Bonanza Trucking Corp. v. US, Court No. 86-03-00350.

Decision Date18 June 1987
Docket NumberCourt No. 86-03-00350.
Citation11 CIT 436,664 F. Supp. 1453
PartiesBONANZA TRUCKING CORPORATION, Plaintiff, v. The UNITED STATES of America; The Secretary of the Department of the Treasury; The Commissioner of the U.S. Customs Service; The Regional Commissioner of the U.S. Customs for Region II; The Area Director of the United States Customs Service for J.F.K. International Airport, Defendants.
CourtU.S. Court of International Trade

Soller, Singer & Horn (Carl R. Soller and Margaret Hardy Sachter, New York City, of counsel), for plaintiff.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Joseph I. Liebman, Attorney in Charge, Intern. Trade Field Office, Commercial Litigation Branch, U.S. Dept. of Justice (Paula N. Rubin), New York City, for defendants.

MEMORANDUM & ORDER

AQUILINO, Judge:

Following entry of judgment enjoining the defendants from revoking its licenses to cart bonded merchandise and to operate a container station based on the agency record presented, the plaintiff has applied for an award of its costs and its attorneys' fees and expenses.

Background

The judgment was based on the decision of the court published at 10 CIT ___, 642 F.Supp. 1170 (1986), and cited hereinafter as "Slip Op. 86-47", familiarity with which is presumed. It concluded that Bonanza Trucking Corporation ("Bonanza") had been denied procedure at the administrative level required by law within the meaning of 5 U.S.C. § 706. That is, relying on cases such as Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971), Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970), Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), Armstrong v. Manzo, 380 U.S. 545, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965), Greene v. McElroy, 360 U.S. 474, 79 S.Ct. 1400, 3 L.Ed.2d 1377 (1959) and Barnhart v. United States Treasury Department, 7 CIT 295, 588 F.Supp. 1432 (1984), this court determined that Bonanza had been denied a meaningful opportunity to be heard. The Customs Service had asserted that it was not required to produce any evidence in support of its decisions to revoke the company's licenses. It refused to produce an internal investigative report that its main witness identified as the key to the evidence upon which he relied in making those decisions. Its hearing officer refused a Bonanza request for time to prepare a rebuttal, and he thereafter relied in his report to the Commissioner of Customs on 1981 grand-jury testimony as if it had been given by the witness at trial in 1984. This erroneous, if not tainted, finding was important and was later accepted as true by the Commissioner.

Notwithstanding the nature of the court's decision, which was not appealed, the defendants oppose award of any fees or expenses.

I

Plaintiff's application is made pursuant to the Equal Access to Justice Act ("EAJA"), as extended and amended by Congress in Pub.L. No. 99-80, 99 Stat. 183 (1985) and codified at 28 U.S.C. § 2412.

A. Lack of Substantial Justification

The plaintiff, in the first instance, seeks an award of fees and expenses under section 2412(d)(1)(A) incurred during the judicial proceedings and under section 2412(d)(3) for those incurred during the underlying administrative proceedings. The two EAJA provisions are, in pertinent part, as follows:

(d)(1)(A) Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in ... proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
* * * * * *
(3) In awarding fees and other expenses under this subsection to a prevailing party in any action for judicial review of an adversary adjudication, as defined in subsection (b)(1)(C) of section 504 of title 5, United States Code, ... the court shall include in that award fees and other expenses to the same extent authorized in subsection (a) of such section, unless the court finds that during such adversary adjudication the position of the United States was substantially justified, or that special circumstances make an award unjust.

Plaintiff's application was filed 90 days after entry of this court's judgment. EAJA requires that a request for an award under subsection (d) be filed "within thirty days of final judgment". 28 U.S.C. § 2412(d)(1)(B). As discussed in Gavette v. Office of Personnel Management, 808 F.2d 1456, 1459 (Fed.Cir.1986), the "party seeking an award under the EAJA must submit the application to the court within 30 days of the date when the judgment becomes final and not appealable", relying on 28 U.S.C. § 2412(d)(2)(G), and it was held in Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. United States, that, since the government had 60 days to appeal the underlying judgment, the plaintiff had a total of 90 days within which to file its application.1 The same circumstance exists here, hence the same conclusion.

