Henry J. Anderson, Petitioner, v. Director, Office of Workers Compensation Programs;brady-hamilton Stevedore Company; Manhattanre-insurance Company, Respondents, 91 F.3d 1322 (9th Cir. 1996)

On March 6, 1992, the OWCP awarded $125 per hour for attorney services through June 1984, $150 per hour for attorney services from September 1986 to January 1992, and $40 for legal assistant services. It made no adjustment for the delay in the fee award and denied compensation for time spent preparing fee applications. The BRB affirmed these determinations on May 21, 1993, and again on September 19, 1994. We now consider Anderson's appeal from the BRB's decisions concerning attorney's fees.

II

As the prevailing party in an LHWCA suit, Anderson is entitled to receive "a reasonable attorney's fee against the employer." 33 U.S.C. § 928(a). Anderson says what's reasonable is the "current rate"--the rate his lawyer charged at the time of the fee award in 1992. Respondents counter that Anderson is only entitled to the "historic rate"--the rate his lawyer charged at the time the services were rendered (primarily between 1982 and 1984), with no adjustment for inflation or the time value of money. Neither is precisely right.

The Supreme Court has held that, under the fee-shifting provisions of the Civil Rights Act, 42 U.S.C. § 1988, " [a]n adjustment for delay in payment is ... an appropriate factor in the determination of what constitutes a reasonable attorney's fee." Missouri v. Jenkins, 491 U.S. 274, 284, 109 S. Ct. 2463, 2469, 105 L. Ed. 2d 229 (1989). The Court reasoned that attorney's fees "are to be based on market rates" and such rates are based on the assumption that bills will be paid reasonably promptly; delays in payment thus deprive successful litigants of the market rates. Id. at 283, 109 S. Ct. at 2469. To make up the difference, losses from delay can be compensated "by the application of current rather than historic hourly rates or otherwise." Id. at 284, 109 S. Ct. at 2469. Thus, the Court held that there may be some adjustment for the delay, but the method of adjustment is somewhat discretionary; it does not necessarily call for payment of the lawyer's current hourly rate. Because a "reasonable" fee should mean the same thing under all federal fee-shifting statutes, City of Burlington v. Dague, 505 U.S. 557, 562, 112 S. Ct. 2638, 2641, 120 L. Ed. 2d 449 (1992), Jenkins calls for a delay enhancement under the LHWCA.

Respondents, however, argue that LHWCA cases are different because in such cases delay is a fact of life. They rely on Hobbs v. Director, OWCP, 820 F.2d 1528 (9th Cir. 1987), where we upheld the BRB's first attempt to address delay enhancements. We deferred to the BRB's presumption that a reasonable fee under the LHWCA did not call for a delay enhancement because attorneys for longshoremen typically factor in the likelihood of delay when they set their fees. Id. at 1529-30. But as the BRB recently acknowledged, Jenkins and Dague have changed the fee-shifting landscape since Hobbs, so that LHWCA cases may not be given special treatment; a delay enhancement is therefore appropriate under the Act. Nelson v. Stevedoring Services of America, et al., 29 BRBS 90, 97 (1995) ("In light of the Supreme Court's decisions in Jenkins and Dague, it is clear that enhancement for delay is appropriate in fee awards under Section 28 of the Act."). And, as in Hobbs, we "will respect the Board's interpretation of the Act if that interpretation is reasonable and reflects the policy underlying the statute." Hobbs, 820 F.2d at 1529; see Mesa Verde Const. Co. v. Northern Cal. Dist. Council of Laborers, 861 F.2d 1124, 1134-35 (9th Cir. 1988) (three judge panel is free to adopt a new and reasonable agency interpretation of the law so long as "prior decisions of this court constitute [d] only deferential review"). To the extent the BRB in this case relied on Hobbs 's presumption against delay enhancements, ER at 46, its decision contravenes the position it took in Nelson.¹  Because we must defer to the Board by adopting its more recent interpretation in Nelson, our decision in Hobbs regarding the availability of delay awards is no longer good law in this circuit.

In addition to relying on Hobbs, the BRB below deferred to the OWCP district director, holding that a delay enhancement was purely discretionary in this case. Although Nelson appears to circumscribe the district director's discretion to deny an enhancement even in cases of ordinary delay,²  Anderson's case is much stronger because it involves extreme delay: Ten years elapsed between the time services were rendered and the time a fee was awarded. There is no indication that Anderson's lawyer bears any blame for this delay; he filed his fee application in 1986 for services rendered between 1982 and 1984, but the OWCP did not rule on it until 1992, almost 6 years later.³  It has now been 14 years since Anderson's lawyer was hired, and he still hasn't been paid. Nelson involved only an 11 year wait for payment. More importantly, the lawyers in Nelson did not have to wait almost 6 years for action on their fee petition. Nevertheless, the BRB found that it was an abuse of discretion to fail to award a delay enhancement in Nelson. A fortiori, the same is true here.

We therefore remand to the OWCP to award a delay enhancement. Under normal circumstances, the OWCP would be entitled to exercise its discretion in selecting the method of enhancement by awarding either current rates or historic rates adjusted to reflect present values. See Gates v. Deukmejian, 987 F.2d 1392, 1407 (9th Cir. 1992). However, these are extraordinary circumstances, the delay being even more egregious than in Nelson where the BRB approved an award of current rates. To avoid the possibility of further delay caused by yet another appeal, we order the OWCP on remand to award Anderson's attorney fees at his current hourly rates.

III

It's now well established that time spent in preparing fee applications under 42 U.S.C. § 1988 is compensable. Clark v. City of Los Angeles, 803 F.2d 987, 992 (9th Cir. 1986). Such compensation must be included in calculating a reasonable fee because uncompensated time spent on petitioning for a fee automatically diminishes the value of the fee eventually received. As the definition of what is a reasonable fee applies uniformly to all federal fee-shifting statutes, Dague, 505 U.S. at 562, 112 S. Ct. at 2641, Clark applies here as well. The BRB erred in holding otherwise.

The respondents, nevertheless, argue that the time and costs claimed for preparation of the fee petition were excessive. This argument is misplaced: If Anderson's attorney spent too much time on the fee petition, the OWCP was entitled to reduce the award. See Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S. Ct. 1933, 1939-40, 76 L. Ed. 2d 40 (1983) (hours not "reasonably expended" should be excluded from the initial calculation); D'Emanuele v. Montgomery Ward & Co., 904 F.2d 1379, 1384 (9th Cir. 1990) (same). But the OWCP denied fees for preparation of the application altogether, so the question on appeal is not the reasonableness of the amount claimed, but whether any compensation for preparing fee applications must be included as part of an award. Our cases say they do. Consequently, the OWCP on remand shall award Anderson's counsel reasonable compensation for time spent preparing the fee applications.

VACATED AND REMANDED.