Source: https://law.justia.com/cases/federal/appellate-courts/F2/766/974/302897/
Timestamp: 2020-06-01 03:37:37
Document Index: 681280999

Matched Legal Cases: ['§ 2412', '§ 632', '§ 2412', 'art:\n28', '§ 2412', '§ 706', '§ 2412', '§ 706', '§ 706']

Trident Marine Construction, Inc., Plaintiff-appellant, v. District Engineer, the United States Army Corps Ofengineers, Detroit District; Col. Raymond Beurket, Jr.,contracting Officer; Richard Durkin, Regionaladministrator; United States Small Business Administration,chicago Region, Defendants-appellees, 766 F.2d 974 (6th Cir. 1985) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1985 › Trident Marine Construction, Inc., Plaintiff-appellant, v. District Engineer, the United States Army...
Trident Marine Construction, Inc., Plaintiff-appellant, v. District Engineer, the United States Army Corps Ofengineers, Detroit District; Col. Raymond Beurket, Jr.,contracting Officer; Richard Durkin, Regionaladministrator; United States Small Business Administration,chicago Region, Defendants-appellees, 766 F.2d 974 (6th Cir. 1985)
US Court of Appeals for the Sixth Circuit - 766 F.2d 974 (6th Cir. 1985) Argued May 1, 1985. Decided July 9, 1985
Trident Marine Construction, Inc. appeals an order of the district court denying it attorneys' fees pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(d).1 The district court found that the government's position in the underlying litigation was substantially justified and that attorneys' fees were therefore not permissible under the Act. 587 F. Supp. 799. We affirm.
The underlying action in this case involves the awarding of a government contract by the United States Army Corps of Engineers for the repair of the south breakwater in Muskegon Harbor. In the summer of 1983, the government decided that submission of bids on the contract was to be limited to small businesses as defined in the Small Business Act, 15 U.S.C. § 632. On July 14, 1983, Canonie Construction Company formally protested the decision to set aside the contract for small business. This protest delayed the opening of bids on the project until August 23, 1983. This was a setback to the Corp of Engineers because the contract had to be awarded by September 30, 1983 or the funding would be lost to another project.
After obtaining the relief it sought, Trident sought reimbursement for its attorneys' fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d). That section states in relevant part:
28 U.S.C. § 2412(d) (1) (A). The district court denied Trident's request for attorneys' fee, finding that the government's litigating position was substantially justified.
The question of whether the "position of the United States" in the Equal Access to Justice Act is intended to refer to the government's litigating position or the underlying agency position is an issue that has been considered by nine circuit courts. A majority of the circuits have concluded that the government's "position" refers only to its litigating position. Ashburn v. United States, 740 F.2d 843, 849 (11th Cir. 1984); Boudin v. Thomas, 732 F.2d 1107, 1116 (2d Cir. 1984); United States v. 2,116 Boxes of Boned Beef, 726 F.2d 1481, 1487 (10th Cir.), cert. denied, --- U.S. ----, 105 S. Ct. 105, 83 L. Ed. 2d 49 (1984); Spencer v. NLRB, 712 F.2d 539, 557 (D.C. Cir. 1983), cert. denied, --- U.S. ----, 104 S. Ct. 1908, 80 L. Ed. 2d 457 (1984); Tyler Business Services, Inc. v. NLRB, 695 F.2d 73, 75 (4th Cir. 1982); Broad Avenue Laundry and Tailoring v. United States, 693 F.2d 1387, 1390-91 (Fed. Cir. 1982). The Third Circuit, however, has concluded that only the underlying agency position should be considered. National Resources Defense Council, Inc. v. U.S. Environmental Protection Agency, 703 F.2d 700, 707 (3d Cir. 1983). The Eighth and Ninth Circuits have chosen a hybrid approach by considering both the underlying agency position and the government's litigating position. Iowa Express Distribution, Inc. v. NLRB, 739 F.2d 1305, 1309 (8th Cir.), cert. denied, --- U.S. ----, 105 S. Ct. 595, 83 L. Ed. 2d 704 (1984); Rawlings v. Heckler, 725 F.2d 1192, 1196 (9th Cir. 1984). This is an issue of first impression in this circuit.3 See Sigmon Fuel Co. v. Tennessee Valley Authority, 754 F.2d 162, 166 n. 5 (6th Cir. 1985).
