please which is this morning we are in the privilege of welcoming chief judge sue robinson from the district of delaware you can stand that's court judge especially an experienced judge such as drums and so we're we really are grateful to have her here now on to the business of the day in the first two cases if counsel for the well all three parties in those two cases could approach the lectern mr gallo it's and mr huffman for the we are going to propose unless there is a strong objection from any of the counsel to arrange the arguments a little differently but the proposal would be to have mr yallow its go first then avoiding the risk of repetition in argument or having the government responding in one case to arguments that may or may not have been made or may be made by i wanted the other accounts i think it would keep things easier for us at least if there's no objection show we proceed in that manner ok very well then we'll do that we will save each of you has has saved three minutes for rebuttal and we'll keep an eye on that and   bad faith but actually contemplates that the judges it will be paid not out of the general judgment but will be paid by the agency itself a reason for that is so that the agency states could only be held liable for bad faith and the litigation phase that subsection c would make no sense why would congress say if the if the department of justice bar had been cited with approval in you know a great number of supreme workplaces five or six supreme court cases give had been applied by the  but i think that's true i think i think that the in here power to shift fees is reserved for extreme cases i would submit this is an extreme case i don't think there's much question that it's circumstances well i don't think that the facts are on our can be laid on the facts of this case in in the way in the way that one might say the case is on all fours but i think that on established the principle which is that the courts have the power to look at the underlying conduct and here judge gr i don't have that i can't look at the underlying conduct and make a judgment about whether the agency acted bad faith and i think that if we look at cases around the country that have applied the bad faith test to government action we we do see facts that are similar to this and so far as instructive for the power   and i made them fairly broad pronouncements that you address directly the situation even in chambers be it in there is a dissent in chambers that addresses the question before us which is does the court that power to look at the operative conduct and and four of the five justices there on  said that the court does not have such power but the majority said we aren't serving that decision they said that we're not addressing this question and in chambers itself that the confronting him and and it's clear for example in the in the d c circuit the case is followed chambers have continued to live a standard that i'm arguing for underlying conduct the recalcitrance i guess to to choose a word that i don't think they actually use with respect to the compensation for the underlying conduct and of the this because i think the distinction between phases one and two is it's not it's not a useful distinction and i think a hypothetical about our case my instruct judge asked about the agency conduct and i said that i thought the agency was in bad faith and that the court had the power to say that and hold the united states liable for that they have faith in the from governments counterpart but and therefore under the sixth circuit taxonomy we are we are within phase is why we're in phases two and threatened to bring the lawsuit the government understood that government agents wrote that down and so from nine hundred eighty nine for the we were in sort of phase two of the six circuit  be kinds of can i can see the problem in this case i wonder there might be certain kinds of cases in which cases i forget i think one szymon was bad faith in litigation two was the i i think they did right but i can see how for example if you had a federal tort claims act case and you had an injury that was caused by terrible conduct but then the administrative claim was made which is a requirement in all of the ca cases and in the administrative claim one of two things would happen either there would be a reasonable determination that the as a matter of law there was not liability in which case you would say well that's not bad faith that's it was terrible conduct but the administers niall and ultimately the legal position taken in court would be perfectly all right that would be one category you could also have a category which suppose the agency said we're not going to allow any of these administrative claims let him so us in which case you could say that that pre lit a geisha conduct denial of any access to a resolution pre litigation would be in bad faith there it would seem that the the six circuits test actually would have some but there could be there could be that's what the legislative history says that is the reasoning the judges friendly used in the gerstner case in which you said it's a turn to that doesn't violate the american  guess my question i can't stray far from that though is that it was congress and the president which ultimately passed the legislation which constituted the breach and if it seems to me that it would be difficult any time the government loses with your standard it would be difficult if the government litigate and loses i'm not sure where you draw the line as you'd always be requesting attorney in your scenario so that's really two questions one is i don't know why the agencies conduct three breach has anything to do with this case