U.S. v. Trident Seafoods Corp.

• Decision Date: 07 August 1996
• Docket Number: Nos. 94-35989,95-35074,s. 94-35989
• Citation: 92 F.3d 855
• Parties: , 65 USLW 2131, 35 Fed.R.Serv.3d 1486, 26 Envtl. L. Rep. 21,511, 96 Cal. Daily Op. Serv. 5873, 96 Daily Journal D.A.R. 9575 UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. TRIDENT SEAFOODS CORPORATION, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 855

92 F.3d 855

43 ERC 1217, 65 USLW 2131, 35

Fed.R.Serv.3d 1486,

26 Envtl. L. Rep. 21,511,

96 Cal. Daily Op. Serv. 5873,

96 Daily Journal D.A.R. 9575

UNITED STATES of America, Plaintiff-Appellee-Cross-Appellant, v. TRIDENT SEAFOODS CORPORATION, Defendant-Appellant-Cross-Appellee.

Nos. 94-35989, 95-35074.

United States Court of Appeals Ninth Circuit.

Argued and Submitted April 10, 1996.

Decided Aug. 7, 1996.

Lois J. Schiffer, Assistant Attorney General, Lisa E. Jones, United States Department of Justice, Washington, D.C., for plaintiff-appellee-cross-appellant.

Ralph H. Palumbo, Heller, Ehrman, White & McAuliffe, Seattle, Washington, for defendant-appellant-cross-appellee.

Daniel T. Fitzpatrick, Pacific Legal Foundation, Sacramento, California, for amicus curiae.

Appeals from the United States District Court for the Western District of Washington, Carolyn R. Dimmick, District Judge, Presiding. D.C. No. CV 92-1025-CRD.

Before WRIGHT, PREGERSON and TASHIMA, Circuit Judges.

TASHIMA, Circuit Judge:

The United States brought an action against Trident Seafoods Corporation (Trident) for violating the Clean Air Act. Trident made an offer of judgment before trial, which the United States rejected. Because the offer of judgment exceeded the final judgment, Trident moved for an award of attorneys' fees and costs pursuant to Fed.R.Civ.P. 68. The district court denied Trident an award of fees, but granted an award of costs. Trident appeals the order denying fees, and the United States cross-appeals the order awarding costs. We affirm.

BACKGROUND

Trident is a seafood processing corporation. In May 1988, the company purchased and began to renovate an abandoned fish cannery in Anacortes, Washington. To remove asbestos insulation from the facility, Trident hired James Hinton, a general contractor.

He in turn hired a subcontractor, Thomas Stakkeland, who removed over five tons of asbestos during five days in August and September 1988. Stakkeland, who was not certified at the time to remove asbestos, used his eleven-year-old son and a person with no prior experience in asbestos removal to assist in the clean-up. After the clean-up was supposedly completed, at least five bags of asbestos were left at the facility.

On September 26, 1988, an asbestos inspector for a state agency, the Northwest Air Pollution Control Authority (NWAPCA), learned of the asbestos removal and inspected the facility. During the inspection, he removed samples of suspected asbestos for analysis. The results showed that all samples contained more than one percent asbestos.

On September 30, 1988, Trident notified the government of its intent to remove the asbestos. On October 5, 1988, the five bags of asbestos left by Stakkeland were removed from the Anacortes facility. The inspector also returned and removed additional samples from the facility, which again tested positive for asbestos.

Trident eventually hired a new asbestos contractor to remove the remaining asbestos at the Anacortes facility. Twenty-five bags were removed on October 14, 1988. NWAPCA cited Trident for failing to provide advance written notice of the planned asbestos abatement. As a result, Trident paid a $250 fine to the State of Washington.

The Environmental Protection Agency (EPA) also learned of the asbestos abatement at the Anacortes facility. The Clean Air Act authorizes the EPA to develop National Emission Standards for Hazardous Air Pollutants (NESHAP). 42 U.S.C. §§ 7412(c) and 7414(a) (1988). ¹ The asbestos NESHAP provides notice requirements and work practice standards that must be met when renovating or demolishing a facility that contains asbestos. 40 C.F.R. pt. 61, subpt. m (1988). A violation of NESHAP constitutes a violation of the Act. 42 U.S.C. §§ 7412(c) and (e) (1988).

In August 1989, the EPA served Trident with a request for information regarding the abatement of asbestos at the Anacortes facility. Trident responded that same month. Nearly three years later, on April 8, 1992, the United States Department of Justice (DOJ) notified Trident that the EPA had referred the asbestos abatement matter to the DOJ, which intended to file an action against Trident for violations of § 7413(b) of the Clean Air Act, 42 U.S.C. § 7413(b). The DOJ explained that its purpose in notifying Trident was to give the company an opportunity to settle the matter before it filed a complaint.

