United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER OVERRULING
DEFENDANTS' OBJECTIONS TO PROPOSED FINDINGS AND
RECOMMENDED DISPOSITION OF MOTION FOR ATTORNEY FEES AND
ADOPTING THE RECOMMENDED DISPOSITION OF MAGISTRATE JUDGE
JERRY H. RITTER
matter comes before the Court on Magistrate Judge Jerry H.
Ritter's Proposed Findings and Recommended Disposition of
Motion for Attorney Fees (Doc. 418), filed May 9,
2018, which recommended that the Court deny Defendants'
Application for Attorney's Fees and Other Expenses
Pursuant to the Equal Access to Justice Act. Doc.
349. Pursuant to 28 U.S.C. § 636(b) and Federal
Rule of Civil Procedure 72(b)(2), Defendants filed objections
to the Magistrate Judge's Proposed Findings and
Recommended Disposition ("PFRD") and the United
States filed a Response to Defendants' Objections.
See Docs. 419, 422. The Court, having conducted a
de novo review of Defendants' objections, hereby
overrules them and adopts the PFRD for the reasons set forth
Standard of Review
of the magistrate judge's ruling is required by the
district court when a party timely files written objections
to that ruling." Hutchinson v. Pfeil, 105 F.3d
562, 566 (10th Cir. 1997). Specifically, "[d]e novo
review is required when a party files timely written
objections to the magistrate judge's
recommendation." In re Griego, 64 F.3d 580,
583-84 (10th Cir. 1995) (citation omitted). "De novo
review requires the district court to consider relevant
evidence of record and not merely review the magistrate
judge's recommendation." Id. "However,
neither 28 U.S.C. § 636(b)(1) nor Fed.R.Civ.P. 72(b)
requires the district court to make any specific findings;
the district court must merely conduct a de novo review of
the record." Garcia v. City of Albuquerque, 232
F.3d 760, 766 (10th Cir. 2000).
United States filed its Complaint for Injunctive Relief and
Civil Penalties against the Defendants on August 5, 2015.
Doc. 1. Counts I through VIII of the Complaint
alleged violations of the Packers and Stockyards Act
("PSA") and sought civil penalties resulting
therefrom. See Id. at 22. Count IX sought injunctive
relief against Defendant Calvin Pareo. Id. at 21.
Finally, the United States requested, pursuant to Federal
Rule of Civil Procedure 65 and 7 U.S.C. § 228a, a
temporary restraining order prohibiting Defendants "from
operating as a market agency or dealer while livestock
sellers and consignors remain unpaid and livestock buyers
remain unreimbursed for overcharges[.]" Id. at
September 2, 215, this Court referred "the matter of
appointment of a receiver to Magistrate Judge William P.
Lynch to convene proceedings with the parties and determine
whether appointment of a receiver is indicated."
Doc. 18. Thereafter, after a four-day evidentiary
hearing, Magistrate Judge Lynch issued an Order Appointing a
Receiver on December 8, 2015. Doc. 55. In the
alternative, Magistrate Judge Lynch stated that, "if HPL
decided that it would rather not operate than to do so under
a receiver, that is a business decision that will be in
accord with the letter and spirit of this Order."
Doc. 55 at 30. In response, "[a]fter reviewing
the Order, and after consulting with the lienholder of the
facility, who considers the mortgage in default and notes
terminated, High Plains Livestock dba Producers Livestock
Auction,  decided that it [would] not operate under a
receiver and [would] discontinue operations." Doc.
59. Defendants further filed a Notice and Request for
Emergency hearing. Id.
parties submitted numerous briefs and documents on the issue
of the appointment of a receiver, and the Court held two
hearings and a telephonic status conference. See Doc.
296 at 5. Ultimately, the Court appointed Special Master
Gayland Co wen. Id. at 6. The Court granted the
Special Master broad authority to monitor the financial
activities of HPL and granted him electronic access to
HPL's bank accounts. Id. at 7. On March 16,
2016, the United States filed its Motion for Appointment of
Receiver and/or Co-Special Master, or Preliminary Injunctive
Relief. Doc. 153. This Motion was granted on March
31, 2017. See generally Docs. 296, 351. A Co-Special
Master was appointed on July 10, 2017. Doc. 353.
on April 11, 2016 this Court, acting sua sponte,
dismissed Counts I through VIII of the Complaint for lack of
jurisdiction "for the reasons set forth in Pan
American World Airways, Inc. v. United States, 371 U.S.
296 (1963)." Thereafter, the parties briefed
Defendants' Motion to Dismiss Count IX for failure to
state a claim; however, before the Motion was ruled on, the
United States moved to dismiss Count IX without prejudice on
May 30, 2017. See Docs. 336, 345; see also Fed. R.
Civ. P. 41(a)(2) ("Unless the order states otherwise, a
dismissal under this paragraph is without prejudice.").
Defendants did not oppose the Motion, and so it was granted,
"leaving in place only the United States' request
for temporary injunctive relief under 7 U.S.C. §
228a." Doc. 345.
retaining jurisdiction under Section 228a, this Court
directed the United States to file an administrative claim by
a date certain or face dismissal of the request for temporary
injunctive relief. Doc. 388 at 2. The United States
filed an administrative claim, which was set for a hearing on
the merits on September 11, 2017. Id. However, prior
to the start of the hearing, the Secretary and Defendants
entered into a Consent Order that "directs the
Defendants to cease and desist activities that were the
subject of the administrative claim and that imposes
sanctions under the PSA." Id. (citing Exhibit 1
thereto). Specifically, the Consent Order suspends HPL's
registration as a market agency selling on commission for 4
years, requires Defendants to cease and desist from six
separate violations of the PSA, and assesses a one-hundred
thousand dollar civil penalty against the Defendants, jointly
and severally (with $90, 000.00 held in abeyance). Doc.
388 at 9-10. Upon entry of the Consent Order, Defendants
filed an Unopposed Emergency Motion to Dismiss Remaining
Claims and for an Order Directing Special Masters to cease
all Work on and Related to this Matter. See generally
Doc. 388. This Court granted the Unopposed Motion on
September 12, 2017. Doc. 390.
granting the Unopposed Motion, this Court retained
jurisdiction to rule on Defendant's Application for
Attorney's Fees and Other Expenses Pursuant to the Equal
Access to Justice Act. Doc. 349. On November 13,
2017, this Court referred the Application to Magistrate Judge
Jerry Ritter to "initiate and complete necessary
proceedings deemed necessary in order to address the pending
motion and submit to this Court a recommended disposition
of the motion." Doc. 415. Magistrate Judge
Ritter issued his Proposed Findings and Recommended
Disposition ("PFRD") of Defendants' Motion for
Attorney Fees on May 9, 2018. Doc. 418. After
summarizing the material facts of this case, Magistrate Judge
Ritter concluded that Defendants were not a "prevailing
party" under the Equal Access to Justice Act
("EAJA") and that, even if they were, that the
position of the United States in litigating this action was
substantially justified. Id. at 7-20. As such,
Magistrate Judge Ritter recommended that the Court deny
Defendant's Application. Id. at 21.
object to Magistrate Judge Ritter's conclusion and to
many of his findings. Defendants first and foremost object
that the Magistrate Judge's discussion of the material
facts of this case "does not provide a full and accurate
description of the procedural history of this matter."
Doc. 419 at 1. In support of this position,
Defendants focus their argument on the fact that Judge
Ritter's PFRD "does not adequately address the basis
for the dismissal of Counts I through VIII and Count IX,
which is the basis for the claim for fees under EAJA."
Doc. 419 at 1; id. at 4 ("In other
words, the United States did not have any legal basis for
filing Counts I through VIII against the Defendants. This
ruling, along with the dismissal of Count IX against
Defendant Calvin Pareo, is the basis for Defendants' EAJA
claim for attorney fees."). Unfortunately for
Defendants, this approach is not persuasive. "[T]he
EAJA-like other fee-shifting statutes-favors treating a case
as an inclusive whole, rather than as atomized
line-items." Comm'r, IKS. v. Jean, 496 U.S.
154, 161-62 (1990). As such, while the "basis for the
dismissal of Counts I through VIII and Count IX" is
relevant, it cannot be the focus of the Court's analysis.
"[O]nly one threshold determination for the entire civil
action is to be made." Id. at 159. Thus,
Defendants' position - that the Court should view this
case with a narrow perspective - is rejected.
this standard in mind, the Court notes certain facts that
Defendants do not, and cannot, dispute. For example,
Defendants do not dispute that the United States sought an
injunction against them pursuant to 7 U.S.C. § 228a in
the Complaint. Id. at 2. Defendants cannot dispute
that "Section 228a allows a federal district court to
grant temporary injunctive relief until such time as an
administrative complaint is issued and dismissed by the
Secretary of Agriculture." Doc. 388
(Defendants' Unopposed Motion to Dismiss) at 2.
Defendants do not dispute that "[f]rom January 11,
2016[, ] to September 12, 2017, the Defendants operated their
dealer business under the oversight of Mr. Cowen," the
Court-appointed special master. Doc. 419 at 3. Nor
do Defendants dispute that a co-special master was appointed
on March 31, 2017, and assisted in monitoring their business
until September 12, 2017. Id. Defendants cannot
dispute that "[t]he United States filed an
administrative claim, which was set for hearing on the merits
beginning September 11, 2017, [but that] [p]rior to the start
of the hearing, the Secretary, through [the Grain Inspection,
Packers, and Stockyards Administration], and the Defendants
entered into a Consent Order that directs the Defendants to
cease and desist activities that were the subject of the
administrative claim and that imposes sanctions under the
PSA." Doc. 388 at 2. Thus, Defendants do not
and cannot dispute that they were subject to the Court's
jurisdiction for the purpose of injunctive relief and that
they were monitored by Co-Special Masters until entering into
a Consent Order before an administrative agency. And,
"Defendants are not claiming that they prevailed in
regard to the injunctive relief that was in place during the
course of the proceedings." Doc. 419 at 7.
this backdrop, Magistrate Judge Ritter concluded that
Defendants are not a "prevailing party" under EAJA,
because "[w]hen the result is viewed as a whole, as
required by the controlling case authorities, there is no
logical characterization of Defendants, or any one of them,
as prevailing in this litigation." Doc.
418 at 12 (emphasis in original). Moreover, in the event
that this Court was to reject that conclusion, Magistrate
Judge Ritter concluded that the position of the United States
in bringing and litigating this case was substantially
justified "given: (1) the need for prompt injunctive
relief to protect the public; (2) the evidentiary record of
multiple violations of the [A]ct sufficient to justify
substantial restrictions on Defendants' business
activities; (3) the absence of initiative by Defendants to
raise the issue of exclusive jurisdiction before it was
raised by the District Court sua sponte; and (4) the
lack of any evidence of bad faith by the Government[.]"
Id. at 20.
to Magistrate Judge Ritter's conclusions, Defendants
argue that they both prevailed in this litigation and that
the position of the United States was not substantially
justified. Having reviewed the ...