Pierce v. Underwood

Justice Brennan,

with whom Justice Marshall and Justice Blackmun join, concurring in part and concurring in the judgment.

I agree that an award of attorney’s fees under the Equal Access to Justice Act (EAJA) was appropriate in this case, *575and I agree that the courts below did not adhere to the statutory hourly cap on fees. Therefore, I concur in the Court’s judgment affirming the decision to award fees and remanding for a new determination as to the amount. I disagree, however, with some of the Court’s reasoning. While I agree that appellate courts should review district court EAJA fee awards for abuse of discretion, in my view the Government may not prove that its position was “substantially justified” by showing that it was merely “reasonable.” Therefore, although I join Parts I, II, and IV of the Court’s opinion, I do not join Part III.¹ Further, because I believe that the Court’s interpretation of the predicate showing for a party to obtain a fee award exceeding the statutory cap — that there existed “a special factor, such as the limited availability of qualified attorneys for the proceedings involved” — is stingier than Congress intended, I do not join Part V of the Court’s opinion.

I

Concerned that the Government, with its vast resources, could force citizens into acquiescing to adverse Government action, rather than vindicating their rights, simply by threatening them with costly litigation, Congress enacted the EAJA, waiving the United States’ sovereign and general statutory immunity to fee awards and creating a limited exception to the “American Rule” against awarding attorneys fees to prevailing parties. S. Rep. No. 96-253, pp. 1-6 (1979) (S. Rep.). Consequently, when a qualified party (as defined in the Act) prevails against the United States in an adversarial proceeding not. sounding in tort, the EAJA prescribes that “a court shall award . . . fees and other expenses . . . 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. § 2412(d)(1)(A). *576In this, our first EAJA case, we are called upon to consider the phrase “substantially justified.”

The Court begins, as is proper, with the plain meaning of the statutory language. The Court points out that “substantially” is not a word of precise and singular definition. Indeed, the word bears two arguably different relevant definitions: “‘considerable in amount, value, or the like; large’”; and “‘in substance or in the main.’” Ante, at 564. See also Webster’s Third New International Dictionary 2280 (1976) (“considerable in amount, value, or worth”; and “having a solid or firm foundation . . . being that specified to a large degree or in the main”). The Court concludes, and I agree, that, to the extent they are different, Congress intended the latter meaning.

Unfortunately, the Court feels duty bound to go beyond the words enacted by Congress and to fashion its own substitute phrase using what it perceives to be a more legally precise term. The test upon which the Court alights is initially the “‘reasonable basis both in law and fact’” standard, adopted by the courts below. Ante, at 565. While this phrase is often mentioned in the legislative history as the explication of “substantially justified,” this alternative phraseology is inherently no more precise than the statutory language. In fact, it may be less so, for the Court equates it with “the test of reasonableness,” ante, at 568, a standard rejected by Congress and significantly more forgiving than the one actually adopted.

The Senate Judiciary Committee considered and rejected an amendment substituting the phrase “reasonably justified” for “substantially justified.” S. Rep., at 8. Clearly, then, the Committee did not equate “reasonable” and “substantial”; on the contrary, it understood the two terms to embrace different burdens. “Reasonable” has a variety of connotations, but may be defined as “not absurd” or “not ridiculous.” Webster's New Third International Dictionary 1892 (1976). Even at its strongest, the term implies a posi*577tion of some, but not necessarily much, merit. However, as we have seen, “substantial” has a very different definition: “in substance or in the main.” Thus, the word connotes a solid position, or a position with a firm foundation. While it is true “reasonable” and “substantial” overlap somewhat (substantial at its weakest and reasonable at its strongest) an overlap is not an identity. Therefore, although Congress may well have intended to use “substantial” in its weaker sense, there is no reason to believe, and substantial reason to disbelieve (as I will discuss below), that Congress intended the word to mean “reasonable” in its weaker sense.