in the second i don't know how the government can defend itself it not been for the deceptive conduct at the agency level and this was conduct in which agency employees the very people who only a few months earlier had we're not talking about every case we're talking about a very high standard here which is a subset of standard bad faith requires some moral culpability and it  full and accurate information and they assert on page eight that that is what the agencies did here and that because that's what they do or they say they cannot be found to be in bad faith i would agree with that if the agency's people in nineteen eighty ninety ninety one the treasury and the r t c had made full and accurate statements to congress that there would be no basis for bad fa of of anguish and shouts of despair by the agencies that their contracts were being their contractual obligations were being undermined the case as it came to us states but that would be bad say it would be honest but the agencies for whatever reasons and not to are that much and felt that they couldn't say that because it might not work i mean after all they'd be telling congress yeah we made the over we need you to break so what do they do they said there is no deduction you need to clarify that that will avoid litigation the treasury said we're there's no deductions we're prepared to vindicate this at the same time the same treasury official is telling this here in private if we author of that report and the author of the memo to be secure was personally involved right prior to that and saying exactly the opposite thing to congress to his agency to  statement there is no doubt in congress needs to clarify because to say the truth there is a deduction congress needs term retroactive for these deals even though we used it to get would have been politically difficult but i do think it's important to understand that that is different than the conduct which the trial court itself found was the basis for it determination that the implied company breached by the review legislation or even the allegation against the agencies that was what the court found turned bait and switch it was the behavior of using a fruit or form of consideration to entice someone into to enter into a deal with you and then you turn on you lobby congress to appropriate the fruit of that contract for the united states that was the breach of the five there is a long history of the five hundred of appropriating the fruits of the contract for oneself that has nothing to do with being deceptive in reports to congress that's statements to congress well i think it makes a difference because there are there is quite a bit of evidence in the record that congress was reacting to what the or d c and the treasury were asking for  so i don't think one can just simply discount the the contributing nature of the agency conduct to the ultimate breach but more importantly the under the easy test and  with which congress we believe warrants at least the trial for really examining that and seeing whether that bad faith was close enough for being factors to conduct that had played a role and was part of the reason we were forced into with aviation i think the ultimate question would be who would congress would we have happened with this case if the bothers me about the breadth of that of the d c circuit test as i understand it suppose you have underlying conduct by an agency that is all would agree  outlandish conduct but as to which the agency lawyers and then ultimately the department of justice dept of the weather in pre law suit or in the lawsuit take the position that there's qualified  immunity with respect to that conduct and that's a perfectly plausible defense they maintain that defense through an expensive litigation that goes all the way up to the supreme court at which point the supreme court holds for the first time that qualified immunity does statutory duty in the the initial statutory duty of the agency was clearly breached that is to say the duty of the agency not to intentionally seek to harm someone the plant that that's the substance of conduct from which the lawsuit flows now after that the department of justice looks at insist the agency has really acted badly but you know what we have a qualified immunity defense which is perfectly plausible we have to run with that we have are we represent the taxpayers we don't give away money where there is a legal obligation to do so and everything that's done after the initial outlandish conduct breach of the agency's duty to the plaintiffs is done in perfect good faith even though it ultimately is unsuccessful in that setting do you shift these under the d c circuits test and and your test here and if not what's the difference between that case and this case the first issue  to be split split away it's usually in this case that that example troubles me with respect to how far we would be going if we adopt the d c circuit clearly a violation of legal duties to the plaintiff but it is because of in my example qualified immunity not actionable it's terrible but it's not actionable i don't think that the felt that we were entitled to access to this deduction but that was the whole point of the and that it would be a breach of contract unfair and everything else to take it away have to deal having been done and we haven't given our consideration taking over his assets the actions of the agency the records to congress were all taking with that claim if you will in do you make of the second category szymon i think i understand the first and third i am struggling to understand the the exact parameters of the second i share your conduct and what i'm trying to see is the extent to which the