Opinion ID: 571357
Heading Depth: 2
Heading Rank: 2

Heading: quantum

Text: 36 The government next argues that even if Chiu is entitled to attorney fees under the EAJA, the Claims Court erred in its determination of the amount of such fees. Specifically, the government contests the hourly rate of $102.73 used by the Claims Court to compute the fee award. The EAJA sets the hourly rate for attorney fee awards at $75 and permits upward adjustments to this figure in two circumstances; for increases in the cost of living and where special factors are found to exist: 37 (2) For the purposes of this subsection-- 38 (A) fees and other expenses includes ... reasonable attorney fees (The amount of fees awarded under this subsection shall be based upon prevailing market rates for the kind and quality of the services furnished, except that ... attorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.) 39 28 U.S.C. § 2412(d)(2)(A). The government's disagreement with the Claims Court's determination of the applicable hourly rate centers on the upward adjustment made to reflect increases in the cost of living during the litigation. 40 To adjust the base rate of $75 per hour for increases in the cost of living as provided by the EAJA, the court must first set a base date from which increases in the cost of living may be calculated. While the government once advanced the date of reenactment of the EAJA in 1985 as the base date in case after case, it now appears to have accepted that the original date of enactment of the statute, October 1, 1981, is the appropriate starting date. See Headlee v. Bowen, 869 F.2d 548, 549 (10th Cir.), cert. denied, 493 U.S. 979, 110 S.Ct. 507, 107 L.Ed.2d 509 (1989); Ramon-Sepulveda v. United States Immigration & Naturalization Serv., 863 F.2d 1458, 1464 (9th Cir.1988); Kelly v. Bowen, 862 F.2d 1333, 1336 (8th Cir.1988); Trichilo v. Secretary of Health and Human Servs., 823 F.2d 702, 705-07 (2d Cir.1987); Action on Smoking and Health v. Civil Aeronautics Bd., 724 F.2d 211, 218 (D.C.Cir.1984). The Claims Court here correctly used that date for computation of the fee rate COLA, excluding a COLA for services rendered before that date. See Chiu, 18 Cl.Ct. at 570. 41 The next step for computing a COLA to the fee rate is establishing the end date or dates. The Claims Court used a single end date, namely the date judgment was entered granting the EAJA fee award, June 28, 1989. The government takes issue with use of that date, which is particularly significant here inasmuch as the attorney's services were in large part performed much earlier. The government's position is that any COLA after the date the attorney's services are rendered, i.e., post-performance, constitutes an award for delay in receipt of fee reimbursement. Per the government, such adjustment contravenes the no-interest rule reaffirmed by the Supreme Court in Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986). We agree. The EAJA does not authorize increases to the hourly rate in the nature of interest payments. Further, the no-interest rule obtains here to limit the COLA to the date on which legal services were performed and fees thereby incurred. 42 In Shaw, the Supreme Court invoked the no-interest rule to bar recovery of interest on an award of reasonable attorney fees pursuant to section 706(k) of the Civil Rights Act, 42 U.S.C. § 2000e-5(k). The Court set forth in Shaw two principles which are crucial to the disposition of this case. First, the Court soundly rejected any distinction between types of awards for purposes of the no-interest rule so long as the award compensated for the time value of money. Id. at 321-22, 106 S.Ct. at 2965. The second proposition is that no award in the nature of interest against the United States is permitted unless expressly and unambiguously authorized by statute. Id. at 323-24, 106 S.Ct. at 2966. Here, the post-performance adjustment to the attorney fee rate constitutes payment for the time value of money and, thus, the no-interest rule bars the award unless expressly and unambiguously authorized in the EAJA. We are further convinced that the EAJA does not mandate such adjustments to the hourly fee rate. 43 In including the post-performance time period within the COLA to the EAJA fee rate, the Claims Court characterized this adjustment as one that offsets the decrease in the value of the $75 fee limitation due to inflation until the decision was rendered that fees are to be paid by the government. See Chiu, 18 Cl.Ct. at 571. We agree that adjustment to the EAJA fee rate for post-performance periods has this effect. This characterization, however, clearly implicates the no-interest rule. As the Supreme Court stated in Shaw, 478 U.S. at 321, 106 S.Ct. at 2965: 44 [T]he force of the no-interest rule cannot be avoided simply by devising a new name for an old institution: 45 [T]he character or nature of 'interest' cannot be changed by calling it 'damages,' 'loss,' 'earned increment,' 'just compensation,' 'discount,' 'offset,' or 'penalty,' or any other term, because it is still interest and the no-interest rule applies to it. United States v. Mescalero Apache Tribe, 207 Ct.Cl. 369, 389, 518 F.2d 1309, 1322 (1975), cert. denied, 425 U.S. 911 [96 S.Ct. 1506, 47 L.Ed.2d 761] (1976). 