## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N os. 10

- 2676 & 10

- 3599 U NI T ED S TATE SOF A MERI CA, P la intif f-A pp ellee, v. M ARS HALL P EC OR E AND C ONRAD W ANIGER, D efend a nts-A pp ella nts.

A pp ealsfr o m the United S t ates Di strictC our t fo r the E astern Di stricto f Wisc onsin
. No . 07- C- 316

—WilliamC. G riesbach, Judg e.
A RGUED S EP TE MBE R 22, 2011

— D ECI DE D D ECE MBE R 30, 2011

Befo re B AUER, M A NI ON, a nd K ANN E , C ircu it Judges . K ANN E , Cir cu i tJudg e . A ftera si x-y eari nvest i gat i on, an add i ti onaltwo- and-o ne- hal fye ar s o fdi sc overyand pretrialpos tu ring, an d a nine-d ay j ury t r ial, M arsh allPec ore and C onr ad W ani ger ( the “defendants”) pre vai l ed aga i nst ci vi l c h arges thattheyvi ol ate d the F al se Clai m s Act ( “F CA ”)

. Unsa ti sfi ed wi thj us t th e tr i alv i ctorya nd perhaps di sturbed thatthe gov er nm ent s pent near l y a decade chasing ab out $75, 000, the defe nd ants m ove d fo r2 N os. 10

- 2676 & 10

- 3599
att or ney’ s fees under th e Eq ual A cces s t o J usti ce Act ( “EA J A ”) , 28 U
. S. C. § 2 412( d)( 1) ( A ) , o r al tern ati vel y, sancti ons und erR u le 37( c) ( 2) o fthe Feder alRule s o f Civi lPro cedure. The di str i ct c ou rt deni ed both m oti ons. Des pi te o urdi sc o m f o r t wi thwhat l o o k s l i k e g o ve r nm en t overreach ing, w e find that the d istri ct cou rt’s rul i ng was not an abuse o fdi scr eti on a nd ac c or d ingl y, we a ffi r m.

I. B ACK GR OUN D The or i gi ns o fthi s d isp ute date bac k t o 2000 wh en M enom i nee Tr ibalEnter pri ses ( “M en om i nee, ” “ M TE , ” o r the “ Tribe”) , the pri nci pal busi ness ar m o fthe M enom i nee I nd i an Tribe of W i sco nsi n, fi rs t appli ed f or an d recei ved federa lfund i ng under the H azar dous Fuel s Re d ucti on p rogram ( “H FR ”). Th e federa l B ure au of I n d ian A ff airs ( “ BI A” ) c r e a t e d HF R a s a l o ng - t e r m s t r a t e g y t o g r a dual l y re i ntro du ce the benefi ci al aspects of fi re int o fi re depen de nte c o s y s t e ms s uc h a s de ns e l y - wo o de d fo r e s t s. To o btain H FR fund s, an a pp l i cant is requir ed to fi rs t su bm i t a pro posalf ori ts pla nned fi re r educti on work

. U nl i ke previ ous fede ra l p ro gr am s, thi s fi re r educti on p ro gr am req u ire d ap p ro ve d ap p lica n ts to req u es t B IA re i m burse m ent o nl y a fteri ncurr i ng proj ect cos ts. I n 200 0 a nd ag ai n i n 200 1, M enom i nee for estm anage r M ar shal lPeco re , and M enom i nee fi re m anage m ent o ffi cer Conrad W ani ger, appli ed f orH FR fund i ng on b eh al fo f the T r ib e . T he a pp l i c ati on so ughtfe de r a lfun ds t o g r a de 141 m i l es off or est r oa d s and to cr eat e a n additi onalN os. 10

- 2676 & 10

- 3599 3

A fu el b rea k is a strip of land cleare d of po ten tially flam m ab le 1 vegetati on th a t ru ns paral le l to a f ores t r oad

. Am ong other benefit s, an e ffecti ve fuel break provides a defensi ve area for firefigh ters. 273 m il es of fue l breaks

. T o c reate th ese fuel breaks, M T E ’s 1 ap pli cati on r epres ented that i t would r em ove exce ss v e g e t a t i o n b y p e r f o r mi n gb r u s h i n ga n d d i s k i n gwo r k

. As i t s n a me i mp l i e s , b r u s h i n g r e mo v e s p o t e n t i a l l y f l a mm abl e bru sh neara f or estr oad. Dis ki ng, o n the othe r hand , i s the p ro cess o fm i xi ng o rg ani c so i lwith for est veg eta ti on t o el i m i nate the c ontinui ty ofve get ati on o n the for estfl oo r. A fterobtai ni ng B I A ap prova l, M enom i nee be g anHFR wor kin Dec embe r2 00 0, a nd b eg ani nv o i cing B I A i n 2 0 0 1

. Ea r l y MT E i n v o i c e s r e q u e s t e d B I A r e i mb u rs em en t tot alin g a flat fee of $45 0 for ea c h m i l e o ffu elbreak w ork. A s w ork progres sed , M T E aban d one d i ts p erm i l e, fi xed-fee i nvoi ces i n exchange f ori nvoi ces that r eque st ed r ei m bur se m en t f o ra ctua lc o st s i nc ur r ed. The p u rp os e o f th is c h an ge w as h ot ly d isp u te d d u rin g t ria l. The go ver nm ent c l ai m ed t h at probl em s with the Tribe d evel o p ed i n Jun e 2001, after seve ral M T E staff m em ber s t ol d D ave Congos, the BIA fo re ste r ass i gned to the Tr ibe, thatM TE ’ s Roa ds Departm ent b ud getwas runni ng a defi ci t. M enom i nee em plo yee s r epor ted that the T r ib e pu rpos e ful l y di v e r t e d HF R fun ds t o the R o a ds D ep ar tm en t a s a w ay to clo se th e b u d ge t s h or tfa ll. Pro m pted by these re port s, Congos an d Th om as M agnuson, ano therBI A f or est er, per sonal l y inspected som e o fthe w or k M TE cl ai m ed to have com ple ted. Congos4 N os. 10

- 2676 & 10

- 3599 and M agnuson w al ked the f or estr oad s and co m pared thei r obs er vati ons of w or k perf or m ed to a m ap p re pared by M TE thatpurport ed t o sh ow com ple ted and i nvoi ced wor k

. Bo thCo ng o s an d M agnus o n c o nc l ude d tha t th e subm i tte d i nvoi ces ove rs tat ed th e actualwork done. I n so m e ca ses , Congos felt that the w or k per f or m ed ac tu ally inc re as ed th e ri s k o ffir e. C on go s re p or te d h is fi nd i ngs to hi s supervi sor and di scusse d th e res ult s wi thW an i g er, who a g r ee d t o r ewo r kc er ta i n po r ti o ns ofthe f or est
. Fol l owing thei r i ni ti alm eet i ng i n 2001 , W an i gersubm i tte d re vis ed m aps to Congos thatag ai n purport ed to show porti ons ofthe f or estwh er e H FR fi re pre venti on wor kha d be en co m pl et ed an d i nv o i ce d. I n o ne mem o r an du m subm i tte d b y W ani ger docum enti ng 2001 fi re r educti on a ccom plis hm ents, W angi ercl ai m ed that fuelbr eak s w er e cr eat ed f or96

