Court Opinion

ID: 9493310
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:04:34.535055+00
Date Added: 2024-06-11T17:55:46.486873
License: Public Domain

RADER, Circuit Judge,
concurring-in-part, and dissenting-in-part.
This court’s opinion today applies the “reasonable attorney fees” language of the Back Pay Act to achieve an unreasonable result. Or rather, this court does not in reality apply the “reasonable attorney fees related to the personnel action” language of the Back Pay Act, which requires a far different result. Relying on the Civil Rights Act instead of the different standards set by the Back Pay Act, this court permits a not-for-profit union to collect attorney fees at prevailing market rates charged by profit-making private attorneys, although the actual cost of the legal services was substantially less than the amount recovered.
Because ethical rules do not bar the recovery of fees, I concur in part. However, I must respectfully dissent in part because the Back Pay Act does not allow this court to award fees to non-profit legal organizations at the rates for profit-making private law firms.
*940I.
Without cause, the United States Bureau of Prisons placed Larry Raney on home duty. He challenged the disciplinary action in an arbitration proceeding under his union’s collective bargaining agreement with the Bureau. The arbitrator’s original decision ordered reinstatement of Mr. Raney with back pay, but denied his request for attorney fees and overtime pay. On Mr. Raney’s motion to reconsider the denials of attorney fees and overtime pay, the arbitrator rendered a supplemental decision. That decision reviewed the statutory basis for awarding attorney fees under the Back Pay Act, see 5 U.S.C. §§ 5596(b)(1)(A)(ii) and 7701(g) (1994), and awarded Mr. Raney attorney fees based on the American Federation of Government Employees’ cost of providing representation to Mr. Raney. The arbitrator also reviewed Mr. Raney’s request for overtime pay and again declined that request. This court now reviews those decisions en banc.
II.
In the first place, the Government contends that payment of “reasonable attorney fees” raises ethical concerns. This court correctly dismisses that contention. After all, the Back Pay Act expressly authorizes payment of an attorney fee to an eligible prevailing party. Because unions and other non-profit legal organizations qualify for fee-shifting, the Act itself has answered any ethical concerns. As this court correctly reasons, with the payment of the first dollar to a non-profit entity, the ethical obstacle to further payments vanish. Theoretical ethical concerns do not multiply with the amount of a payment but instead would vest with the payment of a single dollar. Because the Back Pay Act permits payments to non-profit entities, see 5 U.S.C. 5596(b)(l)(A)(ii), the Act itself acknowledges no ethical obstacle to a nonprofit entity at a total cost to that entity substantially lower than market rates for profit-making private attorneys qualifying for fees. This court correctly disposed of the Government’s ethical argument.
III.
Disposing of the ethical argument, however, does not answer the fundamental question in this case: what is a “reasonable attorney fee related to the personnel action ... in accordance with the standards established under 7701(g)” when the service provider works for a non-profit entity? The Back Pay Act authorizes a “reasonable attorney fee related to the personnel action ... in accordance with the standards [of] 7701(g).” 5 U.S.C. § 5596(b). This court does not directly address that language or its implications, but instead concludes by reference to Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984), that 42 U.S.C. § 1988 governs the meaning of the different language in the Back Pay Act. By expressly tying the words “reasonable attorney fee” to the qualifying phrases “related to the personnel action” and “in accordance with ... 7701(g),” the Back Pay Act envisions a different fee-shifting scheme than the Supreme Court addressed in Blum under the Civil Rights Act.
The Back Pay Act expressly ties “reasonable attorney fees related to personnel action[s]” to the “standards ... under 7701(g).” Section 7701(g), in turn, authorizes the adjudicator of the employee’s case to “require payment by the agency involved of reasonable attorney fees incurred by an employee or applicant.” 5 U.S.C. § 7701(g)(1) (emphasis added). This language means what it says. The Act specifies that the fees awarded must be the fees actually incurred by the employee, the fees actually billed rather than some speculative or punitive award.9 *941Thus, for instance, if Mr. Raney had settled his claim quickly instead of arbitrating over a period of years, he could only recover for the amount of time his attorneys actually spent on his case. Similarly, if Mr. Raney had retained a junior solo practitioner who charged him fifty dollars per hour, he could not claim an award of attorney fees of five hundred dollars per hour that might have been charged by a senior partner in a private law firm. Thus, Mr. Raney, under the standards of § 7701(g), which bind this case, cannot receive an award commensurate with the amount charged by attorneys in private practice unless his union lawyers caused him to incur that liability. To find otherwise ignores the reality of the markets for legal services and reads the word “incurred” out of the governing statute.
The standards of § 7701(g) have still more to say about the meaning of “reasonable attorney fees related to ... personnel actionfs]” under the Back Pay Act. The second paragraph of § 7701(g) highlights this court’s error in relying on the Civil Rights Act and Blum to support its result. That second paragraph requires courts to use the standards set forth in the Civil Rights Act to compute attorney fees when a Back Pay Act “decision is based on a finding of discrimination.” 5 U.S.C. § 7701(g)(2). Thus, § 7701(g) sets forth two separate rules to govern the computation of attorney fees — one for cases involving illegal discrimination, and another for all other personnel cases.
