Kerin v. USPS

• Decision Date: 01 August 1999
• Docket Number: Docket No. 99-6184
• Citation: 218 F.3d 185
• Parties: (2nd Cir. 2000) WILLIAM J. KERIN, Plaintiff-Counter-Defendant-Appellee, v. UNITED STATES POSTAL SERVICE, Defendant-Counter-Claimant-Appellant
• Court: U.S. Court of Appeals — Second Circuit

Page 185

218 F.3d 185 (2nd Cir. 2000)

WILLIAM J. KERIN, Plaintiff-Counter-Defendant-Appellee, v. UNITED STATES POSTAL SERVICE, Defendant-Counter-Claimant-Appellant.

Docket No. 99-6184

August Term, 1999

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: February 11, 2000

Decided: May 31, 2000

Appeal from a supplemental judgment of the United States District Court for the District of Connecticut (Thomas P. Smith, Magistrate Judge), awarding appellee William J. Kerin attorneys' fees and costs pursuant to the Equal Access to Justice Act, 28 U.S.C. §2412.

Vacated and remanded.

[Copyrighted Material Omitted] CONSTANCE A. WYNN, Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, D.C. (David W. Ogden, Acting Assistant Attorney General, Michael Jay Singer, Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, D.C.; Stephen C. Robinson, United States Attorney for the District of Connecticut, of counsel), for Defendant-Appellant United States Postal Service.

PHILIP L. STEELE, Hartford, CT, for Plaintiff-Appellee William J. Kerin.

Before: WALKER, CALABRESI and KATZMANN, Circuit Judges.

KATZMANN, Circuit Judge:

Defendant United States Postal Service ("USPS") appeals from a supplemental judgment of the United States District Court for the District of Connecticut (Thomas P. Smith, Magistrate Judge), awarding plaintiff William J. Kerin ("Kerin") attorneys' fees and costs in the amounts of $172,662.50 and $5,587.87, respectively. The USPS contends on appeal that the district court abused its discretion by misapplying the Equal Access to Justice Act, 28 U.S.C. §2412 ("EAJA"), in awarding attorneys' fees. Because the district court did not adequately specify its basis for the award of attorneys' fees, and erred in the calculation of fees under the EAJA, we vacate and remand.

BACKGROUND

The factual background and procedural history of this case are set forth in a prior opinion by another panel of this Court, with which we assume familiarity. See Kerin v. United States Postal Serv., 116 F.3d 988, 989-90 (2d Cir. 1997) ("Kerin I"). In brief, Kerin, the lessor, brought suit against the USPS in 1990, alleging, inter alia, that the USPS had breached the lease on its South Windsor, Connecticut, postal facility. See id. at 990. The dispute between the parties centered on the maintenance of the sewage system and the parking lot at the postal facility, and Kerin sought to eject the USPS, in addition to claiming money damages for breach of the lease and unjust enrichment. See id. The USPS counterclaimed for the expenditures it had made to repair the septic tanks and the parking lot. See id. Following a trial conducted over seven days between March and June 1994, the district court issued its extensive Amended Memorandum of Decision in October 1994. The district court found that ejectment was inappropriate, but held that the USPS was liable for both breach of the lease and unjust enrichment, and further found that the USPS's counterclaim was "excessive, unreasonable, and unmeritorious." Am. Mem. of Decision dated Oct. 14, 1994, at 2, 6. In March 1996, the district court issued its Memorandum of Decision on Damages awarding Kerin $126,802, of which $65,000 was an unjust enrichment award.

The USPS appealed from the district court's judgments, and in Kerin I this Court affirmed in part and reversed in part, holding that the USPS was liable for breach of the lease, but that Kerin was not entitled to the $65,000 unjust enrichment award. See Kerin I, 116F.3d at 993-94. Kerin I reasoned that the contract damages awarded by the district court were comprehensive, and that Kerin had not proved that the benefit enjoyed by the USPS had harmed him beyond such damages. See id. at 994. Accordingly, the Court held that Kerin was only entitled to $61,802 in damages. See id.

