Opinion
Civil Action No. SA-98-CA-1011-XR.
August 31, 2004
ORDER
On this day, the Court considered Plaintiff's Motion and Application for Attorney's Fees, as well as Plaintiff's Memorandum of Law in Support and Defendants' Response. After consideration of the motion and the record, the Court is of the opinion that the motion should be DENIED. (docket no. 168).
I. Factual and Procedural Background
Rothe Development Corporation ("Rothe") brought suit against the United States Department of Defense and the United States Department of the Air Force ("United States") in November of 1998 for declaratory and injunctive relief. Rothe asked the Court to declare 10 U.S.C. § 2323 unconstitutional, to enjoin the United States from discriminating on the basis of race or national origin in the administration of federal government contracting, and to award Rothe a government contract on which it claimed it was the lowest bidder. The suit arose from provisions of the National Defense Authorization Act of 1987 Pub.L. 99-661, 100 Stat. 3816, § 1207, which established an annual goal that five percent of the total dollar amount spent for defense contracts should be awarded to small business owned and controlled by socially and economically disadvantaged individuals. Congress authorized the Department of Defense to adjust bids submitted by non-socially and economically disadvantaged firms upward by ten percent. Rothe was the lowest bidder on a defense contract, but, as a non-socially and economically disadvantaged firm, its bid was adjusted upward by ten percent and a third party, an Asian American owned business that qualified as a socially and economically disadvantaged business, become the lowest bidder and was awarded the contract. During the course of this litigation, the United States solicited and awarded a replacement contract to an entirely different entity, to take the place of the contract at issue. In addition, the United States tendered a payment of $10,000 to Rothe under the Tucker Act as payment for costs incurred in the original bid preparation and presentation. Rothe continued with its case in this Court, seeking prospective injunctive and declaratory relief, as well as court costs and attorney's fees and expenses.
On July 2, 2004, the Court granted summary judgment in part for Rothe and granted summary judgment in part for the United States. Rothe Development Corp. v. U.S. Dep't of Defense, 324 F. Supp.2d 840 (W.D. Tex. 2004). The Court separated Rothe's declaratory judgment claim into two separate but interrelated claims, an as-applied challenge to § 2323 at the time the case was filed (1998), analyzing the circumstances known to Congress as the statute was re-authorized in 1992, and a facial challenge to § 2323, analyzing the circumstances known to Congress as the statute was reauthorized in 2003. The Court found that the evidence purporting to establish the necessity of the program in 1992 did "not demonstrate a strong basis for Congress to believe that a race based remedial program was necessary because of the lack of statistical evidence of discrimination." Id. at 853. The Court detailed the evidence before Congress leading up to the re-authorization in 1992, noting "Congress' obvious concern that discrimination was not just lingering, but rather, scandalously being perpetrated by the Department of Defense" at the time. Id. at 852-53. Despite the fact that there was some evidence on the record that discrimination was prevalent with regard to the awarding of defense contracts, the Court found that the evidence was not strong enough to overcome Rothe's as applied challenge because there was a lack of statistical evidence of discrimination against Asian Americans, the racial classification of the company awarded the contract instead of Rothe. Id. at 853. The Court therefore held that "the program, as reauthorized in 1992 and applied in 1998, was unconstitutional." Id. at 854 (emphasis added).
As to Rothe's claim that § 2323 was facially unconstitutional, the Court found that Congress had met its burden of demonstrating statistical evidence documenting pervasive discrimination affecting all minority groups when it re-authorized the program in 2003. Id. at 856-58. Specifically, the Court found that "59 statistical studies from across the nation succinctly demonstrates that Congress was reacting with a strong basis in the evidence." Id. at 859. The Court focused on evidence regarding all minority groups, rather than just Asian Americans as with the decision under the as applied challenge, due to the fact that when a program at issue can be constitutionally applied in just one set of circumstance, the statute is constitutional. Id. at 855. The Court therefore held that § 2323, as re-authorized in 2003, was constitutional and denied Rothe any prospective relief. Id. at 859-60. In the last sentence of the Order, the Court ruled that "[b]ecause the position of the United States was substantially justified in this action, each side shall bear their own costs." Id. at 860 (citing 28 U.S.C. § 2412(d)(1)(A)). Rothe now moves for attorney's fees under § 2412(d)(1)(A) as a "prevailing party," claiming that the United States's position was not substantially justified.