. 2 m i l es. Of thos e 9 6 m i l es, 54 m i l es w ere full y com p leted and the r e m a in ing 42 m il es w ere 95 % c o m pl et e. M ap s a nd mem o s i n h an d, Co ng o s i nspe ct ed Tr iba lg r o unds f o ra s ec ond t i m e to de te r m i ne w h ether the actual work perf or m ed re conci l ed to wh at M T E h ad billed . C on go s’s ins p ec tio n s c on firm ed h is bel i efthatthe defe nd ants w er e s ubm i tting f al se i nvoi ces f o rwor ktha t was ne ve rc o m pl et ed or c om pl et ed i n a way th at di d no t m ee t H F R st an dar ds. Thi s inspec ti o n, i n pa r t, s ubseq uent l y s er ve d a s th e ba si s f o rthe g o ve r nm ent’ s F al se Clai m s Act sui t. I n J ul y 2 0 0 2 , Co ng o s a nd Magnu s o n c o nt a c ted J ose ph S chw ar tz i n the Offi ce of I nspector G en er al ( “OI G”) f orthe Dep ar tm ent o fInter i or . Based o nN os. 10

- 2676 & 10

- 3599 5 Congos’ s r epor t, S chw artz i ni ti ate d an i nvest i gat i on i n t o Me n o mi n e e ’ s b i l l i n gp r a c t i c e s th a ti n c l u d e d e mplo yee i nter vi ew s a nd a re vi ew o fsubpoenae d rec or ds. Du ring the i nvest i gat i on, the gov er nm ent a l so i denti fi ed wh a t i t b e l i e v e d we r e i n s t a n c e s o f f a l s i fi e d t i me c a r ds re l ating to H FR fund s. N am el y, the go ver nm ent a l l ege d that Tribe m anage m ent r equi re d certai n em plo yee s t o code t i m e w or ked to fi re r educti on e ff or ts eve n though these em ployee s were actual l y work i ng o n unrel ate d proj ects
. By 200 5, the gov er nm ent for m al l y c ontac ted M TE to di sc us s th e r es ul ts o fthe OI G i nv es ti g at i o n. Throu g ho ut th e ne xts ev er almonths , the pa r ti es c o m m uni ca te d r egul a r l y a n d ev en ap p ea re d clo se to a se tt lem en t. B u t in 2006 , the defe nd ants re fu sed the gov er nm ent’ s s ett l em en t o ffera nd b r o k e o ffne g o ti at i o ns . At tha t ti m e, the d efe n d an ts m ain ta i n ed th eir inn oc en c e a n d p rin c ip ally a r g u ed that the allegations w ere allone big m isun d erstan d in g. H ad govern m en t investigators sp en t m ore tim e d iscus sing th e all egation s w ith Pec ore and W an iger, the d efendants a rgue thatthe prot ra cted l i ti gat i on c o ul d h a v e b e e n a v o i de d. W i tha s et tl emento ffthe t ab l e i n Apr i l2 00 7, the U ni ted S tat es fi l ed sui t a gainst M TE , Peco re , and W ani ger a l l e g i ngv i o l a t i o ns o fthe F CA, 3 1 U. S

. C. § § 3 7 2 9

- 3 3
. MTE, Pe co r e, and W an i g era l lfi l ed m o ti o ns t o di smi ss . The di st r i ctc o ur t den i ed th e m o ti o ns a s to Pe co r e an d W ani ger, but gr ante d M T E’s m oti on be cause i t was not a “ perso n” withi n the m eani ng o fthe FCA

. S ubsequentl y, th e di stri ctc o ur t r ej ec te d the r emai ni ngde fen dan ts ’ a nd the g ove rnm ent’ s par ti alm oti ons f or sum m ar y j ud gm ent.6 N os. 10

- 2676 & 10

- 3599

The d efendan ts s ub m it ted the Sl oan report s hortl y before 2 t ri al, butaft erthe di s c ove ry pe ri od ha d cl os ed. The gove rn m ent vigorou sl y argued thatthe reports houl d b e excl ud ed f r om t r i a l o n the g r ou nd s thatthe de fe nd a nt s h a d v i ol a t e d a di s c ove ry ord er . The di s t ri c tc our tno t ed the vi ol at i on but ulti m at e l y a c c e pt e d the e vi de nc e t o “ e ns ur e a ful l r e c or d an d p ro tect t he D efend an ts them selv es fro m the a rg u ab ly defi ci en t perf orm ance ofthe iratt orney. ” U ni t ed Sta t es v. M enom i n ee Tri bal En te rs. , N o. 07-C -316 , 20 1 0 W L 2 46 55 05 , at *4 (E .D . W is. Ju n e 1 5 , 20 1 0 ). At t r i al, the de fen dan ts cl ai m ed th atthe g o ve r nm en t w as u n c l e a r a b ou t t h e s ta n d ar d fu el-b re ak w id th it w oul d use to ev al uate w hetherM TE co m pli ed w i th H FR pr o to co l s. The de fen dan ts c o ns true d thi s si l ence a nd subsequent confusi on about the fuel

-bre ak sta nd ar d as ev id en c e o f a sim p le m isu n d er st an d in g ra th er th an ev idence thatthe defe nd ants knowingl y s ubm i tte d fa l se i nvoi ces. T here was furtherco nfusi on about w hether M enom i nee e m plo yee s were proper l y r eco rd ing t i m e t o HF Rp r oj e c t s . T h e d e fe n d a n t s c o n c e d e d tha t o n e e mplo yee had tr ulym i scl ass i fi ed hi s ti m e, but thi s f abr i cati on w as nothi ng m or e than an i sol ate d anom aly . A l lo ther tim e-c a r d d isc re p an c ies w er e re ally a p ro p er int er n alre port i ng sc hem e desi gned to r ecl ass i fy t i m e be tw een c er ta ind ep ar tm en ts . A ga in, ha d th e g ov er n m en t in ve st ig at o r s ex pl i ci tly di sc us se d the se di sc r epa nc i es wi ththe Tr ibe , ther e woul d ha ve b ee n n o ne ed f o rl i ti g at i o n. The defe nd ants consi dered the i r ace- i n-the-h ole to be a 2 009 i nspecti on pre pared byKen Sl oan, a re ti re d for es te r. T h e d efe n d an ts h ire d Sloa n to ind ep e n d en tly