Those courts that have concluded that the litigating position view best implements congressional policy have relied primarily on one argument.5 Ashburn v. United States, 740 F.2d at 849; Boudin v. Thomas, 732 F.2d at 1115-16; Spencer v. NLRB, 712 F.2d at 552-53. See also National Resources Defense Council, Inc. v. U.S. Environmental Protection Agency, 703 F.2d at 717, 717-19 (Hunter, J., dissenting). That argument is that the agency position view could result in automatic fee-shifting in many cases, which is what Congress was trying to avoid. Such automatic fee-shifting would result because the federal courts often review agency action to determine whether it is arbitrary or capricious or was not supported by substantial evidence. See 5 U.S.C. § 706. "After [a] court [has] concluded that the agency's action was arbitrary and capricious, and the prevailing party asked for attorney's fees, it would be hard for the court to then rule that the agency's action was nevertheless 'substantially justified.' " Ashburn v. United States, 740 F.2d at 849.6 Based primarily on this concern, several circuits have adopted the litigating position approach to avoid such automatic fee shifting.
Those courts that have rejected the litigating position approach have similarly relied primarily on one policy reason. Those courts have stated that " [i]f we were to limit our consideration of the government's position to merely the stance taken in litigation, no matter how outrageous the underlying governmental action, the government would be absolved from liability if Justice Department litigators acted reasonably." Iowa Express Distribution, Inc. v. NLRB, 739 F.2d at 1309. See also Rawlings v. Heckler, 725 F.2d at 1196; Natural Resources Defense Council v. U.S. Environmental Protection Agency, 703 F.2d at 707. Moved by this concern, these courts have found that the underlying agency position must be considered to further the purposes of the Act.
Having determined that we will examine the government's litigating position, we must now review the district court's conclusion that that position was substantially justified. Whether or not the government's position is substantially justified is basically a question of reasonableness. Wyandotte Savings Bank v. NLRB, 682 F.2d 119, 120 (6th Cir. 1982). "The government must therefore show that there is a reasonable basis in truth for the facts alleged in the pleadings; that there exists a reasonable basis in law for the theory it propounds; and that the facts alleged will reasonably support the legal theory advanced." United States v. 2,116 Boxes of Boned Beef, 726 F.2d at 1487.
We review under an abuse of discretion standard the district court's ruling that the government's position was substantially justified. Westerman, Inc. v. NLRB, 749 F.2d 14, 17 (6th Cir. 1984). "In this context, however, the term 'abuse of discretion' takes on a special meaning. With respect to findings based upon the district judge's assessment of the probative value of the evidence, a highly deferential standard of review such as the clearly erroneous standard is in order. With respect to the district court's evaluation of the government's legal argument, a de novo standard is appropriate." Sigmon Fuel Co. v. Tennessee Valley Authority, 754 F.2d at 167 (citations omitted).
At trial, the government argued that SBA's interpretation of its own regulation was entitled to deference and that the court should not substitute its judgment on the sufficiency of the protest for the SBA's judgment. Although the district court did not accept the government's claim, we agree with the district court that this is a substantial argument to justify the government's position. The law is well settled that the federal courts should accord great deference to an agency's interpretation of its own regulations. Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 801, 13 L. Ed. 2d 616 (1964); Housing Authority of Elliott County v. Bergland, 749 F.2d 1184, 1189 (6th Cir. 1984). Based on this precedent, the government had a strong argument that Zenith's protest was sufficient.
