Court Opinion

ID: 2814255
Source: CourtListenerOpinion
Date Created: 2015-07-02 18:00:58.459611+00
Date Added: 2024-06-11T11:30:31.163225
License: Public Domain

Case: 14-40585         Document: 00513102926         Page: 1     Date Filed: 07/02/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                              United States Court of Appeals
                                                                                       Fifth Circuit

                                                                                     FILED
                                        No. 14-40585                              July 2, 2015
                                                                                Lyle W. Cayce
GATE GUARD SERVICES, L.P.; BERT STEINDORF,                                           Clerk

                                     Plaintiffs - Appellees Cross-Appellants

v.

THOMAS E. PEREZ, SECRETARY, DEPARTMENT OF LABOR,

                                     Defendant - Appellant Cross-Appellee

                    Appeals from the United States District Court
                         for the Southern District of Texas

Before JONES and HAYNES, Circuit Judges, and CRONE, District Judge. *
EDITH H. JONES, Circuit Judge:
      It is often better to acknowledge an obvious mistake than defend it.
When the government acknowledges mistakes, it preserves public trust and
confidence. It can start to repair the damage done by erroneously, indeed
vindictively, attempting to sanction an innocent business.                      Rather than
acknowledge its mistakes, however, the government here chose to defend the
indefensible in an indefensible manner. As a result, we impose attorneys’ fees
in favor of Gate Guard as a sanction for the government’s bad faith. 28 U.S.C.
§ 2412(b).

      *   District Judge of the Eastern District of Texas, sitting by designation.
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                                No. 14-40585
      At nearly every turn, this Department of Labor (“DOL”) investigation
and prosecution violated the department’s internal procedures and ethical
litigation practices. Even after the DOL discovered that its lead investigator
conducted an investigation for which he was not trained, concluded Gate
Guard was violating the Fair Labor Standards Act (“FLSA”) based on just three
interviews, destroyed evidence, ambushed a low-level employee for an
interview without counsel, and demanded a grossly inflated multi-million
dollar penalty, the government pressed on.       In litigation, the government
opposed routine case administration motions, refused to produce relevant
information, and stone-walled the deposition of its lead investigator.
      For this misbehavior, the district court awarded Gate Guard attorneys’
fees under the Equal Access to Justice Act’s (“EAJA”) substantially-justified
provision, 28 U.S.C. § 2412(d), but denied fees under the EAJA’s bad faith
provision, 28 U.S.C. § 2412(b). On appeal, the government acknowledges that
“mistakes were made” but insists that an attorneys’ fee award is unjustified.
The partial concession, although welcome, is too little, too late. We hold that
attorneys’ fees are appropriate under the EAJA’s bad faith provision and,
therefore, REVERSE and REMAND for further proceedings.
                               BACKGROUND
      Gate Guard contracts with oil companies to provide gate attendants for
remote drilling sites. R. 9776.     The attendants remain at the drill sites,
recording the license plates of vehicles entering and leaving the oil field twelve
to twenty-four hours a day.       Id.   Because many locations are isolated,
attendants often live on-site and Gate Guard employs service technicians to
deliver supplies. R. 9039. Gate Guard considers the attendants independent
contractors and pays them between $100 and $175 per day. Id.
      In July 2010, DOL investigator David Rapstine received a tip from Jerry
Studlar, a former Gate Guard service technician and drinking companion of

