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United States v. High Plains Livestock, LLC

United States District Court, D. New Mexico

May 9, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
HIGH PLAINS LIVESTOCK, LLC, dba PRODUCERS LIVESTOCK AUCTION, MICHAEL FLEN, CALVIN PAREO, and DARCIE PAREO, Defendants.

          PROPOSED FINDINGS AND RECOMMENDED DISPOSITION OF MOTION FOR ATTORNEY FEES

          JERRY H. RITTER UNITED STATES MAGISTRATE JUDGE

         Defendants High Plains Livestock LLC, Michael Flen, and Calvin and Darcie Pareo filed an Application for Attorney's Fees and Other Expenses Pursuant to the Equal Access to Justice Act 28 U.S.C. § 2412 [] on June 29, 2017. [Doc. 349]. The United States filed a response on August 21, 2017 [Doc. 375], and Defendants filed a reply on September 22, 2017. [Doc. 398]. With leave of court, see [Docs. 410 & 411], the United States filed a sur-reply on October 25, 2017. [Doc. 412].

         On November 13, 2017, U.S. District Judge M. Christina Armijo entered an Order of Reference of the motion to U.S. Magistrate Judge Jerry H. Ritter [Doc. 415], with direction to prepare a recommended disposition.

         ISSUE(S) PRESENTED

1. Whether the District Court should consider Defendants' motion or, instead, dismiss or return it as premature?
2. Whether any of the Defendants is a “prevailing party” which could be eligible for an award of fees and expenses under the Equal Access to Justice Act (“EAJA”)?
3. Whether the position of the United States was “substantially justified” so as to foreclose an award to a prevailing party under the EAJA?
4. If the Defendants are entitled to attorney fees and costs, what fees and costs should be awarded?

         MATERIAL FACTS

         The United States filed this action to resolve thirteen claims that the Defendants violated the Packers & Stockyards Act (PSA), 7 U.S.C. §§ 181-231, and sought civil penalties and injunctive relief [Doc. 1]. At the direction of District Judge Armijo, U.S. Magistrate Judge William P. Lynch held an evidentiary hearing to determine whether a temporary injunction should issue. After four days of testimony, Magistrate Judge Lynch found that Defendants had committed multiple violations of the PSA that it was “appropriate to appoint a receiver to conduct an initial review of HPL's continued viability and, if viable, to take over all aspects of HPL's operations. Additionally, Defendants Calvin and Darcie Pareo and Michael Flen [were to] have no control over the business, but [were] permitted to provide advice to the receiver.” [Doc. 55, at 2-3]. When no qualified receiver could be obtained, District Judge Armijo appointed a Special Master to monitor and report on Defendants' operations. [Docs. 103 & 104]

         Subsequently, District Judge Armijo resolved a jurisdictional challenge to Counts I-VIII by ruling that the governing statutes require the Secretary of Agriculture to pursue civil fines or prohibitions upon violations of the PSA through an administrative process before filing suit in the courts. [Doc. 165, at 10-12]. The District Court denied the United States' motion for reconsideration. [Doc. 295].

         The District Court did not dismiss Count IX, against Calvin Pareo [Doc. 165, at 14], nor dissolve the injunctive relief previously entered against all Defendants, deeming it in the public interest to maintain oversight over the Defendants' activities pending initiation of administrative proceedings by the United States. [Id., at 14-16]. The Court noted that Congress "anticipated ... and allowed for such temporary relief under strictly defined circumstances. 7 U.S.C. § 228a." [Id., at 7]. The Court later ordered the appointment of a co-special master, not then identified, to provide additional oversight and issued a preliminary injunction addressed to the operations of Defendants under the PSA. [Doc. 296].

         Defendants filed a separate motion to dismiss Count IX for failure to state a claim against Calvin Pareo [Doc. 266], but the motion was not ruled upon. Instead, Count IX was dismissed [Doc. 345] upon the unopposed motion of the United States which asserted that, so long as temporary injunctive relief remained in place, it was "no longer in the interest of the United States to pursue this claim." [Doc. 336, at 1]. The order of dismissal expressly "[left] in place only the United States' request for temporary injunctive relief under 7 U.S.C. § 228a." [Doc. 345, at 1].

