[Date: November 29, 1995]
Case Nos. 87-ERA-6
87-ERA-40
In the Matter of:
JOHN C. REX,
Complainant
v.
EBASCO SERVICES, INC.
Respondent,
and
THE SOLICITOR OF LABOR
on behalf of
THE ADMINISTRATOR, WAGE & HOUR DIVISION, EMPLOYMENT STANDARDS
ADMINISTRATION
Party in Interest
RECOMMENDED DECISION AND ORDER DENYING ATTORNEY FEES
The matter is before me on an application by the
complainant's attorneys, Billie Pirner Garde and Robert Guild
("the Attorneys"), for an award of fees under the Equal Access to
Justice Act ("EAJA"), 5 U.S.C. § 504 and 29 C.F.R.
§§ 16.101-16.308. The Attorneys request compensation
for the services of their attorneys, Mona Lyons and Peter Butch-
er, in representing them in connection with a disciplinary
proceeding arising from this case. The Solicitor of Labor ("the
Solicitor") opposes the application. As discussed below, I find
that the Attorneys are not eligible for fees under the EAJA, and
recommend that the application be denied.
I. Procedural History
On March 4, 1994, the Secretary of Labor ("the Secretary")
issued an order dismissing the complaint on the merits in this
case. The Secretary also directed the Chief Administrative Law
Judge ("ALJ") to notify all Department of Labor ALJs that the
[PAGE 2]
presiding ALJ in the case, Judge Robert L. Ramsey, had recommend-
ed that sanctions be imposed against the Attorneys and that, in
any case in which the Attorneys appeared in the future, the ALJ
had the discretion, after notice and opportunity for hearing, to
take the action authorized by 29 C.F.R. § 18.34(g)(3), i.e.
denial of authority to appear.
The Attorneys filed a motion for clarification with the
Secretary on April 6, 1994, Chief ALJ Nahum Litt submitted a
memorandum on April 18, 1994, and the Secretary permitted the
filing of additional memoranda by the Attorneys and the Wage Hour
Administrator. In his memorandum, Judge Litt pointed out that 29
C.F.R. § 18.34(g)(3) does not provide for a single deter-
minative hearing on attorney misconduct, but requires the issue
to be addressed each time an attorney enters an appearance, and
that this procedure could result in numerous hearings on the same
issue with potentially inconsistent results. Judge Litt recom-
mended that the matter be reopened and remanded to OALJ to
appoint an ALJ to conduct a single hearing.
On October 3, 1994, the Secretary issued a supplemental
order. In that Order, the Secretary agreed that it would be
unfair and administratively burdensome to require a hearing to
determine the fitness of the Attorneys to practice each time they
entered an appearance. The Secretary therefore referred the
matter to the Chief ALJ to hold a hearing and make a recommenda-
tion on whether sanctions should be imposed for the Attorneys'
alleged misconduct. The Secretary's final decision would then be
binding in all cases in which the Attorneys appeared as represen-
tatives of a party. The Secretary ordered the Solicitor, repre-
senting the Wage Hour Administrator as the Department of Labor
official delegated responsibility for administration of 29 C.F.R.
Part 24, to present the case for imposition of sanctions and to
prove any allegations by a preponderance of the evidence. The
Secretary also authorized the Solicitor to enter into a settle-
ment of the matter, subject to approval by the Secretary. Rex
v. Ebasco Services, Inc., Nos. 87-ERA-6, 40 (Sec'y October 3,
1994).
The matter was assigned to the undersigned, the parties were
notified, and a proposed prehearing schedule was issued by Order
of November 7, 1994. On May 11, 1995, the Solicitor and the
Attorneys entered into a settlement agreement, which, based on
the undersigned's review and recommendation for approval, was ap-
proved by the Secretary on July 11, 1995. The Secretary then
dismissed the proceeding with prejudice pursuant to the settle-
ment agreement.
