Air Trans Assn Can v. FAA ( 1998 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed October 9, 1998
No. 97-1360
Air Transport Association of Canada,
Petitioner
v.
Federal Aviation Administration,
Respondent
Consolidated with
Nos. 97-1356, 97-1357, 97-1358, 97-1359,
97-1362, 97-1363, 97-1364
---------
On Petitioner's Motion for Attorneys' Fees
---------
Before: Wald, Sentelle, and Henderson, Circuit Judges.
O R D E R
This matter coming to be heard and being heard before the
court upon the application of the Air Transport Association of
Canada for reimbursement of attorneys' fees pursuant to the
Equal Access to Justice Act, 28 U.S.C. s 2412(d), and it
appearing to the court for the reasons set forth more fully in
the opinion filed contemporaneously herewith that the motion
is well taken, it is hereby
ORDERED, ADJUDGED, and DECREED that the Unit-
ed States reimburse the Air Transport Association of Canada
for attorneys' fees and expenses incurred during its prepara-
tion for Asiana Airlines v. Federal Aviation Administration,
134 F.3d 393 (D.C. Cir. 1998), in the amount of $99,246.33 this
9th day of October, 1998.
Per curiam
For the Court:
Mark J. Langer, Clerk
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed October 9, 1998
No. 97-1360
Air Transport Association of Canada,
Petitioner
v.
Federal Aviation Administration,
Respondent
Consolidated with
Nos. 97-1356, 97-1357, 97-1358, 97-1359,
97-1362, 97-1363, 97-1364
On Petitioner's Motion for Attorneys' Fees
---------
Before: Wald, Sentelle and Henderson, Circuit Judges.
Opinion for the court filed by Circuit Judge Sentelle.
Sentelle, Circuit Judge: On January 30, 1998, we issued
an opinion allowing multiple consolidated petitions to vacate a
fee schedule imposed by the Federal Aviation Administration
("FAA" or "the Administration") against foreign air carriers
for services provided to airline overflights. The matter now
returns to us on the application of Air Transport Association
of Canada ("ATAC"), one of the original petitioners, for
attorneys' fees. The FAA offers various objections both as to
ATAC's entitlement and the amount of the fees sought.
Finding the application to be meritorious, and the objections
to be without merit, for the reasons more fully set out below,
we allow the application.
Background
In our original opinion in this matter, Asiana Airlines v.
Federal Aviation Administration, 134 F.3d 393 (D.C. Cir.
1998), we reviewed an FAA fee schedule established pursuant
to 49 U.S.C. s 45301(a)(1) covering "[a]ir traffic control and
related services provided to aircraft other than military and
civilian aircraft of the United States government or of a
foreign government that neither take off from, nor land in,
the United States." Petitioners therein raised several proce-
dural and substantive objections to the schedule. We reject-
ed procedural challenges for reasons set forth in our earlier
opinion, but concluded that the substantive objections were
meritorious. Therefore, we vacated the schedule in its entire-
ty and remanded to the FAA for further proceedings. Peti-
tioners' objection, with which we agreed, was straightforward.
In the enabling statute, Congress had expressly directed the
Administration to "ensure that each of the fees required ...
is directly related to the Administration's costs of providing
the service rendered," 49 U.S.C. s 45301(b)(1)(B). The FAA
conceded the correctness of petitioners' rather unremarkable
interpretation that the statute forbade the agency from bas-
ing fees on the value of services to the recipient rather than
on cost to the provider. Because the Administration had
determined its fee schedule based in essential part on the use
of a system called "Ramsey pricing," which derived from
nothing other than the value of services to the recipient, we
had no difficulty in ruling that petitioners' substantive objec-
tion was well taken. 134 F.3d at 401-03. Because the rule
before us and the supporting material "suggest[ed] no way to
circumscribe a component of the fees based entirely on direct
costs of services," we struck down the schedule in its entirety.
Id. at 403. Successful petitioner ATAC now seeks recom-
pense for a portion of its attorneys' fees under the Equal
Access to Justice Act ("EAJA"), 28 U.S.C. s 2412(d). Under
that Act, we are required to "award to a prevailing party" of
qualifying size against the United States fees and expenses
inclusive of "reasonable attorney fees," subject to defenses
and exceptions created by the Act. 28 U.S.C. s 2412(d)(1)(A)
& (2)(A). While conceding that ATAC is a prevailing party
for purposes of the Act, the FAA contests both its entitlement
to fees and the amount of those fees on statutory grounds.
