Dissenting Circuit Judge Would Have Awarded Defendants Fees Because DOL’s Case Was Not Substantially Justified When Viewed Under An Objective Standard.
The Equal Access to Justice Act (EAJA) was enacted to curb abusive and costly lawsuits involving the federal government, authorizing a prevailing party to seek attorney’s fees and costs from a federal agency if the agency’s litigation position was not “substantially justified” or the government acted in bad faith under 28 U.S.C. § 2412(b), (d)(1)(A), (d)(2)(A). The EAJA also empowers a court to award taxable costs. 28 U.S.C. § 2412(a).
These statutory provisions were at issue in Su (Dept. of Labor Secretary) v. Bowers, No. 22-15378 (9th Cir. Oct. 25, 2023) (published). DOL lost an overinflated valuation case against defendants after the district court rejected the opinion of DOL’s star expert witness. Although defendants were awarded certain costs, the federal judge did not award fees after finding that the “substantially justified” or “bad faith” requirements were not met. The Ninth Circuit, in a 2-1 opinion, affirmed even though acknowledging the case was “a close call.” DOL could not predict that its expert’s opinion would be considered entirely faulty, even though one piece of it was, such that its actions were substantially justified and not taken in bad faith. However, the entire panel did reverse the refusal to award deposition costs to defendants because there was a clear error given that the depositions were properly necessary for summary judgment purposes.
Circuit Judge Collins dissented from the fee denial order. He believed that too lax a standard was being used to judge the government’s actions, substituting a “could have rationally believed” standard versus an objective “substantially justified” standard. He would have remanded to see what fees were authorized because eligibility is tied to certain “net worth” requirements of the requesting parties under section 2412(d)(2)(B).
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