1 United States Court of Appeals,

Fifth Circuit.

No. 95-50060.

TEXAS FOOD INDUSTRY ASSOC., National-American Wholesale Grocers'

Assoc./International Foodservice Distributors Assoc., National

Grocers Assoc., Plaintiffs-Appellees,

v.

UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant-Appellant.

April 30, 1996.

Appeal from the United States District Court for the Western

District of Texas.

Before REYNALDO G. GARZA, JOLLY and DUHÉ, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

The National-American Wholesale Grocers'

Association/International Foodservice Distributors Association

("NAWGA") is a national trade association comprised of over 200

whol esale grocery distribution companies, a number of which are

multi-billion dollar corporations. NAWGA prevailed in litigation

against the Uni ted States. It now seeks an award of attorneys'

fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. §

2412 et. seq. EAJA limits eligibility for a fee award to entities

based on net worth and number of employee s. The sole question

presented by th is appeal is whether eligibility of a trade

association for an EAJA award is determined by reference to the

assets and size of the association itself or whether the

association's eligibil ity additionally hinges on the assets and

size of its constituent members. We conclude that, under the plain

language of the statute, an assoc iation's eligibility for a fee2

award under EAJA § 2412(d)(2)(B) depends only on the association's

net worth and size, and we affirm the di strict court's award of

attorneys' fees and expenses in the amount of $163,083.75 to NAWGA.

I

NAWGA incurred the attorneys' fees at issue when it and two

other meat and poultry industry trade associations (together, the

"Trade Associations") brought thi s action on behalf of their

members to delay implementation of an interimfinal rule

promulgated by the United States Department of Agriculture

("USDA"). The interim rule, which required packages of meat to

contain safe handling and preparation instructions, provided only

for a 30-day, post-rule comment period. USDA solicited no comments

prior to its promulgation of the interim rule.

In the merits phase of this action, the Trade Associations

challenged USDA's failure to comply with the notice and comment

requirements of the Administrative Procedure Act (the "APA"), 5

U.S.C. § 553. In October 1993, the district court entered judgment

for the Trade Associations, finding that USDA violated the APA and

preliminarily enjoining it from enforcing the interim rule. USDA

then issued a proposed rule in conformity with the APA. Following

a full comment period, USDA published a final rule on March 28,

1994, imposing essentially the same labelling requirements. The

Trade Associations then moved to dismiss their action against USDA

as moot. The district court granted dismissal on May 31, 1994.

On June 30, 1994, NAWGA, which financed the APA litigation for

itself and its co-plaintiffs out of its general operating budget,3

alone applied for attorneys' fees under EAJA, 28 U.S.C. § 2412(d).

It is this phase of the case that is at issue on this appeal. USDA

vigorou sly contested NAWGA's eligibility for an EAJA award,

contending, among other things, that NAWGA, which employs only 36

full-time employees and has a net worth of approximately $3.3

million, exceeded EAJA's eligibility limitations for net worth and

size. To be eligible for a fee award, an association must employ

no more than 500 employees and have a net worth of not more than $7

million. 28 U.S.C. § 2412(d)(2)(B)(ii). NAWGA was ineligible for

an EAJA award, USDA argued, because § 2412(d)(2)(B)(ii) requires

the aggregation of the net worth and size of a trade associations'

individual members when the association is representing primarily

the members' interests in litigation. USDA also argued that NAWGA

is ineligible for a fee award because the i ndividual ineligible

members of the Trade Associations would receive a "free ride" if

the costs of the APA litigation is paid for under EAJA.

The district court rejected USDA's aggregation an d "free

rider" arguments and awarded NAWGA fees and expenses in the amount

of $163,083.75. USDA filed a timely notice of appeal from the EAJA

award on the question of NAWGA's eligibility for fees.

II

We review the conclusions of law underlying a denial of

attorneys' fees de novo. Perales v. Casillas, 950 F.2d 1066, 1072

(5th Cir.1992). Because EAJA is a partial waiver of sovereign

immunity, it must be strictly construed in the government's favor.