[PAGE 3]
On August 9, 1995, the Attorneys, by their counsel Mona
Lyons and Peter Butcher, filed a timely and properly documented
application ("App.") for attorneys' fees and costs pursuant to
the Equal Access to Justice Act ("EAJA"), 5 U.S.C. § 504 and
29 C.F.R. §§ 16.101 - 16.308, the Department of Labor's
implementing regulations. Lyons requested compensation for
representing the Attorneys in the disciplinary proceeding against
them for 115.45 hours of her time between August 11, 1994 and
August 9, 1995, for 122.60 hours of time for Butcher, an associ-
ate under Lyon's supervision, between January 31, 1995 and August
9, 1995, and for costs of $986.97. Lyons states in her affidavit
that her hourly billing rates during the relevant time frame have
ranged from $175 to $250, while Butcher's have ranged from $90 to
$120.
II. Positions of the Parties
The Attorneys argue that the disciplinary proceeding to
which they were parties was an adversary adjudication within the
meaning of the EAJA and the Agency's regulations, and that,
because they received a favorable outcome through a settlement
and dismissal with prejudice, they are prevailing parties for
purposes of their EAJA application. (App. 4-5). They contend
that the Agency's position in the matter was not substantially
justified in fact, because the Solicitor conceded in the settle-
ment that the evidence was insufficient to support Judge Ramsey's
allegations. (App. 9-15). They also argue that there was no
basis in law to conduct such a proceeding, because the Department
of Labor's regulations do not specifically authorize conducting a
single proceeding to determine an attorney's fitness to practice
in all future cases before the Department of Labor. (App. 17-20).
The Attorneys concede that they agreed with the Secretary's
initial determination that reexamination of their qualifications
in every proceeding where they appeared presented the danger of
creating unacceptable administrative burdens, inconsistent
decisions, and unfairness. They also concede that the Agency has
the authority to promulgate regulations to provide for such a
consolidated proceeding, but assert that the lack of such regula-
tions may not be cured by the exercise of such authority in their
particular case, and that they "are now entitled to compensation
for the effort they were obligated to expend in defending against
such an approach." (App. 20).
The Solicitor has filed an opposition to the motion.
("Opp.") He argues that the attorney disciplinary proceeding at
issue here does not constitute an "adversary adjudication" within
the meaning of the EAJA, because it is not governed by the formal
adjudication requirements of the Administrative Procedure Act
[PAGE 4]
(APA), and that, assuming the EAJA applies, the Attorneys do not
qualify as "parties" entitled to an award of fees. The Solicitor
further argues that, because the agency's position was substan-
tially justified, and special circumstances exist which would
make an award unjust, the Attorneys are not entitled to an award
of attorneys' fees and costs. The special circumstances are that
the Attorneys agreed that the consolidated hearing was preferable
to the likely alternative, i.e. a fitness hearing in each and
every matter in which they entered an appearance. The Solicitor
also argues that the fees sought are excessive. (Opp. 7. n. 1,
10-18, 23; letter October 23, 1995).
In their reply to the Solicitor's Opposition ("Reply"), the
Attorneys argue that the disciplinary proceedings against them
must be adversary adjudications under section 554 of the APA,
because the Energy Reorganization Act of 1974 ("ERA"), 42 U.S.C.
§ 5851(b)(2)(A), which governs the case in which these pro-
ceedings were brought, Rex v. Ebasco Services, requires
such adjudications. (Reply 1-3). They further contend that they
have been admitted as parties to this proceeding and have been
treated as such. (Reply 3). They argue that, because attorney
disciplinary proceedings, especially those threatening the right
to practice, implicate constitutional due process rights and
entitle respondents in such proceedings to adequate notice and a
hearing on the charges, § 554 of the APA must apply. (Reply
4).
III. Applicable statutory and regulatory
provisions5 U.S.C. § 504. Costs and fees of parties
(a) An agency that conducts an adversary adjudi-
cation shall award, to a prevailing party other than
the United States, fees and other expenses incurred by
that party in connection with the proceeding, unless
the adjudicative officer of the agency finds that the
position of the agency was substantially justified or
that special circumstances make an award unjust. ...