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Rapstine. R. 9777. Studlar was concerned that Gate Guard had miscalculated
his wages.      After Rapstine spoke with Studlar, another former service
technician, and a gate attendant, he suspected that Gate Guard misclassified
its gate attendants as independent contractors instead of employees under the
FLSA. Id. If that were true, Gate Guard would be violating the FLSA by not
paying attendants overtime and keeping accurate records of the hours they
worked.
       Later that month, Rapstine who had little training or experience in
contractor misclassification cases, opened a formal investigation into Gate
Guard’s employment practices. 1 On July 15, 2010 Rapstine notified Gate
Guard that he was beginning an investigation. R. 9777. Rapstine and Gate
Guard scheduled an opening conference for July 29. Id. A week before the
opening conference, however, Rapstine appeared unannounced at Gate
Guard’s offices. Id. Although he knew that Gate Guard was represented by
counsel, Rapstine confronted a low-level Gate Guard employee by announcing
his presence and demanding payroll information. R. 8168. Rapstine himself
admitted this was very unusual; during his ten-year career, he had never
shown up unannounced before an opening conference. R. 8175; 8285-86.
       Rapstine returned to Gate Guard’s offices on July 29th for the previously
scheduled opening conference. R. 9777. What happened during the conference
is unclear. Afterward, however, Rapstine sent an email to a colleague involved
in the investigation saying: “Wish you could have been there, it was a good
example of being quiet and letting them do all the talking and consequently,
digging their own grave.” R. 9276. Without further investigation and after

       1  Of the 400 investigations Rapstine conducted, only five were contractor
misclassification cases. R. 3973. Rapstine’s personnel file showed no training in contractor
misclassification cases. Id. And he could only recall reviewing a single memo discussing
contractor misclassification cases. Id.
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conducting only three interviews, Rapstine began calculating the potential
penalty. He concluded that Gate Guard owed over $6 million in back wages,
nearly the company’s entire net worth. R. 9778.
      Rapstine then began interviewing other gate attendants to support his
conclusion. R. 9777. According to Rapstine, he took handwritten notes during
each of these interviews and used them to compose formal witness interview
statements. Once he had produced the statements, he destroyed his notes—
either by shredding them or placing them in a “burn barrel.” Id. There is no
indication that this was Rapstine’s normal practice and he provided no
explanation for his actions.   Even if the record of these interviews were
available, they would be of little use: Rapstine interviewed only a fraction of
the 400 affected gate guards. Id.
      What we know of the interviews shows that, at a minimum, Rapstine’s
investigation was cursory. Rapstine failed to ask basic questions relevant to
the attendants’ FLSA classification, such as whether they declared themselves
as independent contractors on their tax returns, whether Gate Guard
guaranteed them additional work, whether they maintained and repaired their
own equipment, or whether they worked for Gate Guard’s competitors.
R. 3975-76. Even when Rapstine asked relevant questions, he ignored or
discounted responses that contradicted his conclusion.      Id.   For instance,
Rapstine ignored that Gate Guard did not supervise attendants and that
attendants found their own relief workers, were not restricted from working
with competitors, and were not evaluated or disciplined based on performance.
R. 3976.
      On October 4, Rapstine presented his findings to Gate Guard. R. 9777.
Based on only seventeen interviews, Rapstine concluded that Gate Guard
misclassified 400 gate attendants as independent contractors and, therefore,
failed to abide by the FLSA’s minimum wage and overtime requirements.

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R. 9777-78. As a penalty, Rapstine demanded Gate Guard pay over $6 million
in back wages and unpaid overtime. Id. Going forward, Rapstine insisted that
Gate Guard pay gate attendants the federal minimum wage for every hour the
attendant is on site and that Gate Guard comply with the FLSA’s time-keeping
requirements. R. 9778. Gate Guard denied any wrongdoing and refused to
treat gate attendants as employees under the FLSA.
      After the closing conference and in preparation for this litigation,
Rapstine sent Gate Guard’s file to his supervisor for review. R. 8328. During
the review, Rapstine’s supervisor found several violations of internal policy.
First, it was improper to begin back-wage computations before actually
determining Gate Guard was violating the FLSA. R. 8342. Second, Rapstine
had not followed protocol when presenting his findings to Gate Guard. R. 8334.
In particular, Rapstine should have sought voluntary prospective compliance
before demanding millions of dollars in back pay and unpaid overtime. Id.
Third, Rapstine had inflated the amount of Gate Guard’s penalty by $4 million
dollars because, in Rapstine’s erroneous view, Gate Guard must pay employees
for every hour they are on site, even if that time is spent sleeping or eating.
R. 8333.
      A month after the closing conference, Gate Guard met with the DOL’s
district director, Eden Ramirez. R. 9778. Ramirez informed Gate Guard that
an enforcement action was imminent because Gate Guard refused to comply
with the FLSA. Id. A week later, Gate Guard’s counsel again met with
Ramirez and two other DOL employees. Id. The DOL reasserted its position
on liability, ordered Gate Guard to comply with the FLSA’s minimum wage
and overtime provisions, and demanded Gate Guard pay a multi-million dollar
penalty. Id.