Upon review of ATAC's claims and the FAA's defenses, we
conclude that ATAC is correct as to its entitlement and the
amount.
A. Entitlement
The EAJA provides, in pertinent part, that "a court shall
award to a prevailing party ... fees and other expenses ...
incurred by that party in any civil action ... including
proceedings for judicial review of an agency action, brought
by or against the United States ... unless the court finds
that the position of the United States was substantially
justified or that special circumstances make an award unjust."
28 U.S.C. s 2412(d)(1)(A). While the FAA concedes that
ATAC is a prevailing party and meets other criteria for the
award of fees, it contests ATAC's entitlement, arguing that
the position of the United States (in this case, its agency
FAA) was substantially justified and that special circum-
stances would make an award unjust. Both objections fail.
1. Substantial Justification
Where, as here, a movant under the EAJA has established
that it is a prevailing party, "the burden is on the government
to show that its litigation position was substantially justified
on the law and the facts." Cinciarelli v. Reagan, 729 F.2d
801, 806 (D.C. Cir. 1984). To establish substantial justifica-
tion, the government need not establish that it was correct--
indeed, since the movant is established as a prevailing party it
could never do so--but only that its position is one that "a
reasonable person could think ... correct, that is, [that the
position] has a reasonable basis in law and fact." Pierce v.
Underwood, 487 U.S. 552, 566 n.2 (1988). The FAA claims
that it has met that standard because ATAC raised five issues
in its appeal, and the FAA prevailed on four of them. The
Administration argues that we should conclude that the gov-
ernment's position was reasonable "on the full range of issues
ATAC presented" and was therefore substantially justified.
Brief of the FAA, citing Roanoke River Basin v. Hudson, 991
F.2d 132, 139 (4th Cir. 1993).
We cannot accept what the government styles as a "holistic
approach" to determining whether an agency's position is
substantially justified under the Act so as to bar the recovery
of attorney fees by a prevailing party. That is, it cannot be
the case that Congress intended that a party who prevails on
an essential ground of a petition to set aside government
action cannot recover the congressionally contemplated fees
because the government's action was substantially unjustified
on only one of several possible bases. Virtually any govern-
ment action is either grouped with other actions or is a
component of some greater action. Presumably the govern-
ment is usually substantially justified on most of its actions.
If a litigant who has successfully challenged a government
action as substantially unjustified and achieved a complete
victory in terms of the relief prayed cannot recover EAJA
fees because of this well-nigh universal grouping, then Con-
gress's enactment of the EAJA becomes a virtual nullity.
While we do not suggest that the substantial justification
question can be determined without context, this does not
mean that the context can be so "holistic" as to allow the
government's generally justifiable conduct to defeat the oth-
erwise legitimate EAJA claim of a litigant who has succeeded
in obtaining precisely the relief it prayed from the govern-
ment because of the substantially unjustified element under
litigation. If the government would defeat ATAC's claim, it
must do so by showing that the Administration's use of
Ramsey pricing was substantially justified.
The Administration makes a stab at justifying its action.
It admits certain inarguable propositions: Congress directed
it to "ensure that each of the fees required ... is directly
related to the Administration's costs of providing the service
rendered," 49 U.S.C. s 45301(b)(1)(B) (emphasis added);
Ramsey pricing allocates each fee not on a cost basis but on
the basis of the inflexibility of the demand among the users;
the Administration determined each fee charged ATAC and
the other petitioners on the basis of Ramsey pricing. None-
theless, in the face of these admitted inarguables, the Admin-
istration insists that because the total price structure was
designed to recover the Administration's costs, that meant
that the scheme complied with the statutory requirement that
each fee be cost based. To allow that reasoning to control
would be to write out of the statute the requirement that
"each of the fees" be "directly related" to the cost of provid-
ing the service rendered. All that the Administration's rea-
soning can establish is that the totality of the fees charged all
users is ultimately related to the cost of providing all services.
