Former Employees, Motorola Ceramic Prods. v. U.S.

• Decision Date: 24 July 2003
• Docket Number: No. 02-1223.,02-1223.
• Citation: 336 F.3d 1360
• Parties: FORMER EMPLOYEES OF MOTOROLA CERAMIC PRODUCTS, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

336 F.3d 1360

FORMER EMPLOYEES OF MOTOROLA CERAMIC PRODUCTS, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 02-1223.

United States Court of Appeals, Federal Circuit.

July 24, 2003.

Munford Page Hall, II, Dorsey & Whitney LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was Linda B. Popejoy.

Claudia Burke, Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Robert D. McCallum, Jr., Associate Attorney General; David M. Cohen, Director; and Lucius B. Lau, Assistant Director.

Before CLEVENGER, RADER, and DYK, Circuit Judges.

Opinion of the court filed by Circuit Judge DYK; Dissenting opinion filed by Circuit Judge RADER.

DYK, Circuit Judge.

James Barney and Michael Hanseman ("appellants") appeal the Court of International Trade's decision denying them attorneys' fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, on the ground that they were not "prevailing parties." We hold that parties who secure a consent order remanding a proceeding to an administrative agency because of an alleged error on the merits (where the court also retains jurisdiction) are "prevailing parties" under EAJA if they succeed on the merits in the remand proceeding. We accordingly vacate the contrary decision of the Court of International Trade and remand for further proceedings consistent with this opinion.

BACKGROUND

In early 1999, pursuant to a force reduction, James Barney and Michael Hanseman were dismissed by their employer, Motorola, from their jobs at an Albuquerque, New Mexico, plant that produced ceramic filters. They applied to the Department of Labor ("Department") for Worker Adjustment Assistance under the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418 § 1421, 102 Stat. 1107 (codified at 19 U.S.C. § 2272 (2000)), which makes workers who lose their jobs due to "increases of imports of articles like or directly competitive with articles produced by" the affected workers eligible for adjustment assistance benefits. 19 U.S.C. § 2272(a)(3) (2000). The appellants' applications were both denied on the ground that their job loss was not due to competition from imports, and they separately requested reconsideration. Their requests for reconsideration were granted, but again their applications were denied, this time on the ground that the ceramic filters were not directly competitive with the imported product.

The appellants, on behalf of all similarly affected workers at the Albuquerque plant, filed suit in the Court of International Trade, which has jurisdiction to review decisions denying Worker Adjustment Assistance. If the Court of International Trade finds that such a decision is not supported by "substantial evidence," it may remand to the Department "to take further evidence," or it may set aside the determination, in whole or in part. 19 U.S.C. § 2395(b)-(c) (2000), amended by Trade Act of 2002, Pub.L. No. 107-210 §§ 123(b)(4), 142(a)(1), 11 Sat. 944, 953 (2002). The Court of International Trade also has the authority under the Administrative Procedure Act to set aside the decision as contrary to law or arbitrary and capricious. 5 U.S.C § 706(2)(A) (2000); see also 28 U.S.C. § 2631(i) (conferring jurisdiction).

The appellants' cases were consolidated, and they moved for judgment on the agency record, requesting that the Court of International Trade certify them for Worker Adjustment Assistance benefits, or, in the alternative, remand to the Department for reconsideration. The appellants argued that the Department's denial was not supported by substantial evidence; that the investigation was inadequate; and that the decision was not in accordance with law. The Department did not oppose the remand but instead consented to the appellants' request for a remand and "respectfully request[ed] that the case be remanded to the Department of Labor for reconsideration." (Def.'s Resp. at 1.) "After review of the arguments contained in the brief in support of plaintiffs' motion for judgment upon the agency record," the government said in its response, "the Department has concluded that a reconsideration of the negative determination is appropriate." Id. The Court of International Trade ordered

that the defendant's consent motion is granted and the case is remanded to the Department of Labor for reconsideration...

[and] that the Department of Labor will file the results of the reconsideration within sixty days from the date of entry of this order.

