Opinion ID: 421798
Heading Depth: 2
Heading Rank: 2

Heading: The Position of the United States

Text: 18 The statute permits the government, when it loses a case, to avoid liability for attorneys' fees if it can show that its position was substantially justified. 26 The government's position, for these purposes, might mean one of two things. First, the term could refer to the governmental action that precipitated the lawsuit. Second, it could refer to the posture assumed by the government in litigation. These two interpretations have come to be known, respectively, as the underlying action  and the litigation position  theories. 19 The judiciary has yet to settle on one or another construction. As of the end of March of 1983, the issue had been addressed (explicitly or implicitly) in twenty-two decisions. In twelve of those cases, the court opted for the underlying action theory. 27 In the other ten, the court opted for the litigation position theory. 28 This circuit has not yet been confronted with the issue. The case law, in sum, affords us little aid in attempting to construe the position of the United States. We are obliged, therefore, to conduct our own inquiry. 29
20 The statute itself contains no clear indication of which of the readings is correct. Section 2412(d)(1)(A) does not explicate the term. And section 2412(d)(2), the definitional provision, makes no reference to the position of the United States. 21 Only two provisions of the Act offer any guidance, and they point in inconsistent directions. First, section 2412(d)(2)(C) indicates that the term  'United States' includes any agency and any official of the United States acting in his or her official capacity. 30 As the Third Circuit observed in a recent case, this encompassing definition provides some support for the underlying action theory, both because of its use of the word acting and because of the fact that most of the officials referred to by the provision would be incapable of taking a position in litigation. Natural Resources Defense Council v. U.S. Environmental Protection Agency, 703 F.2d 700, 707 (3d Cir.1983). However, the support that this definitional provision lends to the underlying action theory is at best modest. As Judge Hunter pointed out in his dissent in NRDC, the definitional section might plausibly be read as nothing more than an acknowledgment of the fact that the government as an entity can only take a 'position,' whatever the meaning of that term, through its agencies and the individuals who administer its agencies. Id. at 718 n. 2. Second, section 2412(d)(3) directs a court, when reviewing adversary adjudications before administrative agencies, to award to a private party who prevails on appeal the attorneys' fees he incurred in the course of his litigation before the agency, 31 unless the court finds that during such adversary adjudication the position of the United States was substantially justified, or that special circumstances make an award unjust. 32 As the highlighted language indicates, the provision presumes that the government's position, for the purpose of assessing its liability for attorneys' fees resulting from administrative adjudication, is the stance it adopted in litigation before the agency. It remains possible, of course, that the phrase position of the United States was intended to have a different meaning when used in the context of litigation before the courts, but if Congress contemplated such a difference, it failed to indicate as much in the statute. In short, the unequivocal adoption of the litigation position theory in section 2412(d)(3) suggests that the identical phrase, when used without qualification in section 2412(d)(1)(A), should be interpreted as the posture adopted by the government before the court. 33 22 On balance, we think that the support lent the litigation position theory by section 2412(d)(3) is somewhat stronger than that lent the underlying action theory by the definitional provision in section 2412(d)(2)(C). We concede, however, that the scales do not tip decisively one way or the other. One would hope that the legislative history would make possible a clean resolution of this issue. Unfortunately, study of relevant statements made by proponents and opponents of the bill proves even more inconclusive. 23 Neither the committee reports nor the debates contain an explicit statement purporting to construe the position of the United States. The legislative history is, however, rife with arguments that take for granted one or the other option. Unfortunately, the number that seem founded on the underlying action theory is roughly the same as the number that seem founded on the litigation position theory. Those various references have been canvassed elsewhere; 34 for present purposes, it will suffice to note the most important. 24 Strong support for the litigation position theory is provided by the language used in both committee reports to describe the standard of liability under section 2412(d)(1)(A): Where the Government can show that its case had a reasonable basis both in law and fact, no award [of attorneys' fees] will be made. H.R.REP. NO. 1418, supra note 20, at 10; S.REP. NO. 253, supra note 20, at 6 (emphasis added) U.S.Code Cong. & Admin.News 1980, at 4989. Other statements, also appearing in both reports, suggest (at least when read in isolation) that Congress was exclusively concerned with irresponsible governmental decisions to initiate or continue litigation: 25 A court should look closely at cases ... where there has been a judgment on the pleadings or where there is a directed verdict or where a prior suit on the same claim had been dismissed. Such cases clearly raise the possibility that the Government was unreasonable in pursuing the litigation. 26 The standard, however, should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing. 27 H.R.REP. NO. 1418, supra note 20, at 11; S.REP. NO. 253, supra note 20, at 6-7 (emphasis added) 35 U.S.Code Cong. & Admin.News 1980, at 4989. 28 One can find equally evocative statements, however, supportive of the underlying action theory. For example, in defending the decision to place on the government the burden of demonstrating that its position was substantially justified, 36 both committee reports argue that it is far easier for the Government, which has control of the evidence, to prove the reasonableness of its action than it is for a private party to marshal the facts to prove that the Government was unreasonable. H.R.REP. NO. 1418, supra note 20, at 11; S.REP. NO. 253, supra note 20, at 6 (emphasis added), U.S.Code Cong. & Admin.News 1980, at 4989. The conclusions to both reports declare: Thus, by allowing an award of reasonable fees and expenses against the Government when its action is not substantially justified, S. 265 provides individuals an effective legal or administrative remedy where none now exists. H.R.REP. NO. 1418, supra note 20, at 12; S.REP. NO. 253, supra note 20, at 7 (emphasis added), U.S.Code Cong. & Admin.News 1980, at 4991. And, in the floor debates, both supporters and critics of the bill frequently manifested their assumption that liability for fees would turn upon the strength of the government's justification for its regulatory behavior, rather than the colorability of the legal arguments subsequently advanced in support of that conduct. 37 29 We have thus arrived at an impasse; we must acknowledge that Congress failed clearly to resolve the question before us. To answer it, consequently, we must enlarge our field of vision; we must try to discern the underlying purposes of the Act as a whole, and then determine which of the two possible definitions of the position of the United States would best serve those ends.
