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True the Vote, Inc. v. Internal Revenue Service

United States District Court, District of Columbia

May 30, 2019

TRUE THE VOTE, INC., Plaintiff,
v.
INTERNAL REVENUE SERVICE, et al., Defendants.

          MEMORANDUM OPINION

          REGGIE B. WALTON UNITED STATES DISTRICT JUDGE.

         The plaintiff, True the Vote, Inc., brought this civil action against the Internal Revenue Service (“IRS”), the United States of America, and several IRS officials in their official capacities, [1] alleging violations of the First Amendment to the United States Constitution; the Internal Revenue Code, 26 U.S.C. § 6103 (2018); and the Administrative Procedure Act, 5 U.S.C. § 706 (2018), and seeking declaratory and injunctive relief, as well as monetary damages. See First Amended Verified Complaint for Declaratory Judgment, Injunctive Relief, and Compensatory, Statutory, and Punitive Damages (“Am. Compl.” or the “Amended Complaint”) ¶¶ 139-61, 168-206. Currently before the Court are (1) the Plaintiff's Application and Motion for Attorneys' Fees, Costs, and Expenses Under the Equal Access to Justice Act (“Pl.'s Mot.” or the “motion for attorneys' fees”); (2) the Plaintiff's Supplemental Application and Motion for Attorneys' Fees, Costs, and Expenses Under the Equal Access to Justice Act (“Pl.'s Supp. Mot.” or the “supplemental motion for attorneys' fees”); and (3) the Plaintiff's Motion for Oral Argument (“Pl.'s Oral Argument Mot.” or the “motion for oral argument”). Upon careful consideration of the parties' submissions, [2] the Court concludes that it must grant in part and hold in abeyance in part the plaintiff's motion for attorneys' fees and hold in abeyance the plaintiff's supplemental motion for attorneys' fees and motion for oral argument pending further submission by the plaintiff.

         I. BACKGROUND

         The Court has previously set forth the factual background of this case, see True the Vote, Inc. v. IRS, 71 F.Supp.3d 219, 223-25 (D.D.C. 2014) (Walton J.), aff'd in part, rev'd in part and remanded, 831 F.3d 551 (D.C. Cir. 2016), and therefore will not recite it again here. The Court will however, briefly summarize the procedural posture of this case, which is pertinent to the resolution of the pending motions.

         As previously noted by this Court, the plaintiff asserted five claims in this action:

Count one s[ought] declaratory relief that the plaintiff is entitled to enjoy tax-exempt status as a charitable organization described in 26 U.S.C. § 501(c)(3). Count two also s[ought] a declaratory judgment that the IRS [t]argeting [s]cheme violated the plaintiff's First Amendment rights, and injunctive relief to prevent additional violations. Count three s[ought] monetary damages against certain defendants in their individual capacities for their alleged participation in the IRS [t]argeting [s]cheme. Count four claim[ed] violations of 26 U.S.C. § 6103, which relate[d] to unauthorized disclosures and inspection of any tax return or tax return information. And count five assert[ed] violations of the Administrative Procedure Act for the alleged IRS [t]argeting [s]cheme.

True the Vote, 71 F.Supp.3d at 224 (third, fourth, sixth, seventh, tenth, and eleventh alterations in original) (citations and internal quotation marks omitted). On September 20, 2013, the “United States, on behalf of itself, the [IRS], and the [IRS] employees named in their official capacities, [ ] move[d] to dismiss” counts one, two, four, and five of the Amended Complaint. Defs.' Mot. to Dismiss at 1-2. On October 23, 2014, the Court granted the defendants' motion to dismiss and dismissed counts one, two, and five as moot, see True the Vote, 71 F.Supp.3d at 226-29, and dismissed counts three and four for failure to state a claim, see id. at 232-35. On appeal, the Circuit affirmed the dismissal of counts one, three, and four, see True the Vote, 831 F.3d at 556-58, but reversed the dismissal of counts two and five, see id. at 561-64, and remanded those claims to this Court for further proceedings, id. at 564.

