Meinhold v. U.S. Dept. of Defense

• Decision Date: 28 August 1997
• Docket Number: No. 96-56094,96-56094
• Parties: 71 Empl. Prac. Dec. P 44,984, 97 Cal. Daily Op. Serv. 6954, 97 Daily Journal D.A.R. 11,259 Volker Keith MEINHOLD, Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF DEFENSE; United States Department of the Navy, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1275

123 F.3d 1275

71 Empl. Prac. Dec. P 44,984, 97 Cal. Daily

Op. Serv. 6954,

97 Daily Journal D.A.R. 11,259

Volker Keith MEINHOLD, Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF DEFENSE; United States

Department of the Navy, Defendant-Appellant.

No. 96-56094.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 4, 1997.

Decided Aug. 28, 1997.

Anthony J. Steinmeyer, Department of Justice, Washington, DC, for defendant-appellant.

Robert Barnes, Kaye, Scholer, Fierman, Hays & Handler, LLP, Los Angeles, CA, for plaintiff-appellee.

Appeal from the United States District Court for the Central District of California; Terry J. Hatter, District Judge, Presiding. D.C. No. CV-92-6044-TJH.

Before BOOCHEVER, KOZINSKI and JOHN T. NOONAN, Jr., Circuit Judges.

BOOCHEVER, Circuit Judge:

Navy officer Keith Meinhold was discharged for stating that he was gay, although he later truthfully denied that he engaged in homosexual conduct. A previous panel of this court held that the Navy violated its regulations by discharging Meinhold without evidence of an expressed desire to engage in homosexual conduct. The district court awarded Meinhold attorney fees under the Equal Access to Justice Act, and the government appeals the award, the district court's finding of bad faith, and the amount of fees. We affirm.

FACTS

Keith Meinhold, a Navy petty officer with twelve years of exemplary service, stated "I am in fact gay" on May 19, 1992, during an interview on ABC World News Tonight. The Navy immediately began discharge proceedings Meinhold challenged his discharge in federal district court. The district court issued a preliminary injunction ordering his reinstatement. The Navy reinstated Meinhold. The Navy then filed an appeal of the preliminary injunction.

                against Meinhold under then-existing military policy, which provided that a member "shall be separated" if "the member has stated that he or she is a homosexual," i.e., "a person ... who engages in, desires to engage in, or intends to engage in homosexual acts."   DOD Directive 1332.14, 32 C.F.R. pt. 41, App.  A (1981).  The Navy discharged Meinhold on August 12, 1992
                

Meanwhile, the parties filed cross-motions for summary judgment in the district court. The district court granted Meinhold's motion, finding his discharge unconstitutional under the Equal Protection Clause because the Navy's policy of discharging gay servicemembers based on a statement of homosexual status alone was not "rationally related to its permissible goals." Meinhold v. United States Dep't of Defense, 808 F.Supp. 1455, 1457 (C.D.Cal.1993) ("Meinhold I" ). The district court also permanently enjoined the Department of Defense from denying enlistment to or discharging any person based on sexual orientation alone. Id. at 1458.

The Navy appealed, and another panel of this court affirmed in part. Meinhold v. United States Dep't of Defense, 34 F.3d 1469 (9th Cir.1994) ("Meinhold II" ). We avoided deciding the constitutional question, instead construing the regulation "to mandate separation due to a statement of homosexuality only when that statement itself indicates more than the inchoate 'desire' or 'propensity' that inheres in status." Id. at 1479. We affirmed the district court's grant of summary judgment to Meinhold on the discharge issue because Meinhold's statement "manifests no concrete, expressed desire to commit homosexual acts." Id. The Navy's presumption that Meinhold's statement meant that Meinhold desired or intended to engage in homosexual conduct "arbitrarily goes beyond what DOD's policy seeks to prevent." Id. at 1479-80. We also, however, vacated the district court's nationwide injunction, except to the extent it enjoined the Navy from discharging Meinhold. Id. at 1480.

Meinhold subsequently filed a motion for attorney fees under the Equal Access to Justice Act (the "EAJA"), 28 U.S.C. § 2412, which entitles a party who substantially prevails in a civil action against the government to attorney fees unless the position of the government was "substantially justified." In July 1995, the district court awarded Meinhold $443,175.73 for hours spent in the litigation and on the EAJA fees application. The Navy appealed, and this court remanded to the district court for an explanation of reasons for the attorney fees award. [ER pp. 168-69]

The district court issued a memorandum opinion on May 14, 1996, explaining its reasons for the fee award: Meinhold had been discharged solely on his statement of personal status, "I am in fact gay." The court stated that the government did not have substantial justification for the discharge and for its defense of the discharge. The court also explained how it arrived at the amount of fees awarded.