46 That the Claims Court characterized the COLA as an adjustment for inflation is thus of no moment for purposes of the no-interest rule. Indeed, in rejecting any distinction between interest and belated receipt of money, the Court expressly referred to adjustments for inflation by reason of delay as within the class of awards subject to the no-interest rule: 47 Interest and a delay factor share an identical function. They are designed to compensate for the belated receipt of money. The no-interest rule has been applied to prevent parties from holding the United States liable on claims grounded on the belated receipt of funds, even when characterized as compensation for delay. [Citation omitted.] Thus, whether the loss to be compensated by an increase in fee award stems from an opportunity cost or from the effects of inflation, the increase is prohibited by the no-interest rule. 48 Id. at 322, 106 S.Ct. at 2965 (emphasis added). In the usual fee relationship, a preperformance COLA implicates no delay factor in receipt of moneys. Prior to services being performed, there is no obligation to pay and no fee incurred, except possibly in unusual circumstances not present here. Thus, in the pre-performance period there is no delay in receipt of moneys for attorney fees; an adjustment in the ceiling price for inflation during that period does not compensate for any delay; and such an adjustment can not properly be characterized as interest. Therefore, the COLA provision in the EAJA need not overcome the no-interest rule in order to permit the fee cap to be raised with respect to legal services performed thereafter. 49 The opposite is true after services are rendered. Where such services have been timely paid for by the client, 8 any adjustment for time during the period until the award is made and presumably paid to the client can only be an adjustment for loss of use of the money by reason of delay. Indeed, this is precisely why the adjustment was made in this case. See Chiu, 18 Cl.Ct. at 571-72. However, under Shaw, such an adjustment constitutes a payment of interest on fees incurred at the time a lower cap applied. 50 Thus, the Claims Court's analysis was flawed in discerning no difference in allowance of an adjustment for inflation whether pre- or post-performance. The latter situation implicates the no-interest rule, the former does not. See, e.g., Phillips v. General Servs. Admin., 924 F.2d 1577, 1583 (Fed.Cir.1991); Griffin & Dickson v. United States, 21 Cl.Ct. 1, 10 & n. 9 (1990) (Rader, J.); Cox Constr. Co. v. United States, 17 Cl.Ct. 29, 37 (1989); Kunz Constr. Co. v. United States, 16 Cl.Ct. 431, 439 (1989), aff'd, 899 F.2d 1227 (Fed.Cir.1990). 51 Due to the applicability of the no-interest rule, to determine whether post-performance time periods may be included in adjusting the EAJA fee rate, we must look for explicit authorization. As the Supreme Court explained in Shaw, 478 U.S. at 318, 106 S.Ct. at 2963: 52 In analyzing whether Congress has waived the immunity of the United States, we must construe waivers strictly in favor of the sovereign, see McMahon v. United States, 342 U.S. 25, 27 [72 S.Ct. 17, 19, 96 L.Ed. 26] (1951), and not enlarge the waiver  'beyond what the language requires.'  Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-86 [103 S.Ct. 3274, 3278, 77 L.Ed.2d 938] (1983), quoting Eastern Transportation Co. v. United States, 272 U.S. 675, 686 [47 S.Ct. 289, 291, 71 L.Ed. 472] (1927). The no-interest rule provides an added gloss of strictness upon these usual rules. 53 [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. United States v. N.Y. Rayon Importing Co., 329 U.S. , at 659 [67 S.Ct. 601, 604, 91 L.Ed. 577] [1947]. 54 The Claims Court viewed the EAJA language of section 2412(d)(2)(A) which expressly permits the court to determine that an increase in the cost of living ... justifies a higher [than $75 per hour] fee, as sufficient authorization for the court to include an adjustment for post-performance time periods so long as the hourly rate allowed does not exceed 'prevailing market rates.'  See Chiu, 18 Cl.Ct. at 570-72. We do not agree that this language meets the exacting standard required to grant the Claims Court such discretion. It must be borne in mind that the statute before us is a fee shifting statute not a damage award statute. Further, the statute concerns an adjustment of a $75 cap on attorney fees set with respect to all fees, market rate or not, incurred in 1981. Clearly, the statute does not contemplate full recoupment. See Underwood, 487 U.S. at 573, 108 S.Ct. at 2554. That is the point of the cap. It even more clearly does not contemplate recoupment of delay damages. 55 Were there any doubt on this interpretation, the language of the statute is at best ambiguous, and in accordance with the no-interest rule, awards in the nature of interest are not permitted except where the statutory mandate is unequivocal. Shaw, 478 U.S. at 318, 106 S.Ct. at 2963; Doyle v. United States, 931 F.2d 1546 (Fed.Cir.1991). For the foregoing reasons, we conclude that an adjustment to the attorney fee rate cap to compensate for the plaintiff's economic loss due to delay is not a cost of living adjustment to the fee cap within the meaning of section 2412(d)(2)(A) of the EAJA. Thus, Chiu's EAJA attorney fee rate COLA can include only pre-performance time periods. 