Case Name: Volker Keith MEINHOLD, Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF DEFENSE; United States Department of the Navy, Defendant-Appellant
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 1997-08-28
Citations: 123 F.3d 1275
Docket Number: No. 96-56094
Parties: Volker Keith MEINHOLD, Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF DEFENSE; United States Department of the Navy, Defendant-Appellant.
Judges: Before BOOCHEVER, KOZINSKI and JOHN T. NOONAN, Jr., Circuit Judges.
Reporter: Federal Reporter 3d Series
Volume: 123
Pages: 1275–1287

Head Matter:
Volker Keith MEINHOLD, Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF DEFENSE; United States Department of the Navy, Defendant-Appellant.
No. 96-56094.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Feb. 4, 1997.
Decided Aug. 28, 1997.
Anthony J. Steinmeyer, Department of Justice, Washington, DC, for defendant-appellant.
Robert Barnes, Kaye, Scholer, Fierman, Hays & Handler, LLP, Los Angeles, CA, for plaintiff-appellee.
Before BOOCHEVER, KOZINSKI and JOHN T. NOONAN, Jr., Circuit Judges.

Opinion:
' BOOCHEVER, Circuit Judge:
Navy officer Keith Meinhold was discharged for stating that he was gay, although he later truthfully denied that he engaged in homosexual conduct. A previous panel of this court held that the Navy violated its regulations by discharging Meinhold without evidence of an expressed desire to engage in homosexual conduct. The district court awarded Meinhold attorney fees under the Equal Access to Justice Act, and the government appeals the award, the district court's finding of bad faith, and the amount of fees. We affirm.
FACTS
Keith Meinhold, a Navy petty officer with twelve years of exemplary service, stated "I am in fact gay" on May 19, 1992, during an interview on ABC World News Tonight. The Navy immediately began discharge pro ceedings against Meinhold under then-existing military policy, which provided that a member "shall be separated" if "the member has stated that he or she is a homosexual," i.e., "a person . who engages in, desires to engage in, or intends to engage in homosexual acts." DOD Directive 1332.14, 32 C.F.R. pt. 41, App. A (1981). The Navy discharged Meinhold on August 12,1992.
Meinhold challenged his discharge in federal district court. The district court issued a preliminary injunction ordering his reinstatement. The Navy reinstated Meinhold. The Navy then filed an appeal of the preliminary injunction.
Meanwhile, the parties filed cross-motions for summary judgment in the district court. The district court granted Meinhold's motion, finding his discharge unconstitutional under the Equal Protection Clause because the Navy's policy of discharging gay servicemembers based on a statement of homosexual status alone was not "rationally related to its permissible goals." Meinhold v. United States Dep't of Defense, 808 F.Supp. 1455, 1457 (C.D.Cal.1993) ("Meinhold I"). The district court also permanently enjoined the Department of Defense from denying enlist ment to or discharging any person based on sexual orientation alone. Id. at 1458.
The Navy appealed, and another panel of this court affirmed in part. Meinhold v. United States Dep't of Defense, 34 F.3d 1469 (9th Cir.1994) ("Meinhold II"). We avoided deciding the constitutional question, instead construing the regulation "to mandate separation due to a statement of homosexuality only when that statement itself indicates more than the inchoate 'desire' or 'propensity' that inheres in status." Id. at 1479. We affirmed the district court's grant of summary judgment to Meinhold on the discharge issue because Meinhold's statement "manifests no concrete, expressed desire to commit homosexual acts." Id. The Navy's presumption that Meinhold's statement meant that Meinhold desired or intended to engage in homosexual conduct "arbitrarily goes beyond what DOD's policy seeks to prevent." Id. at 1479-80. We also, however, vacated the district court's nationwide injunction, except to the extent it enjoined the Navy from discharging Meinhold. Id. at 1480.
Meinhold subsequently filed a motion for attorney fees under the Equal Access to Justice Act (the "EAJA"), 28 U.S.C. § 2412, which entitles a party who substantially prevails in a civil action against the government to attorney fees unless the position of the government was "substantially justified." In July 1995, the district court awarded Mein-hold $443,175.73 for hours spent in the litigation and on the EAJA fees application. The Navy appealed, and this court remanded to the district court for an explanation of reasons for the attorney fees award. [ER pp. 168-69]
The district court issued a memorandum opinion on May 14, 1996, explaining its reasons for the fee award: Meinhold had been discharged solely on his statement of personal status, "I am in fact gay." The court stated that the government did not have substantial justification for the discharge and for its defense of the discharge. The court also explained how it arrived at the amount of fees awarded.
