Augustine v. Department of Veterans Affairs

Error: Bad annotation destination
 United States Court of Appeals for the Federal Circuit



                                       04-3162



                            CASSANDRA A. AUGUSTINE,

                                                            Petitioner,

                                          v.

                      DEPARTMENT OF VETERANS AFFAIRS,

                                                            Respondent.




        Michael J. Kator, Kator, Parks & Weiser P.L.L.C., of Washington, DC, argued for
petitioner.

       Kent G. Huntington, Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for respondent. With
him on the brief were Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, and Kathryn A. Bleecker, Assistant Director.

Appealed from: United States Merit Systems Protection Board
 United States Court of Appeals for the Federal Circuit


                                       04-3162

                            CASSANDRA A. AUGUSTINE,

                                                            Petitioner,

                                          v.


                      DEPARTMENT OF VETERANS AFFAIRS,

                                                            Respondent.

                          ___________________________

                          DECIDED: November 15, 2005
                          ___________________________


Before RADER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and DYK, Circuit
Judge.


DYK, Circuit Judge.

      Petitioner Cassandra Augustine was successful in her appeal to the Merit

Systems Protection Board (“Board”). The Board held that the Department of Veterans’

Affairs (“VA”) violated Augustine’s right to a veterans’ preference under the Veterans’

Preference Act, 5 U.S.C. § 3309, by not selecting her for a competitive civil service

position. As the prevailing party, Augustine moved for attorney’s fees under 5 U.S.C. §

3330c(b). The Board held that Augustine could not recover fees because her attorney

was not licensed to practice in the state in which the services were rendered. We

vacate the Board’s decision and remand for further proceedings.
                                     BACKGROUND

      Many federal agencies, including the Board, permit both attorneys and non-

attorneys to represent clients in administrative proceedings.      See, e.g., 5 C.F.R. §

1201.31(b) (2004) (Merit Systems Protection Board); 37 C.F.R. § 1.31 (2004) (Patent

and Trademark Office); 29 C.F.R. § 18.34 (2004) (Department of Labor); 20 C.F.R. §

410.685(b) (2004) (certain claims before the Social Security Administration). Typically,

non-attorney representatives are not entitled to an award of fees.        Even when the

private party is represented by an attorney, under the “American Rule,” the prevailing

party is generally responsible for his own attorney’s fees.       Indep. Fed’n. of Flight

Attendants v. Zipes, 491 U.S. 754, 758 (1989). However, Congress has created several

exceptions to this rule, allowing prevailing parties before federal courts or agencies to

recover attorney’s fees.1     The Veterans Employment Opportunities Act of 1998

(“VEOA”), Pub. L. No. 105-339, 112 Stat. 3182 (codified at 5 U.S.C. § 3330a, et seq.

(2000)), is such an exception. The VEOA provides that veterans who prevail in certain

employment actions “shall be awarded reasonable attorney fees, expert witness fees,

and other litigation expenses.” 5 U.S.C. § 3330c(b) (2000). This case presents the

question as to what, if any, role state law should play in determining who is an “attorney”

for purposes of section 3330c(b).




      1
         See, e.g., 5 U.S.C. § 7701(g)(1) (2000) (providing for fees for appeals before
the Board); 42 U.S.C. § 1988(b) (2000) (The Civil Rights Attorney’s Fees Awards Act of
1976); 42 U.S.C. § 2000e-5(k) (2000) (Title VII of the Civil Rights Act of 1964); 28
U.S.C. § 2412(d) (2000) (Equal Access to Justice Act); 42 U.S.C. § 406(b) (2000)
(Social Security Act); 12 U.S.C. § 3417(a)(4) (2000) (Right to Financial Privacy Act of
1978).



04-3162                                  2
         The petitioner in this case, Augustine, filed a pro se appeal with the Board,

arguing that the VA violated her right to a veterans’ preference under the Veterans’

Preference Act by not selecting her for the position of “Veterans Service

Representative.” On March 14, 2000, the administrative judge (“AJ”) rendered an initial

decision concluding that the VA had violated the Veterans’ Preference Act and ordering

the VA to appoint Augustine to the Service Representative position retroactively and to

compensate her for any loss of wages or benefits. The AJ also awarded liquidated

damages for violations of the statute. The VA sought review by the full Board. The full

Board then vacated the initial decision, and directed the parties to submit additional

briefing to the full Board on various issues.