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                           PROCEDURAL HISTORY
      On November 19, 2010, Gate Guard sued the DOL seeking a declaration
that it was in compliance with the FLSA. R. 9778. Gate Guard also sought
attorneys’ fees under the EAJA if it prevailed. R. 41-42. Before Gate Guard
served the complaint, the DOL filed its own FLSA enforcement action for back
wages and injunctive relief. R. 9778. Both suits were filed in the Southern
District of Texas, but in different divisions.        Id.    Gate Guard filed the
declaratory judgment action in the Victoria Division; the DOL filed the FLSA
enforcement action in the Corpus Christi Division. Id.
      During litigation, the government opposed nearly every motion—even
routine case administration motions—on spurious grounds and filed specious
motions of its own. First, Gate Guard moved to transfer the FLSA enforcement
action 2 to the Victoria Division where its declaratory judgment action was
already pending.     The company noted that the actions were substantially
related, Victoria was the most convenient forum, and there was a possibility of
conflicting judgments. R. 9779. The DOL opposed the motion to transfer, even
though Victoria and Corpus Christi are less than 100 miles apart. Moreover,
eighty-five of the affected gate attendants resided within the Victoria division,
R. 1327, and Rapstine worked in the Victoria field office, R. 1326. DOL also
argued that the two suits—both centering on whether Gate Guard violated the
FLSA—were not substantially similar. R. 440. Unsurprisingly, the district
court granted Gate Guard’s motion to transfer. R. 446.
      Gate Guard then moved to consolidate the FLSA enforcement and
declaratory judgment actions. DOL opposed this routine motion because, inter
alia, “consolidating the two actions will confuse the jury,” R. 1330, and
“consolidation would accelerate disputes between the parties, causing

      2 Gate Guard alternatively moved to dismiss the enforcement action. The district
court denied that part of Gate Guard’s motion.
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unnecessary cost and delay,” R. 1331. The consolidation motion was granted.
R. 1333.
      While Gate Guard’s motion to consolidate was pending, the government
moved to dismiss the declaratory judgment action on the grounds that there
was no “final agency action” and the controversy was not “ripe.”           The
government took this position despite the fact that DOL had conducted a
“final” conference to inform Gate Guard of its findings and demanded a multi-
million dollar penalty, had threatened legal action if Gate Guard did not
comply, and then sued Gate Guard for enforcement. R. 1305-19. The district
court denied the government’s motion. R. 1333.
      The government’s conduct worsened as this litigation entered the
discovery phase. During Rapstine’s initial deposition, which lasted only forty-
five minutes, DOL’s lead counsel, Colleen Nabham, objected 102 times.
R. 9780 n.3. Eighteen additional times Nabham instructed Rapstine not to
answer basic questions related to his investigation. Id. As a result, Nabham
spoke more during the deposition than Rapstine did. Id. Nabham’s conduct
was so disruptive, the deposition had to be stopped and Gate Guard was
required to seek court supervision of future depositions. R. 9780. Gate Guard
later withdrew its motion after the DOL agreed that Nabham would not defend
any other depositions, that it would not coach witnesses, and that Rapstine
would sit for another deposition. R. 9780.
      Notwithstanding the deposition debacle, the government continued its
belligerent litigation tactics.   It forced Gate Guard to seek court-ordered
production of the witness statements underlying this prosecution, which the
government claimed were privileged. The government maintained its position
even after it filed some of the same statements with the court as evidence and
thereby waived any privilege. R. 9780. Gate Guard had to seek a protective
order when the government sent harassing and misleading letters to gate