The underlying problem with the Court’s methodology is that it uses words or terms with similar, but not identical, meanings as a substitute standard, rather than as an aid in choosing among the assertedly different meanings of the statutory language. Thus, instead of relying on the legislative history and other tools of interpretation to help resolve the ambiguity in the word “substantial,” the Court uses those tools essentially to jettison the phrase crafted by Congress. This point is well illustrated by the Government’s position in this case. Not content with the term “substantially justified,” the Government asks us to hold that it may avoid fees if its position was “reasonable.” Not satisfied even with that substitution, we are asked to hold that a position is “reasonable” if “it has some substance and a fair possibility of success.” Brief for Petitioner 13. While each of the Government’s successive definitions may not stray too far from the one before, the end product is significantly removed from “substantially justified.” I believe that Congress intended the E-AJA to do more than award fees where the Government’s position was one having no substance, or only a slight possibility of success; I would hope that the Government rarely engages in litigation fitting that definition, and surely not often enough to warrant' the $10(1 million in attorney’s fees Congress expected to spend over the original EAJA’s 5-year life.

*578My view that “substantially justified” means more than merely reasonable, aside from conforming to the words Congress actually chose, is bolstered by the EAJA’s legislative history. The phrase “substantially justified” was a congressional attempt to fashion a “middle ground” between an earlier, unsuccessful proposal to award fees in all cases in which the Government did not prevail, and the Department of Justice’s proposal to award fees only when the Government’s position was “arbitrary, frivolous, unreasonable, or groundless.” S. Rep., at 2-3. Far from occupying the middle ground, “the test of reasonableness” is firmly encamped near the position espoused by the Justice Department. Moreover, the 1985 House Committee Report pertaining to the EAJA’s reenactment expressly states that “substantially justified” means more than “mere reasonableness.” H. R. Rep. No. 99-120, p. 9 (1985). Although I agree with the Court that this Report is not dispositive, the Committee’s unequivocal rejection of a pure “reasonableness” standard in the course of considering the bill reenacting the EAJA is deserving of some weight.

Finally, however lopsided the weight of authority in the lower courts over the meaning of “substantially justified” might once have been, lower court opinions are no longer nearly unanimous. The District of Columbia, Third, Eighth, and Federal Circuits have all adopted a standard higher than mere reasonableness, and the Sixth Circuit is considering the question en banc. See Riddle v. Secretary of Health and Human Services, 817 F. 2d 1238 (CA6) (adopting a higher standard), vacated for rehearing en banc, 823 F. 2d 164 (1987); Lee v. Johnson, 799 F. 2d 31 (CA3 1986); United States v. 1,378.65 Acres of Land, 794 F. 2d 1313 (CA8 1986); Gavette v. OPM, 785 F. 2d 1568 (CA Fed. 1986) (en banc); Spencer v. NLRB, 229 U. S. App. D. C. 225, 712 F. 2d 539 (1983).

In sum, the Court’s journey from “substantially justified” to “reasonable basis both in law and -fact” to “the test of *579reasonableness” does not crystallize the law, nor is it true to Congress’ intent. Instead, it allows the Government to creep the standard towards “having some substance and a fair possibility of success,” a position I believe Congress intentionally avoided. In my view, we should hold that the Government can avoid fees only where it makes a clear showing that its position had a solid basis (as opposed to a . marginal basis or a not unreasonable basis) in both law and fact. That it may be less “anchored” than “the test of reasonableness,” a debatable proposition, is no excuse to abandon the test Congress enacted.²

II

1 also disagree with the Court’s discussion of the circumstances supporting a fee enhancement beyond the $75-per-hour (adjusted for inflation) cap set by Congress, although I do agree that the lower courts’ judgment in this regard cannot stand. The statute states that courts may not award fees in excess of this cap unless “a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies the higher fee.” 28 U. S. C. §2412(d)(2)(A)(ii). The District Court found that there was a limited availability of qualified attorneys here, and also that there were additional special factors warranting an increase. In so deciding, however, the District Court’s and Court of Appeals’ analyses erroneously mirrored the analysis under 42 U. S. C. § 1988, a fee-shifting statute without an hourly rate limitation. Congress clearly meant to contain the potential costs of the EAJA by limiting the hourly rate of attorneys where fees are awarded. Consequently, a consideration of factors like counsel’s customary rate, while perfectly appropriate under § 1988, cannot justify exceeding the EAJA cap. To hold otherwise would render the cap nothing more than *580advisory despite Congress’ expressed intent to permit higher awards only in rare cases.