         Thereafter, the parties submitted a proposed Consent Order resolving the claims that had been reinstated by the Circuit, which the Court signed on January 19, 2018. See Consent Order at 1 (Jan. 19, 2018), ECF No. 150. The Consent Order contained, inter alia, a declaratory judgment stating that (1) “it is wrong to apply the United States tax laws . . . to any tax-exempt application or entity based solely on such entity's name, any lawful positions it espouses on any issues, or its associations or perceived associations with a particular political movement, position or viewpoint”; (2) “any action or inaction taken by the IRS must be applied evenhandedly and not based solely on a tax-exempt applicant or entity's name, political viewpoint, or associations or perceived associations with a particular political movement, position, or viewpoint”; and (3) “discrimination on the basis of political viewpoint in administering the United States tax code violates fundamental First Amendment rights.” Id. ¶¶ 48-50. The plaintiff then timely filed its motion for attorneys' fees, see generally Pl.'s Mot., as well as a supplemental motion for attorneys' fees seeking costs incurred during the preparation of its motion for attorneys' fees, see generally Pl.'s Supp. Mot., and a motion requesting oral argument on its motion for attorneys' fees, see generally Pl.'s Oral Argument Mot., which are the subjects of this Memorandum Opinion.

         II. STANDARD OF REVIEW

         The Equal Access to Justice Act (“EAJA”) provides, in relevant part:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs . . . incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought or against the United States in any court having jurisdiction of that action, 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) (2018).[3] Thus, to award attorneys' fees under the EAJA, the Court must find that “(1) [the plaintiff] is the prevailing party; (2) [the plaintiff] has incurred [reasonable] fees or expenses; (3) the position of the United States in the action was not substantially justified; and (4) no special circumstances make an award of fees unjust.” Brooks v. Berryhill, Civ. Action No. 15-00436 (CKK/GMH), 2019 WL 120767, at *3 (D.D.C. Jan. 7, 2019). Once the plaintiff establishes that it is the prevailing party under the EAJA, the government has the burden of showing that its position was “substantially justified” or that special circumstances make the award unjust. See Taucher v. Brown-Hruska, 396 F.3d 1168, 1173 (D.C. Cir. 2005). Finally, if a court concludes that an award of attorneys' fees and costs is warranted, it is incumbent upon the plaintiff to establish that the fees and costs it is seeking are reasonable. See Role Models Am., Inc. v. Brownlee, 353 F.3d 962, 969-70 (D.C. Cir. 2004) (“[C]ourts properly have required prevailing attorneys to justify the reasonableness of the requested rate or rates.” (quoting Blum v. Stenson, 465 U.S. 886, 896 n.11 (1984)).

         III. ANALYSIS

         The plaintiff argues that it is entitled to an award of attorneys' fees under the EAJA because

[it] is the prevailing party in this litigation; [ ] the [defendants] cannot carry [their] heavy burden of showing [their] position was substantially justified in either law or fact and will not be able to show special circumstances mak[ing] an award of fees unjust; and [ ] the requested fees are fair and reasonable.

         Pl.'s Mot. at 1-2. The defendants respond that this Court should not award attorneys' fees to the plaintiff because the plaintiff does not qualify as a prevailing party under the EAJA, the defendants' position in this matter was substantially justified, special circumstances exist that make an award of attorneys' fees and costs to the plaintiff unjust, and the plaintiff's requested fees and costs are not reasonable. See Defs.' Opp'n at 2-19.[4]

         A. Whether the Plaintiff was the Prevailing Party

In Thomas v. National Science Foundation, the [District of Columbia] Circuit distilled a three-part test . . . for an EAJA prevailing party analysis. First, there must be a “court-ordered change in the legal relationship between the plaintiff and the defendant.” Second, the judgment must be in favor of the party seeking the fees. Third, the judicial pronouncement must be accompanied by “judicial relief.”

Ctr. for Food Safety v. Burwell, 126 F.Supp.3d 114, 120 (D.D.C. 2015) (citations omitted) (quoting Thomas v. Nat'l Sci. Found., 330 F.3d 486, 492-93 (D.C. Cir. 2003)).