II. Plaintiff's Motion for Attorney's Fees
Under 28 U.S.C. § 2412(d)(1)(A), a "prevailing party" is entitled to an award of fees and other expenses incurred in a civil 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. Rothe has moved for attorney's fees, claiming that it is a prevailing party "on a significant portion of it Motion for Summary Judgment" and claiming that "[t]he Court has not issued an opinion regarding attorney's fees and expenses pursuant to 28 U.S.C. § 2412(d)(1)(A)." The Court has previously ruled in its July 2, 2004 Order that the United States's position was substantially justified and that each side should bear its own litigation costs and fees. Id. For the sake of clarity, however, the Court will address in detail Rothe's motion and its contention that the United States's position was not substantially justified, as well as Rothe's contention that it is a prevailing party.
The Court is troubled by Rothe's assertions that this Court has not previously ruled on the matter of attorney's fees. Counsel for Rothe is admonished about his failure to address the Court's ruling in its July 2, 2004 Order and is directed to Federal Rule of Civil Procedure 11(b).
A. The United States's Position Was Substantially Justified
The United States's position in this litigation was essentially to justify a duly and properly enacted federal statute against an attack on its constitutionality. While the statute was actually found unconstitutional as re-authorized in 1992, that does not necessarily mean that the United States's defense of the statute was not substantially justified. The Court noted the detailed evidence before Congress at the time regarding pervasive discrimination in the awarding of defense contracts. Id. at 852-53. It does not stretch credibility to believe that a reasonable argument could be made in defense of the constitutionality of the statute, even if that argument was eventually proven incorrect.
"When the government is defending the constitutionality of a statute enacted by Congress, the position of the United States should almost invariably be deemed justified." Gregory C. Sisk, The Essentials of the Equal Access to Justice Act: Court Awards of Attorney's Fees for Unreasonable Government Conduct (Part Two), 56 La. L. Rev. 1, 70 (1996); see also United States v. Certain Real Estate Property, 838 F.2d 1558, 1562 (11th Cir. 1988) ("When the [United States] follows the express dictates of a given statute, and there is no reason to believe that such a course is otherwise unauthorized, its position, for purposes of [§ 2412(d)(1)(A)], cannot lack substantial justification."). "[T]he government's litigation position in defense of a statute against a court challenge likewise should be regarded as reasonable per se." Sisk, 56 La. L. Rev. at 75; see also id. at 73 (quoting Learned Hand, Mr. Justice Homes at Eight-Five, quoted in GERALD GUNTHER, LEARNED HAND: THE MAN AND THE JUDGE 387 (1994)) ("`[A] law which can get itself enacted is almost surely to have behind it a support which is not wholly unreasonable.'"). While it may be that Congress likely intended an award of fees under § 2412(d)(1)(A) for some constitutional attacks on statutes, see League of Women Voters v. FCC, 798 F.2d 1255, 1259 (9th Cir. 1986), the Court does not feel that this is such a case. The United States's position was justified on the basis that a reasonable argument could be made in defense of the constitutionality of the statute. This is evidenced by the struggle that this Court, as well as the Federal Circuit, has gone through in order to come to some resolution in this case. The Court is unwilling to say that the defense of the statute at issue here was not substantially justified. In fact, the Court holds, as it has before, that the United States's position was substantially justified.
This struggle still has no clear end in sight, as Rothe has appealed the Court's summary judgment with regard to the constitutionality of § 2323 as re-authorized in 2003.
