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<![CDATA[
CCASE:
AIRLINE INSTRUMENTS INC.
DDATE:
19880801
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: August 1, 1988
CASE NO. SCA-1341
IN THE MATTER OF
AIRLINE INSTRUMENTS, INC.,
A CORPORATION AND DALE IRELAND,
AN INDIVIDUAL,
RESPONDENTS.
BEFORE: THE DEPUTY SECRETARY OF LABOR
DECISION OF THE DEPUTY SECRETARY
Pursuant to the McNamara-O'Hara Service Contract Act of 1965
(SCA or the Act), as amended, 41 U.S.C. [secs] 351-358 (1982), and
the rules and regulations thereunder, 29 C.F.R. Parts 4, 6 and 8
(1987), this matter was commenced by the filing of a complaint on
February 13, 1981, alleging violations of the SCA by the
Respondents in the performance of a service contract with the
United States Government. The alleged violation arose under
Defense Contract Administration Contract No. F41608-76-D-0155, on
which the Respondents performed repair and overhaul of aerospace
equipment.
The Administrative Law Judge (ALJ) issued a notice on December
29, 1981, stating that a hearing was set for February 24, 1982. In
early 1982, both parties filed motions to dismiss, and on February
10, 1982, prior to the February 24 hearing date, the ALJ granted
the Government's motion and dismissed the case. The Respondents
then submitted an application for attorneys' fees under the Equal
Access to Justice [1]
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[2] Act, 5 U.S.C. [sec] 504 and 28 U.S.C. [sec] 2412 (1982). Over
the Government's opposition, the ALJ, on April 6, 1983, awarded
Respondents $1,170.00 in attorney's fees. Decision and Order --
Awarding Attorney's Fees (D. and O.) at 6. The Government excepted
and the matter now is properly before me /FN1/ for decision
pursuant to 29 C.F.R. [secs] 16.305, 16.306.
The initial question raised by the case is whether hearings
under the SCA are covered by the EAJA. In the preamble
accompanying the promulgation of rules to implement the EAJA, which
was effective October 13, 1981, the Department stated:
The [EAJA] applies to hearings under section 554 of the
Administrative Procedure Act, that is adjudications [*]
required by statute [*] to be determined on the record
after opportunity for an agency hearing.... The
hearings which the Department of Labor considers to be
covered by the [EAJA] are those required by statute and
in which the Department appears as an adversarial party.
* * * *
The legislative history of the [EAJA] indicates that [it]
[*] excludes from coverage those hearings which are not
required by an underlying statute [*]. Accordingly,
these rules exclude from coverage those proceedings which
are established by regulation but are not required by the
governing statute. The Department [2]
/FN1/ The Deputy Secretary has been designated by the Secretary to
perform the functions of the Board of Service Contract Appeals
pending the appointment of a duly constituted Board. 29 C.F.R.
[sec] 8.0 (1987); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [2]
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[3] conducts hearings under several programs implementing
statutes which do not require hearings [*] under section
554 of the Administrative Procedure Act. The [*]
statutes include ... Service Contract Act [*]....
46 Fed. Reg. 63,020 (1981) [*](emphasis supplied)[*].
Respondents argue that this construction of EAJA is erroneous
and the ALJ agrees. The ALJ takes the position that not only are
proceedings under 5 U.S.C. [sec] 554 covered by EAJA, but also
covered is any proceeding in which the agency position is
represented by counsel:
To suggest that the government may at its discretion hold
a hearing when it has accused a party of violating the
Service Contract Act and has taken action against them
(eg. withholding funds under the contract) obstructs due
process. The legislative history of the Service Contract
Act identifies this problem and states that the
provisions of sections 4 and 5 of the Walsh-Healey Public
Contracts Act is applicable, entitling contractors to
notice, hearing, and other procedures when contractors
are listed for violations of the Act it is recommended
that no further contracts of the United States Government
be awarded. For the reasons stated I find the Service
Contract Act within the coverage of the Equal Access to
Justice Act for awards of attorney's fees.
D. and O. at 3, Footnote omitted.
In its exceptions the Government argues that the Service
Contract Act does not require the Government to hold hearings to
determine the propriety of its act of withholding wages for alleged
violations of the Act and, therefore, that Service Contract Act
hearings are not the type in which awards of attorney's fees are
authorized. The Government also argues [3]
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[4] that, because the Department of Labor has issued regulations
interpreting the Equal Access to Justice Act, its administrative
law judges lack authority to do anything other than acquiesce in
those regulations. Finally, the Government argues that if it is
found that EAJA applies, its position was substantially justified
and thus no attorney's fees should be awarded.
The Government's position that the Service Contract Act is not
within the EAJA definition of adversary proceeding is well taken.
See In the Matter of Verticare, etc., 82-SCA-44, Final Decision of
the Deputy Secretary issued June 7, 1988, Errata issued June 28,
1988, (copies appended). As discussed in the Verticare decision:
EAJA provides for payments of attorney's fees and
expenses to the prevailing party in litigation against
the United States in an adversary adjudication, defined
as any "adjudication under Section 554 of this title in
which the position of the United States is represented by
counsel or otherwise...." 5 U.S.C. [sec] 504(b)(1)(C).