We cannot hold that an attempt by an agency to completely
displace Congress is substantially justified. We therefore
hold that the respondent has failed to meet its burden of
establishing that its actions meet this exception to the Equal
Access to Justice Act.
2. Special Circumstances
The Administration next argues that even if ATAC's fee
petition survives the substantial justification exception, it
should be denied under the second statutory exception deny-
ing fees when "special circumstances make an award unjust."
28 U.S.C. s 2412(d)(1)(A). The statute makes no attempt to
define or in any way delineate what circumstance might be of
the special sort warranting an exception to the EAJA. The
statutory history, for what it's worth, includes a passage in
the House Report accompanying the EAJA describing this
exception as a "safety valve" and declaring that it
helps to insure that the Government is not deterred from
advancing in good faith the novel but credible extensions
and interpretations of the law that often underlie vigor-
ous enforcement efforts. It also gives the court discre-
tion to deny awards where equitable considerations dic-
tate an award should not be made.
H. R. Rep. No. 1418, 96th Cong., 2d Sess. at 11, reprinted in
1980 U.S.C.C.A.N. 4953, 4984, 4990.
With the scant guidance of the sparse legislative language
and the snippet of history, courts have generally held that the
statutory language expresses a congressional directive for
courts "to apply traditional equitable principles" in determin-
ing whether a prevailing party should receive a fee award
under EAJA. Oguachuba v. INS, 706 F.2d 93, 98 (2d Cir.
1983). This seems sound as a guiding principle, although we
have no occasion to attempt to establish a general rule of
limitation on the application of that exception to the fee
awards statute. In this case, the Administration contends
that "traditional equitable principles" should bar a recovery
because the Administration has made full reimbursement of
all illegally determined fees to the members of ATAC and
others who had paid fees under the improperly determined
fee schedule. As the Administration notes, had it set the fees
properly, those members would have paid some amount of
money. Thus, to the extent that amounts which could have
been lawfully collected from the airlines under properly de-
termined schedules are encompassed within the amounts
unlawfully extracted from them but now refunded, the air-
lines have realized a windfall.
As a bare logical proposition, what the Administration
asserts is true. As a practical guideline to whether ATAC
should recover a fee award in this case, the proposition is of
little help. Neither the Administration, nor the petitioner,
nor the court has any real idea what the numbers would be in
the phantom calculation proposed by the Administration.
The theoretical application of general principles of equity is
not the sort of application of traditional principles upon which
courts have based a denial of fee award in other cases. For
example, in Oguachuba, upon which the Administration relies,
the habeas corpus petitioner who was seeking the fee award
had repeatedly violated federal immigration law in numerous
ways "hoping to cause a technical error by the INS which
would allow him to remain in this country." Though he
indeed prevailed on his writ for habeas corpus, "he would not
have been incarcerated in the first place but for his notorious
and repeated violations of the United States immigration
law." In denying him counsel fees, the Second Circuit,
speaking in "classic equity terms," declared him to be "with-
out clean hands." 706 F.2d at 99.
That theme of "unclean hands" pervades the jurisprudence
of "special circumstances" under EAJA. In Taylor v. United
States, 815 F.2d 249 (3d Cir. 1987), the court denied attor-
neys' fees where the applicant had taken advantage of unlaw-
ful government action and then challenged that action in
order to avoid imprisonment under a valid manslaughter
conviction. In United States Dep't of Labor v. Rapid Rob-
ert's, Inc., 130 F.3d 345 (8th Cir. 1997), the court denied a fee
award to a petitioner who had reaped a windfall, but the
windfall there was far different than the one argued by the
government in the present case. In Rapid Robert's, the
petitioner had unquestionably committed illegal acts, but the
Department of Labor had imposed some of its penalties
under an improperly promulgated regulation. A district
court relieved Rapid Robert's of penalties considerably ex-
ceeding the amount that actually resulted from the invalidat-
ed regulation. There was no argument against the proposi-
tion that Rapid Robert's had acted illegally, only that a
portion of the fines (in the view of the Circuit an excessive
portion) had been remitted. The uncalculated possible wind-
fall in the present case does not bear the same stigma of
unclean hands, nor should it cause the same result.
In sum, the FAA has not established that this case comes
within either of the exceptions to the fee award statute of
EAJA, 28 U.S.C. s 2412(d). We therefore will enter an
award as prayed by petitioner.