30 The central objective of the EAJA, and of section 2412(d)(1)(A) in particular, was to encourage relatively impecunious private parties to challenge unreasonable or oppressive governmental behavior by relieving such parties of the fear of incurring large litigation expenses. 38 Achievement of that end, it was believed, would promote three more general goals. First, Congress hoped to provide relief to the victims of abusive governmental conduct, to enable them to vindicate their rights without assuming enormous financial burdens. 39 Second, it sought to reduce the incidence of such abuse; it anticipated that the prospect of paying sizeable awards of attorneys' fees when they overstepped their authority and were challenged in court would induce administrators to behave more responsibly in the future. 40 Third, by exposing a greater number of governmental actions to adversarial testing, Congress hoped to refine the administration of federal law--to foster greater precision, efficiency and fairness in the interpretation of statutes and in the formulation and enforcement of governmental regulations. 41 31 Single-minded pursuit of the foregoing goals would have induced Congress to enact a law providing for the automatic award of attorneys' fees to private parties who prevailed in suits against the government. Congress did not go that far, however, because of its sensitivity to two other considerations. First, it did not wish to inhibit legitimate efforts by the executive to enforce the law. 42 Second, it feared the potentially huge cost to the government of an automatic fee-shifting provision. 43 Accordingly, it selected an intermediate rule. In the words of the committee reports: 32 Under S. 265, fees will be awarded unless the Government can show that its action was substantially justified or that special circumstances make an award unjust. This standard balances the constitutional obligation of the executive branch to see that the laws are faithfully executed against the public interest in encouraging parties to vindicate their rights. 33 H.R.REP. NO. 1418, supra note 20, at 10; S.REP. NO. 253, supra note 20, at 6, 44 U.S.Code Cong. & Admin.News 1980, at 4989. 34 Which of the two possible interpretations of the position of the United States would comport better with the foregoing complex of concerns? To answer that question, we first need to determine when and how it will matter which theory we adopt. Examination of the variety of kinds of controversies covered by the Act reveals that, in the large majority of contexts, it makes no functional difference how one conceives of the government's position. 45 In actions brought by the United States, the governmental action that precipitates the controversy almost invariably is its litigation position. Most suits brought against the United States entail a similar correspondence. In the usual case, the government acts in a particular fashion and then defends its conduct before an administrative agency and/or a court. Under such circumstances, the litigation position of the United States will almost always be that its underlying action was legally justifiable. 46 Only in a minority of cases does it matter whether a court, reviewing a petition for fees brought under the EAJA, looks to the government's original behavior or to its subsequent legal arguments. Assessment of the competing theories, therefore, must be made with reference to those unusual contexts. Relying on our experience, we believe it not unreasonable to assume that most such cases will take one of five forms: 35 Example One: Appeals from Agency Actions Under Deferential Standards of Review 36 The standards by which courts review most kinds of administrative action embody some principle of deference. An agency rulemaking decision, for instance, must be upheld if it contravenes no statutory or constitutional provision, was reached in compliance with pertinent procedural requirements, is supported by substantial evidence, and is not arbitrary, capricious, or an abuse of discretion. 5 U.S.C. § 706(2) (1976). A decision by an agency not to institute a rulemaking proceeding is accorded even more deference: if the agency adequately explains the facts and policy concerns it relied upon, and if those facts and concerns have some basis in the record, a court will not overturn its judgment. WWHT, Inc. v. FCC, 656 F.2d 807, 817 (D.C.Cir.1981). To take a more specific example especially germane to the instant case, a decision by the NLRB regarding the appropriate scope of a bargaining unit will not be reversed by a court unless it was made in excess of [the Board's] delegated powers and contrary to a specific prohibition in the [National Labor Relations] Act. See Leedom v. Kyne, 358 U.S. 184, 188, 79 S.Ct. 180, 183, 3 L.Ed.2d 210 (1958); Boire v. Greyhound Corp., 376 U.S. 473, 480-82, 84 S.Ct. 894, 898-99, 11 L.Ed.2d 849 (1964). 37 When an appellate court, applying one of these deferential standards of review, overturns an agency's decision, how should the agency's liability for attorneys' fees under the EAJA be assessed? Assume, for example, that the promulgation of a novel regulation is held to have been arbitrary and capricious. If the ensuing EAJA petition submitted by the prevailing private party were evaluated under the underlying action theory, the agency's liability for fees would turn upon whether its adoption of the rule was substantially justified. It is very unlikely that the agency would prevail under such a test; a court that has just concluded that the agency's action was arbitrary and capricious would be hard pressed to rule that its action was nevertheless substantially justified. The net effect would be that the EAJA would become, for all practical purposes, an automatic fee-shifting provision in these circumstances. 