That said, our job is to decide the meaning of the term: “‘a special factor, such as the limited availability of qualified attorneys.” The Court begins with the single expressed special factor, the “limited availability of qualified attorneys. ” It holds that this phrase refers to an attorney with a required, articulable specialization, and does not refer to the limited availability of attorneys experienced or skilled enough to handle the proceedings involved. The Court reasons that allowing an enhancement for extraordinary skill or experience, even if required, would render the cap nugatory, since those factors merely set the market rate. This tidy analysis is too simplistic.

The most striking aspect of the Court’s holding in this regard is its willingness to ignore the plain meaning and language of the exception. After all, in the rare EAJA case where highly experienced attorneys are truly required, a neophyte lawyer is no more “qualified ... for the proceedings involved” than a nonpatent lawyer is to handle a patent case. The Court’s interpretation might nonetheless be appropriate if the cap would otherwise be actually rendéred meaningless, but that is not the case here. First, we must keep in mind the nature of the cases Congress envisioned would result in a fee award: those in which the Government’s position was not “substantially justified.” This observation takes much of the force from the Court’s reasoning, as it will be a rare case in which an attorney of exceptional skill is necessary and where the Government’s position was weak enough to warrant an EAJA award.

Second, the phrase “limited availability of qualified attorneys,” read in conjunction with “special factor,” reflects a congressional judgment that if the price of lawyers generally exceeds the cap, that trend alone will not justify an increase. Therefore, awarding an enhancement in cases where extráor-*581dinary experience or skill is required does not write the cap out of the statute.

Third, the Court’s economic analysis assumes that the market price for services rendered will always be precisely known, an assumption I cannot share, and one that there is no reason to believe Congress shared. A “reasonable” hourly rate cannot be determined with exactitude according to some preset formulation accounting for the nature and complexity of every type of case. Therefore, courts often assume that an attorney’s normal hourly rate is reasonable, or, in the case of public interest counsel, a reasonable rate is generally the rate charged by an attorney of like “skill, experience, and reputation.” Blum v. Stenson, 465 U. S. 886, 895, n. 11 (1984). Certainly adjustments up or down are appropriate where the fee charged is out of line with the nature of the services rendered. However, such adjustments are often difficult to make given that the “prevailing market rate” is determined by reference to the particular attorney involved rather than to a minimally qualified hypothetical lawyer, ibid., and that the fee determination should not become a “second major litigation.” Hensley v. Eckerhart, 461 U. S. 424, 437 (1983). Moreover, to some extent, even in a simple case higher hourly rates may be offset by fewer hours billed due to counsel's greater efficiency. Absent the statutory cap, these factors would be used in an EAJA analysis as extensively as they are used in a § 1988 analysis. However, a showing that the particular attorney retained normally charges more than the statutory cap will., by itself, avail a fee applicant nothing under EAJA, although it may, by itself, be dispositive under § 1988.

Therefore, the Court is simply wrong when it asserts that if we allow a showing of extraordinary skill or experience (in the rare case where it is required) to justify an enhanced award, then the cap will be rendered meaningless. Far from it. The same logic supporting a “patent lawyer” exception— that when only a fraction of the bar is qualified to handle a *582case, those attorneys may charge a premium for their services — supports an enhancement for skill or experience.

Equally troubling is the Court’s requirement that a “special factor” must not be “of broad and general application:” Ante, at 573. We are given no explanation of or for this limitation, beyond the declaration that it is necessary to preserve the efficacy of the cap. Further, while the Court is willing to say what is not a special factor — everything relied upon below — we are given no example of anything that is a special factor other than the subject-matter specialization already considered as falling within the “limited availability of qualified attorneys for the proceedings involved” example. Having rejected the lower courts’ list of factors in its entirety, it seems as if the Court leaves nothing remáining.