(b)(1) For the purposes of this section --
(C) "adversary adjudication" means (i)
an adjudication under section 554 of [Title
5] in which the position of the United States
is represented by counsel or otherwise ...
5 U.S.C. § 554. Adjudication
(a) This section applies ... in every case of
[PAGE 5]
adjudication required by statute to be
determined on the record after an opportunity
for an agency hearing ...
29 C.F.R. Part 16 -- Equal Access to Justice Act
§ 16.102 Definitions
As used in this part:
(b) Adversary adjudication means an adjudication
under 5 U.S.C. 554 or other proceeding required by
statute to be determined on the record after an oppor-
tunity for an agency hearing ...
§ 16.105 Eligibility of Applicants
(a) To be eligible for an award of attorney fees
and other expenses under the Act, the applicant must be
a party ... to an adversary adjudication for which it
seeks an award ... .
29 C.F.R. Part 18 -- Rules of Practice and Procedure for
Administrative Hearings Before the Office of Administrative Law
Judges
§ 18.34 Representation
(g) Qualifications-(1) Attorneys. An attorney at
law who is admitted to practice before the Federal
courts or before the highest court of any State, the
District of Columbia, or any territory or commonwealth
of the United States, may practice before the Office of
Administrative Law Judges. ...
(3) Denial of authority to appear. The adminis-
trative law judge may deny the privilege of appearing
to any person, within applicable statutory constraints,
e.g. 5 U.S.C. 555, who he or she finds after notice of
and opportunity for hearing in the matter does not
possess the requisite qualifications to represent
others; or is lacking in character or integrity; has
engaged in unethical or improper professional conduct;
or has engaged in an act involving moral turpitude. ...
§ 18.36 Standards of Conduct
(a) All persons appearing in proceedings before
an administrative law judge are expected to act with
integrity and in an ethical manner.
(b) The administrative law judge may exclude
[PAGE 6]
parties, participants, and their representatives
for refusal to comply with directions, continued
use of dilatory tactics, refusal to adhere to
reasonable standards of orderly and ethical con-
duct, failure to act in good faith, or violation
of the prohibition against ex parte communica-
tions. The administrative law judge shall state
in the record the cause for suspending or barring
an attorney or other representative from partici-
pation in a particular proceeding. Any attorney
or other representative so suspended or barred may
appeal to the Chief Judge but no proceeding shall
be delayed or suspended pending disposition of the
appeal ... .
IV. Discussion
The Attorneys seek compensation under the EAJA from the
Department of Labor for defending disciplinary proceedings which
implicate their privilege to practice before its chief adminis-
trative tribunal, the Office of Administrative Law Judges. They
appropriately liken these proceedings to disciplinary proceedings
before Article III courts. (App. 17). The Attorneys have, howev-
er, cited no precedent for an award of attorney fees under
any circumstances to an attorney who successfully resists
disciplinary proceedings before the courts. They have also cited
no precedent for an award under the EAJA to an attorney who
successfully resists disciplinary proceedings before an adminis-
trative agency, despite the fact that the EAJA has been in effect
for fifteen years, and that federal administrative agencies have
long had "the authority to disbar or discipline attorneys for
unprofessional conduct." Koden v. United States Department of
Justice, 564 F.2d 228, 233 (7th Cir. 1977).
Prior to the enactment of the EAJA in 1980, awards of
attorney fees against the United States were barred by both the
"American Rule," and the doctrine of sovereign immunity. Under
the American Rule, the prevailing litigant is ordinarily not
entitled to collect an attorneys' fee from the loser. Alyeska
Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247
(1975). Under the doctrine of sovereign immunity, the United
States may not be sued, nor its funds expended, without its
consent. United States v. Chemical Foundation, Inc., 272
U.S. 1, 20 (1926). Because the EAJA is a partial waiver of
sovereign immunity, it must be strictly construed in favor of the
United States. Ardestani v. Immigration and Naturalization
Service, 502 U.S. 129, 137 (1991). Waivers of sovereign
immunity must be "unequivocal." United States Department of
Energy v. Ohio, 503 U.S. 607, 615 (1992). I find no such
unequivocal waiver here, because the disciplinary proceeding at
issue is not an adversary adjudi
[PAGE 7]
cation within the meaning of the Act.
