January 24, 1990

In the Matter of the Petition by

CORAL S. VELLOCIDO
94-1076 Lumikula Street

	at

Waipahu, HI 96797-3937


P.S. Docket No. DCA-47

Appearance for Petitioner:
Coral S. Vellocido 
94-1076 Lumikula Street 
Waipahu, HI 96797-3937

Appearances for Respondent:
Stephen E. Alpern, Esq.
James A. Friedman, Esq.
Robert P. Sindermann, Jr., Esq.
Law Department
United States Postal Service
Washington, DC 20260-1132

M. Perry Johnson, Esq.
Office of Field Legal Services
United States Postal Service
Western Division
San Bruno, CA 94099-0170

Larry Koseki
Manager, Labor Relations
United States Postal Service
Main Post Office
3600 Aolele Street
Honolulu, HI 96820-9401

DECISION UNDER THE EQUAL
ACCESS TO JUSTICE ACT

Petitioner, Coral S. Vellocido, has filed an application under the Equal Access to Justice Act (EAJA), 5 U.S.C. §504 (1988), seeking an award of attorney fees and other expenses arising from her successful petition under the Debt Collection Act (DCA). Petitioner seeks $5,481.53, representing attorney fees and costs incurred for such expenses as photocopying, phone calls, messenger services and word processing.

1. On May 30, 1989, Petitioner filed a Petition for Hearing Under the DCA in response to a notice of an involuntary salary offset. The notice was issued due to Petitioner's failure to pay an alleged debt arising from Petitioner giving approval to a clerk to accept a check drafted by Wolf Media Group (Wolf), a firm whose name appeared on the "Cash Only" list. ¹  Subsequently the check was returned for insufficient funds. By decision dated September 19, 1989, Petitioner's petition was granted. Thus Petitioner was the prevailing party in the proceeding. The findings and discussion in the Final Decision under the DCA proceeding are adopted insofar as they are relevant to this proceeding. Coral S. Vellocido, P.S. Docket No. DCA-47 (Sept. 19, 1989 (Final Decision Under Debt Collection Act Of 1982).

2. On October 17, 1989, Petitioner filed an application under the EAJA for an award of fees and expenses arising from the DCA proceeding.

3. Petitioner is an individual whose net worth does not exceed $2,000,000. Application (filed Oct. 17, 1989).

4. Petitioner incurred the following expenses in connection DCA proceeding:

The total hours for professional services include conference calls with the presiding officer and opposing counsel, conferences with Petitioner, legal research, drafting, preparing for discovery, reviewing files and records, and preparing for and attending the hearing. Affidavit of Elbridge W. Smith (Nov. 30, 1989); Application (filed Cot. 17, 1989).

5. Petitioner was charged attorney fees at the rate of $125 per hour for services provided by the attorney designated as Petitioner's representative and $110 per hour for the services of an associate. Paralegal fees were charged to Petitioner at a rate of $40 per hour. Affidavit of Elbridqe W. Smith (Nov. 30, 1989).

In its answer to Petitioner's application, Respondent argues that the Judicial Officer Department lacks jurisdiction to decide the application. Respondent bases its argument on two points: first, that neither the DCA (5 U.S.C. §5514(a)) nor the rules of practice for DCA proceedings (39 C.F.R. §961) expressly sanction reimbursement of attorney fees or costs, and second, that the rules of practice for EAJA proceedings (39 C.F.R. §960) do not expressly apply to DCA proceedings. Respondent's first argument misses the point since Petitioner does not seek to invoke jurisdiction under the DCA, but under the EAJA. The EAJA provides for award to the prevailing party of fees and other expenses incurred in administrative adjudications. ³ 5 U.S.C. §504(a)(1).

Respondent's second argument also lacks merit. The rules of practice implementing EAJA proceedings do not exclude recovery of fees and expenses incurred in DCA proceedings. Section 960.3 of the rules provides that "the types of proceedings generally covered are proceedings relative to false representation . . . and mailability ...." 39 C.F.R. §960.3(a)(1) (emphasis added). This language provides examples of the types of proceedings covered by the EAJA; it does not exclude other types of proceedings from its coverage. Further, the enabling act makes it clear that DCA proceedings are intended to be within the scope of the EAJA. The types of proceedings which the EAJA covers are adjudications as defined in 5 U.S.C. §554. Escobar Ruiz v. Immigration and Naturalization Serv., 813 F.2d 283, 288-91 (9th Cic. 1987), aff'd on reh'g en banc, 838 F.2d 1020 (1988); Cocaella v. Schweiker, 728 F.2d 978, 988 (8th Cir. 1984); 5 U.S.C. §504(b)(1)(C). A section 554 adjudication is that which is 'required by statute to be determined on the record after opportunity for an agency hearing ." 5 U.S.C. §554(a). The DCA provides for a final decision after an opportunity for a hearing. Id. §5514(a)(2). Therefore, the EAJA applies to DCA proceedings and the Judicial Officer Department has jurisdiction to decide this matter.

II.

