National Truck Equipment Ass'n v. National Highway Traffic Safety Admin., 89-3713

• Decision Date: 06 August 1992
• Docket Number: No. 89-3713,89-3713
• Citation: 972 F.2d 669
• Parties: NATIONAL TRUCK EQUIPMENT ASSOCIATION, Petitioner, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, United States Department of Transportation, and the United States of America, Respondents.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 669

972 F.2d 669

61 USLW 2125

NATIONAL TRUCK EQUIPMENT ASSOCIATION, Petitioner, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, United States Department of Transportation, and the United States of America, Respondents.

No. 89-3713.

United States Court of Appeals Sixth Circuit.

Argued April 13, 1990.

Decided Aug. 6, 1992.

Mark M. Levin, Kimberly Madigan, Christopher Eric Hagerup, Irving P. Margulies (argued) and Mark H. Sidman (briefed), Weiner, McCaffrey, Brodsky & Kaplan, Washington, D.C., for petitioner.

Stephen P. Wood, Enid Rubenstein (argued and briefed), Kenneth N. Weinstein, Nat. Highway Traffic Safety Admin.; Freddi Lipstein, U.S. Dept. of Justice, Civ. Div. Appellate Staff; and Richard L. Thornburgh, Atty. Gen., U.S. Dept. of Justice, Antitrust Div., Washington, D.C., for respondents.

Before: MERRITT, Chief Judge; MARTIN and GUY, Circuit Judges.

MERRITT, Chief Judge.

Petitioner, an organization that prevailed in judicial review of federal administrative rulemaking, seeks attorney fees and costs under the Equal Access to Justice Act [hereinafter "EAJA"]. We must resolve whether fees and costs may be appropriately awarded to an organization with numerous corporate members whose assets and employees, if aggregated, would exceed the EAJA's purpose and limitations. This issue has been extensively briefed, and a Special Master of this Court has conducted thorough hearings on the issue. For the foregoing reasons, the petitioner's motion for attorney fees and costs under 28 U.S.C. § 2412(d)(1)(A) will be denied, while petitioner's costs under 28 U.S.C. § 1920 will be granted.

National Truck Equipment Association, a trade organization representing some 1,400 manufacturers of customized bodies for special-purpose trucks, sought judicial review of an order of respondent National Highway Traffic Safety Administration. This order, Federal Motor Vehicle Safety Standard No. 204, promulgated steering-wheel safety standards for all trucks under 10,000 pounds. Compliance with this standard would have required the petitioner's members either to devise safety and crash tests to ensure their adherence, or to obtain hard-to-get manufacturer certifications. The Truck Association argued that the costs of either of these measures would have been impracticable for the majority of its members.

Our Circuit granted the petition for review and remanded the case to the Administration for further rulemaking proceedings to resolve various defects in the regulations' compliance procedures. See 919 F.2d 1148 (6th Cir.1990). After that decision, the Truck Association filed its motion as a "prevailing party" for attorney fees and costs under the EAJA. A total of $110,284.00 was ultimately requested for all expenses incurred in the original proceedings and in supplemental briefing on the EAJA issue. Following hearings, this court's Special Master recommended that the petitioner was not entitled to attorney fees but was entitled to $3,042.14 in costs pursuant to 28 U.S.C. § 1920. After determining that an "aggregation" standard should not bar the petitioner's motion, the Special Master nevertheless concluded that the government's position was "substantially justified," and recommended that the petitioner be precluded from recovery of attorney fees and costs under 28 U.S.C. § 2412(d)(1)(A).

I.

The EAJA provides limited exceptions to the general rule of sovereign immunity where recovery of costs against the United States is concerned. The exception should not be construed liberally. See Owens v. Brock, 860 F.2d 1363, 1366 (6th Cir.1988) (citing Library of Congress v. Shaw, 478 U.S. 310, 318, 106 S.Ct. 2957, 2963, 92 L.Ed.2d 250 (1986)). Section 2412(d)(1)(A) specifies that 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 ... 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.A. § 2412(d)(1)(A) (West Supp.1991). The definition of a "party" raises the crucial issue in the instant case:

"[P]arty" means ... (ii) any owner of an unincorporated business, or any partnership, corporation, association, unit of local government, or organization, the net worth of which did not exceed $7,000,000 at the time the civil action was filed, and which had not more than 500 employees at the time the civil action was filed....

28 U.S.C.A. § 2412(d)(2)(B) (West Supp.1991) (emphasis added).

II.

