Court Opinion

ID: 7861808
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:55:56.692843+00
Date Added: 2024-06-11T16:31:00.393592
License: Public Domain

D.H. GINSBURG, Circuit Judge,
dissenting:
I agree with the court that the trial court’s finding of bad faith, which addresses a mixed question of law and fact, should be rejected only if clearly erroneous. As the court acknowledges, however, the substantive requirements for an award of attorneys’ fees on the basis of a party’s bad faith are “stringent.” Nepera Chemical, Inc. v. Sea-Land Service, Inc., 794 F.2d 688, 702 (D.C.Cir.1986). Because I think the district court clearly erred in finding those requirements met in this case, I would reverse.
The court notes that bad faith may be found where a party has violated a “clear [legal] duty.” Ct.op. at 401. See also Nepera, 794 F.2d at 702 (bad faith can be inferred “where a party ... withholds action to which the opposing party is patently entitled”) (internal quotation marks and citation omitted). The court reasons first that “[b]ecause the Stipulation had the force of law and because the District Court found that publication of the Final Rule contradicted the Stipulation, ... HHS effectively forced AHA to sue to enforce the plain legal rights defined by the Stipulation.” Ct.op. at 401.
The conclusion that the defendant has violated a “clear,” “patent,” or “plain” legal obligation cannot follow simply from a finding that it has violated a legal obligation; otherwise, attorneys’ fees would be available whenever the plaintiff prevails. Yet AHA offers no argument in support of its assertion, repeated again and again throughout its brief, that issuance of the Final Rule “clearly” violated the “unambiguous” language of the Stipulation. AHA does argue that because HHS has not appealed from the November 9th order granting the preliminary injunction, the doctrine of res judicata precludes HHS from arguing on appeal that issuance of the Final Rule did not violate the Stipulation. This claim is both incorrect and irrelevant, however. The trial court’s November 9th order did not find that HHS had violated the Stipulation by issuing the Final Rule; rather, it stated that “enforcement of certain provisions of the Final Rule ... [against the plaintiffs] would be contrary to the Joint Stipulation.” Order of November 9 at 1-2 (emphases supplied). Moreover, even if HHS were precluded from attacking the district court’s legal conclusion that it violated the Stipulation, the Government could still argue that issuing the Final Rule did not violate a “clear” or “patent” duty, and consequently, did not demonstrate bad faith. So much for AHA’s loose talk of res judicata.
HHS argues that publishing the Final Rule did not in fact violate the Stipulation; it characterizes that action as “merely the follow-through to the Notice of Proposed Rulemaking.” Further, it claims that the Stipulation itself appears to contemplate promulgation of the Rule by providing that member hospitals would be able to collect from liability insurers without risking penalty under § 1395y(b)(l) or under any “rules or regulations, existing or proposed ” that implement that section. (Emphasis supplied.) Whether HHS’s argument is correct — as it may well be — is beside the point. It is a serious argument that must be taken seriously, and that is enough to defeat the suggestion of bad faith based merely upon HHS’s having promulgated the Rule.
The court also states that the district court’s finding that the publication was “at best, ... calculated to confuse plaintiffs’ member hospitals [and,] at worst, ... an attempt to chill plaintiffs’ ... assertion of their rights” supports the court’s finding of bad faith. Ct.op. at 403. The problem is that the only evidence to support this finding is that the Final Rule made an express exception for the hospitals involved in the Oregon litigation. This is too thin a reed to support the inference that HHS’s failure also to make an express exception for the AHA hospitals was done in bad faith. Bad faith by a litigant is serious business, and the standard for finding it is, appropriately, “stringent.” The court acknowledges as much, but proceeds from the stringent standard to the serious conclusion, as did the district court, without giving any reason for believing that the Secretary may have sought, or could have gotten, any *405advantage from “chilling” AHA member hospitals in the assertion of their rights, let alone from “confusing” them. I am aware of no reason for believing that the Secretary thought or could reasonably have thought he would gain any advantage thereby. On the contrary, if the mere promulgation of the Final Rule were contrary to the Stipulation, it would have been painfully obvious that the plaintiff would be able to get immediate relief in the district court. That court’s finding of bad faith therefore presupposes that the Secretary is not only a knave but a fool.

I dissent.