Ardestani v. INS, 502 U.S. 129, 137, 112 S.Ct. 515, 520-21, 1161 The circuit courts have divided on the issue of

aggregation. The United States Court of Appeals for the Sixth

Circuit, in National Truck Equipment Association v. National

Highway Traffic Safety Administration, ruled that aggregation is

appropriate where an association's members received significant

benefits from affiliating with the association in the litigation.

972 F.2d 669 (6th Cir.1992). In contrast, the United States

Court of Appeals for the Ninth Circuit, in Love v. Reilly, held

that where an association is a legitimate party with standing in

litigation, the fact that an ineligible constituent member

benefitted from the litigation does not preclude an EAJA fee

award to the association. 924 F.2d 1492, 1494 (9th Cir.1991).

4 L.Ed.2d 496 (1991); Perales, 950 F.2d at 1076.

Whether the aggregation of the net worth and size of an

association's members is required when determining the

association's eligibility for a fee award is a question of the

proper interpretation of § 2412(d)(2)(B)(ii). 1 A prevailing party

is eligible for fees and expenses only if he meets the statutory

definition of a party:

(d)(2) For purposes of this subsection—

(B) "party" means

... (ii) any owner of an unincorporated

business, or any partnership, corporation, association,

unit of local government, or organization, the net worth

of which did not exceed $7,000,000 at the time the civil

action was filed, and which had not more than 500

employees at the time the civil action was filed; e xcept

that an organization described in s ection 501(c)(3) of

the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3))

exempt from taxation under section 501(a) of such Code,

or a cooperative association as defined in section 15(a)

of Agricultural Marketing Act (12 U.S.C. 1141(j)(a)), may

be a party regardless of the net worth of such

organization or cooperative association * * *.

28 U.S.C. § 2412(d)(2) (emphasis added).

NAWGA urges us to accept the district court's construction of

§ 2412(d)(2) that a prevailing association is a "party" if it meets

the provision's bright-line rule for eligibility, and nothing more.2 Because of this carve out, non-profits and agricultural

cooperatives qualify for an EAJA fee award even if their net

assets exceed $7 million.

3 Senator DeConcini remarked that:

In the West, and I suspect in other parts of the

country, small farmers often band together to form

agricultural cooperatives. They have often been

considered as a unit particularly in determining their

assets for insurance and borrowing purposes. Such

aggregate treatment would cause the whole cooperative

to exceed the [then] $5 million limitation.

Reauthorization of EAJA, Hearing Before the Subcomm. on

Administrative Practice and Procedure of the Senate Comm. on

the Judiciary, 98th Cong., 1st Sess. 17 (April 14, 1983).

4 USDA also notes that Congress has clarified the definition

of "party" since enacting EAJA, to express its intent that a

local labor union's "entitlement to fees should be determined

without regard to the assets and/or employees of the

international union with which the local is affiliated."

H.R.Rep. No. 99-120, 99th Cong., 1st Sess. at 17., reprinted in

1985 U.S.S.C.A.N. 132, 146.

5 Although USDA concedes that "neither the language of the statute

nor the legislative history explicitly directs aggregation of the

net worth and number of employees of an association's members," it

nevertheless contends that structure of § 2412(d)(2)(B) betrays an

implicit aggregation requirement that is applicable here.

As support for its construction, USDA points out that §

2412(d)(2) explicitly exempts agricultural cooperatives and

non-profit organizations from E AJA's net worth limit. 2 Citing

Senator DeConcini's post-enactment explanation of the provision, 3

USDA characterizes this treatment of agricultural cooperatives and

non-profits a s a waiver of the statute's "implicit net worth

aggregation requiremen t." From these "exceptions" 4 and the

statutory canon expressio unius est exclusio, USDA concludes that5 Congress may have been motivated by its desire to preserve

the assets of non-profits for charitable purposes and to maintain

the assets of cooperatives for use in farmer cooperative

6 "§ 2412(d)(2)(B)(ii) should be construed to exempt from the

aggregation requirement only the

... types of associations

specifically referred to by Congress, and no others."