The respondents have conceded that the petitioner prevailed within the meaning of the statute. This Court agreed with the petitioner that Federal Motor Vehicle Safety Standard No. 204 was impracticable as applied to those final-stage manufacturers comprising the Truck Association's membership. We accordingly remanded the case to the agency for further corrective rulemaking. See 919 F.2d at 1150.

The challenge arises in determining whether the petitioner meets § 2412(d)(2)(B)'s threshold definition of an eligible party. In 1991 the Truck Association had twelve employees and a net worth of $842,320. The petitioner would appear to have established its prima facie eligibility under the prerequisites of § 2412(d)(2)(B). See, e.g., In re Davis, 899 F.2d 1136, 1144 (11th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 510, 112 L.Ed.2d 522 (1990) (placing burden of proof upon EAJA claimant to establish threshold criteria).

The question before us is whether we should aggregate the net worth and employees of the members of the Association in light of the following findings of fact by the Special Master:

1. "If the individual net worths of all of [the] petitioner's members were combined, the resulting aggregate total would exceed $7,000,000. The petitioner's members employ a combined total of more than 500 employees." Finding of Fact 4, Special Master's Report and Recommendation (Jan. 24, 1992) [hereinafter Report], at 2-3.

2. At least six of the member organizations employed over 500 persons during 1989. Finding of Fact 5, Report, at 3.

3. At least one of those member organizations had a net worth in excess of $7,000,000. Finding of Fact 6, id., at 3.

4. A cursory review of the Truck Association's membership listing for 1991 reveals the identity of some of its associate members. One page alone of the Association's roster contains listings for the following companies: DuPont; Ford Motor Company; Freightliner Corporation/Mercedes-Benz; General Electric's Fleet Services Group; GTE; and the Truck Division of General Motors Corporation. See National Truck Equipment Assoc., 1991 Membership Roster and Product Directory, at 139.

The question of aggregation under the EAJA is an issue of first impression within this Circuit. The D.C. Circuit analyzed the issue as one of control of the litigation, under a real party in interest doctrine. Cf. In re Davis, 899 F.2d at 1144-45 n. 18; American Assoc. of Retired Persons v. EEOC, 873 F.2d 402, 404-05 (D.C.Cir.1989); Unification Church v. INS, 762 F.2d 1077, 1081 (D.C.Cir.1985) (third person who exercises control over litigation should be treated as "party" under the statute). One District Court in this Circuit has applied that doctrine, but in a manner more analogous to that of piercing the corporate veil. See United States v. Lakeshore Terminal & Pipeline Co., 639 F.Supp. 958, 961-63 (E.D.Mich.1986). Two cases consider the issue not as a threshold question of definitions but as a "special circumstance" that requires the court to resolve first whether the petitioner was a prevailing party and second, whether the government's position was substantially justified. See Love v. Reilly, 924 F.2d 1492, 1495 (9th Cir.1991), and State of Louisiana ex rel. Guste v. Lee, 853 F.2d 1219, 1224-25 (5th Cir.1988).

This position is contrary to Grason Electric Co. v. NLRB, 951 F.2d 1100, 1103-05 (9th Cir.1991) (reasoning that legislative history nowhere mentions financial circumstances as a "special circumstance" to defeat an award; "special circumstances" are only substantive issues, such as close or novel questions of law). Grason Electric is persuasive. In that case, six employers belonging to a multi-employer organization disputed the NLRB's refusal to award EAJA fees to them under 5 U.S.C. § 504(a)(1). While deciding that aggregation was inappropriate under the circumstances--based in part upon a 1985 amendment concerning labor union relationships--the Ninth Circuit rejected the contention that aggregation should be considered as a "special circumstance:"

The House Report discusses the "special circumstances" language only in the context of legal issues ... [and] nowhere mentions financial circumstances, other than those spelled out in the statute, as a "special circumstance" that could defeat an award.... In [two Ninth Circuit cases], the "special circumstances" language was raised in the context of legal questions [concerning "close or novel" questions of law].

Grason Electric, 951 F.2d at 1103. The focus of an aggregation inquiry is on the net assets and employees of a company or organization. We conclude that this inquiry is directly related to the Act's definition of a "prevailing party" and therefore requires initial resolution before considering the other factors concerning "special circumstances."

The basic principle underlying the EAJA is this: "EAJA awards should be available where the burden of attorneys' fees would have deterred the litigation challenging the government's actions, but not where no such deterrence exists." SEC v. Comserv Corp., 908 F.2d 1407, 1415-16 (8th Cir.1990). The Model Rules of the Administrative Conference of the United States are consistent with this expression of legislative intent and provide guidance in our inquiry. The Model Rules were promulgated pursuant to 5 U.S.C. § 504 in 1981 to govern...