has the Government asserted any special circumstances which
would make the award unjust or inequitable. As such, the issues
before the Court are (I) whether the United States was
substantially justified in its position and (II) the amount of
fees to be awarded.
I. Substantially Justified
Under the statute, a court shall award "fees and other
expenses" to a party that has prevailed in a civil action
against an official of the United States acting in his or her
official capacity unless the position of the United States was
"substantially justified." 28 U.S.C. § 2412(d)(1)(A). The
Government bears the burden of proving that its position, both
in the underlying agency action and the arguments defending the
action in court, were substantially justified. See Cinciarelli
v. Reagan, 729 F.2d 801, 806 (D.C.Cir. 1984). The Supreme Court
has interpreted "substantially justified" to mean, "not
justified to a high degree, but rather justified in substance or
in the main — that is, justified to a degree that could satisfy
the reasonable person." Pierce v. Underwood, 487 U.S. 552,
565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988). This means the
Government must prove that the position had "a reasonable basis
in law and fact." Air Transport Association of Canada v.
Federal Aviation Administration, 156 F.3d 1329, 1332 (D.C.Cir.
1998) (quoting Pierce, 487 U.S. 552, 566 n. 2, 108 S.Ct. 2541,
101 L.Ed.2d 490 (1988)). Courts have interpreted this to mean
that government bears the burden of demonstrating that both the
underlying agency action and the litigation positions were
substantially justified. See Halverson v. Slater,
206 F.3d 1205, 1208 (D.C.Cir. 2000); Nat'l Assoc. of Mfrs. v. United
States Department of Labor, 962 F. Supp. 191, 196 (D.C. 1997).
In this case, the Court finds that the IG was not
substantially justified in its actions, and, therefore, the
issue of whether the Government was substantially justified in
its litigation position need not be discussed in detail.
Further, a court's merits reasoning is not necessarily
determinative of the issue of substantial justification and the
inquiry into the reasonableness of the Government's position may
not be collapsed into antecedent evaluation on the merits. See
Halverson, at 1208. Therefore, even in cases such as this,
where the district court previously accepted the Government's
position, or, a portion of that position, and then is reversed,
the district court must still determine whether the Government's
actions and arguments were substantially justified. See id.
The Government claims it was substantially justified in
conducting the investigations because (1) the IG had a good
faith belief that he had the necessary authority under the IGA
to participate with the Federal Bureau of Investigation, and the
U.S. Attorney's Office in joint investigations of motor
carriers; (2) three different U.S. courts have upheld the
Government's position; and, (3) the IG received specific
authorization from Congress to Proceed with its investigations
of interstate motor carriers pursuant to legislation passed 1999
including the DOT Appropriations Law, Public Law No. 106-69, and
the MCSIA (discussed above).
The Court finds that the Government has failed to demonstrate
that the IG's actions in this case were substantially justified.
First, this Court previously found that the legislative history
and structure of the IGA made it plain that Congress did not
intend to grant the IG authority to conduct investigations
pursuant to regulatory statutes that are the concern of the DOT
programs. The Court also found that the Secretary of DOT could
transfer to the IG authority to investigate motor carriers'
compliance with federal motor carrier safety regulations. The
Court concluded that the IG acted outside the scope of his
authority in conducting the contested investigations because he
was involved in a routine agency investigation into compliance
with motor carrier regulations. The Court of Appeals agreed with
this Court's finding that the IG violated the IGA when he
conducted the contested investigations and seized plaintiffs'
records. Therefore, the Government's arguments that its "good
faith belief" equates to substantial justification of its
actions and that the decisions of other courts provide
substantial justification are without merit. In this case, the
record is clear that the IG acted ultra vires at the time of
the investigations. See Truckers United for Safety v. Mead,
251 F.3d 183, 190 (D.C.Cir. 2001) ("On the record at hand, there
can be no doubt that the IG violated the Inspector General Act
when he conducted the disputed investigations and seizures of
the appellants records in 1998.").
Second, the Government's arguments that at the time when the
IG conducted the criminal investigations, the law was settled in
the Government's favor and that its litigation position was
substantially justified because three different U.S. Courts have
upheld the position is equally unpersuasive. The two cases cited
by the Government in support of its "settled law" argument are
distinguishable and the Government's reliance thereon is
misplaced. In Adair v. Rose Law Firm, the IG of the Resolution
Trust Corporation ("RTC") sought a motion for summary
enforcement of a civil subpoena. The court found that the
language of the IGA was expansive enough "to extend the IG's
authority beyond investigations of the agency itself to
investigations of individuals and entities outside the agency
involved with the agency's programs." 867 F. Supp. 1111, 1115
(D.C. 1994) (emphasis added). In that case, the Rose Law firm
was in essence a contractor to the RTC as it had entered service
agreements with the RTC to provide legal services with respect
to a number of failed thrift institutions. The other case,
United States v. Hunton & Williams, 952 F. Supp. 843 (D.C.
