William T. Arnold v. Department of the Air Force, AT-0752-00-0594-E-2, August 6, 2003.

The Merit Systems Protection Board (MSPB or "Board") holds that, although an appellant may be the prevailing party, he or she is not automatically entitled to attorney's fees under civil service law. The Board is allowed to exercise its discretion to determine whether the requested fees are reasonable.

On July 31, 1998, the agency removed the appellant on the charge of physical inability to perform the duties of his position. The appellant filed a formal complaint of discrimination with the agency, claiming that the removal was based on disability discrimination. In a February 2000 final agency decision (FAD), the agency found that the appellant was a qualified individual with a disability, and that it had not satisfied its burden of reasonable accommodation because it did not consider assigning him to certain vacancies, and did not assess his ability to perform the essential functions of those positions.

To comply with the FAD, the agency conducted a job search to assess whether the appellant could perform the essential duties of positions which were vacant. In April 2000, the agency notified the appellant that it had complied with the February 2000 FAD by conducting a job search which turned up no vacant positions into which he could be placed given his medical restrictions.

In May 2000, the appellant filed an appeal with the Board regarding his removal, alleging disability discrimination. Based on the results of the job search done to comply with the FAD, the agency contended that the appellant was not a qualified individual with a disability because he could not be accommodated. In the October 2000, initial decision, the MSPB administrative judge (AJ) noted that the appellant had limited his accommodation claim before the Board to one position, namely that of Production Controller. The AJ stated that the appellant had failed to show that he could perform the essential duties of that position without endangering the health and safety of himself or others, and concluded that the appellant did not prove his claim of disability discrimination. The initial decision became the Board's final decision when neither party petitioned the Board to review it. The appellant then sought EEOC review of the AJ's decision.

In a July 26, 2001 decision, the EEOC stated that, under its case law, an agency may not rescind a prior finding of discrimination. The EEOC found that "because in this case the agency chose to issue a FAD finding liability, it was bound by that finding, and was estopped from denying liability on appeal before [the Board.]" On that basis, the EEOC "differ[ed] with the final decision of [the Board] finding no discrimination in light of the agency's prior issuance of a FAD conceding discrimination," and referred the matter back to the Board.

In an August 2001 Opinion and Order, the Board agreed with the EEOC, concurring in and adopting EEOC's finding that the agency discriminated against the appellant on the basis of disability. The Board forwarded the case to the regional office for adjudication of the appellant's claim for compensatory damages and for issuance of an addendum initial decision resolving that claim.

In September 2001, the appellant filed a pleading with the MSPB AJ, making a motion for "an extension of time to file a motion for attorney fees." In a January 4, 2002 initial decision, the AJ found that he had no authority to grant the motion, but had considered the request for an extension of time as a request for attorney fees. He also considered the motion as a request to dismiss the case without prejudice to refiling, and he denied the motion to dismiss without prejudice. The AJ went on to cite his earlier finding that the appellant would have been separated even if the agency had conducted a proper job search, and found that, even if compensatory damages were awarded as a remedy, the appellant would not return to the rolls of the agency. The AJ concluded that the appellant could not be a prevailing party, and denied the request for attorney fees.

Neither party petitioned the Board to review the January 4, 2002 initial decision, and it became the Board's final decision. The appellant, however, asked EEOC to review this initial decision, and in a June 27, 2002 opinion, EEOC disagreed with the January 4, 2002 initial decision. The EEOC held that "compensatory damages, or even simply declaratory relief, can be sufficient, even in the absence of reinstatement or back pay, to render a party a prevailing party. The EEOC referred the case back to the Board for further consideration and issuance of a new decision.

On June 25, 2002, the MSPB AJ issued another initial decision on the appellant's claim for compensatory damages, finding that the appellant was not entitled to compensatory damages. The appellant did not file a petition for review with the Board, but instead sought EEOC review of the decision. The EEOC left undisturbed the AJ's finding that the appellant was not entitled to compensatory damages. In light of this decision, the only matter remaining for Board consideration was the EEOC's June 27, 2002 nonconcurrence on attorney fees.