         By August 13, 2001, Augustine retained an attorney, Wild Chang, to represent

her. Augustine herself was a resident in California. Chang, who was also located in

California, represented Augustine in the subsequent proceedings before the full Board

as well as in a mediation conducted in August 2001. The VA moved to withdraw its

petition for review on September 7, 2001. On September 22, 2003, the Board entered

an order stating: “we DISMISS the agency’s petition for review as withdrawn. And, in

light of this disposition, we also VACATE the Board’s Opinion and Order at 88 M.S.P.R.

407. . . . the once-vacated initial decision is now revived, entitling the appellant to all the

relief ordered therein. The initial decision of the administrative judge is now final.” J.A.

at 34.

         As the prevailing party, Augustine moved for attorney’s fees and costs of

$39,124.34 under the VEOA’s attorney’s fees provision, 5 U.S.C. § 3330c(b). In an

initial decision, the AJ agreed that the petitioner was a prevailing party but denied the




04-3162                                    3
fee request. Although Chang was licensed to practice law in both Massachusetts and

New York, he was not licensed in California, where the services were performed. The

AJ held that “although [Chang] could appear in the proceeding as a nonlawyer

representative pursuant to Board regulations,” he could not appear as an attorney

unless California law permitted him to appear. J.A. at 9. The AJ reasoned that “[a]n

attorney appearing before the Board, whether representing a private party or an agency,

will be expected to conform to the applicable state rules governing attorney conduct.”

J.A. at 3-4. Concluding that “all services were evidently performed while counsel was in

California,” the AJ then determined that, as part of the rules governing attorney conduct

in California, “a non-member of the California State Bar . . . is [ ] forbidden to ‘practice

law in California,’” and may not “recover compensation for services as an attorney at

law in California . . . .” J.A. at 4.

       While recognizing that the California prohibition had not applied to regulate

practice in federal courts, the AJ explained that the Board was not a court. “As neither

the California Legislature nor the courts have expressly created an exception” for

practice before federal agencies, the AJ “decline[d] to create a new exception” here.

J.A. at 8 (internal quotation marks omitted). The AJ noted that the Board did not “have

its own rules as to admission and professional conduct. . . . Thus, there is no conflict

between Board law and state rules; indeed, the one incorporates the other.”              Id.

Because Augustine did not seek full Board review, the AJ’s decision became the final

decision of the Board pursuant to 5 C.F.R. § 1201.113. Augustine then sought review

by this court under 5 U.S.C. § 7703(b)(1).




04-3162                                  4
                                      DISCUSSION

       As this appeal concerns only the Board’s legal determination regarding who may

be awarded fees under 5 U.S.C. § 3330c(b), we review the Board’s decision without

deference. Kievenaar v. Office of Pers. Mgmt., 421 F.3d 1359, 1362 (Fed. Cir. 2005).

We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(9) (2000).

       The Board’s decision here is not entirely clear. It could be read as holding that

California law controls the right to practice as an attorney before the Board and the right

to fees for performing such service. Alternatively, it could be read as holding that the

federal attorney’s fee statute incorporates state law. We conclude that neither ground

for the decision is tenable.

                                             I

       We first address the theory that state law is controlling.        Section 6125 of

California Code provides that: “No person shall practice law in California unless the

person is an active member of the State Bar.” Cal. Bus. & Prof. Code § 6125 (2003).

This “prohibition against unauthorized law practice is . . . designed to ensure that those

performing legal services do so competently.” Birbrower, Montalbano, Condon & Frank

v. Superior Court, 949 P.2d 1, 5 (Cal. 1998).2 Accordingly, a violation of section 6125 is

considered a misdemeanor, and “[n]o one may recover compensation for services as an

attorney at law in [California] unless the person was at the time the services were




       2
          The AJ noted that a violation of section 6125 was also a violation of the state’s
rules governing attorney conduct under Rule 1-300(B) of the California Rules of
Professional Conduct. Rule 1-300(B) states: “A member [of the California Bar] shall not
practice law in a jurisdiction where to do so would be in violation of regulations of that
profession in that jurisdiction.” Cal. Prof. Conduct, Rule 1-300(B) (2005).