B. Amount
Although we conclude that the petitioner is entitled to an
award, we nonetheless must consider the Administration's
objections to the amount prayed. As the Administration
argues, ATAC prevailed on only one of the grounds asserted.
The Administration contends that under National Ass'n of
Concerned Veterans v. Secretary of Defense, 675 F.2d 1319,
1327 (D.C. Cir. 1982), ATAC should therefore only be award-
ed fees for the amount of attorney time spent on that issue.
ATAC does not dispute this proposition. Because ATAC
does not raise the issue, we need not consider whether the
present petition is governed by National Ass'n of Concerned
Veterans or by Hensley v. Eckerhart, 461 U.S. 424, 435
(1983), which held that:
Litigants in good faith may raise alternative legal
grounds for a desired outcome, and the court's rejection
of or failure to reach certain grounds is not a sufficient
reason for reducing a fee. The result is what matters.
Given petitioner's concession, we accept the government's
proposition that only time spent on the Ramsey pricing issue
will be compensable.
Petitioner has filed an affidavit setting forth the hours
worked on this litigation by various professionals. The appli-
cation further contains calculations applying to the hours
worked, fee rates reflecting the cap of $125 per hour imposed
by EAJA, 28 U.S.C. s 2412(d)(2)(A)(i) & (ii). After making
other adjustments, the applicant applies a 40% multiplier to
the figure to represent the portion of the total time which
ATAC asserts was devoted to the issue on which it prevailed.
Based on its calculations, ATAC prays a total of $99,246.93.
The Administration attacks the reasonableness of the
amount on two bases. First, it asserts that the 40% figure is
too high, and that 25% (or less) would be reasonable. It
offers little support for this proposition. The FAA argues
only that the ground for ATAC's success was a "narrow" one,
and that the court's opinion on the merits devoted only 25% of
its space to the issue. Neither of these arguments is helpful.
We are not at all certain what the Administration means by
the "narrowness" of the ground, but we know that it was
broad enough to entitle the petitioner to all the relief prayed.
As to the percentage of time properly allotted to the success-
ful issue, the ratio of the space devoted to it in our opinion to
the total length of the opinion bears no necessary relationship
to the ratio of the time afforded the issue by ATAC's profes-
sional representatives to the total time those professionals
expended on the case. Indeed, as ATAC points out, the
space ratio in its brief yields a 44% figure. The best evidence
before us as to a proper percentage is the affidavit of the
submitting professional, and the Administration has done
nothing to affect its credibility. We therefore employ the
40% figure submitted by ATAC.
The Administration's other argument for reducing ATAC's
prayer for fees is that some of the fees and expenses incurred
were attributable to the administrative proceedings prior to
the litigation before us and not to the litigation itself. As the
Administration notes, a petitioner for fees under EAJA "is
foreclosed from claiming fees for proceedings before the
agency unless those proceedings involved an 'adversary adju-
dication.' " Hirschey v. FERC, 760 F.2d 305, 311 (D.C. Cir.
1985). Again, however, ATAC's petition, affidavit, and ac-
companying documentation support its claim, and as to attor-
neys' fees, we will not reduce the amount prayed.
The Administration relies on the factually correct assertion
that much of the professional time for which ATAC claims
was incurred in connection with its unsuccessful motion for a
stay pending the appeal. ATAC claims that the work per-
formed in preparation for the state petition, e.g., in preparing
arguments on the "likelihood of success," contributed to the
ultimate result obtained in this litigation. We find the peti-
tioner's assertion persuasive. As the Ninth Circuit observed
in a fee awards case under a civil rights statute, 42 U.S.C.
s 1988, "Rare, indeed, is the litigant who doesn't lose some
skirmishes on the way to winning the war." Cabrales v.
County of Los Angeles, 935 F.2d 1050, 1053 (1991). We agree
with the Ninth Circuit that a litigant "who is unsuccessful at a
stage of litigation that was a necessary step to her ultimate
victory is entitled to attorney's fees even for the unsuccessful
stage." Id. Accordingly, we award ATAC the amount
prayed.
Conclusion
For the reasons set forth above, we are entering contempo-
raneously with the filing of this opinion an order allowing
ATAC's petition for fees in the amount of $99,246.93.