Pay Back: Employee Entitled to Attorneys’ Fees When a Case Becomes Moot after Agency Appeal
An employee petitioned for review of a Merit Systems Protection Board (MSPB) decision that denied her request for attorneys’ fees because, after the Agency first appealed an MSPB order declaring her removal unlawful and ordering her to be reinstated with back pay, the Agency voluntarily provided her with back pay while its appeal was pending. Last month, the Federal Circuit held the employee was entitled recover attorneys’ fees in a mooted agency appeal and reversed the MSPB’s decision.
The Back Pay Act provides a remedy when an agency employee is affected by unjust or unwarranted personnel action. An action which results in the reduction of pay, allowances or differentials, provides the employee with a few key entitlements: 1) correction of the personnel action; 2) all pay the employee would have received during this period less any pay gained through other employment during this time; and (3) reasonable attorneys’ fees related to the personnel action. 5 U.S.C. § 5596. But for decades now, the MSPB and Federal Circuit have held that it cannot award attorney fees when an agency voluntarily provides an employee with the relief they are entitled to, rather than doing so only as a result of a court or MSPB order.
The employee worked at the Department of Veterans Affairs (VA) from 2012-2020. She was removed from her position on August 10, 2020 for alleged unacceptable performance. The employee appealed to the MSPB arguing (1) that the VA was required to offer her a performance improvement plan (PIP) prior to her removal under the master collective bargaining agreement (CBA); and (2) that her removal stemmed from unreasonable performance standards.
Two years prior to the employee’s appeal, there was union arbitration on the same PIP issue the employee raised, brought by individuals in the national union for VA employees. The arbitrator found the master CBA required the VA offer employees a PIP prior to their removal. As the employee’s initial removal appeal was pending, the Federal Labor Relations Authority (FLRA) in that separate union litigation upheld the arbitrator’s decision. Based in part on this arbitrator and FLRA action, the AJ issued an initial decision on the merits which set aside the employee’s removal. The Agency then petitioned for review of this initial decision arguing that the FLRA decision was non-precedential, factually different from the employee’s case, and applied to a different category of workers, not including all Bargaining Unit employees.
Despite its petition, on December 8, 2021, the Agency notified the employee she was eligible for reinstatement via a mass mailing. The employee responded to the mailing indicating she wanted to be reinstated and made whole. The Agency reinstated her. After her reinstatement, the Agency notified the MSPB that the employee’s removal was cancelled, she was returned to her duty, and the process for her to receive backpay was initiated. In turn, on January 6, 2023, the MSPB instructed the Agency to provide reason as to why its appeal was not moot now that it had voluntarily provided the employee with relief. In response, the Agency stated whether the employee was entitled to attorneys’ fees was a live dispute. On July 21, 2023, the Board determined that the employee received all relief the Board could give her and thus dismissed the VA’s appeal. The MSPB notified the employee that she may be entitled to reasonable attorneys’ fees, and the employee petitioned the MSPB for attorney fees in response.
The employee’s petition was granted, but after the Agency petitioned for review to the full Board, it reversed the initial decision. The Board determined that although a decision had issued from the Board holding Appellant’s removal was contrary to law, it had been unenforceable during the pendency of the Agency’s petition for review, at which point the Agency voluntarily provided full relief through a different mechanism. The full Board held the petition for review was thus moot at the point of voluntary relief, and thus the employee had not received the kind of final order that might have entitled her to attorney fees. The employee filed a petition for review with the Federal Circuit arguing she was the prevailing party because the AJ’s initial decision provided her with legally enforceable relief.
The Federal Circuit sided with the employee because status as a prevailing party is conferred “when a court conclusively resolves a claim by granting enduring judicial relief on the merits that materially alters the legal relationship between the parties.” Lackey v. Stinnie, 604 U.S. 192, 203-04 (2025). The Federal Circuit explained they agree with circuit court precedent which demonstrates “[w]hen plaintiffs clearly succeeded in obtaining the relief sought … and an intervening event rendered the case moot on appeal, plaintiffs are still ‘prevailing parties’ for the purpose of attorney’s fees.” Diffenderfer v. Gomez-Colon, 587 F.3d 445, 454 (1st Cir. 2009) (citing UFO Chuting of Haw., Inc. v. Smith, 508 F.3d 1189, 1197 & n.8 (9th Cir. 2007). Here, the Federal Circuit determined the AJ’s initial decision on the merits resolved the employee’s claim and instructed the VA to both reinstate her and provide her with back pay. The Federal Circuit determined it was irrelevant the case became moot after the petition for review and stated the fact the claim was moot does not change the fact that the employee was the prevailing party and is therefore entitled to attorneys’ fees.
Read the full case: Neal v. DVA
