Court Opinion

ID: 8997019
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:49:52.721728+00
Date Added: 2024-06-11T17:11:06.379996
License: Public Domain

K.K. HALL, Circuit Judge,
dissenting:
Between 1962 and 1982, through the administrations of six presidents, Boeing made twenty-one lump sum payments to employees departing for federal service. All of these payments were disclosed to the government. Until the case of the appel-lees, the government had acquiesced in the practice. A full four years after receiving actual notice of the payments, the government filed this suit to place a constructive trust on them. Four more years were expended as the appellees worked their way towards unanimous vindication in the Supreme Court. The price of vindication, over a half-million dollars of attorneys’ fees, was dear — more, indeed, than the government’s original complaint sought to recover. Today, the majority permits the government to walk away from the carnage it has wrought and leave the appel-lees to clean up as they may. Because I believe that the district court did not abuse its discretion in awarding EAJA attorneys’ fees to appellees, I would affirm. I therefore respectfully dissent.
I.
The majority opinion turns the issue of Boeing’s indemnity obligation on its head. *1171EAJA is not served by a rule that the government may take unjustified positions in litigation against anyone who may have a collateral source to defray his attorneys’ fees. I see nothing in EAJA that permits the government to stand in the back of the line to pay attorneys’ fees.
The government asserts that it is legally and factually certain that Boeing must indemnify under state law; therefore, appel-lees have not “incurred” attorneys’ fees reimbursable under EAJA.
Boeing has not yet decided whether it will indemnify appellees. The government points out that Boeing has no interest in making such a determination until this case is resolved. I do not doubt the accuracy of the government’s observation. On the other hand, though I think it is likely Boeing would indemnify the appellees if they do not recover their fees in this action, I do not share the majority’s confidence, ante at 1164 n. 2, that it is a foregone conclusion. Boeing must indemnify if the suit was brought against a person “by reason of the fact that he is or was a director, officer, employee or agent of the corporation.” 8 DehCode § 145(a), (c). Aside from this court’s lack of day-to-day familiarity with Delaware law, Boeing is not even before us. It may fight indemnification claims; the record before us contains no concessions or waivers from Boeing. We have no way of knowing what creative arguments its lawyers may present to the state courts.
Moreover, even if Boeing is compelled to indemnify, I do not see any particular reason why it should be the first source of reimbursement for appellees. I think it is much more reasonable to reduce Boeing’s state-law obligation by the amount first recovered from the government than to do it the other way around. The government’s obligation is fault-based; Boeing’s is analogous to insurance. The majority’s decision implicitly rejects the wisdom of the common-law collateral source rule, which does not permit the wrongdoer to profit from his victim’s foresight to secure an insurer.
The majority’s authority is SEC v. Comserv, 908 F.2d 1407 (8th Cir.1990). The court in Comserv held that a corporate officer did not “incur” attorneys’ fees where those fees were paid by his employer. The important distinguishing fact of Comserv, however, is that the employer undertook, at the beginning of. the litigation, to pay the employee’s attorneys’ fees, win or lose. The court found that “from the inception of the underlying lawsuit, [the employee] was able to pursue his defense in the SEC action secure in the knowledge that he would incur no legal liability for attorneys’ fees.” 908 F.2d at 1414.
Appellees began this litigation with none of the security of the employee in Com-serv. The most basic difference is that the Comserv employee’s fees would be paid even if he lost. In the instant case, victory was a prerequisite to even the possibility of indemnification. Therefore, appellees most definitely “incurred” fees for which they were and are personally liable. That they have another potential source from which to obtain reimbursement ought not be a defense for the government. I find the district court’s observations compelling, 747 F.Supp. at 321:
Simply put, the mere possibility of future indemnification by a company for the attorney’s fees incurred by its employees is not, in itself, enough to alter the fact that employees who are ultimately liable for those fees are the real parties in interest. Were this not the case, the government would be able to viciously pursue corporate employees with the knowledge that, due to the possibility of later corporate indemnification, the government would not be held accountable for any unjustified conduct. The EAJA would certainly not be served by such a rule.
II.
Likewise, I disagree with the alternate ground for the majority’s decision. I believe that the district court did not abuse its discretion in finding that the government’s position was not substantially justified.
*1172The Supreme Court’s unanimous ruling in favor of appellees rested heavily upon the rule of lenity, and the root of my disagreement with the majority lies in the significance of the Court’s use of the rule. The majority notes that reliance on the rule of lenity presupposes that the statute was ambiguous; I concede as much. I disagree, though, that any colorable construction urged by the government of an ambiguous criminal statute is a substantially justified one.
The rule of lenity is not a passive recognition of a statute’s ambiguity; it is an affirmative principle in favor of the individual, and it protects him from the tyranny of vague criminal laws. If an individual must parse conference committee notes and remarks of bill sponsors to discover the hidden meaning of a criminal law, the law is too ambiguous to satisfy the rule of lenity.
In other words, lenity is not merely a way to decide whether the government prevails on the merits of a foray into the boundaries of a criminal law; it is also a force the government must weigh before it decides to go on its foray. Our inquiry, then, should be whether the government, knowing that ambiguity in the statute would be resolved against it, was substantially justified in taking the position it took on the meaning of § 209(a). The district court held that it was not; that holding is not an abuse of discretion.
Finally, though I recognize that the majority expressly does not so hold, ante at 1167, I fear that we have turned the longevity of a case, the particular earnestness with which the government litigated it, and interim victories before administrative bodies or lower courts into impregnable shields against EAJA liability. See Crawford v. Sullivan, 935 F.2d 655, 659-660 (4th Cir.1991) (Hall, J., dissenting). The government’s trying of the case does not prove that it was substantially justified in bringing it.
I respectfully dissent.