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attendants seeking further information about their relationship with Gate
Guard.   R. 9780.    Gate Guard also had to ask the court to seal several
depositions containing trade secrets and confidential company information
because the DOL unreasonably withheld its consent. R. 9780.
      Meanwhile, the legal basis for the DOL’s position began eroding, as the
same district court held, in a nearly identical case, that gate attendants are
not FLSA employees. See Mack v. Talasek, No. V-09-53, 2012 WL 1067398, *2
(S.D. Tex. Mar. 28, 2012). Further, the DOL continued this prosecution even
after discovering that the federal Army Corps of Engineers utilizes gate
attendants and classifies them as independent contractors.             R. 9786.
Predictably, given the legal precedents and botched investigation, the district
court found the DOL’s case so weak, it granted summary judgment for Gate
Guard—a disposition the DOL has not appealed. See Gate Guard Servs. L.P.
v. Solis, No. V-10-91, 2013 WL 593418, at *13-14 (S.D. Tex. Feb. 13, 2013).
      Gate Guard then moved to recover attorneys’ fees under the EAJA’s bad
faith provision, 28 U.S.C. § 2412(b). The district court surveyed the in-circuit
and out-of-circuit precedent, eventually concluding that the government’s
conduct was not sufficiently egregious to constitute bad faith. See Gate Guard
Servs. L.P. v. Solis (Gate Guard I), No. V-10-91, 2013 WL 3873275, at *6-7 (S.D.
Tex. July 24, 2013). Specifically, although only one of eleven relevant facts
weighed in favor of FLSA employee status, the court found that the
government’s position was “not entirely frivolous.” Id. Accordingly, it denied
Gate Guard’s request.     Id.   In the same opinion, the court left open the
possibility that Gate Guard could recover attorneys’ fees under the EAJA’s
substantially justified provision, 28 U.S.C. § 2412(d). Id. Gate Guard took the
hint and reframed its original fee request. Gate Guard Servs. L.P. v. Perez
(Gate Guard II), 14 F. Supp. 3d 825, 828 (S.D. Tex. 2014). The district court
agreed that the government’s position was not substantially justified and

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awarded Gate Guard over $565,000 in attorneys’ fees. Id. at 841. Both sides
now appeal.
                          STANDARD OF REVIEW
      We review decisions to award or deny attorneys’ fees under the EAJA for
abuse of discretion. Perales v. Casillas, 950 F.2d 1066, 1071 (5th Cir. 1992). A
district court abuses its discretion when it relies on clearly erroneous factual
findings, erroneous conclusions of law, or misapplies the factual or legal
conclusions. See Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 775 F.3d 242,
254 (5th Cir. 2014) (citing N. Alamo Water Supply Corp. v. City of San Juan,
Tex., 90 F.3d 910, 916-17 (5th Cir. 1996)).
                                 DISCUSSION
      The EAJA provides two paths for recovering attorneys’ fees from the
government. First, under 28 U.S.C. § 2412(b), the federal government may be
liable for attorneys’ fees “to the same extent that any other party would be
liable under the common law.” The general rule in federal courts and under
the common law is that litigants are responsible for their own attorneys’ fees.
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240, 257, 95 S. Ct. 1612,
1621 (1975). Courts can, however, award attorneys’ fees when a party has
“acted in bad faith, vexatiously, wantonly, or for oppressive reasons” or when
a “litigant has conferred a substantial benefit on a class of persons.” F.D. Rich
Co., Inc. v. U. S. ex rel. Indus. Lumber Co., 417 U.S. 116, 129-30, 94 S. Ct. 2157,
2165 (1974). Thus, § 2412(b) essentially applies these common-law bad faith
and common fund exceptions to the government. Baker v. Bowen, 839 F.2d
1075, 1080 n.3 (5th Cir 1988). Second, 28 U.S.C. § 2412(d) allows courts to
award attorneys’ fees “unless the court finds that the position of the United
States was substantially justified or that special circumstances make an award
unjust.”   Section 2412(d) does not apply to high net worth individuals or

