In addition to the Wells case, the court in Devine cited with approval several other cases decided by the Merit Systems Protection Board ("MSPB"), which also limits fees for union-salaried attorneys to actual costs. See Allen v. Department of Treasury, 20 MSPB 518 (1984); Powell v. Department of Treasury, 8 MSPB 21 (1984); O'Donnell v. Department of Interior, 2 MSPB 604, 611 n. 10 (1980). The MSPB is under the exclusive jurisdiction of the Federal Circuit. 5 U.S.C. § 7703.
In opposition to defendants' argument, plaintiff relies on cases from the Ninth and District of Columbia Circuits which have held that awards to a union's legal services fund should be based on prevailing market rates. In Curran v. Department of Treasury, 805 F.2d 1406, 1408 (9th Cir. 1986), the court rejected the rule adopted by the Federal Circuit and the MSPB, holding that "a separate operating account for legal services provides sufficient protection against the unauthorized practice of law by a lay organization." The court stated that it did not see how an indirect benefit accruing to a union from an award of market rate fees to its separate litigation fund would encourage the unauthorized practice of law, since the union "would still necessarily rely on attorneys to conduct the litigation." Id. at 1409. The court also observed that an above-cost fee award will not always provide an indirect economic benefit to the non-legal activities of a lay organization, since the organization might choose to maintain its contribution to the fund at the same level, and simply add the fee award to the fund's account as a means of financing greater legal activity. Id. at 1409 n. 2.
The District of Columbia Circuit agreed with Curran in AFGE Local 3882 v. FLRA, 292 U.S. App. D.C. 1, 944 F.2d 922, 935 (D.C. Cir. 1991), in which the court held that fees awarded to an organization that provides both legal and non-legal services should be limited to actual costs "unless there is some guarantee that the amount above the organization's actual cost will ultimately be spent in the provision of legal assistance--as, for example, by placement into a fund maintained exclusively for legal representation." In addition to adopting the rationale of Curran, the court also noted that any fee award, whether cost- or market-based, confers a benefit, and that in either situation, "the size of the benefit varies, of course, but its character not one whit, and it defies logic to say that in the one instance the benefit is ethically permissible but in the other it is not." Id. at 936.
The court also noted that both the Federal Circuit and the MSPB had relied in part on the District of Columbia Circuit's prior decision in NTEU v. Department of Treasury, 211 U.S. App. D.C. 259, 656 F.2d 848 (1981), which held that a market-rate award was not appropriate where it appeared that the award would go directly into a union's coffers. In AFGE, however, the court stated that both the Federal Circuit and the MSPB had misread NTEU "as an unqualified declaration that unions can never recoup more than their costs." 944 F.2d at 937. The court pointed out that NTEU itself had suggested that market-rate fee awards to unions might be allowable "when the monies are directed into a fund for maintenance of a legal services program ..." Id. (quoting NTEU, 656 F.2d at 855).
The Third Circuit has also expressed its agreement with Curran and AFGE, stating that "segregating legal fees [i.e., by awarding them to a separate legal fund] eliminates ethical barriers to a market rate calculation for attorney fee awards." Kean v. Stone, 966 F.2d 119, 123 (3d Cir. 1992). The Federal Labor Relations Authority also applies market-based rates for union attorneys. See United States Customs Service & National Treasury Employees Union, 46 FLRA No. 98, 1992 FLRA LEXIS 499 (1992).
Both sides in the case at bar state that the Second Circuit has not ruled on this issue, and this court has not found any authority suggesting otherwise. After reviewing the case law, however, I find the reasoning of the Ninth and District of Columbia Circuits to be more persuasive. Moreover, the Federal Circuit's and MSPB's view appears to be based at least in part on a misinterpretation of the NTEU case. I will therefore award plaintiffs fees at prevailing market rates.
Aside from their contention that fees should be limited to actual costs, defendants do not object to the claimed rate of $ 171.82 per hour for Cohen's time. I have reviewed the materials plaintiff has submitted in support of this rate, and find it to be reasonable. Therefore, the fee award shall be calculated as follows:
For time spent by Martin R. Cohen, Esq.: 80 hours at a rate of $ 171.82 per hour, totaling $ 13,745.60.
For time spent by Susan Cooney, Esq.: 34.38 hours at a rate of $ 90 per hour, totaling $ 3094.43. The total amount of attorney's fees, therefore, is $ 16,840.03.
Finally, plaintiff seeks reimbursement for $ 1200 in travel costs. Plaintiff has attached to his reply brief copies of tickets and other documentation to support this request. However, $ 600 of that amount was incurred in connection with Cohen's attendance at plaintiff's administrative hearing in 1990. I have previously stated why I do not believe that that time is compensable, and for the same reasons I will reduce this portion of the request by $ 600.
Plaintiff's motion for attorney's fees and costs pursuant to the Back Pay Act, 5 U.S.C. § 5596(b), is granted in part. Plaintiff is awarded $ 16,840.03 in attorney's fees, and $ 600 in costs. The total amount, $ 17,440.03, is to be paid to plaintiff by defendants within thirty (30) days of the date of entry of this Order.
IT IS SO ORDERED.
DAVID G. LARIMER
UNITED STATES DISTRICT JUDGE
Dated: Rochester, New York
August 21, 1995.