04-3162                                  5
performed a member of The State Bar.” Id. (quoting Hardy v. San Fernando Valley

Chamber of Commerce, 222 P.2d 314, 317 (Cal. Ct. App. 1950)) (alterations omitted).

       California courts have yet to fully articulate the scope of what constitutes

“practicing law in California” under section 6125. They have made clear that section

6125 covers representation before California courts. Birbrower, 949 P.2d at 5. On the

other hand, section 6125 “does not regulate practice before United States courts,” id. at

6, and therefore does not restrict the receipt of attorney’s fees for services related to

federal court proceedings. Cowen v. Calabrese, 230 Cal. App. 2d 870, 872-73 (Cal. Ct.

App. 1964). In Z.A. v. San Bruno Park School District, 165 F.3d 1273 (9th Cir. 1999),

the Ninth Circuit determined that section 6125 covered practice before state agencies

even when the state agencies are enforcing federal law.    Id. at 1276.

       Although the Ninth Circuit applied section 6125 to practice before state

administrative agencies, our attention has not been directed to any instance in which

section 6125 has been applied to restrict attorney practice before a federal

administrative agency. To the contrary, a 1994 memorandum issued by the Office of

Professional Competence, Planning & Development of the State Bar of California

indicated that the bar at least does not view section 6125 as covering federal

administrative proceedings:

              The State Bar takes the general position that where a non-member
              is permitted to practice before a federal court (district, appellate,
              admiralty) or a federal agency (INS, Patent Office), such individual
              is not engaged in the unauthorized practice of law while performing
              activities before such federal courts or agencies in California on
              behalf of clients.

J.A. at 44.




04-3162                                 6
       The parties vigorously dispute whether the activities of petitioner’s counsel

violated California law. Whether or not California law applies, it is quite clear that state

law purporting to govern practice before a federal administrative agency would be

invalid. It is long established that any state or local law which attempts to impede or

control the federal government or its instrumentalities is deemed presumptively invalid

under the Supremacy Clause. Leslie Miller, Inc. v. Arkansas, 352 U.S. 187, 189-90

(1956); Johnson v. Maryland, 254 U.S. 51, 57 (1920); McCulloch v. Maryland, 17 U.S.

316, 429-430 (1819); Mount Olivet Cemetery Ass’n. v. Salt Lake City, 164 F.3d 480,

486 (10th Cir. 1998); Don’t Tear It Down, Inc. v. Pa. Ave. Dev. Corp., 642 F.2d 527,

534-35 (D.C. Cir. 1980).3

       As a consequence, the Supreme Court and the courts of appeals have frequently

invalidated state licensing requirements for federal employees and federal contractors.

See Leslie Miller Inc., 352 U.S. at 190 (holding that the United States Air Force alone

has the authority to determine the type of license that is required of its independent

contractors); Johnson, 254 U.S. at 57 (holding that a state could not require the driver of

a United States Postal truck to obtain a state driver’s license before performing his

duties); United States v. Virginia, 139 F.3d 984, 987-88 (4th Cir. 1998) (holding that the

Virginia Criminal Justice Services Board could not require private investigators under

contract with the FBI to obtain state private investigator licenses); Taylor v. United



       3
            While there is no bright line rule regarding what constitutes a “federal
instrumentality,” the Supreme Court has looked to several factors, including: whether
the entity was created by the government; whether it was established to pursue
governmental objectives; whether government officials handle and control its
operations; and whether the officers of the entity are appointed by the government.
Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 397-98 (1995) (considering these
factors to find that Amtrak was an instrumentality of the United States).


04-3162                                  7
States, 821 F.2d 1428, 1431-32 (9th Cir. 1987) (noting that California could not require

an army hospital or its health care providers to be licensed under state law).

        So too state licensing requirements which purport to regulate private individuals

who appear before a federal agency are invalid. In Sperry v. Florida, 373 U.S. 379

(1963), the Florida Bar attempted to enjoin a non-attorney from performing services in

the state relating to a patent prosecution occurring before the United States Patent and

Trademark Office (“PTO”). Id. at 381. The Florida Bar argued that the non-attorney

was engaged in the “unauthorized practice of law” because the Florida Bar had not

licensed him. Id. at 382. The Supreme Court held that a “State may not enforce

licensing requirements which . . . give ‘the State’s licensing board a virtual power of

review over the federal determination’ that a person or agency is qualified and entitled

to perform certain functions,” and found that the state’s licensing requirements could not

govern practice before the PTO. Id. at 385, 388 (quoting Leslie Miller, Inc., 352 U.S. at

190).

        Just as the states cannot regulate practice before the PTO, they cannot regulate

practice before the Merit Systems Protection Board. Allowing state control would plainly

impede the conduct of federal proceedings even though the Board does not have

procedures for admitting counsel to practice before it. The Board “is an independent

Government agency that operates like a court.” 5 C.F.R. § 1200.1 (2004). California

has no authority to require that attorneys practicing before the Board obtain a state

license or to regulate the award of fees for work before federal agencies. To the extent

that the Board held otherwise, that decision cannot stand.

                                             II




04-3162                                  8
       We turn now to the second question—whether federal law incorporates state law.

This in turn requires consideration of two subsidiary questions: whether federal law

incorporates state law as to the right to practice before the Board; and whether federal

law incorporates state law as to who is entitled to fees.

       Although a state cannot regulate the licensing requirements of attorneys before

the Board, federal law may adopt or incorporate state law standards as its own. See,

e.g., NLRB v. Natural Gas Util. Dist. of Hawkins County, 402 U.S. 600, 603 (1971)

(“There are, of course, instances in which the application of certain federal statutes may

depend on state law.”) (quoting NLRB v. Randolph Elec. Membership Corp., 343 F.2d

60, 62 (4th Cir. 1965)). But incorporation “is controlled by the will of Congress. In the

absence of a plain indication to the contrary . . . it is to be assumed when Congress

enacts a statute that it does not intend to make its application dependent on state law.”

Id. (internal quotation marks omitted).

       The relevant statute regarding appeals to the Board states that: “An appellant

[before the Board] shall have the right . . . to be represented by an attorney or other

representative.” 5 U.S.C. § 7701(a)(2) (2000). The regulation states that “[a] party may

choose any representative as long as that person is willing and available to serve.” 5

C.F.R. § 1201.31(b) (2004). Here, neither the statute nor the regulation imposes a

requirement that an attorney appearing before the Board be licensed in the state in

which the services are rendered. Thus, we must assume that neither Congress nor the

Board had intended to incorporate state law.

       Quite apart from the statutory and regulatory silence, it seems to us clear that

federal law here does not incorporate state-law rules governing the unauthorized




04-3162                                   9
practice of law.   Congress has addressed the role of state law most directly in

connection with the application of state-law rules to government attorneys. In 1998,

Congress, concerned that government attorneys should abide by state ethics standards,

enacted 28 U.S.C. § 530B, which provides:

             An attorney for the Government shall be subject to State laws and
             rules, and local Federal court rules, governing attorneys in each
             State where such attorney engages in that attorney’s duties, to the
             same extent and in the same manner as other attorneys in that
             State.

28 U.S.C. § 530B(a) (2000). But nothing in section 530B suggests that government

attorneys must abide by state licensing requirements. To the contrary, 28 C.F.R. § 77.2

(which is referred to by section 530B(c) for the definition of “attorney for the

Government”) explicitly rejects the proposition that government attorneys must comply

with state licensing requirements. The regulation states that the “phrase state laws and

rules and local federal court rules governing attorneys . . . . does not include . . . [a]

statute, rule, or regulation requiring licensure or membership in a particular state bar.”

28 C.F.R. § 77.2(h) (2004). Thus, while government attorneys must abide by the ethical

codes of conduct of each state in which they perform their services, they do not have to

be licensed by those states to practice law.

