Source: http://courtsandwriting.blogspot.com/2015/07/republican-fifth-circuit-justices-rule.html
Timestamp: 2017-06-27 22:36:09
Document Index: 647858839

Matched Legal Cases: ['§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§ 2412', '§\n2412', '§ 2412', '§ 2412', '§\n2412', '§\n2412']

Courts and Writing: Republican Fifth Circuit Justices Rule Obama's Labor Department's Position in Bad Faith
Republican Fifth Circuit Justices Rule Obama's Labor Department's Position in Bad Faith
Even after the Department of Labor discovered that its lead investigator conducted an investigation for which he was not trained,
concluded Gate Guard was violating the Fair
Labor Standards Act based
on just three interviews as to approximately 400 affected workers, destroyed evidence,
ambushed a low-level employee
for an interview without
counsel, and demanded a grossly
inflated multi-million dollar penalty, the government pressed on. In litigation, the government opposed routine
case administration motions,
refused to produce
relevant information, and stone-walled the deposition of its lead investigator.
For this misbehavior, the district court awarded Gate Guard attorneys’ fees under the Equal Access to Justice Act’s substantially-justified provision, 28 U.S.C. § 2412(d),
but denied fees under the EAJA’s bad faith provision, 28 U.S.C. § 2412(b). On November
19, 2010, Gate Guard sued the DOL seeking
a declaration that it was in compliance with the FLSA. R. 9778. Gate Guard also sought attorneys’ fees under the EAJA if it prevailed. R. 41-42. Before Gate Guard served the complaint, the DOL filed its own FLSA enforcement action for back wages and injunctive relief. R. 9778. Both suits were filed in the Southern District of Texas, but in different divisions. Id. Gate Guard filed the declaratory
judgment action in the
Victoria Division; the DOL
filed the FLSA enforcement action
in the Corpus Christi
Division. Id.
During litigation, the government opposed
nearly every motion—even routine case administration motions—on spurious grounds and filed specious motions of its own. First,
Gate Guard moved
to transfer the FLSA
enforcement action[1]2 to the Victoria Division
where its declaratory judgment action was already pending. The company noted that the actions were substantially related, Victoria
was the most convenient forum, and there was a possibility of conflicting judgments. R. 9779. The DOL opposed
the motion to transfer,
even though Victoria
and Corpus Christi are less than 100 miles apart. Moreover, eighty-five of the affected gate attendants resided within the Victoria
division, R. 1327, and Rapstine worked in the Victoria field office, R. 1326. DOL also argued
that the two suits—both centering on whether Gate Guard violated the FLSA—were not substantially similar.
R. 440. Unsurprisingly, the district court granted Gate Guard’s motion to transfer. R. 446.
Gate Guard then moved to consolidate the FLSA enforcement and declaratory judgment actions. DOL opposed this routine
motion because, inter alia, “consolidating the two actions will confuse the jury,” R. 1330, and “consolidation would accelerate disputes between the parties, causing unnecessary cost and delay,” R. 1331. The
consolidation motion was granted. R. 1333.
While Gate Guard’s motion to consolidate was pending, the government moved to dismiss the declaratory judgment
action on the grounds that there was no “final agency action”
and the controversy was not “ripe.”
The government took this position despite
the fact that DOL had conducted a “final” conference to inform
Gate Guard of its findings
and demanded a multi- million dollar
penalty, had threatened legal action if Gate Guard
did not comply, and
then sued Gate Guard for enforcement. R. 1305-19.
The district court denied the government’s motion. R. 1333.
The government’s conduct worsened as this litigation entered the discovery phase. During Rapstine’s initial deposition, which lasted only forty- five minutes, DOL’s lead counsel, Colleen Nabham,
objected 102 times. R. 9780 n.3. Eighteen additional times
Nabham instructed Rapstine not to answer basic questions
related to his investigation. Id. As a result,
Nabham spoke more during the deposition than Rapstine
did. Id. Nabham’s conduct was so disruptive, the deposition had to be stopped
and Gate Guard
to seek court supervision of future
depositions. R. 9780. Gate Guard later withdrew its motion after the DOL agreed
that Nabham would not defend any other
depositions that it would not coach witnesses, and that Rapstine would sit for another deposition. R. 9780.
