Kali v. Bowen

• Decision Date: 10 August 1988
• Docket Number: No. 87-2094,87-2094
• Citation: 854 F.2d 329
• Parties: Annette KALI; Valeska K. Wise; individually and on behalf of all persons similarly situated, Plaintiffs-Appellants, v. Otis R. BOWEN, Secretary of the Department of Health and Human Services, * Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 329

854 F.2d 329

Annette KALI; Valeska K. Wise; individually and on behalf

of all persons similarly situated, Plaintiffs-Appellants, v. Otis R. BOWEN, Secretary of the Department of Health and Human Services, ^* Defendant-Appellee.

No. 87-2094.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted April 15, 1988.

Resubmitted June 29, 1988.

Decided Aug. 10, 1988.

John Ishihara and Raymond E. Gurcyzynski, Legal Aid Society of Hawaii, Honolulu, Hawaii, Brenton Rogozen, San Jose, Cal., for plaintiffs-appellants.

Joseph Stein, Asst. Regional Counsel, Dept. of Health and Human Services, San Francisco, Cal., Michael Chun, Asst. U.S. Atty., Honolulu, Hawaii, for defendant-appellee.

Appeal from the United States District Court for the District of Hawaii.

Before GOODWIN, SCHROEDER and POOLE, Circuit Judges.

GOODWIN, Circuit Judge:

Plaintiffs appeal the order denying attorneys' fees following lengthy litigation which successfully challenged federal and state regulations that changed the conditions of eligibility for benefits under state Aid to Families with Dependent Children (AFDC) for some three-generation families living together.

The district court granted summary judgment to the plaintiff class. ¹ We affirmed, adopting the reasoning of the Minnesota district court in Morrison v. Heckler, 602 F.Supp. 1485 (D.Minn.1985), aff'd, 787 F.2d 1285 (8th Cir.1986). Kali v. Bowen, 800 F.2d 971 (9th Cir.1986) (per curiam).

After winning their appeal, the plaintiffs moved the district court for an award of attorneys' fees and costs against the federal government under the Equal Access to Justice Act (EAJA), 28 U.S.C.A. Sec. 2412(d) (West Supp.1988). The district court denied the motion, observing that only one district court had addressed the question at the time the action was filed and that the Ninth Circuit had never addressed the regulations until this case:

The Court finds that Defendant Bowen's position was reasonable, and one of first impression in this circuit. If the question of law is unresolved and of unclear resolution, then the government's litigation of the issue is reasonable and substantially justified. Minor v. United States, 797 F.2d 738, 739 (9th Cir.1986), and Foster v. Tourtellotte, 704 F.2d 1109 (9th Cir.1983).

The same rationale applies with respect to the government's decision to appeal this case. Because the Ninth Circuit had not yet ruled on this issue, and other circuits had not yet or were in the midst of publishing an opinion on these issues, and because the government's interpretation of the statute was a reasonable one, attorney's fees are not justified.

We review the district court's decision to deny attorneys' fees under the EAJA for an abuse of discretion. See Pierce v. Underwood, --- U.S. ----, ---- - ----, 108 S.Ct. 2541, 2546-49, 101 L.Ed.2d 490 (1988); Minor v. United States, 797 F.2d 738, 739 (9th Cir.1986) (per curiam). The district court abuses its discretion when its "decision is based on an erroneous conclusion of law or when the record contains no evidence on which [it] rationally could have based that decision." Petition of Hill, 775 F.2d 1037, 1040 (9th Cir.1985). Interpretation of the EAJA presents a question of law reviewable de novo. See id.

The plaintiffs suggest that attorneys' fees might be available under 28 U.S.C.A. Sec. 2412(b) (West Supp.1988), which authorizes awards of attorneys' fees against the United States "to the same extent that any other party would be liable under the common law or the terms of any statute which specifically provides for such an award." Attorneys' fees for an action brought under 42 U.S.C. Sec. 1983 (1982) are authorized by 42 U.S.C. Sec. 1988 (1982). However, "[f]ederal officials who violate federal rights protected by Sec. 1983 generally do not act under 'color of state law,' and therefore cannot be held liable for attorneys' fees under 28 U.S.C. Sec. 2412(b) and 42 U.S.C. Sec. 1988." Olson v. Norman, 830 F.2d 811, 821 (8th Cir.1987). Because the plaintiffs make no allegation that federal and state officials conspired so that the actions taken by the federal officials could be deemed to have been under "color of state law," the plaintiffs have not demonstrated a statutory basis for an award of attorneys' fees under Sec. 2412(b) (West Supp.1988). See id.