2 i nsp ec t por ti ons ofthe f or estto deter m i ne wh etherN os. 10

- 2676 & 10

- 3599 7

Ten d ays bef ore oralargum ent, the def endan ts reques ted 3 that we t a ke j udi c i a l n ot i c e o fva r i ou s l e t t e r s a nd m e m or a nd a tha t pu rp or ted ly illu strate C on g os’s b ias ag ain st de fend an ts Pe c or e and W ani ge r. The defen dant s i nt er pre tthi s bi as a s the real reas on the governm ent brou ght s u it. Althoug h w e are skepti cal thatdocum ents def ense counseli nad ve rtentl y f ail ed to i nclude in the r ecord are the prop er s ub j ectofj ud ic ial not i c e , we o ffe r n o o p i n i o n o n th i s ma t t e r b e c a u s e th e s e d oc um ents do no t c hange ou r c onclus ion that the dis tr ic t c ourt di d notabus e i t s di s c re t i on i n fi ndi ng s ubs t ant i al j u sti fi c at i on f or the gove rn m en t ’ s pos i t i on. M en o m i ne e ha d a ctua l l y co nduc te d a ppr o pr i at e br us hi ng an d di sk i ng wor k be twe en 20 00

- 20 02
. I n r es po ns e, the go ve rn m en t c on d u c te d its ow n r ein ve st iga tio n in October20 09. Congos te sti fi ed at tr ial that the S l oan photog ra p h s showed so m e e vi dence ofcutt i ng, but that i t was notev i dence of cu tt ing r el ate d to the HFR prog r am. Addi ti o na l l y, C o ng o s te st i fi ed th ato th erl o ca ti o ns evalu ated by Sloan con tinu ed to show no signs of any fi re preve nti on work

. At the c l o se o fthe g o ve r nm en t’ s ev i den ce , the de fen dants m ove d fo r j ud gm en t as a m att ero fl aw , wh i ch th e di st r i ctc o ur t den i ed. Af te ra nine - dayt r i al, the de fen dan ts ’ the o r y p r ev ai l ed. F o l l o wi ngthe i rt r i alv i ct o r y, the defe nd an ts m ove d fo r att or ney’ s fees under EA J A o r al t e r na t i v e l y, s a nc t i o ns u nd e rR ul e 3 7 ( c ) ( 2 )

. T he di s t ri ct cour t deni ed both m oti ons, and the defe nd ants fi l ed th is t im ely ap p ea l. 38 N os. 10

- 2676 & 10

- 3599 II. A NA LYSIS Pecor e a nd W ani ger p re sent tw o re l ate d i ssues f or our re vi ew . T h e defe nd ants fi rs t co ntend that the di str i ct cou rt erred by rej ectin g t h e ir p ost-trialm otion for E A JA att or ney’ s fees . S i m i l ar l y, Peco re and W an igerchal l enge the d i st r i ctc o ur t’ s r efus alt o i m po se Rul e 37s an ct i o ns aga i nst the go ver nm ent. W e r evi ew bo th o fthe dist ri ct c ou rt ’s d ec isio n s fo r an ab u se of d isc re tio n . Pierce v
. U nde rwood, 48 7 U.S

. 55 2, 55 9- 60 (19 88) ( re aso ni ng tha t i n EA J A cas es, “th e d i str i ct c ourtm ay have i nsi ghts not conve yed bythe re cor d, i nto such m att er s a s whether parti cul arev i den c e w as w or thy o fbeing r el i ed upon, o r w hethercr i ti calf acts co uld e asi l y hav e be en ve rifi ed by th e G ov er n m en t.” ); Johns on v. Kakvan d, 19 2 F
. 3d 656, 661 (7th Cir. 1999) (f in d ing tha t Ru le 37 dec isi ons are re vi ew ed defe re nti al l y b ecause “[ d]i str i ct c ourt s pos ses s wi de l at i tu de i n f as hi oni nga ppr o pr i at e sa nc ti o ns a nd evaluati ng the r eas onabl eness o fthe att or ne ys ’ fees r equ ested ”).

A
. E A JA A tto rney ’s Fees The defe nd ants pri nci pal l y c ont en d thatthe dist ri ct cour t abused its di scr eti on byr ej ecting the i r m oti on f or EA J A at torney’ s fees. A di str i ct c ourtm ay aw ar d such fee s where “ ( 1) the c l ai m an t i s a pr ev ai l i ngpa r ty ; ( 2) the g o ve r nm en t was no t su bs ta nt i al l y j us ti fi ed i n i ts po si ti o n; ( 3) no s pec i alc i r cumst ance s m ak e ana war d unj us t; a nd ( 4) the fe e app l i cati on i s t i m el y a nd supporte d by a n i tem i zed st ate m ent. ” C o nra d v . B a rnh a rt, 43 4 F
. 3d 987, 98 9 ( 7 th Ci r . 2 0 0 6 ) ( qu o t a t i o n mar k s o mi t t e d) ; 2 8 U. S

. C.N os. 10

- 2676 & 10

- 3599 9 § 24 12 ( d) ( 1) ( A). Her e, the de fen dants o nl y c ha l l en g e th e dist ri ct c ourt ’ s fi nd i ng r el ate d to the s eco nd ele m en t: w h et h er th e g ov e r n m en t w as su b st an tia lly j u st ified in br i ng i ngthe F CA a ct i o n. The governm en t be ar s th e b u rd en ofp ro vin g t h at its p os itio n w as su b st an tia lly j u st ifie d , an d to d o s o, it m u st sh ow : “(1) a rea so n ab le b as is in tru t h f or th e fa c ts alleg ed ; (2) a re as on ab le b as is inlaw for t h e t h eo ry p ro p ou n d ed ; an d (3) a re as on ab le con ne ction be tw een the facts all eged a n d the th eory propounded

. ” C onrad, 434 F. 3d at 99 0; see also G o lem biew ski v. B a rnh a rt, 382 F. 3d 721, 724 (7 t h C ir. 2 00 4)

. In e v a l u a t i n gth e g o v e r n me n t ’ s p o s i t i o n, we r ev i ew the c l ai m i n i ts e nt i r ety r athe rtha n the i nd i vi du al p os i ti ons the g ove rnm ent m ay have tak en th ro u gh ou t d iffer en t ph as es of litig at ion
. Com m ’ r, I
. N
. S. v. Je an , 496 U

. S. 154, 161-62 (1990 ). W ith that, we turn t o the defendants’ ar gum ent o n appeal, wh i ch ci tes thr ee set s o funcontes ted facts that pu rpor ted ly prove thatthe gov er nm ent’ s ca se l acke d substa nti alj usti fi cati on . Fi rs t, the defe nd ants sugge st th at th e g ov er n m e n t ’s p os itio n h ad n o re as on ab le b as is i n the l aw . S i m i l ar l y, the defe nd an ts n ex t a rgue that the g ov er nm ent’ s pos i ti on was notr eas onabl y b ase d on th e f ac ts
. And thi r d, Pe co r e and W ani g era r g ue tha t th e g o ve r nm en t f ai l ed to a dequa te l y i nv es ti g at e th e defen dan ts ’ e vi den ce. Ea chs eto ff ac ts s ta ndi nga l o ne , the defen dan ts a ss er t, i s en o ug h t o s ho w tha t th e g o ve r nm en t’ s po si ti o n was no t su bs ta nt i al l y j us ti fi ed. Li k e th e d ist ric t c o u r t b e for e u s, w e’ll ev alu at e e ac h of th es e a ll ega ti ons i nd i vi du al l y.10 N os. 10