         On June 29, 2017, after dismissal of the claims for civil penalties but before the naming of the co-special master, Defendants filed the instant motion seeking an award of attorney fees and other expenses in the amount of $168, 037.73. [Doc. 349, at 7]. While Defendants' motion for EAJA fees and expenses was pending, the District Court appointed a co-special master to fulfill some of the objectives of the injunction it previously put in place. [Doc. 353].

         After initiating a parallel administrative process through the U.S. Department of Agriculture, the parties resolved their dispute and Defendants submitted an Amended Unopposed Emergency Motion to Dismiss Remaining Claims and for an Order Directing Special Masters to Cease All Work on and Related to this Matter [Doc. 388], which the District Court granted on September 12, 2017. [Doc. 390]. The same day, the District Court entered a Judgment dismissing "all of Plaintiff's claims against Defendants". [Doc. 391, at 1].

         DISCUSSION

         The Equal Access to Justice Act contains two provisions authorizing an award of attorney fees under proper circumstances, 28 U.S.C. §§ 2412(b) and 2412(d). Defendants here rely upon the latter provision, which states: "[e]xcept 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 awarded pursuant to subsection (a), incurred by that party in a civil action (other than cases sounding in tort), ... brought by 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).

         FIRST ISSUE:

         Whether the District Court should consider Defendants' motion or, instead, dismiss or return it as premature?

         The Equal Access to Justice Act requires that a motion for fees and expenses be filed "within thirty days of final judgment in the action." 28 U.S.C. § 2412(d)(1)(B). The term "final judgment" is defined as "a judgment that is final and not appealable, and includes an order of settlement." 28 U.S.C. § 2412(d)(2)(G); see Melka Marine, Inc. v. United States, 29 Fed.Appx. 594, 597 (Fed. Cir. 2002) (unpublished). "The 30-day EAJA clock begins to run after the time to appeal that 'final judgment' has expired." Melkonyan v. Sullivan, 501 U.S. 89, 96 (1991).

         Citing an outdated case, Bryan v. Office of Pers. Mgmt., 165 F.3d 1315 (10th Cir. 1999), the United States contends that the EAJA application period is jurisdictional. [Doc. 375 at 2]. In 2004, the U.S. Supreme Court held that the thirty-day period is not a declaration of subject-matter jurisdiction but is a claim processing rule. See Scarborough v. Principi, 541 U.S. 401, 413-14 (2004). For that reason, and in distinction from subject-matter jurisdiction which cannot be created by consent, Bender v. Williamsport Area School District, 475 U.S. 534, 541 (1934), the Government can waive the time requirement. Such a waiver can occur either before the filing period begins, see Former Employee of Marlin Firearms Co. v. United States Secretary of Labor, 2017 WL 2591781, *3 (No. 11-00060, June 14, 2017) ( U.S.Ct. Int'l Trade), or after it has run. See Vasquez v. Barnhart, 459 F.Supp.2d 835 (N.D. Iowa 2006). In this case, however, the United States has not waived the statutory time period, and so the Court must decide what authority it has to review an application filed “too soon”, noting that "[t]he EAJA is a waiver of sovereign immunity and it therefore must be strictly construed, Ruckelshaus v. Sierra Club, 463 U.S. 680, 685 (1983)." United States v. Charles Gyurman Land & Cattle Co., 836 F.2d 480, 483 (10th Cir. 1987).

         The plain meaning of the preposition within indicates that an EAJA application neither be filed after, nor before, the thirty-day statutory window. In keeping with that approach, before final judgment, a pending application can be dismissed without prejudice, see, e.g., J.C.N. Constr., Inc. v. United States, 2013 WL 491013, at 1 (Fed. Cl. Feb. 8, 2013). As another option, in 2002, the Federal Circuit ruled that it is within a court's discretion to "return" an EAJA application filed before entry of a final judgment. Melka Marine, Inc., 29 Fed.Appx. at 4.

