Opinion ID: 573091
Heading Depth: 3
Heading Rank: 1

Heading: Cost-of-Living Adjustment

Text: 27 Defendants do not now contend that a cost-of-living increase is not warranted, or that the rate selected by the district court is excessive. Rather, defendants focus on the timing of plaintiffs' attorneys' work. Defendants argue, as they did below, that a blanket fee for all hours expended is not appropriate, and contend that the cost-of-living increase should be calculated from 1981 for each year, separately, since the hours began accumulating in 1985 (historic rates). Hence, defendants contend that in setting a cost-of-living adjustment, the court may consider only inflation that occurred prior to the attorneys' performance and may not consider increases that occurred subsequent to the work performed. In support of this contention, defendants rely on Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 2961, 92 L.Ed.2d 250 (1986), which held that the United States is immune from an interest award, absent express congressional consent. Justifying current rather than historic rates because of delay in relief, defendants contend, is tantamount to awarding interest. 28 Defendants correctly construe Shaw as holding that principles of sovereign immunity dictate, as a general proposition, that interest awards against the United States are prohibited. However, we have recognized that this general rule admits of several exceptions, 10 only one of which is potentially relevant in this case; namely, where the United States has expressly consented to such an award, sovereign immunity does not bar interest. Shaw, 106 S.Ct. at 2961. The focus of this exception is whether the legislation giving rise to the cause of action expressly subjects the government to interest payments. McGehee v. Panama Canal Comm'n, 872 F.2d 1213, 1215 (5th Cir.1989). 29 In analyzing whether Congress has waived the immunity of the United States in a particular statute, we must construe the statute strictly in favor of the sovereign, and not enlarge any waiver found therein beyond what the language requires. Shaw, 106 S.Ct. at 2963. The no-interest rule provides an added gloss of strictness upon these usual rules of construction. Id. Driving home the point of explicit waiver, the Supreme Court admonished in Shaw: 30  '[T]here can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute or contract to permit the recovery of interest suffice where the intent is not translated into affirmative statutory or contractual terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed.'  Id. (quoting United States v. N.Y. Rayon Importing Co., 329 U.S. 654, 67 S.Ct. 601, 604, 91 L.Ed. 577 (1947)). 31 Underscoring its point, the Court observed that [w]hen Congress has intended to waive the United States' immunity with respect to interest, it has done so expressly. Id. 11 32 We conclude that this is an issue of first impression in this Circuit. 12 Initially, we recognize that many courts have awarded a cost-of-living adjustment under the EAJA based on the current Consumer Price Index (CPI) without regard to the year in which the services were performed. See, e.g., Garcia v. Schweiker, 829 F.2d 396, 402 (3d Cir.1987) (reasoning that attorneys should not have the purchasing power of their fees eroded by such inflation); United States v. Boeing Co., Inc., 747 F.Supp. 319, 322-23 (E.D.Va.1990) (noting that the CPI should serve as a disincentive to the government to prolong the litigation process); Rutledge v. Sullivan, 745 F.Supp. 715, 717 (S.D.Ga.1990) (concluding that the award should compensate for the time value of money and the effects of inflation). The apparent motivating factor behind each of these decisions was a desire to compensate the attorney for the delay between performance and payment. None of these courts, however, addressed the question of whether such awards impermissibly required the United States to pay interest. 33 Turning to the language of the EAJA, as mandated by Shaw, we observe that it does expressly provide for the award of post-judgment interest, but only in certain circumstances. 13 Moreover, although the EAJA does not use the phrase prejudgment interest, it does allow the $75 maximum rate to be increased based on the cost of living or special factors. In Hong-Yee Chiu v. United States, 18 Cl.Ct. 567, 572 n. 2 (1989), the Court of Claims found such language sufficient to justify adjusting the $75 rate as of the date of the award, rather than as of the date services were rendered. The court considered and rejected the arguments that defendants now make, observing that 34 [i]f the $75 per hour rate is not adjusted for inflation between the time the work is performed and the time the award is made, the value in real dollars of the award would decrease during that period and plaintiff would end up bearing more of the actual economic costs associated with securing attorney representation and less would be shifted to the government. Id. at 571. 35 Distinguishing the Supreme Court's prohibition in Shaw of interest awards on the ground that the statute interpreted in Shaw (42 U.S.C. § 2000e-5(k)) merely authorized the award of a reasonable attorney's fee, the court continued: 36 The attorneys' fee provision in the EAJA ... contains the very link found missing in Shaw. The EAJA explicitly provides for adjustment to the $75 per hour statutory rate for cost of living increases, i.e., there is an affirmative authorization by Congress permitting the grant of a COLA to the $75 per hour maximum rate. Therefore, the proper focus of inquiry herein is not whether Congress waived sovereign immunity to permit a COLA to the $75 statutory rate but rather, in effect, whether Congress precluded the court from considering inflation that occurred subsequent to performance of the attorney work when establishing a COLA. As explained above, Congress did not. Id. at 572 n. 2 (citation omitted). 