Respondent next argues that costs and fees should not be awarded to Petitioner since Respondent was substantially justified in the actions it took against Petitioner. To support its argument, Respondent contends that Petitioner was aware that Wolf was on the "Cash Only" list and that she would be liable for the amount of any check she approved which was returned for insufficient funds. Respondent further argues that it duly pursued recompense from Wolf by way of letters threatening lawsuit and by phone conversations. Respondent contends that it was substantially justified in pursuing Petitioner, rather than Wolf for the amount due, since she was responsible for the loss by violating regulations ⁴  set forth in Post Office Accounting Procedures, Handbook F-1.

Respondent has not shown that its position was substantially justified. See Charter Management, Inc. v. NLRB, 768 F.2d 1299, 1301 (11th Cir. 1985) (agency bears burden of proof). The Supreme Court has determined that the use of the term "substantially justified" means "justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 56 U.S.L.W. 4806, 4810 (U.S. June 27, 1988). Respondent's position does not meet the reasonableness standard. Respondent should have pursued Wolf with more diligence to obtain payment of the debt before attempting to take action against Petitioner. In fact, section 312.2 of Handbook F-l, which is relied upon by Respondent to support its assertion that its conduct was substantially justified, shows just the opposite. The cited section of the Handbook describes the procedure to be followed when a check is returned for insufficient funds. The customer must be contacted within one business day. If payment is not made, the is to be sent a certified letter requesting payment. If the customer fails to make payment within one week of mailing, the postmaster is authorized to file suit in the State small claims court.

The actions or inactions by Postal Service management attempting to collect payment from Wolf and subsequently in attempting to obtain reimbursement from Petitioner, and in litigating its position, were not reasonable or substantially justified. Wolf's bad check was returned to the Postal Service November 21, 1988. It was not until January 12, 1989, that any Postal Service employee wrote Wolf requesting reimbursement of the amount of the check. The regulation required contact with the customer within one day -- contact was not attempted for 52 days. Although the letter threatened initiation of court proceedings for non-payment, suit was never filed. Nor does the record indicate any further consideration was given to filing a small claims suit, despite the authorization given to the postmaster by regulation to do so. The record indicates that Wolf was operative in Hawaii during this period and Respondent offered no evidence that Wolf was insolvent. Under these circumstances Respondent should have taken more effort to pursue available remedies against Wolf prior to initiation of proceedings against Petitioner.

III.

Respondent also argues that Petitioner's application for costs and fees is defective as it does not comply with 39 C.F.R. §§960.6, .11, since Petitioner has not provided an hourly rate upon which to determine award of attorney fees. However, in the reply to Respondent's answer, such hourly rates were provided. Finding of Fact (FOF) 5. Petitioner requests more than the $75 per hour statutory maximum allowed by the EAJA (5 U.S.C. §504(6)(1)(A)). That section of the EAJA states in part "attorney or agent fees shall not be awarded in excess of $75 per hour unless the agency determines by regulation that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys or agents for the proceedings involved, justifies a higher fee." There has been no regulation promulgated by the Postal Service that would permit payment of a rate higher than $75 per hour. Thus, the maximum rate allowed for reimbursement to Appellant is $75 per hour. Considering the time actually spent representing Petitioner and the nature of the case, the 42.25 hours expended appears reasonable. See 39 C.F.R. §960.6; see also FOF 4. Therefore, Petitioner's award for attorney fees is $3168.75 (42.25 x $75). Paralegal fees are allowable at the actual rate paid to the paralegal, not the rate billed. Coastal, Inc., PSBCA No. 1728, 89-2 BCA ¶21,876 (1989); Margaret Howard, ASBCA Nos. 28648, 29097, 88-2 BCA ¶20,655 (1988). Petitioner has not provided any evidence beyond the rate charged, therefore, the paralegal costs are disallowed.

Respondent disputes tile allowability of Petitioner's miscellaneous expenses. Respondent contends that the Recorder provided Petitioner with a copy of the transcript. Respondent is mistaken. The Recorder does not provide parties opposing the Postal Service with free copies of hearing transcripts. Respondent argues that the costs of facsimilies, photocopying, messenger service, postage, court reporters, and long distance phone calls are disallowed under the standard of 28 U.S.C. §§1920 and case law interpreting 28 U.S.C. §§1920, 2412. However, decisions interpreting 5 U.S.C. §504, the provision which governs this proceeding, have determined such costs to be allowable. Coastal, Inc., supra; Warwick Holding Co., GSBCA Nos. 8459-C(5070), 8460-C(5387), 8461-C(5388), 8462-C(5457), 8463-C(5543), 88-3 BCA ¶21,114 (1988). These costs appear reasonable, therefore award for the sum of $243.53 is granted for these additional expenses.

Petitioner is entitled to $3168.75 for attorney fees and $243.53 for other expenses. The total amount granted is $3412.28.

					James D. Finn, Jr.
					Associate Judicial Officer

²  An unexplained difference of $24.50 exists between the amount sought in the petition and the itemized breakdown of attorney fee and costs.

³  Respondent contends that this proceeding is governed by 28 U.S.C. §2412. However, section 2412 is inapplicable since it provides for costs incurred in a federal "court" proceeding. 28 U.S.C. §2412(a). This EAJA proceeding is brought pursuant to 5 U·S.C. §504, pertaining to administrative adjudications. See also 39 C.F.R. §960.1 (citing 5 U.S.C· §504).

⁴  The cited regulation in §312.3 provides for the creation of a "Cash Only" list but does not clearly establish employee liability for failure to reject checks submitted by those on said list.