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corporations and limits attorney compensation to $125 per hour absent special
factors. 28 U.S.C. § 2412(d)(2)(A)-(B).
      As noted earlier, the court awarded fees under § 2412(d) but denied them
under § 2412(b). In this appeal, the government contends that an award under
§ 2412(d) was inappropriate because its position was substantially justified
and Gate Guard’s application was untimely. Gate Guard cross-appeals the
denial of fees under § 2412(b). Because we hold that Gate Guard is entitled to
fees under § 2412(b), our discussion is limited to that provision.
                                          I.
      Relying primarily on authority from other circuits, the district court
denied fees under the bad faith exception.       See Gate Guard I, 2013 WL
3873275, at *4-7. To constitute bad faith, the court explained, a party must
show that: “(1) the government’s position was meritless, (2) the meritlessness
was known to the government, and (3) the government’s position was advanced
or maintained for an improper purpose, such as harassment.”            Id. at *4
(internal citations and quotation marks omitted). Because the government’s
position that gate attendants are employees was “not entirely frivolous”—
meaning it was not “wholly unsupported” or “easily dispatched by cursory
review of the evidence”—the court found that the government did not act in
bad faith. Id. at *7. The district court’s analysis has two flaws.
                                          A.
      First, the court utilized an unduly rigid test that is unsupported by this
court’s precedent or the common law. The power to award attorneys’ fees for
bad faith conduct “ ‘is part of the original authority of the chancellor to do
equity in a particular situation.’ ” Hall v. Cole, 412 U.S. 1, 5, 93 S. Ct. 1943,
1946 (1973) (quoting Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 166, 59 S. Ct.
777, 780 (1939)).   Equity, unlike law, affords courts a certain flexibility.
Holland v. Florida, 560 U.S. 631, 650, 130 S. Ct. 2549, 2563 (2010). Courts are

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free to exercise this flexibility whenever “overriding considerations indicate the
need for such a recovery” or “the interests of justice so require.” Hall, 412 U.S.
at 5, 93 S. Ct. at 1946. This sort of flexibility stands in tension with the district
court’s three-part test, which “if strictly applied, threaten[s] the ‘evils of
archaic rigidity.’ ” Holland, 560 U.S. at 650, 130 S. Ct. at 2563 (quoting Hazel-
Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 248, 64 S. Ct. 997, 1002
(1944)).
       Consistent with the flexibility inherent in equity, this court has never
articulated a mechanical three-part test like the one used by the district court.
See Perales, 950 F.2d at 1071-72 (explaining that the “American rule” permits
a fee award when the losing party acted “ ‘in bad faith, vexatiously, wantonly,
or for oppressive reasons’ ” (internal citation omitted)); Baker, 839 F.2d at
1081-82 (same); Batson v. Neal Spelce Assocs., Inc., 805 F.2d 546, 550 (5th Cir.
1986) (same). The government urges us to follow instead some other circuits’
tests, similar to that of the district court, which require both frivolousness and
improper purpose. 3 See e.g., Griffin Indus. Inc. v. EPA, 640 F.3d 682, 685-86
(6th Cir. 2011) (“In order to justify such a bad faith award of attorney fees, the
district court must find (1) that the position advanced or maintained by a party
was meritless, (2) that the meritlessness was known to the party, and (3) that
the position was advanced or maintained for an improper purpose, such as