Indeed, the defendants have not challenged the application on the basis of time. Rather, they insist that, although "the court found that erroneous evidence and certain procedural irregularities in the administrative proceedings denied Bonanza meaningful cross-examination and procedural due process of law"2, their "litigation position both at the agency level and upon judicial review was substantially justified". Defendants' Opposition, p. 13.

This contention does not comport, however, with the holding in Gavette, where the plaintiff Internal Revenue Service agent had been forced into a disability retirement as a result of an IRS submission to the OPM contending unfitness for further service. The IRS, citing provisions of the Freedom of Information Act and the Privacy Act, had refused to comply with the agent's request for copies of documents used to support its submission. The Court of Appeals concluded that the agency refusal to provide the information constituted harmful procedural error. See 808 F.2d at 1459. In deciding to award the plaintiff fees under EAJA, the court held that the substantial-justification standard

requires that the Government show that it was clearly reasonable in asserting its position, including its position at the agency level, in view of the law and the facts. Id. at 1467 (emphasis in original, footnote omitted).

After examining the facts contained in the record, it determined that the government had not shown that the agency met this standard in refusing to disclose the information sought. While the IRS had attempted to justify this refusal on its understanding of the two statutes, the court was not convinced that the agency had not persisted in pressing a tenuous factual or legal position.

The Customs Service's failure to disclose its internal investigative report herein is analogous to the refusal to disclose in Gavette. However, defendants' argument that their position was substantially justified is even weaker here, where no genuine attempt was made to support the failure to disclose the document.3 Rather, the defendants claim that the "price of these errors is the exclusion of the evidence." Defendants' Opposition, p. 13 (emphasis deleted).

This is not necessarily the only price. As discussed in Gavette,

EAJA rested on the premise that individuals and small businesses "may be deterred from seeking review of, or defending against unreasonable governmental action because of the expense involved in securing the vindication of their rights." The purpose of the EAJA was to "reduce the deterrents and disparity by entitling certain prevailing parties to recover an award of attorney fees, expert witness fees and other expenses against the United States." 808 F.2d at 1459-60 (footnotes omitted), quoting H.R.Rep. No. 1418, 96th Cong., 2d Sess. 5-6 (1980).

In other words, with the enactment of EAJA, parties like Bonanza which seek to vindicate their rights at the administrative level may be awarded fees and expenses incurred thereby, unless the court finds that the position of the United States was substantially justified.

As was the case in Gavette, this court is unable to conclude that the denial of procedure required by law was substantially justified. Thus, the plaintiff may recover reasonable attorneys' fees and expenses sustained by it before the Customs Service. That denial of due process led to commencement of this action and vindication of plaintiff's rights thereto. It has also resulted in the instant application for an award of those fees and expenses incurred by the plaintiff herein. The nature of this case, in turn, gives rise to the question of whether unsuccessful defense of an action asserting such denial of due process can ever result in an ex post facto determination under EAJA that the position of the United States in court was substantially justified. If there is such a case, this is not the one.

Indeed, at the outset the defendants sought to perpetuate the perception that the 1981 testimony had really been given in 1984.4 Ultimately, they admitted the misrepresentation, but insisted that opposing counsel's original silence amounted to a waiver of the right to argue before this court that the hearing officer had misunderstood the nature of the criminal-trial transcript.5 As indicated above, that stance was rejected upon the court's findings that plaintiff's counsel had not been granted access to the Customs evidence in advance of the hearing, had objected to its introduction, and had not been permitted time to prepare a rebuttal. See Slip Op. 86-47, 10 CIT at ___, 642 F.Supp. at 1175-76.

In view of the nature of the administrative proceedings and resultant judicial disposition, the court did not...

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