         There is abundant authority, however, for the proposition that a court may likewise exercise discretion to consider the merits of an early application, although the U.S. Supreme Court has not ruled definitively on the issue. Compare Melkonyan, 501 U.S. at 103 (1991) ("This case is not an appropriate vehicle for resolving the issue [of whether the applicant can file for EAJA fees even before entry of a final judgment]."). Some circuit courts have found circumstances where EAJA fee applications were deemed timely even though filed before entry of a final judgment. See, e.g., Cummings v. Sullivan, 950 F.2d 492, 495 n. 4 (7th Cir. 1991) (EAJA application deemed timely when filed after "section six" Social Security remand but prior to final judgment) (issue raised sua sponte); Haitian Refugee Center v. Meese, 791 F.2d 1489 (11th Cir. 1986) (Interim fees could be awarded on application filed after remand of interlocutory appeal where district court denied government motion to enter final judgment.), partially vacated on other grounds after rehearing en banc, 804 F.2d 1573 (11th Cir. 1986); Bostic v. Comm'r of Social Security, 858 F.Supp.2d 1301, 1303-04 (M.D. Fl. 2011) (EAJA application filed seven weeks before entry of final judgment deemed timely filed.). In 2006, the District Court for the District of Hawaii reported that, while the Ninth Circuit Court of Appeals had not weighed in on the issue, since the 1985 EAJA amendments every circuit district court opinion on the issue declared the thirty-day period to be "a deadline, not a window." Center for Food Safety v. Johanns, 2006 WL 3783434, *1 (CV. NO. 03-00621-JMS-BMK, Nov. 7, 2006).

         Defendants argue [Doc. 398, at 2] that the timeframe issue is moot since the Court entered a “final judgment” on September 12, 2017 [Doc. 391]. Although the definition of final judgment in the EAJA requires the expiration of appellate deadlines after the trial court's judgment, 28 U.S.C. § 2412(d)(2)(G), the combination of the September 12th filing and the lack of any appeal thereafter brings this case within authority from the Tenth Circuit and elsewhere which would allow the District Court to consider the merits of this EAJA application. See Koch v. U.S. Dep't of Interior, 47 F.3d 1015, 1021 (10th Cir. 1995) ("[A] plaintiff may ask for attorney's fees [under EAJA] even when the time for appeal has not elapsed."); see also, e.g., Heger v. U.S., 114 Fed.Cl. 204, 208 n. 3 (2014) ("Subsequent cases have interpreted Melkonyan to allow courts to give effect to EAJA applications filed prior to final judgment."); Bostic, 858 F.Supp.2d at 1304 (citing Singleton v. Apfel, 231 F.3d 853, 956 (11th Cir. 2000), Haitian Refugee Ctr., 791 F.2d at 1495-96, and Inman v. Apfel, No. 3:97-CV-1273-J-HTS, 2000 WL 1221858 (M.D. Fla. July. 14, 2000)).

         As a practical matter, a dismissal or return of the application as “premature” would only invite Defendants to refile, with a likely challenge by the United States that the new application is untimely, creating a “Catch-22” situation that would prevent a determination of the merits of the application and, to that extent, frustrate the purpose of Congress in enacting the EAJA. See Ewing v. Rodgers, 826 F.2d 967, 970 (10th Cir. 1987).

         SECOND ISSUE:

         Whether any of the Defendants is a “prevailing party” which could be eligible for an award of fees and expenses under the EAJA?

         Under the Equal Access to Justice Act, to obtain an award of fees and expenses in litigation against the United States, an applicant must be a "prevailing party". 28 U.S.C. § 2412(d)(1)(A).

         The EAJA does not contain an express definition of prevailing party, except in condemnation cases. See 28 U.S.C. § 2412(d)(2)(H). The watershed definition of prevailing party for federal fee-shifting statutes is from Buckhannon Board & Care Home, Inc. v. W.Va. Dep't of Health and Human Resources, 532 U.S. 598 (2001) (as recognized and applied to an EAJA application by the Tenth Circuit Court of Appeals in Biodiversity Conservation All. v. Stem, 519 F.3d 1226 (10th Cir. 2008)). Further development of the definition of prevailing party occurs throughout federal cases involving multiple fee-shifting statutes as the same definition generally applies. See Cactus Canyon Quarries, Inc. v. Fed. Mine Safety & Health Review Comm'n, 820 F.3d 12, 16 (D.C. Cir. 2016).

         Buckhannon identified "some relief by the court", 532 U.S. at 603, as essential to creation of a prevailing party, although not necessarily through a decision on the merits. For example, an enforceable consent decree even without admission of liability may suffice. Id. at 604. The necessary judicial investment may also be represented by the mooting of the applicant's claims, and particularly claims for damages. See Id. at 608-09. The key element is the "judicial imprimatur" on the result; for that reason, a voluntary action by the opponent, even where ...


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