PAT'S JANITORIAL SERVICE, INC., 1981-SCA-1308 (Dep. Sec'y July 7, 1988)
CCASE:
PAT'S JANITORIAL & M.Y. PATTERSON & R. McGEE
DDATE:
19880707
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: July 7, 1988
CASE NO. 81-SCA-1308
IN THE MATTER OF
PAT'S JANITORIAL SERVICE, INC.,
M.Y. PATTERSON, INDIVIDUALLY, AND
RAYMOND McGEE, INDIVIDUALLY,
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. [sec] 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
November 10, 1980, alleging violations of the SCA by the
Respondents in the performance of a service contract with the
United States Government. The alleged violations arose under
contracts with the Small Business Administration pursuant to
section 8(a) of the Small Business Act, 15 U.S.C. [sec] 637(a)
(1982), to provide janitorial services to Fort Hood Army Base
(contracts, No. DAKF 48-77-C-0011 and No. DAKF 48-78-C-0096).
After a hearing on August 25, 1982, this complaint was
dismissed by the Administrative Law Judge (ALJ) in a Decision and
Order issued February 28, 1983. That order was not appealed, but
Respondents thereafter filed an application for [1]
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[2] attorney's fees and expenses pursuant to the Equal Access
to Justice Act (EAJA), 5 U.S.C. [sec] 554, and 28 U.S.C. [sec]
2412 (1982). In a Recommended Supplemental Decision and Order,
issued January 20, 1984, (corrected by the ALJ's order of January 27,
1984, to read Recommended Decision (R.D.)) the ALJ found in favor of
Respondents application in the amount of $15,896.36. The Government
filed exceptions to the Recommended Decision and the case now is
properly before me /FN1/ for decision pursuant to 29 C.F.R. [sec]
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 [*][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] [*] 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 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 or otherwise:
A study of the Act and its legislative history
compels the conclusion that proceedings under the Service
Contract Act are covered. As the legislative history
shows the Congress specifically intended to change the
existing law regarding attorney's fees by establishing a
general statutory exception for an award of fees against
the government, amending 28 U.S.C. [sec] 2412 to that
end. Under this exception certain parties who prevail in
adversary adjudications or civil actions brought by or
against the United States will be entitled to attorney
fees and related expenses ...". [sic] The intent to
cover administrative proceedings to the extent that they
are adversarial proceedings (in which the United States
is represented) is clear from the legislative history,
the Act and applicable regulations. The purpose of the
adversary proceeding herein was not the establishment or
fixing of a rate.
* * * *
While, "in legislation, or rule making, there is no
constitutional right to any hearing whatsoever", where
agency adjudication is at issue, the procedural safeguard
developed in the administration of justice by courts must
be observed: "It is [3]
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[4] elementary also in our system of law that adjudicatory
action cannot be validly taken by any tribunal, whether
judicial or administrative, except upon a hearing. . . .
This is a requirement of the due process clause." It is
abundantly clear that notice and the opportunity to be
heard as provided under the Service Contract Act and by
regulations promulgated by the Secretary are not matters of
discretion but are fundamental due process rights.
I find that the Act applies to this and like
adversary proceedings under the Service Contract Act.
R.D. at 3-4 (footnotes omitted). /FN2/
The Government raises a number of exceptions to the ALJ's
Recommended Supplemental Decision and Order. First, the Service
Contract Act proceeding is not within the EAJA definition of
"adversary adjudication" and therefore the EAJA does not apply to
SCA proceedings. Second, even if EAJA applies to SCA proceedings,
the Government's position in this case was "substantially
justified" and therefore no EAJA fees should be awarded. Third, if
the EAJA is applicable, it should not be applied to fees or
expenses incurred before the effective date of the Act, i.e.,
October 1, 1981, and if retroactive application is permitted, the
EAJA should not be applied to fees incurred prior to the issuance
of a formal [4]
/FN2/ The ALJ's analysis of the applicability of EAJA to SCA cases,
R.D. at 3-4, fails to give any consideration to the Departments's
implementing regulations 29 C.F.R. Part 16, and analysis of EAJA as
set forth in the preamble. 46 Fed. Reg. 63,020. By ignoring the
regulations, the ALJ, in effect, has rejected them. This the ALJ
may not do. See Office of Federal Contract Compliance Programs v.
Western Electric Co., 80-OFCCP-29, Remand Decision and Order of the
Deputy Under Secretary for Employment Standards, slip op. at
13-14.[4]
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[5] complaint by the Government. Fourth, the fees sought by
Respondents are excessive.
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 Department. /FN[3]/ 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[4]/ [5]
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[6] /FN[3]/ 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.
[6] /FN[4]/ Cf. Smedberg 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. [END FN4]
[6] Id. at 1092.
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
proceedings that are covered in 29 C.F.R. [sec] 16.104(a). The
list does not include proceedings under the SCA. This is a [6]
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[7] 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[5]/ 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 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 [7]
/FN[5]/ 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. [7]
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[8] 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., 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[6]/
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D. C. [8]
/FN[6]/ It is therefore unnecessary to consider the other
exceptions raised by the Government. [8]