- 2676 & 10

- 3599

O n a p p eal, the def endan ts argue f or the fir stti m e that 4 soverei gn i m m u nity protect s tr ibal em ployees such as Pecore a n d W a n i g e r fr o m F C A su i t s, a n d a s s u c h, th e g o v e r n m e n t ’s pos i t i on l ac ke d s ubs t ant i al l eg al j us t i fi c at i on. Al tho u g h the d efend an ts m ad e a sim ilar sov ereig n im m u nity arg u m en t in the i r m er i t s br i efs uppor t i ng s um m ar y j udgm en t, whi c h the di s t ri c tc our tr ej ec t ed, the defen dant s di d notr ai s e thi s i s s ue i n the i r pos t
- t ri al br i eff or EAJ A at t or ne y’ s fees. Acc or di ngl y, t h e d e fe n d a n t s w a i v e d th i s a r g u m e n ta s t o E A JA a t t o r n e y ’s fee s, an d w e w ill n o t c o n sid er it. F edn av Int’ l Ltd. v . C o n t’l Ins. C o. , 62 4 F .3d 83 4 , 84 1 (7t h C ir . 20 1 0 ). 1
. Th eG o v e r n me n t ’s P o s i t i o n Wa s R e a s o n ab l y B a s e d On The Law 4 T he de fend an ts fi rst con ten d that tw o l eg a l errors preve nted the gov er nm ent fro m ev ere stabl i shi ng a substa nti al l y j usti fi ed cl ai m . Fi rs t, the BIA fa iled to f o l l o w i ts o wn i nt ernal p ol i ci es b efo r e th e g o ve r nm en t filed su it. Se c on d , th e gov er n m en t’s FC A su it w as rea lly a po o r l y di sgui se d b r ea cho fc o nt r ac t su i t. The g o ve r nm ent’ s f ai l ure to sel ect the pr opercause o fact i on pre cl ud ed i t fro m d ev el opi ng a substa nti al l y j usti fi ed FCA cl ai m . Both a rgum ents ar e ba sel ess . F i r st, the de fen dan ts a r gu e tha t th e g o ve r nm en t vi ol ate d the inter nalBI A pol i c y m anual and the M i dw est Re g i o na lOffi ce Handbook, bo tho fwhi chr equi r e th e govern m en t to cons ult w ith Tribe p erson ne l before ta k i ngfede r ala ct i o n. Had the g o vern m en t o be y ed th e tw o i nter nalco nsultati on pol i ci es, the Tribe c oul d have expla i ned aw ay the c onfusi on about i ts fi re r educti on wor k, the r at i o na le fo ri ts c o m pl ex b i l l i ngpr ac ti ce , a ndN os. 10

- 2676 & 10

- 3599 11

w hetherthe w i dth ofi ts fuelbr eak s co m pli ed w i th H FR st andards. A ccor ding to the defendants, had thes e conve rs ati ons o c curr ed, bo th par ti es coul d have a voi ded trial

. Bu t, as a th resh old m at t e r , a govern m en t agen cy’s in te rn al p olic ies a n d p r oc ed u re s (a s o p p os ed to d u ly en ac te d reg u lat ion s) d o n o t h av e t h e fo rc e o f law

. See K rasily ch v. Ho lder, 58 3 F
. 3d 962, 96 6 ( 7th Cir

. 2009 ) ( noting, for ex am p le, that the “A ttorn ey G en eral’s gu id e lin es are i nt erna lr ul es tha t ha ve no l eg alf orce” )

. In thi s ca se , the cl ue a s to th e s tatus o fthe BI A pol i cyi s l o ca te d o n the ve r y fi r stpa g e of th e Gov ernm en t- to
- Gov ernm en t Con

sul tat i on Pol i cy, wh er e i t pl ai nl y s tat es th at the pol i cy “i l l ustr ate s the gu ideli nes thatthe Bu re au o fInd i an Aff ai r s wi l lf o l l o w f o rc o ns ul ta ti o n wi tht r iba lg o ve r nm ents. ” Burea u of Ind i an A ff ai rs , Governm ent- to- Governm en t C ons ultation Poli cy 1 (2000) (em p ha sis add ed ). Certa i nl y a gencygui del i nes do not car rythe w eig ht o f l aw , and th u s, an y a l l ege d vi ol ati on ca n ser ve onl y a s p ro b at ive ev id en c e t h a t t h e g ov er n m en t fa iled to file su i t i n g o o d f ai th

. The sev en cases ci ted bythe defe nd ants i n supp or t o f thei r pol i ci es and procedure s a rg u m en t do not bol ste r th eir cla im . In st e a d , e ac h ca se on ly su gg es ts th e p os sibi l i tyf o rEAJ A at to r ne y ’ s fee s when the g o ve r nm en t vi ol ate s a l aw , an age ncy re gul ati on, or cl ear j ud i ci al p re c ed en t. Se e, e . g. , St e wartv. As t r ue, 56 1 F

. 3d 679, 68 4 ( 7th Ci r. 20 09) ( aw ar ding EA J A a tt or ney’ s fees “be cause the AL J co ntra vened l ongs tandi ng ag ency re gul ati ons, as w ell as j u d icia l p re c e d e n t” ); Gole m b i e wski, 38 2 F
. 3d at 724 (aw ar di ngEAJ A at to r ne y ’ s fee s be ca us e “the ALJ a nd C o mmi s s i o n e rv i o l a t e d c l e a ra n d l o n gj u d i c i a lp r e c e d e nt12 N os. 10

- 2676 & 10

- 3599 and vi ol ate d the Com m i ssi oner ’ s o w n Ruling and Regu la t i o n s” ); O r . Nat ural Re s . Counc i l v. M adigan , 98 0 F
. 2d 1330 , 13 32 ( 9th Ci r. 199 2) (aw ar ding att or ney’ s fees afterthe age ncy f ai l ed to i ssue re gul ati ons dem anded by cl ear sta tutory l anguage )

. Because the defe nd ants al l ege onl y that t h e gove rnm ent v i ol ate d i nter nalpol i cy gui del i nes, we rej ect thei r fi rs t l ega lar gum ent. Even i ft h e BIA’s pol i ci es had the f or ce a nd effect of l aw , the re cor d bel i es the defe nd ants’ cl ai m thatthey wer e no t ade quat ely c o ns ul te d b efo r e th e g o ve r nm en t br o ug hts ui t. F o re xa m pl e, Co ng o s te st i fie d tha t he spoke with W ani geri n 200 1 about the w or k defi ci enci es Con g o s i den ti fi ed dur i nghi s i ni ti alf o r es t i ns pec ti o n, a nd W a n i g e rp r o mi s e d t o r e wo r kth e i d e n t i fi e d a r e a s . D u r i ng th e r emai nde ro f2 00 1 an d 2 00 2, Co ng o s, W an i g er, a nd Pe co r e co m m unica te d thr o ug h wr i tt enmem o r an da an d w ork-co m p leti on m ap s abou t the statu s of th e Tribe’s H FR work. In 200 5, the go ver nm ent c ontac ted the Tribe to f o r m al l y di sc us s th e res ult s o fthe OI G i nv es ti g at i o n. A n d , d u rin g m u c h of 20 06 , th e p ar tie s e n g a g e d in s ign ificant s ett l em ent ne got i ati ons. Each dis cussi on o ccurr ed bef or e the go ver nm en t b ro ught sui t in 200 7. A s a si m ple questi on o ff act, the re cor d rev eal s that the defend an ts ha d several ye ars to eli m inate an y m isun d ersta nd i ngs about i ts w or k. U l ti m ate l y, the de fen d ants’ i nter nal