Notwithstanding the deposition debacle, the government continued its belligerent litigation tactics. It forced
Gate Guard to seek court-ordered production of the witness statements underlying this prosecution, which the government claimed
were privileged. The government maintained its position even after it filed some of the same statements with the court as evidence
waived any privilege. R. 9780. Gate Guard had to seek a protective order when the government sent harassing and misleading letters
to gate attendants seeking
further information about their relationship with Gate Guard. R. 9780. Gate Guard also had to ask the court to seal several depositions containing trade secrets and confidential company information because the DOL unreasonably withheld
its consent. R. 9780.
Labor’s legal position eroded during their bad
behavior. The same district court held, in a nearly identical
case, that gate attendants are not FLSA employees. See Mack v. Talasek, No. V-09-53, 2012 WL 1067398,
*2 (S.D. Tex. Mar. 28, 2012). Further,
the DOL continued
this prosecution even after discovering that the federal
Army Corps of Engineers utilizes gate attendants and classifies them as independent contractors. R. 9786. Predictably, given the legal precedents and
botched investigation, the district court found the DOL’s case so weak, it granted summary judgment
for Gate Guard—a disposition the DOL has not appealed.
See Gate Guard Servs. L.P. v. Solis, No. V-10-91, 2013 WL 593418, at *13-14 (S.D. Tex. Feb. 13, 2013).
Gate Guard then moved
to recover attorneys’ fees under the EAJA’s
bad faith provision, 28
U.S.C. § 2412(b). The district court surveyed
and out-of-circuit precedent, eventually concluding that the government’s conduct was not sufficiently egregious to constitute bad faith. See Gate Guard Servs. L.P. v. Solis (Gate Guard I), No. V-10-91,
2013 WL 3873275, at *6-7 (S.D. Tex. July 24, 2013). Specifically, although only one of eleven relevant facts weighed in favor of FLSA employee
status, the court found that the government’s position
was “not entirely
frivolous.” Id. Accordingly, it denied
Gate Guard’s request.
Id. In the same opinion, the court left open the possibility that Gate Guard could recover
attorneys’ fees under the EAJA’s substantially justified provision, 28 U.S.C.
§ 2412(d). Id. Gate Guard took the hint and reframed
its original fee request.
Gate Guard Servs.
L.P. v. Perez (Gate Guard II), 14 F. Supp. 3d 825, 828 (S.D. Tex. 2014). The district court agreed that the government’s position
was not substantially justified and awarded Gate Guard over $565,000
in attorneys’ fees. Id. at 841. Both sides appealed.
The appellate court used an abuse of discretion
standard. Perales v. Casillas, 950 F.2d 1066, 1071 (5th Cir. 1992). A district court abuses its discretion when it relies on clearly
erroneous factual findings, erroneous
conclusions of law, or misapplies the factual
or legal conclusions. See Symetra
Life Ins. Co. v. Rapid
Settlements, Ltd., 775 F.3d 242, 254 (5th Cir. 2014) (citing N. Alamo Water Supply Corp. v. City of San Juan, Tex., 90 F.3d 910, 916-17 (5th Cir. 1996)).
The EAJA provides two paths for recovering attorneys’ fees from the government. First, under 28 U.S.C. § 2412(b),
the federal government may be liable
for attorneys’ fees “to the same extent that any other party would
be liable under the common law.” The general rule in federal courts and under the common law is
that litigants are responsible for their own attorneys’ fees. Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257, 95 S. Ct. 1612, 1621 (1975).
Courts can, however, award attorneys’ fees when a party has “acted in bad faith, vexatiously, wantonly,
or for oppressive reasons” or when a “litigant has conferred a substantial benefit on a class of persons.” F.D. Rich Co., Inc. v.
U. S. ex rel. Indus. Lumber Co., 417 U.S. 116, 129-30, 94 S. Ct. 2157, 2165 (1974). Thus, § 2412(b) essentially applies these common-law
bad faith and common fund exceptions to the government. Baker v. Bowen, 839 F.2d 1075, 1080 n.3 (5th Cir 1988). Second,
28 U.S.C. § 2412(d)
allows courts to award attorneys’ fees “unless
the court finds that the position of the United States was substantially justified or that special
circumstances make an award unjust.”
Section 2412(d) does not apply to high net worth
individuals or corporations and limits
attorney compensation to $125 per hour absent
special factors. 28 U.S.C.
§ 2412(d)(2)(A)-(B).
the court awarded
fees under § 2412(d)
but denied them under § 2412(b). In this appeal,
that an award under §
2412(d) was inappropriate because its position was substantially justified and Gate Guard’s
application was untimely. Gate Guard cross-appeals the denial
of fees under § 2412(b). Because we hold that Gate Guard is entitled to fees under § 2412(b),
our discussion is limited
The district court denied fees under the bad faith exception. See Gate Guard I, 2013 WL 3873275, at *4-7. To constitute bad faith, the court explained, a party must show that: “(1) the government’s position
meritless, (2) the meritlessness was known to the government, and (3) the government’s position
was advanced or maintained for an improper purpose, such as harassment.” Id. at *4 (internal citations and quotation marks omitted). Because the government’s position that gate attendants are employees was “not entirely frivolous”— meaning it was not “wholly unsupported” or “easily
dispatched by cursory review of the evidence”—the court found that the government did not act in bad faith.
Id. at *7. The appeals court made two
was criticized two ways. First, the court’s test was unduly rigid. The district court’s three-part test “if strictly
applied, threaten[s] the ‘evils of archaic
rigidity.’ ” Holland, 560 U.S. at 650, 130 S. Ct. at 2563 (quoting Hazel- Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 248, 64 S. Ct. 997, 1002 (1944)).
Second, in applying its unduly rigid test, the district court mistakenly focused solely on whether the government’s position—that gate attendants are employees—was frivolous.[2] With the foregoing
principles in mind, there is no doubt that a bad faith award of attorneys’
fees is appropriate. The government’s conduct was oppressive and its case legally
The EAJA allows for an attorneys’ fees award against the government whenever it has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons.”
F.D. Rich, 417 U.S. at 131, 94 S. Ct. at 2165. Although
the most common situation will involve the government knowingly
bringing a frivolous claim, a finding of legal frivolousness is not required.
Here, the circumstances giving rise to an award included both the government’s conduct
before and during litigation as well as a legally
insupportable case. The government’s conduct here was sufficiently
egregious to warrant
an award under §
2412(b). Circuit
Judge Edith H. Jones wrote for a panel including Circuit
Judge Catherina Haynes and Eastern
District of Texas Judge Marcia Crone, happily remembered of the beautiful Bayou City, reversed the
district court and remanded the case for calculation of attorneys’ fees under §
2412(b).
Gate Guard Services, L.P. v.
___ F.3d ___, No. 14-40585, available at http://www.ca5.uscourts.gov/opinions/pub/14/14-40585-CV0.pdf
(July 2, 2015, no cert. h.)
[1] Gate Guard
alternatively moved to dismiss the enforcement action. The district court denied that part of Gate Guard’s
[2] The district court did cite cases
involving fees awards for abusive or defiant litigation conduct. Gate Guard I, 2013 WL 3873275, at *6. But
the court only analyzed whether the FLSA
enforcement action was frivolous. See id.
The district court never discussed whether the government’s conduct throughout this
litigation justified an attorneys’ fees award. Id.