Mr. Raney’s case does not involve illegal discrimination. Therefore, it is not governed by the second paragraph of § 7701(g) and the standards of the Civil Rights Act. Inexplicably, this court ignores § 7701(g) and applies the Civil Rights Act and Blum (a Civil Rights Act case) to Mr. Raney’s case. Without reference to § 7701(g), this court stretches the Blum approach and Civil Rights Act standards to govern attorney fees in Back Pay Act cases, thus nullifying § 7701(g)(2) and frustrating the Act’s instruction to apply a different standard- — -that prescribed in the Civil Rights Act — only for Back Pay Act-cases involving illegal discrimination cases.
The majority reads Blum to provide “crystal clear” instructions entitling nonprofit legal services organizations to the rates charged by private law firms. However, for some of the reasons mentioned above, this court has previously explained that Blum “is inapposite.” See Goodrich v. Department of Navy, 733 F.2d 1578, 1580 (Fed.Cir.1984). In Goodrich, this court distinguished Blum on the ground that a union is different from the nonprofit law office at issue in Blum, and because Blum interpreted a different statutory scheme with entirely different underpinnings. The Goodrich court explained:
A major reason for awarding attorney's fees in [civil rights] cases is to encourage and facilitate the bringing of suit[s] to protect and vindicate those rights. Cf. Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968). There is a no comparable public policy to encourage the bringing of suit by federal employees challenging adverse personnel actions against them.
Goodrich 733 F.2d at 1580-81.
As § 7701(g) makes abundantly clear, the Goodrich court got it right. The Supreme Court’s instructions in Blum are inapplicable to Mr. Raney’s case. The very first sentence of Justice Powell’s opinión in Blum explains that “[t]itle 42 U.S.C. § 1988 provides that in federal civil rights actions ‘the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney’s fee as part of the costs.’ ” Blum, 465 U.S. at 888, 104 S.Ct. 1541 (emphasis added). Thus, the Supreme Court may have announced a crystal clear rule in relation to federal civil rights actions, but said nothing of stretching their jurisprudence to apply to all attorney fee statutes, partie-*942ularly those with distinctly different statutory language. In particular, 42 U.S.C. § 1988 contains no mention of the “incurred by an employee” language in the Back Pay Act.
The Supreme Court’s analysis in Blum also relies heavily upon the legislative history of § 1988. The legislative history of the Civil Rights Act simply cannot reach to embrace interpretation of the Back Pay Act, except as expressly incorporated by § 7701(g)(2). The Supreme Court has repeatedly clarified that civil rights cases require higher levels of legal scrutiny because of the important and compelling interests concerned. Perhaps to prevent devaluation of civil rights currency by overuse, the Back Pay Act expressly specified a different standard.
The legislative history excerpted in footnote 7 of Blum also relies on four cases, all involving attorneys in private practice and not those employed by a union. The cited legislative history analyzes those four cases and notes that they “do not produce windfalls to attorneys.” Blum, 465 U.S. at 893 n. 7, 104 S.Ct. 1541. Thus, the senators that authored the legislative history indicated that the market-based fees approach does not produce windfalls when applied to private practice attorneys — hardly a surprising conclusion. However, that legislative history also indicates that those senators sought to prevent windfalls in fee awards.
IV.
Before today’s result, this court interpreted “reasonable attorney fees” in the context of the Back Pay Act to mean fully loaded costs of providing the representation when computing attorney fee awards for services supplied by unions. This standard reflects more accurately the statutory standard for “reasonable attorney fees related to personnel actions” governed by the Back Pay Act. Although the Supreme Court in Blum rejected the argument for cost-based fees in the context of the Civil Rights Act, the Back Pay Act’s different language and standards support the wisdom of this court’s established practice of using market principles to shift fees.
Without belaboring the economics, it is clear that costs and fees of a non-profit union legal office differ drastically from the costs and fees of a profit-making private law firm in terms of fixed costs, variable costs, and profit. For example, union law practices do not have the same client expectations for office space and equipment, do not compete for the same pool of entering attorneys at the same pay rates, do not impose the same billing requirements on new attorneys, and do not bill their clients with the same profit making agenda. Thus, the employee in a personnel action “incurs” a different liability than a client negotiating to hire the services of a “blue chip” law firm. A reasonable attorney fee related to a personnel action incurred by the employee who uses union attorneys is thus very different from the prevailing market rate fee at private law firms. This court’s analysis does not convince otherwise. The purpose of the Back Pay Act’s fee-shifting statute is to make an aggrieved federal employee whole, not to require the federal employer to pay a larger amount than what was actually incurred, even assuming that the larger amounts are used to subsidize other legal activities rather than for general union purposes.
In sum, I agree with the majority’s well reasoned approach to the ethical issues asserted by the Government. However, because I believe that this court’s rule in Goodrich remains justified by the language of the Back Pay Act, I would affirm.

. Obviously the strictest reading of the "incurred” language of the statute would preclude any attorney fee award for the union because Mr. Raney "incurred” no actual attorney fees. However, to reach the majority's conclusion reads "incurred” out of the statute entirely. Therefore, I conclude that "in*941curred” must be taken to mean incurred by, or on behalf of, an employee.