47 That result seems plainly inconsistent with Congress' general objective in enacting section 2412(d)(1)(A): to establish an intermediate standard for the allocation of attorneys' fees, one falling somewhere between the English Rule and the current American Rule. 48 More consistent with the purposes of the Act would be a rule whereby a court, when reviewing an EAJA petition arising out of a case of the sort described above, would ask: Was the agency's litigation position (i.e., its argument on appeal that its promulgation of the regulation was not arbitrary and capricious) substantially justified? 49 38 Example Two: Standards of Liability Linked to the Justification for Conduct 39 The government's liability, in several kinds of suits, turns upon its ability to offer a reasonable justification for its own or its officials' behavior. The category that springs most readily to mind are suits brought against the United States under the Eighth Amendment 50 alleging that conditions in federal prisons constitute cruel and unusual punishment. Though the standard of liability governing such actions remains somewhat in flux, a crucial element in almost all modern formulations of the test is the absence of a defensible rationale for the conditions at issue. Thus, the Supreme Court recently summarized the governing law as follows: 40 Today the Eighth Amendment prohibits punishments which, although not physically barbarous, involve the unnecessary and wanton infliction of pain, or are grossly disproportionate to the severity of the crime. Among unnecessary and wanton inflictions of pain are those that are totally without penological justification. 41 Rhodes v. Chapman, 452 U.S. 337, 346, 101 S.Ct. 2392, 2398, 69 L.Ed.2d 59 (1981) (citations and footnote omitted). Clearly, a prerequisite to a finding of a constitutional violation, under the foregoing standard, is a determination that the prison conditions in question are not substantially justified. 51 42 The close parallel between the standard of liability, in suits of this sort, and the criterion for the award of attorneys' fees under the EAJA gives rise to a set of problems similar to those discussed in the preceding example. If, when evaluating an EAJA petition brought by a plaintiff (or class of plaintiffs) who prevailed in a case of the kind just described, the judge focused on the justification for the government's underlying action, he or she would find it virtually impossible to deny the plaintiff(s) attorneys' fees. The net result would be that the EAJA would again become something approaching an automatic fee-shifting provision for a significant category of cases. As indicated above, this seems not to have been contemplated by the congressmen who enacted the statute. 52 Thus, in this context as well, it seems preferable for the court to attend to the strength of the arguments advanced by the government in support of its denial of liability, rather than to the justification for the behavior itself. 53 43 Example Three: Defenses Unrelated to the Merits of the Government's Behavior 44 When civil actions are brought against the United States, it is sometimes able to resist on the basis of defenses unrelated to the merits of the underlying actions of its officials. For example, if, as a result of a change in the government's own position or of unrelated events, the potential for impairment of a plaintiff's interests has been reduced, the government may be able to argue that the case is moot. Or, if the plaintiff delayed bringing suit, the government may be able to rely on a statute of limitations or the doctrine of laches. 54 Each of these defenses is founded on important policy considerations. For example, the mootness doctrine reduces the likelihood that courts will decide cases unaided by the kind of thorough adversarial scrutiny of the relevant issues that only a genuine controversy between the parties can create. 55 Statutes of limitation and the laches doctrine promote repose and encourage aggrieved persons to bring suits while evidence is still fresh and reliable. 45 The choice between the underlying action and litigation position theories will significantly affect the government's willingness to assert viable defenses of this sort. An example might be the situation of a government attorney who must decide whether to contest a moderately stale suit against the United States. Because of the passage of time, he may be able to collect only scant evidence to dispute the plaintiff's allegations, but he may nevertheless have a colorable (but not sure-fire) laches defense. If the governing interpretation of the position of the United States, within the meaning of the EAJA, were the government's underlying action, the attorney might well decide not to contest the suit (i.e., not to assert the laches argument). He would realize that, if he did not prevail, the government would automatically be liable, not only for the value of the claim, but also for the plaintiff's attorneys' fees (because government counsel would be unable, at this late date, to show that the original behavior by the alleged perpetrators of the plaintiff's harm was substantially justified). 