal quotations omitted)); Hernandez v. Cowan, 200 F.3d
995, 997 (7th Cir. 2000); Williams v. Runyon, 130 F.3d 568,
572 (3d Cir. 1997); United States v. Schlesinger, 49 F.3d
483, 485 (9th Cir. 1994); see generally City of Oklahoma
City v. Tuttle, 471 U.S. 808, 815–16 (1985).
AFGE LOCAL 3599 v. EEOC                                     9

each award.” Price v. Soc. Sec. Admin., 398 F.3d 1322,
1325 (Fed. Cir. 2005) (quoting Allen, 2 M.S.P.R. at 434).
    That principle decides this case. In order for this court
to be able to conduct its reviewing responsibility, even on a
matter as to which the adjudicator is given broad defer-
ence, it is ordinarily necessary for the adjudicator to pro-
vide some sort of explanation for its action. That is a
principle frequently reiterated in administrative law deci-
sions in various contexts. As the Supreme Court explained
in Motor Vehicle Manufacturers Ass’n v. State Farm Mu-
tual Automobile Insurance Co., 463 U.S. 29, 43 (1983)
(quoting Burlington Truck Lines, Inc. v. United States, 371
U.S. 156, 168 (1962)), “[t]he scope of review under the ‘ar-
bitrary and capricious’ standard is narrow and a court is
not to substitute its judgment for that of the agency. Nev-
ertheless, the agency must examine the relevant data and
articulate a satisfactory explanation for its action including
a ‘rational connection between the facts found and the
choice made.’”
    To be sure, a court will “uphold a decision of less than
ideal clarity if the agency’s path may reasonably be dis-
cerned.” Bowman Transp., Inc. v. Arkansas-Best Freight
Sys., Inc., 419 U.S. 281, 286 (1974). But a reviewing court
“may not supply a reasoned basis for the agency’s action
that the agency itself has not given.” Motor Vehicle Mfrs.,
463 U.S. at 43; see also SEC v. Chenery Corp., 332 U.S. 194,
196–97 (1947) (“It will not do for a court to be compelled to
guess at the theory underlying the agency’s action . . . .”).
    Although the procedural requirements governing adju-
dicative hearings under the Administrative Procedure Act,
5 U.S.C. §§ 556, 557, do not apply to Merit Systems Protec-
tion Board and parallel arbitration proceedings, see 5
U.S.C. § 554(a)(2), it is nonetheless instructive that the
Act, which sets forth principles broadly applicable to fed-
eral administrative proceedings, provides that all decisions
by adjudicators in cases in which a hearing is required to
10                                    AFGE LOCAL 3599 v. EEOC

be held “shall include a statement of . . . findings and con-
clusion, and the reasons or basis therefor, on all material
issues of fact, law, or discretion presented on the record.”
Id. § 557(c)(3).
     This court and others have made the same point in dif-
ferent contexts. See, e.g., Fla. Power & Light Co. v. Lorion,
470 U.S. 729, 744 (1985) (“[I]f the reviewing court simply
cannot evaluate the challenged agency action on the basis
of the record before it, the proper course, except in rare cir-
cumstances, is to remand to the agency for additional in-
vestigation or explanation.”); Palantir USG, Inc. v. United
States, 904 F.3d 980, 994 (Fed. Cir. 2018) (quoting Sierra
Club v. Gorsuch, 715 F.2d 653, 660–61 (D.C. Cir. 1983) (“If
there is reasoned decisionmaking lurking behind such
agency behavior, it is yet to be articulated. For agency ac-
tion to be upheld, it must not only be explainable; it must
be explained.”); Impresa Construzioni Geom. Domenico
Garufi v. United States, 238 F.3d 1324, 1338 (Fed. Cir.
2001) (“[E]ven if the agency is not obligated to provide rea-
sons, a court may nonetheless order the agency to provide
explanation if such an explanation is required for meaning-
ful judicial review.”); Kitchens v. Dep’t of the Treasury, 535
F.2d 1197, 1200 (9th Cir. 1978) (“The statement of reasons
need not include detailed findings of fact but must inform
the court and the petitioner of the grounds of decision and
the essential facts upon which the administrative decision
was based.”); Kowal v. United States, 412 F.2d 867, 873–74
(Ct. Cl. 1969) (“If an administrative conclusion is affirmed
because of the existence of evidence which might support a
ground not set forth, a court runs the danger of upholding
a decision never in fact made.”).
     That principle has been applied repeatedly in the con-
text of attorney fee awards. Although such awards are typ-
ically reviewed for an abuse of discretion, courts have been
careful to insist that the adjudicators responsible for con-
sidering attorney fee awards provide a sufficient explana-
tion for their decisions to facilitate appellate review. See,
AFGE LOCAL 3599 v. EEOC                                       11

e.g., Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“We
reemphasize that the district court has discretion in deter-
mining the amount of a fee award. This is appropriate in
view of the district court’s superior understanding of the
litigation and the desirability of avoiding frequent appel-
late review of what essentially are factual matters. It re-
mains important, however, for the district court to provide
a concise but clear explanation of its reasons for the fee
award.”); Biery v. United States, 818 F.3d 704, 710 (Fed.
Cir. 2016) (same); Wagner v. Shinseki, 640 F.3d 1255, 1261
(Fed. Cir. 2011) (same); Libas, Ltd. v. United States, 314
F.3d 1362, 1364 (Fed. Cir. 2003) (reversing denial of fee
award where trial court did not “sufficiently explain its ba-
sis for denying the EAJA petition for attorneys’ fees and
expenses”; holding that trial court’s discretion over attor-
ney fee award “is not without limits and the abuse of dis-
cretion standard does not dilute our meaningful
examination of the trial court’s decision”).
    In some instances, the matter may be so clear that the
failure of the adjudicator to provide an explanation for its
action will be harmless error, so that this court can enter
judgment in accordance with the ruling below despite the
absence of an explanation for that ruling. But this is not
such a case. In fact, the circumstances of this case illus-
trate why an explanation of the reasons for a ruling such
as the denial of fees is typically critical to judicial review of
that ruling.
     When the union sought reconsideration of its request
for fees, the EEOC argued to the arbitrator that fees should
be denied for two reasons: (1) because an award of fees was
not warranted in the interest of justice; and (2) because the
parties’ collective bargaining agreement provided that
“fees and expenses shall be borne equally by both parties,”
and that the union’s request for attorney fees “violate[s] the
expressed purpose of the Arbitration clause contained in
the parties’ contract.”
12                                  AFGE LOCAL 3599 v. EEOC

    The EEOC did not defend that second ground for deny-
ing fees in its brief, and at oral argument the EEOC dis-
claimed the argument, and properly so. The contract
provision to which the EEOC referred in its opposition to
the union’s motion for reconsideration provides that “[t]he
Arbitrator’s fees and expenses shall be borne equally by the
Parties.” That provision does not provide for each party to
be responsible for its own attorney fees, as the EEOC ar-
gued to the arbitrator. While that argument is plainly in-
valid, the arbitrator’s failure to provide a reason for his
decision denying fees leaves us with no assurance that the
arbitrator rejected that argument. Because the EEOC in-
vited the arbitrator to deny fees on that ground, the agency
is not well situated to argue that the arbitrator must have
denied fees based on a valid ground, rather than on the in-
valid ground that the agency itself proposed.
    Accordingly, we vacate the arbitrator’s award as to the
fees issue and remand for the arbitrator to reconsider the
issue of fees and to include a statement of reasons for what-
ever decision the arbitrator reaches on that issue.
     Costs to the petitioner.
              VACATED AND REMANDED