We examine first the language and structure of EAJA to

determine the proper meaning of the term "party." Section 2412(d)

provides that attorneys' fees shall be awarded to pre vailing

parties and explicitly includes in the definition of a party any

"association,

... the net worth of which did not exceed $7,000,000

at the time the civil action was filed, and which had not more than

500 employees at the time the civil action was filed." §

2412(d)(2)(B). This language is clear and unambiguous. Nowhere

does it limit EAJA's application only to associations whose members

individually are eligible for EAJA fees. Instead, it imposes a

ceiling only on the net worth and size of the association itself.

It was open to Congress to include additional limitat ions on

eligibility, such as the aggregation rule that USDA advocates, but

Congress did not do so.

We are unpersuaded, moreover, that EAJA's special eligibility

rule for agricultural cooperatives and non-profit organizations is

evidence of an implicit aggregation rule. Neither the statute nor

its legislative history suggest that the special eligibility rule

for a gricultural cooperatives and non-profits was motivated by

concerns about ineligibility resulting from the aggregation of

employees and assets. 5 Indeed, this rule does not even address theventures, however the net worth of these entities might be

calculated. See Gregory C. Sisk, The Essentials of the Equal

Access to Justice Act: Court Awards of Attorney's Fees for

Unreasonable Government Conduct, 55 La.L.Rev. 217, 360 (1995).

6 Significantly, the proof of aggregation that USDA offers

does not support the particular aggregation rule it advances: to

determine an association's EAJA eligibility, the net worth and

number of employees of an association's constituent members are

aggregated; an association is ineligible for EAJA fees if either

aggregate figure exceeds the statutory limitations. Section

2412(d)(2), however, excepts agricultural cooperatives and

tax-exempt organizations only from the net worth ceiling, not the

employment size limitation. Clearly, this limited exception

cannot support an implicit rule requiring the aggregation of

employees and assets.

7 subject of "aggregation"; instead, it allows a s ingle agricultural

cooperative or a single nonpr ofit organization to qualify for an

EAJA fee award regardless of the singular net worth of that

entity. 6

Neither are we persuaded, on the basis of Senator DeConcini's

statement, that this special eligibility rule is to be construed as

a waiver of some implicit aggregation requirement. As the Supreme

Court has made clear, post-enactment legislative history does not

control a statute's interpretation. P ierce v. Underwood, 487 U.S.

552, 566, 108 S.Ct. 2541, 2550-51, 101 L.Ed.2d 490 (1988). In sum,

we are unable to discern in the unadorned words of § 2142(d)(2)(B)

an unwritten aggregation requirement. As we have stressed

repeatedly, we must "presume that a legislature says in a statute

what it means and means in a statute what it says." U .S. v. Meeks,

69 F.3d 742, 744 (5th Cir.1995) (citing Connecticut Nat'l Bank v.

Germain, 503 U.S. 249, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992)).

Notwithstanding this cardinal canon of statutory8

construction—that the words of a statute will be given their plain

meaning absent ambiguity—USDA contends that an implicit aggregation

rule also is necessary in order to avoid a result "that is plainly

at variance with the policy of the legislation as a whole."

Congress intended in EAJA , USDA argues, to reduce the financial

deterrent only to small entities in litigating against the United

States; it did not intend fee awards to extend to associations

like NAWGA, whose membership includes multi-billion dollar

corporations that have bountiful coffers from which to pay

attorneys' fees. Such an "absurd result" is avoided, USDA

maintains, by recognizing an implicit aggregation rule.

Because we think that judicial inquiry into the applicability

of § 2414(d)(2)(B) must begin and must end with § 2414(d)(2)(B)'s

clear and unambiguous words, we also reject USDA's contention that

aggregation will effect Congress' intent. The statute's purpose,

by its plain language, is to make associations eligible for an

award on the basis of each association's independent

qualifications—not the qualifications of its constituent members.

Congress surely understood that "associations" are made up of

constituent members, some more wealthy and larger than others, yet

who have joined together to further a common business purpose. It

is not implausible that Congress would think it appropriate to

treat associations qua associations instead of atomizing the body

politic of each association, then i nspecting and distinguishing

each comp onent member to determine whether each is individually

eligible. Neither is it inconceivable that Congress envisioned an7 We also reject USDA's related argument that NAWGA is

ineligible for a fee award because NAWGA's members received a

"free ride" in the APA litigation. In State of Louisiana, Ex.

Rel. Guste v. Lee, we held that in special circumstances,

participation in litigation by an eligible party may make an EAJA

award for other eligible parties unjust. 853 F.2d 1219, 1225

(5th Cir.1988). This is so where the claimant for attorneys'

fees is an eligible party who takes a "free ride" through

litigation by joining an ineligible party who is "fully willing

and able to prosecute the action against the United States." Id.

In contrast, we concluded that "if the ineligible party's

participation is nominal or narrow, then the eligible parties

should not be denied the access that Congress sought to ensure by

enacting the EAJA." Id.

9 association as the only viable vehicle for certain small businesses

to prosecute their claims against the United States. In order to

deny the benefits of an EAJA award to an association's wealthy,

ineligible members, USDA would have us unfairly exclude from EAJA's

clear reach an association's eligible members.

USDA also fails to recognize th at any implicit aggregation

rule may well have application to entities other than associations.

S ection 2412(d)(2) lists as eligible parties the owners o f

unincorporated businesses, as well as partnerships, corporations,

and units of local government. Although we expressly do not pass

on the question, we find it unlikely that Congress intended an

impli cit aggregation rule to apply to these entities. Congress,

for example, presumably did not intend that the courts determine a

corporation's eligibility for a fee award by reference to the

assets and employees of the corporation's individual shareholders.

In sum, we believe that the statute's plain language provides

no basis for the aggregation requirement that the government would

have us engraft. 7 Accordingly, we AFFIRM the district court'sAs USDA concedes, the "free-rider" analysis in Guste is

limited to suits prosecuted against the United States by

co-plaintiffs who both are eligible and ineligible,

respectively, for EAJA fees, a situation not present here.

10 award of EAJA fees to NAWGA in the amount of $163,083.75.

AFFIRMED.

REYNALDO G. GARZA, Circuit Judge, dissenting:

The majority would al low a trade association representing

billion dollar corporations to receive an award of attorneys' fees

under the Equal Access to Justice Act ("EAJA"). Because such a

ruling ignores the intent of Congress to lessen the burden for

small economic entities to seek review of or defend against

unreasonable governmental actions, I respectfully dissent.

The majority relies on a plain-meaning approach to conclude

that the National-American Wholesale Grocers'

Association/International Foodservice Distributors Association

("NAWGA") has met the eligibility requirements for attorneys' fees

under EAJA, 28 U.S.C. § 2412(d)(2)(B)(ii). NAWGA was a prevailing

party against the government, had a net worth less than $7 million

and fewer than 500 employees, and funded the litigation. At first

glimpse, NAWGA apparently qualifies for an award. I agree with the

majority that the text is paramount but I also agree with them that

when strict adherence to the words of a statute "[leads] to absurd

or futile results," the Court should "look[ ] beyond the words to

the purpose of the act." U nited States v. American Trucking

Associations, 310 U.S. 534, 543, 60 S.Ct. 1059, 1064, 84 L.Ed. 1345

(1940) (footnote omitted). Even "when the plain meaning [does] not1 NAWGA has admitted on appeal that its members include

Supervalu Inc. ($12.57 billion in revenues and 42,000 employees),

Fleming Companies, Inc. (sales of $12.93 billion and 22,900

employees), SYSCO Corp. ($8.9 billion and 23,000 employees), and

Kraft Foodservice, Inc. (sales of $120 million and 300

employees). See Standard and Poor's Register of Corporations,

Directors, and Executives 1994 (covering 1993, the pertinent

year).

11 produce absurd results but merely an unreasonable one "plainly at

variance with the policy of the legislation as a wh ole,' " the

Court should "follow[ ] the purpose rather than the literal words."

Id.

This Court should constru e the language of EAJA to "give

effect to the intent of Congress." I d. at 54 2, 60 S.Ct. at 1063

(footnote omitted). We should avoid an interpretation that

violates the intent of Congress to open the court to small economic

entities in litigation with the government. 1 Considering the text

and purpose, I believ e that an award to NAWGA, which is clearly

acting on behalf of its megalithic members, is an unreasonable

and/o r absurd result. In support of my assertion, I would adopt

the reasoning and result of a Sixth Circuit decision, National

Truck Equip. v. National Hwy. Safety Admin., 972 F.2d 669, 673-674

(6th Cir.1992), which considered the problem currently before this

panel.

In National Truck E quip., an association of truck part

manufacturers had successfully overturned an agency safety rule on

procedural grounds and requested fees under EAJA. I d. at 670. The

Sixth Circuit concluded that agg regation of the net worth and

number of employees of trade association members is required when2 In 1985, Congress clarified the definition of "party" as it

applies to "associations" in § 2412(d)(2)(B)(ii) to exempt

certain local unions from the net worth requirement if they are

separate from their international union affiliates by law.

H.R.Rep. No. 99-120, 99th Cong., 1st Sess. at 17, reprinted in

1985 U.S.C.C.A.N. 132, 146. The House Committee's statement on

this provision supports an aggregation requirement:

It is the Committee's intent that if the local union is

to be considered to be a separate labor organization

for purposes of the Labor Management Reporting and

Disclosure Act of 1959, it should be considered to be a

separate organization for purposes of EAJA as well, and

the local's entitlement of fees should be determined

without regard to the assets and/or employees of the

international union with which the local is affiliated.

Id. Why create an exemption here if the district court is

to look merely at a discrete association without considering

that association's affiliation. NAWGA is in a similar

position to the local union with regard to NAWGA members.

NAWGA is its members when it acts solely in their interest.

Those members' net worth and number of employees should be

considered in that situation when determining eligibility.

12 those associa tions are primarily representing the interests of

their members. I d. at 673. The truck parts association was not

entitled to fees because the aggregate net worth and number of

employees of its members exceeded the eligibility standards. Id.

Examining the text of EAJ A, the Sixth Circuit noted that

Congress specifically exempted three types of associations from the

net worth requirement (agricultural cooperatives, non-profit

organizations and certain local unions). I d. at 673-674. The

exemptions chosen suggest that Congress was aware that aggregation

could render these types of organizations ineligible. 2 Congress

made a policy choice to exempt them from the net worth requirement.

While these exemptions do not use the word "aggregation,"

legislative history is informative.3 The analysis in this dissent is limited to aggregation as

it would apply to associations. Whether other entities would be

affected by an aggregation rule is not before us, as noted by the

majority.

13 Senator DeConcini explained the exemption for agricultural

cooperatives in the following way:

In the West, and I suspect in other parts of the country,

small f armers often band together to form agricultural

cooperatives. They have often been considered as a unit

particularly in determining the ir assets for insurance and

borrowing purposes. Such a ggregate treatment would cause the

whole cooperative to exceed the [then] $5 million limitation.

Reauthorization of EAJA, Hea ring Before the Subcomm. on

Adm inistrative Practice and Procedure of the Senate Comm. on the

Judiciary, 98th Cong., 1st Sess. 17 (April 14, 1983) (emphasis

added). While the majority dismisses this piece of legislative

history, the Senator's comment seems to indicate that the net worth

of association members should be aggregated u nless that type of

organization is exempted. 3

An association such as NAWGA functions like an agricultural

cooperative whose members join in common economic efforts.

However, Congress provided these cooperatives with exemption from

net wor th limits to avoid aggregation. Because Congress created

waivers expressly for certain groups, we can properly presume that

Congress did not intend to exempt all associations from the net

worth aggregation requi rement; e xpressio unius est exclusio

alterius. Leatherman v. Tarrant County Narcotics Intelligence &

Coordination Unit, 507 U.S. 163, 167-68, 113 S.Ct. 1160, 1163, 122

L.Ed.2d 517 (1993). Congress must thus have intended aggregation4 Even if the agricultural exemption were insufficient to

establish by implication a statutory aggregation rule, at the

very least it creates an ambiguity, allowing this Court to

consider the policy and purpose of EAJA. The purpose of EAJA is

served by an aggregation rule.

14 of net worth for other associations. 4 N ational Truck Equip., 972

F.2d at 674. Presumably, aggregation would still apply to the

employee number limit since none of the entities listed in EAJA

were granted exemption from that limit.

