Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-01360/USCOURTS-caDC-97-01360-1/pdf.json

Parties Involved:
Air Transport Association of Canada
Petitioner
Federal Aviation Administration
Respondent

Document Text:

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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 United States reimburse the Air Transport Association of Canada

for attorneys' fees and expenses incurred during its preparation 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

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For the Court:

Mark J. Langer, Clerk

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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,

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the United States." Petitioners therein raised several procedural and substantive objections to the schedule. We rejected 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 entirety and remanded to the FAA for further proceedings. Petitioners' 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 basing 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 objection 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 recompense 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 circumstances 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

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on the law and the facts." Cinciarelli v. Reagan, 729 F.2d

801, 806 (D.C. Cir. 1984). To establish substantial justification, 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 government's position was reasonable "on the full range of issues

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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 government action is either grouped with other actions or is a

component of some greater action. Presumably the government 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 Congress'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 otherwise legitimate EAJA claim of a litigant who has succeeded

in obtaining precisely the relief it prayed from the government 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. Nonetheless, in the face of these admitted inarguables, the Administration 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 providing the service rendered. All that the Administration's reasoning 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.

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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 denying 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 vigorous enforcement efforts. It also gives the court discretion to deny awards where equitable considerations dictate 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 determinUSCA Case #97-1360 Document #388319 Filed: 10/09/1998 Page 7 of 11
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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 determined schedules are encompassed within the amounts

unlawfully extracted from them but now refunded, the airlines 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 "without clean hands." 706 F.2d at 99.

That theme of "unclean hands" pervades the jurisprudence

of "special circumstances" under EAJA. In Taylor v. United

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States, 815 F.2d 249 (3d Cir. 1987), the court denied attorneys' fees where the applicant had taken advantage of unlawful 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 Robert'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 exceeding the amount that actually resulted from the invalidated regulation. There was no argument against the proposition 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 windfall 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 awarded 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:

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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 application 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 successful 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 professional 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.

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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 adjudication.' " Hirschey v. FERC, 760 F.2d 305, 311 (D.C. Cir.

1985). Again, however, ATAC's petition, affidavit, and accompanying documentation support its claim, and as to attorneys' 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 performed 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 petitioner'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 contemporaneously with the filing of this opinion an order allowing

ATAC's petition for fees in the amount of $99,246.93.

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