The Board had already concurred in the EEOC's decision that the agency discriminated against the appellant on the basis of disability; however, the Board's concurrence in the EEOC's definition of "prevailing party" was limited to this case. According to the EEOC, its definition of "prevailing party" was unaffected by the decision of the Supreme Court in Buckhannon Board and Care Home v. West Virginia Department of Health and Human Resources, 532 US 598, 121 S. Ct. 1835 (2001). Following Buckhannon, the United States Court of Appeals for the Federal Circuit held in Sacco v. Department of Justice, No. 02-3043 (Fed. Cir. 1/21/2003), that the term "prevailing party" authorizes an award of attorney fees only when "it is accompanied by a corresponding 'alteration of the legal relationship of the parties.'" As noted previously, the Board proceeding in this case resulted in no alteration of the legal relationship of the parties because the appellant received nothing more from the Board than he already obtained from the agency prior to filing this appeal. Therefore, under Buckhannon and Sacco it would be questionable whether the appellant the appellant would meet the definition of "prevailing party" under civil service law.

Although the Board concurred in and adopted the EEOC's finding that the appellant is a prevailing party under discrimination law for purposes of an award of attorney fees, Title 5, US Code, Section 7701, requires the Board to exercise its discretion on a case-by-case basis to determine whether a party who prevails on a claim of discrimination is entitled to attorney fees. Section 7701(g)(2) sets forth the standard for awarding attorney fees where the appellant is the prevailing party in a Board appeal and the Board's decision "is based on a finding of discrimination prohibited under section 2302(b)(1) of [Title 5]." In such cases, "the payment of attorney fees shall be in accordance with the standards prescribed under section 706(k) of the Civil Rights Act of 1964 [42 US Code 2000e-5(k)]." Section 2000e-5(k) of Title 42 gives federal district courts the discretion to award reasonable attorney fees to prevailing parties in Title VII discrimination cases where there has been a finding of discrimination.

Under Title 5, US Code, Section 7701(g)(2), Congress has provided the Board with the same discretion afforded federal courts to award or not award attorney fees to a prevailing party where a Board decision is based on a finding of discrimination. In other words, the civil service statute does not make an award of attorney fees automatic because a party prevailed on a claim of discrimination; it only makes a party eligible for an award of fees. However, "eligibility does not mean entitlement," as the Federal Circuit held in Sterner v. Department of the Army, 711 F.2d 1563 (Fed. Cir. 1983).

The Board, in applying Section 7701(g)(2), to this case, also relied on the Supreme Court's decision in Farrar v. Hobby, 506 US 103, 113 S. Ct. 566 (1992), which held that if a party is found to have prevailed, "the degree of [his] overall success goes to the reasonableness" of a fee award. Therefore, not every prevailing appellant in a discrimination case will be entitled to attorney fees.

As reflected in the EEOC's June 26, 2002 decision, the agency made a finding of disability discrimination in its February 4, 2000 FAD. The sole reason set forth in the EEOC's July 27, 2001 decision for differing with the MSPB administrative judge's finding of no discrimination was EEOC law stating that an agency is bound by its own finding of discrimination and cannot relitigate that issue on appeal. In the EEOC's opinion, because the agency chose to issue a FAD finding liability, it was bound by that finding, and was estopped from denying liability on appeal before the Board. The Board limited its concurrence to the adoption of the EEOC finding that the agency was estopped from denying disability discrimination before the Board.

In the instant case, the discrimination issue was conclusively decided before the appellant ever filed an appeal with the Board, given that EEOC law precluded the agency from challenging its February 4, 2000 FAD in the Board appeal. Therefore, the only thing that allowed the appellant to "prove" his claim of disability discrimination before the Board was the February 2000 FAD, which preceded and was independent of the filing of the Board appeal. In sum, the appellant received no more relief for having brought a Board appeal than he had already from the agency. As such, although the Board concurred in the EEOC's finding that the appellant was a prevailing party, the facts of the case weighed against an award of attorney fees in accordance with the guidance in Farrar.

While an appellant may be a prevailing party under discrimination law for purposes of an award of attorney fees, Title 5, US Code, Section 7701, requires the Board to exercise its discretion on a case-by-case basis to determine whether a party who prevails on a claim of discrimination is entitled to attorney fees. Further, the Board, in applying section 7701(g)(2), will also ensure that any such decisions are consistent with the decision of the Supreme Court in Farrar, which held that if a party is found to have prevailed, "the degree of [his] overall success goes to the reasonableness" of a fee award.