       3 Although this court once implied that both frivolousness and improper purpose are
necessary, that decision was unpublished. See United States v. Medica Rents Co. Ltd., Nos.
03-11297, 06-10393, 07-10414, 2008 WL 3876307, at *4 (5th Cir. Aug. 19, 2008) (holding that,
although there was evidence of improper purpose, “we are not convinced that the government
brought claims that were either wholly unsupported or that were easily dispatched by cursory
review of the evidence.”). Unpublished opinions are not binding on this court. 5th Cir.
R. 47.5. Further, Medica Rents’s holding is inconsistent with this court’s earlier published
decision in Baker, which allows recovery when a party has abused the judicial process. See
839 F.2d at 1081-82. Because no panel of this court can overrule a prior decision, our earlier
published decision in Baker remains the law in this circuit. See Jacobs v. Nat’l Drug
Intelligence Ctr., 548 F.3d 375, 378 (5th Cir. 2008) (discussing the rule of orderliness).
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harassment.”); FTC v. Kuykendall, 466 F.3d 1149, 1152 (10th Cir. 2006) (“In
order to fall within the exceedingly narrow bad faith exception to the general
rule, there must be clear evidence that the challenged claim “is entirely
without color and has been asserted wantonly, for purposes of harassment or
delay, or for other improper reasons.”); Kerin v. United States Postal Serv.,
218 F.3d 185, 190 (2d Cir. 2000) (“[N]either meritlessness alone nor improper
purpose alone will suffice.”); but see Rodriguez v. United States, 542 F.3d 704,
709 (9th Cir. 2008) (holding that fees are recoverable when a party “argues a
meritorious claim for the purpose of harassing an opponent”).
       These conjunctive tests appear to lack the flexibility equity requires and
overlook that the common-law rule allows for attorneys’ fees disjunctively
whenever a party has “acted in bad faith, vexatiously, wantonly, or for
oppressive reasons.” Alyeska Pipeline, 421 U.S. at 257, 95 S. Ct. at 1621; F.D.
Rich, 417 U.S. at 129, 94 S. Ct. 2165; Hall, 412 U.S. at 5, 93 S. Ct. at 1946
(emphasis added).        Although the first three terms articulated in Alyeska
Pipeline may require a party’s position to be frivolous, 4 the last does not. As a
result, this court’s position is similar to that of the Ninth Circuit that a “finding
of bad faith is warranted where an attorney knowingly or recklessly raises a
frivolous argument, or argues a meritorious claim for the purpose of harassing
an opponent.” Rodriguez, 542 F.3d at 709 (internal quotation marks and

       4 Few courts have explored the difference, for purposes of attorneys’ fees, between
conduct that is in bad faith, vexatious, or wanton. Each requires the litigant’s position to be
objectively frivolous. The difference between them, however, turns on the subjective
knowledge or motivation of the individual. Bad faith implies that a litigant intentionally
took a position he subjectively knew was unfounded. BRYAN A. GARNER, BLACK’S LAW
DICTIONARY 166 (10th ed. 2014) (defining bad faith as “dishonesty of belief, purpose, or
motive”). Vexatious conduct implies not only that a litigant knew a position was unfounded,
but that his purpose was to “create trouble or expense” for the opposing party. Id. 1796.
Finally, wantonness suggests that a litigant has recklessly pressed an objectively frivolous
position. Id. 1815; see also Stive v. United States, 366 F.3d 520, 522 (7th Cir. 2004)
(interpreting wantonly to mean “recklessly making a frivolous claim”).