1997), also involved the enforcement of a subpoena by the RTC
against a contractor to the RTC.
There is nothing in either opinion that suggests the IG
authority should extend to criminal investigations which are at
the heart of an agency's general compliance enforcement
responsibilities. In the case at bar, plaintiffs were not
contractors to the DOT but were being investigated by the DOT's
OMC. The DOT engaged the IG to use its purported search and
seizure authority to improperly obtain plaintiffs business
records. On the facts of this case, the "settled law" of Rose
Law Firm and Hunton & Williams, does not demonstrate that the
Government's position was substantially justified.
The Government's reliance on In re Search of Florilli Corp.,
33 F. Supp.2d 799 (S.D.Iowa 1998), as "supplement[ing] the
Defendants' belief that it's [sic] actions were substantially
justified" is also misplaced. First, Florilli was decided on
November 10, 1998, a mere 7 days before plaintiffs in this case
filed their complaint. On that fact alone, the Court does not
see how this supports the Government's position that it was
substantially justified in its actions at the time of the
contested compliance investigations. To the extent the
Government offers Florilli in support of its argument that its
litigation position was substantially justified, while the
Court does not find this persuasive,*fn1 the Court
need not address this where, as here, the Court finds that the
record is clear that the IG did not possess the authority under
the IGA to conduct the contested compliance investigations.
The Government's third argument that it was substantially
justified also fails. The Government argues that the passage of
the MCSIA in 1999 and the DOT Appropriations Law, supra, are
evidence that it was substantially justified in its position
that it had authority to investigate the plaintiffs. As to the
MCSIA of 1999, the Court of Appeals found error in relying on
this for a retroactive grant of authority and specifically cited
the legislative history pointed to by the Government as
insufficient. The Court of Appeals stated:
This sparse piece of legislative history cannot carry
the day for the IG.
Prior to the passage of s 228 [of the MCSIA], the
statutory and legal framework defining the IG's
authority focused on the IG's role as an independent
and objective investigator of fraud and abuse. These
responsibilities contrasted with the responsibilities
delegated to other offices in the DOT which were in
charge of implementation and enforcement of the motor
carrier safety regulations. Within this institutional
framework the IG was not authorized to engage in
ordinary compliance reviews, even those potentially
implicating criminal punishments.
Truckers, 251 F.3d at 190. This legislative history is equally
unpersuasive in this Court's evaluation of substantial
justification. The language of the DOT Appropriations Law also
does not demonstrate that the Government was substantially
justified in its position where the statutory and legal
framework of the IG's authority were clearly established at the
time of the contested investigations.
In summary, the Court finds that the Government has not meet
its burden in showing the its position was substantially
justified. While the Government correctly points out that a
reversal at the appellate level should not be held against the
Government when awarding fees under the EAJA, see, e.g. Broad
Ave. Laundry and Tailoring v. United States, 693 F.2d 1387
(Fed.Cir. 1982), where the record is clear that the IG did not
have the authority at the time of the contested investigation —
as is clear from this Court's opinion and that of the Court of
Appeals — the Government has not demonstrated that it was
substantially justified in its actions. Therefore, plaintiffs as
the prevailing party are entitled to an award of fees and
expenses under the EAJA.
II. Fee Award
The Court must address the amount of fees requested by
plaintiffs. Plaintiffs seek $115,682.24 in costs, fees, and
expenses incurred in this litigation. Plaintiffs have provided
an itemized statement of fees and expenses to support this
request. The Court has reviewed this submission and will accept
as reasonable and necessary the fees described as professional
services in the amount of $114, 400.50 and costs — copying,
filing fees, Federal Express, expert witness, transportation,
and messenger service — totaling $1,281.74. Therefore, the
plaintiffs are entitled to a total award of $115,682.24. The
Court will, however, discuss the contested issue of recovery of
attorneys fees above the
statutory maximum — the only contested issue in this case as to
the amount of fees and expenses recoverable under the EAJA.
Plaintiffs are seeking an hourly rate of $260 for lead
counsel, Anthony J. McMahon, and $135 for Edward M. McClure.
These rates are above the statutory maximum established in the
EAJA. The EAJA establishes a rate of $125.00 per hour for
attorney's fees "unless the court determines that an increase in
the cost of living or a special factor, such as limited
availability of qualified attorneys for the proceedings
involved, justifies a higher fee."
28 U.S.C. § 2412(d)(2)(A)(ii). The Supreme Court in Pierce interpreted
this language to mean that an hourly rate above the statutory
maximum is due to attorneys "having some distinctive knowledge
or specialized skill needful for the litigation in question — as
opposed to an extraordinary level of the general lawyerly
knowledge and ability useful in all litigation." 487 U.S. at
572, 108 S.Ct. 2541. Consideration is also given to the level of
skill expected of a lawyer commanding the lawyer's usual hourly
fee in assessing the hourly rate recoverable under the EAJA.