The Navy appeals, arguing that its discharge of Meinhold and its litigation posture were substantially justified and that EAJA fees were therefore wrongly awarded, and that the district court's opinion did not sufficiently explain the fee amount. We affirm.
DISCUSSION
I. Substantially justified
28 U.S.C. § 2412(d)(1)(A) provides that when a private litigant succeeds in a civil proceeding against the United States, the prevailing party must be awarded fees and expenses "unless the court finds that the position of the United States was substantially justified." The government's position is substantially justified when it "has a reasonable basis both in law and in fact," and the burden of showing that reasonable basis is on the United States. United States v. Rubin, 97 F.3d 373, 375 (9th Cir.1996) (quotations omitted). The "position" of the government includes the action on which the civil litigation is based, as well as the positions the government takes during the litigation. Oregon Natural Resources Council v. Madigan, 980 F.2d 1330, 1331 (9th Cir.1992).
We review the district court's decision that the government's position was not substantially justified for an abuse of discretion. We may reverse only if the district court based its decision that the Navy was not substantially justified "on an erroneous conclusion of law or when the record contains no evidence on which [it] rationally could have based that decision." Oregon Natural Resources Council v. Marsh, 52 F.3d 1485, 1492 (9th Cir.1995) (as amended) (quotations omitted). If the government's position violates the Constitution, a statute, or its own regulations, a finding that the government was substantially justified would be an abuse of discretion. Mendenhall v. National Transp. Safety Bd., 92 F.3d 871, 874 (9th Cir.1996); Madigan, 980 F.2d at 1332.
Mendenhall does not establish an ironclad rule, however. The issue before the Mendenhall court was the violation by the Federal Aviation Administration of its own policies, the interpretation of which was clear and not disputed. 92 F.3d at 875-76. The case on which Mendenhall relied, Yang v. Shalala, 22 F.3d 213 (9th Cir.1994), presented a situation where "the Secretary's position was based on violations of the Constitution, the [Social Security] Act and several SSA regulations." Id. at 217. Consequently it is not fair to conclude that every violation of a regulation by an agency stamps its position as unreasonable. The government may avoid EAJA fees if it can prove that the regulation it violated was ambiguous, complex, or required exceptional analysis. See Madigan, 980 F.2d at 1332; Pottgieser v. Kizer, 906 F.2d 1319, 1324 (9th Cir.1990); Southern Oregon Citizens Against Toxic Sprays v. Clark, 720 F.2d 1475, 1481 (9th Cir.1983).
A fair reading of the precedents suggests that we have been at some pains to respect the discretionary nature of the call made by the district judge who was most familiar with the case. We defer to familiarity. We discourage fee applications from turning into retrials and re-appeals of the principal case. With due observance of these considerations, we cannot say that the district judge in this case abused his discretion in holding that the government's position was not substantially justified.
The merits panel found that the Navy violated its own regulation in its discharge of Meinhold for the bare statement "I am in fact gay."
[T]he regulation . can reasonably be construed to reach only statements that show a concrete, fixed, or expressed desire to commit homosexual acts despite their being prohibited_ The Navy's presumption that Meinhold desires or intends to engage in prohibited conduct on the basis of his statement alone therefore arbitrarily goes beyond what DOD's policy seeks to prevent. Accordingly, Meinhold's discharge on that basis cannot stand.
Meinhold II, 34 F.3d at 1479-80. The court noted that Meinhold "truthfully denied" that he had ever engaged in homosexual activity, and the Navy had stated before the discharge board "There are no allegations whatsoever of act. We're talking specifically about the classification, and not the act." Id. at 1475, 1477 n. 8.
We are bound by the previous panel's decision that the Navy violated its own regulation. Madigan, 980 F.2d at 1332 (panel reviewing EAJA award is bound by merit panel's holding and rationale). The Navy does not contend that the regulation was so ambiguous or complex that it was justified in its mistaken interpretation. In fact, on appeal the Navy returns to an argument squarely rejected by the Meinhold II panel: that an acknowledgement of status is equivalent to an admission of conduct.