- pol i ci es ar gum ent i s ba sel ess . The defe nd ants’ se cond l eg al obj ecti on t o the di str i ct cour t’ s r uling i s that the co urt f ai led to r eco gni ze that th e g o ve r nm en t’ s su i t was mor e ak i n t o a b r ea ch

- o f

- co ntr ac t ac ti o n than a n FCA ac ti o n. Acco r di ngt o the de fen -N os. 10

- 2676 & 10

- 3599 13 dants, i fthe gov er nm ent m isu se d the F CA st atute , then sure l y i t co uld nothave bee n substa nti al l y j u sti fi ed i n br i ngi ng such a suit . As a r esul t, the defe nd ants cl ai m the bre ach- of

- contr act acti on s houl d hav e been gov er ned by the Ind i an S el f

- Det er m i nati on Edu cati on an d A ssistan ce A ct (“I SD E A A ”). W e nee d not s pend m uch ti m e di scussing the m er i ts ofthe defe nd ants’ cla im because the di str i ct c ourtr i ghtfully c oncl ud ed that a c ase i nvol vi ng co ntra ct per f or m ance d oe s n otn ec es sa rily fo re c los e F C A liab ility

. M eno m inee Triba l E nters. , 20 10 W L 24655 05, at* 6 ( cit i n g U n i ted S ta tes ex re l

. D avi s v. D yna Corp
. , 17F. 3d 397 ( 9th Ci r. 19 94) (un p ub li sh ed table de cision)). I t is p erfectly l ogical for a contr acting par ty to knowingl y s ubm i t a f al se i nvoi ce p u rp or te d ly p u r s u an t t o a va lid co n tr ac t. A s w e w ill di s c us s s ho r t l y, the go v e r nme nth a d r e a s o nab l e g r o un ds f orbel i eving tha t the d efendants know i ngl y s ubm i tte d fals e in vo ice s, an d as s u c h, th e g ov er n m en t’s cla im fit n e a t l y i n t o th e F C A. Bec au se the de fen dan ts ’ l eg alo bj ect i o ns a r e wi th o ut m er i t, we fi nd t h at the g ove rnm ent had s ubstanti al l e g a lj u s t i fi c a t i o n f o rb r i n g i n ga n F C A c l a i m.

2
. Th eG o v e r n me n t ’s P o s i t i o n Was R e a s o n a b l yB a s e d On The Facts T he de fend an ts ne xt cont en d that the gove r n m e nt ’s posi ti on was notsubst anti al l y j usti fi ed beca use the go ver n m en t fa iled to p ro ve i t s fa c tu al a lleg at ion s a t t ria l. H er e, the defe nd ants ar gue th at an FCA cl ai m r equi re s the g o v e r nme ntt o p r o v e the de fe nd a nt s s ub mi t t e d a14 N os. 10

- 2676 & 10

- 3599 fals e s ta te m en t, s e eH i ndo v. U ni v. of He al t h S cis . / The Chic ago M e d. Sch. , 6 5 F
. 3d 60 8, 6 13 ( 7th Ci r . 1 99 5) , b ut the g ove rnm ent c oul d neverpro ve that the defendants l i ed. In the abse nce o fa l i e, the go ve rnm ent’ s pos i ti on ha d no s ubs ta nt i alf ac tu alj us ti fi ca ti o n. Befo re r evi ew i ng the r eco rd, i t is fi rs t i m port ant t o re cal lth at the s ubstanti alj usti fi cati on s tandard does not r equi r e th e g o ve r nm en t to ha ve w on att r i al

. In f ac t, the go ve rn m en t’s p os i t i o n n ee d n otev en be co rre c t. P ie rc e, 487 U
. S. at56 6 n. 2 (“ [ A ] posi ti on ca n be j usti fi ed eve n th ou gh i t i s no t co rr ect, and w e be l i eve i t ca n be substa nti al l y ( i.e. , f orthe m ostpart ) j usti fi ed i fa re asonab l e perso n could thi nk i t co rr ect. ”)

. Rather, substa nti alj u st ifi cati on o nl y r equi re s the posi ti on t o have “a re aso nabl e basi s i n l aw an d fact. ” Conrad, 43 4 F
. 3d at 99 0; P ie rc e, 487U .S

. a t 5 65 (a p os itio n n ee d on ly b e “ j u st ifi ed to a degree that cou ld s a tisfy a reason able pe rso n” )

. H er e, th e defen dan ts br o ad as se r ti o ns th at“[t] he g o ve r nm en t’ s [ m o ti ve ] th eo r y co l l aps ed att r i al ” an d “ th e Gover nm ent failed to pro ve that ei therPeco re o r W an i g erl i ed, ” o nl y s ug g es t th atthe j ur y s i d ed w i ththe defe nd ants, notthatthei r opponent’ s pos i ti on was n ev er su b s ta n tia lly j u st ified . Th er efo re , w e g en er ally ign or e w h a t t h e ju ry be liev ed or d id n otbe liev e a t t ria l, an d ins t e a d fo c us o n whe the rthe g o v e r nme nt ’ s p o s i ti on as a w h ole co u ld s a t i s fy a rea so n ab le p er so n . Se eJe an , 496 U
. S. at16 1- 62. M oving to the f acts , the defe nd an ts fi rs t a rgue with som e for ce that the g ove rnm ent c oul d neverar ti cul ate a re aso nabl e m oti ve theo ry . A fteral l, wh y would tw o m enN os. 10

- 2676 & 10

- 3599 15

M o tiv e i s n o t a n el em en t fo r a n F C A cla im
. SeeHi ndo , 65 5 F. 3d at 61 3. Rathe r, the defen dant s appe ar t o o nl y hi ghl i ghtthe lack of m otiv e as e v i d e n ce tha t d efend an ts did no t kn ow ing ly sub m it a f alse statem en t. ri sk cri m i naland ci vi lsa ncti ons w h en the y nev er recei ved any benefi ts i n re turn? W i thout a m oti ve theo ry, the defendants co nten d t hat the go ver nm ent c oul d not p ro ve a lie or fals e c laim , an d w ith ou t a lie, an FC A cla im necess ar i l y f ai l s. H i ndo , 65 F
. 3d at 61 3. Altho ug h the 5 defe nd ants att em pt to co nstr ue the m oti ve questi on as u n c on te st ed , t h is iss u e w as su bj ec t t o c on flict in g e vidence and tes ti m ony such thata re aso nabl e per son c ou ld h av e a c c ep te d eith er ve rs io n o f ev en ts , w h ich is all w e re q u ire
. P ie rc e, 4 87U. S