A covered adversary adjudication is one which, under the
APA, "is required by statute to be determined on the record after
opportunity for an agency hearing ..." 5 U.S.C. § 554. As
the Attorneys point out, the ERA does contain such a statutory
mandate, 42 U.S.C. § 5851 (b)(2)(A). It is evident from the
plain language of the ERA, however, that this mandate applies
only to the merits and involves only the actual parties to this
case, John Rex and Ebasco Services; it does not apply to the
derivative disciplinary proceeding here to which the Attorneys
became parties.
The Attorneys have pointed to no specific statute that re-
quires disciplinary proceedings against attorneys appearing
before OALJ to be determined on the record after an opportunity
for an agency hearing. While OALJ's rules of practice require an
ALJ to give notice and an opportunity to be heard before denying
an attorney the privilege of appearing (29 C.F.R. § 18.34 (-
g)(3)), the statute which authorizes these regulations, 5 U.S.C.
§ 301, contains no such mandate.
In Ardestani, the Supreme Court held that admin-
istrative deportation proceedings do not qualify as adversary
adjudications under EAJA because the Immigration and Naturaliza-
tion Act expressly supersedes the hearing provisions of the APA
under Section 554. The Court noted that "the EAJA's unqualified
reference to a specific statutory provision mandating specific
procedural protections is more than a general indication of the
types of proceedings that the EAJA was intended to cover."
Id. at 134. The Court also held that an agency's choice,
as here, to provide procedures similar to those required under
the APA by regulation, does not subject those proceedings to
EAJA. Id.(immaterial to EAJA coverage that Attorney
General in 1983 promulgated regulations to conform deportation
hearings more closely to the procedures required for formal
adjudications under the APA); See alsoSmedberg
Machine & Tool, Inc. v. Donovan, 730 F.2d 1089, 1092-1093
(7th Cir. 1984)(no EAJA coverage where Department of Labor
regulation permitting hearings before Administrative Law Judges
to review labor certification decisions is not statutorily
mandated). As the D.C. Circuit has observed, Section 554 applies
only "when a statute commands a hearing 'on the record.'"
Dart v. United States, 961 F.2d 284, 286 (D.C. Cir. 1992).
The Attorneys argue that, because they have a constitutional
right to procedural due process of law in any disciplinary
hearing, Section 554 of the APA must apply, because the Constitu
[PAGE 8]
tion is "more than a statutory [command]." Wong Yang Sung v.
McGrath, 339 U.S. 33, 50 (1950). Although they concede that
the specific holding of McGrath was overruled in
Marcello v. Bonds, 349 U.S. 302 (1955), they argue that
this principle, that Section 554 also applies to certain hearings
required by the Constitution, "remains viable today." (Reply 4).
The case they cite for this proposition is Leitman v.
McAusland, 934 F.2d 46, 49 (4th Cir. 1991). In
Leitman, the appellants appealed a District Court decision
affirming their administrative debarment from further purchases
of federal government surplus and foreign excess personal proper-
ty. Appellants argued that the hearing officer violated the APA
by acting as both prosecutor and debarring official. In affirm-
ing the lower court's decision, the 4th Circuit expressly avoided
the issue of whether an adjudication on the record complying with
5 U.S.C. § 554 is constitutionally mandated by assuming,
without deciding, that the statute applied. Id. at 49.
Because the Court did not decide the issue, the reference in
Leitman to the McGrath case is, at best,
dicta.