The Meinhold II court examined the statute's language and found that it was "arbitrary" for the Navy to equate Meinhold's statement with prohibited conduct. The district court awarded fees, finding that the Navy's position lacked substantial justification. The Navy had the burden in the district court to show that its litigation posture was reasonable. The district court found that the Navy had not carried its burden, and we cannot say that "the record contains no evidence on which [it] rationally could have based that decision." Marsh, 52 F.3d at 1492 (quotations omitted).
The government argued that its decision to discharge Meinhold and its position throughout the subsequent litigation were both substantially justified because "all five courts of appeals to decide the validity of the former policy-including this Court-have uniformly sustained it against various constitutional challenges." [Blue Br. at 11] (Emphasis added.) This characterization of the ease law existing at the time the district court awarded Meinhold fees is incorrect. Only Ben-Shalom v. Marsh, 881 F.2d 454, 464 (7th Cir.1989) explicitly held that it was constitutionally permissible to equate a statement of homosexuality with conduct ("Plaintiffs lesbian acknowledgement, if not an admission of its practice, at least can rationally and reasonably be viewed as reliable evidence of a desire and propensity to engage in homosexual conduct.").
Cases subsequent to the decision in Meinhold II are not strong support for the government's position. Three construed the "don't ask, don't tell" regulations implemented in 1994, two years after Meinhold's discharge. Those regulations, unlike the regulations in place at the time of Meinhold's statement, are pursuant to a statute that explicitly provides that a statement such as "I am a homosexual" creates a rebuttable presumption that the servicemember engages in homosexual conduct or has the propensity or intent to do so. 10 U.S.C. § 654(b)(2). See Richenberg v. Perry, 97 F.3d 256 (8th Cir.1996); Able v. United States, 88 F.3d 1280, 1286 (2d Cir.1996); Thomasson v. Perry, 80 F.3d 915, 930 (4th Cir.) (en banc), cert. denied, — U.S. —, 117 S.Ct. 358, 136 L.Ed.2d 250 (1996). In a fourth, Steffan v. Perry, 41 F.3d 677, 698 (D.C.Cir.1994) (en banc) (as amended), the en banc court concluded that the plaintiff did not have standing to bring a constitutional challenge to the regulations in place at the time of Meinhold's discharge because the record showed that he "declared himself to be a 'homosexual' because he in fact engaged in homosexual conduct." Again, only Ben-Shalom declared, under the regulations applied to Meinhold, that it was constitutional to discharge a servicemember for merely stating that he or she was a homosexual, with no evidence of homosexual conduct. 881 F.2d at 458, 464.
We are not charged with determining the constitutionality of the regulation. Nor are we charged with determining in the first instance whether the government's position is substantially justified, which would renew an extensive debate regarding a regulation that is no longer in place. Our role is limited to determining whether the district court abused its discretion. The question is whether the district court was entirely without foundation, in law and in fact, for its decision awarding fees.
[T]he text of the statute permits, and sound judicial administration counsels, deferential review of a district court's decision regarding attorney's fees under the EAJA. [Such review] will implement our view that a "request for attorney's fees should not result in a second major litigation." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983).
Pierce v. Underwood, 487 U.S. 552, 563, 108 S.Ct. 2541, 2548, 101 L.Ed.2d 490 (1988).
The dissent quotes from the district court opinion to support its conclusion that the district court erred as a matter of law in awarding fees to Meinhold. A careful reading of the dissent shows that the quotations come from the bad faith portion of the district court opinion, however, which did not form the basis of any fee award in the district court. See note 1, supra. Because those statements are in a portion of the opinion which we explicitly decline to address, we do not, as the dissent suggests, adopt by our affirmance any error of law the district court might have made in making the bad faith finding.