      In Collins v. Department of Justice, 94 M.S.P.R. 62 (2003), the Board held that

private attorneys appearing before it will also be expected to conform to applicable state

rules governing attorney conduct but did not suggest that they must abide by state

licensing requirements. The issue in Collins was whether a particular attorney should

be disqualified to serve as a representative under 5 C.F.R. § 1201.31(b). Although the

regulation allows a party to choose “any representative as long as that person is willing




04-3162                                 10
and available to serve,” the regulation provides that “[t]he other party or parties may

challenge the designation, however, on the ground that it involves a conflict of interest

or a conflict of position.” 5 C.F.R. § 1201.31(b). In Collins, Collins’ designated attorney

representative had previously established an attorney-client relationship with a witness

opposing Collins and therefore had a potential conflict of interest. Collins, 94 M.S.P.R.

at 63-64. The Board reasoned that private attorneys should follow the same state

ethics rules as government attorneys, referring to section 530B. Id. at 68-69. It found

that under California’s ethics rules, Collins’ attorney was disqualified. Id. But Collins did

not suggest that private attorneys should be subject to state licensing requirements.

       It would indeed adversely affect proceedings before federal administrative

agencies if state licensing rules were applied, since the pool of available attorney

representatives would be severely impaired. In addition to finding an attorney who is

accessible and familiar with Board practice, the private party would also have to find an

attorney who is licensed in the state in which services are to be rendered. In a similar

situation, the Supreme Court in Sperry, while not directly addressing the incorporation

issue, concluded that applying state licensing requirements to practitioners appearing

before the PTO would have a “disruptive effect,” given that one-quarter of the attorney

practitioners before the PTO would have been disqualified because they were not

licensed in the state in which they were practicing. 373 U.S. at 401. Moreover, the

various state bar rules governing unauthorized practice are not uniform. See generally

ABA Section of Legal Educ. and Admissions to the Bar & Nat’l Conference of Bar

Examiners, Comprehensive Guide to Bar Admissions Requirements (2005). To require

the federal agency and those practicing before it to determine in every case whether a




04-3162                                  11
representative was authorized to perform particular services within the state as an

attorney would burden both the bar and the agencies themselves. We thus conclude

that the federal statute here does not incorporate state law and that an attorney licensed

in any state or federal jurisdiction is authorized to practice as an attorney before the

Board.

         The government nonetheless argues that even if petitioner’s counsel could

properly practice before the Board as an attorney, his entitlement to fees is determined

by state law, and that no federal interest is undermined in determining fees in

accordance with state law. As with the first issue regarding the right to practice before

the Board, there is nothing in the text of the fee-shifting statute to suggest incorporation

of state law. Here, the fee-shifting provision of the VEOA states: “A preference eligible

who prevails in an action under section 3330a or 3330b shall be awarded reasonable

attorney fees, expert witness fees, and other litigation expenses.” 5 U.S.C. § 3330c(b)

(2000). The Board’s regulation governing attorney’s fees merely states that the fee

application must show why the applicant is “entitled to an award under the applicable

statutory standard,” and must show “an established attorney-client relationship.”         5

C.F.R. § 1201.203 (2004). Given the statutory and regulatory silence, the presumption

here again is that federal law does not incorporate state standards. There is also no

legislative history suggesting an intent to incorporate state law.

         In a similar fee-shifting statute, we have given the term “attorney” its ordinary

meaning. In Cook v. Brown, 68 F.3d 447 (Fed. Cir. 1995), we determined that where

the Equal Access to Justice Act did not define “attorney” for fee purposes, the ordinary

meaning of the term prevailed. Id. at 451 (citing Black’s Law Dictionary, which defines




04-3162                                  12
“attorney at law” as a “[p]erson admitted to practice law in his respective state and

authorized to perform both civil and criminal legal functions for clients”). We then noted

that “[t]he EAJA gives no indication that it intends ‘attorney’ to be defined other than as

‘attorney at law,’ i.e., someone formally trained and licensed in the general practice of

law.” Id.