The Navy appeals, arguing that its discharge of Meinhold and its litigation posture were substantially justified and that EAJA fees were therefore wrongly awarded, and that the district court's opinion did not sufficiently explain the fee amount. ¹ We affirm.

DISCUSSION

I. Substantially justified

28 U.S.C. § 2412(d)(1)(A) provides that when a private litigant succeeds in a civil proceeding against the United States, the prevailing party must be awarded fees and expenses "unless the court finds that the position of the United States was substantially justified." The government's position is substantially justified when it "has a reasonable basis both in law and in fact," and the burden of showing that reasonable basis is on the United States. United States v. Rubin 97 F.3d 373, 375 (9th Cir.1996) (quotations omitted). The "position" of the government includes the action on which the civil litigation is based, as well as the positions the government takes during the litigation. Oregon Natural Resources Council v. Madigan, 980 F.2d 1330, 1331 (9th Cir.1992).

We review the district court's decision that the government's position was not substantially justified for an abuse of discretion. We may reverse only if the district court based its decision that the Navy was not substantially justified "on an erroneous conclusion of law or when the record contains no evidence on which [it] rationally could have based that decision." Oregon Natural Resources Council v. Marsh, 52 F.3d 1485, 1492 (9th Cir.1995) (as amended) (quotations omitted). If the government's position violates the Constitution, a statute, or its own regulations, a finding that the government was substantially justified would be an abuse of discretion. Mendenhall v. National Transp. Safety Bd., 92 F.3d 871, 874 (9th Cir.1996); Madigan, 980 F.2d at 1332.

Mendenhall does not establish an ironclad rule, however. The issue before the Mendenhall court was the violation by the Federal Aviation Administration of its own policies, the interpretation of which was clear and not disputed. 92 F.3d at 875-76. The case on which Mendenhall relied, Yang v. Shalala, 22 F.3d 213 (9th Cir.1994), presented a situation where "the Secretary's position was based on violations of the Constitution, the [Social Security] Act and several SSA regulations." Id. at 217. Consequently it is not fair to conclude that every violation of a regulation by an agency stamps its position as unreasonable. The government may avoid EAJA fees if it can prove that the regulation it violated was ambiguous, complex, or required exceptional analysis. See Madigan, 980 F.2d at 1332; Pottgieser v. Kizer, 906 F.2d 1319, 1324 (9th Cir.1990); Southern Oregon Citizens Against Toxic Sprays v. Clark, 720 F.2d 1475, 1481 (9th Cir.1983).

A fair reading of the precedents suggests that we have been at some pains to respect the discretionary nature of the call made by the district judge who was most familiar with the case. We defer to familiarity. We discourage fee applications from turning into retrials and re-appeals of the principal case. With due observance of these considerations, we cannot say that the district judge in this case abused his discretion in holding that the government's position was not substantially justified.

The merits panel found that the Navy violated its own regulation in its discharge of Meinhold for the bare statement "I am in fact gay."

[T]he regulation ... can reasonably be construed to reach only statements that show a concrete, fixed, or expressed desire to commit homosexual acts despite their being prohibited.... The Navy's presumption that Meinhold desires or intends to engage in prohibited conduct on the basis of his statement alone therefore arbitrarily goes beyond what DOD's policy seeks to prevent. Accordingly, Meinhold's discharge on that basis cannot stand.

Meinhold II, 34 F.3d at 1479-80. The court noted that Meinhold "truthfully denied" that he had ever engaged in homosexual activity, and the Navy had stated before the discharge board "There are no allegations whatsoever of act. We're talking specifically about the classification, and not the act." Id. at 1475, 1477 n. 8.

We are bound by the previous panel's decision that the Navy violated its own regulation. Madigan, 980 F.2d at 1332 (panel reviewing EAJA award is bound by merit panel's holding and rationale). The Navy does not contend that the regulation was so ambiguous or complex that it was justified in its mistaken interpretation. In fact, on appeal the Navy returns to an argument squarely rejected by the Meinhold II panel: that an acknowledgement of status is equivalent to an admission of conduct.

The Meinhold II court examined the statute's language and found that it was "arbitrary" for the Navy to equate Meinhold's statement with prohibited conduct. The district court awarded fees, finding that the Navy's position lacked substantial justification. The Navy had the burden in the district court to show that its litigation posture was reasonable. The district court found that the Navy had not carried its burden, and we cannot say that "the record contains no evidence on which [it] rationally could have based that decision." Mar...