. a t 56 5. F o re xa m pl e, the gov er nm ent m ai ntai ned th ro ughout t ri althatCongos and Pecor e were l oo ki ng f ora sour ce o ffund s t o kee p th e M en o m i ne e Ro ads De par tmenti n the b l ac k

. The di st r i ct cou rthe ar d t es ti m o ny t o thi s effec t. On th e o th erha nd, the de fen dan ts c l ai m tha t th e g o ve r nm en t’ s “k ey ” m o ti ve wi tn es s unkno wi ng l y c o nt r adi ct ed th e gov er nm ent’ s theor y b y s ugges ti ng tha t a dd i tio nal R oad s D ep artm en t fun d s w er e only spe nt three yea rs after t h ey w er e r equeste d. The defe nd ants const rued th i s te st i m o ny a s pr o o ftha t th e Ro ads Depar tment ne ve rhad a n ur g en t ne ed f o ra ddi ti o na lfundi ng, a nd thus, Peco re and W an i gerwere neverm oti vate d to f al si fy g ove rnm ent invoi ces to obt ai n additi onalfund i ng. I n po i nt i ngt o the v e rs i ono fe v e nt s tha tthe j ur y a pparently bel i eve d, the defe nd ants i gnor e the legit i m ate16 N os. 10

- 2676 & 10

- 3599 f ac tu aldi spu te tha t ex i st ed th r o ug ho utthe l i ti g at i o n. Inste ad, the defe nd ants see m to si m plyr el y o n th eir tr i alvi cto ry. But thi s i s no t e nough. Fur ther m or e, ev en i fwe com ple tel y a ccept a s t rue th e defendants’ ve rs i on ofm oti ve, i t s ti l ldoes notdi re ctl y c ontr adic t o r dispr ove th e g o vernm en t’ s po si ti o n tha t th e Ro ads De par tment f ac ed se r i o us b udg etdi ffi cul ti es . A cc o r di ng l y, the di st r i ctcour t di d no t ab us e i ts di sc r et i o n in fi ndi ng th at th e g ov er n m en t’s m ot ive th eo ry w as su b st an t i ally j u st ified , eve n th ou gh it ap p ar en tly failed attria l. The de fen dan ts ’ s ec o nd f ac tu aldi spu te hi g hl i g ht s th e m i sco m m unica ti on be tw een the par ties abo ut Tribal bi l l i ng pra cti ces. H er e, the defe nd ants cl ai m thatthey ne ve rb i l l ed th e g o ve r nm en t o n a per-m il e ba si s, b ut ra ther, o nl y s u b m itted bi l l s foractual fi re pre venti on cos ts i n c u rred. M or eov er, the bi l l s deta i l i ng ac tualco sts re presented an a ccurat e s napshot o fM TE ’ s l egi ti m ate cos ts. The defendants al so conte nd thatt h e m ap s s ubm i t te d to C on go s w er e n ev er su p p os ed to ac c u ra te ly r e p r e s e n tth e p r e c i s e a mo u n to fw o r kM TE ha d c o mplete d . Instea d, the m aps were onl y t o be use d as a ge nera lgui de to thei r w or k. A ccor dingl y, the defend an ts a r g ue tha t g o ve r nm en t co nfus i o n was the r ea so n fo rthe c harges ag ains t Pe co r e an d W an i g er, a nd th us , the gove rnm en t cou ld n e ver p rove th at Pe core o rWa n i g e rs u b mi t t e d a f a l s e c l a i m. A s was the case f orthe f actuald i spute ab out the defendants’ m oti ve, the go ver nm ent o ffer ed evi dence to co unt erthe de fen dan ts ’ the o r y . F i r st, the g o ve r nm en t o ffe r e d t e s t i mo n y s u g g e s t i n g th a t MT E h a d s u b mi t t e d aN os. 10

- 2676 & 10

- 3599 17 hand ful ofi nvoi ces on a p er - m i l e ba si s. Onlyafter C on go s’s i ni ti ali nspecti on di d the Tribe c hange to cos tbase d i nvoi ci ng. N ext, the g ove rnm ent o ffer ed a 2 001 acco m pli shm ents m em or andu m prepar ed by W ani ger st at i ngtha t fue lb r ea k s wer e cr ea te d f o r9 6. 2 m il es a nd th atwor kwas a t l ea st9 5% co m pl et ed. The g o ve r nm en t al so offer ed tes ti m ony i nd i cating t hat W ani gersubm i tt ed a se co nd c o m pl et i o n map to Co ng o s afte rM TE re w or k was co m ple ted. Final l y, the gov ernm ent o ffered Con g o s’ s te st i m o ny abo uthi s 20 01 a nd 2 00 2 i ns pec ti o ns as wel la s hi s b rief2 00 9 r eins pec ti o n fo l l o wi ngthe K en Sl oan re p o r t. O n ap p eal, our review of th e record confi rm s the di str i ct c ourt ’ s fi nd i ng tha t there was am ple c onfusi on a sso ci ate d w i th the Tribe’ s invoi ces. W e al so agr ee w i th the di str i ct c ourt ’ s fi nd i ng tha t “ eve n i fthe De fen dan ts ’ e xpe ns e-ba se d view o fi ts b i l l i ng w as en tir ely corr ect, thatdi d not e nti tl e i t t o l i st ar eas ofwork done (by m i l eage) if those ar eas were not actual l y done. ” M eno m inee Triba l E nters. , 2010 W L 24655 05, at * 3. U l ti m ate l y, the i ntense n at u re o fthi s debat e sugge sts to us that e i therparty’ s pos i tion co uld be acce pte d a s true b y a r ea so nabl e per so n. Tw o fi na l p oints abo ut the defe nd ants’ f actualdi sput es b ea rment i o ni ng . F i r st, the de fen dan ts i g no r e th e obj ecti ve, al though not necess ar i l y concl usi ve, evi dence that the go ver nm ent’ s co m pla i nt sur vi ved bo th a m oti on t o d ism iss an d a m ot ion for s u m m ar y jud gm en t. U ni t ed S tates v. Thouv enot, Wade & M oers chen, Inc. , 5 9 6 F
. 3 d 3 78, 382 ( 7th Cir

. 2010 ) ( “[ T]her e i s a [ re buttabl e] pre sum pti on that a g ove rnm ent c ase st ro n g enough t o survi ve both a m otion to di sm i ss and a m oti on f orsum m ary j ud g-18 N os. 10

