Knights of the Ku Klux Klan Realm of Louisiana v. East Baton Rouge Parish School Bd., 79-1780

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Citation: 679 F.2d 64
• Docket Number: No. 79-1780,79-1780
• Parties: 4 Ed. Law Rep. 710 KNIGHTS OF THE KU KLUX KLAN REALM OF LOUISIANA, Plaintiff-Appellee Cross-Appellant, v. EAST BATON ROUGE PARISH SCHOOL BOARD, et al., Defendants-Cross-Appellees, U. S. Department of Health & Human Services, Defendant-Appellant Cross-Appellee. . Unit A *
• Decision Date: 25 June 1982

Page 64

679 F.2d 64 4 Ed. Law Rep. 710 KNIGHTS OF THE KU KLUX KLAN REALM OF LOUISIANA,
Plaintiff-Appellee Cross-Appellant,
v.
EAST BATON ROUGE PARISH SCHOOL BOARD, et al.,
Defendants-Cross-Appellees,
U. S. Department of Health & Human Services,
Defendant-Appellant Cross-Appellee. No. 79-1780. United States Court of Appeals,
Fifth Circuit.
Unit A ^* June 25, 1982.

Page 65

C. Michael Hill, Asst. U. S. Atty., Baton Rouge, La., Joseph B. Scott, Atty., William Kanter, Wendy M. Keats, U. S. Dept. of Justice, Civ. Div., Appellate Staff, Washington, D. C., for defendant-appellant cross-appellee.

Anderson, Anderson & Steffes, Lawrence R. Anderson, Jr., Baton Rouge, La., for plaintiff-appellee cross-appellant.

John F. Ward, Jr., Baton Rouge, La., for East Baton Rouge.

Appeals from the United States District Court for the Middle District of Louisiana.

ON REMAND FROM THE SUPREME COURT OF THE UNITED STATES

Before GOLDBERG, POLITZ and SAM D. JOHNSON, Circuit Judges.

SAM D. JOHNSON, Circuit Judge:

On February 23, 1981, this Court reversed the district court and denied the Ku Klux Klan, Realm of Louisiana (KKK) an award of attorneys' fees against the Department of Health, Education and Welfare (HEW). Knights of K. K. K. v. East Baton Rouge Parish School Board, 643 F.2d 1034 (5th Cir. 1981). The basis of the denial was this Court's determination that the Civil Rights Attorneys' Fees Awards Act of 1976 did not allow recovery of attorneys' fees against the federal government. While the KKK's appeal was pending before the Supreme Court, the Equal Access to Justice Act (EAJA) went into effect. 5 U.S.C. § 504, 28 U.S.C. § 2412 (West.Supp.1981). Because the EAJA allows attorneys' fees awards to certain parties prevailing in actions against the federal government, the Supreme Court has now remanded this case, --- U.S. ----, 102 S.Ct. 626, 70 L.Ed.2d 609 for reconsideration in light of that Act. ¹

I. Attorneys' Fees Awards Under the EAJA

Prior to implementation of the EAJA, 28 U.S.C. § 2412 barred an award of attorneys' fees to the prevailing party in any civil action brought by or against the United States government, unless specifically

Page 66

provided for by statute. ² The district court in the case sub judice nevertheless awarded the KKK $11,920.41 in attorneys' fees against HEW without referring to any statutory basis for its award. The KKK had asserted a right to attorneys' fees after it had prevailed in a 42 U.S.C. § 1983 action against the Baton Rouge Parish School Board (Board) and HEW. ³ This Court reversed the district court on grounds that no statutory authority existed for the award. ⁴ The KKK contended that the Civil Rights Attorneys' Fees Awards Act of 1976 (Awards Act), 42 U.S.C. § 1988, provided such statutory authority, ⁵ but this Court determined that the Awards Act does not possess the "clear or express" language necessary to waive federal sovereign immunity for attorneys' fees under 28 U.S.C. § 2412. ⁶

This Court did not consider the applicability of the EAJA to the instant case because that Act did not become effective until October 1, 1981. The EAJA made significant changes in 28 U.S.C. § 2412. As amended, section 2412 still retains a general provision barring attorneys' fees and expenses against the federal government, except as otherwise specifically provided by statute. Sections 2412(b) and 2412(d), however, provide two broad statutory exceptions. The most significant change is the statutory exception in section 2412(d), 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 (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.

A party is only eligible for this mandatory fee award if it is a "prevailing" party and meets certain financial eligibility requirements set forth in section 2412(d)(2)(B):

(B) "party" means (i) an individual whose net worth did not exceed

Page 67

$1,000,000 at the time the civil action was filed, (ii) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization whose net worth did not exceed $5,000,000 at the time the civil action was filed, except that an organization described in section 501(c)(3) of the Internal Revenue Code of 1954 (26 U.S.C. 501(c)(3)) exempt from taxation under section 501(a) of the Code and a cooperative association as defined in section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)), may be a party regardless of the net worth of such organization or cooperative association, or (iii) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization, having not more than 500 employees at the time the civil action was filed.

Even if a prevailing party is not eligible for a mandatory attorneys' fee award, section 2412(b) permits a court in its discretion to award attorneys' fees and other expenses against the federal government to the same extent it may award fees in cases involving other parties. ⁷ Under this provision, the federal government is now subject to the "bad faith" and "common benefit/common fund" exceptions to the traditional "American Rule" that litigants bear their own costs, including attorneys' fees. Under the bad faith exception, an award of fees will be allowed against the losing party if it has willfully disobeyed a court order or otherwise acted in bad faith. See F. D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129-30, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974). Under the "common benefit" exception, a court may award fees to a party where the party's actions have conferred a substantial benefit upon a class of persons. ⁸ Id. Under the discretionary award provision in section 2412(b), no financial eligibility requirements are imposed upon a prevailing party.

II. Retroactive Application of the EAJA

The KKK was appealing this Court's denial of attorneys' fees when the EAJA became effective as law on October 1, 1981. At the outset, the question arises whether such an action on appeal is covered by the EAJA.

The implementation provision provides that the Act shall apply to any civil action that "is pending on, or commenced on or after" October 1, 1981....