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citations omitted). The government’s position, in short, impermissibly deviates
from this court’s precedent and the Supreme Court’s rule.
       Today’s holding in no way lessens the necessarily stringent standards
governing awards of attorneys’ fees under the common law. Batson, 805 F.2d
at 550 (citing Roadway Express Inc. v. Piper, 447 U.S. 752, 766, 100 S. Ct. 2455,
2463 (1980)). We emphasize that “[f]ee awards under section 2412(b) [ ] are
not mandatory,” and the bad faith exception is very narrow. Baker, 839 F.2d
at 1080. “A party should not be penalized for maintaining an aggressive
litigation posture,” and a court should award fees only in extraordinary cases.
Batson, 805 F.2d at 550. An attorneys’ fee award “should not be assessed
lightly or without fair notice and an opportunity for a hearing on the record.”
Roadway Express, 447 U.S. at 767, 100 S. Ct. at 2464.
       This case, viewed in light of Alyeska Pipeline and our precedent, requires
no unusual application of § 2412(b). The government’s position here was poorly
documented and legally dubious at the commencement of litigation. As the
case evolved, even its tenuous legal basis eroded following the district court’s
adverse decision in a similar case and the revelation of Army Corps of
Engineers’ employment practices. The government’s intransigence in spite of
its legally deteriorating case, combined with extreme penalty demands and
outrageous tactics, together support a bad faith finding.                          Thus, the
government’s bad faith is established under either our disjunctive or other
circuits’ conjunctive tests.
                                               B.
       Second, in applying its unduly rigid test, the district court mistakenly
focused solely on whether the government’s position—that gate attendants are
employees—was frivolous. 5 When a defendant requests fees, “the bad faith,

       5The district court did cite cases involving fees awards for abusive or defiant litigation
conduct. Gate Guard I, 2013 WL 3873275, at *6. But the court only analyzed whether the
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vexation, wantonness, or oppression often relates to filing and maintaining the
action.” Batson, 805 F.2d at 550 (internal citation omitted). Consequently
“courts may also award fees [ ] as a sanction for . . . bad faith in the conduct of
the litigation resulting in an abuse of judicial process.” Id.; accord Roadway
Express, 447 U.S. at 766, 100 S. Ct. at 2464; Hall, 412 U.S. at 15, 93 S. Ct. at
1951. Therefore, “while the presence of merit in a claim or defense may negate
any finding of bad faith in its filing, it cannot justify abuse of the judicial
process in the method of prosecution.” Batson, 805 F.2d at 850 (citing Lipsig
v. Nat’l Student Mktg. Corp., 663 F.2d 178, 182 (D.C. Cir. 1980)). By focusing
solely on whether the government’s claim that Gate Guard was violating the
FLSA was colorable at the outset, the court ignored both that the case lost all
“color” as it proceeded and the government’s misconduct throughout this
litigation.
                                            C.
       With the foregoing principles in mind, there is no doubt that a bad faith
award of attorneys’ fees is appropriate.            The government’s conduct was
oppressive and its case legally frivolous.
       This court has upheld awards where the government has deliberately
concealed information and consistently violated an agency’s internal
regulations. Baker, 839 F.2d at 1082; Perales, 950 F.2d at 1072. In private
disputes, this court has found attorneys’ fees justified when a party “engaged
in dilatory tactics during discovery, refused to cooperate during depositions,
[and] misused [ ] claim[s] of privilege.” Batson, 805 F.2d at 551. Sadly, all
these circumstances are present here.
       This case is rife with the type of misconduct justifying an award of
attorneys’ fees under the EAJA’s bad faith provision. Rapstine, the DOL’s lead

