The stage of the proceeding at which the case is decided may be considered as a factor in the substantial justification analysis. Sec. Exch. Comm'n v. Fox, 855 F.2d 247, 252 (5th Cir. 1988) (citation omitted). However, dismissal of the case on summary judgment is not an automatic indicator that the position of the United States was unjustified, especially when the disposition involves questions of law rather than questions of fact.

The burden of proving substantial justification falls to the Government. Herron v. Bowen, 788 F.2d 1127, 1130 (5th Cir. 1986). It must show, based on the record (including the record with respect to the decisions of the agency upon which the civil action is based), that it acted reasonably at all stages of the litigation. 28 U.S.C. § 2412(d)(2)(D); SEC v. Fox, 855 F.2d 247, 248, 251-52 (5th Cir. 1988); Herron, 788 F.2d at 1130. Davidson argues the district court's denial of fees was error because the FSA's refusal to allow him to revise his farm acreage report was arbitrary and capricious, and thus not substantially justified.

A `substantially justified' determination properly focuses on the governmental misconduct giving rise to the litigation, as well as on the government's litigation position." Id. (citing Jean, 496 U.S. at 165, 110 S.Ct. at 2323; SEC v. Fox, 855 F.2d 247, 251-52 (5th Cir. 1988)). Unless the government's position leading up to, and in response to, the litigation has a "reasonable basis both in law and fact," the district court should award attorney's fees to the prevailing party, absent "special circumstances" which would make an award unjust.

The district court's determination of whether the government's position was "substantially justified" is reviewed for abuse of discretion, Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 2548-49, 101 L.Ed.2d 490 (1988); however, underlying conclusions of law are reviewed de novo and conclusions of fact are reviewed for clear error. SEC v. Fox, 855 F.2d 247, 251 (5th Cir. 1988) (construing Underwood). In Underwood, the Supreme Court interpreted "substantially justified" as meaning "'justified in substance or in the main' — that is, justified to a degree that could satisfy a reasonable person."

Such projections give rise to a duty to abstain or [to] disclose if they are material." SEC v. Hoover, 903 F. Supp. 1135, 1144 (S.D. Tex. 1995) (citing SEC v. Fox, 855 F.2d 247, 252-53 (5th Cir. 1988)); see, e.g., United States v. Smith, 155 F.3d 1051, 1064-66 (9th Cir. 1998) (holding that "forecasts of future sales and revenue" may "constitute 'material' information within the meaning of Rule 10b-5"); Johnson v. Aljian, 490 F.3d 778, 779-80 (9th Cir. 2007) (holding that a "report [that] projected a 'significant' decline in free cash flows" was MNPI because the defendant "had unrestricted access to the report"); SEC v. Brethen, No. 3:90-CV-00071, 1992 WL 420867, at *18 (S.D. Ohio Oct. 15, 1992) (holding that "Monthly Management Report and its Preliminary and Rolling Sales Forecasts" were MNPI because they were distributed to top management, contained actual or projected sales, and "ke[pt] top management informed as to how [the company's] divisions were then performing"). The undisclosed Projection was particularly significant because "Gain on Sale of loans, net" was more than 85% of Rocket's total revenue.

The Government must demonstrate based on the record that it acted reasonably during the course of the litigation. See SEC v. Fox, 855 F.2d 247, 248 (5th Cir. 1988) (“The EAJA requires only that a government agency act reasonably.”). The Government's position is “substantially justified” if it is “justified in substance or in the main - that is, justified to a degree that could satisfy a reasonable person.”

However, it is well settled that "scienter may be established by circumstantial evidence." SEC v. Fox , 855 F.2d 247, 253 (5th Cir. 1988) (first citing Dirks v. SEC , 463 U.S. 646, 663, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983) ; and then citing Herman & MacLean v. Huddleston , 459 U.S. 375, 390 n.30, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983) ); United States v. Ruggiero , 56 F.3d 647, 655 (5th Cir. 1995) (noting that "in proving scienter in fraud cases, ‘circumstantial evidence can be more than sufficient’ " (quoting Huddleston , 459 U.S. at 390 n.30, 103 S.Ct. 683 )). Here, the district court (1) observed that cherry-picking "necessarily involves knowing and intentional conduct," (2) found that scienter was "confirmed by the testimony of Wesley Perkins," and highlighted other facts, such as the daily deletion of allocation documentation, and (3) further found that "the facts of this case provide strong evidence of scienter on the part of Wesley Perkins."

In addition, this court has held that forecasts may be material. SEC v. Fox, 855 F.2d 247, 253 (5th Cir. 1988). As we held in Fox, "the determination of materiality `requires delicate assessments of the inferences a `reasonable shareholder' would draw from a given set of facts and the significance of those inferences to him, and these assessments are peculiarly ones for the trier of fact.'"

See 28 U.S.C. § 2412(d)(1)(B). See also S.E.C. v. Fox, 855 F.2d 247, 250-52 (5th Cir. 1988). We have noted that Congress, when it passed the statute governing asylum applications, "did not intend to confer eligibility for asylum on all persons who suffer harm from civil disturbances — conditions that necessarily have political implications."

Under the well-established American Rule, "the prevailing litigant is ordinarily not entitled to collect a reasonable attorney's fee from the loser." Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 3096, 92 L.Ed.2d 439 (1986) (quoting Alyeska Pipeline Ser. Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed. 2d 141 (1975)); SEC v. Fox, 855 F.2d 247, 250 (5th Cir. 1988). Section 38.002 states: