RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 17a0189p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

UNITED STATES OF AMERICA ex rel. BRIAN WALL, 

Plaintiff-Appellee, 

v. 

CIRCLE C CONSTRUCTION, LLC, 

Defendant-Appellant. 

┐

│

│

│

│

│

│

│

┘

No. 16-6169 

Appeal from the United States District Court 

for the Middle District of Tennessee at Nashville. 

No. 3:07-cv-00091—Kevin H. Sharp, Chief District Judge. 

Argued: March 15, 2017 

Decided and Filed: August 18, 2017 

Before: BATCHELDER, ROGERS, and KETHLEDGE, Circuit Judges. 

_________________ 

COUNSEL 

ARGUED: Timothy W. Burrow, BURROW & CRAVENS, P.C., Nashville, Tennessee, for 

Appellant. Melissa N. Patterson, UNITED STATES DEPARTMENT OF JUSTICE, 

Washington, D.C., for Appellee. ON BRIEF: Timothy W. Burrow, BURROW & CRAVENS, 

P.C., Nashville, Tennessee, for Appellant. Melissa N. Patterson, Charles W. Scarborough, 

UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. 

 KETHLEDGE, J., delivered the opinion of the court in which BATCHELDER, J., joined. 

ROGERS, J. (pg. 7), filed a separate dissenting opinion. 

>
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 2

_________________ 

OPINION 

_________________ 

KETHLEDGE, Circuit Judge. This case is before us for a third time. The defendant, 

Circle C Construction, is a family-owned general contractor that built 42 warehouses for the 

United States Army in Kentucky and Tennessee. In the course of building all those warehouses, 

over a period of seven years, a subcontractor, Phase Tech, paid two of its electricians about 

$9,900 less than the wages mandated by the Davis-Bacon Act. That underpayment rendered 

false a number of “compliance statements” that Circle C submitted to the government along with 

its invoices. As a result, the government thereafter pursued Circle C for nearly a decade of 

litigation, demanding not merely $9,900—Phase Tech itself had paid $15,000 up front to settle 

that underpayment—but rather $1.66 million, of which $554,000 was purportedly “actual 

damages” for the $9,900 underpayment. The government’s theory in support of that demand was 

that all of Phase Tech’s electrical work, in all of the warehouses, was “tainted” by the $9,900 

underpayment—and therefore worthless. “The problem with that theory,” we wrote in the last 

appeal, was that, “in all of these warehouses, the government turns on the lights every day.” 

United States ex rel. Wall v. Circle C Constr., LLC, 813 F.3d 616, 617 (6th Cir. 2016). 

We therefore reversed a $763,000 judgment in favor of the government and remanded for entry 

of an award of $14,748—less than 1% of the government’s demand. 

Over the past decade, Circle C paid its attorneys an estimated $468,704 to defend against 

the government’s claim. In Circle C’s view, Congress has contemplated situations like this one: 

a 1996 amendment to the Equal Access to Justice Act provides that, if a court awards damages to 

the federal government, but the government’s original demand for damages was both 

“substantially in excess of the judgment finally obtained” and “unreasonable when compared 

with such judgment,” then (subject to two exceptions) the court must “award to the [defendant] 

the fees and other expenses related to defending against the excessive demand.” 28 U.S.C. 

§ 2412(d)(1)(D). 

Accordingly, on remand after the last appeal, Circle C moved under § 2412(d)(1)(D) for 

recovery of its attorneys’ fees in this litigation. But the district court denied the motion. Citing 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 3

only legislative history—and indeed without first identifying any ambiguity in the words of the 

provision at issue, contrary to Supreme Court precedent, see, e.g., Exxon Mobil Corp. v. 

Allapattah Servs., Inc., 545 U.S. 546, 567-68 (2005)—the district court chose to put “aside the 

mathematical disparity between the damages demand [and] the eventual award[.]” Op. at 4. The 

court did so even though the actual words of the statute (“[a] demand by the United States 

. . . substantially in excess of the judgment finally obtained”) specifically directed the court to 

consider that disparity. And otherwise the district court reasoned that the government’s theory in 

support of its demand was “not unreasonable” simply because the court itself had twice accepted 

that theory. Op. at 3-4. Circle C then brought this appeal. 

 We review the district court’s denial of Circle C’s motion for an abuse of discretion. See 

Minor v. Comm’r of Soc. Sec., 826 F.3d 878, 882 (6th Cir. 2016). The relevant statutory scheme 

is straightforward. Title 31 U.S.C. § 3730(g) provides, “[i]n civil actions brought under this 

section by the United States, the provisions of section 2412(d) of title 28 shall apply.” This case 

is undisputedly an action brought under § 3730 by the United States—which means that 

§ 2412(d)(1)(D) (the fee-shifting section cited in Circle C’s motion) “shall apply” here. 

 Yet the government ventures to argue that § 2412(d)(1)(D) does not apply. Section 

3730(g) is entitled, “Fees and expenses to prevailing defendant.” Circle C technically was not a 

prevailing defendant, because on remand the district court entered a judgment in favor of the 

government (albeit in an amount that was less than 1% of the amount the government initially 

sought). The government thus contends that § 2412(d)(1)(D) does not apply, because that 

section authorizes awards to non-prevailing defendants (in cases where, among other things, the 

government’s demand was unreasonable). But that argument overlooks a basic principle of 

statutory construction, namely that a provision’s title “cannot limit the plain meaning of the 

text.” Penn. Dep’t of Corr. v. Yeskey, 524 U.S. 206, 212 (1998) (citation omitted). And here the 

text of § 3730(g) could hardly be plainer: that subsection says that, in circumstances 

undisputedly present here, “the provisions of § 2412(d) of title 28 shall apply”—which means 

that all of those provisions apply, including § 2412(d)(1)(D). 

 Thus we turn to § 2412(d)(1)(D), which provides in relevant part: 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 4

If, in a civil action brought by the United States . . . the demand by the United 

States is substantially in excess of the judgment finally obtained by the United 

States and is unreasonable when compared with such judgment, under the facts 

and circumstances of the case, the court shall award to the party the fees and other 

expenses related to defending against the excessive demand, unless the party has 

committed a willful violation of law or otherwise acted in bad faith, or special 

circumstances make an award unjust. 

Under this subsection, the party seeking fees bears the burden of proving (i) that the 

government’s demand was substantially in excess of the award obtained by the judgment and 

(ii) that the government’s demand was unreasonable compared to that judgment. See United 

States v. One 1997 Toyota Land Cruiser, 248 F.3d 899, 906 (9th Cir. 2001). Here, the 

government demanded $553,807.71 in purported actual damages, trebled to about $1.66 million. 

See 31 U.S.C. § 3729(a)(1)(G). And “the judgment finally obtained by the United States” was 

$14,748. To say that the government’s demand was substantially in excess of the judgment, 

therefore, only understates matters.

 That leaves the question whether the government’s demand was “unreasonable” as that 

term is used in § 2412(d)(1)(D). Neither this circuit nor, so far as we can tell, any other has 

specifically interpreted the term “unreasonable” as used in that provision. But that term is hardly 

abstruse. As a matter of ordinary usage, “unreasonable” means “not governed by reason” or 

“exceeding reasonable limits; immoderate[.]” The American Heritage Dictionary 1957 (3d ed. 

1994). And meanwhile there is a well-developed body of law concerning a similar inquiry under 

a related provision: namely, whether the government’s position was “substantially justified” 

under § 2412(d)(1)(A). On that point, our court (along with numerous others) has held that 

“[t]he question of substantial justification is essentially one of reasonableness[.]” United States 

v. 0.376 Acres of Land, 838 F.2d 819, 827 (6th Cir. 1988) (internal quotation marks omitted); see 

also, e.g., Foley Constr. Co. v. U.S. Army Corps of Eng’rs, 716 F.2d 1202, 1204 (8th Cir. 1983) 

(gathering cases). Thus, the inquiry under both provisions turns on reasonableness. We 

therefore look to the caselaw interpreting “substantially justified” under § 2412(d)(1)(A) to 

determine whether the government’s demand was “unreasonable” under § 2412(d)(1)(D). 

 The Supreme Court has held that, to be “substantially justified” under § 2412(d)(1)(A), 

the government’s position “of course” must be “more than merely undeserving of sanctions for 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 5

frivolousness[.]” Pierce v. Underwood, 487 U.S. 552, 566 (1988). To meet that standard, rather, 

the government’s position must be “justified to a degree that could satisfy a reasonable person.” 

Id. at 565. 

 The question, then, is whether the government’s demand for $1.66 million as 

compensation for Phase Tech’s $9,900 underpayment of its electricians, in a project spanning 

seven years, was justified to that degree. The short answer to that question, as we said in the last 

appeal, is that the damages the government sought to recover in this case were “fairyland rather 

than actual.” Wall, 813 F.3d at 618. 

 A longer answer begins with the observation that actual damages are a simple concept, 

familiar to any first-year student in law school. In the context of this case, actual damages are 

simply “the difference in value between what the government bargained for and what the 

government received.” Id. at 617 (citing U.S. ex rel. Roby v. Boeing Co., 302 F.3d 637, 646 (6th 

Cir. 2002)). And here those damages were easy to calculate. “[T]he government bargained for 

two things: the buildings, and the payment of Davis-Bacon wages. It got the buildings but not 

quite all of the wages. The shortfall was $9,916. That amount [was] the government’s actual 

damages.” Id.

 The government therefore faces strong headwinds—both common-sense and legal—in 

asserting that its demand for roughly $554,000 in actual damages, and $1.66 million overall, was 

reasonable nonetheless. The government’s theory, as noted above, was that all of Phase Tech’s 

electrical work was tainted by the $9,900 underpayment and therefore valueless to the 

government. As a matter of common sense, however, the government in fact benefits from that 

work every minute of every day. And legally, as we explained last time, the underpayment is 

easy to remedy with money damages. Id. at 618. True, goods or services can be legally 

worthless to the government if, for example, they are “dangerous to use,” id., or the damages 

from the contractor’s breach are not “calculable in terms of market value.” Id. at 619 (Rogers, J., 

concurring). But for reasons we have already explained, see id. at 617-18, those conditions are 

absent here—indeed, obviously absent. Thus, on this record, a reasonable person could not 

accept the government’s argument that Phase Tech’s electrical work was worthless. 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 6

 The district court, as noted above, held that the government’s theory was reasonable 

simply because the court itself had twice accepted the theory. But “the fact that one other court 

agreed or disagreed with the Government does not establish whether its position was 

substantially justified.” Pierce, 487 U.S. at 569. True, “a string of successes” in advocating a 

position might indicate the position is reasonable; but that is hardly what the government 

presents to us here. Id. Thus, in this case as in most cases, what matters is “the actual merits of 

the Government’s litigating position.” Id. The district court said nothing about those merits in 

denying Circle C’s motion. And we have said enough about them already. The government’s 

demand for $1.66 million as compensation for Phase Tech’s $9,900 underpayment was 

unreasonable within the meaning of § 2412(d)(1)(D). 

 That means Circle C was entitled to a fee award unless it “committed a willful violation 

of law or otherwise acted in bad faith, or special circumstances make an award unjust.” 

28 U.S.C. § 2412(d)(1)(D). The district court did not reach this issue because it mistakenly 

thought that the government’s demand was reasonable. Yet we choose to reach the issue because 

the parties have briefed it, the merits are clear, and this litigation has already persisted for nearly 

ten years. See Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 446 (6th Cir. 2012). 

We begin with the burden of proof. Typically, when a statute articulates a general rule, 

the burden of proving an exception rests with the party invoking it. See N.L.R.B. v. Kentucky 

River Cmty. Care, Inc., 532 U.S. 706, 711 (2001). Here, under § 2412(d)(1)(D), when a party 

establishes that the government’s demand was both excessive and unreasonable, the district court 

“shall” award fees to the defendant “unless” certain exceptions (e.g., “bad faith” or “special 

circumstances”) apply. 28 U.S.C. § 2412(d)(1)(D). Thus, the burden of proving “bad faith” or 

“special circumstances” under § 2412(d)(1)(D) rests with the government. See id. 

As to these exceptions, the government first argues that Circle C “acted in bad faith.” 

The Act does not define bad faith, but it is a common term of art. The sixth edition of Black’s 

Law Dictionary—the one in effect at the time § 2412(d)(1)(D) was enacted—defines “bad faith” 

as “not prompted by an honest mistake as to one’s rights or duties, but by some interested or 

sinister motive.” Black’s Law Dictionary 139 (6th ed. 1990). That definition nicely captures the 

term, and we adopt it here. 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 7

The government has not shown that the conduct giving rise to Circle C’s $14,748 of 

liability in this case was driven by a sinister motive rather than the result of an honest mistake. 

Unlike many cases under the False Claims Act, this case did not involve a large-scale, systematic 

effort to defraud the government. Compare, e.g., United States v. Rogan, 517 F.3d 449, 451 (7th 

Cir. 2008). Instead, Circle C submitted compliance statements that were inaccurate as to $9,900 

of particulars in a project costing more than $20 million. Moreover, one of Circle C’s coowners, John Cates, testified that Phase Tech gave Circle C a “set price” for each building, 

which obscured the amount that Phase Tech paid each electrician. And both of Circle C’s 

owners, Frances and John Cates, testified that they submitted the certifications on the honest 

belief that they were true. The government cites no evidence that shows otherwise. 