Rothe claims that "only sheer foolishness would have led to [sic] the federal government to ignore in 1992 that it needed to identify specific industries against qualified contractors in order to support a race-based program" in support of its contention that the United States's position was not substantially justified. Essentially, it is claiming that if there had been evidence to support the program at the time, as the United States's claimed in this case, "only sheer foolishness" would have led Congress to fail to include this evidence in the record. While Rothe (and its counsel) are undoubtedly not calling either the U.S. Attorney or the members of the U.S. Congress "foolish," the Court is troubled by the inference that "only sheer foolishness" would have led the 1992 Congress to fail to adequately support the program with statistical evidence, especially in light of the evidence the Court has detailed actually was in front of Congress at the time, and the struggle the courts have had with this case.
B. Rothe Is Not A Prevailing Party
While the Court is convinced that Rothe's motion should be denied based on the fact that the United States's position was substantially justified, the Court also notes that Rothe is not a prevailing party within the meaning of § 2412(d)(1)(A) in order to qualify for an award of attorney's fees. No fee award is permissible until the plaintiff has crossed the "statutory threshold" of prevailing party status. Hensly v. Eckerhart, 461 U.S. 424, 433 (1983). This means that a prevailing party must "succeed on [a] significant issue in the litigation which achieves some of the benefit the parties sought in bringing suit." Id. "[I]n a declaratory judgment action[,] if the defendant, under pressure of the lawsuit alters his conduct (or threatened conduct) towards the plaintiff that was the basis for the suit, the plaintiff will have prevailed." Hewitt v. Helms, 482 U.S. 755, 761 (1987).
Rothe has not been granted any relief that would allow it to claim status as a prevailing party. A judicial statement that does not affect the relationship between the parties under the Declaratory Judgment Act is not the equivalent of a judicial judgment that would qualify Rothe as a prevailing party. Id. "The only relief [Rothe] received was the moral satisfaction of knowing that a federal court concluded that his rights had been violated." Id. at 762. Rothe's situation is similar to the Ninth Circuit case of Lear Siegler, Inc. v. Lehman, in which the plaintiff's request for attorney's fees was denied even though its position with regard to the constitutionality of the statute was upheld by the court, due to the fact that the plaintiff's efforts resulted in no change in the bid procedure at issue. 893 F.2d 205, 208 (9th Cir. 1989). Like the plaintiff in Lear Siegler, Rothe's "victory" in this case gave it only the "moral satisfaction" of knowing the statute at issue was, at the time applied to it, unconstitutional. The fact that the statute is now constitutional denies Rothe any prospective relief and essentially precludes it from claiming status a prevailing party.
Rothe is also precluded from claiming prevailing party status because there has been no final judgment in this case. 28 U.S.C. § 2412(d)(1)(B) provides that "[a] party seeking an award of fees and other expenses shall, within thirty days of final judgment in the action, submit to the court an application for fees and other expenses which shows that the party is a prevailing party and is eligible to receive an award." A "final judgment" is defined to mean "a judgment that is final and not appealable." 28 U.S.C. § 2412(d)(2)(G).
Rothe claims that it is entitled to attorney's fees because it was a prevailing party on a significant portion of its motion for summary judgment. It claims that it is entitled to an award of the full amount of attorney's fees because the nature of the summary judgment motion cannot be separated between analysis of the 1992 re-authorization and the 2003 re-authorization. The Court's July 2, 2004 Order clearly held that Rothe's claim was justified as to the 1992 re-authorization and that the United State's defense was justified as to the 2003 re-authorization. Rothe has since appealed the Court's ruling as to the constitutionality of the 2003 re-authorization. Clearly, then, Rothe is not a prevailing party with regard to a final judgment. Where a party appeals part of a decision, those items not appealed are not final. See Dole v. Phoenix Roofing, Inc., 922 F.2d 1202 (5th Cir. 1991). Rothe, therefore, cannot claim status as a prevailing party under § 2412(d)(1)(A).
In addition, the 30 day deadline of § 2412(d)(1)(B) is jurisdictional. Briseno v. Ashcroft, 291 F.3d 377, 379 (5th Cir. 2002). Even if the Court's summary judgment Order were held to be a "final judgment" and Rothe were entitled to fees under § 2412(d)(1)(A) as a "prevailing party," Rothe's motion would be denied because it was filed 35 days after the Order, outside the 30 day deadline.