Masonry Masters, Inc. v. Nelson

• Decision Date: 25 April 1997
• Docket Number: No. 94-5404,94-5404
• Citation: 105 F.3d 708
• Parties: , 65 USLW 2533 MASONRY MASTERS, INC. and Rigoberto Perdomo, Appellants, v. Alan C. NELSON and Janet Reno, Attorney General, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 708

105 F.3d 708

323 U.S.App.D.C. 94, 65 USLW 2533

MASONRY MASTERS, INC. and Rigoberto Perdomo, Appellants, v. Alan C. NELSON and Janet Reno, Attorney General, Appellees.

No. 94-5404.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 24, 1996.

Decided Feb. 7, 1997.

Suggestion for Rehearing In Banc Denied April 25, 1997.^*

Appeal from the United States District Court for the District of Columbia (No. 86cv00201).

James H. Lesar, Washington, DC, argued the cause, for appellants. With him on the brief was Susan Au Allen. Paul S. Allen entered an appearance.

Keith V. Morgan, Assistant United States Attorney, argued the cause, for appellee. With him on the brief were Eric H. Holder, Jr., United States Attorney, and R. Craig Lawrence, Assistant United States Attorney, Washington, DC.

Before: EDWARDS, Chief Judge, HENDERSON and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

Concurring statement filed by Circuit Judge HENDERSON.

TATEL, Circuit Judge:

Authorizing awards of attorney's fees to parties prevailing in litigation against the federal government, the Equal Access to Justice Act ("EAJA") allows courts to increase the statute's $75-per-hour rate to reflect changes in the cost of living since the Act's 1981 effective date. The question in this case is whether cost-of-living enhanced rates should be calculated separately for each year in which services were provided, or whether a single enhanced rate reflecting the increase in the cost of living from 1981 to the year in which the court approved the fee award should be applied to all services rendered throughout the litigation. Because the latter approach compensates for delay in payment, the functional equivalent of interest, and because the EAJA does not waive the government's long-established immunity from awards of interest, we agree with the district court that cost-of-living enhancements must be calculated for each year in which services were performed.

I

Following several years of litigation, the district court overturned the Immigration and Naturalization Service's denial of an immigrant visa petition filed by appellant Masonry Masters on behalf of one of its employees. Masonry Masters, Inc. v. Thornburgh, 742 F.Supp. 682 (D.D.C.1990). Masonry Masters then sought reimbursement for attorney's fees and expenses under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412 (1994). That Act allows a prevailing party to recover reasonable attorney's fees and costs if the government's position was not "substantially justified," unless "special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A) (1994); Pierce v. Underwood, 487 U.S. 552, 556, 108 S.Ct. 2541, 2545, 101 L.Ed.2d 490 (1988). The Act provides that

The amount of fees awarded under this subsection shall be based upon prevailing market rates for the kind and quality of the services furnished, except that ... attorney fees shall not be awarded in excess of $75 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). Cost-of-living enhancements are calculated from 1981, the year the EAJA became effective. Hirschey v. FERC, 777 F.2d 1, 5 & n. 24 (D.C.Cir.1985). Enhancements are based on the U.S. Department of Labor's Consumer Price Index. Wilkett v. ICC, 844 F.2d 867, 875 (D.C.Cir.1988).

The district court granted appellants' initial request for fees in January 1992, calculating the fee on the statutory base of $75 per hour. Masonry Masters, Inc. v. Barr, Civ. No. 86-0201, 1992 WL 13208 (D.D.C. Jan.9, 1992). Following additional briefing, the district court ruled that it would enhance the $75 rate according to the "historic" cost of living--i.e., for each year in which Masonry Masters' attorneys rendered services, the $75 rate would be increased by the appropriate CPI for that year. Masonry Masters, Inc. v. Barr, Civ. No. 86-0201, slip op. at 6 (D.D.C. Aug. 13, 1992) ("Masonry Masters II"). An "historic" cost-of-living enhancement for work performed, for example, in 1988 produces an hourly rate of $98.53 ($75 plus $23.53, the increase in the cost of living from 1981 to 1988). See Pls.' Notice of Filing (Dec. 23, 1994), Ex. A.

Masonry Masters had requested fee enhancement according to the "current" cost of living, i.e., the increase in the cost of living from 1981 to 1992, the year in which the court initially approved the fee petition. The "current" approach yields an hourly rate of $119.63 ($75 plus $44.63, the increase in the cost of living from 1981 to 1992), which Masonry Masters argues should apply to all legal services rendered by its attorneys from 1985, when the suit was filed, through 1992. See id.