46 In sum, tying EAJA awards to the strength of the justification for the government's original action would discourage counsel for the government from asserting defenses unrelated to its officials' conduct that have a significant chance of prevailing. Such an outcome seems both unfortunate, from a policy standpoint, and inconsistent with Congress' desire not to chill legitimate efforts by the executive to enforce the law. Thus, here again, it seems more sensible for courts, when reviewing EAJA petitions, to attend to the strength of the legal arguments advanced on behalf of the United States. 47 Example Four: Supervening Change in the Law 48 Frequently, during the time in which a suit brought against (or by) the United States is pending, the pertinent legal rules are altered in a manner adverse to the government. 56 The effect of such a change often is that, while the government's action was substantially justified when originally undertaken, persistence in defending that action in court is unjustifiable. In such a situation, if counsel for the United States stubbornly continues litigating the case, compelling the private party to incur attorneys' fees before eventually prevailing, it seems clear that the objectives underlying the EAJA would be served by shifting those costs to the government. Application of the underlying action theory would not have that effect; application of the litigation position theory would. Example Five: Surrender by the Government 49 Assume that a government contractor believes that the United States has failed to abide by the terms of an agreement (e.g., has misapplied a provision designed to adjust contract prices to accord with inflation). The contractor hires a lawyer who (without consulting the government contracting officer) conducts an investigation and then drafts and files a civil complaint. The government's attorney, upon receiving the complaint, conducts his own inquiry and concludes that the claim is meritorious. (E.g., he finds that, though the government's error was inadvertent, it nevertheless constituted a clear violation of the terms of the contract.) The government attorney informs the responsible official of his findings, who pays the plaintiff the money to which he is legally entitled. The plaintiff then brings a second action, under the EAJA, to recover his attorneys' fees. If the petition is evaluated under the underlying action theory, the contractor will prevail. (Even though the government never took a litigation position hostile to the plaintiff, the plaintiff will qualify as a prevailing party, and the conduct that gave rise to the suit will fail the substantial justification test.) 57 If it is assessed on the basis of the litigation position theory, the contractor will lose. 58 50 It is not immediately obvious which of the foregoing results is preferable. In favor of the first option, it could be argued that the prospect of being compelled to pay attorneys' fees in such situations would make government administrators more careful and (perhaps more importantly) would reduce the incidence of less innocent mistakes. 59 In favor of the second option, it could be argued that routine payment of attorneys' fees under these circumstances would only foster collusion between lawyers and putative victims of governmental errors and would result in unnecessary expenditures of public funds. Most such disputes can be resolved quickly and easily through informal discussion between the aggrieved party and the responsible government official. Awarding attorneys' fees to private parties who, instead of availing themselves of such avenues of relief, file civil complaints would simply result in unnecessary--and unnecessarily costly--formalization of the processes whereby the competing interests of state and citizen are clarified and accommodated. Though the issue is not clear-cut, we think that, on balance, the latter considerations are the more compelling, in view of the purposes of the Act as a whole. Accordingly, the litigation position theory seems preferable in this context as well. 60 51 To summarize, in each of the five contexts we can imagine in which the definition of the position of the United States would make a difference, it seems more sensible and consistent with the purposes of the EAJA to interpret the phrase as the stance taken by the United States in litigation than to interpret it as the governmental behavior that precipitated the suit. 52 One potential objection remains to be considered: it might be argued that our analysis has been flawed by our reliance on a false dichotomy. Why not award fees if either the government's litigation position or its underlying action was not substantially justified? Review of the scenarios described above, however, reveals the emptiness of this argument. Of the five situations we examined, only one--the supervening change in the law 61 --could be handled sensibly through application of the suggested alternative definition of position of the United States. 53 Finally, we note that exclusive use of the litigation position theory would have one important incidental advantage: it would permit and encourage courts to award to prevailing private parties the fees they incurred in combatting unreasonable arguments advanced by the government, while denying fees incurred in defeating substantial arguments. 62 Such a practice, if it became widespread, would induce government counsel to evaluate carefully each of the various claims they might make in a particular controversy, and to assert only those that are substantially justified. The net result would be more sensitive and effectual promotion of the objectives of the EAJA. 54 For the foregoing reasons, we hold that the position of the United States, for the purposes of the Act, means the arguments relied upon by the government in litigation. 55