The plaintiffs also seek attorneys' fees under 28 U.S.C.A. Sec. 2412(d)(1)(A) (West Supp.1988). As originally adopted, 28 U.S.C. Sec. 2412(d)(1)(A) (1982) provided that a party prevailing in a suit against the United States or one of its agencies is entitled to attorneys' fees, costs, and other expenses "unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." The Ninth Circuit "has long applied a test of reasonableness in determining whether the government's position was substantially justified." Oregon Envtl. Council v. Kunzman, 817 F.2d 484, 498 (9th Cir.1987); see, e.g., League of Women Voters of California v. FCC, 798 F.2d 1255, 1257 (9th Cir.1986) (stating that the "substantially justified" requirement of Sec. 2412 requires only a showing that the government's " 'case had a reasonable basis both in law and fact' ") (quoting H.R.Rep. No. 1418, 96th Cong., 2d Sess. 10, reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4984, 4989); Foster v. Tourtellotte, 704 F.2d 1109, 1112 (9th Cir.1983) (per curiam).

The original EAJA contained a "sunset" provision and expired on Sept. 30, 1984. In 1985, Congress reenacted the EAJA without changing the language of 28 U.S.C. Sec. 2412(d)(1)(A). See 28 U.S.C.A. Sec. 2412(d)(1)(A) (West Supp.1988). The House report accompanying the 1985 reenactment suggests that something more than mere reasonableness is required to satisfy the "substantially justified" standard:

Another problem which has developed in the implementation of the Act has been the fact that courts have been divided on the meaning of "substantial justification." Several courts have held correctly that "substantial justification" means more than merely reasonable. Because in 1980 Congress rejected a standard of "reasonably justified" in favor of "substantially justified," the test must be more than mere reasonableness.

H.R.Rep. No. 120, 99th Cong., 1st Sess. 9, reprinted in 1985 U.S.Code Cong. & Admin.News 132, 138 (footnote omitted).

At least five Ninth Circuit cases have acknowledged that the 1985 legislative history may require a showing of something more than reasonableness to satisfy the "substantially justified" standard, but the cases have found it unnecessary on the facts presented to resolve the issue. See Bresgal v. Brock, 843 F.2d 1163, 1172 (9th Cir.1988); Thomas v. Peterson, 841 F.2d 332, 335 & n. 1 (9th Cir.1988); Andrew v. Bowen, 837 F.2d 875, 878-79 & n. 2 (9th Cir.1988); Edwards v. McMahon, 834 F.2d 796, 802 (9th Cir.1987); Oregon Envtl. Council, 817 F.2d at 498. In Pierce, --- U.S. at ---- - ----, 108 S.Ct. at 2549-51, the Supreme Court rejected the argument that the 1985 legislative history changed the applicable test, finding that the "substantially justified" standard is equivalent to "the 'reasonable basis both in law and fact' formulation adopted by the Ninth Circuit and the vast majority of other Courts of Appeals that have addressed the issue."

The government has the burden of demonstrating that its position was substantially justified. See Hill, 775 F.2d at 1042. The government's failure to prevail does not raise a presumption that its position was not substantially justified. See id. "In analyzing the reasonableness of the government's position under the 'totality of the circumstances' test, we must look both to the position asserted by the government in the trial court as well as the nature of the underlying government action at issue." League of Women Voters of California, 798 F.2d at 1258.

The inquiry into the nature of the underlying government action will by definition concern only the merits of that action. The inquiry into the government's position at trial will encompass the first inquiry to the extent that the government chooses to defend the merits of the challenged action. However, the second inquiry must also focus upon extraneous circumstances bearing upon the reasonableness of the government's decision to take a case to trial. Perhaps the most important of these extraneous circumstances will be the existence of precedents construing similar statutes or similar facts. See Pierce, --- U.S. at ----, 108 S.Ct. at 2551-53 (observing that "a string of losses" or "a string of successes" may be "indicative" on the issue of substantial justification).

The inquiry into the existence of substantial justification therefore must focus on two questions: first, whether the government was substantially justified in taking its original action; and, second, whether the government was substantially justified in defending the validity of the action in court. We will address the second question first.

The plaintiffs argue that the Secretary lacked substantial justification because at the time that the government decided to defend the suit the Minnesota district court had already decided Morrison, 602 F.Supp. 1485, in a manner adverse to the government, and the Secretary's decision to litigate therefore was intended to create an intercircuit conflict on the issue. ² The Supreme Court has recently rejected this argument. "Obviously, the fact that one other court agreed or disagreed with the Government does not establish whether its position was substantially justified." Pierce, --- U.S. at ----, 108 S.Ct. at 2552. ³

We now turn to the determination whether the government's decision to promulgate its original regulation was substantially justified. As a threshold matter, we may reject two claims made by the plaintiffs that the nature of the district court's disposition necessarily indicates that the government lacked substantial justification.

Fi...