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Keywords

lawsuitsettlementplaintiffattorneystatuteappealwillrespondent
attorneystatuteappealrespondent

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Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 101 L.Ed.2d 490, 56 USLW 4806, Unempl.Ins.Rep. (CCH) P 14030A

Facts

The dispute arose when a predecessor of the Secretary of Housing and Urban Development decided not to implement an operating subsidy program intended to assist owners of government-subsidized apartment buildings. This decision was challenged in lawsuits across nine Federal District Courts, leading to a settlement with most plaintiffs after two decisions were affirmed by Courts of Appeals. During the administration of this settlement, the EAJA was enacted, allowing for the award of attorney fees unless the government's position was found to be substantially justified. The District Court awarded fees to the respondents, concluding that the Secretary's position was not justified and that special factors warranted exceeding the $75 per hour cap on attorney fees.

One of petitioner's predecessors as Secretary of Housing and Urban Development decided not to implement an 'operating subsidy' program authorized by federal statute, which was intended to provide payments to owners of Government-subsidized apartment buildings to offset rising utility expenses and property taxes.

Issue

Whether the government's position was 'substantially justified' under the Equal Access to Justice Act, and whether the courts below properly identified 'special factors' justifying an award in excess of the statute's $75-per-hour cap on attorney's fees.

Whether the Government's position was 'substantially justified' and whether the courts below properly identified 'special factors' justifying an award in excess of the statute's $75-per-hour cap on attorney's fees.

Rule

The standard of review for determining whether the government's position was substantially justified is abuse of discretion. 'Substantially justified' means justified in substance or in the main, not necessarily to a high degree. Special factors justifying an increase in attorney fees above the statutory cap must be narrowly defined and not of broad application.

The statutory phrase 'substantially justified' means justified in substance or in the main—that is, justified to a degree that could satisfy a reasonable person.

Analysis

The court applied the abuse-of-discretion standard to review the District Court's determination that the government's position was not substantially justified. It found that the government's willingness to settle and the opinions of other courts did not provide sufficient justification for its position. The court also determined that the reasons given by the District Court for exceeding the $75 cap did not meet the criteria for 'special factors' as intended by the EAJA, leading to the conclusion that the award of attorney fees was improperly calculated.

The Court of Appeals correctly ruled that the District Court did not abuse its discretion in finding that the Government's position was not 'substantially justified.' Although 'objective indicia' can be relevant to establishing 'substantial justification,' they are inconclusive in this case.

Conclusion

The Supreme Court affirmed the Court of Appeals' decision that the government's position was not substantially justified, but vacated the award of attorney fees that exceeded the statutory cap, remanding the case for further proceedings consistent with its opinion.

The District Court abused its discretion in fixing the amount of respondents' attorney's fees, since none of the reasons relied on by the court to increase the reimbursement rate above the statutory maximum was a 'special factor' within the EAJA's meaning.

Who won?

Respondents prevailed in the case because the court found that the Secretary's position was not substantially justified, which allowed them to recover attorney fees under the EAJA.

Respondents prevailed in the case because the court found that the Secretary's position was not substantially justified, which allowed them to recover attorney fees under the EAJA.

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