Former Employees of Motorola Ceramic Prods. v. United States, No. 99-07-00393, slip op. at 1 (Ct. Int'l. Trade Jan. 19, 2001) ("Remand Order"). It did not enter a judgment and retained jurisdiction. Id. The parties thus agreed that the Department had erred in its action on the applications. This agreement was memorialized in the consent order requiring reconsideration of the negative determination. By consent, relief on the merits was thus awarded.

On remand, the Department stated that it had conducted a new investigation and obtained new information that, in its view, entitled all workers discharged at about the same time from the Albuquerque plant to adjustment assistance benefits. The Department then certified the appellants and all those similarly situated for adjustment assistance, thus awarding them the benefits they sought. By consent of both parties, the Court of International Trade then dismissed the case. Former Employees of Motorola Ceramic Prods. v. United States, Nos. 99-07-00393, 367 (Ct. Int'l Trade Aug. 7, 2001).

On September 6, 2001, the appellants sought attorney's fees under EAJA, which provides, in pertinent part:

a court shall award to a prevailing party other than the United States fees and other expenses, ... incurred by that party in any civil action ... including 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.

28 U.S.C. § 2412(d)(1)(A) (2000). EAJA defines "position of the United States" to include "in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based." 28 U.S.C. § 2412(d)(2)(D) (2000). The Department opposed the fee request.

The Court of International Trade denied the appellants' application because it held that the appellants were not "prevailing parties." Former Employees of Motorola Ceramic Prods. v. United States, 176 F.Supp.2d 1370, 1371 (Ct. Int'l Trade 2001). It relied on Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), which it interpreted to limit prevailing party status to those who have been awarded "an enforceable judgment on the merits or through a court-ordered consent decree." Id. at 1373. The court concluded that the appellants in this case had obtained neither, and that they therefore could not be prevailing parties. Id. "Plaintiffs' motion for judgment on the agency record may well have been the catalyst for the [Department's] determination that Plaintiffs were eligible to apply for adjustment assistance," the Court of International Trade concluded. Id. "However, this Court's remand order did not constitute a judicially sanctioned change in the parties' legal relationship." Id.

The plaintiffs timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

DISCUSSION

I

The question whether the appellants are "prevailing part[ies]" under EAJA is an issue of law. We therefore review without deference the Court of International Trade's decision on this issue. Brickwood Contractors, Inc. v. United States, 288 F.3d 1371, 1376 (Fed.Cir.2002).

In its recent decision in Buckhannon, the Supreme Court interpreted the phrase "prevailing party" in the fee-shifting provision of the Fair Housing Amendments Act of 1988, 42 U.S.C. 3613(c)(2), to exclude the so-called "catalyst" theory of recovery. 532 U.S. at 605, 121 S.Ct. 1835. Before Buckhannon, most circuits had interpreted "prevailing party" to include parties who "achieve[d] the desired result because the lawsuit brought about a voluntary change in the defendant's conduct." Id. at 601, 121 S.Ct. 1835. The Court rejected the "catalyst" theory. "A defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change," the Court held. Id. at 605, 121 S.Ct. 1835. The Court explained that the term "prevailing party" does not "authorize[] federal courts to award attorney's fees to a plaintiff who, by simply filing a nonfrivolous but nonetheless potentially meritless lawsuit (it will never be determined), has reached the `sought-after destination' without obtaining any judicial relief." Id. at 606, 121 S.Ct. 1835. Rather, to be a prevailing party, one must "receive at least some relief on the merits," id. at 603, 121 S.Ct. 1835 (quoting Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987)), which "alter[s] ... the legal relationship of the parties." Id. at 605, 121 S.Ct. 1835. Two examples of an alteration in the legal relationship between the parties were an enforceable judgment on the merits and a court-ordered consent decree. Id. at 605, 121 S.Ct. 1835.

The Supreme Court has interpreted the phrase "prevailing party" consistently in all federal fee-shifting statutes.¹ We have held that Buckhannon applies to EAJA. Brickwood, 288 F.3d at 1379. The question here, therefore, is whether the appellants in this case are prevailing parties.

II

First we must determine whether a remand order...