Rejecting the "current" rate, the district court acknowledged that using the "historic" enhancement meant that "services rendered by Plaintiffs' counsel in 1986 will not be compensated in 1991[sic] dollars." Masonry Masters II, slip op. at 6. The court also rejected Masonry Masters' request for fee enhancement under the EAJA's "special factors" provision. Id. at 5. Following several more rounds of filings on the appropriate method of calculating the cost-of-living enhancement, the district court entered a final order allowing in part and disallowing in part appellants' supplemental fee request. Masonry Masters, Inc. v. Reno, Civ. No.86-0201 (D.D.C. Oct. 25, 1994) ("Masonry Masters III").

II

On appeal, Masonry Masters urges us to adopt the "current" cost-of-living enhancement to compensate for delay in payment for services rendered years earlier, claiming its lawyers have "lost approximately one-fifth of the present value of their labor through delay in the receipt of payment." Appellants' Br. at 20. Contending that compensation for delay is equivalent to interest, the Government argues that "current" cost-of-living enhancements are barred by the long-standing rule prohibiting recovery of interest against the United States unless the government expressly waives its sovereign immunity. See United States ex rel. Angarica v. Bayard, 127 U.S. 251, 260, 8 S.Ct. 1156, 1160-61, 32 L.Ed. 159 (1888). According to Masonry Masters, the EAJA's cost-of-living provision amounts to just such a waiver. We review this purely legal issue de novo. United States v. Wishnefsky, 7 F.3d 254, 256 (D.C.Cir.1993).

The key to this case is the Supreme Court's decision in Library of Congress v. Shaw, 478 U.S. 310, 314-15, 106 S.Ct. 2957, 2961-62, 92 L.Ed.2d 250 (1986), an action arising under Title VII's fee-shifting provision, 42 U.S.C. § 2000e-5(k) (1994). To compensate counsel for a five-year delay in receiving payment for their services, the district court awarded a thirty percent enhancement to the "lodestar." Affirming, this court concluded that Title VII, by making the government liable for fees "the same as a private person," waived the Government's immunity against interest. Shaw v. Library of Congress, 747 F.2d 1469, 1475 (D.C.Cir.1984). The Supreme Court reversed. Tracing the early history of the no-interest rule, the Court noted that "[f]or well over a century," it had "consistently ... recognized that federal statutes cannot be read to permit interest to run on a recovery against the United States unless Congress affirmatively mandates that result.... When Congress has intended to waive the United States' immunity with respect to interest, it has done so expressly." Shaw, 478 U.S. at 316-18, 106 S.Ct. at 2962-63. Pointing out that neither the statute nor its legislative history referred to interest, the Court concluded that Congress's decision to make the government liable "the same as a private person" waived the government's immunity from fees, not from interest on those fees. Id. at 319, 106 S.Ct. at 2964. Unpersuaded by the fee recipient's argument that the no-interest rule did not prohibit the award of compensation for delay, the Court stated that "[i]nterest and a delay factor share an identical function. They are designed to compensate for the belated receipt of money.... [They] are functionally equivalent." Id. at 322, 106 S.Ct. at 2965.

Shaw controls the two basic issues in this case: whether fee enhancements based on the "current" cost of living amount to awards of interest; and, if so, whether the EAJA waives the federal government's immunity from such awards. The answer to the first question turns on the quite different effects produced by "historic" and "current" cost-of-living enhancements. Awards based on the cost of living for the year in which services were provided do no more than "update the [Act's] statutory rate" to compensate for inflation since the Act's 1981 effective date. Perales v. Casillas, 950 F.2d 1066, 1076 (5th Cir.1992). Such "historic" enhancements do not compensate for delay because "[p]rior to services being performed, there is no obligation to pay and no fee incurred...." Chiu v. United States, 948 F.2d 711, 720 (Fed.Cir.1991).

"Current" cost-of-living increases produce very different consequences. By using a CPI for a period of time extending beyond the actual provision of services, the "current" rate accomplishes more than "updat[ing] the [Act's] statutory rate;" it compensates for delay in payment. Perales, 950 F.2d at 1076; see Chiu, 948 F.2d at 720. To illustrate, the $97.20 "historic" rate for 1988 merely updates the $75 rate to account for increases in the cost of living since the Act's effective date. By comparison, applying the $119.63 "current" rate, i.e., the rate for 1992, to services performed in 1988 goes well beyond updating the statutory rate. The $22.43 difference between the two rates, as appellants candidly admit, "compensat[es] for delay." Appellants' Br. at 9, 10, 16; see id. at 12-13. And "compensation for delay," according to Shaw, is just another term for "interest"; they are "functionally...