Such a strained interpretation, apparently reading the words “such as” out of the Act, is unnecessary. See Vibra-Tech Engineers, Inc. v. United States, 787 F. 2d 1416 (CA10 1986); Action on Smoking and Health, v. CAB, 233 U. S. App. D. C. 79, 724 F. 2d 211 (1984). Cf. Kungys v. United States, 485 U. S. 759, 778 (1988) (“[N]o provision [of a statute] should be construed to be entirely redundant”). A “special factor” may be readily analogized to the factors we identified in Blum to enhance the lodestar figure under § 1988. In Blum, we held that the lodestar amount (the reasonable hourly rate multiplied by the number of hours billed) is “presumably” the reasonable fee. However, we also held that an upward adjustment may be appropriate “in the rare case where the fee applicant offers specific evidence to show that the quality of service rendered was superior to that one reasonably should expect in light of the hourly rates charged and that the success was exceptional.” 465 U. S., at 899 (internal quotations omitted).³ Analogizing to the EAJA *583context, the lodestar would be calculated by multiplying the reasonable rate (as capped) by the number of hours billed. That amount would presumably be the proper award. However, where a factor exists that would justify an enhancement of the lodestar amount under § 1988, an enhancement of the EAJA award might also be appropriate. Unlike the lower courts’ approach, this rule would not read the cap out of the statute, for as we predicted in Blum, a lodestar enhancement would be appropriate only in “the rare case.”

Although the Blum enhancers constitute more than the situation where there is a limited availability of qualified counsel, the statute expressly allows more to be considered. The Court’s miserly refusal to accede to this statutory command is unjustified and unwarranted. I therefore concur only in the judgment as to the fee calculation.

Justice White,

with whom Justice O’Connor joins, concurring in part and dissenting in part.

I agree with the majority’s interpretation of the term “substantially justified” as used- In the Equal Access to Justice Act (EAJA), 28 U. S. C. § 2412(d). However,, because I believe that a district court’s assessment of whether the Government’s legal position was substantially justified should be reviewed de novo and that the attorney’s fees award in this case could not be sustained under that standard of review, I dissent from Parts II and IV of the majority’s opinion.

I-*

The majority acknowledges that neither the language nor the structure of the EAJA “compel[s]” deferential review of a district court’s determination of whether the Government’s position was substantially justified. Ante, at 559. In fact, the statute is wholly silent as to the standard under which *584such determinations are to be reviewed.¹ This congressional silence in the face of both the general rule of de novo review of legal issues and the EAJA’s special purpose of encouraging meritorious suits against the Government suggests a different result than that reached by the majority.

The Congress that adopted the EAJA certainly was aware of the general rule that issues of law are reviewed de novo while issues of fact are reviewed only for clear error. See Fed. Rule Civ. Proc. 52(a); Pullman-Standard v. Swint, 456 U. S. 273, 287 (1982). Congress would have known that whether or not a particular legal position was substantially justified is a question of law rather than of fact. The historical facts having been established, the question is to be resolved by the legal analysis of the relevant statutory and decisional authorities that appellate courts are expected to perform. As the District of Columbia Circuit has observed, “the special expertise and experience of appellate courts in assessing the relative force of competing interpretations and applications of legal norms makes the case for de novo review of judgments [of whether the Government’s legal position was substantially justified] even stronger than the case for such review of paradigmatic conclusions of law.’’ Spencer v. NLRB, 229 U. S. App. D. C. 225, 249, 712 F. 2d 539, 563 (1983), cert. denied, 466 U. S. 936 (1984). It is thus most likely that Congress expected that the courts of appeals would apply the same de novo standard of review to a district *585court’s assessment of whether the Government’s interpretation of the law was substantially justified for purposes of the EAJA as they would apply to a district court’s assessment of whether the Government’s interpretation of the law was correct in the underlying litigation.

De novo appellate review of whether the Government’s legal position was substantially justified would also foster consistency and predictability in EAJA litigation. A court of appeals may be required under the majority’s “abuse of discretion” standard to affirm one district court’s holding that the Government’s legal position was substantially justified and another district court’s- holding that the same position was not substantially justified. As long as the district court’s opinion about the substantiality of the Government case rests on some defensible- construction and application of the statute, the Court’s view.would command the court of appeals to defer even though that court’s own view on the legal issue is quite different. The availability of attorney’s fees would not only be difficult to-predict but would vary from circuit to circuit- or even within a particular circuit. Such uncertainty over the potential availability of attorney’s fees would, in my view, undermine the EAJA’s purpose of encouraging challenges to unreasonable governmental action. See Spencer, supra, at 249-250, 712 F. 2d, at 563-564.²