         The plaintiff argues that the Consent Order signed by the Court on January 19, 2018, see generally Consent Order (Jan. 19, 2018), ECF No. 150, and the District of Columbia Circuit's decision issued on August 5, 2016, see generally True the Vote, 831 F.3d 551, accord prevailing party status on the plaintiff, see Pl.'s Mem. at 7-11. The defendants respond that the “[p]laintiff . . . does not qualify as a ‘prevailing party' under the EAJA, ” Defs.' Opp'n at 2, because the “[p]laintiff obtained none of the relief it requested in this suit, ” through either the Consent Order signed by this Court or the Circuit's August 5, 2016 decision, id. at 3. The Court will first address whether the plaintiff is a prevailing party under the Consent Order.

         As to the first prong of the prevailing party test adopted in Thomas, the plaintiff argues that under the Supreme Court's decision in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, “enforceable judgments on the merits and court-ordered consent decrees create the material alteration of the legal relationship of the parties necessary to permit an award of attorney's fees.” Pl.'s Reply at 4-5 (quoting Buckhannon Bd. & Care Home, Inc. v. W.Va. Dep't of Health & Human Res., 532 U.S. 598, 604 (2001)). Specifically, it argues that the Consent Order represents a change in the legal relationship between the parties because “the [defendants] made a wholesale admission [in the Consent Order] that [their] treatment of [the plaintiff] was wrong, ” Pl.'s Mem. at 9, and “[a]s a direct result [of the Consent Order] . . ., the inappropriate [agency] actions towards [the plaintiff] have fully, unequivocally, and permanently ceased, ” id. at 11. The defendants respond that the “[p]laintiff points to various parts of the Consent Order as changing the legal relationship between itself and the [defendants], but none of them actually do.” Defs.' Opp'n at 4. Specifically, the defendants argue that “[t]he fact that the United States acknowledges that [the] [p]laintiff made certain allegations in this action, and the fact that the Court signed the Consent Order containing that acknowledgement, do not constitute a finding by the Court that those allegations are true, ” because “nowhere in the Consent Order is there any conclusion that the stipulated facts give rise to a violation of law.” Id. at 5.

         The Supreme Court has held that

settlements agreements enforced through a consent decree may serve as the basis for an award of attorney's fees. Although a consent decree does not always include an admission of liability by the defendant, it nonetheless is a court-ordered chang[e] [in] the legal relationship between [the plaintiff] and the defendant . . . . [E]nforceable judgments on the merits and court-ordered consent decrees create the material alteration of the legal relationship of the parties necessary to permit an award of attorney's fees.

Buckhannon, 532 U.S. at 604 (first, second, and third alterations in original) (citations and internal quotation marks omitted). “This case does not involve a mere ‘[p]rivate settlemen[t]' which this [C]ourt has no jurisdiction to enforce. Rather, the ‘terms of the [parties'] agreement are incorporated' into the Consent [Order]” signed by the Court. Ctr. for Food Safety, 126 F.Supp.3d at 120-21 (D.D.C. 2015) (first and second alterations in original) (quoting Buckhannon, 532 U.S. at 604 n.7); see Consent Order at 2 (Jan. 19, 2018), ECF No. 150. Moreover, in the Consent Order, the defendants admitted to conduct, albeit indirectly, which the Court declared “violates fundamental First Amendment rights.” Compare Consent Order ¶ 40 (Jan. 19, 2018), ECF No. 150 (incorporating admission by the defendants that they “screen[ed] [the plaintiff's] application based on its name or policy positions, subject[ed] the application to heighted scrutiny and inordinate delays, and demand[ed] of [the] [p]laintiff some information that the [the] [United States Treasury Inspector General for Tax Administration (“TIGTA”)] determined was unnecessary to the defendants' determination of [the plaintiff's] tax-exempt status”), with id. ¶¶ 48, 50 (declaring that “it is wrong to apply the United States tax laws . . . to any applicant or entity based solely on such entity's name, any lawful positions it espouses on any issues, or its associations or perceived associations with a particular political movement, position, or viewpoint” and that “discrimination on the basis of political review in administering the United States tax code violates fundamental First Amendment rights”); cf. ...


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