- 2676 & 10

- 3599

T h e d efe n d a n ts critic ize Thouvenotbe c aus e it sup p osed ly sh ift s 6 the gove rn m en t ’ s s t atut or y bur den ofpr ooft o the pre vai l i ng defe nd ant by creat ing a presu m ption ofs ub st anti al j usti fic ati on ifa c ase s urvives both a m oti on to d ism iss a nd s um m ary ju d g m en t. T h is is w ro n g . Thouvenoton l y c ons t ru es a m ot i on t o di s m i s s or s um m ary ju d gm en tvi c t or y a s obj ec t i ve and p er h a p s co m p el lin g ev id en ce o f su b sta n tia l ju sti fic a tio n . Pie rc e, 4 8 7U .S. a t 5 6 8 (fin d in g th a t o b jec tiv e fa ct o r s a re re le v a n t). N o ta b ly , Th ou v en ot le ft the doo r op en f or an at torney’ s fees awar d i n th os e c as es w he re som ethi ng em er ge s at t ri al pr ovi ng thatthe gov ernm ent never had a c a se or i n thos e c ase s w here the di s t ri c tc our tj udge has ne w evi denc e t o s ho w thats he “e rr ed g ri evo us l y i n r efus i ng t o gr antthe defen dant’ s m ot i on to d is m is s or m oti on f or s um m ary j ud gm ent. ” Th o uv e no t, 596 F .3 d a t 3 8 2 . B u t, ev en if Thouvenotwas s om eh ow i m pro perly d ec id ed, the dist ri ctcourt in this cas e ex press ly s tat ed that Th o uv e not w as on l y a s ec ond, i ndepe nden tgr ound for rej ect ing t h e d efendants’ EA J A m oti on. In other wo rds, even if Thou v enotdid not exi st, the gov ernm ent’ s posit ion was sti ll su b sta n tia lly ju sti fie d

. m en t is su b st an tia lly j u st ified .”). T h is ob j ec tiv e e vi- 6 dence co m bi ned w i th the i ntensi ty ofthe f actual di spu te s be twe en the pa r ti es i l l us tr at es tha t th e g o ve r nm ent had a subst anti alf act-base d j usti fi cati on f or b rin ging sui t. The se cond, and perhaps m or e i m port ant, concl ud i ng tho ught i s that o ur rev i ew i s l i m i ted to a disc ussi on o fwh etherthe d i str i ct c ourtabuse d i ts disc re tio n . Conrad, 4 3 4 F
. 3 d a t9 9 0
. A l th o u g h o u ro wn review of th e record show s tha t the govern m en t’s posi ti on was subst anti al l y j usti fi ed, w e m ust a gain acknow l edge the di str i ct c ourt ’ s uni que posi ti on t oN os. 10

- 2676 & 10

- 3599 19

o b s e r v e a nd we i g h the e v i de nc e o v e rt wo - a nd- oneh alf y ea rs o fan int en se ly fa c tu al litig at ion
. P ie rc e, 48 7 U
. S. at56 0 ( “[ S] om e o fthe elem ents that bearupon whethe rthe Go ve r nm en t’ s po si ti o n ‘ w a s su b st an tia l ly j us tif ie d ’ m ay be kn ow n on ly to the district cou rt. ”). Ult i m at ely, the de fen dan ts ha ve no t o ffer ed an y thi ng to c as t do ubto n the di st r i ctc o ur t’ s wel l

- r ea so ne d s i xt ee npag e o pi ni o n. For the pr ec edingr ea so ns , we fi nd the di st r i ctcou rt did notabuse i ts d isc re ti on in concl ud i ng tha t the go vernm en t’ s po si ti o n h ad a su bs ta nt i alf ac tu alj us ti fi ca ti o n.

3. The G o vern m ent P rop erly In vestig a ted The D efend a nts’ E vidence F i na l l y, the de fen dan ts a r g ue tha t th e gov ernm en t faile d to p ro p er ly in ve st iga te its o w n FC A cla im , in vi ol ati on o f31 U
. S. C. § 3 730( a) ( “The A tto rney Genera l dil i gently s hal li nvest i gat e a vi ol ati on under s ecti on 3729
. ”)

. S ucha f ai l ur e to i nv es ti g at e, a cc o rdi ngt o the d efend an ts, is furt he r eviden ce t h at th e govern m en t’s po si ti o n was ne ve rs ubs ta nt i al l y j us ti fi ed. Pe co r e an d W ani geras ser t that the go ver nm en t’s re l i ance o n st al e Con g os i ns pec ti o ns i ns te ad o fthe mor e r ec en t Sl oan re portexculp atingthe defe nd ants i s pro ofthat the g ove rnm ent f ai l ed to i nvest i gat e. W e di sag re e. As a th r e s h o l d ma t t e ra n d a s th e d i s t r i c tc o u r tn o t e d, th e l o o s e g r a s p th e g o v e r n me n t s u p p o s e d l y h a d o n t he facts m ight ha ve m ore to d o w ith th e d efend an ts’ bord erli ne di sc o ve r y abus es r athe rtha n the g o ve r nm en t’ s20 N os. 10

- 2676 & 10

- 3599 failu re to inv es tig at e t o t h e d efe n d an ts ’ likin g. See M e n o m inee Triba l E nters. , 2 0 1 0 WL 2 4 6 5 5 0 5 , a t* 4
. We l end l i ttl e cr edence to the defendants’ ar gum ent that the g ove rnm ent s houl d have dro pp ed its sui t a fter re adin g th e Sl oan re portwh en thatr epor t was notpro d uc ed un t il t h e eve of trial

. Secon d , there is no su p p ort f o r th e defen dan ts ’ appa r en t po si ti o n th at th e governm ent m ust g i ve gr eat erdefer ence to the defendants’ expertr atherthan re l y o n i ts own f or est er ’ s inspecti ons. Instea d, tr i all iti gat i on r outi nel y b oi l s down to a b a t t l e o fe xp e r t s , a nd a disp ut e b e t we e n e xp e r t s “ t e nd s to show a go od f ai th di sp u te, ” Chic ago D i s t
. Counc i l of Carp e nt e rs Pe ns i on Fun d v

. Re i nkeIns ul at ion Co. , 46 4 F. 3d 651, 65 6 ( 7th Ci r. 20 06) , wh i ch is a n othe r w ay to s a y tha tb o th pa r t i e s ’ c l a i ms we r e s ub s t a nt i a l l y j us t i fi e d. Thir d, the defe nd ants’ conte nti on that Congos’ s in specti ons w er e s tal e a s co m pared to the Sl oan re porti s, at best, i rr el ev an t. To the co ntra ry, a re aso nabl e per son cou ld h ave fo u n d that the C ong os insp ection s w ere m or e r el i abl e be cause they occur re d cl ose r in ti m e t o wh e n th e fi r e r e d u c t i o n w o r kw a s s u p p o s e d l y c o mpl et ed. Fi na l l y, Co ng o s te st i fi ed att r i altha t th e g o ve r nm ent c onducted i ts own r ei nspecti on in Octobe r 2009 f ol l owing the b el ate d Sl oan i nspecti on. A ccor ding to Congos, the Sl oan photos sh ow ed so m e e vi dence of cu tting u nrelated to the H FRpro g r a m , bu t othe r porti o ns o f th e f o r es t co nt i nue d to sh o w n o si g ns o f an y fi re preve nti on work