*586Finally, the Federal Courts of Appeals have concluded with near unanimity that “close scrutiny,” or de novo review, should be applied to district courts’ assessments of whether the Government’s legal position was substantially justified. See, e. g., Brinker v. Guiffrida, 798 F. 2d 661, 664 (CA3 1986); United States v. Estridge, 797 F. 2d 1454, 1457 (CA8 1986); Haitian Refugee Center v. Meese, 791 F. 2d 1489, 1496 (CA11 1986); United States v. Yoffe, 775 F. 2d 447, 451 (CA1 1985); Russell v. National Mediation Bd., 775 F. 2d 1284, 1289 (CA5 1985); Essex Electro Engineers, Inc. v. United States, 757 F. 2d 247, 252-253 (CA Fed. 1985); Hicks v. Heckler, 756 F. 2d 1022, 1024-1025 (CA4 1985); Sigmon Fuel Co. v. TVA, 754 F. 2d 162, 167 (CA6 1985); Boudin v. Thomas, 732 F. 2d 1107, 1117 (CA2 1984); United States v. 2,116 Boxes of Boned Beef, 726 F. 2d 1481, 1486 (CA10), cert. denied sub nom. Jarboe-Lackey Feedlots, Inc. v. United States, 469 U. S. 825 (1984); Spencer, supra, at 251, 712 F. 2d, at 565. This weight of appellate authority reinforces my view that whether or not the Government’s interpretation of the law was substantially justified is an appropriate question for de novo review.

II

I do not believe that the District Court’s conclusion that the Government’s position in this litigation was not substantially justified could withstand appellate scrutiny under a de novo standard of review.

The. housing statute at issue in this case provided for three subsidy programs: a “deep-subsidy” program, an “interest-reduction” program, and an “operating-subsidy” program: *587It was the Secretary’s failure to implement the last of these programs that was challenged by respondents.

The statute provided that the Secretary was “authorized to make, and contract to make” operating-subsidy and interest-reduction payments. 12 U. S. C. §§ 1715z — 1(f)(3), I715z-1(a) (1970 ed., Supp. IV) (emphasis added). In contrast, the statute stated that the Secretary “shall make, and contract to make” deep-subsidy payments. § 1715z-l(f )(2) (emphasis added). In 1974, after concluding that Congress had not authorized her to commit funds, sufficient to operate all three subsidy programs, Secretary Hills decided to devote the available funds to the more clearly mandatory deep-subsidy program (and to certain pre-existing commitments under the interest-reduction program)'.rather than to spread the funds among all three programs.

Whether or not the courts might differ with Secretary Hills on the scope of her discretion to decline to implement the operating-subsidy program, see ante, at 569, given the statutory language and the existing ease law, her conclusion was not without substantial justification. The statutory provisions instructing the Secretary to make deep-subsidy payments, but merely “authorizing” her to- make operating-subsidy payments, could reasonably be construed as vesting the Secretary with some discretion over the implementation of the operating-subsidy program. If Congress had intended to give the Secretary no choice in the matter, it is defensible to believe that Congress would have directed that the Secretary “shall make, and contract to make” operating-subsidy payments.

Moreover, the then-recent decision in Pennsylvania v. Lynn, 163 U. S. App. D. C. 288, 501 F. 2d 848 (1974), offered further support for the Secretary’s position. The Court of Appeals held in that case that the Secretary had not abused his discretion in suspending the interest-reduction program — under which the Secretary was likewise “authorized to make, and contract to make” payments — after he had con-*588eluded that the program was not serving national housing goals. The Lynn case is not, of course, on all fours with this one. However, because Lynn suggests that the Secretary has a degree of discretion over whether to implement housing programs that are not couched in clearly mandatory statutory language, that decision would have given Secretary Hills reason to believe that such discretion could properly be exercised with regard to the operating-subsidy program.³

Because I would conclude upon de novo review that the Secretary’s refusal to implement the operating-subsidy program was substantially justified, I would reverse the award of attorney’s fees under the EAJA.⁴