FLSA enforcement action was frivolous. See id. The district court never discussed whether
the government’s conduct throughout this litigation justified an attorneys’ fees award. Id.
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investigator, deliberately shredded his notes or put them in a “burn barrel,”
thus impeding Gate Guard’s ability to defend itself. Rapstine never explained
why he destroyed evidence he knew would be relevant to this litigation.
Rapstine also instigated an investigation he was unqualified to undertake,
surprised a low-level Gate Guard employee when he knew the company’s
attorneys would not be present, came to a conclusion after interviewing just
three witnesses, explained to a colleague after the opening conference that
Gate Guard had “dug its own grave,” inflated the damages calculations by
approximately $4 million, and broke protocol in presenting his findings.
Despite all of this, the government continued litigating the factually
incomplete case Rapstine worked up.
        The government’s extraordinarily uncivil and costly litigation tactics
strongly suggest that it hoped to prevail by oppressively pursuing a very weak
case.    The government opposed Gate Guard’s reasonable and customary
motions to transfer and consolidate for no viable reason. During discovery, the
DOL refused to produce Rapstine’s witness statements, even in redacted form,
based on the government informant privilege, despite submitting portions of
those statements to the court as evidence for its own purposes. To fill the gaps
of Rapstine’s incompetent investigation, the government began harassing gate
attendants for more information.         Last, but certainly not least, the
government’s lead counsel obstructed Rapstine’s deposition so much, it had to
be stopped. In a gross understatement, the court concluded that the “DOL
failed to act in a reasonable manner both before and during the course of this
litigation.” Gate Guard II, 14 F. Supp. 3d at 839.
        All of this left Gate Guard at a tremendous and unfair disadvantage.
Without Rapstine’s notes or witnesses statements, Gate Guard had no way of
assessing its risk in this case or evaluating settlement potential. Batson,
805 F.2d at 551. Only by expending over $800,000 in attorneys’ fees, wasting

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                                No. 14-40585
countless hours of employees’ time, and marshalling affidavits from ninety-
four gate attendants was Gate Guard able to vindicate itself.         R. 9091;
Appellee’s Principal and Resp. Br. 7. These expenditures were needless:
      Had the DOL interviewed more than just a handful of [Gate
      Guard’s] roughly 400 gate attendants before presenting [Gate
      Guard] with a $6,000,000.00 demand and filing its Enforcement
      Action against [Gate Guard], it would have known the gate
      attendants were not employees. Once discovery revealed the facts
      cited . . . above, the DOL should have abandoned this litigation.

Gate Guard II, 14 F. Supp. 3d at 839. Instead of acting responsibly and
abandoning the case, the government continued its prosecution, “despite
overwhelming contradictory evidence.” Id.
      This view, with which we agree, is at odds with the district court’s
subsequent conclusion that the government’s enforcement action was not
frivolous. The district court reasoned that because “as with most employee-
status cases, there are facts pointing in both directions” and the FLSA claims
were not “easily dispatched by cursory review of the evidence,” the
government’s position was not frivolous. Gate Guard I, 2013 WL 593418, at
*7. By the court’s logic, a finding of frivolousness may be precluded whenever
the relevant standard involves a fact intensive inquiry or a multi-factor
balancing test. This cannot be right. A claim may be frivolous if the result of
factual inquiries undeniably favors one party and no reasonable person could
find otherwise. Frivolousness should also take account of the government’s
duty, as prosecutor, to pursue only clearly meritorious enforcement actions.
That the employee-status test is fact intensive, therefore, does not preclude
finding the government’s position here was frivolous, even if some facts point
in both directions. As a result, we find that the government’s position here was
frivolous.

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                            No. 14-40585
      That the government had every reason to abandon this litigation is
evident from many factors noted above, including:             Rapstine’s shoddy
investigation, his destruction of material information, his many deviations
from internal policy in pressing the charges, an intervening, contrary decision
issued by the same court, and the evidence of Army Corps of Engineers’
practices at odds with DOL’s charges here. The litigation, even if colorable at
the outset, soon was revealed as frivolous through the discovery process.
                               CONCLUSION
      The EAJA allows for an attorneys’ fees award against the government
whenever it has “acted in bad faith, vexatiously, wantonly, or for oppressive
reasons.” F.D. Rich, 417 U.S. at 131, 94 S. Ct. at 2165. Although the most
common situation will involve the government knowingly bringing a frivolous
claim, a finding of legal frivolousness is not required. Here, the circumstances
giving rise to an award included both the government’s conduct before and
during litigation as well as a legally insupportable case. The government’s
conduct here was sufficiently egregious to warrant an award under § 2412(b).
For these reasons, we REVERSE and REMAND to the district court for
calculation of attorneys’ fees under § 2412(b).

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