. U l ti m ate l y, the defe nd ants’ co ntenti on that i ts i nspecti on i s be tte r than the o ther s i s s i m i l arto the o ther fa c t- i ntensi ve disputes the defe nd ants have h igh ligh te d on ap p ea l. L ike th is ot h er co n flict in g e vi-N os. 10

- 2676 & 10

- 3599 21 den ce , the pa r ti es ’ de ba te abo utthe v al i di tyo fthe i nspe ct i o ns s ay s l i tt l e ab o uts ubs ta nt i alj us ti fi ca ti o n. Rather, the i ntensi ty ofthe dispute, bo th attr i aland on appeal, sho w s that a r eas onabl e per so n could have bee n sa tis fied by eith er p ar ty ’s t h eo ry . P ie rc e, 48 7 U.S

. at56 5. Defen dan ts ’ rel iance o n Phi l S mid t& So n , In c . v . NLRB , 810 F. 2d 63 8 ( 7th Ci r. 19 87) , i s m i spl aced. There , w e r ev er se d th e di st r i ct co ur t’ s r efus al to i m po se EA JA att or ney’ s fees ag ai nst the go ve rn m ent in partbec ause o fthe s tr o ngc o nt rad i ct o r y e vi den ce pr es en te d b y the defen dan t. W e ch i ded the go ve r nm en t f o rno t m ak i ng
“ anyat tem pt to i nd ep en dentl y c or robor ate [ i ts] al l ega ti on. ” Id. at 643 (em p ha sis add ed ). In this case, how ever, th e r ec o r d r ev ea l s th atthe g o ve r nm en t i nv es ti g at ed th e S l o anr epo r t, r eins pec te d po r ti ons of th e f o r es t, a nd concl ud ed that Congos’ s inspecti ons w er e m ore r el i abl e. T h i s i s n ota c as e w h er e t h e g ov er n m en t c om p let ely ab d i c a t e d i t s d u t y t o d i l i g e n t l y i n v e s t i g a t e i t s c l a i ms agains t Pec ore and W an iger. Because the go ver nm ent’ s pos i ti on throu gh out tr i al w as substa nti al l y j ustifie d , the dist ri ct c ourtdi d not ab us e i ts di sc r et i o n i n deny i ngde fen dan ts ’ EAJ A m o ti o n.

B. Rul e37 ( c) (2) Sa nc t i ons The defe nd ants al l ege thatthe dis tr i ct courtal so abused its d isc re tio n in d en yin g its R u le 3 7 m ot ion . Fed er al R u le of CivilProc e d u r e 3 7(c)(2) prov ides that a district cou rt m us t im p ose reason able e x p en ses inclu d ing attorn ey’s fees o n a par ty that f ai l s t o proper l y a d m it th e g enui ne-22 N os. 10

- 2676 & 10

- 3599

ness ofa docum ent pursu an t to a Rul e 3 6 r equest f or ad m i s sio n . Fed . R. C iv. P . 37(c )(2) ; H i ck l i n Engi ne e r i ng, L.C. v. B arte ll, 439 F.3d 34 6, 35 1 (7 th C ir. 20 06 ). B u t, t h is rul e pr ovi des an e scape hatch f orthose parti es that “had a re a s o nab l e g r o un d t o b e l i e v e tha ti tmi g htp r e v a i lo n th e m att e r .” Fe d

. R. Civ. P. 37(c)( 2)(C). Th e d istri ct cou rt f o und th at th e g o ve r nm en t fi t i nt o th i s ex ce pti on, and thus, i t deni ed t h e defendants’ r equest f orsa ncti ons. W e a gr ee. I n i ts mot i o n fo rs an ct i o ns a nd a g ain o n app ea l, the defe nd ants i denti fy tw o types ofRule 36 r equests that the g o v e r nme nts ho uld ha v e a dmi t t e d. T he fi r s tty pe was a requ es t l i k e Re que st2 1, whi cha sk ed th e g o ve r nm ent t o adm i t that the defendants i ncu rre d $8 , 707. 50 i n ex pen se s r el at ed to i nv o i ce 20 0. The g o ve r nm en t denie d knowledge suffi ci ent t o adm i t or d en y the r equest. Th e s eco nd ty pe ofRule 36 r equest ask ed the g ove rnm ent t o adm i t that workrel ate d to i nvoi ce 20 0, f o re xa m pl e, ha d b ee n s ubs ta nt i al l y c om pl et ed. The gov er nm ent unam bi guousl y deni ed thi s type o fr equest as i t was the go ver nm ent’ s pos i ti on a l lal ong that Pecor e a nd W ani gersubm i tte d i nvoi ces f or w or k that w as i ncom ple te, defi ci ent, o r both. The defendants se rv ed i denti calr equests f orse ver aldi ffer ent invoi ces. W e ne ed no t sp end m ucht i m e di spo singo fthe de fen dants’ ar gum ent b ecause w e have al re ady co ver ed m uch of th is gr ou n d i n o u r E A JA an aly sis . Th er e, w e h eld th at t h ere w as reason able con fusion su rroun d ing M T E ’s i nvoi ces, co m ple tion m aps, and acco m pli shm ent m em ora nd a s uch that either party ’ s pos i ti on was “j usti fi ed to aN os. 10

- 2676 & 10

- 3599 23 degre e that co uld s ati sfy a r eas onabl e per son . ” P ie rc e, 487 U
. S. at 565. Ru le 37(c) (2) incorp orates a st a n d a rd that i s s tr i ki ng l y s i m i l arto P ie rc e . Th e 1970 A d visory Com m i tte e no tes pro vi de that “the tr ue te st und er Rul e 3 7 ( c ) i s n o t wh e th e r a p a r t y p r e v a i l e d a t t r i al b ut whethe rhe a ct ed r ea so nabl y in b el i ev i ngtha t he might preva i l

. ” F ed. R. Ci v. P. 37advi sory c om m i tte e’ s no te; se e M ut. Se rv. Ins. Co
. v. Frit Indus. , Inc. , 35 8 F
. 3d 1312 , 13 26 ( 11 th C i r . 2 0 0 4 )

. B a s e d o n o u rE AJ A a n a l y s i s , we fi nd tha t th e g o ve r nm en t rea so nabl y b el i ev ed i t m i g ht p r e v a i lo n t h e i n v o i c e a n d ma p i s s u e f o rth e s a me re aso ns we f ound the go ver nm ent’ s pos i ti on t o be s ubsta nti al l y j u stifi ed. There f or e, we fi nd thatthe distr i ctc o ur t di d no t ab us e i ts di sc r et i o n in r ej ec tingthe defe nd ants’ r equest f orRule 37sa ncti ons.

III. C ON CLU SI ON W e h o l d tha tthe di s t r i c tc o ur tdi d n o tab us e i t s di scre ti on a nd acc or dingl y, we A FF IRM its dec i si o n de ny i ng defe nd ants’ m oti ons f orat torn ey ’ s fees under e i ther E A JA or R ule 37(c)(2).

12- 30- 11