56 Chiu cites a number of cases from the District of Columbia Circuit and one Third Circuit case in an effort to support the inclusion of post-performance time inflation. None of these cases persuade us to a different result. With respect to the cases from the District of Columbia Circuit, that circuit adheres to the view that COLA's to the EAJA fee rate are restricted to the date services are performed. See Wilkett v. Interstate Commerce Comm'n, 844 F.2d 867, 875 (D.C.Cir.1988); Massachusetts Fair Share v. Law Enforcement Assistance Admin., 776 F.2d 1066, 1069 (D.C.Cir.1985). However, that circuit adopted a position permitting adjustment to the fee rate for delay in receipt of fees as a special factor. See Wilkett, 844 F.2d at 875-77 & nn. 4 & 5; Hirschey v. Federal Energy Regulatory Comm'n, 777 F.2d 1, 5 (D.C.Cir.1985). That position, however, has been expressly discredited by the Supreme Court in Underwood, 487 U.S. at 573, 108 S.Ct. at 2554, where the Supreme Court limited the cognizable special factors, for purposes of fee rate increase, to those that are not of broad and general application. It is not urged here that delay between the time that debt for legal services is incurred and the time an award under the EAJA is obtained may be deemed a special factor, and we believe, in any event, it would suffer from the same no-interest defect as a COLA for post-performance inflation. 57 With respect to the Third Circuit case, Garcia v. Schweiker, 829 F.2d 396 (3d Cir.1987), Chiu is correct that in that case the court refused to limit the COLA to the fee rate to the time services were rendered. The court in Garcia premised its conclusion on the belief that the agency should not reap the benefits of any inflation during litigation, and that attorneys should not have the purchasing power of their fees eroded by inflation. Id. at 402. We respectfully disagree with the position taken by the Third Circuit in Garcia. While the Third Circuit is correct that the agency reaps the benefits of any delay between the time services are performed and the time of award under the EAJA, the Third Circuit failed to acknowledge and discuss Shaw and the no-interest rule, which expressly serves the purpose of permitting the government to occupy an apparently favored position by protecting it from claims for interest that would prevail against private parties. 9 Shaw, 478 U.S. at 317-18, 106 S.Ct. at 2962-63. In light of the no-interest rule, as well as the restrictive interpretation given the EAJA by the Supreme Court subsequent to Shaw in Underwood, the ambiguity as to whether the statutory authorization for COLA's to the EAJA fee rate includes post-performance time periods which constitute delay until receipt of a fee award must be resolved in favor of the sovereign. In this case, the COLA to the EAJA fee rate is required to be calculated from October 1, 1981 to the date services are performed, and the Claims Court had no discretion to extend the COLA end date beyond the performance date. Consequently, the Claims Court's quantum determination must be remanded for redetermination. 10 Commissioner v. Jean 58 As a final point, the government raises the Supreme Court's footnote in its recent decision of Commissioner v. Jean, 496 U.S. 154, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990), and argues that the attorney fee quantum determination must be remanded and redetermined to consider reductions to the fee award for the fee litigation phase of the Claims Court proceedings. In Commissioner v. Jean, the Supreme Court held that only one finding of no substantial justification was required under the EAJA to permit a fee award for the entire proceedings before that court, including litigation over the EAJA fee award. In a footnote, however, the Court indicated that its decision in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), required 59 the district court to consider the relationship between the amount of the fee awarded and the results 60 obtained [. Thus] fees for fee litigation should be excluded to the extent that the applicant ultimately fails to prevail in such litigation. For example, if the Government's challenge to a requested rate for paralegal time resulted in the court's recalculating and reducing the award for paralegal time from the requested amount, then the applicant should not receive fees for the time spent defending the higher rate. 61 Jean, 110 S.Ct. at 2321 n. 10. The Claims Court did not have the benefit of Jean at the time it rendered its quantum determination. In light of the need for remand to redetermine quantum, we agree with the government that any such quantum redetermination should take heed of the Supreme Court's Jean decision, particularly with regard to that portion of the fee litigation attributable to the government's contesting inclusion in the COLA to the fee rate an adjustment for post-performance inflation.