The 7th Circuit's decision in Smedberg is more
persuasive. In contrast to Leitman, that case was brought
under the EAJA. As here, the Plaintiffs argued that the labor
certification review proceedings were compelled by the due
process clause of the Fifth Amendment even if not by statute, and
that the "adjudication under Section 554" clause of Section
504(b) should be interpreted to include constitutionally required
proceedings. The Court rejected this argument on the grounds
that, because the EAJA is a waiver of the sovereign's traditional
immunity from claims for attorney fees, Section 504 must be
construed strictly in favor of the United States and could not
accommodate the plaintiffs' request for an expansion of the
meaning of "adjudication."
The cases cited by the Attorneys establish a procedural due
process right in attorney disciplinary proceedings to notice of
the charges and an opportunity to be heard; they do not establish
a requirement for an APA on-the-record adjudication. SeeIn re: Ruffalo, 390 U.S. 550 (1968); Matter of
Thalheim, 853 F.2d 383, 388 (5th Cir. 1988); Charlton v.
FTC, 543 F.2d 903 (D.C. Cir. 1976). In this connection, the
Attorneys' argument that this proceeding violated their due
process rights because it took a form not expressly authorized by
the Department's applicable regulations at 29 C.F.R. Part 18
(Opp. 17-20) must also be rejected. The Attorneys have a consti-
tutional right to notice and an opportunity to be heard in a
disciplinary proceeding, but they have cited no authority for a
constitutional right to a
[PAGE 9]
particular format for such a proceeding.
Matter of Thalheim, 853 F.2d 383 (5th Cir. 1988), cited
by the Attorneys, is not persuasive in this regard. In that
case, the Fifth Circuit reversed an attorney debarment because
the district court below had not followed the applicable disci-
plinary rules, stating that "[a] court cannot ignore and circum-
vent its rules at will to the detriment of those covered by
them." Id. at 390. Here, in contrast, there has been no
showing of detriment to the Attorneys; they participated in a
hearing procedure to which they had consented, were not debarred,
and the proceedings against them were dismissed.
On the contrary, the Attorneys agreed that the Secretary's
initial determination on March 4, 1994 to reexamine their quali-
fications in every proceeding where they appeared, as specifical-
ly authorized by 29 C.F.R. § 18.34, presented the danger of
creating unacceptable administrative burdens, inconsistent
decisions and unfairness. (App. 19). As discussed, it was this
concern for possible unfairness to the Attorneys which led to the
Secretary's October 3, 1994 Order to hold a consolidated disci-
plinary proceeding. The Attorneys failed to object to that
Order, or to present any objection to the consolidated proceeding
to the undersigned ALJ appointed to preside over the matter, or
to request the Secretary to reconsider his Order of July 11, 1995
approving the ALJ'S recommendation to approve the settlement
dismissing the allegedly unconstitutional proceeding against
them. Accordingly, I find that they consented to the consolidat-
ed proceeding ordered by the Secretary and cannot now be heard to
complain of any unfairness based on a procedure which, far from
resulting in any detriment, resulted, as they themselves agree,
in a favorable outcome. (App. 51).
CONCLUSION
The disciplinary proceeding against the Attorneys in this
case is not an adversary adjudication within the meaning of the
EAJA. Accordingly, the doctrine of sovereign immunity bars
attorney fees against the Department of Labor.
RECOMMENDED ORDER
IT IS HEREBY ORDERED THAT the Attorneys' application for
fees under the EAJA is DENIED.
EDITH BARNETT
Administrative Law Judge
[PAGE 10]
DATED: November 29, 1995
Washington, D.C.
EB/BLS:bdw
7560
NOTICE OF REVIEW
NOTICE: This Recommended Decision and Order and the admin-
istrative file in this matter will be forwarded for review by the
Secretary of Labor to the Office of Administrative Appeals, U.S.
Department of Labor, Room S-4309, Frances Perkins Building, 200
Constitution Ave., N.W., Washington, D.C. 20210. The Office of
Administrative Appeals has the responsibility to advise and
assist the Secretary in the preparation and issuance of final
decisions. See 55 Fed. Reg. 13250
(1990).