The dissent also seizes on these statements made in the context of the bad faith finding to suggest that we have decided a constitutional issue that is not before us, namely, whether the military may discharge members for saying they are homosexuals. A careful reading of our opinion shows that we address no such question. The district court reviewed Ninth Circuit and out-of-circuit precedent existing at the time of the underlying-actions and litigation and our holding in Meinhold II and found that the Navy was not substantially justified in reading its regulations to allow it to discharge Meinhold based solely on his statement that he was gay. In affirming the district court, we express no opinion as to whether Meinhold could have been discharged under different regulations, an issue that we stated in Meinhold II should await the proper case for resolution. We also express no opinion, as the issue is not before us, on whether the Navy would have been substantially justified in discharging Meinhold under the "don't ask, don't tell" regulations that we recently construed as applied to homosexual conduct in Philips v. Perry, 106 F.3d 1420 (9th Cir.1997). We merely hold, consistent with our reading of Meinhold II, that the district court did not abuse its discretion in determining that the government was not substantially justified here, considering the time and place in which the underlying actions and litigation arose, and we affirm the award of fees.
II. Fee amount
The Navy argues that the amount of fees awarded was wrong, and the district court's explanation was inadequate. This court reviews the decision regarding the amount of attorney fees for an abuse of discretion. Brown v. Sullivan, 916 F.2d 492, 495 (9th Cir.1990) (as amended).
The government spends fifteen pages, and Meinhold spends four, disputing the amount awarded, disagreeing on where the district court made a calculation error, and identifying various small and large discrepancies between the (various) fee applications and the eventual award. This exhaustive debate over the fee amount would require us to rule on the details of the award, and any monetary calculations we make would likely result in yet another appeal. The Supreme Court's caution in Hensley v. Eckerhart that a "request for attorney fees should not result in a second major litigation" militates against such micromanagement of a district court's fee award:
We reemphasize that the district court has discretion in determining the amount of a fee award. This is appropriate in view of the district court's superior understanding of the litigation and the desirability of avoiding frequent appellate review of what essentially are factual matters.
Hensley v. Eckerhart, 461 U.S. at 437, 103 S.Ct. at 1941.
The district court, after pruning nearly a quarter of the fees Meinhold originally sought, provided a "concise but clear explanation of its reasons for the fee award." Id. We hold that it did not abuse its discretion in determining the amount. Meinhold admits, however, that the district court's final calculations were off by $21,688.08. We therefore remand to the district court with instructions to amend its order to award fees in the reduced amount of $421,487.65. [Red Br. p. 29]
Because we affirm .the award of fees under the EAJA, Meinhold is entitled to attorney fees on this appeal. Love v. Reilly, 924 F.2d 1492, 1497 (9th Cir.1991) (party properly awarded fees in district court on EAJA application is also entitled to fees on appeal). On remand, the district court should also determine the amount of fees on appeal.
AFFIRMED AND REMANDED.
. The district court also found that the government had acted in bad faith in the discharge and in the course of the litigation. Because the fee award was not based on the bad faith determination, the bad faith finding is not necessary to the resolution of the attorney fees issue, and we decline to address it.
. Contrary to the dissent's statement in its footnote 2, neither Woodward v. United States, 871 F.2d 1068 (Fed.Cir.1989), nor Rich v. Secretary of the Army, 735 F.2d 1220 (10th Cir.1984) involves a mere statement of homosexuality. In Woodward, the Federal Circuit explicitly avoided deciding whether status'alone could suffice to justify a discharge where "there is no claim by [the servicemember] that he is celibate." 871 F.2d at 1074 n. 6. In Rich, the Tenth Circuit allowed a discharge to stand when the servicemember was discharged "because during enlistment he falsely denied having engaged in homosexual activity." 735 F.2d at 1229.
. In many cases it would be impossible for an individual to obtain counsel willing to invest the time and effort expended by Meinhold's counsel in this case, without the EAJA's provision for attorney fees. As stated in the legislative history, the EAJA
rests on the premise that certain individuals . may be deterred from seeking review of, or defending against unreasonable government action because of the expense involved in securing the vindication oh their rights. The economic deterrents to contesting governmental action are magnified in these cases by the disparity between the resources and expertise of these individuals and their government. The purpose of the bill is to reduce the deterrents and disparity by entitling certain prevailing parties to recover an award of attorney fees . against the United Stales, unless the Government action was substantially justified.
H. Rep. No. 969-1418, at 5-6 (1980), reprinted in 1980 U.S.C.C.A.N. 4953, 4984.