Attorney’s Fees Under the Equal Access To Justice Act

Congress enacted the Equal Access To Justice Act (“EAJA” or the “Act”) temporarily in 1980 before reauthorizing the statute permanently in 1985. Motivated in part by a desire to deter government overreach and wrongdoing, the Act significantly departed from the default American rule—that each party pays its own litigation costs, regardless of the outcome of a case, as opposed to the English rule that the losing party pays the winner’s attorney’s fees—by permitting awards of attorney’s fees against the federal government in many types of judicial and administrative proceedings. The statute includes three key provisions.

First, 28 U.S.C. § 2412(b) provides that “in any civil action brought by or against the United States” or any U.S. agency or official, the government “shall be liable” for attorney’s fees “to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.” Section 2412(b) thus expands any existing statutory and court-created exceptions to the American rule to apply to the federal government as they would to a private party.

Second, 28 U.S.C. § 2412(d) requires a court to award attorney’s fees and costs to a party prevailing against the United States in a civil action, “unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.” The Supreme Court has interpreted the substantial justification standard to require the government to prove that its litigating position had “reasonable basis both in law and fact”. Pierce v. Underwood, 487 U.S. 552, 565 (1988).

Third, 5 U.S.C. § 504 authorizes awards of attorney’s fees in proceedings before an administrative agency on the same terms as Section 2412(d). The EAJA provides that fee awards shall be paid by the defendant agency. In practice, however, the Department of Justice often advances funds and then receives gradual reimbursements from the agency.

Scope of Application

The EAJA’s fee award provisions apply “except as otherwise specifically provided by statute.” Put another way, the EAJA does not supersede other, more specific federal laws that allow or restrict fee awards. The Act’s judicial fee award provisions apply only to civil actions, meaning they do not authorize awards of attorney’s fees in criminal proceedings. Section 2412(d) further excludes cases sounding in tort. Section 2412(d) applies to suits in “any court,” which includes the federal district and appellate courts, the U.S. Court of Federal Claims, and the U.S. Court of Appeals for Veterans Claims. It is unclear whether bankruptcy courts can award fees under the Act, but they may recommend that the district court do so. The provision related to administrative proceedings applies to “adversary adjudication,” including agency proceedings under the Administrative Procedure Act and certain other statutes. Petitions for judicial review of agency action are included among the civil actions subject to Section 2412(d).

Eligibility

The EAJA permits recovery of fees by both organizations and individuals, but Sections 504 and 2412(d) limit the parties that may receive a fee award. First, those provisions only allow for one-way fee shifting: “a prevailing party other than the United States” may receive attorney’s fees, while the government may not. Second, only an individual with a net worth of $2 million or less, or the owner of a business or other organization worth $7 million or less and with no more than 500 employees may recover an award of attorney’s fees under Sections 504 and 2412(d). Nonprofits exempt from taxation under Section 501(c)(3) of the Internal Revenue Code are not subject to the size and net worth caps.

Limitations on Fees

The EAJA caps the rate for recoverable attorney’s fees at $125 per hour (lower than the prevailing rates in many legal markets), subject to exceptions due to cost of living increases or the presence of “a special factor, such as the limited availability of qualified attorneys for the proceedings involved.” In Pierce v. Underwood, 487 U.S. 552 (1988), the Supreme Court interpreted the “special factor” language narrowly. The Court held that it was improper to increase fees based on general conditions in the legal market. A departure from the base rate was warranted only when a case required “attorneys having some distinctive knowledge or specialized skill needful for the litigation in question,” such as an expertise in patent law, foreign law, or foreign language.

What Is A Prevailing Party?

One of the most often litigated questions under the EAJA is when a litigant may be considered a “prevailing party” entitled to attorney’s fees. In Texas State Teachers Association v. Garland Independent School District, 489 U.S. 782 (1989), the Supreme Court held that a party need not prevail on all of its claims, or even on the “central issue” in the case, but only on “any significant issue in litigation which achieve[d] some of the benefit the parties sought in bringing the suit.” A party also need not prevail after a full trial on the merits. A favorable settlement may support a finding that a party prevailed, if embodied in a judicially enforceable consent decree. However, absent an enforceable agreement, a party is not deemed to have prevailed just because a proceeding caused the government to alter its behavior. Prevailing party status is a threshold issue determining the potential availability of any attorney’s fees under the EAJA. It is unnecessary that the prevailing party recover substantial monetary damages. In Farrar v. Hobby, 506 U.S. 103 (1992), the Supreme Court held that a litigant who received a nominal damages award of one dollar had prevailed because such an award “materially alters the legal relationship between the parties.” However, the Act also provides that an award of fees must be “reasonable.” In Farrar, the Court explained that the degree of the plaintiff’s success relative to the other goals of the lawsuit is critical to determining the size of a reasonable fee, holding that a plaintiff who prevails in part may nonetheless receive no fees at all.

 
Primary Source:
https://crsreports.congress.gov/product/pdf/IF/IF11246