Instead, the government contends that, “[b]y definition, a defendant who has been found 

liable under the False Claims Act has ‘knowingly’ made or caused ‘false or fraudulent claims’ on 

public money.” Government Br. at 34 (quoting 31 U.S.C. § 3729(a)). Under the False Claims 

Act, however, “knowingly” is itself a term of art, which refers to three mental states: “actual 

knowledge,” “deliberate ignorance,” or “reckless disregard.” 31 U.S.C. § 3729(b)(1)(A). The 

district court found that Circle C was reckless—the least culpable of these states—as to whether 

its compliance reports were accurate regarding the wages paid to Phase Tech’s electricians 

(actually, on this record, just two of them). But “recklessness is a less stringent standard than 

bad faith[.]” United States v. Wallace, 964 F.2d 1214, 1219 (D.C. Cir. 1992); see also Red 

Carpet Studios Div. of Source Advantage, Ltd. v. Sater, 465 F.3d 642, 646 (6th Cir. 2006) (citing 

Wallace for the same proposition). And on this record we see no reason to depart from that rule. 

The government also argues that this case presents two circumstances that are special 

enough to “make an award unjust.” 28 U.S.C. § 2412(d)(1)(D). First—in reference to the 

government’s theory that all of Phase Tech’s electrical work was worthless—the government 

says that, in applying § 2412(d)(1)(D), we should leave room to allow the government to present 

“novel but credible” interpretations of law. See generally United States v. Winchester Mun. 

Utils., 944 F.2d 301, 306 (6th Cir. 1991). We have no quarrel with that proposition generally, 

but here the government’s theory was not credible because it was unreasonable within the 

meaning of § 2412(d)(1)(D). 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 8

Second—and finally—the government warns that a fee award in this case would have a 

“chilling effect” on its efforts “to vigorously enforce” the False Claims Act. Gov’t Br. at 13-14, 

37. One should hope so. In this case the government made a demand for damages a hundredfold 

greater than what it was entitled to, and then pressed that demand over nearly a decade of 

litigation, all based on a theory that as applied here was nearly frivolous. The consequences for 

Circle C included nearly a half-million dollars in attorneys’ fees. Section 2412(d)(1)(D) makes 

clear that the government must bear its share of those consequences as well. 

* * * 

The district court abused its discretion when it denied Circle C’s motion. We reverse the 

district court’s June 17, 2016 Order and remand the case for an award to Circle C of “the fees 

and other expenses related to defending against the [government’s] excessive demand,” 

28 U.S.C. § 2412(d)(1)(D), including, to the extent appropriate, fees incurred during this appeal 

and on remand. 

 
No. 16-6169 United States ex rel. Wall v. Circle C Constr. Page 9

_________________ 

DISSENT 

_________________ 

ROGERS, J., dissenting. The majority accepts that the Government does not owe fees if 

its position was “substantially justified.” That standard permits the Government to take 

reasonable litigating positions. See Pierce v. Underwood, 487 U.S. 552, 566 (1988); Glenn v. 

Commissioner of Soc. Sec., 763 F.3d 494, 498 (6th Cir. 2014). It is a matter of judgment, 

however, whether the Government’s litigating position in this case was reasonable. Here the 

Government had already prevailed on its “taint” theory of damages before the two district courts 

that considered this suit, and it was also able to point to a line of cases where something like that 

theory had prevailed before this and other courts, see, e.g., U.S. ex rel. Compton v. Midwest 

Specialties, Inc., 142 F.3d 296, 304 (6th Cir. 1998); United States v. Mackby, 339 F.3d 1013, 

1018–19 (9th Cir. 2003); United States v. Rogan, 517 F.3d 449, 453 (7th Cir. 2008). While it is 

true that we ultimately rejected the analogy to those cases in the context of this case, that 

rejection does not mean that those analogies were not “supported by law and fact” or not 

“justified to a degree that could satisfy a reasonable person,” as required under the EAJA, Glenn, 

763 F.3d at 498–99 (internal quotation marks omitted) (quoting Pierce, 487 U.S. at 565). Under 

abuse of discretion review, where “substantial deference” is accorded to the judgment of the trial 

court, Imwalle v. Reliance Med. Prods., 515 F.3d 531, 551 (6th Cir. 2008), the district court’s 

denial of fees should be affirmed.