Supporting the above conclusions are the Model Rules adopted

by the Administrative Conference of the United States, applicable

in agency adjudications, which interpret virtually identical

language to that in 28 U.S.C. § 2412(d)(2)(B). S ee 5 U.S.C. §

504(b)(1)(B) (costs and fees awards in administrative

adjudications). Model Rule 0.104(f) states in part: "The net

worth and number of employees of the applicant and all of its

affiliates shall be aggregated to determine eligibility."

(emphasis added). The commentary to the rule explains that "[t]he

intent of Congress in passing the EAJA was to aid truly small

entities rather than those that are part of a larger group of

affiliated firms." Administrative Conference of the United States,

Equal Access to Justice Act: Agency Implementation, 46 Fed.Reg.

32900, 32903 (1981).

Model Rule 0.104(g) states: "An applicant that participates

in a proceeding primarily on beh alf of one or more persons or

entities that would be ineligible is not itself eligible for an

award." 46 Fed.Reg. 32900, 32912 (emphasis added). The commentary

to this rule addresses the issue of trade associations as follows:15

Trade associations may sometimes become involved in litigation

on thei r own account ( e .g., as employers) as well as in the

interests of their own membership. On reflection, we believe

the best way of handling this situation is through the

provision on participation on behalf of others. When a

proceeding involves a trade association independent of its own membership, the association's eligibility should be measured

individually like any other applicant's; when an association

is representing primarily the interests of its members, the

agency can examine the facts of the particular situation."

46 Fed.Reg. at 32903.

The Mod el Rules and commentary discussed above reflect the

policy of the statute. One can hardly dispute that the purpose of

the Equal Access to Justice Act was "to ease the burden upon small

businesses of engaging in litigation with the federal government."

Unification Church v. INS, 762 F.2d 1077, 1082 (D.C.Cir.1985). As

the Eighth Circuit noted, "EAJA awards should be availa ble where

the burden of attorneys' fe es would have deterred the litigation

challenging the government's actions , but not where no such

deterrence exists." S EC v. Comserv, 908 F.2d 1407, 1415-1416 (8th

Cir.1990). S ee also Pub.L. No. 96-481, § 202, 94 Stat. 2325 (1980)

("It is the purpose of this title—to diminish the deterrent effect

of seeking review of, or defending against, governmental action by

providing in specified sit uations an award of attorney fees ...

against the United States.").

Congress was no t likely concerned that a trade association

wholly financed by its large co rporate members would be deterred

from litigation. EAJA reveals Congress's "desire not to subsidize

... the purchase of legal services by large entities easily able to

afford legal services." U nification Church, 762 F.2d at 1083.

Under the logic of the majority, any large industrial group16

(pe troleum, automobile manufacturing, etc ...) could set up and

fund an association separate from itself that would readily meet

EAJA's limits on net worth and employees even though its individual

members or members in the aggrega te would not. EAJA was not

intended to f und the litigation of corporate Goliaths in the

costume of David.

We thus are not compelled to reach the result advocated by the

majority. Based on statutory analysis, reference to legislative

pol icy, and commentary in an identical provision in the

Administrative Conference Model Rules, I would hold that awarding

EAJA fees to NAWGA was improper w ithout consideration of NAWGA's

members' net worth and number of employees. As the Sixth Circuit

stated in Nat'l Truck Equip.,

When businesses have the economic power to pursue litigation

against t he government without being deterred by the costs,

the congressional purposes of the EAJA are undermined by an

award to those businesses. The same result occurs when a

trade association's membership also contain s a number of

companies who can readily afford the costs to protect their

own interests.

972 F.2d at 674.

I would reverse and remand for the district court to determine

whether NAWGA primarily represents it s own interests or those of

its members. If NAWGA is primarily representing the interests of

its members, the district court should then aggregate the net worth

and employees of those members to determine the association's

eligibility. Given that NAWGA has conceded that it has at least

one ineligible member, I suspect that NAWGA would be ineligible for5 I disagree with the majority that aggregation would be

unfair to eligible members of an association. What financial

deterrent exists for a trade group when the members' combined net

worth exceeds $7 million or when that group has members with

billions in assets? Such a group is likely both willing and able

to defend itself against government actions absent EAJA fee

awards.

17 fees. 5