government endorsers that exception to the no looking at prim litigation conduct white house doctor i understand that  purports to distinguish braun that's on the ground in part it least that this was really not so much the primary conduct so much as it was the denial of relief which was s open hence doesn't tell us anything other than what four nights of the supreme court would have done with this case i actually think change is good for that matter because i think if you look at butler the footnote really does say does it not that we're not say that it is soley prelate a geisha and in fact it's kind of before even the conduct that led to the underlying ring because the underlying claim is based on congress's breach in passing the legislation is it if in fact the standard is it can't be solely prevented a sure you can look at it but it can't be so only then is that a way to respond to the arguments or or are we talking about other well let me ask a question to drums this question because given that there is an apparent if not a square conflict among the circuits there's at least strong tension among the various circuit courts on this i mean this this is a case that could potentially find its way into spring court either way  we have to be very careful that we understand the full parameters of these tests so i i really want to make sure i understand exactly what the government's position is with respect to that second category here because the argument is being made by your your adversaries that szymon allows recovery even if a broad application of the fee shifting doctrine is the agency says let's suppose at the administrative clean level the agency the postal service in this case says we're not going to accept any of these claims these people can just so us in a certain number of mil just give up so to heck with them and the agency has let's assume that is bad faith they'll you're too in it to entertain these claims at the administrative stage at which point the person has to file suit that person filed suit and then the department of justice skin ducks the defense in perfect good faith and loose these are no fees in that case what's the department's position  was yes but not the litigation once the case made it to court then the litigation was in complete good faith everything that was done from the complaint on was in good faith but it's  no no so you're really asking us if i understand it to take not szymon not american hospital but a third position in which we would be out there alone i think i don't know of any other court that has gone beyond szymon and said under no circumstances even if you have engaged in conduct that forces the person to go to court to vindicate their claims that there is no right to be that's that is that your position respect to conduct during during the litigation not conduct that gave rise to the cause of that association inflated senders but that that doesn't as i understand it that doesn't walk away from egypt we believe not only does not lend support to the plaintiffs it lends support the us and egypt of course i'm sure the poorest familiar with the difference between section twenty four twelve deep and section twenty four twelve centex in their brief makes much of the legislative history from one hundred eighty five where it is and we agree that this pretty clear that the purposes of section twenty four twelve did you look at the underbody conduct as part of the analysis was whether the government w substantially justified there is explicitly says in the same legislative history they're talking about in the house report that you cannot consider that that would just leave history for purposes of section twenty four twelve b but but how c talks about this is if the agency who engages in their fake conduct that agency is the one who was supposed to pay the fees might be technically not universally but typically it's the department of are so since he didn't reach any of these questions were we to find it necessary to get to these issues we couldn't decide the case on iran could we without him to get back to judge we're looking i think oh yes that's good news or finding based kinds because i think that it's useful in sort of defining the difference between the d c circumstance or the shaman standard and the standard that the government is now  would say in that fades to here which is the administrative law the bad faith is also compounds and now the government is arguing phase one and they're arguing that not based on any circuit that has adopted their argument it based on the in first they draw from a dissent in the chambers case and on the theory that chambers inherently were subsequent she'll return form and i think they will agree for his good law their standard can apply and  was phase one hold he never looked at the face to that he said i'm not going to look at the phase two i'm only going to look at the department of justice and i agreed that they were actually i'm not sure that he went quite that far and maybe you can help me i interpreted what he was saying is that in this case there isn't a she mine face to perhaps he's her but i think he did say a period in which people in to support it litigation but it hasn't yet risen and we know people can start shredding documents and doing things that that would enhance their their ability to win their case that they sense to adoption mark is because in this case there's not a clean sort of break between faces three to one faces three in two melded together to a significant jurisdiction so i do think that that's necessary and department of justice counsel said it's the agency's comply with the statute to make full and complete purports to congress so long as they