Thus it is necessary to consult Section 554 which defines
an adversary adjudication as one "required [*] by statute
[*] to be determined on the record after an opportunity
for an agency hearing...." 5 U.S.C. [sec] 554(a)
[*](emphasis supplied)[*].
The SCA authorizes, but does not require, a hearing on
the record. The SCA incorporates the authority of the
Secretary of Labor granted by the Walsh-Healey Act, 41
U.S.C. [secs] 38 and 39, to make rules and regulations
and to hold hearings, 41 U.S.C. [sec] 353(a), and the
implementing regulations under the SCA authorize the
Secretary "to hold hearings and make such decisions based
upon findings of fact as are deemed necessary to enforce"
the SCA. 29 C.F.R. [sec] 4.189. Nowhere in the
statute, however, are SCA contractors granted any [*]
right [*] to a hearing to protest any determination under
the Act by the [4]
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[5] Department. /FN[2]/ Accordingly, hearings under SCA
cannot be considered to be "required by statute," 5
U.S.C. [sec] 554(a), and EAJA is inapplicable to such
proceedings. /FN[3]/
In the Matter of Verticare etc., slip op. at 6-8 [*](emphasis in
original)[*].
It may be argued that the right to attorney's fees is
authorized by regulation. However, 29 C.F.R. Part 16, the
Department of Labor's rules implementing the EAJA, lists the [5]
/FN2/ The only statutory provision requiring a hearing is section
4(c) of the SCA, 41 U.S.C. [sec] 353(c), which requires that a
contractor comply with its predecessor's collective bargaining
agreement, if any, unless the Secretary finds after a hearing that
the wages and benefits in the agreement are substantially at
variance with those prevailing in the locality.
/FN3/ Cf. Smedberq Machine & Tool. Inc. v. Donovan, 730 F.2d 1089
(1984), where the court considered the applicability of EAJA in the
context of a labor certification statute:
The statutory provision regarding labor certification
does not provide for any administrative review, and
certainly not a hearing review of the Secretary of
Labor's decisions denying or granting the certifications.
See 8 U.S.C. [sec] 1181(a)(14).... Therefore, the EAJA
does not provide for attorneys fee awards to plaintiffs
who prevailed in those proceedings. The fact that the
Department of Labor had chosen to promulgate regulations
which permit hearings in review of certification
decisions ... does not warrant a different result in this
case.
Id. at 1092. [END FN3][5]
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[6] [. . .] list does not include proceedings under the SCA. This
is a procedural rule, 46 Fed. Reg. 63,020, and the right to an
award of attorney fees and expenses is a substantive right, not a
question of procedure. /FN[4]/ See United States v. French Sardine
Co. Inc., 80 F.2d 325, 326 (9th Cir. 1935); Aycrigg v. United
States, 124 F.Supp. 416 (N.D. Cal. 1954).
In Aycrigg, the court stated in a caption that "The Rule of
Strict Construction is Especially Applicable when it is Sought to
Mulct the Sovereign with Costs," and continued:
The above rule of construction is applied with especial
rigor in cases where it is sought to hold the United
States liable for costs.
In United States v. Chemical Foundation, Inc., 1926, 272
U.S. 1, 20, 47 S.Ct. 1, 8, 71 L.Ed. 131 the Supreme Court
used the following language:
'The general rule is that, in the absence of a
statute directly authorizing it, courts will
not give judgment against the United States
for costs or expenses. (Cases cited.) ***.
'Equity Rule 50 [28 U.S.C.A. Appendix] in
general terms provides that stenographers'
fees shall be fixed by the court and taxed as
costs, but it does not [*] specify [*] costs,
or judgment for money against the United
States. The rule does not mention the United
States [*] and does not affect the sovereign
prerogative not to pay costs. Congress alone
has power to waive or qualify that immunity
[*]. But no statute authorizes the giving of
judgment against [6]
/FN[4]/ The current procedural sections of the SCA regulations, 29
C.F.R. [secs] 6.6(a) and 8.19, are explicit in foreclosing the
award of attorneys fees in SCA cases. Those provisions were
promulgated March 21, 1984, 49 Fed. Reg. 10,627, and are not relied
on in this decision. [6]
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[7] the United States for these items or
authorizes the Attorney General or other
counsel in the case to consent to such a
judgment. No such authority is necessary for
the proper conduct of litigation on behalf of
the United States, [*] and there is no ground
for implying that authority [*]. It follows
that the direction for judgment against the
United States for costs cannot be sustained.'
[*](Emphasis Supplied)[*].
124 F. Supp. at 418 (footnote omitted).
Thus, it is clear that the right to attorney's fees and
expenses does not, and cannot, derive from the regulations but must
be clearly authorized by the EAJA. As I have previously held, In
the Matter of Verticare, etc., and In the Matter of Pat's
Janitorial Services, etc., 81-SCA-1308, Decision of the Deputy
Secretary issued July 7, 1988, the Equal Access to Justice Act does
not cover proceedings under the Service Contract Act. Accordingly,
I do not accept the recommendation of the Administrative Law Judge.
Respondents' application for attorneys fees and expenses IS DENIED.
/FN[5]/
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D. C. [7]
/FN[5]/ It is therefore unnecessary to consider the other
exceptions raised by the Government. [7]
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