37 Despite its logical appeal, we find the analysis in Hong-Yee Chiu to have ignored the clear directive in Shaw. The Supreme Court could not have more clearly stated that waivers of sovereign immunity must be strictly construed; therefore, the presumption is against allowing interest awards. Moreover, we cannot simply side-step this difficult question by calling the award a cost-of-living adjustment rather than an interest award. [W]hether the loss to be compensated by an increase in a fee award stems from an opportunity cost or from the effects of inflation, the increase is prohibited by the no-interest rule. Shaw, 106 S.Ct. at 2965. Accordingly, we look not to whether Congress precluded a current adjustment for all hours, but whether Congress expressly allowed such awards. We find no language in the EAJA authorizing fees at current adjusted rates for all hours whenever expended. The narrowest reasonable construction of the cost-of-living provision in the EAJA leads us to conclude that this was an attempt to allow the statute to be self-updating in light of the modern realities of inflation. This purpose is accomplished through the award of historic rates; anything more treads impermissibly across the line and is tantamount to interest. Therefore, in keeping with Shaw's mandate of not enlarging the waiver of sovereign immunity beyond what the language requires, we hold that cost-of-living adjustments under the EAJA must be made to reflect the appropriate rate in the year in which the services were rendered. 38 A simple example illustrates the logic of what may seem to be a nice distinction. If an attorney provides services in 1991 and is compensated in that same year, adjusting the $75 statutory rate based on increases in the cost of living between 1981 and 1991 provides no concerns of prohibited interest. The adjustment operates simply to update the EAJA's statutory rate; delay is not a consideration. Suppose instead the attorney provides services in 1988 and the appropriate adjusted rate is then $100 per hour; however, because of the delays normally attendant on litigation, the fee award is not made until 1991. An award of $100 per hour for those services is expressly permitted under the EAJA. If the court goes further and awards the attorney $110 per hour to compensate for inflation not only between 1981 and 1988, but also between 1988 and 1991, then the court has in effect awarded interest for the three-year delay in payment. We do not find that the EAJA expressly countenances such a result. Accordingly, following the teachings of Shaw, we conclude that cost-of-living compensation of attorneys under the EAJA merely for the delay in payment is a prohibited award of interest against the United States. 39 Turning to the issue of whether special factors may independently justify departing from the historic rates rule, we note that we have previously recognized, albeit in dicta, that delay in payment may be a special factor within the meaning of the EAJA. Baker v. Bowen, 839 F.2d 1075, 1082-83 (5th Cir.1988). However, in Baker we also observed that such a factor will arise only rarely and will be unique to the fact situation of the particular case. Id. at 1083. In this case, the magistrate determined that the delay anticipated by plaintiffs before receipt of the award cannot be considered normal delay. This determination was based on the already protracted nature of the litigation and on the anticipation that defendants would continue to appeal the merits to the Supreme Court and appeal the fee award to this Court, creating a delay of at least a year or more before plaintiffs would receive the award. Accordingly, he recommended that the adjusted rate be applied to all of plaintiffs' hours, whenever expended. 40 Despite our passing recognition in Baker that delay may justify increasing the EAJA's statutory rate, we have not had the occasion to define the boundaries of delay vis-a-vis the EAJA's special factor provision. Several courts have concluded that the special factor provision in the EAJA allows an increase in the statutory cap to compensate parties for prolonged delay in payment. See, e.g., Action on Smoking & Health v. Civil Aeronautics Bd., 724 F.2d 211, 219-20 (D.C.Cir.1984) (allowing slight increase in cap because payment of award occurred four years after services were rendered, where delay was partly attributable to agency's six requests for stays). Even after the Supreme Court's sweeping prohibition in Shaw of interest awards against the United States, the D.C. Circuit adhered to this view, noting that the EAJA expressly gives the courts leeway to adjust the statutory maximum in the presence of a special factor. Wilkett v. ICC, 844 F.2d 867, 876 (D.C.Cir.1988). However, the court made clear its position that routine delay alone does not justify increasing the fee. Id. 41 We agree that some forms of delay may justify enhancing the statutory base rate under the EAJA. However, we recognize, as did the court in Wilkett, that some delay in payment of fees is and has long been nearly always inevitable. Therefore, the normal delay attendant on litigation of a fee request can hardly be called a special factor. Nor will we permit an increase in the cap in every instance of complex litigation where the delay is unusually long. Instead, we believe that delay will become a special factor only when it is truly exceptional and not attributable to negligence or improper conduct of the prevailing party. 14 42 We do not find the delay in this case to have been truly exceptional. Any delay in payment experienced by plaintiffs in this case has been caused merely by the complexity of the litigation and defendants' appeals to this Court. Were we to conclude that such delays are exceptional, we would remove any real meaning from the term special factor. Accordingly, we hold that the district court, in its alternate award, abused its discretion in compensating plaintiffs' attorneys above the properly adjusted per hour statutory maximum because of delay in payment. 43