See Action on Smoking & Health v. C.A.B., 724 F.2d 211, 219
Plaintiffs contend that Mr. McMahon has a usual fee of $280.
They seek to recover at a rate of $260 per hour due to the
limited availability of qualified attorneys for the proceedings
involved. Plaintiffs contend that Mr. McMahon is the only
attorney in the United States, so far as is known, to have
challenged the activities of the IG in investigating possible
criminal conduct by trucking companies. Mr. McMahon gained
specialized and detailed knowledge of the Federal Highway
Administration ("FHWA") and the detailed regulatory scheme as
Chief Counsel of the FHWA from 1985 to 1989 and in his
uncompensated bar activities, particularly in his activities in
the Transportation Section of the Federal Bar Association. He
was also chair of the Committee on Transportation Law on the
Transportation Research Board, an arm of the National Academy of
Sciences. Plaintiffs claim that through these activities and his
experience, Mr McMahon gained knowledge that the regulatory
activities of the IG not only were ultra vires but had a
negative impact on highway safety.
Plaintiffs contend that Mr. McClure, who served as co-counsel
has a usual fee of $200 per hour. Plaintiffs seek a recovery of
$135, or $10 above the statutory maximum, based on the increased
cost of living in the Baltimore-Washington area and in light of
his normal billing rate and experience. Plaintiffs cost of
living calculations reflect that $9.40 of the $10 requested
increase is based on the higher cost of living in the area. Mr.
McClure has been admitted to the bar since 1982.
The Government argues that plaintiffs are not entitled to fees
in excess of the statutory cap based on the plaintiffs'
contention that there are a limited number of qualified
attorneys available. The limited availability provision, they
contend, "must refer to attorneys qualified for the proceedings
in some specialized sense, rather than just in their legal
competence." Pierce, 487 U.S. at 572, 108 S.Ct. 2541. Further
they argue, justification of higher fees requires that attorneys
possess some special skill or distinctive knowledge necessary
for the litigation; and, that this Circuit has specifically held
that appropriate specialties are ones "requiring technical or
other education outside the field of American law." Waterman
Steamship Corp. v. Mar. Subsidy Bd., 901 F.2d 1119, 1124
(D.C.Cir. 1990). The Government also contends that this Circuit
has held that expertise developed from experience, as opposed to
specialized training, does not
justify higher fees. See F.J. Vollmer Co. v. Magaw,
102 F.3d 591, 598 (D.C.Cir. 1996). Lastly, the Government contend that
claims that the case involves complex statutory and regulatory
also are not sufficient justification for higher hourly fees.
The Court is not persuaded by the Government's arguments. In
this case, Mr. McMahon did gain much of his knowledge through
his experience as Chief Counsel for the FHWA and in his bar
activities. Presumably, this experience and the knowledge
acquired could have been acquired by any member of the bar
through competent research. Mr. McMahon, however, not only
gained his knowledge of the complex regulatory structure through
his experience as Chief Counsel for FHWA, he also gained
specialized expertise in the safety aspects of the trucking
industry and how this interplayed with the regulatory scheme.
The Court find this to be a special factor which warrants an
award of attorneys fees in excessive of the statutory cap. Mr.
McMahon's specialized or distinctive knowledge was critical to
Moreover, the Government's claims that "several other
attorneys have also challenged, or worked with Plaintiffs'
counsel, on the same issues in other district courts," may
support rather than refute plaintiffs' contention because it
illustrates that there is a limited availability of qualified
attorneys. Plaintiffs also point out that in United States v.
David Kristler and Grandson Trucking Inc., cited by the
Government, Mr. McMahon actually prepared pleadings which were
signed by local counsel. The Court finds that McMahon's
requested hourly fee of $260 per hour is reasonable in light of
the lack of qualified attorney's possessing the specialized
knowledge of trucking industry and the technical aspects of its
safety in relation to the complex regulatory regime.
As to plaintiffs request for recovery of $135 per hour for
attorney Edward M. McClure, the Government does not oppose this
request. The Court therefore has no trouble awarding a
reasonable request for fees in excess of the statutory cap based
on the rise in the cost of living. The Court has been presented
with no arguments that lead the Court to question the accuracy
of plaintiffs' cost of living figures. Therefore, the hourly
rate recoverable for attorney Edward M. McClure will be $135 per
the plaintiffs request.
ORDERED that plaintiffs are entitled to recover $115,682.24
for fees and expenses incurred in this litigation as described
in Exhibit A to plaintiffs' motion.
For the foregoing reasons, the Court will grant plaintiffs'
motion for attorneys fees and costs under the Equal Access to
Justice Act (28 U.S.C. § 2412(d)). Plaintiffs are entitled to
recover $115,682.24. An appropriate Order will accompany this
For the reasons stated in the accompanying Memorandum Opinion,
it is hereby
ORDERED that plaintiffs' motion for an award of attorneys'
fees and costs under the Equal Access to Justice Act
28 U.S.C. § 2412(d) is GRANTED. Accordingly, it is hereby