32 C.F.R. Sec. 1-703(b) (3) (i) (1984). The district court was apparently of the view that because the Corps had decided to wait for a size determination from the SBA in this case, it was estopped from awarding the contract without first getting that size determination.11
The evocation of estoppel against the government presents significant and difficult legal and factual issues. The Supreme Court has left open the issue of whether the government can ever be estopped, Heckler v. Community Health Services, --- U.S. ----, 104 S. Ct. 2218, 2224, 81 L. Ed. 2d 42 (1984), and this Court has recently stated that " [e]quitable estoppel generally is not available against the government." Housing Authority of Elliott County v. Bergland, 749 F.2d at 1190. Given the great disfavor with which estoppel against the government is viewed in federal court, we believe the government had a substantial legal basis to argue that it was not estopped from awarding the contract to Zenith in this case.12
Pursuant to a sunset provision in the Equal Access to Justice Act, 28 U.S.C. § 2412(d) was automatically repealed as of October 1, 1984. Pub. L. No. 96-481, Sec. 204(c), 94 Stat. 2321, 2329 (1980). The Act is still applicable, however, to all cases that were pending as of that date. Id. This case would fall in that category
We note, as have many other courts that have considered the issue, see Spencer v. NLRB, 712 F.2d at 551, that in most cases the government's litigating position and the agency's position will be one and the same. Usually the government will simply try to defend the agency's action in litigation. In this case, however, the distinction between the litigating position and agency position is important for two reasons. First, the district court stated that it had reviewed the agency's action under the "arbitrary and capricious" standard of 5 U.S.C. § 706. As we will discuss, see infra p. 979, the standard of review could cause a different result in attorneys' fees cases depending on whether the litigating position view or agency position view is used. Second, certain facts were apparently known at the agency level that were not known by the government's counsel in litigation. See infra p. 981. For this reason, we also must determine which interpretation is correct
Trident argues that even if legislative intent as to the meaning of "position" was unclear when the statute was passed, congressional intent has been clarified by the passage of a bill that reenacted the EAJA. H.R. 5479, 98th Cong.2d Sess., 130 Cong.Rec. 14,387-88 (1984). In that bill, Congress amended the EAJA to define the "position of the United States" to include the underlying agency position. This bill was subsequently pocket vetoed by the President. Taylor v. United States, 749 F.2d 171, 174 (3d Cir. 1984). Although we recognize that the intent of later Congresses has "persuasive value," Bell v. New Jersey, 461 U.S. 773, 103 S. Ct. 2187, 2194, 76 L. Ed. 2d 312 (1983), this Court has recently stated that it is "well settled that the views of subsequent congressional sessions are not reflective of the appropriate interpretation of statutes enacted by an earlier assembly of law makers." Davis v. Devine, 736 F.2d 1108, 1113 (6th Cir.), cert. denied, --- U.S. ----, 105 S. Ct. 436, 83 L. Ed. 2d 362 (1984). Given our conclusion, see infra p. 10, that the litigating position view is much more in conformity with the original purposes of the Act, we do not find a later Congress's efforts to amend the EAJA persuasive enough to dissuade us that the litigating position view is the correct approach
One of the strongest criticisms of the litigation position approach is that under that approach, a litigant could never recover attorneys' fees against the government when the government settled the suit prior to trial. See Note, The Equal Access to Justice Act in the Federal Courts, 84 Colum. L. Rev. 1089, 1114 (1984). According to this argument, settlement by the government will always be deemed reasonable by the courts, and the government thus will avoid paying attorneys' fees
Although we agree that a litigant should be able to recover attorneys' fees against the government in certain cases when it forces the government to settle a claim, see Kreimes v. Department of Treasury, 764 F.2d 1186, 1190 (6th Cir. 1985); Citizens Coalition for Block Grant Compliance, Inc. v. City of Euclid, 717 F.2d 964, 966 (6th Cir. 1983), we do not believe that our adoption of the litigation approach precludes such a recovery. When a district court considers an Equal Access to Justice Act fee request after the government has settled a case, the district court should examine the government's position if it had been forced to go to trial. If that position is untenable, the opposing litigant should be able to recover attorneys' fees.
The district court apparently found that SBA's interpretation was "arbitrary and capricious" under 5 U.S.C. § 706(2) (A). We are unsure whether the SBA's action, if it in fact was improper, was "arbitrary and capricious" or just "otherwise not in accordance with law" Id. Obviously, no matter which ground is relied upon, the result is the same
Not only is the legal question of whether the government can be estopped a substantial one, there are also substantial factual issues in an estoppel case. See Heckler v. Community Health Services, 104 S. Ct. at 2223-24. Although the district court did not make any findings in this regard, we think there were substantial factual issues as to whether the Corp had made any misrepresentation of fact upon which Trident reasonably relied