       We are also not aware of any suggestion in the myriad of Supreme Court cases

concerning attorney’s fees statutes that state law limits fee awards under federal law. In

fact, it is quite clear that denying fees to attorneys authorized to practice before federal

agencies would severely undermine the congressional purpose.4

       The federal fee-shifting statutes recognize that awarding compensation to the

prevailing party plays an important role in allowing clients to secure counsel in the first

place.5     The Supreme Court has, on numerous occasions, explained that the

“fundamental aim of [fee-shifting] statutes is to make it possible for those who cannot

pay a lawyer for his time and effort to obtain competent counsel, this by providing




       4
          Where a statute’s text and legislative history are silent on an issue of statutory
construction, the overriding purpose of the provision is highly relevant in resolving the
ambiguity. Candle Corp. of Am. v. U.S. Int’l. Trade Comm’n, 374 F.3d 1087, 1093 (Fed.
Cir. 2004); Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1355 (Fed. Cir. 2003)
(“When interpreting a statute, the court will not look merely to a particular clause in
which general words may be used, but will take in connection with it the whole statute
(or statutes on the same subject) and the objects and policy of the law, as indicated by
its various provisions, and give it such a construction as will carry into execution the will
of the Legislature.”) (quoting Kokoszka v. Belford, 417 U.S. 642, 650 (1974)).
       5
           Generally, the various federal fee-shifting statutes are to be interpreted
consistently. Buckhannon Bd. & Care Home, Inc. v. W.V. Dep’t of Health and Human
Res., 532 U.S. 598, 603 n.4 (2001); Indep. Fed’n. of Flight Attendants, 491 U.S. at 758
n.2 (1989); Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983).



04-3162                                  13
lawyers with reasonable fees to be paid by the losing defendants.” Pennsylvania v. Del.

Valley Citizens’ Council, 483 U.S. 711, 725 (1987).6

       It seems to us axiomatic that the denial of fees to attorneys practicing before

federal agencies would discourage such representation by attorneys.               To allow

attorneys to practice before federal agencies, while barring them from collecting fees

under the attorney’s fees statute, would, as a practical matter, bar such private

representation entirely in many cases and limit representation to the few attorneys

willing to serve without compensation. Under the government’s theory it might even be

impermissible for the attorney to receive compensation out of the client’s own monetary

recovery. A restrictive reading of the term “attorney” in the fee-shifting statute would

thus naturally limit the opportunities that veterans would have in obtaining counsel.

       Under these circumstances, the purposes of the fee-shifting statute can be

served only by allowing fees for representatives who are licensed as attorneys in any



       6
           See also Kay v. Ehrler, 499 U.S. 432, 436-38 (1991) (finding that the purpose
of the fee-shifting provision in 42 U.S.C. § 1988 was “to enable potential plaintiffs to
obtain the assistance of competent counsel in vindicating their rights”); Pennsylvania v.
Del. Valley Citizens’ Council, 478 U.S. 546, 565 (1986) (“[T]he aim of [fee-shifting]
statutes was to enable private parties to obtain legal help in seeking redress for injuries
resulting from the actual or threatened violation of specific federal laws.”); Hensley, 461
U.S. at 429 (“The purpose of § 1988 is to ensure effective access to the judicial process
for persons with civil rights grievances.”) (internal quotation marks omitted); N.Y.
Gaslight Club, Inc. v. Carey, 447 U.S. 54, 63 (1980) (“It is clear that [in the fee-shifting
provision of the Civil Rights Act] Congress intended to facilitate the bringing of
discrimination complaints. Permitting an attorney's fee award . . . furthers this goal,
while a contrary rule would force the complainant to bear the costs . . . and thereby
would inhibit the enforcement of a meritorious discrimination claim.”); Christiansburg
Garment Co. v. EEOC, 434 U.S. 412, 420 (1978) (noting that Congress’ primary
purpose in enacting the fee-shifting provision of the Civil Rights Act was to “make it
easier for a plaintiff of limited means to bring a meritorious suit”); Martin v. Hadix, 527
U.S. 343, 364 n.1 (1999) (Scalia, J., concurring in part and concurring in the judgment)
(“I think it clear that the purpose of [§ 1988] was to enable the civil rights plaintiffs to
offer a rate of compensation that would attract attorneys.”).


04-3162                                  14
state or federal jurisdiction, without regard to the state licensing requirements of the

state in which services were rendered.

                                    CONCLUSION

       For the foregoing reasons, the decision below is vacated, and this case is

remanded to the Board for further consideration of Augustine’s attorney’s fee

application. We do not decide the government’s other objections to petitioner’s fee

application.

                             VACATED and REMANDED

                                         COSTS

       No costs.




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