According to Trident, settlement negotiations took place in April 1992, during which the DOJ stated that it was pursuing the action because "Trident has deep pockets" and because the United States wanted "a piece" of $30 million Trident earned in sales the previous year. The government contended that Trident would likely incur more than $346,000 in litigation expenses and risk a liability judgment of more than $3 million, if the company proceeded to trial. The government, therefore, offered to settle the action for $346,886. Trident rejected the offer. Its research indicated that the average settlement in 1992 for alleged violations of NESHAP was between $20,000 and $35,000.

On June 29, 1992, the DOJ filed an action on behalf of the United States against Trident. The complaint alleged one notice violation and four work practice violations of the asbestos NESHAP as a result of the asbestos abatement at the Anacortes facility. Stakkeland and Hinton were named as individual defendants.

During discovery, the government noticed depositions of Trident's President and Vice President to take place during the Christmas holidays. These depositions were rescheduled, however, when the trial date was continued. The government also caused Trident employees and officers to be served at their homes by United States Marshals, even though Trident's in-house counsel agreed to On May 3, 1993, Trident served the government with an offer of judgment pursuant to Fed.R.Civ.P. 68. The offer included a civil penalty of $30,000, as well as a consent decree to: (1) conduct a survey of all Trident vessels and shore facilities; (2) institute a company-wide asbestos control program; and (3) expend at least $100,000 on asbestos abatement within two years. The government rejected the offer on May 19, 1993.

accept trial subpoenas on behalf of all company employees.

On July 3, 1993, Trident served the government with a superseding Rule 68 offer of judgment, which was identical to the previous offer, except that it increased the civil penalty to $50,000. The government again rejected the offer.

On July 22, 1993, the district court granted summary judgment in the government's favor on the claim that Trident violated the NESHAP notice requirement by failing to provide advance written notice to the EPA of its intent to remove asbestos.

Shortly before trial, the government made a settlement demand in the amount of $125,000, which Trident rejected. The trial, which began in August 1993, resulted in a jury verdict in favor of Trident on all four charges of work practice violations. The district court assessed a penalty for the NESHAP notice violation in the amount of $65,000, finding that the violation was continuous with mitigating factors. ²

Trident moved for an award of attorneys' fees and costs pursuant to (1) Rule 68, (2) the Equal Access to Justice Act (EAJA), and (3) the Clean Air Act. The court denied the motion for attorneys' fees, but granted the motion for statutory costs pursuant to the EAJA.

Trident appealed the $65,000 penalty and we reversed, finding that the violation was singular rather than continuous. United States v. Trident Seafoods Corp., 60 F.3d 556, 557 (9th Cir.1995). We remanded the action and directed the district court to impose a new penalty not to exceed $25,000. On remand, the district court entered judgment imposing a penalty of $25,000, less $250 already paid.

Trident now appeals the order denying attorneys' fees. In a consolidated appeal, the government seeks review of the order awarding costs. We have jurisdiction over these timely appeals under 28 U.S.C. § 1291, and we affirm.

DISCUSSION

I. ATTORNEYS' FEES

Trident contends that it is entitled to attorneys' fees as part of the costs awardable under Rule 68. We review the issue de novo. Erdman v. Cochise County, 926 F.2d 877, 879 (9th Cir.1991) (citing Simon v. Intercontinental Transp. (ICT) B.V., 882 F.2d 1435, 1439 (9th Cir.1989)). Under Rule 68, if a plaintiff rejects a defendant's offer of judgment, and the judgment finally obtained by plaintiff is not more favorable than the offer, the plaintiff must pay the costs incurred subsequent to the offer. ³ Liberty Mut. Ins. Co. v. EEOC, 691 F.2d 438, 442 (9th Cir.1982). The award is mandatory; Rule 68 leaves no room for the court's discretion. Id.

The minimum value of Trident's offer of judgment is indisputably $50,000. On December 18, 1995, the district court entered a final judgment imposing a penalty of $25,000 against Trident. Thus, the offer of judgment exceeds the final judgment.

The term "costs" in Rule 68 is intended to refer to all costs properly awardable under the relevant substantive statute. Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 3016-17, 87 L.Ed.2d 1 (1985). Absent congressional expressions to the contrary, where the underlying statute defines "costs" to include attorneys' fees, such fees are to be included as costs for purposes of Rule 68. Id. To determine the interplay between Rule 68 and the Clean Air Act, the Court must construe the "plain meaning" interpretation of both the Rule and the statute in a manner that gives meaning to every word in each. Id. at 9-11, 105 S.Ct. at 3017.

The Clean Air Act indicates that Congress did not intend to award attorneys' fees unless the action was unreasonable. The Act provides:

In the case of any action brought by the Administrator under this subsection, the court may award costs of litigation (including reasonable attorney and expert witness fees) to the party or parties against whom such action was brought if the...