On remand, the district court proceeded to consider Kerin's motion for attorneys' fees and costs pursuant to the EAJA, and issued its Ruling on Plaintiff's Application for Attorney Fees in May 1999. In analyzing Kerin's eligibility for a fee award, the court first held that Kerin had fulfilled the requirement of being a "prevailing party" under the EAJA, and that the USPS's position was not "substantially justified" under 28 U.S.C. § 2412(d)(1). The district court referred to the analysis and description of the USPS's "inappropriate behavior," and held that the USPS's position was "not substantially justified" as it had no "reasonable basis in fact or law." Ruling on Pl.'s Appl'n for Att'y Fees dated May 7, 1999 ("Ruling"), at 4. It further held that there were no special circumstances precluding an award of attorneys' fees in this case. See 28 U.S.C. §2412(d). The court proceeded to calculate the amount of attorneys' fees and costs, noting that § 2412(d)(2)(A) provides for a statutory cap of $125 per hour on attorneys' fee awards, absent increases in the cost of living and/or certain special factors. However, the district court held that because of the USPS's bad faith, Kerin was entitled to an increase of $75 per hour beyond the statutory ceiling. Referring to the USPS's "unfairness and arrogance," the district court reiterated its prior finding that the USPS's counterclaim was "excessive," "unreasonable," and "retaliatory," and further held that the USPS had acted improperly by using its superior resources to "cavalierly brush[] aside" Kerin's claims by "deploy[ing] expert after expert to crush [Kerin] whichever way he turned." Ruling, at 7. Therefore, by using a rate of $200 per hour to calculate the amount of fees, the district court awarded "attorney fees to [Kerin] in the amount of $172,662.50 and costs in the amount of $5,587.87 pursuant to EAJA 28 U.S.C. §2412(d)." Id. at 7-8.

The USPS filed a timely notice of appeal in July 1999, and argues, inter alia, that the district court misunderstood the statutory framework of the EAJA, improperly awarded attorneys' fees for bad faith, failed to account for the USPS's success on its prior appeal, and applied the wrong statutory rate in calculating fees. We find that the district court did not adequately specify the legal and factual basis for its award of attorneys' fees and adopted an erroneous methodology in calculating the amount of such fees. We therefore vacate and remand.

DISCUSSION

The standard of review with respect to decisions to award or deny attorneys' fees, including under the EAJA, is abuse of discretion. See Pierce v. Underwood, 487 U.S. 552, 571 (1988); Wells v. Bowen, 855 F.2d 37, 46 (2d Cir. 1988). A district court abuses its discretion if it relies on "an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).

I. Statutory Framework Governing Awards of Attorneys' Fees Under the EAJA

In order to analyze whether the district court abused its discretion in awarding attorneys' fees, it is first necessary to understand the statutory framework for an award of such fees under the EAJA. The EAJA contains two distinct and express statutory waivers of sovereign immunity permitting the recovery of attorneys' fees in lawsuits brought by or against the United States. See 28 U.S.C. §§2412(b), (d); Wells, 855 F.2d at 46 (noting that these two bases "stand[] completely apart"). First, § 2412(d) states, in relevant part, that:

[e]xcept 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 any civil action (other than cases sounding in tort), . . . 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). Section 2412(d) is therefore an entirely statutory basis for the award of attorneys' fees. It requires:

(1) that the claimant be a "prevailing party";¹ (2) that the Government's position was not "substantially justified"; (3) that no "special circumstances make an award unjust"; and, (4) pursuant to 28 U.S.C. §2412(d)(1)(B), that any fee application be submitted to the court within 30 days of final judgment in the action and be supported by an itemized statement.

Commissioner, INS v. Jean, 496 U.S. 154, 158 (1990). With respect to the second prong of this test, the government's position was "substantially justified" if it had "a reasonable basis both in law and in fact." Pierce, 487 U.S. at 563 (internal quotation marks omitted). "To be 'substantially justified' means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve." Id. at 566.

With respect to the calculation of fees under § 2412(d), there is a statutory cap of $125 per hour "unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. §2412(d)(2)(A). Of course, a district court may award "reasonable attorney[s'] fees" pursuant to §2412(d) using any hourly rate below this statutory cap. The current cap of $125 per hour applies to all civil cases commenced on or after March 29, 1996. See Contract with America Advancement Act of 1996, Pub. L. No. 104-121, 110 Stat. 847, 863, §§232(b)(1), 233. The previous statutory cap of $75 per hour applies to all cases commenced between March 29, 1996 and October 1, 1981, the effective date of the EAJA. See id.; Parks v. Bowen, 839 F.2d 44, 45 (2d Cir. 1988) (per curiam). The $75 per hour rate therefore applies to this case, which was commenced by Kerin in April 1990, if the district court's award was indeed pursuant to § 2412(d).

Second, § 2412(b) provides, in relevant part, that:

[u]nless...